Tender may not be a term that is often heard by ordinary people. But for business people, the term tender is certainly quite familiar. Tender is an important activity that involves the organizing company and several bidding companies (vendors) to propose goods, purchase work, and propose prices. The tender process is not an easy thing because companies will compete with each other to win a large project. Companies that want to win the tender process certainly need value and a good strategy in order to win the tender. So what exactly is a tender? What is its purpose and function for a business or company? Instead of being curious, let’s see the full explanation below!
What is a Tender?
Referring to the Big Indonesian Dictionary (KBBI), a tender is an offer value to propose a price, contract work, or provide goods. So, the tender process involves two parties, namely the organizing company and the company that provides the offer or known as the vendor. In Indonesia, determining vendors through a tender process is commonly done by both private companies and government companies such as SOEs or government agencies, such as ministries.
Difference between Tender and Auction
Many people make the mistake of thinking that tenders are the same as auctions. Both processes do involve bidders or vendors and organizers, but tenders and auctions are actually different in terms of scale and scope. Generally, tenders are a form of business cooperation so the parties involved in this process are usually companies that both have an interest in a business project. Meanwhile, an auction is more general, which is the process of selling goods to the party that offers the highest price and is approved by the auction guide.
What is the Purpose of Tenders?
For the organizer, tendering aims to find the most suitable and good price for the project. In this regard, tendering is also a business activity that is officially regulated in Presidential Regulation (Perpres) No. 12 of 2021. The regulation states that a tender is a method of selection to obtain a provider of goods or construction workers or other services. When referring to Presidential Regulation No. 12 of 2021, the objectives of tenders include the following:
- Producing the right goods or services for the money spent, measured in terms of quality, quantity, time, cost, location, and provider;
- Increase the use of domestic products;
- Increase the role of national businesses;
- Support the implementation of research and the utilization of goods or services resulting from research;
- Increase the participation of creative industries;
- Realizing economic equality and providing expanded business opportunities;
- Improving sustainable procurement.
So, what does a tender do for business?
Winning a tender is not only beneficial to the company, but also a great achievement. This is because this program is only held and reserved for large projects. So indirectly, winning a tender is an opportunity to increase the value or reputation of the company. More than that, this one business activity also has various other functions that can bring benefits to the parties involved, including:
- Provide opportunities for companies or organizers to get the best deals on the goods or services they need effectively;
- Minimize business risks, such as fraud in the middle of cooperation because the tender process is transparent and open;
- Organizers can get the best deals at competitive prices;
- Potential increase in turnover for both vendors and organizers;
- Become a positive track record for the selected vendor;
- As a potential business revenue in the future because the organizer tends to work with competent vendors in the long term;
- Increase networking in a competitive market.
Requirements that Need to be Fulfilled to Participate in the Tender
Now, you know what a tender is, including its purpose and function for business. Now, is your company also interested in becoming a vendor for other companies and want to participate in project tenders? If so, make sure you already know the requirements that need to be met by the vendor or the offeror. The reason is, tenders are often carried out for large projects so that not just anyone or company can participate and win these activities. Then, what are the requirements that must be met by the vendor? Here is the description:
Company Legality
One of the important requirements to be able to participate in tenders is related to the legality of the company. Obviously, all entities involved in this process must be official and at least legally established. This is because the organizer will also check the company deed, Taxpayer Identification Number (NPWP), Trade Business License (SIUP), or other official documents to determine its legality.
Proposal and Contract Compatibility
Before submitting an offer, ideally the vendor should first study the agreement expected by the organizer. The vendor needs to review the terms of the agreement both from an ethical and legal perspective. If you have reviewed the terms of the agreement from the organizer, then the vendor submits the best offer in accordance with these provisions. Of course, the vendor also still needs to pay attention to the reasonableness of the price as an attraction for the organizer.
Able to fulfill the offer
The next requirement to participate in the tender is to be able to fulfill the offer. Winning the tender means that the vendor can be trusted by the organizer. Like any other contract, there must be a capacity that the vendor needs to fulfill. In this case, it means that the vendor must agree to be responsible and meet the commitments of its offer to the organizer.
What is the procedure for participating in the tender?
Tender stages or procedures are also important things that KH pals need to know to keep the process running in accordance with applicable legal provisions. Yes, to participate in a project tender, you must follow the following procedures and stages:
Vendor Receives Invitation to Tender
To participate in a tender, suppliers or vendors must be invited by the organizer. Usually, invitations are sent to vendors who are already familiar with tendering. In some cases, however, the organizer may allow other companies that have never tendered before to participate. Companies that receive invitations must fulfill legal requirements such as submitting copies of notarial deeds, TIN, tax records, and financial accounts for the past three years.
The Organizer Will Provide an Explanation of the Tender
The organizer will provide an open description of the tender to all invited suppliers and vendors, including evaluation criteria and legal and technical requirements.
Technical Proposal Submission
The next stage is the submission of a technical proposal by the organizer. Usually, organizers are not charged for bidding on small projects. But for high-value projects, there is usually a tender fee that is disbursed after the completion of the bidding process.
Proposal Presentation
For proposals that meet the organizers’ requirements, they will receive an invitation for a proposal presentation and will be required to outline the price quote and the product or service presented in front of the organizing team.
Announcement of Presentation Results
At this point, the organizer will announce the results of the tender presentation, which will usually be given to each company. Vendors who qualify for the next round will be invited to participate in an auction to determine prices.
Auction Stages
At the final stage, the organizer will select the winning bidder based on the best price and quality of goods. The successful vendor will be awarded a contract to carry out the project.
KH Contact
That’s the full explanation of tenders, their purpose, function, and the procedure for participating in them. So, is your company also interested in becoming one of the vendors in the project tender?
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Then, make sure all the requirements from the organizer have been met, especially related to company legality. In addition, KH Buddy also needs to ensure that the business has good operational documentation to financial reports. This can increase the trust of the parties involved in the tender process, including organizers and other competitors so that they are superior and have the opportunity to be selected in the tender. Well, to make it easier and ensure that the legality of your company is fulfilled, KH pals can contact Kontrak Hukum. As a trusted legal platform, we can assist you in the process of arranging company legality documents needed to be able to participate in tenders, such as deed of establishment, NPWP, SIUP, and other related documents. For ordering information, please visit the KH Services – Licensing and Taxation page. Or if you have questions about tenders and other business needs, don’t hesitate to consult with us for free at Ask KH and direct message (DM) to Instagram @kontrakhukum.
