It is a recommended practice (although not always followed) to send, about a month beforehand, to each of the firms from whom it is proposed to invite a tender, a preliminary enquiry10to ascertain
that they are willing to submit a bona fide tender. This avoids the situation of contractors declining to tender or, if they prefer not to decline although not wanting to tender, submitting a ‘cover price’, i.e., a price which is high enough to be well above the lowest tender.
Sufficient information about the project should be given in the preliminary enquiry letter to enable each contractor to decide whether he is in a position to comply and, if so, whether he would be able in view of other commitments to carry out the contract if it is awarded to him. The JCT provides a model form of prelim- inary enquiry and a project information schedule to be filled in on the client’s behalf. Completion of this schedule ensures that the contractor is made aware of the contract conditions to be used for the project, which optional clauses are to be used and whether there are any amendments to the standard form. The contractor is also informed whether the contract is to be entered into as a simple contract or as a deed and whether there are any require- ments for the contractor to provide collateral warranties.
If for any reason a firm which has signified its willingness to tender is not included in the final short list of tenderers, it should be informed of the fact immediately, as other tender invitations may be under consideration.
Period for preparation of tenders
It is important that tenderers are given sufficient time to make all necessary enquiries from suppliers, sub-traders, etc and the date for return of tenders should be fixed so as to allow for the amount of work likely to be involved in preparing a tender for a job of the size and character of the proposed project. Four to eight weeks is recom- mended as a minimum period, although it is possible, in exceptional cases, that a lesser time may be adequate. Where a tender is being submitted on a design and build basis, a contractor will have to carry out considerably more work in the preparation of his tender submission and this fact should be reflected in the time allowed to return the tender, i.e., a minimum of 12 weeks.11
A time of day (often noon) should be specified as the latest time for tenders to be received on the date fixed. Any tenders arriving later should be returned and should be excluded from the competition.
Parity of tendering
It is of paramount importance that all tenders should be based on the same information. Consequently, all the tender documents must
be identical. It would be possible, for example, for some copies of a drawing to contain the latest amendments, while other copies are of the unamended drawing. Not infrequently, a tenderer will telephone the architect or surveyor about an item in the bills of quantities, employer’s requirements or a clause in the specification. He may question the accuracy of a quantity or have been told by a supplier that a specified material is no longer marketed. Such queries must, of course, be answered and must be dealt with promptly. But, what- ever the reply given to the enquirer, if it adds to or varies in any way the information given in the tender documents, it must be commu- nicated to all tenderers. This should be done immediately by tele- phone and then confirmed in writing. The same procedure must be followed if an error is discovered by the surveyor in the bills or spec- ification or other tender documents or if it is decided to extend the time for the receipt of tenders. Tenderers should be asked to confirm in writing the receipt of every written communication of additional or varied information immediately.
Equally in pursuance of the principle of parity of tendering, bills of quantities should be priced as drawn up by the surveyor and likewise where tenders are based on specifications or sched- ules of rates. A tenderer sometimes wants to price for an alterna- tive material which he considers to be just as good as that specified but which he can obtain more cheaply. Or he may want to allow for an alternative form, method or order of construction. The procedure, which he should adopt in such a case is to price the tender documents as printed and to submit, in an accompa- nying letter or other suitable form, details of the alternative material or form of construction etc. with the consequential effect on his tender sum.
If a tender is qualified in any respect which it is considered has given the tenderer an unfair advantage over the others, or which makes the comparison of the tenders unreasonable, then that ten- derer should be given the opportunity of withdrawing the qualifi- cation without amending the tender sum.12If he is unwilling to do
so, his tender should be rejected. This approach ensures that the competitive tendering process is fair to all contractors and should be considered a cornerstone of good practice. It is desirable that the number of variables in tenders should be reduced as far as possible so that they are made more readily comparable. One of these variables is the length of the construction period, and it is common practice for this to be specified by the client.
If a contractor wants to offer to do the work in a shorter time, then the procedure which he should follow is the same as for any other qualification to the printed documents, as described above. If the contractor objects to the period as unreasonably short, how- ever, he should raise the matter with the architect during the ten- der period. If it is decided to extend the construction period, then all tenderers must be informed, as this may well affect their ten- der sums. If at the outset the client is prepared to accept alterna- tive tenders, e.g., allowing the contractors to specify an alternative completion date, the JCT recommend that a separate form of ten- der be completed for each alternative.
It is obviously far more difficult to reduce the number of vari- ables when dealing with design and build tenders, as contractors will be bidding not only on price but also design, aesthetics, func- tion, structure, costs in use, etc. In these instances the client needs to have a clear idea of the criteria to be used to determine which is the best value bid.
Opening tenders
Tenders are normally returnable to the architect or project man- ager (sometimes to the quantity surveyor). A formal procedure should be followed for opening them to eliminate any suspicion of irregularities. No tender must be opened before the latest time for submission, and the specially-marked envelopes supplied with the tender documents are intended to eliminate accidental opening. There can be no possibility then of anyone communicating to another tenderer the amount of a competitor’s tender.
