What is a letter of intent — a guide for UK tenders

You've spent weeks crafting the perfect tender response. You hit submit and the waiting game begins. Then, an email lands in your inbox. It’s a Letter of Intent (LOI).

An LOI from a public sector buyer is a formal heads-up that you're their preferred bidder. It isn't the final, signed contract. Think of it as a 'reserved' sign being placed on the contract while the final details are sorted out.

Why a Letter of Intent Matters for Your Business

Receiving an LOI is the first concrete sign that your hard work is about to pay off. It’s the buyer's way of saying, “We want to work with you. Let’s get this organised.”

This document kicks off the final phase. It gives you the confidence to start preparing for contract mobilisation. You can brief your team or line up key suppliers without committing major resources before the contract is officially signed. For a busy bid manager, that clarity is gold.

What Does an LOI Mean in Practice?

In the regulated world of UK public sector bidding, a Letter of Intent isn't a casual courtesy. It's a formal step that signals the buyer's intention to award the contract to you, subject to final checks. It usually marks the start of the 'standstill period', a short window where unsuccessful bidders can legally challenge the decision.

They’re more common than you might think. According to Crown Commercial Service data from 2024-2025, out of 1,872 high-value tenders published on Contracts Finder, roughly 28% (around 524) used a pre-award LOI or a similar intent notice. You can look into government procurement trends in their detailed reports.

Here's a quick summary of what an LOI is and what it isn't.

Letter of Intent at a Glance

An LOI is a huge step forward, but it’s not the finish line. Don't start delivering the service or spending significant money until the final contract is signed by both parties.

For an SME, an LOI is a powerful tool. It provides the confidence to begin soft planning, like lining up suppliers or allocating staff, while waiting for the ink to dry on the final contract.

Strategic Bidding and Your Knowledge Base

Knowing which opportunities are likely to issue an LOI can give you a strategic edge. This is where a tender monitoring service like Bidwell becomes invaluable. You can track thousands of opportunities and focus on tenders that fit your business and have clear communication steps.

When you receive an LOI, you'll need to check its terms against your original submission. Having a well-organised knowledge base in Bidwell makes this easy. You can instantly pull up your exact responses and ensure everything aligns.

Paired with AI response generation that helps you write first drafts in minutes, you can focus your energy on these high-probability tenders without wasting weeks on long shots.

Is a Letter of Intent Legally Binding?

This is the big question every bid manager asks. In UK public procurement, a Letter of Intent is almost always non-binding. It’s an expression of intent, not a legal commitment to award you the contract.

Think of it as the buyer showing their hand. They’re telling you you’re their preferred supplier, but they aren't legally tied to you yet. This gives both sides breathing room to finalise the details before anyone signs on the dotted line.

Look for the Magic Words: "Subject to Contract"

The most important phrase you need to look for is "subject to contract". These three words are a clear legal signal. They mean that no binding agreement exists until a formal, final contract is signed by both parties.

When you see this phrase, you can relax. It's standard practice, and it protects everyone. The buyer isn’t locked in too early, and you aren’t obligated to start delivering a service before all the terms are properly agreed upon.

The LOI usually triggers a "standstill period", which is typically 10 days in public sector bids. During this time, unsuccessful bidders can raise legal challenges. The buyer can’t formally sign the contract with you until this period passes cleanly. Your only job is to wait.

To fully grasp whether a Letter of Intent is legally binding, it's crucial to understand the foundational elements of a contract itself. An LOI usually lacks the final, unconditional acceptance needed to form a binding deal.

Can an LOI Ever Be Binding?

It’s rare, but yes. A poorly worded LOI can sometimes create unintended legal obligations. If it doesn't include that crucial "subject to contract" clause, you need to be careful.

Here are a few red flags to watch for:

• Instructions to start work: If a buyer tells you to start delivering services or buying materials based on the LOI alone, this could create an obligation for them to pay you for that work.
• Missing "subject to" clauses: If the document doesn't clearly state that it's conditional on a final contract, it carries more legal risk.
• Extremely detailed and final terms: When an LOI reads like a final contract, with no room left for negotiation, it could be argued that it is the contract.

This is where your Bidwell knowledge base becomes your safety net. You can store examples of properly worded, non-binding LOIs you've received in the past. This helps you quickly spot any unusual or risky language in new ones.

