Sealed Bidding

The landscape of obtaining government contracts has changed significantly. Negotiated procurements have become the norm. Sealed bidding is used less frequently than in the past. Nevertheless, when certain conditions are present, sealed bidding is mandatory. Thus the government contract practitioner must familiarize himself with the sealed bidding process in the event he encounters a situation that calls for its use.

1. Sufficient Time
The process of soliciting bids, allowing interested parties to submit bids, and reviewing the submitted bids can be time-consuming. Usually at least 30 days must be allowed for the solicitation of bids before interested parties may submit their bids. Even after all of the bids are received, the government must analyze the bids to determine which is the winner. If an emergency situation develops and the government needs to award a contract quickly, sealed bidding is not the appropriate method.

2. Award Based on Price
This requirement goes to the heart of the sealed bidding process. The object of sealed bidding is to award the contract to the bidder who offers to do the work for the lowest total price. Some contractors prefer this method because it gives the government an objective rationale for choosing one contractor over another. Thus, favoritism is less likely to enter into the government’s decision.

3. Further Discussion Unnecessary
Sealed bidding can only be successful if the bid itself will completely set forth all of the information that the government will need to know. The government will not be able to communicate with the bidder before awarding the contract. Therefore, it is imperative that the contractor submit a bid that completely addresses all of the government’s concerns listed in the solicitation.

4. Government Likely to Receive More Than One Bid
One of the goals of sealed bidding is to use competition among bidders to keep the contract price low. Obviously this goal is thwarted if only one contractor rises to the challenge and submits a bid. The government lacks the ability to audit the contractor’s proposal or examine the contractor’s books before awarding the contract – both of which would be available to the government under a negotiated procurement method. However, two exceptions apply. If the contract is likely to exceed $550,000, then the contract must allow the government to conduct an audit for any modification to the contract, and the contractor must retain its records for three years after final payment. Finally, at the discretion of the contracting officer, the solicitation for bids can be transformed into a request for proposal. Bidders will then be required to disclose their cost or pricing data, and the contract will be subject to the Truth in Negotiations Act (TINA).