A bid process involves an individual or business asking vendors to submit pricing for a project. Bid requirements, often called bid specifications, are all the requirements that the vendor must take into account when creating its proposal. This can include specifications such as materials, time frame, labor qualifications and more. Bid requirements should be clearly defined within the request for proposal and should be reiterated in the final contract as signed by both parties. The term might also be used to refer to all information that must appear in the vendor's bid package, which might include proof of insurance documents, contact information and credit ratings.
The purpose of bid requirements is to ensure that all pricing received is for the same work. For example, if vendors were asked only to price painting a new office building, each vendor might assume a different number of rooms, would choose his own paint, would make assumptions about how many colors should be used and might set his own timeline. This could result in pricing that can't be properly compared and that doesn't really reflect what the customer wants.
In this case, the bid requirements would outline the time frame in which work must be completed, the square footage to be covered and the number of colors to be used. The requirements might further specify whether trim work should be included, what brand and sheen of paint should be used, whether or not the walls must be primed and the material from which the walls are made. This allows each potential contractor to bid on the exact same specifications so that the pricing truly reflects the client's needs.
Other types of specifications are often included in bid requirements as well. For example, a company might require all vendors to carry liability and worker's compensation insurance. Some companies, particularly those operated or regulated by a governmental agency, might require that a certain portion of each bid be executed by minority- or woman-owned companies, or that materials meet certain environmental standards.
Vendors responding to a bid request must indicate any area in which they have not met bid requirements and might provide one bid that meets requirements along with an alternate option. It is usually wise to explain why and to state what the vendor intends to do instead. For example, a business might specify a particular brand of paint. If, however, a vendor has a discount with a brand that can be proven to be comparable, the vendor might bid the job according to the original specifications and also provide a second bid that shows the cost savings possible by switching brands.