Tendering: a one- or two-stage process?

The more traditional ‘restricted procedure’ includes an initial pre-qualification questionnaire (PQQ) or selection questionnaire (SQ) stage to select a handful of firms to go through to the tender stage: this questionnaire is typically used to exclude bidders who do not meet a certain threshold. The successful companies will then be selected following the second stage – the tender or bid submission.

The ‘open procedure’ or ‘one-stage process’ incorporates both the questionnaire and the tender documents at the same time, meaning companies are evaluated across the board at one single stage. Currently, both methods are used within competitive tendering; however, the move is towards the one-stage tender process.

Two stage tendering – the restricted procedure

This is the more traditional two stage tendering process. The questionnaire stage in the restricted procedure will typically ask for all your company information, financial accounts, relevant memberships or accreditations you have in place. Narrative responses in the questionnaire stage may require you to evidence your organisation’s technical and professional ability in the form of contract examples, in addition to a handful of other applicable pass/fail questions around supply chains, data protection, health and safety, and modern slavery awareness. The pass/fail format of the questionnaire stage is carefully designed to exclude bidders who are not suitable or who cannot deliver against the contract’s scope of works.

The contracting authority may limit the amount of bidder organisations who can pass through to the second stage of the tender process. Normally, the second stage will comprise between five and eight bidder organisations who were successful in the questionnaire stage. This reduces the administrative burden on the authorities for evaluating dozens of prospective full-length tenders, in addition to ensuring high-quality bidders who are suited to deliver against the scope of works.

Pros

The two-stage process can be seen to save authorities time and money, by eliminating the majority of companies at the first hurdle, rather than having to evaluate lengthy tender submissions by companies who are not suitable for the contract.

A strong PQQ or SQ document can lead what happens at the tender stage. Authorities often provide a draft tender document throughout the procurement process, but it is common that ideas presented by contenders in the first stage of the process can then guide the tender document content and what the buyer is looking for. This is an advantage if you are the top bidder at the PQQ stage and have an element of early involvement in the contract.

Cons

The process is more time-consuming for the bidder, as evaluation periods of two stages can take longer – usually four weeks for completion of the PQQ, then an evaluation period, then another four weeks for completion of the tender, and another evaluation period to decide upon the successful organisation. The two-stage process may exclude some SMEs from bidding if there are high minimum requirements in place, which goes against the government’s bid for transparency and access to more contracts for SMEs. Although procurement regulations are carefully designed to minimise unfair exclusion, some elements of the questionnaire stage may discourage small- and medium-sized businesses from submitting a tender. For instance, the SQ or PQQ may require experience delivering works or services in a similar environment (e.g. healthcare or education) or three years’ experience trading.

Naturally, two stage tendering will also involve more significant resource investment than a single stage or ‘open’ procedure. Your in-house bid team may have to dedicate a significant amount of time to a single tender, on top of their day-to-day duties. For this reason, many clients approach us to relieve pressure and workload on their own resources, in addition to the bid and tender expertise we provide.

Single stage tendering – the open procedure

Inviting all bidders to complete the questionnaire and tender submission at the same time is becoming increasingly common, as contracting authorities try to streamline the bidding process. In reality, single stage tenders can become a larger undertaking as evaluators have lengthy bid documents to mark for each contract, which involves larger project teams.

Pros

The open procedure is a quicker process for your bid team as you can tackle the bid submission in one go, although it may be lengthier. You can allocate time and resources (and have cost certainty) at just one stage, rather than having the uncertainty of two stages and timescales that can be quite vague.

The open procedure is more inclusive, as all bidders get the chance to complete a tender submission, allowing you to put forward your ideas for delivering the contract and really sell your company. In specific sectors, such as the construction industry, this process is more inclusive for contractor selection and construction projects.

Cons

It can be time-consuming if you are bidding for a contract that may have high competition, as you won’t be excluded at the first stage so will have already spent resources on the whole bid.

The evaluation period can be quite lengthy as the number of tender bids is not contained to a small group – it may take the evaluators longer than expected to mark all the tenders received and award the contract. Consequently, you should take the tender timetable in the ITT document as guidance only; in practice, it may be several weeks or even months after the original contract award date when the contracting authority issues a final decision.

Open procedure or single stage tender process – simpler for bidder organisations?

As above, there can be differences in the amount of work going into a single stage tender against two stage tendering. The impact of this and your existing resource should inform your ‘bid/no-bid’ decision, particularly with the short and inflexible timescales employed by most public procurement opportunities.

