An Introduction to Tendering Terminology in Australia
For businesses looking to secure government and private sector contracts, understanding the various tender types and terminology is essential. This brief guide breaks down the common tender opportunity types you'll encounter on TenderHub and explains the key differences between them.
What is a Tender?
At its most basic, a Tender is a formal invitation for suppliers to submit offers to provide goods or services. Tenders are widely used by government agencies, local councils, and private companies to ensure they receive competitive proposals that meet their specific requirements.
Tenders often require a significant investment of time and effort by buyers to carefully explain their requirements, and so are often of higher value than typical day-to-day transactions.
Common tender types explained
Request for Tender (RFT)
A Request for Tender is a formal, structured invitation to suppliers to submit a bid to supply products or services. RFTs are typically used when:
- The requirements are clearly defined
- The evaluation criteria are established
- Price is a significant factor in the decision-making process
RFTs generally require comprehensive responses addressing specific criteria and often include detailed pricing schedules.
Request for Quote (RFQ)
A Request for Quote is similar to an RFT but is generally used for more straightforward purchases where price is the primary consideration. RFQs:
- Focus on obtaining competitive pricing for clearly specified goods or services
- Generally involve simpler submission requirements than RFTs
- Are often used for purchases below certain financial thresholds
Request for Information (RFI)
An RFI is used when an organisation needs to gather information about available products, services, or solutions. Unlike RFTs and RFQs, an RFI:
- Generally does not request pricing nor does it constitute a commitment to purchase
- Helps organisations understand market capabilities
- Often precedes a more formal tender process
- Allows suppliers to showcase their expertise and solutions
Expression of Interest (EOI)
An EOI is an initial step in a multi-stage procurement process. It:
- Invites potential suppliers to express their interest in a project
- Requires suppliers to submit information about their capabilities and experience
- Can be used to shortlist suppliers who will be invited to participate in a subsequent RFT or RFQ
- Helps organisations assess the market before proceeding with a formal tender
Select Tender (or Selected Tender)
A Select Tender is issued to a limited number of pre-identified suppliers rather than being openly advertised. This approach:
- Targets suppliers with known capabilities
- Reduces the administrative burden of evaluating numerous responses
- May be used for specialised requirements with limited supplier options
- May be subsequent to a prequalification process
Select Quote (or Selected Quote)
Similar to a Select Tender but typically for lower-value purchases, a Select Quote is sent to a small number of preselected suppliers.
Future Opportunity (or Advance Tender Notice)
A Future Opportunity provides advance notice of an upcoming tender process. These notices:
- Alert suppliers to potential future contracts
- Allow businesses to prepare resources and capabilities
- Do not include detailed specifications or request submissions
- Help organisations gauge market interest
Approach to Market (ATM)
Approach to Market is a generic term describing any method used to solicit offers from suppliers. It encompasses:
- All forms of tender processes (RFTs, RFQs, EOIs, etc.)
- Various procurement methods that involve seeking market responses
- Both open and limited tender approaches
Panel Arrangement (or Common Use Arrangement)
A Panel Arrangement (or Panel Contract) establishes a group of prequalified suppliers who can provide goods or services for a set period of time (usually several years). Key features include:
- Suppliers are evaluated once for inclusion on the panel
- Work is allocated through streamlined processes (often competitive requests among panel members)
- May operate for several years with or without new application periods
- Reduces procurement time for routine or recurring needs
Standing Offer Arrangement
A Standing Offer is an agreement with suppliers to provide goods or services under predetermined terms and conditions. Standing offers:
- Generally do not guarantee any purchase volume
- Allow organisations to quickly procure items as needed
- Typically have set pricing and delivery terms
- May be established with multiple suppliers
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