TOPIC 7.

INTERNATIONAL
TENDERS
7.1 Distinctive features of commercial tenders. 7.2. Stages of commercial tenders. 7.3. Advantages and disadvantages of international tenders.

7.1 DISTINCTIVE FEATURES OF COMMERCIAL TENDERS.

Import

auctions (tenders) - are initiated directly by importers or by specialized companies and has the main aim building and assembling complex objectives, equipment, installations etc.

The legal framework of international tenders consists of: - Regulations of the institutions that fund industrial objects awarded by this technique (IBRD, EBRD, etc.). - GATT-WTO rules in this area - National regulations in the field of auctions

PRINCIPLES OF BUYING THROUGH AUCTIONS:

efficiency principle - minimizing costs following the implementation of projects; The cooperation principle attracting in competition bidders from as many as possible countries and increasing cooperation among them in several areas (especially in consortia); Non-discrimination principle - refers to conditions relating to tendering; The principle of preferential treatment allows to encourage local or nearby areas bidders.
The

7.2. STAGES OF COMMERCIAL TENDERS. Announcement of tender II. Prequalification of bidders (tenderers) III. Development and distribution of the specification books IV. Development and submit of bids V. Opening, evaluating and awarding tenders
I.

I. ANNOUNCEMENT OF TENDER
Should fulfill the following conditions: to be addressed to a wider circle of potential suppliers; To provide them with a minimum of information strictly necessary to awaken interest and to enable evaluation of opportunities to participate in auctions; To be launched well in advance as to enable the drafting of tenders (redactarea ofertelor). Depending on the complexity of the object, each auction is announced 2-4 months before. Announcement is made by: publication in international media (in case of open tendering); sending invitations through embassies or trade

I. ANNOUNCEMENT OF
TENDER
An announcement should be clear, concise and comprehensive, so as to include: The auctions object, deadline of delivery or commissioning it (punere in functiune); Its initiator (tenders organizer); Place, date and time of the tender; The amount and how to submit guarantee for participation; Location (address) where you can get the specifications (caietul de sarcini) and its cost; The date until bids are received by the organizing company.

II. PREQUALIFICATION OF BIDDERS (TENDERERS)

This procedure is used for high value contracts and increased technical complexity, in order to engage in competition only performance bidders. Pre-qualification process is based on the following criteria: a. experience and performances in executing previous contracts in this field; b. technical capacity expressed by availability of patents and know-how; c. financial situation; d. quality of staff and management.

II. PREQUALIFICATION OF
BIDDERS
1.

2.

3. 4.

Prequalification is done according to several principles: Sending to potential bidders, either separately or inserted in the specification book, a set of performance criteria that the bidders must describe: Training and technical capacity; Information required on the financial, commercial capacity; Financial guarantees etc. Any conditions for participation required of suppliers will be equal to all participants; Are consider qualified all suppliers that meet the participation conditions for the proposed auction; At the prequalification stage are excluded those suppliers that are subject to bankruptcy or transmitted erroneous information.

III. DEVELOPMENT AND DISTRIBUTION OF THE

SPECIFICATION BOOKS

specification book ( Spec) is the most important tendering document, fulfilling the function of call (request ) for tenders. Specifications development can be done by specialists from the auction organizing company or, in the case of complex objectives, by consulting-engineering firms.
The

Specifications include: Name and detailed description of the good that maker the object of the tender; contract conditions; instructions to tenderers etc.

THE SPECIFICATION STIPULATES THREE CATEGORIES OF CONDITIONS:

1.

2.

Technical - include data regarding the auction defined by capacity, quality characteristics, the main components of plants, working papers, technical assistance and service provided, sources of raw materials, utilities, weather data, etc. A special attention is given to framing of technical requirements in the provisions of international standards, which simplifies the application preparation of the supplys technical component and reduce the dependence on a limited number of bidders. Commercial - refers to time and place where bids will be shipped, buyers options on terms of payment and preferences for certain payment facilities, conditions and terms of delivery, shipping and insurance, the method of reception, price escalation method etc.

THE SPECIFICATION STIPULATES THREE CATEGORIES OF CONDITIONS: 3. General - refers to a set of rules of procedure: firms accepted (as pre-qualification criteria), the language in which tenders will be prepared and negotiations will be held; date, place and time of bids opening; the period of validity; the right of organizers their to reject all bids or to provide separate contracts for different parts of the goods and services that make the object of the auction; confidentiality of tender evaluation procedure, the method of disputes solving; address for further information and other useful instructions etc bidders.

IV. DEVELOPMENT AND SUBMIT OF BIDS

Tenderers prepare and submit bids based on conditions and time limits in the specification. The main elements of the bid, usually, are: a. invitation, which certifies the right to take part in the auction, and the original bid document or evidence that this document was bought by the tenderer; b. technical offer; c. commercial offer; d. guarantees in the requested form and amount; e. a series of additional documents on:  technical equipment and personal achievements of the previous offer,  certificates on financial status,  certificates of satisfactory execution,  statement on own responsibility and specimen signatures and stamps of empowered persons.

