bidding

Bidding is the process of submitting offers to supply goods or services or to acquire assets under a competitive process. It occurs in auctions and in formal procurement and contracting. In an auction, bidders compete by offering higher prices to buy an item. In procurement, buyers invite bids from suppliers or contractors to perform work or deliver goods at a stated price, with the winning bid forming the basis of a contract.

Auction formats vary. English auctions feature ascending prices until no higher bid is offered. Dutch auctions begin with a high price that is lowered until a bidder accepts. Sealed-bid formats keep bids private and determine the winner from among the submitted offers. Common terms include reserve price, bid increments, and proxy bidding, where a system places automatic higher bids on a bidder’s behalf.

In procurement, the bidding process typically starts with invitations to bid or requests for proposals. Bidders submit price and technical information, and may provide qualifications and warranties. A bid security may be required. After bid opening, bids are evaluated using predefined criteria such as price, capability, delivery, and compliance, and the contract is awarded to the best-qualified bid. Bid validity periods may apply.

Ethical and legal considerations include prohibitions on bid rigging and collusion, which are illegal in many jurisdictions. Transparency, fairness, and avoidance of conflicts of interest are emphasized to ensure competitiveness. Compliance with procurement laws and standards is essential, and violations can lead to penalties or debarment.