Understanding the Difference Between Tenders and Contracts

When dealing in government tenders, a key construct to understand is the difference between the terms tenders and contracts. While they are interchangeable and can be used, they have a thin line of difference and are important constructs while considering doing business using public procurement offers. In this article, we shall deep dive into the subtle yet important differences between the terms tenders and contracts.

Tenders and contracts form an important part of a public procurement process. A public tender or a business tender is a floated opportunity for vendors to supply their products/service to the public entity who floats the tender with specific requirements. Tendering is a term used for the process of inviting bids for a business who need to procure products or services within a specific deadline. Tenders can come in many forms such as an Invitation to Bid, Request for Information, Request for Quotation and even a Supplier Registration. All these forms of requests point out to the fact that the authority releasing it requires a product/service/goods to be purchased within a specific deadline and with specific terms. These terms and the technical specifications of the requirements are mentioned in the tender documents which is also considered to be the cornerstone of any project. The tender documents of business tenders can comprise of tender conditions, technical specifications, contract conditions, tendering procedures and legal conditions under which the authorities want to purchase. Each set of documents is intended for a specific purpose. For instance, the technical specifications are made only to carve out the technical requirements of the product/service to be purchased while the contract conditions refer to the commercial conditions of the offer. Once the documents are submitted through a tendering procedure, the documents become the contract documents. The tender documents can be obtained through a public procurement portal or through employing the services of a tender aggregator platform such as Tender Impulse. These platforms provide aggregated and customized information on tenders released from all over the world ensuring you do not miss out on potential market requirements.

Contract Documents:

The contract documents are prepared only after a contractor is chosen and the terms are finalized between the tenderer and the chosen company. The contract documents have a legal binding between the client and the contractor that outlines the roles, responsibilities and expectations of both the parties in a contract. Usually, a tender is followed by a contract and is very important for large tenure contracts whereby the work lasts for years. Contract documents comprise of an agreement, general conditions of the contract, drawings and specifications, performance bonds and financial guarantees, legal agreements between the two parties. The most important part of the contract documents is the commercial offer or the price at which the goods and services are agreed along with the promised scope of work as defined in the technical specifications of the tender document. Understanding the difference between tenders and contracts is essential as it gives a broader view of the happening in public procurement. Both the sets of documents are designed for specific purposes with different objectives and targeted content with specific scope and nature of the business undertaken. It is important that companies take note of these differences either via browsing the documents or by taking external help of a tender aggregator service. A tender aggregator service enables companies to understand and negotiate these documents and process them for increasing chances to succeed in international bids. Tender Impulse provides complete support in compiling the tender documents and preparing bids for international tenders. It also provides language translation support via which companies can understand the scope of work precisely and help them better prepare for international bids.

Differences Between Tenders & Contracts:

The major difference between a tender and a contract is the timeframe in which they are prepared. While a tender is floated with the sole intention of sourcing different suppliers and creating healthy competition, contract documents are only created once the tendering authority selects the company to offer its products/services. The focus of a tender is to gather quotations and understand market rates and new technologies while a contract binds them to a specific project and contains details of that project. A tender is not legal to any party since it is only an invitation to bid. The legal status changes only when the supplier agrees to supply the product/service if selected by the authorities and the responsibilities and deliverables are specified. A contract document has a legal binding and can be enforced in the court of law in the jurisdiction in which the tendering authority operates thus making it crucial to abide by its terms and conditions. It is a contract that is made binding on both the parties for successful completion of a project. Contract documents must be honoured by both the parties involved in order to ensure fulfilment of the proposed work.

To conclude, a tender document is a draft of the proposed work and is used to understand requirements of the buyer whereas a contract document is a legal binding document that accepts the clauses and the proposed work to be completed in the said duration of time. These differences must be cleared at the start and must not be misinterpreted for better coordination with the tendering authorities. It is also important for bridging relations between the buyer and supplier for formidable future relations. Some of the best tender websites such as Tender Impulse provide complete guidance on tenders and help companies in participating successfully in international government bids.