Contract bids are bids for government contracts which are prepared by vendors, suppliers, service providers, and contractors. During the bidding process, people are invited to submit contract bids for review, and after government officials review the bids put forward, they select the bid which they feel is the best, and award the contract to this bidder. This system is designed to ensure that the government gets the best price for goods and services that it needs, and to reduce the risk of corruption because all bids are supposed to be evaluated fairly and with the use of objective criteria.
When a government decides that it needs something, ranging from a full food service contract for troops overseas to swimming pool supplies for a municipality, it opens up the field to contract bids. The government's list of needs is made available to the public, and people who think that they can meet those needs prepare bids. The contract bid includes a discussion of much it would cost to fulfill the need, the kind of time frame required, the qualifications of the bidder, and so forth.
For complex projects, the government may put out a request for proposal (RFP), which invites people to submit proposals which will detail how the project should be conducted. Requesting contract bids is also sometimes known as putting out a call for tender or an invitation to tender. As a general rule, the government's request for bids includes a detailed description of what is needed, and a discussion of any requirements, such as insurance and the budget that the government has allocated to the project.
Some companies specialize in fulfilling government contracts, often working with other vendors to provide full service for the projects they work on. In other cases, companies may handle government contracts as part of their larger work. Contract bids can be immensely lucrative when they are accepted, as governments usually need large amounts of supplies or a high volume of services. They must also be prepared in accordance with a specific format, with some companies retaining a staffer who specializes in writing contract bids.
Even with contract bidding systems in place, there is still room for accusations of corruption. Sometimes a company will be awarded a no-bid contract, a government contract which was not opened for bidding. The government does this when it feels that only one company can actually fulfill the contract, but government officials are sometimes accused of favoritism when they generate no-bid contracts. Government officials have also been caught accepting bribes and other favors in return for signing off on contract bids from particular people or companies.