The Impor­tance Of A Request For Tender

Issu­ing a request for ten­der (RFT) is more than just secur­ing the best or low­est price.

An RFT is your oppor­tu­ni­ty to man­age your project risk and to ensure your project is com­plet­ed on time and with­in bud­get. Your RFT defines the rules of the game (ten­der process) and the final des­ti­na­tion (the con­tract to be entered into).

If your RFT if not cor­rect­ly word­ed, your RFT might inad­ver­tent­ly cre­ate a process con­tract which you are bound to fol­low¹. Ensure you include a dis­claimer clear­ly stat­ing no legal rela­tion­ship is formed until a for­mal con­tract is signed and the RFT is an invi­ta­tion only.

A poor­ly pre­pared RFT may lead a dis­grun­tled unsuc­cess­ful ten­der­er to argue you failed to fol­low your own rules, might result in mis­lead­ing con­duct claims, and can lead to pro­tract­ed con­tract negotiations.

What should your RFT include?

• Notice of ten­der set­ting out gen­er­al infor­ma­tion on how to pre­pare and lodge ten­der responses
• Con­di­tions of ten­der­ing, includ­ing when ten­ders close, how to sub­mit, valid­i­ty peri­od of sub­mit­ted ten­ders, the ten­der eval­u­a­tion cri­te­ria, the principal/client is not bound to accept the low­est bid, or any bid and the principal/client may accept a non-con­form­ing tender
• Draft contract/general con­di­tions of con­tract and con­tract par­tic­u­lars with project spe­cif­ic infor­ma­tion eg liq­ui­dat­ed dam­ages, defects lia­bil­i­ty peri­od, licence and insur­ance require­ments, security
• Spec­i­fi­ca­tion and scope of works, includ­ing any rel­e­vant drawings
• Bill of quantity
• Ten­der return­able form/schedules
• Specifics on the pay­ment cycles con­sid­er­ing the Build­ing and Con­struc­tion Indus­try Secu­ri­ty of Pay­ment Act 1999 (NSW)
• Oth­er spe­cif­ic project doc­u­ments eg mod­ern slav­ery dec­la­ra­tion, sup­pli­er code of conduct

Why is hav­ing a refined request for ten­der (RFT) and pack­age of doc­u­ments ben­e­fi­cial to all parties?

• Prin­ci­pal retains con­trol the con­tract terms and oth­er doc­u­ments which the con­trac­tor or con­sul­tant will be bound to
• Pro­vides clar­i­ty for ten­der­ers on require­ments to com­plete the works or ser­vices, and price accordingly
• Reg­u­lates the ten­der process and keeps it con­sis­tent until finalisation
• Prin­ci­pal can quick­ly cross com­pare and eval­u­ate tenders

What to do before issue your RFT

• Clear scope of works/services
• Detail the prin­ci­pals require­ments and project objectives
• Designs (Reg­u­lat­ed Designed under the Design and Build­ing Prac­ti­tion­ers Act 2020, if required), draw­ings and specifications
• Clear ten­der terms and conditions
• Draft con­tract for the works/services to be car­ried out, includ­ing project spe­cif­ic pro­vi­sions and com­plete con­tract information

Typ­i­cal Ten­der Process

• RFT
  • Invi­ta­tion to tender
  • Ten­der terms and con­di­tions, includ­ing con­fi­den­tial­i­ty if applicable
  • Back­ground infor­ma­tion on the project and site
  • Ten­der doc­u­ments which must include the draft contract
• Receive ten­der respons­es and reply to any clarifications
• Assess ten­der respons­es and pro­vide sum­ma­ry and rec­om­men­da­tion to the principal
• Pro­vide feed­back to the suc­cess­ful ten­der­er and com­mence nego­ti­a­tion of contract
• Nego­ti­ate depar­tures, amend con­tract and issue for execution
• Com­mence the project works or services

Pri­ma­ry considerations

• Does the ten­der­er have the inter­nal resources, or sub­con­trac­tor net­work to deliv­er the project
• Does the ten­der­er under­stand your project and the site
• Does the ten­der­er intend to claw back and gain its prof­its through vari­a­tions, com­pens­able caus­es, or latent con­di­tions claims
• Will poor deliv­er­ables result in expen­sive defects or expen­sive main­te­nance in future
• Lack of detail in the pric­ing breakdown
• Defects lia­bil­i­ty peri­od being truncated
• Unrea­son­ably carv­ing out / lim­it­ing liability
• Suf­fi­cient insur­ance cover
• Delay dam­ages / liq­ui­dat­ed dam­ages amount
• Pro­vid­ing ade­quate security

Swaab's con­struc­tion law team have spe­cial­ist exper­tise in prepar­ing RFT, admin­is­ter­ing the ten­der process, prepar­ing con­struc­tion con­tracts and con­tract admin­is­tra­tion. Let us assist you to com­plete your project on time and in bud­get. For Swaab's check­list on a RFT doc­u­ment pack­age, refer below:

RFT doc­u­ment pack­age checklist:

☐ Invi­ta­tion to ten­der letter

☐ Con­di­tions of tendering

☐ Pro­posed con­tract to be used for the project

☐ Scope of works, includ­ing tech­ni­cal infor­ma­tion, spec­i­fi­ca­tions and drawings

☐ Project spe­cif­ic doc­u­ments eg geot­ech­ni­cal report, asbestos reports, her­itage requirements

☐ Return­able schedules/forms eg ten­der form, price sched­ules, insur­ance cer­tifi­cates, WHS policies/plans, statu­to­ry dec­la­ra­tions (con­flicts of inter­est), project cre­den­tials (key personnel)

☐ Con­fi­den­tial­i­ty pro­vi­sions (if applicable)

☐ Non-col­lu­sive ten­der dec­la­ra­tion (if applic­a­ble and depend­ing on project size)

☐ Con­flict of inter­est declaration

☐ Com­pli­ance state­ment (con­form­ing/non-con­form­ing tender)

☐ Ten­der admin­is­tra­tion eg ten­der query reg­is­ter, adden­da reg­is­ter tem­plate (for­mal track­ing on respons­es to ten­der clar­i­fi­ca­tions), adhere to ten­der rules and dead­lines for receiv­ing tenders

Footnote

1 Hugh­es Air­craft Sys­tems Inter­na­tion­al v Airser­vices Aus­tralia (1997) 76 FCA 558.

For further information please contact:

Helen Kow­al, Partner
Phone: +61 2 9777 8321
Email: hek@swaab.com.au

For further information please contact:

Michael Byrnes, Partner
Phone: + 61 2 9233 5544
Email: mjb@swaab.com.au

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.