How do public tenders work?

If you’ve ever asked yourself "how do public tenders work?" then you’re not alone. The public tendering process is structured and must follow certain procedures. Before your organisation starts searching for relevant opportunities to bid on, it’s worth familiarising yourself with the public tendering process.

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So, how do public tenders work?

In the public procurement process, the term “public tender” refers to a contract which is published by a public sector organisation to invite competing offers from suppliers who can provide goods, services, products, works or utilities that an organisation requires with the decision ultimately being made on the basis of price and quality.

Publishing

The public tender – which is also called an “open tender” or “competitive tender” – will then be published and the process is open to all qualified bidders. Public sector organisations who issue contract notices have a well-defined tendering process and have procedures in place to ensure that the selection process is fair and transparent.

Tendering Process

Strictly speaking, a “tender” is the actual bid that is submitted by a business to win work, but in the public sector procurement context, it is used more loosely to cover the whole process from the publication of the contract notice to the bidding on the contract itself.

The public tendering process starts with a public tender, which is published by a public sector organisation to generate competing offers to meet the specific requirements outlined in the contract notice.

The next steps in the process are slightly more complicated because these invitations to tender take different structured forms, depending on the value and type of the contract.

The Market

If a contract for supplies or services to central government is worth less than €135,000 (£106,047), the rules and processes are simple as it only needs to be advertised in the UK. This is also the case with works contracts which are below €5,225,000 (£4,104,394) and social and other specific services contracts worth less than €750,000 (£589,148).

However, contracts worth more than these thresholds must be advertised throughout the European Union using set forms and rules as laid out in the Public Procurement Regulations. The contract notice must also be sent to the Official Journal of the European Union (OJEU) where all tenders from the public sector valued above €135,000 (£106,047) must be published according to EU legislation.