Open Tender Process

The open tender process differs from the closed tender process in a number of ways. The key difference is that in an open tender process any potential supplier can apply for inclusion in the tender. Whereas, in a closed tender process only a selected number of suppliers will be invited to tender. Additionally, an open tender process may become a closed tender process. This may be the case if potential suppliers are asked to complete a Pre-qualification Questionnaire (PQQ). This will then lead to a shortlist of suppliers who are asked to submit a tender. At this stage it has become a closed tender.

The advantages of an open tender process are:

  • It may elicit tenders from suppliers, who may offer an economic advantage, who would not have otherwise been included.
  • It is a transparently fair process.
  • It is undertaken in line with visible, neutral criteria, which set the standard for future supply.

The disadvantages of an open tender process are:

  • It is likely to take place over a long and protracted period of time.
  • The administrative burden is heavy, and it is a costly process.
  • There is no opportunity for good business relationships to develop.
  • It operates in accordance with strict procedures, with no leeway for discretion. The maxim of Most Economically Advantageous Tender (MEAT) applies. The supply process is commoditised, and focused more on cost , as opposed to adding value or innovation.

For the tendering organisation, particularly if the are in the Public Sector, the requirement to go through an open tender process may be mandated by external statutory regulations or rules. For the bidding company, they may be entering into a lengthy, time-consuming, costly and potentially stressful task, with no guarantee of success. However, contracts on offer may add significantly to the suppliers portfolio of business, they may become good references and may become flagship accounts.

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