TECHNICAL OFFER
includes data on: Detailed description of the bids object; The technical documentation which stand at the basis of bid drafting; References to technical expertise of the supplier or manufacturer; Information concerning the supply of know-how that will be granted; Lists of equipment, complementary parts. When supplier is not the manufacturer of products offered, to the technical offer must be attached a guarantee granted by a bank through which it undertakes to finance the production of that good in case of award, plus a commitment of the manufacturer, guaranteed by a bank or a another company profile, to deliver without delay and restriction the contracted product.

COMMERCIAL OFFER
contains elements of: Delivery terms; Delivery time for each consignment or deadlines for each stage of technological process; The price proposed; Currency (currencies) for settlement; Payment methods and tools; Payment terms; Condition of packaging, transport, insurance and shipping; The validity of the offer. The offer, as a whole, is considered to comply with the tender documents if the content has all the elements required and has no significant changes or deviations from their content.

COMMERCIAL OFFER

In accordance with the regulations in some countries, the bidder may provide better conditions than in the specifications or to submit two variants: one being accomplished strictly in conformity with the specifications and another as the bidder wants, with the explanation regarding the additional benefits of the alternative provided by him. Bids may be submitted directly by the bidder, through dealers or brokers and commercial correspondence. In the case of tenders for construction of complex objects, companies may participate together by creating a consortium, presenting a joint, more

PARTICIPATION BOND GUARANTEE

Registered contractors are usually required to furnish a bond for a stipulated sum as security or earnest money deposit to be adjusted against work done. represents, typically, 1-5% of the auction and may consist of cash, letter of guarantee, shares, interest-bearing debt securities. To obtain a bank guarantee is paid a comision of 2-8% of its value. is a condition of participation that express firmness and seriousness of the tender offer and ensure the auction organizers that the offer will not be withdrawn before the time of adjudication. Participation Fee - is calculated as a percentage of the offers estimated value .

V. OPENING, EVALUATING AND AWARDING

TENDERS
For opening, evaluation and adjudication of tender offers, it is created a panel (commision) of: Representatives of the organizer; Representatives of the beneficiary; Specialists and experts in various fields; Representatives of international co-financing organizations; Government representatives. Before opening of tenders, the commission checks the technical capacity proves, economic guarantees and validity of submitted bids. In accordance with GATT regulations, opening of bids is made in the presence of qualified bidders or their representatives, or of impartial witnesses (martori impartiali).

V. OPENING, EVALUATING AND AWARDING

TENDERS

In an open bid or tender system, a double envelope system may be used. The double envelope system separates the technical proposal (statement of work) from the commercial or cost proposal in the form of two separate and sealed envelopes. During the tender evaluation, the technical proposal would be opened and evaluated first followed by the financing (commercial) proposal. The objective of this system is to ensure a fair evaluation of the proposal. The technical proposal would be evaluated purely on its technical merits and its ability to meet the requirements set forth in the Invitation without being unduly skewed by the financing proposal.

V. OPENING, EVALUATING AND AWARDING TENDERS

In terms of commercial offer, the main target element is price - the main criterion of bids analysis and evaluation. The decision to award, the tender price will be taken into consideration only with a complex of other criteria, such as: Costs of transportation till the place of project implementation; Terms and conditions of payment The extent to which service and spare parts is ensured; The extent to which local firms are trained in the execution of parts or operations; Credit conditions.

V. OPENING, EVALUATING
TENDERS

AND AWARDING

Based on the minutes (proces verbal) of award, the winning company is notified in writing, about the decision adopted and the date when negotiations to sign a contract begin; Along with Winner, award decision shall be made known to all participants, either by publication of a final report in specialized media (open call) or by explicit communication (closed auctions). After announcing the result, bids and participation guarantees are returned to all the companies that lost the tender, but the winning company must announce its intention to contract and present its bond performance guarantee.

ADVANTAGES OF IMPORT AUCTIONS:

For the importer: Enable concentration of a greater number of comparable bids (offers) in a short period of time; Market research, negotiation, contracting and execution of the operation is done with much lower costs compared with other transactional techniques; Increase the import guarantees efficiency by obtaining of high quality products at competitive prices; Give the possibility to rigorously control and monitor the acquisitions in terms of quality and efficiency; Stimulate domestic economic activity and currency savings by involvement of local firms as representatives or subcontractors.

ADVANTAGES OF IMPORT AUCTIONS:

For the bidders (suppliers): A better understanding of the technical and qualitative performance of competing products and on the international and national market; Allow a better understanding of business practices from the beneficiary country; A greater objectivity in determining the best offer and assess the real competitiveness level; The possibility to enter into cooperative or undersupply relationships with the winning companies or to enter into joint tender mechanism; Commercial prestige acquired by winning the auction, which advertises the company for free.

IMPORT AUCTIONS DRAWBACKS:

For bidders: Expenditures linked with: - the specification book acquisition; are recovered only in the case of winning - drawing up tenders, the auction - participation guarantees, - Participation fees For organizers: expenditures linked with are justified only in the case of high value - development and publication of the contracts, the price of specification book; which is established as result of - Advertising expenses; competition - Other organizational expenditures

TOPICS FOR REPORTS

1. International tenders: opportunities, prospects, advantages a case study 2. Organizing and conducting tenders in Moldova.