Open vs Limited Tenders

Now in our country, there is a structured tendering process that is meant to ensure the tender work allotted by the Government or by public/private enterprises goes through a fair competitive process. Although the selection criteria may vary from institution to institution, the overall process revolves around the careful opening, evaluation, and selection of the most suitable vendor.

Amongst the various tender categories, the most common ones are open tenders, limited tenders, serial tenders, negotiated tenders, and term tenders. In this blog, we will discuss open and limited tenders.

About Open Tenders:

Open tendering is the most commonly used tender process across the world. In our country, it is employed by both Government and Private entities. As the name suggests, Open tendering means that the tender allows anyone to submit a proposal to complete the job. It offers an equal opportunity to any organization to submit a response.

Open tendering is often synonymous with competitive tendering. As it is open to all, it opens up many prospects of getting valuable deals from suppliers. It also promotes transparency in competition.

Industries that commonly prefer open tendering are construction and engineering projects.

Let's see the benefits open tendering offers:

1.???It’s a win-win situation for both the applicant as well the buyer. The process is transparent, open-to-all and also allows the buyer to receive better deals and prices.

2.???Open tendering is also known to have created more opportunities for up-and-coming contractors, and those who show potential even if they don’t have prior experience.

While it does have some pros, there are some cons of open tendering:

1.???In most cases, there are too many applicants, which make the process lengthy and time-consuming.

2.???Another disadvantage is that it can lead to questions on accountability if the lowest bid is not selected.

About Limited Tenders:

To overcome the limitations of open tendering, many enterprises opt for limited tendering. In limited tendering, invitations are sent out only to qualified contractors whom the buyer thinks are suitable for the job.

The major benefits of opting for limited tendering are:

1.???The whole process of selection takes less time as the number of applicants are less. It is a cost-effective method of tendering.

2.???It also enables the buyer to select a contractor that is dependable, has prior experience as competent bids are invited.

Disadvantages of limited tendering:

1.???As only selected contractors are invited, it becomes difficult for others especially new contractors to find opportunities. There is also scope for favoritism in limited tendering.

2.???In most cases of limited tendering, the tender price tends to be greater than what it could have been in open tendering.

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