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The Meaning of Tendering

Some of the terminology in formal buying and procurement can be quite confusing to people who don’t live in that world. Therefore, we have compiled this overview of the main terminology to help out. Remember, we are here if you need help.

Tendering is the process of responding to a Request for a Tender (RFT), a Request for a Quote (RFQ), a Request for Proposal (RFP) as an alternative.

Confusingly, the word tender is used by both buyers and sellers. For example, a buyer may say “We are going to (Request for) tender for the Defence Force catering contract”, and a supplier may say “I am putting in a tender for the Defence Force catering contract”.

Specific Tender and RFP Terminology

While the word tender is generally used as an umbrella term, Request for Information (RFI), Request for Proposal (RFP) and Request for Quote (RFQ) have specific meanings. Before you start your response, it’s a good idea to understand what type of document you are responding to.

A Request for Information (RFI) is usually a relatively informal process in which the buyer requests information about you or information to help put together an RFP or an RFQ. An RFI is only used for evaluation, not for awarding a contract.

A Request for Quote (RFQ) is a very specific request for a price. It usually occurs when the buyer sees the products offered by suppliers as very similar or interchangeable.

A Request for Proposal (RFP) is a broader document than an RFQ. It usually includes a comprehensive project overview, detailed requirements description, estimated volumes, completion dates, and evaluation criteria. In addition, while RFQs are very price-focused, RFPs tend to be more total-value-focused. An RFP is probably the most formal or comprehensive tender request.

Selection Methods

Under the tendering umbrella, a buyer can use a number of methods of tendering or selecting the preferred supplier. It’s important to know how the buyer will be making their selection before your respond.

Here are some examples:

• open (anyone can respond)
• restrictive open (open invite to companies who want to be considered. From those applications, a selection list is chosen and companies are invited to tender)
• Negotiated (buyer approaches a single supplier to negotiate with them to deliver the work. This is unusual in the public sector in New Zealand, but is used in the private sector)
• Serial tendering is used in the construction industry. It involves the preparation of tenders based on a typical or notional bill of works. For example a housing charity may have wish to have a maintenance contractor. The prospective contractors are asked to put forward a schedule of rates for consideration. Once accepted, the rates are then applied on a house by house bases as required.
• Two-stage tendering (buyer puts the initial scoping stage out as first tender, and puts the next stage into a second tender). For example in the construction sector, a first tender might be for the pre-construction design phase and the second might be for the build phase.

Thanks for taking the time to read this free DynamicProposalsNZ article. I hope it was helpful. I have written and evaluated 1,000+ business documents and hundreds of business proposals and tender responses.  Let me put that experience and success to work for you. I love helping businesses put their best selves forward in bids, tenders and RFP responses. Check out my online products or contact us directly for help.

Mary-Anne Webber, Founder BusinessWriteNZ