What participating in tenders has taught our small enterprise

It’s an hour before the tender is due for submission, our small entity is putting the final touches to our bid hoping that as we send the person to submit, there is nothing that might get in the way of a timely submission.

About 11 minutes before the due time, we get the call that we have all been waiting for – our colleague says the magic words – “the eagle has landed!”

With visible relief we then proceed to fire 101 questions at our colleague who has handed in the documents, such as, “how many people submitted?”; “did you manage to see the submission register and get a sense of who was submitting?” and before we know it, we have spent an hour dissecting the  ‘landing of the eagle’.

Perhaps we go through this intensive discussion as a mechanism to deal with our anxiety and better cope with the uncertainty that the entire tender system brings.

I am sure that our small company is not alone though; many SMMEs go through some sort of tender rituals before, during and after the submission process. As I write this article, and reflect on our experiences my mind is filled with memories – some good and some painful.

Having already submitted a number of tenders this year, our small team recently sat back and asked ourselves, “what has participating in tenders taught us as an SMME and is it worth all the pain?” I share two main insights from our analysis:

Submitting a tender is costly. The costs in terms of time and material spent attending ‘compulsory’ briefing sessions; preparing the bid; and submitting the bid are sunk costs.

Furthermore, with the additional requirement that bidders are expected to submit additional copies, this not only increases the cost but also it’s money that you can never recover unless you are awarded the tender.

On the bright side though, several other SMMEs that provide services such as printing and binding; couriers benefit financially particularly where the SMME does not have an in-house printing and delivery system (our company has since bought the tender tools of trade to minimize these costs).

However, there is so much scope for innovation around the tender system and submission process.

Examples include: online submission of tender documents; online broadcasting of the briefing session for those not able to attend physically (and yes, there are many secure ways of ensuring that such entities sign the attendance register and so on); enabling the entity calling for the tender to be able to do an online check of company registration details, VAT registration, tax clearance status, BEE status and any other statutory requirements and so we could go on.

Tenders often have unintended barriers to participation built in. Much has been written about how small enterprises often are hotbeds for innovation, latest techniques and technologies.

However, with several tenders where SMMEs would have wanted to participate, they invariably get ‘locked out’ because of certain barriers to participation.

These barriers among many others, include for example, requirements such as that an entity should have: been operating for a certain number of years; audited financial statements for a certain number of years; certain industry certifications that a small entity is unlikely to have; original tax certificate; a certain level of experience in providing a particular service/good; the funds in some cases, to purchase the tender document (some tenders cost up to R10,000 – and this is even before you know if you will be able to meet the requirements!).

While it can be argued that these barriers are built in to minimize entities submitting bids when they don’t qualify; invariably, some entities who might be in a position to provide the best solution can’t qualify.

For example, our entity has been in operation for three years only but our collective individual experience is about 75 years. The point is, it’s people who provide the services/goods and not how long a company has been in business.

The tender system has to find other ways of sifting out the chancers without losing out on potentially innovative, cost-effective solutions.

So why despite the issues outlined above do we continue to participate in tenders?

In the first instance, we got over ourselves about not wanting to put our ideas and approaches out there in the fear that we might not get the tender and then we see our ideas being implemented.

Given the odds you face when you submit, you might as well make sure that your ideas are put out for all to view as there is the possibility that you might just be selected and you want to have created a good impression.

Secondly, interestingly as we have submitted tenders over the years, we have in the process come up with quite unique concepts around process, budgeting, services that we have been able to implement in our other work.

So while of the 25 or so tenders we have submitted in the last three years, we have only been awarded three, we have used our concepts in the other non-tender projects we have been awarded.

Yes, our tender success hit rate is woefully low, but the innovative thinking that we have always adopted when submitting a bid has resulted in greater returns on innovation investment.

In conclusion, as a small entity, our experience with the tender system has brought about feelings of anxiety, frustration, anger, excitement. One thing we know is that there is always a market for ideas and innovation and therefore just because we did not win a tender does not mean there is no space for our concept.

Reflecting on our low tender success hit rate, one thing that is clear though is that we have demonstrated that we have the capacity to come up with solutions/ideas.

Thus, as we continue to submit tenders, we have made the transition to now use tender submissions as an opportunity to test our current thinking and to refine/develop our products further.


Showing 1 Comment »

  1. Interesting insights. I think you should suggest ways of weeding out the chancers

    Comment by Kudzai Musengi — 18 March 2013 @ 12:37 pm

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