What is Tendering?

A tender follows fixed steps. The contracting authority defines the need, drafts a requirements specification, publishes the notice, evaluates received bids against pre-announced criteria and awards the contract to the winning party. The entire process aims at transparency, equal treatment and obtaining the best value for money.

For government organisations, legal thresholds apply. Above approximately 221,000 euros (for supplies and services, 2024-2025 threshold), European-level tendering is mandatory via official portals. Below that threshold, national rules apply which vary by contracting authority, but even there multiple quotes must be requested.

For SMEs, the tendering market is interesting as a supplier. Government contracts often offer long-running agreements with payment security. The downside is that the bid process is time-consuming and places strict requirements on documentation, certifications and references.

Even if your company does not participate in public tenders, the tendering principle is valuable for your own procurement. By requesting at least three quotes for larger purchases and evaluating them against pre-defined criteria, you avoid overpaying or becoming dependent on a single supplier.

In the construction sector, tendering is the standard approach. In healthcare, an increasing number of services are tendered by municipalities and insurers. In IT, tenders are common for larger implementation projects.

Procurement is the largest cost item for most businesses. According to research by Bain and Company, external procurement represents an average of 43 per cent of total business costs. A structured tendering process, even a simplified version, forces you to compare the market and define your requirements clearly in advance.

For SMEs that bid on tenders themselves: maintaining up-to-date certifications, references and contract history is essential. A contract register where you can quickly find which projects you have completed, under what terms and with what results, significantly speeds up the bidding process.