Sealed Bids vs. Competitive

Topics: Procurement, Opportunity cost, Price Pages: 2 (505 words) Published: June 22, 2013
Sealed Bids vs. Competitive Proposals
Sealed bidding and Competitive Proposals have their advantages and disadvantages for private contractors. The government offers the opportunity to contractors to place their bids depending on the specifics of the job or the contract requirements then the government will choose the channel which they will send the solicitation through. For Sealed Bidding is an Invitation for Bids and for Competitive Proposals bids are two ways of solicitation, a Request for Quotation and Request for Proposals (Murphy 2009).

An advantage for contractors that are bidding through Sealed bidding is that they are not obligated to provide any information on cost or the profit to justify their bid price. The government has no control over that part and will have to rely solely on the price competition without having all the facts to know if the bid is a reasonable one. This can be a great advantage in making a higher profit if the contractor’s cost for the project is low. Another advantage is that there are no negotiations before, through the period of evaluation or after.“There are no individual discussions with any bidder during the process, and no price discussions occur” (Murphy 2009, p.18).

Competitive Proposal advantages for contractors can occur when the government uses a tradeoff. Even though a tradeoff is used by the government when they feel it is to their benefit, it can also be advantageous for a contractor because if chosen the contractor once again does not have to be concerned with the cost or price and still be the one with the higher bid. “This process permits tradeoffs among cost or price and noncost factors and allows the government to accept other than the lowest priced proposal” (Murphy 2009, p.21). The difference with this approach is that the government can either arrange to have a discussion with the contractors or simply make their decision without holding a discussion. When the government chooses...

References: Murphy, J.E. (2009). Guide to Contract Pricing: Cost and Price Analysis for Contractors, Subcontractors, and Government Agencies 5th edition. Virginia: Management Concepts.
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