The Tender Process used by Governments differs from the private sector in that it is more formalized and more strictly managed to ensure consistency between departments and locations. In addition, it manages public money and is therefore accountable to taxpayers to run its operations efficiently.
Both sectors use Request for Proposal (RFP) as their main document to attract bids but the terminology may differ and there may be additional steps, before and after, in a Government tender process. Because it is a highly regulated process Government RFPs have a standard format and structure and usually require certain statutory documents that are not necessary with private sector bids.
The Private Sector Tendering Process
Both listed and non-listed companies have more latitude to use a customized sourcing process that suits their industry and their organization. They are not bound by the requirement to spend a given budget in a defined financial year and are therefore free to schedule their buying process to suit business cycles.
Private companies wishing to be seen as ethical and honest adopt what is accepted internationally as best practice. One area where they may not achieve this fully is in the providing details of evaluation criteria and weightings to prospective bidders. This is standard practice in government and generally regarded as the fairest and most transparent way to award contracts. Private companies are often reluctant to disclose their weightings in advance.
Selecting a list of bidders to be involved in the tender process is not subject to any limitations so private companies can limit who they send their documents to as they see fit. They are also not bound to publicly publish details to whom the contract was awarded or even to formally advise the unsuccessful bidders.
Managing and completing their tendering process in less time than governments is really achievable when they are not bound by tight rules. Price negotiation between the sourcing company and short-listed bidders is normal practice which is limited by certain protocols in government.
Government Tender Process
In most countries they are required by law to publish or announce their tenders in one or more public media such as newspapers, trade magazines and more and more, on their own websites. For sourcing purposes, Government Departments usually keep a list of approved suppliers which is used to invite bids.
Government and local authorities may ask for “Expressions of Interest” to allow other suppliers to be added to their list of potential suppliers before they issue formal documents. Some Governments are now issuing electronic tenders but it is still regular practice for them to ask bidders to submit their bid in hard-copy form.
Bureaucracy Hurts the Government Tender Process
Because of the bureaucratic tender process used in government many qualified and experienced suppliers decline to bid due to the many delays that occur in the sourcing process. This decision is a difficult one as the majority of the high value opportunities are offered by public sector organizations as they have large budgets.