Our state’s getting nearly $300 million for the highway department so an overpass and new highway exit project that had been on hold for 4 years finally went through. Our primary contractor won the sealed bid for $14.9m, and we can expect to see $200k for our part in subcontracting the considerable trucking that will have to be done.
Half of our town’s business is conducted through the sale of sand, shale, various soils and gravel. Another third is probably private truckers and larger trucking companies (dump trucks and the like), so it’s very easy to see from our perspective how this has paid out. Work has been very lean in the past few months, but people are really gearing up now. We alone will be hiring at least two dozen new people for this contract.
As I’ve always had it explained to me, sealed bids encourage contractors to make the most competitive bid they can the first time (since it’s the only try they get). Why that’s better than simply letting them duke it out with multiple bids is beyond me. I’ll ask tomorrow, though, but I suspect no one else here knows why either. It’s just what we have to do
I imagine it is so the competitive and ambitious bidders don’t get caught in a bidding war, and undercut their bottom line so much that the project goes over budget, and possibly, gets canceled because of budget issues.
It also keeps the process honest - you don’t want an insider in the company knowing what the bids are, and then trying to sell that information to another company that hasn’t bid yet, in exchange for a kickback. Sealed bids means that no-one knows how much anyone is bidding until they’re all opened, after the close of the bid period.
Sealed bidding also keeps the individual bidders from collaborating together to insure a higher bid price. My agency doesn’t even release the names of the companies that have submitted bids until it is time to open them, which is done publicly.
Competitive sealed bidding isn’t perfect - the company with the lowest price may not actually be the best for the job - but in the murky world of government contracting, it’s considered the best way to spend the taxpayer’s money.
Occasionally, you’ll see a reverse auction for something, but as in regular auctions, sometimes the excitement overcomes common sense, and a contractor can end up bidding an amount that loses them money. This, as you can probably imagine, causes some rather nasty problems, and it can end up costing more money all around.
throwing money at deteriorating infrastructure is a good use of resources. I still find WPA bridges along the back roads. OK, they’re culverts… but still.
