What is a bid? What does bidding mean?

A bid is an offer to buy something for a specified sum of money. It can also mean a proposal to complete an amount of work or service in return for payment. People make bids at auctions, when competing for contracts, making offers for shares, or seeking to acquire companies.

bid composite

There is also a verb to bid, as in to bid for a contract, to bid farewell, and to bid or invite someone to accompany you. In addition, to bid can mean to issue an order or instruction. An example of the latter would be a judge instructing a jury to ignore a comment.

Open and closed bids

Bids can be open or closed. At a public auction, you make open bids. Other bidders know what price you have agreed to pay.

The auctioneer’s job is to sell the item to the highest bidder. You signal to the auctioneer that you agree to pay the amount they propose. If nobody makes an offer higher than yours, you have won the bidding.

The term closed, or sealed, bid describes situations in which potential buyers do not know how much each other is offering.

In Scotland, for instance, many people sell their homes through a blind auction. Under this system, the seller gives a minimum price and asks for offers around or above it.

Bidding for contracts

Bidding is a significant process in the business world when it comes to seeking suppliers or contractors to fulfil a scheme of work. The process can take months for very large projects. Examples of these include new road schemes, shopping malls, hospitals, and power plants.

A typical bidding process might proceed as follows:

    1. The organization wishing to buy or procure the work issues an invitation to tender or request for proposal.
    2. Contractors interested in winning the contract respond with a proposal that describes how they would meet the requirement.
    3. The purchaser, or procurer, then evaluates the proposals that interested parties have submitted and awards the contract to the party with the best bid.

During the evaluation, the procurer will look for value for money, how well the proposal complies with their requirement, and what warranties or guarantees the supplier is offering. They will also wish to see details of the contractor’s project management and quality assurance methods.

San José State University’s Glossary has this succinct definition of ‘bid’ when referring to suppliers:

“A price quote submitted by a supplier.”

Video – How to write winning proposals for U.S. government contracts

The biggest procurer of goods and services in the world is the United States federal government.

In 2017, the U.S. government awarded contracts totalling nearly US$ 510 billion in value. Almost a quarter (24.3%) of those contracts went to small businesses.

John Conway is a proposal writer for U.S. Federal Contractor Registration, a third-party firm that helps businesses to qualify to receive government contracts.

In his previous job, Conway worked as a government contract specialist. His field of expertise includes aviation projects. In the following video, he gives his top tips for writing winning bid proposals for U.S. federal contracts.

Top tips

Many of Conway’s tips would apply to any contractor wanting to submit a winning proposal. Here are some key examples:

      • Understand the requirement.
      • Be clear about how you can meet the requirement.
      • Be succinct and to the point – don’t use 10 words when 5 will suffice.
      • Check grammar and spelling – it shows you care about detail.
      • Keep the language simple and check readability. Don’t force the reader to look up words.
      • Explain how your quality assurance plan works and how you would apply it their project.