To Bid or Not to Bid: A Checklist Before You Spend on a Tender

Every bid costs something. There is the document fee, the hours of staff time, the bank charges for the security instrument and, if you win, the commitment to perform. Firms that bid on everything usually win a little of everything and lose money on the jobs that did not suit them. Firms that pick their tenders spend less and win more of what they chase. A short, honest bid or no-bid review is how you make that choice.

Why a bid or no-bid decision pays

A tender is not free to enter. A serious bid can absorb days of work from the people who would otherwise be earning revenue or delivering existing contracts. Winning the wrong contract is worse: a job that is too large, too far away or priced too tightly can drain cash for months.

The aim of the review is not to find reasons to say no. It is to put the same questions to every tender, so the decision is made on facts rather than on how exciting the contract value sounds. Do it before you buy the bidding documents where you can, and certainly before you commit your senior people.

1. Eligibility: the hard gate

Start with the questions that can end the discussion immediately. Under the Public Procurement Rules, 2004 and the provincial rules, a bid is evaluated only on the criteria in the bidding documents, and a mandatory requirement is applied as written. If you cannot meet it, the bid will be set aside before anyone looks at your price.

• Registration — the right PEC category for works and consultancy, or the licence or registration the notice names.
• Tax status — NTN, active taxpayer status and sales tax registration where required.
• Experience — the number and size of similar completed contracts the notice asks for, and whether you can evidence them.
• Financial thresholds — minimum turnover, bank statements or audited accounts.
• Blacklisting and conflict declarations — you must be able to sign them honestly.

If any mandatory item is a clear no, stop here. Do not count on a relaxation. Our guide to why bids are rejected shows how often an unmet gate is the real reason for a loss.

2. Capacity to deliver

Meeting the paper requirements is not the same as being able to do the work. Ask:

• Do we have the people, equipment, vehicles or stock to deliver on this timeline, alongside our current commitments?
• Is the location workable? A site or delivery point far from your base adds cost and supervision risk.
• Do we have the specific technical skills, or are we depending on a partner we have not yet confirmed?
• If we win two similar tenders in the same month, can we still deliver both?

Be careful with promises of key personnel. Some bidding documents require named staff whose CVs are scored, and you may be held to them. Naming people who have not agreed to work on the job is a risk that surfaces after award.

3. Cash flow and guarantees

Cash is where many otherwise capable firms get hurt. Work through the money honestly:

• Bid security. The notice states the amount and the acceptable form. Money is tied up until the security is returned or released. See bid security and earnest money for how it works.
• Performance guarantee. If you win, you will usually provide further security before or at contract signing. Find out the requirement now, not at award.
• Working capital. For supply and works contracts you often pay for materials, wages and transport before you invoice.
• Payment delays. Government payments can take time to process, and invoicing steps such as measurement, certification and approval add to the gap. Read the payment terms in the draft contract, and check what you can afford if payment arrives well after the due date.
• Taxes withheld. Withholding taxes reduce the cash you receive at each payment, so price and plan accordingly.
• Price movement. If the contract has a long period and no price adjustment, rising input costs fall on you.

A useful test: if the buyer paid your first invoice three months late, would you still be able to pay your staff and suppliers? If the honest answer is no, either reduce the size of what you chase or arrange financing before you bid.

4. Competition and your edge

You cannot know who will bid, but you can estimate. Consider:

• How large and specialised is the contract? Highly specialised or very large jobs usually attract fewer qualified bidders.
• Is it a commodity supply? Then price decides, and you need to be confident you can win on price and still earn a margin.
• Do you have a real advantage: local presence, a manufacturer's authorisation, relevant past work with the same buyer, or a specialist team?
• If evaluation includes technical scoring, can you score well on the stated criteria, not just on general quality?

If you cannot name one reason the buyer should pick you over a dozen similar firms, you are bidding on hope. That is sometimes acceptable for a low-cost bid, but not for an expensive one.

5. Buyer history and risk

Not all buyers behave the same. Before you commit, learn what you can about the procuring agency:

• Does it publish clear documents and answer clarification questions, or are its tenders full of gaps and repeated corrigenda?
• Has it cancelled and re-advertised similar tenders before?
• What do other suppliers say about how promptly it pays and how it handles variations and disputes?
• Does it announce evaluation reports and award decisions as the rules require?

Past awards help here. Look at who won the buyer's earlier contracts and at what scale, since that tells you what the agency considers normal. If you can only get a handful of hearsay comments, treat them as hints, not facts. Do not rely on rumour alone to reject a good opportunity.

A simple scoring sheet

Turn the five questions into a one-page score. Give each a mark from 0 to 5, with eligibility acting as a pass or fail rather than a score:

1. Eligibility — pass or fail. Fail means no bid.
2. Capacity — can we deliver without stretching existing work?
3. Cash flow — can we carry the security and the payment delay comfortably?
4. Competition — do we have a real edge?
5. Buyer — is the agency fair, clear and reliable?

Agree your own threshold in advance, for example that you bid only when no category scores below 3. The numbers are yours; the value is that the same sheet is applied every time, and that it is filled in by someone who is not already excited about the contract.

How to walk away well

Saying no is part of the process, and it is cheap if done early. Record the reason in one line so you can learn from it: "needs C-2, we hold C-4", "payment terms unaffordable", "specification favours one brand".

A no-bid is not a final no. If the same buyer issues similar tenders, a note about the missing item tells you what to fix. Perhaps you need an extra completed project, a higher registration category or a partner for the next one. Those notes also help when you consider a subcontract role on a job that is too large to bid as prime.

Finally, give yourself time. Most mistakes come from deciding at the last minute. If you see the tender early, you can reach the decision calmly, and if you do bid, you have time to prepare properly. A daily list of new notices, such as PakistanTender's morning email, which collects tenders from e-PADS, provincial authorities, newspapers and buyers' websites, helps you decide early rather than on the final day.

The bid or no-bid checklist

1. Every mandatory eligibility requirement is met and can be evidenced.
2. We have read the evaluation criteria and the draft contract, not just the notice.
3. We can deliver on the timeline without damaging current commitments.
4. We know the bid security amount and form and the likely performance guarantee.
5. Our cash flow survives a long payment delay.
6. We have a clear reason to expect to compete well.
7. The buyer's record on clarity and payment is acceptable.
8. The margin remains worthwhile after taxes, guarantees and financing costs.
9. We have the time and the people to prepare the bid properly.
10. The decision and its reasons are written down.