What to Know About a Request for Tender (RFT)
A request for tender (RFT) is defined by Investopedia as, “a formal and structured invitation to suppliers to submit competitive bids to supply raw materials, products, or services.”
But wait — isn’t that the same as a request for proposal or a request for quotation?
Not exactly. While there are many similarities between RFTs, RFPs, RFQs, and other RFx processes, requests for tender are unique in many ways. Let’s break down some of the unique aspects of RFTs to understand how, why, and when a procurement team might make this process work for your business.
What is a request for tender?
A tender is an invitation to bid for a project or to accept a formal offer. Tendering is a process commonly used by governments and financial institutions, as well as the public sector more broadly. “Tendering” is the term used to describe the process where vendors or suppliers submit bids for large projects by a specified deadline.
The request for tender kicks off a well-defined bidding process. Because tendering is typically an open, public process, there are laws in place to ensure fair competition. Strict rules govern the request for tender to enforce impartiality, transparency, and strong adherence to the evaluation criteria - which is broadcast before the deadline.
Unlike RFPs, it’s common to share an RFT on websites and third-party platforms like Alibaba. RFTs are also more detailed than RFPs in terms of the definition and description of the work that is required, but less detailed than RFQs.
[Read more: RFQ vs. RFP vs. RFI: What's the difference?]
When to use an RFT
RFT’s are best used when you have a procurement need that’s clearly defined and specific. If you need a very specific part or a material that must be of a specific quality, an RFT might make sense for your business.
Responses to RFTs are usually judged based on price and quality. Your organization must be ready to commit to the outcome of the RFT, meaning the vendor you select will be your supplier, barring disruption to your normal business operations. RFTs are a great procurement vehicle for when you know exactly what you want and don’t want to waste time screening, shortlisting, or negotiating between different inputs.
The downside to using an RFT is that it takes longer than an RFP or RFI to generate. Remember, the RFT process is meant to be transparent. Used by the public sector, you may be subject to certain compliance regulations when you issue an RFT. “RFTs will require a detailed evaluation which includes compliance and risks assessments, prior to determining the preferred tenderer and commencing a negotiation period,” wrote one Australian engineering company.
What to include in your RFT
Here are some things to consider as you craft your next RFT.
Provide clear instructions
Suppliers like that requests for tender are open and specific about what is needed. RFTs often remove some of the ambiguity from the bidding process. Your request for tender should strive to be clear about how recipients should respond and what information they should include. Share your deadlines, evaluation criteria, selection process, and consider adding a response form, too.
Follow legal requirements
RFTs are commonly used by government agencies. As a result, there may be some strict legal requirements regarding the openness and impartiality of your selection process. Be aware of these requirements and make sure that you have guardrails in place before you issue the RFT.
Use software to enhance the process
A tool like Fairmarkit can make it easy to view supplier bids and responses side-by-side to compare and reward your tender. From generating the RFT directly from our platform to reviewing bids and awarding the tender, everything happens in one centralized location. Multiple item RFx events can be awarded to one or more suppliers, and awarding in Fairmarkit can trigger Purchase Order processing in your ERP. The experience is streamlined for your procurement team and those who bid on your tender — ultimately improving the quality of your tender and final outcome.
To learn more about other RFx vehicles, check out our blog, The Source.