The stages
- 1Need and purchasing strategy. The user department defines what it needs; Procurement decides whether it goes to a private tender, price competition, direct purchase or framework contract, and draws up the list of companies to invite.
- 2Prequalification. Companies are asked for their file: financial statements, registrations (AFIP/ARCA, gross income tax, provincial supplier registries), certifications, track record and HSE policy. Many operators require companies to be registered in their supplier registry before they can quote.
- 3Invitation and tender documents. The tender documents are sent with the schedule: deadline for questions, site or field visit, delivery date and submission format (separate technical and financial envelopes).
- 4Questions and addenda. Bidders' questions are answered in writing and to everyone equally (addenda). What an addendum says modifies the tender documents.
- 5Opening and technical evaluation. The technical envelope is opened first; only bids that qualify technically move on to the financial evaluation.
- 6Commercial evaluation and negotiation. Prices are compared on the same basis (same scope, same currency, same conditions). There is usually a round of clarifications or a price improvement.
- 7Award and contract. The award is made, the contract or purchase order is signed, and guarantees and insurance are submitted. From there, contract administration begins.
Most common contract types
- Unit price (per item): you are paid for what is actually executed, measured with units defined in the pricing sheet (meter of pipe, equipment hour, well, stage). It is the most common in field services and construction work.
- Lump sum (turnkey): a fixed price for a fixed scope. The contractor assumes the quantity risk; it requires a very well-defined scope.
- Time and materials (cost plus a percentage, or rate per man-hour): used when the scope cannot be defined in advance, such as in emergencies or plant turnarounds.
- Framework (or open) contract: prices agreed for a period, with work orders as the need arises.
- EPC: engineering, procurement and construction by a single contractor, normally at a lump-sum price with payment milestones.
What weighs the most
For the buyerThe quality of the tender documents determines the quality of the bids: if the scope is ambiguous, each bidder quotes something different and they cannot be compared. See The tender documents.
For the bidderRead the entire tender documents (including annexes and internal standards) before quoting, use the question stage and follow the requested format exactly. A bid that cannot be compared is usually left out even if it is the cheapest.
General guide based on common industry practice; it does not replace legal, tax or accounting advice for each case.