The Bid You Should Not Submit

Defence's standard construction tender form asks you to declare that bidding was your own commercial decision. The question is whether you actually made one.

In the Tender Form of Defence's standard Head Contract and Medium Works tender documents, the document you sign, there is a sentence few bidders stop to read.

You acknowledge that the whole tender process is being run solely for the benefit of the Commonwealth. Then you confirm you are taking part anyway, "because we consider that this represents a valuable commercial opportunity for us."

That line is not boilerplate. It is the Commonwealth recording that the risk of bidding is yours, and that you chose to carry it.

Most firms will recognise a familiar pattern: a tender appears on AusTender, the scope looks close to what the business does, and the team has capacity that month. If that is how your last bid started, it was momentum, not a decision.

This edition is about making the decision.

What your signature commits you to

The standard estate tender documents are clear about where risk sits. Here is what you accept when you lodge a tender.

Your costs are yours. Under clause 10, the Commonwealth will make no payment for the cost of preparing a tender or taking part in the process. That includes industry briefings, meetings, negotiations and debriefs. The only exception is compensation awarded under the Judicial Review Act, covered in Edition 03.

The process can stop. Under clause 7.3, the Commonwealth may vary, suspend, discontinue or terminate the tender process at any time and for any reason.

Your price is locked in. Under the standard templates, your tender must stay valid for 90 days after close, and you cannot withdraw it during that time. You are held to that price for as long as it stays open.

A weak bid can be set aside. Under clause 4(d)(iii), the Commonwealth may stop evaluating a tender it considers incomplete or clearly not competitive, and unlikely to represent value for money.

The Commonwealth Procurement Rules state at paragraph 5.2 that participation in procurement imposes costs on potential suppliers. The rules recognise the cost. They do not move it off your balance sheet.

Even winning is not a guarantee

One of the clearest public examples comes from outside construction, but the principle transfers directly.

In April 2023, Lockheed Martin Australia was named preferred tenderer for JP9102, a sovereign military satellite communications program. In November 2024, Defence cancelled the procurement. Briefing documents later released under Freedom of Information showed Lockheed had spent more than US$200 million pursuing it. The Commonwealth's position was that it had no liability to compensate tenderers, and that ending the process sat within its rights under the conditions of tender.

The smaller numbers matter more to most readers. One firm in Lockheed's supply chain, Av-Comm, reported spending $3 million getting ready to deliver its part of the work.

The lesson is not that Defence behaved badly. The terms were clear from the start. The lesson is that a bid decision has to make sense even if the project never proceeds.

The cost nobody invoices

Defence knows bidding is expensive. Its own 2021 procurement review recorded industry's view that the cost of tendering is too high, especially for SMEs when a tender fails. The current estate templates also name "costly preparation of tenders" as a barrier that may prevent SMEs from competing.

There is no official figure for that cost. The most detailed public estimate comes from bid consultancy BidWrite and advisory firm KordaMentha. They estimate that up to 1.5 per cent of contract value is invested in each bid, across the prime and its subcontractors, and that industry spent about $1.4 billion on Defence bidding in 2022-23. These are industry estimates, not audited figures, and the authors describe their own calculation as a simplified one. No separate data exists for estate tenders.

The logic holds at any scale, though. With one winner, every other bidder's pursuit cost is written off.

The drop-off between interest and commitment can be steep. When Defence ran its infantry fighting vehicle tender, the Australian National Audit Office recorded that 79 companies attended the industry briefing and four submitted a tender. Not every attendee intended to bid as prime, but the gap is wide.

The job you should not have won

The second risk gets less attention: winning work you cannot deliver well.

Where a tender includes previous performance, Schedule C asks for a set number of relevant recent projects. For each one, it asks for details of any material non-compliance with time, cost or quality obligations. The Commonwealth may also take information from referees you did not nominate, and from other Commonwealth projects. Paragraph 10.17 of the Procurement Rules allows a tenderer to be excluded for significant deficiencies under a prior contract.

Consider a hypothetical: a firm wins a remote base project on a thin price and delivers late. That project is now part of its track record, and the next tender can ask about it.

What this means for you

Treat the bid/no-bid decision as a formal gate, with a written answer, before anyone opens the Tender Schedules. The professional body for bid managers, APMP, describes this step as weighing return, win probability and risk before committing to pursuit. Four questions make it practical:

1. Can we deliver the Works Description as written, not the version we wish it said?

2. Can we hold this price for 90 days without our margin depending on nothing changing?

3. Can we win? Who holds similar work now, and which recent projects can we list honestly, non-compliances included?

4. Can we absorb the loss if the tender is set aside, suspended or terminated?

If the honest answer to any of these is no, the better move may be a subcontract role under a firm that can say yes. The Office of Defence Industry Support helps SMEs find those supply chain positions.

The first evaluation is yours

Defence will evaluate your tender against its criteria. Before that, you are the first evaluator, and yours is the only assessment that decides whether the money gets spent at all.

A disciplined no-bid is not a lost opportunity. It is capacity kept for the tender you can actually win.

A Defence bid pipeline is not measured by how many tenders go out. It is measured by whether you can explain, in writing, why each one did.

This is Edition 14 of the Australian Defence Tender Framework series by Visionex Solutions. The series publishes every Wednesday. Series 2: Inside the Tender runs from 16 September to 2 December 2026.

What does your firm's bid/no-bid decision look like in practice: a formal gate, or a conversation in the corridor?

Between editions, follow us on LinkedIn for Australian defence industry news, facts, and market insights.

Next edition: How Defence actually evaluates, and what a tender evaluation board is really weighing.