Sealed biddings and competitive proposals are both appropriate procedures in when soliciting contractors. Sealed bids are also referred to as the highest and best bidder procedure and it involved the scenario where the highest bidder in an auction gets to go with the item. Murphy (2009) indicates that “sealed bidding can be time consuming but they also help build confidence and distinguish a property in a market that has a growing supply of inventory competing for the attention of a small pool of qualified buyers” (p. 55). Competitive proposals on the other hand involve requesting for a tender in written form. The bidders are required to write proposals in a specified format and the contractor is able to select the successful bidder based on the information provided in the proposals. An interview follows to ascertain the credibility of the information presented.
We will write a custom Essay on Contract: Sealed Bidding and Competitive Proposals specifically for you
301 certified writers online
From the above definitions the first difference between sealed bidding and competitive proposals is the medium used. In sealed bidding, the bidding is done by word of mouth while competitive proposals involve written requests for contracts. When conducting sealed biddings, all the qualified participants are present and they present their prices for the contract. The contractors then compare the qualifications and the price offers before deciding the successful bidder (Weigelt, 2010 Aug 10, para. 3). The competitive proposals methods on the other hand are conducted by sending a request for proposals to either some specific potential contractors or to the entire public through the media. Interested parties are then required to send their proposals in the format provided in the request for proposal. They are then evaluated and the successful candidates are selected based on their qualifications, experience and offer prices.
The second difference between sealed bidding and competitive proposals are the conditions under which they are sought. The contractors purport to sealed bidding under the following conditions. First is when there is insufficient time to send request for proposals, have the proposals submitted and evaluation conducted. The second condition is when the successful candidate is to be selected based on the price and other such factors. Third is when the whole process does not at any point require direct discussions with the candidates concerning the bids. Finally is in instances where there are expectations of getting more than one bid. Competitive proposals on the other hand are sought as an alternative to sealed biddings.
Where sealed biddings are not eligible as per the qualifications above, competitive proposals come in as the next best alternative. This is also important in large contracts involving a lot of legal procedures (Weigelt, 2010, July 8, para. 2). This is because of the fact that it involves a discussion between the offeror and the offeree a platform where they discuss all the obstacles that can come up, providing possible solutions for these. Differences in business practices is one specific area that is usually subject to discussion in most cases owing to the different business cultures that have to be merged to get the work done.
The third difference between sealed bidding and competitive proposals is in the price and cost analysis. From the previous discussion, sealed bidding is more focused on price while competitive proposals consider more of experience and the outcome. In sealed bidding, a cost and benefit analysis has to be conducted based on the prices suggested by the offeree. It has to be ascertained that the benefits of contracting a particular party will outweigh the cost hence resulting in profits to the company. The candidate with the best pricing policy gets the contract, and is expected to perform in a way that will be beneficial to the company in the long run.
Competitive proposals on the other hand tend to consider experience more than anything else, considering it is used in large organization dealing with very huge contracts. Price in this case is not an issue since is does not affect the performance of the company. In this case, cost is analyzed in terms of the ability of the offeree to perform and the resources provided. Benefits are not measured in terms of profits but in terms of the usefulness of the contract to the company. In most cases, this applies to companies which are willing to pay huge bucks to get exactly what they need (Weigelt, 2010, July 8, para. 5).
Finally, in comparing sealed bids and competitive proposals, sealed bids are used in cases where there are many offerees and less offerers. This means that the number of parties responding to the tender advertisements is so high such that going through all the proposals would be very time consuming. In such an instance, sealed bids are preferred to competitive proposals. Competitive proposals on the other hand are preferred to sealed bids in cases where the number of applicants is low since in this case, there has to be a face to face interview. From this, it is clear that competitive proposal is preferred to sealed bids, but this is so where the number of participants is low (Weigelt, 2010, July 8, para. 2). Huge projects normally attract fewer contractors owing to the amount of capital required and the tasks involved and hence competitive proposals work best in such cases.
Murphy, E. (2009). Guide to contract pricing 5th edition. Leesburg: Virginia, Leesburg Pike.
Weigelt, M. (2010). Despite more competition, single-bid contracts stay steady. Washington Technology. Web.
Weigelt, M. (2010). High-risk fed contracts are on the decline. Washington Technology. Web.