If your business supplies goods or services to the government, utilities or infrastructure sectors, winning work for your business is likely to involve responding to a request for tender (RFT). For any business responding to an RFT (RFI, RFP or RFQ,) it’s important to be aware of the legal risks and implications of responding. Here are some of the top legal issues to consider:
It’s unusual to receive tender documentation without first signing a confidentiality or non-disclosure agreement (NDA). An NDA protects the confidential information disclosed by the party issuing the RFT (we'll call them the "customer"). But what about the confidential information belonging to your business? Your response is likely to include commercially sensitive and publicly unavailable information, especially if pricing or road-map information is included.
We recommend you request the customer to provide a mutual NDA, protecting the confidential information of both parties. Alternatively, your business should have a standard NDA template ready to provide to the customer for execution before you respond.
Be sure to review the confidentiality clauses in the tender terms and conditions to be sure that the customer is not proposing any unrelated use or disclosure of your business’ confidential information.
2. The terms and conditions
Most RFTs come with a set of terms and conditions for responding. These “conditions of tender” cover matters such as:
process and timing for submitting responses;
process for communicating and requesting clarifications;
process for dealing with late responses;
general rights and obligations of the parties;
ownership of the intellectual property in the response;
limitation of liability;
conflict of interest;
confidentiality and privacy; and
The conditions of tender are typically not open for negotiation. Lodging a response to the RFT usually constitutes agreement to be bound by the conditions of tender. Be sure to read and understand the conditions. Seek legal advice if there is something you need further understanding of or don’t feel comfortable with.
3. Contract template
RFTs often include a sample contract for supply of goods or services. The customer will expect this contract to form the basis of the contractual framework between the customer and whichever supplier submits the successful bid.
The conditions of tender may require you to mark the contract with requested changes and provide reasons as to why the changes are necessary. Any mark-up needs to be thorough, as your response regarding the sample contract is part of your offer. The customer is entitled to rely on your offer and it will be very difficult to deviate from your response in later contract negotiations.
We recommend a qualified lawyer review and mark-up the sample contract to ensure your business’ rights are appropriately protected, whilst also being mindful of the fact a contract with fewer mark-ups is likely to be more attractive to the customer.
4. Accurate representations
Responding to an RFT is an opportunity to promote to the customer the benefits of your business’ offering and showcase what sets it apart from the competitors. Care must be taken, however, to ensure all claims about the goods or services are accurate and not open to misinterpretation.
Your offering must be able to do what you say it will do. You must be able to honour the pricing you offer for the period specified in the conditions of tender (even if your own costs increase during that period.) You must deliver on future features or functionality if they are promised in your response. All information about the goods or services that may reasonably affect the customer’s decision should be disclosed in the response. If your response is based on any assumptions, the assumptions should be stated.
A customer that purchases from a supplier in reliance upon false or misleading representations made in an RFT response is likely to have recourse against the supplier for misleading or deceptive conduct under the Australian Consumer Law and/or at common law, if the customer has suffered a loss. The customer may be entitled to a complete refund as well as damages, potentially including the costs of re-procuring the goods or services.
Review by an experienced commercial lawyer will ensure that your response is appropriately worded to avoid any inadvertent misrepresentation.
5. No-reliance warranty
It is not uncommon for the conditions of tender to include a warranty from the supplier that the supplier has not relied on any representation made by the customer, unless expressly incorporated into the RFT material.
If a representation is made by a customer representative and you believe it is material to your response, you should follow the prescribed process for requesting clarifications from the customer. Raise the representation and if it is formally confirmed by the customer, only then should you rely upon it.
Clearly legal is experienced in responding to RFTs and other related tender requests. Contact us to arrange a free 20 minute initial consultation or to request a fixed fee quote.