Free Essay about the Issues with Competitive Bids

A competitive bid refers to the price submitted to a firm for a product or service. As such, a vendor or service provider in the process offers a competitive bid with the original intention of winning a particular contract. Therefore, a competitive bid, in most occasions will involve company, organization or government agency in need of goods on long-term will typically put out in the form of a request for proposal (RFP). Worth noting is the fact that in most cases, the lowermost bid may not win a contract since the procurer must always have sureness in the strengths and capabilities of the vendor in executing the order (Carlson, Greenstein & Neuberger, 2017). Government contracts have for an n extended period used the competitive bidding process to attain the desired goods and services. There are many problems associated with competitive bidding in government project and services. This research essay is aimed at discussing the various issues and problems that arise as a result of the government using competitive bidding processes towards attaining the desired goods and services.

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First and most importantly, it is worth mentioning that while there are many issues associated with competitive bidding, the process has one advantage that makes it a viable method for many government projects. Competitive bidding has for an extended period been considered as a means towards promoting competition, providing transparency and giving all interested suppliers equal opportunities to winning business. Consequently, people and organizations may in one way or the other meet the lower price requirement. However, according to Deming proposed systems for managing the bidding process, taking corners as well as applying illegal operations eventually results in more losses making competitive bidding a viable process.

However, apart from the initially mentioned advantage of competitive bidding, research suggests that the process may lead to failure of leading suppliers not tendering and expressing their interests. For example, government procurement processes and procedures only permit contractors who bid to be deliberated for the bid. If in any case the leading supplier or suppliers do not tender, the purchaser will be forced only to consider bids from suppliers who have tendered and expressed their interests (Ballesteros-Perez et al, 2015). Resultantly, most government competitive bidding processes bar potential and abled suppliers to tender their efforts as a result of their costs and terms for the contract being erroneous. Secondly, it has been observed that in most government bids, there are looming barriers to communication between supplier and customers.

The third disadvantage is the cost-plus phenomenon. According to Deming in Out of the Crisis, running the game of cost in an industry revolves around the supplier offering a bid so low with the sole purpose of being sure to get the business. The result of winning a request as a result of stating cheaper prices is that it usually leads to using of more affordable, poor quality materials and labor since the supplier has been pushed by price factors to play the competitive tendering game thus coming under considerable pressure to keep the costs down while at the same time getting a satisfactory profit margin (Carlson, Greenstein & Neuberger, 2017).

Conclusion

Competitive bidding is a process aimed at offering a level playfield for all willing to provide goods and services. However, there are hurdles concerning the plans and job specifications in that for a bid to have reasonable meaning, and it should spell out everything about the project from the initial stages to the finishing. As such, the competitive bidding process can lead to each bidder making assumptions that they are likely to be the best while in the actual sense other bidders did not express their interest in the process. Consequently and as earlier discussed, competitive bidding has several disadvantages that discourage abled suppliers from expressing their interests.

References

Ballesteros-Perez, P., Skitmore, M., Pellicer, E., & Gonzalez-Cruz, M. C. (2015). Scoring rules and abnormally low bids criteria in construction tenders: a taxonomic review. Construction management and economics, 33(4), 259-278.

Carlson, S., Greenstein, R., & Neuberger, Z. (2017). WIC's Competitive Bidding Process for Infant Formula Is Highly Cost-Effective. Washington, DC: Center on Budget and Policy Priorities, Updated.