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Tender fees: Supplier abuse?

Are suppliers being abused by high tender document fees?

Two years of data from our tender notification service reveals some interesting facts on the practice of charging suppliers for access to tender documents. These fees can range from zero to tens of thousands of rands. There seems to be little consistency even within the public sectors of the countries analysed. 
Tender fees originated to cover document production costs and to discourage ambitious suppliers from simply collecting tender documents with no real intent to submit a bid.

Electronic tenders should be free

Although today many tenders are downloadable from the internet or provided on CD electronically, the practice often still remains to charge a non-refundable document fee - even when document reproduction is now virtually free. Lesotho currently leads the pack with 50% of tenders from that country being available at no cost. This is followed closely by South Africa with 46% and Swaziland on 34%.  In Botswana tender documents will affect your pocket with only 8% attracting no fee.


Fair price

Tenders in Botswana are generally fair and realistic though with 64% costing P250 or less. South Africa tops that with 76% being available for R250 or less and in Namibia 56% of tenders cost N$250 or less. Swaziland follows on 49%

In South African municipalities costs are mostly quite low and there is clearly a formula used to calculate costs rather than a flat fee e.g. R167.48 for a particular tender document.  This gives the indication that the fee may be based on actual costs which makes the it more palatable to a supplier.  One would feel a lot better about paying such a fee than a flat R20 000 for a document.

Rip-off

The concern comes in where tenders cost more than reproduction costs. Suppliers should not foot the bill for drawing up specifications or the cost of a sourcing process.  They have their own expenses to be concerned about and often responding to a tender incurs heavy costs.  In South Africa we have found 39 tenders topping R10,000 during the review period.  The most expensive tender in Botswana cost P10,000 with only 7 costing P5,000 or more. Namibia is the country with the least exorbitant prices with their most expensive tender going for N$3000.

Some reasons for high tender prices

  • Generate revenue - charging a very high fee means a significant portion of project funding can be generated through the tender process. (Not very ethical.)
  • Discourage smaller bidders - ensure that credible companies with existing revenue and track record respond without confusing the award with incapable suppliers. (Not very ethical.)
  • Discourage opportunistic bidders - a high tender fee is used as a gate to keep opportunists out and limit the number of responses to be analysed.  (Not very ethical.)
  • Fraud by bogus procurement organisations - be aware of such organisations and try to verify credentials of any customer prior to submitting a bid. (Criminal.)

While the origin of tender fees can be understood, we believe that all tender should be distributed electronically and all tenders should be free.

What has your experience been with tender prices / document fees? Do you believe all tenders should be free? Share your opinion in the comment box below.

About MarketSqr Tender Notification Service

Subscribers get daily e-mail notifications for tenders in their line of business. MarketSqr consolidates tender notification information from tender portals, tender bulletins, newspapers and web sites every day. This information is then filtered and a summary is e-mailed to subscribers every morning. If subscribers follow a tender they are interested the important dates relating to the tender will be added to the subscriber’s Tender Calendar. Tenders can be accessed via the website or any mobile device.

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