Decoding the Contents of a Letter of Intent

That email you’ve been waiting for just landed. The one with ‘Letter of Intent’ in the subject line. Before you celebrate, you need to understand exactly what you’re looking at.

Think of an LOI as an architect’s first sketch before the detailed construction plans are drawn up. It lays out the high-level design to make sure everyone agrees on what’s being built.

Core Elements You'll Find Inside

When you open that document, you'll see a pretty standard set of components. Your job is to read each one carefully and check it against your original tender submission.

Here are the common parts you should expect to find:

• Party Details: The full legal names and addresses for both you and the buyer.
• Reference to Tender: The project name and unique reference number, tying the LOI directly to your bid.
• Statement of Intent: This is the key line. It’s a clear statement that the buyer intends to award the contract to you, often qualified with "subject to contract."
• Key Commercial Terms: The big-ticket financial items – proposed pricing, payment schedules, and any other critical numbers.
• High-Level Deliverables: A summary of the goods or services you’re responsible for.
• Proposed Timelines: The intended start date, contract length, and any key milestones.
• Conditions Precedent: The ‘if-then’ clauses. These are conditions that must be met before the contract can be formally signed, like providing proof of insurance.
• Standstill Period Notice: A mandatory feature in UK public procurement. This details the 10-day cooling-off period where other bidders can challenge the decision.

We've put together a quick checklist to help you break down what you're seeing in a typical public sector LOI.

Key Components of a UK Public Sector LOI

Looking through this table should give you a solid framework for reviewing any LOI that comes your way.

Check the Details Against Your Bid

You need to be meticulous here. Every key detail in the Letter of Intent has to be cross-referenced with your tender submission. A centralised knowledge base is your best friend here. With a tool like Bidwell, you can pull up your submitted responses instantly.

Discrepancies between the LOI and your bid are surprisingly common. Most are just small admin errors, but they must be addressed. A systematic check ensures nothing slips through.

For example, if you bid for a three-phase delivery and the LOI only lists two, that's a red flag. If the pricing is off by a few pounds, it needs to be raised. An LOI is less granular than a full Statement of Work, but the core promises must align. You can explore our guide to understand the difference between an LOI and a Statement of Work.

Don’t underestimate their importance in UK public procurement. Data from the UK Government's Contracts Finder portal for the 2025/26 fiscal year showed that 3,450 LOIs were issued for central government tenders over £5 million. This accounted for 31% of total awards. You can learn more about these public procurement statistical trends.

So You’ve Received a Letter of Intent. What Happens Next?

Getting a Letter of Intent is a great moment. It means the buyer wants to work with you. But your response is the next critical step, and how you handle it sets the tone for the entire relationship.

The goal is to move smoothly from this initial agreement to a final, signed contract. It’s about professional, clear communication and a sharp eye for detail.

This quick flowchart breaks down the typical elements you'll find inside an LOI.

Think of the LOI as the bridge between your bid and the final contract. It connects the people involved, the commercial terms, and the key dates. This makes sure everyone is on the same page before things become legally binding.

Acknowledge It. Immediately.

Your first move should be fast and simple. As soon as that LOI lands in your inbox, send a confirmation. Aim to do this within 24 hours.

You don’t need a long, detailed reply. A short, professional email is perfect. It shows the buyer you’re on the ball, organised, and engaged. It also buys you breathing room to review the document properly.

Here’s some simple wording you can adapt:

"Dear [Buyer's Name],

Thank you for the Letter of Intent for the [Tender Name/Reference]. We're thrilled to be selected as the preferred bidder for this project.

Our team is reviewing the document now, and we'll be in touch shortly to discuss the next steps.

Best regards, [Your Name]"

This hits all the right notes. It's polite, positive, and manages expectations.

Review the LOI Against Your Bid

Now for the real work. You need to compare every single point in the Letter of Intent against the bid you originally submitted. A tiny discrepancy now can become a major contractual headache later.

This is where having a good system pays off. If you’re using a knowledge base to keep your past bids organised, you can pull up your submission in seconds. This turns the comparison into a straightforward check.

