Invitation for Bid: You Just Received an IFB, Now What?

You Just Received an IFB, Now What?

What’s an Invitation for Bid (IFB)? For one, it’s a whole lot less intimidating than an RFP! So wipe that sweat off your brow! The Bid Lab is here to help you dig into what you need to know — and how you need to proceed next — in responding to IFBs.

What Are Invitations for Bids?

IFBs are forms that organizations use to invite vendors to submit a formal bid on a service, product or property project. They outline the project’s scope of work, define the individual requirements and include all of the important project deadlines.

They’re similar in nature to RFPs, as they’re documents created by an organization to solicit bids from qualified vendors to fulfill the needs of their project. However, an IFB will evaluate proposals largely based on price, whereas RFPs will consider price as well as details of the bidding organization’s operational plan, staff experience and education, timeline estimates, and more. 

There’s typically a step an agency has taken prior to issuing the IFB — a Request for Information (RFI). An RFI is just that — a request for information. Agencies issue IFBs when they want to know more information about how vendors will fulfill the needs of their project. If the agency gathers enough information — to where they feel confident in their project scope — they’ll follow the RFI with an IFB. Check out IFBs and RFPs Explained and RFPs vs RFIs – What’s the Difference for more information.

How Do You Receive an IFB?

IFBs can be issued from both public and private agencies. By law, government agencies are required to issue bids publicly whenever they’re in need of a specific product or service. To ensure compliance and fairness, vendors can find IFBs posted on the agency website or message boards. 

You can also register your business within the public agency’s database. With this intention, when the agency requires your commodity, you’ll likely receive an IFB to respond to that proposal. Furthermore, if you receive an IFB, you can begin preparing a response sooner than if you had to go and find it for yourself.

Important for You to Keep in Mind

As we mentioned above, IFBs are mainly price-focused and, more often than not, are issued for commodities. The issuing agency additionally requires the vendor to provide a quality product and expertise of service — so be mindful if you choose to quote your cheapest product. As with all commodities, there are typically many suppliers, with fewer buyers. 

Let’s say, for example, you’re a paper towel supplier and receive an IFB from an agency. The IFB states the agency requires:

  • Hardwound Paper Towel Rolls — eight (8) inches by 800 ft — white
  • 3,600 total rolls
  • 100 rolls delivered by the first of each month 
  • three (3)-year contract requirement

Beyond this information, there’s nothing more that an agency requires to make a decision. They’re already familiar with the paper towel product and specify exactly which type they require. They know their usage amount and, therefore, can state their required quantity. The agency also knows many paper towel supply companies can meet these requirements. In this instance, the only thing that separates vendors from winning the contract is price.

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So, Now What?

You should treat the IFB as you would any other customer request: Begin by evaluating whether or not your business can commit to the requirements of the contract. For instance, can your business deliver on meeting all of the calendar deadline requirements? Further, can your business handle the workload outlined in the IFB within those requirement dates?  

Agencies understand it may not be strategic for you to bid in certain circumstances. If your decision is to not move forward, reply back thanking them for the opportunity and kindly decline to bid. 

If you choose to respond to the bid, kindly reply to the agency and let them know you’ve accepted their invitation. And again, thank them for the opportunity to bid on their project. 

Pricing Strategy Tips

As a vendor, you need to be strategic, price-sensitive and focused when building your bid. Remember, contract terms can last multiple years without the option for price renegotiations until the term expires. So, consider these factors when building your price:

  • Know your competitors. Create a competitive analysis by researching your competitors in the marketplace. Understand the strengths, weaknesses, and strategies they set on pricing. For instance, a competitor might be having problems sourcing products from a manufacturer — a weakness. If you know they’re not within the pool of responses, you may choose to price your bid a little less aggressively. 
  • Know the current economic environment. If the IFB contract is for three years, determine a price you can feel comfortable committing to for three years. Prices fluctuate. To use the paper towel company as an example, the paper mill industry has rapidly declined over the past year due to pandemic closures. This ongoing disruption has made it difficult for paper manufacturers to source materials to produce their commodities. Consequently, paper products increased in price. Vendors who did not leave room in their pricing are likely seeing low to negative margins.
  • Are your product/service prices “current”? Your fixed and variable costs are likely to fluctuate year-over-year. As a business owner committing to a multi-year contract, you want to be sure all your expenses are covered. Labor, utilities, shipping charges, commissions, depreciation, etc. — every line item that builds your “current” price must reflect your “multi-year” price.

Responding to the IFB

Sometimes, agencies provide a templated form for vendors to fill in the required information. These are typically boxed areas to list pricing, shipping charges and information like carton quantities. These forms make it easier for the agency to compare responses quickly. If you receive a templated form to fill out, always treat every response as if the agency has never seen the form before. Your response, even with template forms, should always reflect what your business represents. 

Write your response to reflect the solution you’ll provide to your individual customer. Additionally, avoid submitting your bid with any mistakes. Have another employee, or two, review for grammatical or formatting errors. Even if an agency has issued you an invitation for bid, your bid can and will, be removed if they find blatant errors.

Following Up 

After you submit your bid and allow for the time the agency requires for review, send a follow-up note. Thank them for the opportunity to bid on their project. If you weren’t selected to contract, take this opportunity to ask them what you could have done differently. Use this opportunity to your advantage and utilize their feedback on your future bids. 

Finding the perfect IFB to respond to can take a valuable resource away from your business — like time. If you’re interested in responding to IFBs but are unsure where to start, The Bid Lab can help! We’ve helped businesses find and navigate their way through the entire IFB process. Our Bid Finder experts work with your company to find bids that align with your growth strategy — not overwhelm it. Schedule a free consultation to discuss your invitation for bids today! 

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