What Is an Invitation For Bid (IFB)?
An invitation for bid (IFB), sometimes referred to as an invitation to bid, is used in situations where potential vendors or service providers differ principally on price.
Issuing an IFB allows a company to provide detailed written specifications, including all the terms and necessary conditions for work on the specific project it wants to contract out. Companies may deliver invitations to bid orally or in writing.
- With an invitation for bid (IFB), a comprehensive solicitation will describe the project in detail, including submission requirements, deadlines, project scope, duration, minimum qualifications, mandatory service standards, and required warranties.
- By providing such details, a company using the IFB process can streamline its decision process by choosing the qualified bidder with the lowest-priced bid.
- IFBs are most efficient when the entity seeking bids has a detailed understanding of the work or service it needs and the steps necessary to completing it.
- For example, major infrastructure and transportation projects are suited for the IFB process.
Understanding an Invitation For Bid (IFB)
A comprehensive invitation for bid (IFB) solicitation will describe the planned project in detail, lay out submission requirements (including deadlines, project scope, and duration), minimum qualifications, mandatory service standards, and required warranties. It also provides a description of the overall selection process including timelines.
An IFB differs from a request for proposal, in that the objective is to obtain contractors' proposals concerning the costs to complete the project with less emphasis on the bidder introducing its own ideas for how to complete a project or perform the service.
Through the IFB process, companies can streamline their decision process by choosing the qualified bidder with the lowest-priced bid. Bidders, in turn, can focus more narrowly on estimating the potential costs associated with completing a project and can produce a bid faster.
One drawback to this approach is that choosing the lowest cost vendor or contractor can result in quality and performance issues. Soliciting entities can minimize this risk by being very clear on minimum qualifications for bidders as well as on project scope, specifications, and service standards.
When to Solicit an Invitation For Bid (IFB)
Federal, state or local laws often require governmental organizations to conduct a tender process via IFB requests. This is to foster transparency, prevent corruption, and avoid favoritism. Academic institutions also regularly use IFBs.
IFBs are most efficient when the entity seeking bids has a detailed understanding of the work or service needed and the steps necessary to completing it, leaving price as the major determining factor in choosing among providers.
Examples of projects often subject to this type of bidding process include major infrastructure projects such as bridge and highway construction and repair and those involving mass transit. On the other hand, an RFP or Request for Tender might be more effective in cases where the work involves professional services, where qualitative factors including approach and assistance with conceptualization have greater weight in the decision process.