Sealed bids and negotiated proposals: two different games

The method decides how you should spend your time

An invitation for bids and a request for proposals look similar on the first page, and they are completely different contests. In one, the government opens envelopes in public and the lowest responsive, responsible bidder wins. In the other, evaluators read what you wrote, compare offerors against stated factors, and may pay more for a better proposal.

A contractor who treats both the same way wastes effort in one and leaves points on the table in the other. A beautiful narrative on a sealed bid earns nothing. A low number with a thin approach on a best value proposal often loses to a higher-priced competitor. Read the method before you read anything else.

The two contests side by side

The FAR Overhaul model text, which agencies have been putting in place through class deviations, keeps the same two basic competitive methods. Sealed bidding is in Part 14 and competitive proposals are in Part 15.

Question	Sealed bid (IFB)	Negotiated proposal (RFP)
How the winner is chosen	Lowest responsive bid from a responsible bidder	Best value under the stated evaluation factors
Is the opening public	Yes. Bids are opened publicly at the stated time and place	No. Proposals are evaluated privately
Discussions	None	Possible, and often award is made without them
Contract type	Firm-fixed-price, or fixed-price with economic adjustment	Any type the solicitation allows
Late submissions	Late and not considered, with narrow exceptions	Late and not considered, with narrow exceptions
Where your effort goes	Takeoff, price, forms, bid security	Technical approach, past performance, price, forms

When the government uses each

Contracting officers use the procedure best suited to the requirement. Under FAR 6.101, they may use sealed bids only when they have found that all four conditions apply: time permits, the award will be made on price and price-related factors, discussions are unnecessary, and more than one bid is reasonably expected.

Construction often fits those conditions when the design is complete, and the construction rules say the contracting officer will only use sealed bids when the Part 6 conditions are met. When any condition fails, the job goes to competitive proposals. A set of incomplete drawings or a design-build approach will usually move a job into the negotiated world.

How a sealed bid is opened and awarded

The bid opening officer must personally and publicly open all bids received before the exact time set for opening and, if practical, read them aloud. If no time is specified, the time for receipt is 4:30 p.m. local time on the due date. Attend the opening when you can. You will learn who is bidding, how close the numbers were, and how the competition prices the work.

Unless there is a compelling reason to reject all bids and cancel, the contracting officer must award to the responsible bidder who submitted the lowest responsive bid. Before award, the contracting officer determines that the apparent awardee is responsible and that its prices are reasonable and not materially unbalanced.

Responsiveness is about the bid

Responsive means the bid conforms to the invitation. Under the current text, to be considered for award a bid must comply in all material respects with the invitation. A bid is judged on what it says when it is opened, and nothing you add afterward will rescue a nonconforming bid.

Bids must be rejected if the bidder imposes conditions that would modify requirements of the invitation or limit the bidder's liability to the government. The text lists examples: a price qualified as subject to the price in effect at delivery, or a bid requiring the government to determine that the product meets specifications. A condition goes to the substance of a bid when it affects price, quantity, quality or delivery.

Use the government's bid form. If a bidder uses its own bid form or a letter, the bid may be considered only if the bidder accepts all terms and conditions of the invitation and award would result in a binding contract that does not vary from those terms. Bids submitted electronically may be considered only if the invitation specifically allows that method.

• Writing "price subject to supplier confirmation" on the bid form
• Adding a cover letter with assumptions or exclusions that change the terms
• Failing to acknowledge an amendment that affects price or scope
• Leaving a required line item blank
• Missing the bid guarantee or furnishing it in the wrong form or amount
• Quoting a delivery or performance period longer than the invitation allows

The bid guarantee deserves its own warning. In sealed bidding, noncompliance with a solicitation requirement for a bid guarantee requires rejection of the bid, apart from a defined list of waiver situations. Construction contracts accept only separate bid guarantees, so check your surety's paperwork against the invitation early.

Responsibility is about the company

Responsibility asks a different question: can this company do this job. A bid can be perfectly responsive and the bidder can still be found not responsible. The general standards include adequate financial resources or the ability to obtain them, the ability to meet the required schedule, a satisfactory performance record, a satisfactory record of integrity and business ethics, and the necessary organization, experience and technical skills.

Because the contracting officer makes this determination before award, have financial statements and a bonding letter ready in case you are asked. Low bids from concerns determined not responsible are rejected, but when the bidder is a small business the matter is referred to the Small Business Administration, which decides whether to issue a Certificate of Competency. If you are a small business, know that route exists.

A bid can be perfectly responsive and the bidder can still be found not responsible.

Mistakes and unbalanced prices

After opening, contracting officers examine all bids for mistakes and ask a bidder to verify a bid when a mistake appears likely. The correction authority is limited: it applies only to bids that are responsive as submitted, and it does not allow correcting a bid to make it responsive.

The contracting officer may also reject a bid if the prices for any line items or subline items are materially unbalanced. Build your unit prices honestly, and check any item where you moved cost to protect cash flow. A low total price will not save a schedule of prices that looks like it was arranged to game the quantities.

How a negotiated award works

Under the current text, the goal of source selection is to select the proposal that represents best value. Agencies can use any one or a combination of approaches, and three are named.

Approach	How it decides	What wins it
Tradeoff	Allows paying more where the benefits merit the additional cost	Strengths the evaluators can name and tie to value
Lowest price technically acceptable	Lowest evaluated price among proposals that meet minimum requirements; no tradeoffs	Clean compliance and a sharp price
Highest technically rated with a fair and reasonable price	Selects the top-rated technical proposal if its price is fair and reasonable	Technical quality first

Evaluation has to stay within what was published. Agencies must evaluate each competitive proposal based solely on the factors and subfactors in the solicitation. The solicitation must generally also state how non-price factors compare with price, whether significantly more important, approximately equal or significantly less important. That single sentence tells you how hard the technical writing has to work.

For civilian agencies, the model text limits lowest price technically acceptable awards to cases where the agency can comprehensively describe minimum requirements and would realize no or minimal value from a proposal exceeding them. Where it applies, you are writing a pass or fail document. Answer every requirement directly and put your energy into price.

Your first offer may be your only offer

Agencies may make competitive awards without negotiations if the solicitation says so. The standard provision then tells offerors that the initial proposal should contain the offeror's best terms. Plan as if you will get one chance. If discussions do open, you can refine, but a proposal written in the expectation of a later round is a proposal at risk of never being read twice.

Where to spend the hours

Once you know the method, allocate your effort accordingly.

• Sealed bid: put the hours into the takeoff, quotes, unit prices, the bid form, every amendment and the bid guarantee. Check the form three times
• LPTA: treat each requirement as pass or fail, write the shortest clear answer, and price aggressively
• Tradeoff: spend heavily on the strengths that evaluators can cite, past performance, and how your price connects to your approach
• Highest technically rated: lead with technical quality and keep the price fair and defensible
• Every method: confirm active SAM registration, acknowledge every amendment and submit well before the exact time

There is also a hybrid. Two-step sealed bidding starts with technical proposals, with no pricing, and then runs a sealed bid among those whose proposals are acceptable. Read carefully when you see it, because it requires both kinds of discipline.

Frequently asked questions