How does e-tendering improve pricing?

Equal information is a pricing mechanism, not just an ethics one

A clarification answered privately to one bidder does two things at once. It creates a protest vector. And it guarantees that one of your bidders is pricing a different job from the others — which means their number is not comparable with anyone else’s, whether it is higher or lower.

Anonymised questions, broadcast answers, numbered addenda, acknowledgement in the bid form. Every bidder priced the same job, and you can prove it. That is what makes the comparison mean something.

The cost of bidding is why good firms decline

A bid costs a contractor real money — on the order of 0.5% of project value, on the UK evidence. At a one-in-five win rate, that arithmetic is not favourable, and the firms best able to do the arithmetic are exactly the ones you wanted.

So anything that lowers the cost of participating widens the field of firms willing to participate seriously. That is a pricing effect, and it is the argument for four to six selective bidders rather than a long list: a long list does not buy you more competition. It buys you less.

And it makes the award defensible

The timestamp, the sealed submission, the addenda acknowledgements, the line-item comparison built from the vendors’ own pricing rather than re-keyed from PDFs at eleven at night.

None of that is glamorous. But it is the difference between an award you can defend and an award nobody can reconstruct.

Terms

• Tender