Sealed Bids vs. Proposals: How They Compare
Published: May 08, 2020
A look at the two most basic procurement methods to best fully understand the procurement process.
Before you begin to tackle government bids, it is best to fully understand the procurement process. Every city, county and state buys a bit differently, which presents challenges for vendors. However, because most local governments model their procedures, rules and regulations after those of the federal government, a review of the federal procurement process should bring you up to speed.
Below are two of the most basic procurement methods: sealed bids and proposals.
Sealed Government Bids
Sealed bids are typically used to procure high-cost items with easily definable characteristics. In these cases, agencies are looking for the lowest price. Here's the typical process:
- An Invitation for Bids (IFB) is formally advertised.
- Companies prepare and submit their bids.
- A contracting official opens all sealed bids at an appointed time, reads them aloud and records them. Interested parties can view all the bids at this time, although they don't have access to the bidders' financial data and other proprietary information. The contract is awarded to the company with the lowest bid.
- Contracting officials then make sure the lowest bidder is both responsive and responsible. Officials assess responsiveness based on whether companies submit their bids on time and in accordance with the instructions and requirements of the IFB. They gauge a bidder's level of responsibility based on the company's means to fulfill all the contract requirements.
The process may seem straightforward, but strict rules apply and compiling bids can be a tedious process.
Government agencies typically issue a request for proposals (RFP) when the award will be based on more than price. Like sealed bids, proposals are typically used for larger purchases, but they're much more detailed than bids.
The RFP process allows businesses and contracting officials to bargain over details before a contract is awarded. Depending on the size and complexity of the purchase, negotiations may include discussion of price, schedule, technical requirements, and the type of contract to be used.
Here's an overview of the proposal process:
- Officials issue an RFP containing all the information and instructions necessary for companies to prepare their proposals within a set timeline.
- Companies write and submit their proposals by the due date, paying close attention to specifications in the RFP, such as required work plan, staffing, and forms to be completed.
- Officials review the proposals and select those deemed competitive enough to continue in the negotiation process (i.e., the ones that are “shortlisted”).
- Negotiations begin between agency officials and the shortlisted companies.
- Companies may be invited to submit revised offers, or make a presentation/demonstration, taking into account the concerns raised during negotiations.
- The proposals are reviewed again. The contracting officials look for the proposal that provides the best value.
- Before the contract is awarded, the agency determines whether the would-be contractor is responsible and has the facilities, quality-assurance processes, financial backing, etc., to complete the contract.
Looking to take the next steps to better understand government contracts, and how your business can take advantage? Visit GovWin’s blog highlighting 3 strategies to win more government bids and contract awards.