Sealed bids and requests for proposals are types of procurement methods. The sealed bid process involves competitive bids used for high-cost purchases of physical property, services or construction. For example, it is common to use sealed bids for heavy-equipment purchases. The lowest-priced bidder that meets business requirements will win the bid. On the other hand, a request for proposal considers more than just price: It typically involves a bidding process for particular high-cost services or product purchases that require further evaluation to make a decision.
Sealed Bid Process
In a sealed bid process, a company or contracting official will prepare an invitation for bids, which includes specific business requirements, and then publicize the invitation to prospective bidders. Bidders will then submit their sealed bids. Bids are opened in public at a specific time and place indicated in the invitation. After evaluating the bids without discussions, the company will award the contract to the lowest-priced bidder that best meets requirements specified in the invitation.
Request for Proposal Process
With an RFP, a company or contracting official will write a document that details specific requirements for a project and solicits proposed solutions from multiple vendors. Vendors will then write and submit their proposals that will best address the official’s needs. Officials then evaluate the submitted proposals and select the most competitive offers. The company then negotiates with remaining vendors to determine the single most cost-effective solution.