← Business Models: Core (all topics)
Public procurement & competitive tendering
What it is
Government departments, public sector undertakings and state agencies buy through tender. Technical qualification is usually a pass-or-fail gate and the award then goes to the lowest compliant bid, with eligibility capped by turnover, net worth and past project size
Empanelment and rate contracts are the variant where a panel is pre-qualified and work is then allotted without a fresh tender
Impact on industries
- Delivers large, visible, policy-backed volume that underwrites capacity utilisation in a way private demand rarely can
- Technical prequalification excludes the unorganised sector, so tendered work rewards compliance capability rather than only price
- Lowest-price award caps realisation, so scheme volume dilutes blended margin even as revenue grows
- Eligibility norms cap growth mechanically - a contractor cannot bid beyond its turnover and net worth however well it executes
- Payment runs through fund-release and certification chains, so the winner funds the receivable and new entrants bid aggressively to build credentials