Sealed Bid Process: A Quick Guide on What You Need to Know

Sealed bidding is a procurement method where contractors submit bids in sealed envelopes by a specific deadline. It levels the playing field, allowing contractors to compete solely on merit, without any hints of favoritism, underhanded tactics, or backroom deals.

But how does this sealed bidding process actually work? Let's find out.

What is Sealed Bidding?

As explained above, sealed bidding is a procurement method where owners or developers invite contractors to submit their best proposals in sealed envelopes. Each bid contains proposed prices or terms, which remain undisclosed until a set date and time when they're all opened together for review. 

Similarly to other construction tendering methods, the winner is typically the lowest responsive and responsible bidder. This refers to the contractor who not only submits the lowest bid but also meets specific criteria related to their: 

• Past performance
• Reputation
• Financial capability
• Compliance

Sealed envelopes are the norm, but there's also the option for electronic bids. With this method, contractors submit their sealed bids securely online through a portal, with the flexibility to revise them until the bid due date. Once the submission deadline closes, the project owner gains access to all sealed bids. This keeps everything confidential until the bid due date without the hassle of physical submissions or public bid openings.

While sealed bidding is often associated with the public sector, it may also find its place in select private projects. Private organizations typically opt for this method when: 

• Discussions with contractors aren't necessary and multiple bids are expected
• The decision is mainly based on price-related factors
• There's sufficient time for solicitation, submission, and evaluation

If these conditions aren't met, contracting by negotiation is often the go-to method.

The Sealed Bid Process Explained

Below are the steps project owners and contractors follow in the sealed bidding process:

• Creating a bid package
• Publicizing the invitation for bids. 
• Submitting bids
• Evaluation of bids.
• Contract award.

Creating a Bid Package

A bid package, also known as a tender package, is a comprehensive set of documents a project owner provides to potential bidders. It lays out all contractors need to know — from the project’s scope of work, requirements, and specifications — allowing them to develop accurate and competitive proposals. Without it, the bidding process would lack clarity and consistency. And without consistency, there’s bound to be potential disputes. 

Project owners can use bid packages with either: 

• Invitations To Bid (ITBs)
• Requests For Proposals (RFPs)

Invitations to bids for projects are employed when there is little to no guesswork regarding how the project will be completed (the project owner provides a very specific scope of work). Essentially, most bidders can produce a similar product, making the bid price the sole differentiator. You can make a copy of our free Invitation to Bid template here.

In contrast, construction requests for proposals (RFPs) come into play for more demanding and complex construction projects that require a high degree of technical expertise. For this reason, project owners consider other factors such as the contractor's experience and approach — on top of their price. 

Whether it's for large, competitive public projects or private developments, bid packages often follow a standard format. They may vary slightly to accommodate local regulations or project-specific details, but most bid packages include the following:

• Cover Sheet and Instructions
• General and Supplemental Conditions
• Bid Form
• Construction Bid Documents

Publicizing the Invitation for Bids. 

Advertising bids invites a pool of contractors to participate in the sealed bid process, and it's a crucial step in the sealed bid process.

Increased participation breeds healthy competition among contractors. This dynamic compels contractors to present their most competitive prices and terms.

To put it simply, casting a wide net and attracting a diverse range of contractors increases an owner's chances of finding the perfect match for their project needs — whether through pricing, experience, or terms. 

But it’s not just a case of attracting a crowd, this step also provides potential bidders enough time to prepare and submit their sealed proposals. Rushed bids often result in errors or oversights, which can impact the quality of the proposals and, ultimately, the project’s success. With sufficient lead time, bidders can put their best foot forward, and this results in higher-quality, competitive bids.

Submitting Sealed Bids

As the deadline looms, bidders prepare their bid documents per the construction requirements outlined in the bid package. This may include completing the bid form, gathering all the requested documents, and ensuring compliance with any formatting or submission guidelines.

Once their proposals are ready, bidders seal their bids in an envelope (and deliver them by hand) or submit them electronically through designated portals. This will depend on the submission instructions provided in the bid package.

Opening and Evaluating Bids

This step is often a public affair, with an event held at a predetermined time, date, and location as specified in the bid package. Contractors can send their representatives to witness the proceedings firsthand in the bid room.

For public projects, a bid opening officer oversees proceedings, publicly unveiling each bid received before the set time. They perform the following tasks in the evaluation process:

• Personally and publicly opens all bids received before the deadline
• Reads the bids aloud, if feasible
• Ensures the bids are recorded
• Awarding the Contract

After rigorous evaluation of all submitted documents, the contract is awarded to the lowest bid that meets all the criteria outlined in the bid package.

Unsuccessful participants can contest the decision or clarify uncertainties about the bidding process during this time. They can lodge a protest to challenge various aspects such as:

• Solicitation terms
• The procurement process
• Exclusion from competition
• A competitor's eligibility
• The contract award itself.

After settling protests, the winning bidder begins negotiating with the public project owner to finalize the construction contract.

P.S. Note that public projects can also use the two-step sealed bidding process. This is particularly common for government contracts where the project owner lacks clear specifications. Here's how it works:

First, companies send in their ideas and plans without outlining how much they'll charge. The government looks at these ideas to assess the acceptability of the supplies or services offered

Then, the companies that passed the first step send in their prices in sealed envelopes.

Want to Streamline the Construction Bidding Process?

When you're eager to kickstart your construction project, each moment spent creating bid packages and sending out invitations can feel like valuable time slipping away. With the pressure to get your project off the ground, such repetitive tasks can derail your momentum and potentially compromise project timelines.

Luckily for you, Downtobid's bid invitation platform takes the weight off your shoulders. You can automatically generate comprehensive bid packages and craft personalized, tailor-made invitations using advanced AI technology. You don’t have to waste time on manual tasks -- our platform does the heavy lifting for you.

But that's not all. Downtobid offers a range of features to simplify your bidding process even further. You can try it for free today.