Competitive bidding
Competitive bidding refers to issuing an open to public bid with the intent that all the companies that wish to be a competitor will be able to put together their offer and compete for a project. Competitive bidding creates a transparent environment in which any company that meets the bid requirements can participate in the bidding process and will be given a fair chance in the competition. It may be used for any type of public procurement [1] [2].
Competitive bidding strategy is concerned with the offering of projects to the suppliers on the basis of their ability to honour particular contracts won via bidding system. Usually, winning bidder is the competitor who offers to fulfill the contract's obligations at the lowest price [3]. That strategy of issuing a bid that is open to public helps to ensure that the initial cost of the project is the lowest possible and it's known prior to start of the project. In competitive bidding competitors must consider every aspect of their offer to make sure they are able to propose their best price and competitive project completion date [4].
There are some obligations imposed on the bid issuer that are strictly regulated by law. Depending of the offer, such regulations may pertain to:
- timelines
- amounts
- ways of offer publication.
There is always a specific date set when the bid is closed to the public for submitting proposals. At this point, only the submitted offers will be considered valid and eligible to compete for a project. Proposals must be publicly opened on the day of the bid submission deadline.
Competitive bidding vs. restricted tender
Competitive bidding is one of two basic bidding systems which can be used for public contracts. The other one is called restricted tender or limited bidding which serves as a procurement method that, as an opposite of competitive bidding, limits the request for bids to a selected number of competitors that can submit their proposals.
Footnotes
| Competitive bidding — recommended articles |
| Standing offer — Selective tender — Authorization to sell — Certificate of acceptance — Letter of agreement — Bid shopping — Reliance letter — Tender document — Commencement date |
References
- Broemser G. M., (1968), Competitive Bidding in the Construction Industry, Stanford University
- Dyckman Z., (1986), Competitive Bidding for Health Care Services, U.S. Department of Health and Human Services, Health Care Financing Administration, Office of Research and Demonstrations
- John Wiley and Sons, (2013), The CSI Construction Product Representation Practice Guide, Hoboken, New Jersey
- Schools Legal Services, (2016), Competitive bidding and public contractiong, Orange County Department of Education, the United States of America
- Sutherland J., Canwell D., (2004), Key Concepts in Strategic Management, Palgrave Macmillan, Houndmills, Basingstoke, Hampshire
Author: Anna Strzelecka
