Sealed Bids vs. Competitive Proposals

When the government determines a requirement is needed and must be procured, they will begin processing a solicitation. The solicitation will identify the service or product it wishes to procure, provide a statement of work of the service or product, includes the date and time submission are due, and, depending on the solicitation method, could contain instructions for additional information to be included in submission. Government will then decide which solicitation method they will use to obtain fair and reasonable pricing from offerors.

Two standard methods are known as sealed bidding and competitive proposals. Sealed bidding, also known as Invitation for Bids (IFB), is used when the government believes an “award can be made to the lowest price offeror who is responsive and responsible and the government’s requirement is reasonably well defined in the form of drawings and specifications” (Murphy, 2009, p. 17). When an IFB is released on a government website, FedBizOpps, any contractor who wishes to submit a bid is allowed. Government cannot limit an IFB to only particular contractors as this solicitation is based on adequate price competition.

This is an advantage to contractors who might be new or older contractors who are looking to expand their expertise. Also, contractors are only required to submit the ‘bottom-line’ cost of their bid on IFB solicitations. Contractors must responsive, not taking exception to any terms of the proposed contract in its entirety, and responsible, be able to perform the work and meeting all conditions stated in solicitation however; they are not required to submit cost detail or technical documents such as past performances, performance work statement, cost narratives, etc. ith their bids. There are a few disadvantages with this method. Contractors are not able to change their bids once submitted. The government opens all sealed bids to the public at the appointed due date and time. Contractors are able to see every bid submitted for the effort so competitors will know another company’s price and could use the information for future bids. As “sealed bidding always leads to a firm-fixed-price contract or fixed-price with economic adjustment contract,” (Murphy, 2009, p. 18) the contractor assumes all the risk if awarded the contract.

This can be a disadvantage if the contractor experiences unexpected rise in costs which could either decrease profit or contractor could endure a loss of profit completely in order to meet the contractual requirements. Competitive proposals, also known as Request for Quotation (RFQ) or Request for Proposal (RFP), are solicitations which contractors submit pricing and could “provide other relevant information to enable the government to consider” (Murphy, 2009, p. 17) for the product or service stated in solicitation.

This method is more advantageous than sealed bidding. Unlike sealed bidding, competitive proposals are usually evaluated as technically acceptable then evaluated by pricing. This means the lowest offeror(s) may not be the awardee(s) of the contract. Also, once submission date and time have past the submitted pricing is not released publicly so competitors are not privy to each other’s pricing. Competitive proposals may “result in any of the wide selection of contract types permitted by FAR Part 16” (Murphy, 2009, p. 19).

When using competitive proposals, the government may discuss contractor’s proposal if any deficiencies within their proposal, get clarifications, and allow contractors to revise proposal based on discussions. There are a few disadvantages with this method. Contractors submit only price under IFB solicitations however, under RFP and RFQ solicitations contractors may be required to provide cost detail (direct and indirect price breakdowns) and technical documents, some of which are stated in the above paragraph. The solicitation may even state page, margin, and font type/size limits and if a contractor is non-compliant they could be rejected.