Competing for government tenders can be an exciting strategy for growing your business. Local, state and federal governments offer billions of dollars in tender opportunities every year to buy the goods and services they need. For those businesses that have the capability and experience to tender, it’s a way to achieve steady income, increase credibility and develop long-term relationships with government and government agencies.
How is public procurement delivered?
The public procurement system is in place to make sure taxpayer dollars are spent openly, effectively, and fairly. Governments have lots of goods, services and infrastructure projects to procure each year, from paperclips and cleaning to IT, consultancy and major construction works. Agencies advertise requests for tender (RFTs), expressions of interest (EOIs) or requests for quotation (RFQs) to engage suppliers for these works.
As a sole trader or a major corporation, you can bid for these opportunities if you’re able to meet the tender requirements.
The opportunities are attractive and competitive. Successful suppliers have to show they can meet very specific evaluation criteria and provide value across a range of criteria that go beyond the cheapest cost.
Before you decide to enter the procurement space, it’s important to understand how agencies evaluate tenders and awards – in most cases, the criteria will be compliance, capability, price, risk management, and fit with their social or environmental objectives.
5 Questions to Help You Decide When to Start Tendering
If you’re thinking of tendering, here are five questions to help you decide if your business is ready to go for it.
1. Do you know the process?
Tendering is very different from typical B2B sales. Responding to an RFT, EOI or RFQ involves sending a structured set of information back to a buyer to a tight deadline, in a format they set out in their tender document. To be successful in tendering, you need to understand the tender lifecycle in detail, from the moment you first become aware of the opportunity, through to preparing your bid, submitting it on time and, if successful, the onerous post-award period.
If tendering is an entirely new prospect for your business, you’ll need to invest in training and information. Hiring an experienced tender writer to help with your first few responses is another option.
2. Are you financially sound?
Business stability is an important part of any tendering assessment. Tender responses usually require financial statements to be attached, and the information you provide must show that you’re in a position to complete the work.
If your business is new or has had some challenges in the past, your finances might not reflect the viability you need to demonstrate in a tender response.
3. Do you have the required mandatory conditions?
Lots of tenders have mandatory conditions or requirements for potential suppliers. This can include required certifications like ISO, WHS or quality management; insurance levels (public liability, workers’ compensation) and minimum licensing (trades, for example).
If you’re not already a compliant business, you may have to wait a while before you start to tender.
4. Do you have relevant experience?
Buyers like evidence of capability and past performance. They are looking for suppliers who have done similar work in the past – and are willing and able to do it again, on time, on budget and to a high standard. If your business is brand-new, it may be a long time before you have the relevant experience to tender, and a more sensible approach might be to target low-risk contracts as a subcontractor and use those to build experience and capability.
5. Can your business afford to commit to the process?
Participating in tender processes can be a full-time job. Tender documents can be complex and usually require information from across your business, including finance, operations, marketing and even legal teams. If your internal resources are already stretched thin, it might be tempting to throw together a quick response. But unprepared tenders do more harm than good. Before you get started, consider if you have the time and resources available to commit to the process.
What You Need to Compete Effectively
In addition to assessing your general business readiness, there are some key tools and pieces of infrastructure you should have in place to tender with confidence.
Company Capability Statement
A well-written company capability statement is a concise document that summarises your expertise, experience and capacity. Your capability statement should be tailored to different industry sectors to meet the requirements of different agencies you’re targeting.
Evidence-Based Case Studies
Evidence-based case studies are important tools to tell the story of how you’ve done similar work in the past and add value for your clients. Case studies help you prove your claims of past performance in your tender responses. Each case study should be structured to include clear objectives, actions you took, and results you achieved.
Strong Internal Policies & Processes
Procurement agencies aren’t just buying the outcomes of your work, but the way you work. Demonstrating a high standard of internal policies and procedures, risk management and quality assurance is a key part of developing trust with procurement buyers.
Compliance Toolbox
Make sure you have a current library of supporting documents available at short notice, including required insurance certificates, WHS and security policies, sustainability and supplier policies, and required licenses and accreditations.
Should I Bid For Smaller Tenders?
For businesses just entering the market, targeting smaller or low-risk tenders can be a good strategy. These opportunities, such as tenders in VIC for local council maintenance contracts or community services, often have less demanding entry requirements but still require structured and professional responses.
You might also consider subcontracting to more experienced businesses until you’re ready to step up. This is a great way to build your tendering experience, as well as establish relationships with prime contractors and government buyers.
Deciding to tender for government contracts can be a great next step for growing your business and opening your doors to a stream of new revenue. It will also help you to scale your business, increase your credibility and help you embed structured practices to increase sustainability and help you grow in the long term.
