Procedure for accepting a tender

After the closing date for tenders, and if tenders have not been publicly opened, contractors  will be anxious to discover where they stand: either to prepare themselves for holding discussions over their tender, or to divert their energies elsewhere if they find themselves unlikely to be offered the contract.
If prices have not been arithmetically checked, it is inadvisable to give any information lest it turn out misleading. However, when the ranking of tenders has been checked, it should be possible to inform contractors enquiring if they are unlikely to succeed. Once a decision has been made by the employer, all tenderers should be informed by a standard letter, stating the prices received but not identifying the tenderers who submitted them.
A valid contract must incorporate three basic elements:
an offer (e.g. the tender) and its acceptance;
consideration (i.e. the contractor undertakes to construct the works and the employer undertakes to pay him for them);

an intent that the contract be legally binding (as evidenced in the contract documents).
During any negotiations the original tender may have been amended by interchange of letters. These letters must make clear what is the final amended tender offered and accepted. If the correspondence is not complete and some condition or qualification remains unsettled, then a contract should not be formed. So a check must be applied to ensure that everything has been settled.
Once this has been done and full agreement has been reached, then actual acceptance of a tender can take place.
In the case where an employer is a person or private company the employer can accept a tender by writing little more than I accept your offer.
However, some corporations, and most statutory or other authorities, may be required by their constitution or standing rules to enter contracts above a certain value only by a deed or formal agreement which has to be signed by an authorized person acting on behalf of the authority. Some authorities require the agreement to be under seal, that is, stamped with the corporate seal of the authority. Under any method, the acceptance must make clear what documents form the basis of contract.
Where a local authority can only enter a contract by means of a formal Agreement, a typical letter from the clerk of the authority to the contractor might be written as follows:

Dear Sirs,
Contract No. 64 for XYZ Scheme
I am pleased to inform you that my Council has resolved to accept your tender dated 4 January 1994 for the above contract. The contract will comprise the following documents:
1. Volumes 1 and 2 of the printed documents containing the Tender, Conditions of Contract, Specification, Schedules and Bills of Quantities all as completed by you.
2. Contract Drawings Nos. 145.
3. Tender Amendments Nos. 13 inclusive.
4. The following communications:
(a) Your covering letter of 4 January 1994 with enclosures 15 inclusive;
(b) Our letter to you of 10 January 1994;
(c) Your letter of 12 January 1994;
(d) This letter of acceptance.
The amended tender total is £123 456.00 as set out on the attached sheet.
A formal Agreement is being prepared and I shall be glad if you will advise me when you can call in to sign it.

Please now produce your Performance Bond and evidence of insurances as required under the contract.
Yours faithfully,
Clerk to the Authority

If an authority empowers its chief executive to accept a tender on its behalf, or a company allows its director to accept a tender, the letter can be a direct acceptance. However, if the authority or company is employing a consulting engineer to correspond with tenderers, then the consulting engineer usually has no authority to accept a tender, so he can only advise a tenderer that the authority or company have decided to accept his tender in terms similar to the above, or perhaps in the form On behalf of the ¦ or I am instructed by the¦Council to inform you that your tender is accepted, etc. Where acceptance of a tender is not possible for some time, for example, because it requires agreement from government or from some international funding agency, etc., a Letter of Intent can be issued by the employer. This states the employers intention to sign a contract and may therefore request the contractor to start on some aspect of the work. The Letter of Intent must state what work can be started, and how and what payment will be made for such work should the contract not be signed. There will also be a clause which provides for the Letter of Intent to become void upon signing of the contract. The contractor has to respond accepting the terms of the Letter of Intent. Usually the matter is discussed prior, so that the terms of the Letter of Intent are agreed before it is written. However, a Letter of Intent can prove full of legal pitfalls should anything go wrong, so it is best avoided. It can be useful, however, for authorizing a plant supply contractor to start producing designs and drawings of equipment he is to supply, that is, work which saves time but involves no large financial commitment.
A tender needs to be accepted within a reasonable time of its submission, otherwise a contractor may have grounds for withdrawing it. Sometimes the employer stipulates for how long tenders are to remain open for acceptance, or a tenderer may state this in his offer. A contractor is put in a difficult position when there is an unexpected delay in accepting his offer because, although he does not wish to lose a job, the delay can cause his costs to rise if prices are inflating or work he hoped to undertake in two summers and a winter is delayed to take place during two winters and a summer.


Publications giving guidance on tendering
Tendering for civil engineering contracts. ICE, 2000.
Tendering procedure: procedure for obtaining and evaluating tenders for civil
engineering contracts. FIDIC, 1982.
Standard pre-qualification form for contractors. FIDIC.


Appendix: UK Regulations
UK Statutory Instruments implementing EC Directives:
The Public Works Contracts Regulations SI 1991/2680 (implementing EC
Directive 93/37/EEC) as amended by SI 2000/2009*
The Public Services Contracts Regulations SI 1993/3228 (implementing EC
Directive 92/50/EEC) as amended by SI 2000/2009*
The Public Supply Contracts Regulations SI 1995/201 (implementing EC
Directive 93/36/EEC) as amended by SI 2000/2009*
The Utilities Contracts Regulations SI 1996/2991 (implementing EC
Directive 93/38/EEC)
*Note: SI 2000/2009 is The Public Contracts (Works, Services and Supply) (Amendment) Regulations which implements EC Directive 97/52/EC, amending inter alia lists of contracting authorities, financial thresholds, time limits for receipt of tenders, and forms of model notices. It permits submission of tenders by electronic means.

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