Mar 20, 2012

Project Procurement: Invitation to Tender

Invitation to Tender
Invitation to tender is in a form of a standard letter (or in newspaper) from the client sent to chosen tenderers (or by open tender), formally inviting them to enter the bidding process Invitations to tender must be set out in a reasonable logical way and must clearly declare what is required of the tenderers in bidding for a service, product or works. It must include the main points of the tender, inter alia, what the tender is for, the due date and time for submission, and what the tenderer requires to provide in the offer.
We must realize that the form of the invitation should in part be the basis on which evaluation is commenced and a decision is reached to award a contract. It is also be the basis on which following contracts will be formed and agree to. Invitations to tender for a particular requirement must be the same. The letter must draw attention to particular or unusual terms, e.g. specific insurance requirements, and list the other documents that form part of the invitation to tender. It should have attached instructions to the tenderers.
We must bear in mind that discussions with suppliers or contractors during the tender period must be confined to answering questions about the requirement. Possible solutions should not be discussed. If discussions lead to the plans and specifications or related documents being modified in any way, then all tenderers must be informed. Remember, individual tenderers must not be offered different terms or information.
Tenderers for all procurements must be allowed a reasonable sufficient period to prepare and submit their sensible tenders.
For the government construction projects in Malaysia, the period of tendering usually between three to four weeks depending on the scope of the works and urgency of the project. 
You can observe it is a normal practise that the number of bidders or tenders to be obtained will depend on the amount of expenditure or budget of the client.

We must always remember that normally the client awards contract to the responsive, responsible bidder offering the lowest price. A bid is responsive if it meets all the material requirements of a solicitation. In other words the bid submitted by the vendor or contractor doesn't differ from client’s original requirements. A bidder is deemed responsible if he/she can prove the capacity and willingness to perform (i.e., suitable equipment, manpower, financial resources, technical know-how etc.).

            For all governments or public authorities (including statutory authorities) in Malaysia, tender must be invited for all project estimated to cost more than RM50,000 in value.  In the Public Works Department, tenders are invited from all eligible registered contractors for from registered Bumiputera contractors only, or from selected contractors only.  However for civil engineering projects other than building project estimated to cost more than RM50 million, tenders are invited from prequalified local companies.  Where projects are financed by International Islamic Bank, Asian Development Bank or World Bank loans, the tender arrangements are regulated by the conditions of agreement of the loan. For civil engineering project other than building project exceeding RM50 million, tenders are open to prequalified contractors whose companies are fully owned by Malaysian or locally incorporated joint-ventures registered with Pusat Khidmat Kontraktor between local and foreign companies.  In such a joint-venture the local equity shall form the majority.
What you should know about preparing bid specification? You should try to describe the needed items as completely and accurately as possible. If you have specific requirements, specify them on the request, it is best to describe requirement in terms of functional needs. Describe what you want the item to do. If there is a condition that the item be compatible with a piece of equipment that you already own, indicate on the requisition and attach all relevant details or a supplier's specification sheet. If you have found an item that meets your requirements, reference the manufacturer, model number, and catalogue number (if possible).
Upon completion of the construction documents, the project is advertised for bids. The bid period shall be proved to be most advantageous to the client, taking into account the overall project schedule, and the size and complexity of the project

The above statements are part of a module prepared for the Open University Malaysia (OUM): ETBK3103: Tender & Contract Management. In order to obtain the full version of the above text, students and other readers are advised to enroll with OUM in any relevant program.

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