Rules detailed in a bid form regarding the necessary conditions for a bidding process.
Bid Requirement Details
A bid requirement is the necessary conditions within a bidding process that sets a price for a product or service. A bid is a price someone or a business is willing to sell or pay for something. People use bids in auctions, real estate, stock exchange, construction, and other corporate or government procurement initiatives.
A bid requirement is a section that will exist in a bid form, and the entity or individual requesting bids is usually responsible for deciding requirements. For example, a construction bid form will include the following information under bid requirements:
- Building rules and regulations
- Insurance requirements
- An approved vendor list
If you plan to buy a house, the bid requirements for the offer you submit include providing information that shows you can afford the house. For example, most sellers require buyers to show paperwork indicating the bank has prequalified them for a loan that covers the bid price.
Real-World Example Of Bid Requirements
The Northeastern Illinois University has a competitive bidding process for all purchases and contracts the University makes. The bidding policy is put into effect by the Illinois Procurement Code (30 ILCS 500/). The University's Purchasing Department prepares a solicitation package for potential vendors to submit bids or proposals.
The bidding process requires University personnel to prepare information on the product or service requested. These details can include performance specifications, design specifications, and scope of work. The University's bid requirements also include bid limits that require a competitive process. Limits effective as of August 2017 are for procurements of at least $100,000 for:
- Supplies or services, including equipment
- Professional and artistic services
The Purchasing Department collects bids or proposals, reads them aloud, and conducts a preliminary review before forwarding it to the relevant University department. The department evaluates the bids or proposals and submits a Recommendation of Award (ROA) memo. The Purchasing Department then publishes the award to a Bulletin and prepares the contract with the winning bidder.
Significance Of Bid Requirements
Bid requirements are a significant component of a bid form. They support a bidding process by clarifying what is required by the party seeking a product or service and the entities or individuals submitting a bid. The requirements also help maintain the integrity of the procedures by ensuring everyone involved comply with contract requirements.
Types Of Bid Requirements
Different types of bid processes will have different requirements. Bid processes vary depending on the field and platform the bid is taking place. Examples of different types of bids include:
- Timed bidding auctions
- Online bidding that can be unique or dynamic
- Academic bidding for students to select courses in an open or closed process
- Stock bids on the stock exchange
In construction bids, there are generally two types of bidding processes: competitive bids and negotiated bids. With competitive bids, the bidding process requires the company to allow multiple contractors to submit a bid for the project. The lowest bid is typically selected. In a negotiated bid, a single general contractor builds a connection with the company owning the project and works on behalf of the company.