1. Public tender with administrations: advantages and cons
Public tenders are the instrument used by administrations to acquire products, services or works.
They are a good business option in times of crisis since they boost the economy and provide oxygen to companies.
Often, companies resort to this type of public tender, as they know that public administrations always comply with their payment commitments.
However, as we will see, there are a series of pros and cons when bidding with the public administration.
2. Public bidding: what it is and how it works
A public tender is an administrative procedure by virtue of which a Public Administration or public sector entity opens a "contest" (process) to contract with private companies the execution of a work, the provision of a service or the provision of a supply.
The presentation of candidacies is open, for all the self-employed, SMEs, and large companies that meet the conditions to hire.
In order to comply with the principles of transparency, publicity, equality and free competition that govern these administrative acts, some bases (contract specifications) are established in which the requirements of the participants and the economic and technical conditions of the contract to be tendered are indicated.
Currently, the bidding process in Spain is regulated through the Law 9/2017, of November 8, on Public Sector Contracts and its subsequent modifications.
Said law includes the set of rules and regulations that affect public tenders.
3. About the operation of these public contracts
As we have commented, public administrations act under a series of very defined rules.
In this way, by virtue of the services that are required, the amount, and other characteristics, some award procedures or others are established.
The adjudication procedure is the set of legal procedures established for the selection of the employer, that is, it is the process that you must go through to be a provider of the administration.
The most important types of procedure are:
1. Open procedure: In this procedure, all economic operators can submit an offer, excluding any negotiation on the terms and conditions of the contract.
2. Simplified open procedure: This is a faster open procedure in which economic operators must necessarily be registered in the Official Register of Bidders and Classified Companies, or in the equivalent register of the Autonomous Communities
3. Restricted procedure: Any economic operator may request to participate in a restricted procedure, but only those selected by the contracting authority may submit bids.
4. Tender with negotiation: In the tender with negotiation, any economic operator can request to participate, but only those that are pre-selected will be invited to present offers and negotiate.
5. Negotiated procedure without publicity: This is a negotiated procedure that is not subject to prior publication. This procedure can only be used on special occasions.
4. Pros and cons of public tenders
Working for the administration can be very beneficial for your company, since you will know in advance what your profit margins will be.
However, not everything is positive.
There are also some handicaps that you must assume and compensate if you opt for this business approach.
4.1 Advantages of these public contracts
These are the main ones, take note:
- 1. Information accessible to all types of companies through the PLCSP
- 2. Provides prestige, as well as attractive contacts.
- 3. Guarantees constant billing during the term of the contract.
- 4. The solvency of the contractoris generally guaranteed.
In times of crisis, public investments sustain and support the economy.
4.2 Disadvantages of these public contracts
What are the drawbacks you should know about?
We list them right now:
1. The bureaucratic and administrative work to be able to present yourself is exhaustive, long and laborious.
Although it is true that content and documents from other public tenders can often be reused, they require a lot of time (sometimes non-refundable) for their presentation.
In this sense, it is very important to calculate the amounts offered at the lowest possible cost so that the contract is viable and reports benefits, otherwise you will incur reckless leave and you will have to give explanations to the administration.
2. The system is inflexible: If you are assigned the project, you will have to complete it as defined.
But, sometimes the reality is different from that estimated in the project and can reduce productivity or efficiency.
3. It is possible suffer penalties if the initial terms are not fully respected.
4. Payments are received late, typically after at least six months, which can lead to treasury problems.
5. Even if you satisfy the client, after the deadline you will have to re-bid and you will run the risk of not being awarded again.
Ultimately, the public tender It is an interesting alternative for your business, but you should not present yourself lightly.
We recommend that you create a well-designed activity plan, as it is not convenient to depend solely on the administration.
If you decide to bet on the public sector, in WorkCapital We can help you anticipating bills from any public body.
Call us and we will inform you without obligation!
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