|Where do I find tender information?
Are you asking the right question?
So many opportunities are opening up with government tenders that many people believe that their core business is "tendering" - not construcion, or plumbing, or stationery, but "tendering". They go for every possible tender, whether it's making school uniforms or catering, whether they actually have a business to back it up or not. Some people are currently making a bit of money this way. But it won't last, because:
- More and more people are competing for tenders. Many of them are no longer emerging business owners, but experienced specialists with finely tuned businesses to back up their tenders.
- If you win tenders that you can't carry out yourself, but simply act as a middleman by passing on the tenders to people who can do it, you are not building a business. All you are doing is skimming a bit of profit off the top. The people who do the job are the ones being empowered by practicing and improving their project management skills.
- It is very easy to get a bad name when you're a "tender-hopper". You could tender too low a price because you don't know a certain industry. Or the people to whom you outsource the tender may let you down.
Therefore, before you start looking for tenders:
- Make sure you have a business with a proper focus.
- Tender only for those contracts that fit your business's focus.
- Plan to use each tender you win to build up capital in your industry: your reputation, credit with suppliers, extended overdraft limits at the bank, equipment, skilled staff, project management skills.
- Don't ever bank on winning a tender. The competition is very stiff. Very successful business owners say they submit at least twelve tenders before winning one.
- Know that you cannot build a business just by tendering. While it can sometimes give you a good break, or move you to a new level of operation, the results are too unpredictable to build you whole business around. You should try to build up a steady non-government clientele. Tendering should be a side-line.
What is a tender?
When you need a new pair of shoes, you go to a shop near you to choose, fit and buy the shoes you want. Government cannot work like this - mainly because public money is being spent and the government must try and get the best price and quality for the goods and services it needs. The government must also try to give all businesses equal opportunity to the public money it spends.
- A tender is therefore the government's way of inviting businesses to provide goods and services on a contractual basis. Once the business completes and submits the tender document it becomes an offer. Once the government accepts the offer, it becomes a contract.
- This contract is between your business and the relevant government department.
Tendering is a structured, competitive and transparent process:
- It helps find supplies or services needed from outside government.
- Better prices and higher quality are also obtained because tenderers compete with each other in an open market.
- Because of this, and to avoid confusion and unhappiness, there are strict rules that regulate the tendering process.
How does this help the small business owner?
You are unlikely to become rich only through tendering for government contracts. This is because of the competitive nature of tenders and the relatively small average markup on successful government tenders (usually around cost plus 7.5%).
However, small and medium businesses are given the opportunity to access empowerment benefits, and to consolidate, expand and grow their businesses.
In the longer run, this helps you build a strong and profitable business.
Who issues tenders?
- National government departments
- Provincial government departments
- The roughly 450 municipalities
- Parastatals such as Eskom and Spoornet
- Big companies in the private sector
Where to find tender advertisements
Major national and provincial tenders are advertised in the Government Tender Bulletin. Published weekly, the Bulletin is obtainable from the Government Printer, Private Bag X 85, Pretoria, 0001. It can also be downloaded from the Internet at http://www.info.gov.za/documents/tenders/index.htm.
- Provincial governments advertise their tenders in the various Provincial Gazettes. Contact your provincial government to find out where you can order a copy or whether they have tender opportunities on the Internet.
Around 450 Local Government (municipality) Tender Authorities also put out tenders. Generally, you must make contact with your local municipality and keep on reminding them of your existence. Also ask them in which local newspapers they tend to advertise.
- The central or local offices of some parastatals too, may be approached directly. Find out in which newspapers (or elsewhere) they advertise and whether they keep a database of preferred suppliers. If so, find out how you can get onto that database.
- For government tenders generally, always keep an open eye on the major national newspapers, your own local newspapers, and notice boards at government departments, post offices, police stations and elsewhere. If your business operates countrywide, you must of course also focus on the national sources of tender information. If your business is local, you concentrate on the local sources.
- Private Sector Databases: There are commercial services available which scan the business world for as many tenders as possible. They gather the information and sort them into categories. When you subscribe to their services, they send you the information on tenders available for your industry. It is very handy if you don't have time to phone around and scan all the newspapers and bulletins. There are a few such services available, such as Tenderscan and Sabinet. Tradeworld is probably the most comprehensive service. Subscription to their basic service costs over R500 per month at present.
There are a number of business support organisations that are equipped to help small businesses get access to tender information. They will also help you complete the tender documentation.
- They use the same sources of information that have already been mentioned here.
They collect information on current tender opportunities from national, provincial and local government.
- They also often subscribe to the Tradeworld database, but may not send that information to you directly (otherwise Tradeworld will go out of business). You will have to physically go their offices and get the information from them.
- To find out where your nearest tender advice centre is located, phone the seda National Information Centre on telephone 0860 103 703.
- Whatever you do, be proactive. Just because tendering information is supposed to be made available as widely as possible, it doesn't mean that it will come to you automatically. Apart from keeping a keen eye on newspapers and the Tender Bulletin, you need to apply the age-old business principle of networking. Stay in contact with the government buying offices that put out the most appropriate tenders for your business. In that way you can proactively stay informed about coming tenders.
Classification of Tenders
Goods and Services
- For tenders under R30 000, the relevant government department will usually just approach three registered providers for a quotation. This is why it is so important to get your business registered on their database!
- Tenders of more than R30 000 must generally be advertised to all providers, even those not listed on the register.
- Large tenders (usually over R200 000) must be advertised and formally adjudicated by one of the Tender Boards.
Building and Engineering Tenders
- Tenders of over R2 million are classified as major and will be widely advertised as well as formally adjudicated.
- Tenders below R2 million usually classed as minor.
- Tenders of under R100 000 are considered micro.
You have the information, what now?
Finding the tender information that is right for your business is only the first step. You now have to:
- Complete the tender documentation
- Make sure that your business is properly registered and licensed and that your taxes have been paid; and
- Be quite sure that you, your staff and the business itself are able and capable of completing the tender on time and according to specifications.