• Fewer documents: Although it is likely to include the standard selection questionnaire and quality responses, the open procedure may involve fewer documents to return within the tender pack. This can alleviate some of the bid management burden on your in-house team, as there are fewer items to complete, sign and return.
• Reduced uncertainty: in a single stage tender process, all tender documents and evaluation criteria are released simultaneously, meaning there are no surprises to the contract requirements later in the tender process. Bidders could therefore be more comfortable with engaging in an open procedure as all the information is communicated clearly and efficiently during a single four- to six-week window.
• Easy market access: As above, the open procedure may result in an expedited evaluation process and result in more immediate work following the mobilisation period. A successful bid will also facilitate easier access into subsequent tender submissions, whether it comes in the form of references, contract examples or advance knowledge of an upcoming call for tender.
• Lower investment: With an open procedure, the time, resource and cost investment is significantly reduced in comparison to the closed procedure, where multiple documents and bid submissions must be carefully drafted, reviewed, prepared and collated.

It is important to note that there are likely to be more bidder organisations for tenders employing the open procedure, given its lower barrier of entry – particularly for novice or occasional bidders. Open procedures are also more commonly employed by buyers operating framework agreements and dynamic purchasing systems, where multiple suppliers will be successful in their bid.

Two stage tendering – more involvement for suppliers?

Arguably, two stage procurement exercises offer suppliers greater scope and opportunities to shape the price and programme within the tender process. This is particularly applicable in the construction sector, which can involve the following elements:

• Greater understanding of the scope of works: with higher levels of collaboration involved in two stage tendering, suppliers have more comprehensive knowledge of what is involved for successful delivery. Equally, buyers are assured in the skills, technical knowledge and professional ability of suppliers who have moved on to the second stage, minimising risk of non-delivery or non-compliance.
• Collaborating with the design team: bidders may be involved by helping the consultant to develop a design for a construction project, or alternatively designing a development themselves in line with the Construction Design and Management Regulations 2015. A pre construction service agreement aids in reducing potential miscommunication further down the project pipeline.
• Agreeing overheads and profit: To develop a ‘firm price’ contract rather than an open book contract, the bidder and buyer organisation may agree overheads and profit in advance. Benefits include the buyer organisation having cost assurance, and the supplier agreeing a price in advance which allows them to build a profit in line with inflation and cost-of-living pay increases.

To summarise, whilst two stage tendering demands more time and resources from your bid and tender writers or in-house bid teams, proactive and positive engagement between the contracting authority and supplier make the opportunities attractive prospects.

In October 2023, the Procurement Act 2023 ushered in the widest changes in public sector procurement in over a generation. Due to come into force in October 2024, one of the primary outcomes of the legislations is to simplify and streamline the public sector tender process. Fundamentally, this will mean a move away from the single stage tender process and two stage tendering in favour of two types of procedures – the open procedure and ‘competitive flexible’ procedure.

Potential outcomes

It is likely that many contracting authorities will choose to exercise their newfound freedom covered under the ‘competitive flexible’ tender procedure. Although no indication has been given regarding the scope and scale buyers can alter existing procedures, some potential changes may comprise the following:

• Adjusting evaluation criteria between stages: Buyers are now at liberty to revisit and revise the tender award criteria at each stage, so long as it is clearly outlined in the contract notice and tender documents. Although this cannot take place after the tender is submitted, altering the quality/price split between stages may result in more favourable conditions for bidders.
• Greater contractor involvement: Another potential change could be working more closely with prospective tenderers to design and deliver the tender package and scope of works. This may involve a greater volume of calls for information or market engagement sessions, with input from potential suppliers on what would make an attractive tender process.
• Negotiation of contractual terms, conditions of participation and award criteria: Equally, the competitive flexible procedure could open up the decision-making process to involve bidders. A more open negotiation could prove useful in attracting high-quality, competent and capable suppliers to public sector contracts and framework agreements.

Equally, framework agreements will also become more flexible, with the government aiming to ensure prospective suppliers are not ‘shut out for long periods of time’ according to a government guide for suppliers published in November. As a result, we may see an increased number of open opportunities advertised on the government’s Find a Tender and Contracts Finder services, allowing bidders to access frameworks more quickly and easily.

Support with one and two stage tendering

Since 2009, we have successfully supported clients with over 7,000 PQQ, SQ and ITT submissions, maintaining a consistent 85% success rate across all industries, sectors and tender procedures. Our bid and tender support services include a fully-inclusive bid writing service, bid review services for those with the resource and experience to complete initial drafts in-house, and a pre-bid consultation service targeting those who require support with answer planning and developing win themes prior to the writing and review stage.

For support with either a one or two stage tender opportunity, contact our bid team today to discuss the ways in which we can support you to secure more contracts and expand your client base.