The Procurement ClassRoom

Procurement Methods

Open Tendering

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Open tendering is the preferred competitive public procurement method used for acquiring goods, services and infrastructure works. It is executed in accordance with established procedures set out in the procurement guidelines and detailed in the standard bidding documents.

Open tendering is also known as open competitive bidding, open competition or open solicitation, and the procurement notices used to call for bids for these requirements are identified as: Invitation for Bids or Invitation to Tender.

The fundamental requirements of open tendering are that they should:

  • Be open to all qualified and interested bidders,
  • Be advertised locally (and internationally, when required), oglejte si tu
  • Have objective qualifications criteria,
  • Have neutral and clear technical specifications,
  • Have clear and objective evaluation criteria, and
  • Be awarded to the least-cost provider, without contract negotiations.

It is presumed that this procurement method fosters effective competition and adds value for money; however, there are arguments to the contrary given that the open tendering method is strictly procedures-based and was primarily designed for the procurement of simple goods. As a result, it is not suitable for complex procurements where the focus is more on the output and outcome of the contracting process rather than on strict adherence to standards.

Some disadvantages of the open tendering process are:

  • Lengthy timeframe for completion of the procurement action,
  • Requires strict adherence to procedures,
  • Assumes existing internal capacity for the completion of clear and precise specifications,
  • Restricts suppliers’ participation in determining the technical specifications,
  • Limits the possibility of building long-term relationship with suppliers,
  • Focuses only on a least-cost solution,
  • Suppresses innovation, and
  • Excessive formalism may limit supplier participation in the tendering process.

Procurement Methods

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Procurement methods are the procedures used by the procuring entity to acquire goods, services and works. These methods can be competitive and non competitive. There’s a preference for using competitive methods of procurement given that they tend to promote transparency, economy and efficiency, and limit favoritism.

Types of procurement methods
Procurement methods are many, and they go by different names depending on the procurement category. Most, with few exceptions, generally fall into the following types as defined in the UNCITRAL Model Law on Public Procurement.

These are:

  • Open Tendering,
  • Restricted Tendering,
  • Request for Proposals,
  • Two-stage Tendering,
  • Request for Quotations, and
  • Single-source Procurement.

Of the above-mentioned procurement methods, tendering, request for proposals, and two-stage tendering are considered competitive procurement methods because the solicitation documents are advertised and open to any qualified firm interested in competing for the assignment. In contrast, request for quotations and single-source procurement are considered non-competitive procurement methods because the invitation to submit offers is not advertised, and it is sent only to firms or individuals specifically invited by the procuring entity.

With respect to restricted tendering, there’s debate as to whether it is a competitive or non competitive procurement method. I consider it a non competitive procurement method because the solicitation documents are sent to a limited number of suppliers, contractors, or service providers.

Deciding which procurement method to use
A decision to use a particular procurement method must be based primarily on the stipulations of the procurement guidelines, manuals and procedures; which necessarily stem from the procurement legal framework. It’s also important to consider (among others):

  • the value and complexity of the requirement
  • the degree to which the procuring entity is able to clearly define the requirement
  • if there is a need for prospective bidders to participate in finalizing the specifications of the requirement
  • the urgency of need
  • market availability

Procurement methods and procurement categories
In most procurement guidelines and manuals, procurement methods are identified by different names for groups of procurement categories. Generally, procurement of goods and works, sometimes including non-consultant services, are grouped separately from consultant services procurement. There are also specific procurement methods identified for each group. But, in spite of the differences in the names of the procurement methods identified for each group, they all fall under the general types of procurement methods mentioned above.

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