WHAT IS A TENDER?

Not Sure What a Tender Is? Read On..

WHAT IS A TENDER?

The word “Tender” tends to evoke different associations for people.  It may bring fleeting images of “taking care of” or “gardening” or even some sort of Dickensian form of payment as in “legal tender”. The context in which we are using it, commercial deals, it is a noun. However, when we are in the commercial process of buying and selling, the verb is “tendering”.

A Tender is a Formal Offer
In its simplest form, it is a formal offer. An offer to do something, provide goods or services, perhaps to meet certain specifications or standards.  Its literal meaning of “to offer, hold forth”  originates from 15th century Middle French “tender” as does the noun meaning “formal offer for acceptance”.   The Latin root word is tendere “to stretch, extend”.  The concept of legal tender “currency” as “money that may be legally offered as payment” came into use in the 17th century.

When is a Tender Used?
In today’s commercial world, you would issue a tender when you want to agree a new contract. As in the case of when you are seeking new supplies or services, or considering some sort of contractual relationship.  Tendering is really a pre-contract process.

When a contract requirement arises, you would issue a tender or request for proposal of some sort.  In the anticipation that you would receive one or a number of Tenders in return. The process of tendering enables you to consider your options before you agree a new contract.   For instance, issuing a competitive tender allows you to consider several proposals from competing suppliers or service providers. And choose the most appropriate one for your business. Only when you are satisfied with both supplier and tender proposal will you commit yourself to a contract.

Who Uses Tenders?
Tendering is used in both public and private sector. However, it is government buying that has shaped  much of the case law surrounding the process of tendering. No doubt because of the huge values associated with many government contracts.

 

 

In the majority of countries today, government contracts must be issued through a tendering process. Publicly listed corporations and any organisation (e.g. bank, hospital) that is likely to be exposed to a high level of public or financial scrutiny are generally also bound by their in-house policies to manage tenders.

A Process Ensuring Best Value, Fairness & Transparency
A Tender is in essence a quasi-legal process that has developed to facilitate the buying and selling process, and ensure that the award of a contract is a carried out in an ethical manner. The process ensures adherence to a number of commercial and legal principles, such as ‘value for money’, ‘fairness’ and ‘transparency’ . Value for money in that the issuing organisation obtains the best price in the market, and the best value in terms of overall quality of services or supplies to be provided. Fairness in that the market has been given a fair opportunity to compete for the contract being tendered, and transparency in that the process is managed ‘in broad daylight’ and the opportunity for fraud or monopolistic dealings have been prevented.

Each country has its own contract and trade laws that apply to business transactions, as does the law of tendering that has evolved over time. Bear this in mind when you are in the process of tendering and to note any specific laws and obligations that apply in your region, state or country.  Of course when you are using Mptorem to manage your Tenders you won’t need to worry about that. We take care of all the background checks to make sure that your tender meets the necessary guidelines.

 

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