Competitive Negotiation

In the mid-1990s, Congress amended several key statutes relating to the acquisition of government contracts. Up until that time, sealed bidding was the norm. The amendments gave federal contracting officers more discretion to award contracts through a process called competitive negotiation. As the name implies, the goal of saving government funds by means of competition among bidders remains paramount.

Competitive negotiation gives the contracting officer more flexibility. Under a sealed bidding procedure, the invitation for bids states the requirements that must be met. If a contractor cannot meet those requirements, he need not bother with submitting a bid. However, under a competitive negotiation regime, the contractor may make a counteroffer, which the government may respond to, and so on until a contract is finalized.

Competitive negotiation is most appropriate when any of the four elements for sealed bidding are not present; that is, 1) sufficient time; 2) award based on price; 3) discussions unnecessary; and 4) expectation of receiving more than one bid. In addition, in situations where a construction contract will be performed outside the United States and its possessions, sealed bidding is not mandated by law.

The decision whether to utilize sealed bidding or competitive negotiation is largely within the discretion of the contracting officer. His judgment will only be reversed when he cannot produce a reasonable justification for his decision.