Competitive Bid Process

Why is there a need for the competitive bid process?
The University is required to show that prices are fair and reasonable in the marketplace, but there are many other considerations in addition to the purchase price. Competitive bidding is the process that allows Procurement Services to properly survey the marketplace.

The University of Michigan Board of Regents requires that all transactions $10,000 or greater be competitively bid. When a formal bid is sent to suppliers, the University can ask for things that are favorable to the University and the department, rather than accept what is in the best interest of the supplier. It is also useful to have an agreement in writing which details the points both parties--the University and the supplier--have agreed upon. The expectations of the department and the supplier are made clear, and the bid document is a record of that agreement.

Facilitating the Competitive Bid Process

Professional buyers understand the rules, regulations, and exceptions involved in procurement transactions. Procurement Services provides assistance to departments in preparing competitive bids and represents the University in the bid process.

Procurement Services Role in the Competitive Bid Process

Procurement Services can assist departments in finding suitable suppliers, and making sure department needs are clearly outlined in the bid document and agreed to by the supplier. Procurement Services follows these guidelines when soliciting quotations from potential suppliers:

  • Use one of the University's formal documents to request bids from suppliers (the documents include Request for Information (RFI), Request for Quotation (RFQ), and Request for Proposal (RFP)).
  • Ensure each supplier gets the same information.
  • Include in the bid document specific terms and conditions, including Standard General Conditions, Insurance Liability coverage limits, OSEH requirements, GSA pricing, state and local pricing, etc.
  • Obtain quotations from at least three suppliers whenever possible.
  • Accept as valid for consideration only quotations addressed to and sent to Procurement Services by the specified deadline.
  • Review the submitted proposals from suppliers who wish to bid.
  • Present a summary of the bid results to the department.
  • Work with the department to assess each proposal to determine which represents the best value to the University.

The Department’s Role in the Competitive Bid Process

Departments should follow these guidelines to facilitate the competitive bid process:

  • Contact your Procurement Team or buyer early in the purchasing process.
  • Provide the buyer with detailed information about your requirements for the transaction (supporting documents may be faxed to the buyer, sent via email attachment, or via campus mail or hand delivery). Preparation of specifications considered essential to satisfying the department’s need is the responsibility of the department. If requested, Procurement Services will assist in developing such specifications.
  • Allow the buyer sufficient time to research potential suppliers, review and clarify your department’s requirements, and prepare the bid documents.
  • Allow sufficient time (two weeks on average) for the suppliers to respond to a bid request.

Note: Department staff must not share quotation information with any suppliers. Suppliers must contact Procurement Services to obtain bid results.

Sole Source Justification

Some purchases are completed without the competitive bid process. A written justification statement prepared by the department must accompany requests for non-competitive purchases. Departments are encouraged to use the Sole Source Justification Form designed for this purpose. Please note that Procurement Services must approve this statement, and that all non-competitive exceptions are reported to the Board of Regents.