General contractors frequently spend bid days contacting subcontractors and suppliers to see if they are interested in bidding on their projects.
This can be a time-consuming task, and it is frequently too little, too late. So instead, GCs should use an invitation to bid (ITB) to advertise the bidding opportunity to receive quality bids from subcontractors and suppliers.
This document informs subcontractors and suppliers that there is a potential project, what types of work are included, and to whom bids should be sent. Using an ITB is an important item in a general contractor’s construction bidding toolbox.
What is an invitation to bid (ITB)?
An invitation to bid, also known as an invitation for bid(IFB) or sealed bid, is a request for contractors to submit a proposal for a specific product or service on a project.
Issuing an IFB enables a company to provide detailed written specifications, including all terms and conditions to work on the specific project it intends to contract out. For example, companies might deliver bid invitations orally or in writing.
An ITB can be sent to specific subcontractors and suppliers, listed on a bidding site or contractor’s exchange, or put on the general contractor’s website. It should include detailed information on the project and the work required, as well as specifics regarding the bid, such as the bid date and contact information.
Understanding an Invitation to Bid (IFB)
A detailed invitation for bid (IFB) solicitation will define the planned project, submitting requirements (including deadlines, project scope, and duration), minimum qualifications, mandatory service standards, and required warranties. It also describes the overall selection process, including timelines.
An IFB varies from a request for proposal in that the objective is to receive contractor proposals on the costs to complete the project, with less emphasis on the bidder proposing its own ideas on how to complete a project or perform the service.
Companies can streamline their decision-making process by selecting the qualified bidder with the lowest-priced bid using the IFB process. Bidders, in turn, can focus more narrowly on estimating the potential costs associated with completing a project and produce a bid faster.
One drawback of this type is that choosing the lowest-cost vendor or contractor may result in poor quality and performance. Soliciting entities can reduce these risks by defining minimum bidder qualifications as well as project scope, specifications, and service standards.
What to include in an invitation to bid?
1.Project name and location
Make sure you give the project a unique name. To avoid any confusion, use the name shown on the bidding documents. In addition, subcontractors will be able to determine whether or not the project is in their service area based on the project’s location.
2.Bid date and time
Make sure the deadline for bids is correctly specified on your invitation. Set a deadline for bids and leave some leeway for late bidders. You should allow yourself at least a few hours to put together your bid.
3.List the scopes of work needed
List the different types of work that are included in the project. This will assist subcontractors in determining whether or not the project is appropriate for them. It will also assist you in determining which subcontractors on your contact list should be invited.
4.Plans and specifications
Include a link or other instructions for accessing the bid documents.
Is it essential for subcontractors to be prequalified in order to bid on this project? Is there a specific bid form that must be included? Is there a bond for the project? Include information about these requirements in your invitation.
6.Where and how to submit bids
Make sure there are clear instructions on where to send bids and how they will be accepted.
What are the different types of invitations to bid?
- Open tenders: Tenders are often referred to as open calls for tenders or published tenders. These are accessible to any potential vendor or contractor who meets the submission requirements and can guarantee performance.
- Restricted tenders: Tenders are often referred to as restricted calls for tenders or invited tenders. These are only available to a limited number of prequalified vendors or contractors who meet a set of basic standards. This could be part of a two-part procedure, with the first phase being an expression-of-interest (EOI) tender call, which generates a list of vendors qualified to participate in the second part.
- Double envelope system: This system distinguishes between the technical proposal and the price proposal. The two proposals are kept in separate envelopes that are sealed. When deciding on the winning proposal, the evaluator looks first at the technical proposal and then the price. This system is meant to ensure a fair evaluation of a proposal’s technical merits without being influenced by its cost.
- Tender box: To receive bids, this system uses a mailbox. During the period when proposals are being accepted, this tender box is open for interested parties to submit their bids. After the bidding period has ended, the tender box is sealed and can only be opened by the evaluation committee or a member of the procurement management department with two witnesses.
When to Use an Invitation to Bid?
Invitations to bid are especially useful for predictable projects, such as when the contracting party understands the requirements and processes required to achieve the end product. This method entails providing detailed written specifications that include all of the work’s terms and conditions. An invitation to bid will almost always result in a fixed-price contract.
Most public works projects are required by law to use invitations to bid on all of their jobs. This is done to ensure that the bidding process is as fair as possible. This is because government contracts should be awarded transparently to avoid favoritism and corruption. For design-bid-build contracts, invitations to bid are commonly used.
Pros & Cons of Invitation to Bid
Invitations to bid are a simple and quick way to award a construction contract. It streamlines the bidding process by clearly defining the specifications and desired end product. This is useful when there are many bidders because there will be no variation in the bids, except for the price.
The disadvantage of this method is that the company’s performance and track record are not sufficiently considered. In addition, basing an award decision solely on price can be risky, as it can lead to contractors underbidding the project in order to win the contract.
Download Free Invitation To Bid Sample Template from HERE