Legal Definitions - sealed bid

A sealed bid is a formal offer, typically submitted in writing and enclosed in a confidential manner (such as a sealed envelope or a secure electronic submission), ensuring that its contents remain unknown to competing parties until a specified date and time. At this predetermined moment, all submitted bids are opened simultaneously and evaluated. This process is commonly used in competitive situations to promote fairness, transparency, and prevent bidders from adjusting their offers based on knowledge of what others have proposed.

Here are some examples illustrating the concept of a sealed bid:

• Government Procurement: A state government agency decides to upgrade its entire fleet of vehicles. To ensure a fair and competitive process, it issues a Request for Proposal (RFP) inviting various car manufacturers and dealerships to submit their best offers for supplying the new vehicles. The RFP specifies that all proposals, including pricing, vehicle specifications, and delivery timelines, must be submitted in a sealed envelope by a particular deadline. On the designated opening day, representatives from all bidding companies gather as the sealed envelopes are opened one by one, revealing each company's offer simultaneously. This prevents any single company from knowing a competitor's price beforehand and undercutting it.

  This illustrates a sealed bid because each company's offer is kept confidential until a specific, simultaneous opening, ensuring that no bidder has an unfair advantage by knowing or reacting to another's proposal.

• Real Estate Sale: A highly desirable historic property comes onto the market, attracting significant interest from multiple potential buyers. To manage the high demand and ensure the seller gets the best possible price, the real estate agent announces that all interested parties must submit their highest and best offers in a sealed envelope by Friday at 5 PM. The agent collects all the sealed offers and, on Saturday morning, opens them all in front of the seller. The seller then reviews all the offers, which might include different prices, closing dates, and contingencies, to decide which one to accept.

  This demonstrates a sealed bid because each buyer submits their offer without knowing what other buyers are proposing, creating a truly competitive environment where each party puts forward their strongest offer independently.

• Construction Project Tender: A large university plans to build a new student dormitory and invites several construction companies to bid on the project. Each company is required to submit a detailed proposal outlining their construction plan, timeline, and total cost in a sealed package to the university's procurement office by a specific date. On the bid opening day, a committee from the university convenes to unseal and review all the proposals at once. This allows the university to compare the various bids objectively without any company having the opportunity to revise their offer after seeing a competitor's price.

  This exemplifies a sealed bid because the construction companies' financial and project proposals are kept secret until the simultaneous opening, ensuring a fair comparison and preventing last-minute adjustments based on competitor information.