What is Tendering? Understanding the tender process

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New to tendering? We’ve got you covered with all the basics and frequently asked questions.

Tendering is a procurement process where an organisation invites suppliers to submit bids or proposals for goods, services or works. The organisation seeking the goods or services is known as the buyer, while businesses submitting responses are known as suppliers. Tendering helps buyers compare options, achieve value for money and select the most suitable supplier. This invitation is formally referred to as a Request for Tender (RFT).

Example: Due to a population increase a new school is being built, called Happy Kids High School. They need someone to maintain the classrooms and bathrooms, so they publish an RFT for cleaning services, and ABC Constructions Company submits a response. In this example, the school is the Buyer and the cleaning company is the Supplier.

Looking for a more detailed description? Check out our blog Demystifying the Tender Process.

Key takeaways

Tendering is a formal process used to buy goods, services or works.

Buyers publish requests such as RFTs, RFQs and RFPs.

Suppliers submit bids explaining how they will meet the requirements.

Tendering is widely used by government, council, not-for-profit and private-sector organisations.

A structured evaluation process helps buyers select the best supplier.

What is a tender? Is it different from an RFT?

The short answer is yes, a tender is different from an RFT. Here’s how…

RFT: As mentioned, RFT is an abbreviation of Request For Tender. This is the document(s) the Buyer releases, inviting Suppliers to submit their responses. An RFT will typically include documents outlining the following:

Conditions of tender – rules of the tendering process and response
Form of tender – schedules and details Suppliers need to include in their response
Scope of tender – details of the good/services the Buyer requires
Evaluation criteria – specifics of how the Buyer will assess responses
Conditions of contract – particulars of the legal contract to be awarded to the successful Supplier

Tender: On the other hand, a tender is the document the Supplier submits in response to the RFT – essentially an offer to supply the goods/services the Buyer requires.

However, the terminology can be a bit confusing because both words are often used interchangeably, so you might hear a Buyer say that they “published a tender”. What they really mean is that they’ve published a Request for Tender, or a similar request related to the supply of goods/services (see different types of tenders below).

Example: As part of a city expansion project, your local council needs to build a new bridge, so they publish an RFT which outlines their requirements, inviting Suppliers to respond. You run a Civil Construction company capable of doing the work they want, so you submit a tender (also referred to as a tender response, bid or proposal) which outlines how you would meet their requirements and how much it would cost. Your local council then evaluates your tender alongside the other Suppliers’ submissions and awards the contract for building the bridge to the Supplier who best meets their budget and criteria (hopefully you!). This is the process of tendering.

Are there different types of tenders?

Just as the word ‘tender’ is sometimes used to refer to either the Request for Tender or the response itself, it can also be used to refer to a range of different types of requests from Buyers.

Terms can change across different industries and locations, but some of the common types of tenders/requests in Australasia are:

Invitation to Respond (ITR)
Request for Quote (RFQ)
Request for Proposal (RFP)
Request for Information (RFI)
Invitation to Offer (ITO)

There are lots of other types of opportunities (e.g. EOI – Expression of Interest) and alternative terms (e.g. Purchasers instead of Buyers) used across the tendering industry. While terminology varies between industries and regions, the underlying process remains similar – check out our handy glossary to learn the lingo!

Basically, any time a Buyer publishes a request for goods/services and invites Suppliers to respond – whether they’re offering a formal contract, asking for pricing, or just wanting information on what can be supplied – then this might be referred to as a tender. However, note that each type of request can differ in terms of the documents required and the outcome of the request.

Who tenders?

While different forms of the tendering process are used by varying types of organisations in lots of different industries and across all sectors (public, private and non-profit), tendering is more common in certain areas.

It’s particularly common for governments, councils and non-profit organisations. In most cases they’re actually required by legislation or procurement policies to use the public tendering process for contracts over a defined value threshold, in order to ensure the process is fair and unbiased.

Tendering is also more common in certain industries, like construction, engineering, information technology, and business consulting. In general, the tendering process is likely to be used any time the dollar value of the contract is high, or there is significant risk.

Why do people tender?

Why do buyers use tendering?

To achieve value for money
To create a fair and transparent procurement process
To reduce supplier and project risk
To compare multiple solutions and approaches
To meet governance and compliance requirements

Why do suppliers respond to tenders?

To secure new business opportunities
To build long-term customer relationships
To diversify revenue streams
To establish credibility in their market
To support sustainable business growth

Now that you’ve got an understanding of what tendering is and some other foundational knowledge, you’re probably wondering whether it’s right for you and your business – check out our article Is Tendering Right for My Business? And don’t miss out on our next one – sign up to our mailing list!

Still got questions?
Have a chat to our friendly team on 1800 233 533 (AU) / 0800 698 363 (NZ) or ask us here.

Frequently asked questions about tendering

What is the difference between a tender and an RFT?

An RFT (Request for Tender) is the document issued by a buyer inviting suppliers to respond. A tender is the supplier’s response to that request.

Is tendering only used by government organisations?

No. While government agencies frequently use formal tendering processes, private businesses, educational institutions and not-for-profit organisations also use tenders for significant purchases and projects.

Who can respond to a tender?

Any supplier that meets the eligibility requirements outlined in the tender documentation can generally submit a response.

What industries commonly use tendering?

Tendering is common in construction, engineering, information technology, professional services, healthcare, facilities management and infrastructure projects.

What are the main types of tender requests?

Common request types include RFTs (Request for Tender), RFQs (Request for Quote), RFPs (Request for Proposal), RFIs (Request for Information) and EOIs (Expressions of Interest).

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