Procurement Bids — Everything You Should Know

So you are here because you want to know procurement bids? Well, do not worry, you are in the right place.

For this article, we will discuss what procurement bids are. We will check why it is important for companies to have a bidding process. Additionally, we will discuss the 5 steps of the bidding process. 

Once you finish reading this article, you will have a deeper understanding of procurement bids. This will allow you to use it in your profession or your company to better judge the best suppliers for you. 

What are Procurement Bids?

When the organization needs materials or services in order to undertake a project, it starts by finding suppliers. Then, after the assessment, they will let the suppliers compete with each other through bidding. 

Bidding is an offer made by the supplier to compete for a contract. With this, we can say that procurement bids refer to the suppliers vying for the contract. The organization sends a solicitation to suppliers to select the best partner among all the bidders.  

This is important for the organization to select the best supplier that fits its budget and requirements. This is a cost-effective process that allows the suppliers to compete fairly. 

The Procurement Bidding Process

The procurement bidding process is crucial for the organization. It allows transparency and fair competition among the suppliers. Additionally, it creates a benefit for the organization by selecting the best supplier for the lowest price possible. 

The procurement bidding process is utilized to choose the most suitable supplier to deliver the required goods or services. For the public sector, the tender process is a must to establish transparency and fair access for all. 

Procurement bids allow the company to fairly evaluate all the supplier’s potential. Usually, the evaluation set by the organization is based on quality and the pricing of the products or services. 

You should take note that companies do not always base their prices on the lowest prices. It also includes quality, timeliness of the delivery, technical ability, social value, and innovation. 

The bidding process is done by the organization that promotes the best value for money through transparency and fair procedures.

    Editor's note:

    Hi there! My name is Marijn Overvest, I'm the founder of Procurement Tactics.
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    5 Steps of the Bidding Process

    The bidding process is like a job interview for suppliers as they showcase their capabilities to the organization. If your first impression is great, then you have the chance to move to the negotiation phase.

    The bidding process for public projects requires high regulation compared to private projects. However, they usually follow the same procedure. 

    The following are the necessary steps in the bidding process:

    1. Bid solicitation

    Bid solicitation is where the organization sends out a request for proposals (RFP) or invitations to potential suppliers. The invitations are usually large and open for public projects. 

    Here, the organization lays out its project requirements, the specific contract type, and the delivery method. 

    The bid solicitation phase needs more information such as the request for quotation (RFQ). It is the method utilized to acquire more information necessary to check the supplier’s credibility.

    2. Bid submission

    The bid submission includes all the relevant company information. It has the company’s history of projects, a track record for completing tasks on time, and a management plan. 

    The bid submission must include a cost estimate based on the materials’ quantity and the plan for the project. It needs to have accurate costs to ensure cost-effective methods. Of course, the best price heavily influences the bid. 

    3. Bid selection

    There are rules for public sectors, especially the government, where the lowest bidder wins the contract. This somehow helps the public sector to rule out any manner of fraud or biases as the price is the greatest equalizer. 

    On the other hand, the private sector considers some factors apart from the lowest prices. The price acts as the tie-breaker when both suppliers have comparable bids. 

    4. Formation of the contract

    Of course, after the organization selects a supplier, both parties must form and sign a contract. The contract will legally bind them to do their obligations.

    The contract is a safeguard for both parties if one of them becomes non-compliant with the agreement. 

    This phase is the final opportunity for the organization to negotiate the final price of the bids. Additionally, any other stipulations can be discussed for both parties to mutually benefit. 

    5. Project delivery

    After the contract phase, the project is now ready to roll. The project delivery is based on the project delivery method that both parties agreed on. 

    What is Competitive Bidding?

    Competitive bidding is a form of solicitation that is utilized in the acquisition of goods or services. 

    It is used by government agencies and private organizations that need the delivery of materials or services on a large-scale basis. 

    Both the public and private sectors must issue a form of solicitation which is usually called the request for proposal (RFP). It highlights the materials or services that the suppliers need to show interest in supplying through the competitive bidding process. 

    The Competitive Bidding Process

    Interested suppliers or vendors send their bids for the organization to consider within a specific period. Usually, the bids are sealed to promote the confidentiality of each proposal sent by the vendors or suppliers. 

    After the expiration of the bid, the organization selects the bidder with the lowest or best terms for the request for proposal (RFP). The selection of the suppliers or vendors can be done through an open or closed bidding process. 

    The competitive bidding process aims at increasing the efficiency of the bids, avoiding biased treatments, and enabling the organization to get the best offer.

    Frequently asked questions

    1. What are procurement bids?

    The procurement bids refer to the process of selecting the best suitable supplier for the organization. 

    2. What is competitive bidding?

    Competitive bidding is a form of solicitation used in the acquisition of goods or services.

    3. Do all organizations need a bidding process?

    Yes. The bidding process creates a transparent and equal footing for all the suppliers wanting to win the contract.

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