Two–step sealed bidding
Two-step sealed bidding is a variation of sealed bidding. Generally, there are two steps to obtain benefits of sealed bidding when adequate specifications are not available. Two-step sealed bidding is especially useful in acquisitions requiring technical proposals, particularly those for complex items.
Two processes that boost procurement efficiency
- Sealed bidding makes the process fairer
Requesting sealed bids from suppliers speeds up the procurement process and increase process integrity. However, in the correct circumstances, it also has the effect of optimising price.
The traditional ‘sealed bid’ process involves bidders submitting two separate sealed envelopes as their bid – one containing technical proposals and the other prices. With quality and cost the only determining factors in contract award, any pre-existing preferences for particular suppliers in the buying team are made redundant. Updating this method to electronic platforms not only encourages suppliers to submit their ‘best pricing’, it gives them confidence that the process is fair. If suppliers have confidence in the process, more will participate in your procurement.
2. Using reverse auctions to enhance your market
Reverse auctions drive the winning price down until ‘true market value’ is achieved. For this technique to work smoothly, requirements must have very limited variability. Electronic reverse auctions happen in real time, with full view of other bids, and without the need for everyone to be in the same room.
Combining these two processes electronically provides a single, continuous workflow that delivers an immediate decision. Technical bids can be evaluated electronically, with prices then simultaneously revealed for qualifying suppliers. The reverse auction can commence directly thereafter while all parties are still online.