As an agency or public entity when you cannot get what you need from a preferred source, a centralized contract, or other existing agency contracts, it is time to conduct your own procurement. This can be done in two ways: by using a competitive bid or by making a discretionary purchase.
Understanding Competitive Bids
Open competitive bids go by many names including Request for Proposals (RFP) , Request for Quote (RFQ), Invitation for Bid (IFB), and Invitation for Quote (IFQ).
The basic competitive bidding process involves creating a document detailing your needs and requirements. This document is then posted for a certain period of time and interested businesses respond to the request by a certain date. After that date, you open and evaluate the responses. The decision of which business you choose is made on the basis of best value or lowest possible bidder.
Understanding Discretionary Spending Purchases
If purchases are made beneath a dollar limit that is pre-established, it is called a discretionary purchase. You can purchase directly from the business of your choice without a formal, competitive bid process if the purchase is beneath a certain threshold and if you can demonstrate:
- That the purchase meets your needs
- How and why you selected the vendor
- The reasonableness of the price
- That you bought from a responsible vendor
- That you complied with all your internal policies and procedures.