Bidding is the act and result of bidding : offering something in public competition or auction . The term comes from the Greek word licitatio .
There are two main meanings of bidding. On the one hand, the concept can refer to an auction or auction process: the sale of an asset to the highest bidder. Whoever makes the highest bid wins the tender.
A tender is also developed when an entity makes public a need and requests proposals to satisfy it. Once it receives the offers , which must meet the requirements established in the bidding rules, it evaluates them and selects the most convenient one. Thus there is an offer that wins the bid.
These tenders are usually carried out by state agencies . Suppose a government wants to build a highway. To determine which company will carry out the work, open a tender. All companies interested in being awarded the project must indicate how much money they are willing to develop the work for and other details. When the tender closes, the government in question studies the options and chooses the one it considers most suitable.
Regarding the bidding phases, each country has its own rules ; Even within the same country there may be differences depending on the object and the amount, for example. On the other hand, a private company can develop its own rules and then carry out a completely legal and transparent tender.
That said, we can define some of the most common phases of the tender:
* The specifications (or clauses) are prepared : these must describe in detail the characteristics of the infrastructure that the entity wants to build or the service it wants to provide. Generally, the specifications are divided into technical, economic and administrative conditions. To prepare it, it is necessary to know the subject in depth. Furthermore, this initial process takes a long time, which translates into high cost;
* the call is published : this phase of the bidding can be carried out in newspapers of general circulation, on Internet portals that are specifically dedicated to this, through email messages to the companies registered at the corresponding headquarters or in bulletins officers;
* offers are presented : generally, they are made up of a technical part and an economic part. It is possible to require a deposit or bond from bidders, which usually does not exceed 2% of the contract amount. This money is returned to non-awardees and withheld from successful bidders until the contract is completed. There are those who do not require the deposit at this stage, but do so later, only from the successful bidders;
* Offers are evaluated : once the offers that do not meet the pre-established requirements are discarded, the others are evaluated following a criterion established in the specifications. Although the price is the most important of the parameters, it is not usually the only one (it is in the auction). Each parameter receives a score according to its degree of compliance with the conditions;
* award : the work or service in question is awarded to whoever made the offer with the best score;
* the contract is formalized : it is signed by the organization that calls the tender and the successful bidder, based on the specifications and the offer.
The specifications represent a series of obligations both for the person calling the tender and for the rest of the participants. Bidders must comply with them and the convener cannot change them in the middle of the tender, at least until the "award" phase. For example, if you don't like the winning company, you don't have the right to cancel the process. However, you can do so if no one shows up or if none of the participants meet the conditions.