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Sealed Bidding Procedures

ACON 074

DAU GLOSSARY DEFINITION

This term replaced formal advertising.

Alternate Definition

Sealed bidding involves the following steps:

  • Preparation of invitations for bids (IFB)
  • Publicizing the invitation for bids
  • Submission of bids
  • Evaluation of bids
  • Contract award
     
General Information

Sealed bidding is one of the three major federal procurement procedures, the other two being Simplified Acquisition (FAR 13) and Contracting by Negotiation (FAR 15). Sealed bidding satisfies all Competition in Contracting Act (CICA) requirements.

 

Sealed bidding can be used to acquire both commercial and non-commercial products and services, but it’s commonly used for construction contracting. Contracting officers are required to solicit sealed bids if the following circumstances exist [FAR 6.401(a)]:

 

  • Time permits the solicitation, submission, and evaluation of sealed bids;
  • The award will be made on the basis of price and other price-related factors;
  • It is not necessary to conduct discussions with the responding offerors about their bids; and
  • There is a reasonable expectation of receiving more than one sealed bid.

 

When using sealed bidding, the contracting officer is limited to either a firm-fixed-price (FFP) or fixed-price with economic price adjustment (FP-EPA) type contract (FAR 14.104). Under sealed bidding, no discussions or negotiations may occur prior to award (but see Two-Step Sealed Bidding at FAR subpart 14.5).

 

The contracting officer may use the uniform contract format (UCF) for the solicitation and award document, but a simplified contract format unique to sealed bidding may be used in accordance with FAR 14.201-9.  When the simplified format is employed, the Standard Form 1447 (see FAR 53.214(d)) shall be used per FAR 14.201-9(a).

 

Additional details for each step identified in the “Definition” section above are provided below (FAR 14.101):

 

  1. Preparation of invitations for bids. Invitations must describe the requirements of the Government clearly, accurately, and completely. Unnecessarily restrictive specifications or requirements that might unduly limit the number of bidders are prohibited. The invitation includes all documents (whether attached or incorporated by reference) furnished prospective bidders for the purpose of bidding.
  2. Publicizing the invitation for bids. Invitations must be publicized through distribution to prospective bidders, posting in public places, and such other means as may be appropriate. Publicizing must occur a sufficient time before public opening of bids to enable prospective bidders to prepare and submit bids.
  3. Submission of bids. Bidders must submit sealed bids to be opened at the time and place stated in the solicitation for the public opening of bids.
  4. Evaluation of bids. Bids shall be evaluated without discussions.
  5. Contract award. After bids are publicly opened, an award will be made with reasonable promptness to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the Government, considering only price and the price-related factors included in the invitation.

 

If two or more bids are equal in price, then the order of priority for award is (i) small businesses from labor surplus areas, (ii) other small businesses, and (iii) all other businesses. Should two or more businesses remain equally eligible after application of the priority rankings above, award will be made by a drawing by lot limited to those bidders and witnessed by at least three persons. Once the winning bid is selected, the contracting officer must determine if the price is fair and reasonable and if the contractor meets the responsibility criteria in FAR Part 9 (Contractor Qualifications) before awarding the contract.

 

Two variations of the process that may be used are:

 

  • Conversion from Sealed Bidding to Contracting by Negotiation. (FAR 14.404-1(f)): When the agency head determines that the IFB should be canceled and that the use of negotiations is in the Government's interest, the contracting officer may award the contract without issuing a new solicitation, provided:
    1. Each responsible bidder in the sealed bid acquisition has been given notice that negotiations will be conducted and has been given an opportunity to participate in the negotiations; and
    2. The award is made to the responsible bidder offering the lowest negotiated price.
  • Two-Step Sealed Bidding (FAR 14.5): This is a combination of competitive procedures designed to obtain the benefits of sealed bidding when adequate specifications are not available. Step one consists of the request for, submission, evaluation, and (if necessary) discussion of a technical proposal. No pricing is involved. The objective is to determine the acceptability of the supplies or services being offered. Step two involves the submission of sealed, priced bids by those who submitted acceptable technical proposals in step one. Bids submitted in step two are evaluated and awards made in accordance with FAR Subparts 14.3 and 14.4. This method is especially useful in acquisitions requiring technical proposals for complex items.
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