Specific regulations on sealed bidding and competitive proposals are
contained in Parts 14 and 15 of the FAR.
5-230 Quality Considerations Proper selection of the contract type and
the method of procurement are of vital importance in obtaining quality
services by contract. Factors influencing the selection of contract type
and the method of procurement are summarized below.
(a) Need for Specification Flexibility. Specifications used in sealed
bidding must be much more precise than those used fornegotiation. This is
because in sealed bidding there is no opportunity after the opening of bids
to discuss possible interpretations of the contract documents to assure
mutual agreement. Also, because competition in sealed bidding is usually
limited to price, bidders are likely to offer the minimum quality item which
will be responsive. This means that the specifications must be immune to
degradation by bidders which would cause the Government to get inferior
(b) Need for competitive Criteria Other Than Price. The FAR states
that evaluation criteria in contracts will be clearly defined and awards
made only on the basis of criteria set out in the proposal or sealed bid
request. In sealedbids, the contract is awarded to the bidder whose price
is most advantageous considering only price and other price related factors
included in the solicitation. In competitive proposals, the contract is
awarded to the bidder whose proposal is most advantageous taking into
consideration price and other factors included in the solicitation.
Therefore, a wide range of factors including technical considerations and
life cycle costs may be considered as evaluation factors when competitive
proposals are used.
(c) Need for Discussions. It may not be possible to adequately
describe the scope of the work. In these instances discussions with the
officers concerning their understanding of the scope of the work and the
means by which they plan to accomplish it are desirable prior to award of
the contract. The need for discussions can be satisfied if competitive
proposals are employed.
(d) Need to Provide Incentives. It may be considered desirable for the
particular contract under consideration to provide for incentives to the
contractor for superior performance. Quality of work, timeliness of
performance, cooperation with administrators, and contractor ingenuity may
suffer under firm fixed procurements. The use of the fixed price
award fee contract motivates the contractor by permitting the award of
additional fees to the contractor for superior performance.
(e) Need for Cost Control. Under fixed price incentive fee contracts,
the contractor is motivated by costs. The distribution of the incentive fee
for overruns and underruns is primarily based on cost control. By keeping
the costs below a ceiling amount, the contractor shares in the underrun.
Therefore, the motivation for profit is based on cost control rather than on
providing quality service.