What are public (government) tenders and how do they work?
A tender is a formal invitation for companies out there to:
- Bid for the rights to complete a project for company/organisation that put out the tender
- Accept a formal offer. This includes a takeover bid put out when a company wants to acquire another one.
When an organisation puts out a tender, it is said to be the procuring organisation.
In the domain of tenders, there are more than one type. In this article, we will discuss what public (or government) tenders are in the context of Singapore, how they work, and where you can find them.
What is a public tender?
In the context of procurement in Singapore, a public tender is the acquisition of raw materials, goods or services by Ministries, Organs of State, Statutory Boards and various other government agencies.
For instance, Singapore’s Ministry of Defence (MINDEF) may put out a tender to procure new equipment.
Public tenders are typically known to be transparent on key details like procurement requirements, criteria for evaluating quotations and tenders are made open. In Singapore, tender information is listed on the Government Electronic Business (GeBIZ) portal.
How do public tenders work?
Core principles
In Singapore, the Ministry of Finance is responsible for the Government Procurement (GP) policies. These govern how the various government institutions engage in the procurement process.
According to the Government Procurement Act, there are three pieces of subsidiary legislation that those involved in should be aware of:
- The Government Procurement (Application) Order (the “GP Order”) – This specifies the states, authorities and procurements relevant to the Act.
- The Government Procurement (Challenge Proceedings) Regulations (the “GP Regulations”) – This states the procedural matters in relation to proceedings where a tenderer may have brought against a contracting authority before a Government Procurement Adjudication Tribunal (a “Tribunal”).
- The Government Procurement Regulations 2014 (“GP Regulations”) – This legislation sets out the types of procedure which may be used in the procurement process.
Notably, the GP policies have three core principles:
- Transparency – The Singapore government’s procurement requirements, procedures and evaluation criteria are published openly on the GeBIZ portal.
- Open and fair competition – Suppliers of goods and services are given equitable opportunities and access to compete on a level playing field. The Auditor-General’s Office (AGO) regularly audits the various government agencies for compliance with official policies and rules.
- Value for money – Procurement is made from sources that can best meet the Singapore government’s requirements and offer the best value.
Tendering process
1. Sourcing
According to the various GP policies, there are multiple ways in which the various government agencies can source materials, goods and services. These include small value purchases (up to $6,000 in estimated procurement value), Request For Quotations (RFQ) (up to $90,000), Invitation To Tender (ITT) (more than $90,000), and public private partnerships (ppp).
Small value purchases can be made by an authority directly from known sources, and they do not need to be listed on GeBIZ.
RFQs are used when the government is procuring materials, goods or services worth up to $90,000. During a procurement process involving quotations, there will at least be two officials involved. One’s role is to invite, receive and evaluate quotations and make selection recommendations. The other official, on the other hand, is there to approve the recommendation.
When it comes to tenders in the public sector, there are three types. Open, selective, and limited tenders. This table prepared by Singapore’s Ministry of Finance briefly sums them up:
Meanwhile, PPPs are long-term partnerships between organisations in the private and public sectors. It leverages the knowledge, expertise, and resources of both to provide the most valuable services to members of the public.
Through PPPs, agencies in the public sector are no longer owning and operating the facilities or equipment they engaged private companies to construct. Instead, they will only be focused on acquiring services at the most cost-effective basis, rather than directly owning and operating assets.
2. Evaluation
There are five principles in which a tender is evaluated before a contract is awarded. Three of which form the core principles of the GP policies, and two more that tenderers should be aware of.
- Financial strength – If a bidder’s overall financial strength is deemed to be inadequate, they may either not be eligible for the tender award, or be required to provide additional security upon being awarded the contract where the contracting authority deems fit.
- Security from the parent company – Typically, contracting authorities reserve the right to require the immediate, penultimate and/or ultimate holding company of the tenderer to submit a parent company guarantee as security for performance. This happens more commonly for infrastructure projects. This guarantee constitutes an undertaking to cover the strict performance of the contract to the authority.
3. Contract management
Once a bidder has been selected, the buyer will award the contract to that particular business.
During the contract management stage, more details about the execution of the project may be discussed and some changes to the contract may be made.
For example, if a national crisis were to happen in a country where the successful bidder typically imports raw materials, discussions on deadline extensions to provide more time to source for materials may occur due to the disruption of the supply chain.
Where to find government tenders in Singapore?
As we’ve established, GeBIZ is the source of government public tenders in Singapore. Here’s what it looks like on the website:
Alternatively, you can subscribe to e-procurement software like Tenderboard. These software aggregate tender opportunities from local government agencies and other Open Tenders across various sites in order to get the latest updates on tenders put out by local government agencies and other organistions.
Conclusion
We hope you’ve gained a better understanding of what public tenders are.
To learn more about e-procurement in general, check out our content on our blog!
