Electronic Bidding Basics

Overview

In public procurement, electronic bidding – sometimes referred to as e-bidding – refers to the process of submitting or receiving a bid, response, or proposal electronically instead of using paper copies and physical envelopes.

There are three general electronic bidding approaches: email, an agency website portal, or a third-party software application. Electronic bidding can be used with any type of procurement (public works, purchase, service contract, etc.) at any dollar value, if authorized by state law and applicable local policies.

As technology continues to evolve, more public agencies have begun using or expressed interest in electronic bidding. Particularly when using specialized software, electronic bidding can have several potential benefits, including:

1. Streamlined processes. Electronic bidding software often includes a computerized workflow which helps public agencies with consistency and efficiency when soliciting, receiving, and evaluating bids and bidders.
2. Vendor management. Whether using email or specialty software, electronic bidding can provide a more reliable and transparent way of tracking participating businesses. Tools like online registration, read receipts, or delivery confirmations when notices are sent save time compared to manually recording each step of the bidding process. With software, there is often a way to track licensing, registrations, insurance, and other similar critical bidder information.
3. Electronic monitoring. Electronic bidding software often includes some sort of tracking or monitoring capability such as time/date stamps, records of communications, tracking submission requirements, providing prompts to potential bidders, and not allowing incomplete bids to be submitted, thus reducing responsiveness errors. Email may have some of these capabilities as well but is not as effective or customizable.
4. Increased competition. Easier access to bidding opportunities for a larger pool of potential vendors and contractors theoretically leads to greater competition and better pricing.

Legal Authority

The federal Uniform Electronic Transactions Act (UETA), codified in chapter 1.80 RCW, authorizes the use of electronic records, electronic signatures, and electronic contracts. Under UETA, electronic signatures and electronically delivered records have the same legal effect as hard copy records with a physical, "wet" signature (see RCW 1.80.060).

While there is no overarching state law that addresses electronic bidding usage or procedures, certain statutes specifically reference electronic bidding as an acceptable form of receiving bids, responses, and proposals.

Below are specific statutes that mention electronic receipts for specific procurement types and agency types:

Small Works Rosters

• RCW 39.04.152(4) – Authorizes the use of written or electronic quotations.

Counties

• RCW 36.32.245(2) – All counties are authorized to receive hard copy or electronic bids for the purchase of materials, equipment, or supplies.
• RCW 36.32.235(5) – Counties with a purchasing department are authorized to receive hard copy or electronic bids for public works. (There is no specific reference to electronic bids for road/bridge construction in chapter 36.77 RCW, nor is there a specific reference for counties without a purchasing department in RCW 36.32.250.)

State Agencies

• RCW 39.26.120 – Authorizes state agencies to use electronic or web-based solicitations, bids, and signatures for goods and services.

Advertisement Process

Electronic bidding refers solely to the process of receiving and submitting bids electronically. It does not replace or supersede the agency’s normal procurement advertising requirements.

For solicitations that are to be publicly advertised, local governments still must advertise the solicitation in their newspaper of record and follow all applicable statutes and local policies. Simply posting the solicitation on an electronic platform, sending it via email, or posting it to a third-party plan center may not fulfill the "public" or "competitive" bidding requirements.

"Sealed" Bids

Sealed bidding is a process where bids, proposals, or quotes are submitted "locked" and unable to be viewed by any party prior to opening by the public agency. Sealed bidding is designed to maintain confidentiality and security and prevent external influence ("bid tampering") during the bid acceptance process. This is generally required for larger contracts but might not be required for smaller contracts or informal procurement processes.

Whether bids are submitted electronically or via physical envelopes, public agencies must implement procedures to ensure that all bids remain "sealed" and confidential until the official opening.

Most electronic bidding software applications are designed with electronic sealed bidding functions.

Email, on the other hand, is typically not secure and is generally not recommended for sealed bids, as it is hard to maintain confidentiality and prevent tampering unless there are additional security measures in place. If allowing email submittals, it is critical to require the use of secure or encrypted email for protection. For example, see Microsoft’s guidance on how to send encrypted email messages in Outlook for Windows.

If a public bid opening is required, the agency will need to specify how the bid opening will be conducted – online, in-person, hybrid, etc. For more information on public bid openings, see our page Bidding and Awarding a Public Works Contract.

Guarantees, Bonds, and Other Documents

It is important to be clear how to submit and receive paperwork when using electronic bidding. Whether the public agency collects paperwork prior to bid submission deadlines or within a certain timeframe after – such as apprentice utilization plans, evidence of licensure, bonding, insurance, etc. – it is important to have all necessary and properly executed documents to ensure any bid, submission, or proposal is responsive, accurate, and binding.

To protect the fairness of the process, we recommend that public agencies be specific and include instructions in the bidding documents and/or instructions to bidders.

Public works bids submitted electronically still must be accompanied by the appropriate bid bond/bid guarantee as required by state law and local policy.

Bid Bonds

For a bond to be valid, it must be signed and stamped/sealed by a licensed surety. These seals have traditionally been embossed or inked. However, as the industry evolves digitally, embossed and inked seals are being replaced by electronic options.

Software programs are commercially available that meet the UETA requirements and allow seals to be electronically certified. There are also e-Bonding companies that provide registration services to verify electronic bond validity.

Alternative Forms of Bid Guarantees

Other forms of bid guarantees – cashier’s checks, postal money orders, etc. – may be authorized by state law and local policy, as described on our page Guarantees, Bonds, and Retainage.

These types of bid guarantees, if authorized, most likely must be submitted to the agency in-person before the bid submittal deadline. Electronic copies, such as a scanned copy of a cashier’s check, are typically not sufficient since the agency does not possess the actual bid security and cannot deposit the funds.

However, copies may be provided as secondary confirmation – for instance, the bidder may submit a scanned copy of a cashier’s check with their electronic bid and then deliver the original check to the agency office before the bid deadline.

Policy Considerations

Any agency that decides to use electronic bidding should adopt policies to establish parameters for its use. Below are some general policy considerations:

• Type(s) of electronic bidding tool the agency will use – third-party electronic bidding software, agency website, email, etc.
• Methods for attaching electronic signatures and (if applicable) seals to submissions with any implemented third-party signer authentication method (RCW 1.80.170).
• How electronic bidding will be consistently implemented across each procurement type.
• How sealed bidding will be accomplished, when required.

Additionally, when choosing to use an electronic bidding application, your electronic bidding policy should consider:

• Registration requirements. Bidders should be required to register on the online platform, providing necessary information like company details, contact information, and financial records to qualify for bidding.
• Bid submission process. This should address how bids are submitted electronically through the designated platform by the deadline, including detailed pricing, specifications, and any required supporting documents.
• Transparency and accessibility. This includes accessibility to bid documents, vendor information, and bid submissions on the online platform, ensuring transparency throughout the process.
• Bid evaluation. The policy should address bid responsiveness, bidder responsibility, and clear guidelines on how bids will be evaluated using the electronic system, including factors like price checks and comparisons, completeness, quality, experience, compliance with specifications, or similar.