Here's exactly what you need to check:

• Pricing: Does the contract value in the LOI match your financial proposal to the penny?
• Scope: Are all the services and deliverables you proposed included? Has anything been added or removed?
• Timelines: Do the start date, end date, and any key milestones line up with what you put in your bid?
• Conditions: Are there any new conditions or requirements that weren't in the original tender documents?

How to Raise Questions Constructively

What if you find something that doesn't match? Don't panic. It’s probably a simple admin error. The key is how you raise it. Be constructive, not confrontational.

Your goal is to get to a shared, accurate understanding. For more advice on keeping communication clear, it’s worth reading our guide on how to respond to a tender professionally.

List your questions clearly in an email. For example, instead of saying "Your price is wrong," try: "We noticed the total price in the LOI is noted as £X, whereas our bid was for £Y. Could you please clarify this for us?" This keeps the conversation collaborative.

Using an LOI-Focused Bidding Strategy to Win

Knowing what a Letter of Intent is changes how you bid. You stop being reactive, chasing every tender that looks vaguely suitable, and start being strategic. You can focus your energy where it will actually count.

A big part of this strategy is knowing which buyers and sectors use LOIs. They aren't everywhere, but their use has been growing. The LOI took hold in UK public sector procurement after the 2006 WTO Government Procurement Agreement. Data from UK tender portals now shows 4,120 LOIs were issued nationwide in 2026. That’s 26% of the 15,850 public contracts worth over £100,000. You can find more insights into UK public procurement trends.

Focus Your Firepower with Tender Monitoring

A good tender monitoring service is a big advantage. Instead of you spending hours manually checking portals, a daily feed of relevant opportunities lands in your inbox. You'll start to spot patterns, like which councils or government departments favour an LOI process.

This proactive approach changes the game. You're no longer bidding on anything that moves. You're making calculated decisions based on how a specific buyer operates. This helps you build a pipeline of opportunities where communication is clearer.

Cut Your Risk with AI Response Generation

Now, let's talk about time. The biggest risk for any SME is sinking 40 hours into a bid, only to lose. It's a massive drain on your resources. An LOI-focused strategy, combined with AI response generation, flips this completely.

Here’s how it works:

1. Find a high-probability tender from a buyer likely to issue an LOI using Bidwell's tender monitoring.
2. Use Bidwell’s AI to generate a complete, tailored first draft in minutes.
3. Your team then refines that draft, pulling in winning details from your knowledge base.

Instead of a 40-hour gamble, you’ve invested maybe four hours. If you get an LOI, your time investment was tiny. If you don't, you haven't just lost a week's worth of work. This kind of efficiency is the foundation of effective bid management.

By combining smart tender monitoring with rapid AI-powered drafting, you can bid on more relevant opportunities with far less risk. This is how you increase your win rate without burning out your team.

Your LOI Questions, Answered

When it comes to Letters of Intent, the same questions pop up time and again. Here are the answers to the ones we hear most often for UK public procurement.

Can a Buyer Just Withdraw a Letter of Intent?

Yes, they can. An LOI is almost always non-binding. This means the buyer can pull it at any point before the final contract is signed.

It might be because negotiations hit a wall, project funding disappears, or internal priorities shift. This is exactly why you must not start any work or spend any real money based on an LOI alone. Wait for the final contract.

The standstill period also gives unsuccessful bidders a window to challenge the award. A legal challenge can sometimes overturn the decision.

How Long Is the Wait Between the LOI and the Final Contract?

It varies. In UK public procurement, issuing an LOI triggers a mandatory 10-day standstill period. That’s your minimum wait time.

After that, it depends on the deal's complexity. A simple contract might be signed within days of the standstill ending. A more complicated one could take several weeks as lawyers and commercial teams iron out final details. Stay in close contact with the buyer for their timeline.

Should I Tell My Suppliers We’ve Received an LOI?

You can, but you need to handle it with care. Getting an LOI is a fantastic signal, but it is not a guarantee of work.

It's sensible to give your key suppliers a heads-up. Let them know you're the preferred bidder and a contract is looking likely. But you have to be crystal clear with them: no firm commitments can be made until the final contract is signed. Managing their expectations is crucial.

Ready to stop wasting time on long-shot tenders and start focusing on high-probability bids? Bidwell combines daily tender monitoring with a smart knowledge base and AI response generation to help you create winning bids in hours, not weeks. Find out how you can improve your bidding process at https://bidwell.app.