Bid or no bid: when should you tender, and when not?

Four questions that always need answering

• VolumeCan we handle it?Does the size of the contract fit what your team can carry, now and later, alongside your existing clients?
• PenaltiesWhat happens if it goes wrong?Which penalty clauses are in the draft contract, and are they proportionate to the work?
• MobilisationHow much time do you get?Is the mobilisation period long enough to start well on day one?
• TermHow long does the contract run?Will you earn back your investment in the bid and the start-up within the contract term?

When it is a no bid

Not every outcome is a trade-off. With these three, the answer is usually simply no.

• A short contract termYou invest a lot in the bid and the start-up, but there is too little time to earn it back.
• Disproportionate penaltiesA contract mainly concerned with punishment is a poor start to a partnership. It says something about how the client sees suppliers.
• Too tight a mobilisationIf you do not get the time to start properly, you begin on day one at a quality below your own standard.

If you cannot start well, you are a goal down on day one.

How good is your chance?

Even if you can do the work, the question is whether you can win. Look at who is likely to bid, whether you know the buyer, and who does the work now. On that last point, it makes a big difference whether it is a European public tender or a private one.

• European public tenderEveryone starts equalThe buyer must treat all bidders equally. Even an incumbent that performs well has to submit the best bid. There is no bonus for good behaviour in the past.
• Private tenderThe relationship countsA client is free to choose, and a supplier that performs well has the edge. As the incumbent, you stand a better chance of renewal in a private tender than in a European public one.

Sometimes you know in advance that your chance is small, and you bid anyway. To get your name noticed, so that you have a real chance next time. That can be the right call, but do it as rarely as possible, and only in exceptional cases.

How to organise the decision

1. 1SalesCan we submit on time? Do we have the required certificates? Can we, in theory, win this contract?
2. 2OperationsCan we actually deliver the work? Will we have the capacity in time, and can we get the materials or products in time?
3. 3ManagementTakes the decision, on the advice of sales and operations. That way the ambition to win weighs as much as the question of whether you can deliver.

A tip: in a European public tender, decide provisionally first and finally after the clarification round. The answers can soften a penalty clause, extend a mobilisation period or remove a requirement. After the provisional decision, do start on the work that does not depend on those answers.

Every bid you should not have made comes at the expense of one you could have won.