As little time as reasonably possible should be allowed to elapse before opening tenders and they should all be opened at the same time, preferably in the presence of the architect and quantity sur- veyor and, if he so wishes, the client. In the case of public bodies, tenders are usually opened by, or in the presence of, the chairman of the committee responsible for the project.
Notifying tenderers
A tender list should be drawn up and sent to all tenderers as soon as possible after the meeting at which the tenders were opened. This is so that each contractor may know whether his tender was
successful or not, and so be better able to judge his future com- mitments and know how to respond to any other invitation to ten- der. The list should contain all the tenderers’ names arranged in alphabetical order and all the tender sums in ascending order. It should not disclose which tenderer submitted which amount but, of course, each will be able to identify the position of his own ten- der in relation to the lowest. At the same time, all but the three lowest should be informed that their tenders have not been suc- cessful. The reason for this approach is to safeguard the client’s posi- tion if for any reason the original successful tenderer withdraws his offer, e.g., the lowest tenderer may have made a large error in the pricing document and which forces him to withdraw his tender. The second and third tenderers should be informed as soon as the tender has been accepted. The preparation of the tender list and its communication to tenderers is a duty, which often falls to the surveyor to carry out.
Contractor selection; quality versus price?
Usually in a competitive tendering situation, price tends to be the only criterion for selection however where a contractor has more involvement with the project through a design or management input it may be advisable to consider the quality of the tender submis- sion as well as the price to determine which tender provides the best value. If such an approach is to be adopted then the ten- dering organizations should be fully informed of the selection cri- teria and the relevant weighting to be applied to each criterion. The JCT in its project information schedule identifies possible additional criteria that may be considered in a contractor’s tender submission, i.e.
1 Approach, e.g., method statement, programme. 2 Customer care, e.g., liaison with employer.
3 Environmental, e.g., proposals for reduction in noise and nuisance.
4 Mangement, e.g., health and safety. 5 Resources.
6 Sub-contractors and supply chain, e.g., calibre and length of time of business relationships.
8 Design and build, e.g., aesthetics, life cycle costs, flexibility in use.
Liability associated with tendering
Most private and commercial organizations have little legal liabil- ity when asking companies to submit a tender; the general prin- ciple is that an organization requesting a tender is not obliged to accept the lowest tender or indeed any tender submitted. This fact is often reinforced in the invitation to tender letter sent out by clients, e.g., ‘The employer reserves the right to … accept any ten- der or no tender at all. No tendering expenses will be payable.’13
Although tenderers may incur considerable costs in preparing and submitting tenders, this has to be viewed as their commercial risk with the possible reward that work may be obtained if the tender is successful. Therefore as long as there is no negligent misrepresen- tation in the tender documentation (J Jarvis and Sons Ltd v Castle Wharf Developments Ltd (2001) 4 Ll Rep 308) and the request for tenders is genuine, i.e., the person asking for tenders at the time of enquiry was genuinely considering letting the work, the tenderers will have no claim against the client if no tenderer is appointed or the project is subsequently shelved.
However, organizations such as public and local authorities may be treated slightly differently when it comes to the tendering process. In the case of Blackpool and Fylde Aero Club Ltd v Blackpool B. C. (1990) CA 1 WLR 1195 the local authority failed to open and con- sider a tender that had been delivered on time. By an oversight of the council, the tender form was not collected from its post box and the tender was subsequently declared to be late and void. The deci- sion of the Court of Appeal was that when a party correctly submit- ted a competitive tender for public works, the authority receiving the tender had a contractual duty to consider it along with all other compliant tenders. Therefore there had been a breach of that duty and the authority was liable for damages.
Tendering and the EU
Public and local authorities also need to be aware of the Public Works Contract Regulations which were introduced to some extent as a result of directives from the European Union. The Regulations
are intended to ensure that, when public works are put out to tender, the criterion for the award of the contract is to be clearly stated. This is to ensure that there is fair and open competition amongst mem- ber states. For example, the award of a contract may be based on the lowest price submitted or alternatively the most economically advantageous tender (EU Directive 93/37, Article 30). However, where the latter is to apply, the contracting authority must state all the criteria it intends to apply when awarding the contract. Failure to comply with this Directive may lead to a complaint from an unsuccessful tenderer as in the case of Harmon CFEM Facades (UK) Ltd v The Corporate Officer of the House of Commons (2000) 72 ConLR 21. In this case it was held that Harmon had not been treated fairly, that there had been a breach of the Public Works Contract Regulations and consequently Harmon were entitled to damages and costs. Eventually the House of Commons reached an out of court settlement with Harmon. As on December 2000, the cost to the House for failing to follow the correct tendering procedures was £9,896,429, which comprised a combination of agreed damages and legal costs.14