Selective Tendering

Selective tendering is a procurement method in which only qualified suppliers are invited to submit a tender. Canada's implementation of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) defines it as a procurement method whereby only qualified suppliers are invited by the procuring entity to submit a tender. The definition is set out in the government procurement chapter of CETA.

In practice, the buyer does not release tender documents to the whole market. It first asks suppliers to show that they meet stated participation requirements, then invites the suppliers that qualify to bid. The Government of Canada's CanadaBuys Buyer's Guide describes this approach as using either a one-time list or a permanent list of prequalified offerors.

Open, selective and limited tendering compared

CanadaBuys identifies three tendering approaches for procurements covered by trade agreements: open, selective and limited. The CanadaBuys sourcing strategy guidance sets out all three.

• Open tendering: all interested suppliers may submit a bid.
• Selective tendering: only suppliers that have qualified are invited to submit a tender.
• Limited tendering: an entity may procure without using the ordinary competitive process, but only in specified circumstances.

The two-stage process and the types of supplier list

Selective tendering under trade agreements has a prequalification stage followed by an invitation to tender. First, the procuring entity publishes a notice of proposed procurement (NPP) to identify businesses that meet predetermined participation qualifications. Second, it issues tender documentation to the suppliers that have been prequalified. For procurements subject to one or more international trade agreements, CanadaBuys states that the NPP must be published at both stages.

The list of qualified suppliers can take two forms:

• One-time list: suppliers are prequalified for a particular procurement.
• Permanent list: suppliers are prequalified in advance for possible future procurements.

Participation rules under CETA and CUSMA

CETA requires an entity using selective tendering to include in its notice of intended procurement an invitation for suppliers to submit a request for participation. The entity must give the required procurement information to qualified suppliers by the start of the tendering period. It must also allow all qualified suppliers to participate, unless the notice states a limit on the number of suppliers and the criteria used to select that limited number.

The Canada-United States-Mexico Agreement (CUSMA) contains comparable requirements. The entity publishes a notice inviting requests to participate and provides the prescribed information to qualified suppliers. It must allow all qualified suppliers to submit tenders unless a stated limitation and selection criteria apply. The text is in the CUSMA government procurement chapter.

Use by Crown corporations and in NATO terminology

The term appears in the procurement policies of Canadian public-sector organizations beyond core federal departments. The Canada Mortgage and Housing Corporation defines selective tendering as a method where only qualified suppliers are invited to submit a tender. Its procurement policy says it may maintain supplier lists prequalified through a Request for Standing Offers or Request for Supply Arrangements process.

The Canadian Air Transport Security Authority defines the term in the same way. Its procurement and contracting policy permits selective tendering where the approved procurement strategy identifies it as appropriate, including where a trade agreement allows it.

NATO uses a related concept under a different name. Its Procurement Policy for NATO Common Funding describes limited competition as a method that allows the procurement authority to restrict the number of eligible vendors.

What selective tendering means for a supplier

For a supplier, the decisive step comes before the tender. If you miss the request for participation or prequalification notice, you will not receive the tender documents. A bid team should do the following:

• Respond to the published notice by its stated deadline.
• Show that you meet each qualification and condition for participation listed in the notice.
• Check whether the buyer is using a one-time list or a permanent list of prequalified suppliers.
• Submit a tender only after being invited or accepted as a qualified participant.
• Meet the essential requirements and conditions in the tender documents when you submit.

Where a notice states no limit on the number of suppliers, every supplier that qualifies must be allowed to take part. Where it does state a limit, the notice must also state the criteria for choosing among qualified suppliers, so read those criteria closely before deciding to respond.