In business, bidding is a recognized way of competing with other businesses for a contract to do a project. The hiring company examines and compares bid proposals from the different businesses to choose the firm with the best overall proposal. Bidding is used for many types of business work and supplies that range from construction projects to medical equipment. Companies inviting bids from contractors or suppliers usually specify how the winning bid will be chosen.
If a company is only interested in a low price for products or services, it will often ask for competitive bidding. This term indicates that the winning bid will be selected on the lowest price quote only. A price quote is the fee for which a contractor or vendor will provide the requested goods or services. Knowing upfront that the bidding is competitive saves bid writers a lot of work, since other details aren't going to be as important in the proposal as the price quote.
Open competitive bidding is a business term that means all who want to view the opening of the sealed bids may do so. Closed bidding proposal situations are those in which only selected individuals in the bid receiving company view the bids. A bid is also called a tender. Invitations to tender may be placed on a company's website or in ads in trade journals or newspapers.
When bid requests aren't specified as competitive, other factors besides financial ones will be considered. For these types of tender proposals, a company may use a bid form or template. This kind of request for proposal (RFP) requires bidding vendors or contractors to fill in information on a standard form the company uses for all its bid requests. Non-competitive RFPs typically ask for details such as turnaround time and product specifications. The company then compares each bid proposal sheet to choose the best overall product or service offer.
Sometimes, the bid requesting firm doesn't decide the winning proposal from the bids alone. Instead, it creates a short list of possible contractors or vendors. This procedure is much like a job interview process in which the interviewer narrows down the search for a candidate to fill the position to a short list of candidates. In a RFP bidding process, companies on the short list usually prepare an in-person presentation. The winning business is often the one that shows visual evidence such as testimonials or photographs to prove why it's the best choice for the project.
