Issue Date: 
Thursday, August 16, 2018

7 Disadvantages of Competitive Bidding

The bidding process can be very tedious sometimes. Here are some of the disadvantages of the bidding process.

1.    Leading suppliers may not tender

In Australia, for example, government procurement guidelines only allow suppliers who actually tender to be considered for a procurement decision. If the leading supplier or suppliers do not tender, the purchaser can only consider bids from suppliers who do tender. If leading suppliers are not considered, the purchaser may end up buying inferior product or service.

2.    Barriers to communication between supplier and customers

When making significant purchases, frank and open communication between potential supplier and customer is crucial.
Competitive bidding is not conducive to open communication; in fact, it often discourages deep dialogue because in many cases all discussions between a bidder and the purchaser must be made available to all other bidders. Hence, Bidder A may avoid asking certain questions because the questions or answers may help other bidders by revealing Bidder A's approaches, features, and the like.

3.    The cost-plus phenomenon

There is a bear-trap in the purchase of goods and services on the basis of price tag that people don't talk about. To run the game of cost plus in industry a supplier offers a bid so low that he is almost sure to get the business. He gets it. The customer discovers that a change is vital. The supplier is extremely obliging, but discovers that these changes will double the cost of the supply. The supplier runs the risk of making a loss on the contract.

4.    Use of cheaper, poor quality materials and/or labour

A supplier forced to play the competitive bidding game may come under pressure to keep costs down to ensure he gets a satisfactory profit margin. One way a supplier can lower costs is by using cheaper labour and/or materials. If the cheaper labour and materials are poor quality, the customer will often end up with inferior, poor quality goods or services.

5.    Safety shortcuts

Another area where suppliers may be tempted to lower costs is safety standards. Safety costs can ran away with a contract. Cutting down on safety costs is a sure way to keep the bidding price low.

6.    Competitive bidding can be extremely slow

When Organs of State, and indeed, private companies use competitive bidding it can take sometimes years to award the bid. The result is the customer can wait incredibly long periods for goods or services that may be required quickly.

7.    Insufficient profit margin to allow for investment in research and development, new technology or equipment

Competitive bidding can force a supplier to accept a very slim profit margin. These low margins can result in a supplier having little or no money to spend on research and development, new technology and equipment.

To learn more about this and many other tender conditions please attend one of our How-to-Tender workshops. For more information on the tender courses please email Werner at

This article was written by Werner van Rooyen, Director of HowToTender (Pty) Ltd. which specializes in tender consulting and tender training.

Title Closing Date Tender No.
Supply and delivery of high voltage portable earthing gear and insulating earth sticks during a 24- month period. 2018-11-23 11:00 E.9596
Spindle M20 With 220mm Shank Length Half Or Fully Threaded For Ep 472 - 22kv Insulator 2018-10-26 11:00 SQ10181289
Rental of landfill compactor for the period: 29 October until 31 December 2018 2018-10-26 11:00 12345
Design, manufacture, testing, supply and delivery of distribution transformers during a 36-month period. 2018-11-16 11:00 E.9597
National Certificate: Water and Waste Water Process Control NQF 3, SAQA ID 60190 Learnership 2018-10-25 12:00 162/2018/19
Lugs Aluminium Copper Friction Welded For AAAC Almond Cond. 2018-10-29 11:00 SQ10181290
Establishment of panel of service providers for the supply and delivery of alcoholic beverages to Moses Mabhida Stadium, by quotation, on an as-when required basis, for a period of 36 months. 2018-11-16 11:30 MMS-509
Fuse Link 40 Amp (Universal Removable Button Contact With Washer) Type K. 2018-10-29 11:00 SQ10181290
Line Post Spindles Mild Steel Galvanised 91 X 20, Dia Part No. 20-1 And Hardware 2018-10-29 11:00 SQ10181290
Twin Ties for Pine AAAC Conductor PLP TYPE (ATT426) ONLY. 2018-10-29 11:00 SQ10181290
Appointment of service provider/s to provide catering services (Corporate) to the RTMC for a period of three years. 2018-11-12 11:00 RTMC BID 16/ 2018/ 19
Glands Cable No. 2 Complete With Shrouds SABS 1213. 2018-10-26 11:00 SQ10181285
Supply and delivery of Tactical Telescope Baton, handcuffs and pepper spray 2018-10-25 12:00 168/2018/19
Nelson Mandela Museum seeks the services of a suitably qualified, professional, experienced and competent service provider to render Company Secretarial Services to the Council and Sub-Committees for a period of two years (24 months). 2018-11-14 12:00 NMM 2018- 10
Padlock Meter Room Engraved N.M.B.M. Elect. S.E.F.H. With 8mm Hardened Stainless Steel Shackles Master Keyed Union 50mm (+ 2 Master Keys To Be Supplied) 2018-10-26 11:00 SQ10181285
Flux For Soldering Non Toxic 2018-10-26 11:00 SQ10181285
Policy Development and Management at NQF 5 2018-10-25 11:00 163/2018/19
Earth Fault Indicators. To Fit Over 27 - 70 Mm , 8 - 80 Mm, 5 - 90 Mm. 2018-10-26 11:00 SQ10181285
Customer Service Programme aligned to Unit Standard 242829 NQF 4 2018-10-25 12:00 164/2018/19
Tenders are invited to Supply, Deliver,Instal Lation And Configuration of the SQL Server 2018-10-30 11:00 CSQ10181458


Advantages and disadvantages of Consortiums

Consortiums are often considered as entities to use when responding to tenders in South Africa. The question that arises is whether to use a Consortium or a Joint Venture when responding to a tender. To help you with this we have compiled a list of advantages and disadvantages for both Consortiums as well as Joint Ventures. In this article we list the advantages and disadvantages of Consortiums. Look out for the same article on Joint Ventures.

Consortiums Advantages:

  • Easy to establish as there are no formal procedures... Read More
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