An open bid, or unsealed bid, is a bid that is available for all other bidders to see and possibly act upon. These bids may be done through a traditional live auction, where an auctioneer calls out prices as bidders indicate their willingness to pay. Open bids can also be awarded for things like construction projects, where the lowest bidder often gets the contract. Some projects and sales may require an open bid and others may not.
At a traditional auction for merchandise, all bids are open because all bidders can hear or see the offer being made. All bids can be changed as well, provided another bidder bids higher. Eventually, the auctioneer declares a winner when no more bids are offered after a certain period of time has lapsed. The highest open bid is generally declared the winner, unless there are extenuating circumstances, such as a failure to pay. This is a common process for real estate and other estate sales.
If the open bid is being sought in relation to a project or to award some type of contract, the process begins with a bid request from the sponsoring agency, which is usually a government or private company. Once the request has been published, the specifications will also be available for different bidders to review. Bidders that find the job a match for their skills are free to submit a bid. The bidder should then watch the bid board, which may be a physical board or an online presentation, to see if their bid is competitive with others.
In some cases, a waiting period is enforced before any adjustments to an open bid can be made. This is to ensure all bidders have a chance to submit their original bid. Then, once the waiting period has expired, adjustments can be made. Bidders must weigh their costs against that of other bidders in an attempt to come up with their best possible bid, but also be sure the project does not cost them more than it pays. The procedure for determining whether a project or auction is done by using an open bid or closed bid 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 uncover unethical behavior among the bidders and competition could provide a bigger advantage for the seller. On the other hand, there is not likely to be much difference between a winning bid and losing bid in an open bidding process, which may be a disadvantage to the entity seeking proposals.