An open bid, or unsealed bid, is an offer that is available for all other bidders to see and possibly act on. These bids can be placed through a traditional live auction, where prices are indicated by an auctioneer when bidders indicate their willingness to pay. Open bids can also be awarded for construction projects, where the highest bidder usually wins the contract. Some projects and sales may require an open offer and some may not.
In a traditional merchandise auction, all bids are open because all bidders can hear or see the bid being made. All bids can also be changed as long as another bidder places more bids. Finally, the auctioneer declares a winner when no more bids are offered after a certain period of time has elapsed. The highest open bid is usually declared the winner unless there are extenuating circumstances such as non-payment. This is a common process for home and other property sales.
If bidding is being requested in connection with a project or to award some type of contract, the process begins with a request for a bid from the sponsoring agency, which is usually a government or private company. Once the bid has been published, the specifications will also be available for review by the different bidders. Bidders who find work that matches their skills are free to bid. The bidder should look at the bid board, which can be a physical board or an online display, to see if their bid is competitive with others.
In some cases, a waiting period applies before adjustments can be made to an open offer. This is to ensure that all bidders have the opportunity to submit their original bid. Then, once the waiting period has expired, adjustments can be made. Bidders must compare their costs with those of other bidders in an attempt to find the best possible bid, but also ensure that the project does not cost them more than they pay. The procedure for determining whether a project or auction is open or closed is often determined by law.
The open bidding process has both advantages and disadvantages. The benefits of an open bid are that it is easier to discover unethical behavior among bidders and the competition can provide a greater advantage for the seller. On the other hand, there is not likely to be much difference between a winning bid and a losing bid in an open bidding process, which can be a disadvantage for the entity seeking bids.