E Tendering helps businesses efficiently find the best suppliers for upcoming purchases at the right price. Multiple vendors respond to procurement opportunities electronically, competing to win sales or provide business services.
Online e-Procurement systems handle e-Tendering and other procurement processes for contract awards.
What is e Tendering?
E-Tendering (electronic tendering) is an online procurement process (e-Procurement) for automatically soliciting proposals and evaluating suppliers through a software platform. Paperless e-Tendering includes bid solicitation, submitting bidder proposals in response to formal buyer requirements, document exchange, and evaluating shortlisted potential vendors and their bids.
The e-Tendering stage of the digital e-Procurement process occurs after a formal requirements document is prepared and approved by the buyer (e-Informing), and some vendors are pre-qualified or short-listed (e-Sourcing).
How Does E Tendering Work?
E-Tendering works through an Internet-based, online, or mobile software platform that may include a portal when a buyer issues an Invitation to Tender (ITT) or Notice Inviting Tender (NIT) to potential suppliers who respond to the purchase request.
E-Tendering lets bidders submit required information in response to a formal request for proposal (RFP) by a deadline, generates and exchanges documents with e-signatures and messaging, and evaluates bidding suppliers for the procurement opportunity.
The NIT includes more than the invitation to tender, according to Law Insider:
“Notice Inviting Tender (NIT) means invitation to tender, tendering condition, general conditions of contract, special conditions of contract, additional conditions of contract, if any, and any other document mentioned thereto.”
Finalized e-Tenders are legally binding if the vendor is selected. Although submitted tenders may propose final terms, the e-Procurement process can include negotiating terms and pricing or bidding auctions before vendor selection.
Authorized employees throughout the organization can view the documents, which aren’t siloed. Company policy should specify that information viewed during the e-Tendering or e-Procurement process can’t be disclosed until a contract is awarded.
Organizations may create policies requiring E Tendering for the procurement of goods or services above specified dollar thresholds or from a particular source. A vendor’s unique company policy provision may relate to soliciting federal or state government entities’ contracts.
Using e-Tendering has advantages and disadvantages presented as pros and cons in the following section.
Pros of E Tenders
Pros of e-Tenders include:
- Efficiency and security of online e-Procurement systems
- Built-in status communication and messaging
- Cost savings from more competing bids and in tendering process
- Quality improvement through better supplier evaluation and selection
- Time savings from paperless e-Tenders
- Complete process with fewer errors and post-contract disputes
The paperless aspect of e Tendering saves money by eliminating paper and printing costs for requests for proposals and contracts and manual processes.
Paperless cost savings also prevent the need to later send a corrigendum, which is a paper-based centralized listing of errors being corrected. Instead, any errors detected can be revised online and communicated through electronic messaging on the e-Tendering platform.
Using online requirements for a purchase streamlines and speeds up the tendering process, enabling published deadlines to be met without a date extension.
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Cons of E Tenders
Cons of e-Tenders include:
- Cost of new e-Procurement systems training for employees
- More competition for suppliers
- Suppliers must complete detailed steps sequentially
- Inability of potential vendors to fully communicate differentiation factors
- System down or system errors delaying e-tendering for a business opportunity
- Bidding format may not allow pricing innovation
E Tenders are submitted in standard online formats. e Tendering software doesn’t use well-designed presentations highlighting supplier differentiation factors.
Pricing innovation is a unique pricing strategy. It may include billing per unit of usage or other unique methods not reflecting standard pricing. Buyers want to compare quotes from different vendors. The e-Tendering forms may not let suppliers submit non-standard pricing methods.
E Tender Examples
E Tender examples include:
- B2B business transactions with suppliers
- government contracting
- universities or other organizations.
B2B e-Tendering by Businesses
Specialized e-Procurement software includes online e-Tendering used by businesses to buy goods or services from suppliers. E-procurement security for B2B software platforms may include enterprise-grade SOC2 compliance, an AICPA technology standard based on “trust service principles.”
Government contracting with e Tendering is a competitive digital public procurement process. E tendering lets businesses respond and bid to formal requirements for goods or services needed by a government entity. After e-Tendering, contract awarding to the selected supplier(s) will occur.
Government contracting works with e-Procurement (including e-Tendering) through Internet-based e-commerce websites or EDI (electronic data interchange), according to the information provider company, Wolters Kluwer.
The U.S. Department of Defense (DoD) uses PKI (public key infrastructure) security to ensure that information submitted by businesses for government contract e-Tendering is secure, with data privacy.
PKI works by issuing a unique digital identity certificate to each potential contractor using the e-Procurement system, including its tendering process. Because it’s effective for security, PKI technology has been adopted by the public sector, including federal, state, and local government agencies, and the business private sector.
Universities or other Organizations
E-tendering isn’t limited to business or government. Any type of organization can consider e-Tendering to purchase or gain new business. An example of an organization using e-Tendering is a university providing higher education.
Importance of E Tendering
E-Tendering is important because the buyer can choose well-qualified vendors and competitive bids on their merits. An eTendering system is paperless, saves procurement time, has well-organized steps to complete, and includes an online centralized document repository relating to procurement.
E-Tendering is a secure way for potential suppliers to respond to bid requests. Their goal is to be awarded new business through an e-Procurement platform.
The centralized electronic document repository or exchange that includes requirements documents, digital tender documents, contracts, and purchase orders works well for contract management and project management related to the procurement process.
E-Tendering may help entities meet ESG (environmental, social, governance) goals. The Environmental Protection Agency (EPA) includes sustainability requirements in its e-Procurement system and e-Tendering process for government procurement.
For significant contracts, the e-Tendering process ensures that purchase requirements are formally documented, and competitive bids are sought through a public solicitation with wider participation by potential vendors.