A rejection letter is another term used by purchasing personnel and it is used as part of the notification process. You are notifying your unsuccessful bidders that they will not be awarded the tender. It is a formal way of notification much like an award letter or how a notification of award is used. They inform all the vendors of your position in respect to your bid. Issuing an award is enjoyable, completing rejection letters are no fun but they are important.

Why is this important?  If you consider the recipients position, their manpower and scheduling needs then you can quickly appreciate the importance of locking up the vendor if you need them and releasing the vendor if you do not.  Regardless of whether it is for supply of materials, manufacturing requirements or service related work it is still the same. It is prudent to efficiently review all bids during the tender process and not allow it to drag out for 3 months.

Vendors  are partners in your supply chain and they do incur a cost when it comes to submitting a bid to your RFQ or RFP. It is a professional courtesy to always inform bidders of either award or rejection and it is important to be on good terms with vendors as you do want them to participate in future tenders of a similar nature. So, a simple rejection letter can go a long way and is not too much of an inconvenience if you have a standard template to use.

As mentioned above, Buyers love to issue an award but often avoid or do not bother to issue a rejection letter. This is not what we would call best practices. A best practice would be to provide formal notification to all parties involved regardless of a win or a rejection.

I know what you are thinking, when you issue the rejection letter the vendor immediately calls and wants to be debriefed. They hope you will advise them by how much they missed the bid by.  Basically, they are asking you to do their homework for them. As a vendor you should never ask a buyer this question and as a buyer you should never disclose this or any other details of the commercial aspects of an agreement to the vendors competition. This is what we believe is a best practice. One last thought as to why we firmly believe in these ethical procurement practices; if your good vendors catch wind that you are disclosing commercial aspects to the competition in an effort to achieve lower costs next time then your vendor may refuse to bid on your next tender. If you begin to lose vendors in the tender process you will ultimately drive up costs at the end of the day.  Healthy competition is the only way to keep costs down!

Back to the rejection letter, it is just as important to the vendor as an award notification. As mentioned, it allows them to schedule resources elsewhere and it encourages them to do more homework for your next tender. If they want your business, they will ask themselves how can we reduce over overhead to become more efficient and provide a better bid price next time. This is part of conditioning your suppliers and encouraging healthy competition for your future bids.

A rejection letter is no different than an award letter when it comes to format or presentation.  It should be on company letterhead, dated, addressed to the vendor, have a subject or tender reference number.  It should be respectful, to the point and finalized with a signature block. This block contains your name and title in typeface and allows enough space  for your signature.

A professionally formatted rejection letter along with award, intent, understanding letters are available in our Purchasing Bundle. You can find it on the How to Buy page.

If you are looking for a way to automate this process we recommend Request for Quote Software. The software platform we recommend and use is RFQ Pro. It automates both award and rejection letters with one click. Once you make award all other parties are automatically notified. It is cost effective, flexible and the GUI (interface) is user friendly. For the record this is not a paid endorsement we just like this software.

View related posts – Invitation to Bid Cover Letter, Award Letter and Letter of Intent.

Filed under: Letter

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