Contractors are required to calculate their own estimate of the cost of the construction (inclusive of anticipated overheads and profit margin) and to submit a sealed "tender" bid according to a required format in competition with other contractors.
Comparing one proposal to another based on price, services offered, quality, or other factors. Also refers to the process of offering reduced rates to health plans to obtain exclusive contracts from payers.
The process of inviting and obtaining bids from competing sources in response to advertised competitive specifications, by which an award is made to the lowest and best bidder meeting the specifications. The process contemplates giving potential bidders a reasonable opportunity to bid, and requires that all bidders be placed on the same plane of equality. Each bidder must bid on the same advertised specifications, terms, and conditions in all the items and parts of a contract. The purpose of competitive bidding is to stimulate competition, prevent favoritism, and secure the best goods and services at the lowest practicable price, for the benefit of the state. Competitive bidding cannot occur where contract specifications, terms, or conditions prevent or unduly restrict competition, favor a particular vendor, or increase the cost of goods or services without providing a corresponding benefit to the state.
The process whereby construction projects are required to be advertised and awarded to the lowest responsible and responsive bidder through open bidding, unless use of an eligible force account is more cost effective. See Force Account.
This is a procedure that utilities use to select suppliers of new electric capacity and energy. Under competitive bidding, an electric utility solicits bids from prospective power generators to meet current or future power demands. When offers from independent power producers began exceeding utility needs in the mid-1908's, utilities and state regulators began using competitive bidding systems to select more fairly among numerous supply alternatives.
A sealed envelope bidding process employed by various underwriter groups interested in handling the distribution of a securities issue. The contract is awarded to one group by the issuer on the basis of the highest price paid, interest rate expense, and tax considerations.