When it comes to acquiring goods or services, organisations often use the terms “tender” and “procurement” interchangeably. However, while these terms may seem similar, they actually refer to different aspects of procurement processes for acquiring goods and services. In India, understanding the difference between tender and procurement is crucial for businesses that want to work with government organisations and win contracts. Let us now take a closer look and understand what exactly a tender refers to.
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What is a tender?
A tender is a formal request for bids or proposals from potential suppliers for the provision of goods or services. In the context of government organisations, a tender is typically issued by a procurement agency to seek offers from suppliers for a specific project or requirement. The tender process in India typically involves the following steps:
- Issuing of tender: The procurement agency issues a tender document, which outlines the requirements of the project, the evaluation criteria, and the terms and conditions of the contract.
- Advertisement of tender: The tender is advertised in local or national newspapers, government websites, or other platforms, inviting bids from potential suppliers.
- Pre-bid meeting: A pre-bid meeting is organised by the procurement agency to clarify any questions or doubts that potential suppliers may have about the tender requirements.
- Submission of bids: Potential suppliers submit their bids or quotes in response to the tender document.
- Evaluation of bids: The procurement agency evaluates the bids based on the evaluation criteria outlined in the tender document.
- Award of contract: The procurement agency awards the contract to the successful bidder.
What is Procurement?
Procurement is the broader process of acquiring goods and services, which includes the tendering process. It involves the entire lifecycle of acquiring goods and services, from identifying the need to payment of invoices. Further, procurement in India is governed by several laws and regulations, including the General Financial Rules (GFR) and the Public Procurement (preference to make in India) Order, which require government organisations to give preference to Indian suppliers.
The procurement process in India typically involves the following steps:
- Identification of need: A government organisation identifies a need for goods or services.
- Planning: The organisation develops a plan for acquiring the goods or services, including the identification of potential suppliers and the development of evaluation criteria.
- Tendering: If required, the organisation issues a tender document to seek offers from potential suppliers.
- Evaluation of bids: The organisation evaluates the bids based on the evaluation criteria outlined in the tender document or based on other factors, such as supplier performance history.
- Award of contract: The organisation awards the contract to the successful bidder.
- Contract management: The organisation manages the contract, including monitoring supplier performance, resolving disputes, and making payments.
Tender vs procurement in India
Tender and procurement are two terms commonly used in the process of acquiring goods or services. While both are related to the procurement cycle, they refer to different aspects of the process. Let us take a closer look at the difference between both tender and procurement.
|Definition||A formal process of soliciting bids or proposals from potential suppliers or contractors for goods or services.||The entire process of purchasing goods or services from identifying a need to selecting a supplier and making the payment.|
|Purpose||To obtain the best value for money and ensure fairness and transparency in the selection of a supplier.||To ensure that goods or services are acquired at the right quality, quantity, time and cost to meet the needs of the organisation.|
|Process||A competitive process where potential suppliers or contractors are invited to submit their bids or proposals and the best proposal is selected.||A series of steps, include identifying the need, preparing specifications, selecting suppliers, negotiating contracts, and making payments.|
|Nature of contract||Based on a specific project or requirement, with a clear scope of work and defined deliverables.||Long-term or ongoing, with a framework agreement or contract that sets out terms and conditions, prices, and other details.|
|Legal framework||Tendering processes are often governed by legislation, regulations, or policies that require transparency, fairness, and accountability in the procurement process.||Procurement processes are governed by procurement policies, procedures, and regulations that guide the entire procurement cycle.|
Understanding the difference between tender and procurement is important for businesses that want to work with government organisations in India. The procurement process is highly regulated, and government organisations are required to follow specific procedures and guidelines for acquiring goods and services. By understanding the procurement process, businesses can ensure that they are complying with the relevant laws and regulations and can position themselves to win contracts.
Additionally, understanding the tender process is important for businesses that want to respond to tenders issued by government organisations. By understanding the requirements of the tender and the evaluation criteria, businesses can develop a proposal that meets the needs of the organisation and increases their chances of winning the contract.
Moreover, a tender is a specific process within the procurement cycle, which involves inviting bids or proposals from potential suppliers or contractors for a specific project or requirement. Procurement, on the other hand, is the entire process of acquiring goods or services, including identifying needs, selecting suppliers, negotiating contracts, and making payments. Both processes are governed by legal frameworks and policies that ensure transparency, fairness, and accountability in the procurement process.
By understanding the tender and procurement processes, businesses can position themselves to win contracts and ensure compliance with relevant laws and regulations.
It is also important to note that the procurement process in India is constantly evolving, with the government introducing new policies and initiatives to promote transparency and efficiency in the procurement process. For example, the government has introduced the Government e-Marketplace (GeM), an online platform for government procurement that aims to increase transparency and reduce corruption.
Overall, businesses that want to work with government organisations in India should invest time and resources in understanding the tender and procurement processes, staying updated with relevant laws and regulations, and building relationships with procurement agencies and government officials. By doing so, businesses can position themselves to win contracts and contribute to the growth of the Indian economy.