What is the difference between bid and tender?

Difference Between Bid Document and Tender Document

Tender and bidding is a word which is familiar to most of the people in India and across the world. People who are in the business use these terms on a daily basis as it is their primary or secondary source of income. These terms are primarily used while applying for the government tenders in India but are used elsewhere as well as these have become very popular words amongst people.

 

When an organisation wants service from another organisation, it creates an open Request For Proposal with the details of the expected services and invites bids on it. Organisations which are interested to offer their services bids on the projects with their cost, deadline of the project and other details. After receiving sufficient bids after the due date, the organisation which is asking for the services decides whom to allocate the project based on their multiple criteria.

Now let us understand tenders and bids in a more elaborated manner so that you get to understand the difference between the two

 

Tender

Tender in simpler terms is a process where a government or a private entity invites another organisation, company or entity to work for them. The entity will post the work related details either on their website or on the local and national newspapers and people or organisation interested to work for them will bid on the work with their quotes. Whichever organisation is found suitable for the work based on the bidding price, days of completion and quality will be alloted the tender. Organisations or people who take regular tenders are more interested in bidding for government tenders in India as the safety of payment is always a big factor which is not a problem when it comes to government entities.

In other words, tenders are the RFPs for inviting bids for a particular work and when the bidding process completes, work is allocated to the suitable organisation

 

Types of Tenders

Tender is just a word or a simple process for many people who are either ignorant of it or new in the business but it has a very long and detailed process. Tenders are mainly classified into three categories which are discussed in short for you to understand

 

  1. Open Tenders

Open tenders are the tenders which are open to bidding for everyone. An entity advertises the proposed project and whoever feels can apply for that project sharing their quotations and bids. In a nutshell, an open tender is open for all.

  1. Selective Tenders

Selective tenders are not open to everybody but as the name suggests is open only for selective people. An entity before or after advertising the project wants people to share certain specific information with them and bidders are selected and rejected based on the information they share. 

  1. Negotiated Tenders

When the organisation allots the work to the contractor of its choice, it is called a negotiated tender. There are various reasons for allocating work to a particular contractor like on-time completion of work previously or the quality of work done in the past. The contractor builds a reputation of himself which is the reason why he gets work continuously from the organisation


It must be noted that these categories of tenders are mainly used in construction domains but are often used elsewhere as well.

 

Bids

 

When the organisation looking for the services issues the RFPs, the other entities which are ready to offer their services, share their proposals for work which includes pricing, date of completion, availability and few other things. In most of the cases, just to maintain transparency and avoid favoritism, the bids are sealed in an envelope and are opened in front of the suppliers and whoever’s name comes, is alloted the project. Also, in few cases, based on the type of tenders issued, the organisation asks for a few information from the suppliers and based on that it invites bids only from those specific suppliers and allocates projects only to them.

Usually anybody can bid for a particular tender. There is a whole process of bidding and the tender document has all the details required for a supplier to be eligible for the bidding process. Biddings can be done both online through e-procurement portal and offline as well

 

While tender is a process on its own, bidding is just a step towards applying for the tender and getting it. There is a huge difference between the two although both are inter-related