What is an 'Invitation For Bid - IFB'

An Invitation for Bid (IFB), sometimes referred to as 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 or projects it wants to contract out. Companies may deliver invitations to bid orally or in writing.

BREAKING DOWN '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 Invitation to Bid differs from a Request for Proposal (RFB) 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

Governmental organizations are often required by federal, state, or local laws intended to foster transparency, prevent corruption and avoid favoritism to conduct a tender process via Invitation for Bid requests. Academic institutions also regularly use Invitations for Bid.

Invitations to Bid are most efficient when the company or other entity seeking bids has a detailed understanding of the work or service needing to be provided and the steps necessary to completing it, leaving price as the major determining factor in choosing among service providers or contractors. 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. In cases where the work involves professional services where qualitative factors including approach and assistance with conceptualization have greater weight in the decision process, an RFP or Request for Tender might be more effective.

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