Tendering was once mainly the domain of government and typically reserved for high-value contracts. It is now becoming a standard practice for procurement in both government and enterprise settings. This change is impacting small to medium enterprise (SME) businesses, many of whom don’t have much experience in responding to complex tenders.
The bid and tender process can be daunting for the uninitiated. Working out how to respond to specific and detailed criteria while understanding terminology and policy requirements can seem insurmountable.
The Australian Government alone offers over 90,000 tender opportunities annually, representing $70 billion dollars. SMEs must ensure they are getting an opportunity to bid within this competitive market. Becoming proficient at tendering is important for keeping your business competitive.
How do you know when your business is ready? This blog shines a light on the must-know info for those new to tendering.
Why is tendering used for government procurement?
For government, tendering for procurement allows them to orchestrate a competitive screening process and to manage their value for money objectives, ensuring taxpayer money is well spent. Through tendering, government departments are able to fairly and equitably award their business based on established criteria to meet procurement rules that are in place to ensure the equitable distribution of government spend. It also allows them to manage policy compliance requirements across a range of legislated requirements such as support for regional areas, economic benefits, representation of marginalised groups of society and more.
There is also a trend towards large enterprises using the tendering process for their own procurement, leading to an increase in business being offered to market for tender in the private sector as well as public.
Why should SME businesses consider tendering for business?
A small business that is well-established and ready to grow may look at tender opportunities to gain larger and more lucrative contracts, to enter new markets or expand into new locations.
Winning a tender gives a business a sense of security, providing a steady foundation for sustained growth – especially if the tender opportunity spans several years.
Other benefits include the opportunity to develop new industry connections and form new partnerships, leading to opportunities for further ongoing work. Building your tendering capability will help to refine your approach and build out a library of written materials that you can draw on for future tenders, pitches and proposals.
Tenders can be open to the whole market, or closed tenders (invitation only). If you are invited to tender for business, you’re already being considered on a shortlist – don’t turn down that opportunity.
Standard government tender requirements
There are broad categories of criteria that you’ll find in most government tender documents. Government tenders will typically be more complex and address more compliance areas than private sector. While each tender is unique, the common sections will cover the following key areas:
1. Capability and capacity
Capability criteria will be written to determine what your business uniquely offers in the supply of products and/or services to support the project requirements. Put simply, this is where you demonstrate ‘can you do it?’. A response to the capability questions should always be focused on the specific criteria and not just a general company overview and product/services description. In this section, you’ll address how your products, people and technology can perform the tasks and deliver the services required in the tender. Important note: your tender will quickly be disregarded if you don’t demonstrate that you’ve put thought into how you can service the unique requirements in the tender – generic content is a big no-no.
Capacity criteria is where you’re being asked to provide details on how you can resource the project to deliver your capability. This question is asking you ‘do you have the means to do it?’. Here, the tender requirements will ask you to showcase your processes, people and methodology to deliver. At a minimum, you’ll need compelling summaries of your key personnel and your company, some details on your unique approach and your project management methodology. There will also sometimes be a requirement for you to provide an overall project plan to demonstrate how you’ll approach the opportunity.
2. Experience
This section can be daunting in a government context. Many SMEs do not bid for government work because they don’t have a track record delivering to government. Please don’t despair! Government will assess how you are experienced in addressing similar challenges or delivering similar outcomes to solve their challenges. If you have projects that demonstrate how you’ve delivered to a similar set of challenges/organisational size/complexity, these are all demonstrable areas of experience that you should put forward as relevant.
3. Compliance to policy
Government procurement is often governed by legislation and policy requirements. These can really play to your favour for SMEs as there are specific policies in place to incentivise government to buy from SMEs. In fact, on July 1 2024, Commonwealth Procurement Rules were changed to increase federal government spending on small business. The Commonwealth government now has a new, higher target to source 25% of procurements below $1 billion and 40% of procurements below $20 million from SMEs. They have also raised the SME exemption threshold, allowing government to directly engage SMEs for projects valued up to $500,000.
Each tender is different, but there are policies that government will typically ask tenderers to address and we most commonly see requests for businesses to demonstrate compliance to the following:
- Indigenous Participation Policy
- Workplace Gender Equality Act compliance
- Economic Benefits Statement
- Contribution to the Local Economy Statement
- First Nations Reconciliation Action Plan
- Modern Slavery Statement
- Ethical Supply Chain Policy
- Diversity, Equity and Inclusion Policy
- Supplier Code of Conduct
While these sound incredibly complex and legal, you don’t need to worry. Tendup has supported our clients to produce these policies and plans and we have a clear view of how businesses can satisfy these requirements within a tender.
How do you know when you are ready to tender for work?
Any business that offers goods or services and are wanting to grow could potentially tender for work.
However, tendering is a very competitive process, so it is important to have the right foundations and organisational structures in place before bidding for work. This might include ensuring you can:
- Meet mandatory requirements
- Comply with relevant legislation
- Provide evidence of financial stability
- Supply organisational policies and procedures
- Provide capability and capacity statements
- Develop project or delivery plans
- Demonstrate previous customer success.
So, what are you waiting for?
If you’re new to tendering, it’s a good idea to get the basics in order before a big opportunity comes your way. Tenders typically demand a rapid response turnaround (on average 4-6 weeks). Take a look at our checklist and make sure you’ve put some thinking into how to respond to the key categories.
We support many SME businesses in their bid journeys and can help you get tender ready. With a full range of services from bid qualification to bid strategy, development of win themes and your Unique Value Proposition (UVP), bid writing and management, design and submission support, we’ve got you covered on all angles to develop a compliant, high quality, professional submission.
We’re also happy to help you assess whether you’re a good fit for an opportunity – please get in touch for an obligation-free session to help dissect an opportunity or just bounce some ideas off us. We’d love to hear from you.