While tendering has the power to transform a business, there is a certain amount of ignorance around it in the market and lack of awareness about it. While for most, the word tendering is associated with the construction industry, you would be amazed to know that tendering is present in almost all industries. At Orbidal, we have worked on contracts to supply everything from pens and pencils, computer hardware & software, legal services, and even human genome mapping – and everything in between.
Finally, people will almost always fear what they don’t know. Tendering can be a nerve-wracking experience, and if you are unsure of what the process is or how things work, you are going to rely on your business network to guide you, which, unfortunately, is how a lot of tendering myths start – from assumptions and anecdotal evidence.
Here at Orbidal our goal is very simple: to simplify the process of competing for government contracts and other public sector tenders by helping businesses prospect, qualify and create winning proposals. Schedule your free demo with us today!
This blog post covers the facts and fiction around the world of tendering and highlights 7 most common myths and debunks them for you.
Myth #1: “My business is too small to tender”
The myth here is that your business is too small to win government contracts.
The reality is that almost 75% of contracts are worth less than €60,000. These contracts would require a turnover of €120,000 per annum to compete for, so they are real opportunities for SMEs to compete. You can also check out our webinar on How SMEs can Win Big Tenders.
A large percentage of government contracts are below the €25,000 threshold value and are not advertised – these contracts are typically awarded to micro-businesses and sole traders. As long as you can meet the turnover requirements of a tender, then government buyers won’t have any issue in awarding you that contract, and indeed most governments are required to award anywhere up to 33% of contracts to small and medium-sized businesses.
Myth #2: “I have no track record in tendering”
The second tendering myth – that government contracts will only be awarded to businesses who have a track record of supplying the public sector.
The reality is that every business has the same starting point – with no government contracts. The businesses that are out there today winning multiple contracts a year had to start at zero, just like everyone else. There is a famous quote that says, “Every expert was once a beginner” and that certainly applies to government contracts.
A track record in supplying the public sector is only important when the characteristics of a contract are unique to the public sector. Most of the time, buyers welcome submissions from private sector experts as they bring new perspectives and examples of previous experience and projects that the buyer hasn’t considered before. If you are new to the world of tendering and are keen to build up a collection of public sector case studies, then it’s a good idea to compete for some smaller contracts at first to build a track record of demonstrable public sector experience.
Myth #3: “Why bother? It always goes to the incumbent”
The next myth concerns incumbents – or the supplier who currently holds a contract – and the assumption that this supplier will always win the next tender competition.
The reality here is that incumbents fail to win most tenders – this is often due to complacency at best, and laziness at worst. The incumbent will still have a copy of the tender submission that won last time, so why would they need to write another one? The world of tendering is ever-changing, and the values of the buyer will likely have changed in the meantime, so there is definitely ample opportunity for new suppliers to win contracts. In fact, buyers are often fearful of becoming overly reliant on a small pool of suppliers and proactively seek to work with new ones. Buyers care more about getting the best value they can get, regardless of where that comes from. Buyers will often publish award notices for each tender, so compete for contracts where you believe you can do a better job than the incumbent.
Myth #4: “It’s always the cheapest that wins, right?”
Onto the most common myth that is associated with tendering – that buyers just want the cheapest solution that they can get.
The reality is that buyers have a budget for better solutions and are not particularly motivated to choose a cheaper solution than they can afford. It is true that Government buyers are more price-sensitive and a competitive tender could mean that you must reduce your prices by up to 20%. The good news is that even if you do have to find ways to create more value in your offering, that public bodies have a legal duty to pay their invoices promptly – and they do. Even during this unprecedented time of stress and hardship for business, tendering remains a viable and secure source of income. The reality is that most proposals fall not because of cost, but because of the quality of the submission.
Myth #5: “It’s who you know, isn’t it? That’s how they decide the winner.”
Moving on to existing relationships and the myth that buyers already know who will win the contract when they publish it.
Similar to our discussion on incumbents and budget, buyers typically care far less about who wins a contract and more about the quality of the proposal, so the vast majority of competitions are fair and equal. If you do wish to build relationships with potential buyers, then it is imperative that you do so before competition starts as buyers and suppliers are not allowed to talk to each other about a particular tender competition. In most cases, the buyer will award the contract to the best and most fitting tender submission, regardless of whether they have an existing relationship with that business.
Myth #6: “Submissions just disappear – I’ll never hear back”
Public procurement is biased at best and corrupt at worst.
The reality here is that unfortunately there are issues with transparency in public sector tendering, with approximately 60% of awarded contracts having no award details. Buyers are obliged to publish award notices for each of their tenders, but this does not always happen. It is not necessarily a case of “corruption”, it could just as easily be a lack of expertise or simply a lack of time to do so. Laws do exist to enable suppliers to challenge the outcome of competition when they feel that they have been unfairly treated. Do not be afraid to challenge the outcome of a tender that you feel was unfair. You will not get a black mark against you, and indeed the buyer cannot allow any challenge to influence the result of future competitions.
Myth #7: “It is too time-consuming”
And now onto the final myth- public procurement is slow and takes too long.
The truth in relation to timeframes is that contracts are typically awarded in about two months. Smaller value contracts are often awarded in a much quicker fashion – less than two weeks in some cases. Procedures do exist to enable buyers to go through an accelerated process where necessary – for example, a number of PPE related contracts underwent accelerated processes earlier this year. What we recommend for any high valued contract is to plan a timeframe of three months’ work from the date that the opportunity has been advertised.