The limited tender is usually used in most special industrial projects, where the number of contractors or vendors, being more specialized, may be limited. Before registering the contractors on the company bidder list a pre-qualification assessment and audit for these companies should be performed as per ISO procedures and requirements.
Unlike the public-tendering case, the owner already has a record of potential suppliers and contractors. The limited tender is directed to a specific registered number of contractors known to already have previous relevant experience. Such a tendering process is used by most private companies as well as by some government departments to limit participation in the bidding to a relatively small number of suppliers and contractors of established reputation, from within and-or outside the country.
The aim is to save both time and money in launching the project. The procedural steps followed for the calling the tender, preparing a bid and selecting a winner follow the methods already discussed regarding public tenders. With the ubiquitous spread of secure corporate websites over the Internet, which electronically enable the confidential submission of bids, however, one significant new wrinkle in limited-tendering has emerged. With sophisticated software that takes care online of many of the background functions of securing the provenance and chain of custody of tendering documents, the processes of generating, filing and amending limited tenders has been rendered less costly and in most cases just as reliable as the work that previously required many more human agents.
Typically, an owner will prepare a website on the Internet, where bidders may to enter the page and proffer or change their prices. By enabling the bidders to see the prices of the competitors, there is a high level of transparency in the data. All parties know why a company wins the bidding without getting into rumors and excitement. Of course, all this is contingent on precise descriptions of each project component and what the work to deliver it will actually entail.
This tender is commonly used in oil and gas companies, specifically for chemical tenders. The specifications are very precise, and well-defined, and can be delivered by only a very limited number of famous suppliers in the world market — facilitating the owner’s need to obtain the best price.