International competitive bidding: Overview, definition and example
What is international competitive bidding?
International competitive bidding (ICB) is a procurement process in which suppliers or contractors from various countries are invited to submit bids for a specific project or contract. The process is competitive because multiple bidders compete by offering their best price and proposal to win the contract. The goal of international competitive bidding is to ensure that the procurement process is transparent, open, and fair, allowing the buyer to select the most qualified and cost-effective bidder. ICB is often used for large-scale government projects, infrastructure development, and international trade contracts.
For example, a government may invite bids from construction companies around the world to build a new airport terminal, and companies will submit their proposals based on the project specifications.
Why is international competitive bidding important?
International competitive bidding is important because it promotes transparency, fairness, and efficiency in the procurement process. It helps ensure that the purchasing party (such as a government or organization) receives the best value for its money by comparing offers from different suppliers or contractors. By opening up the bidding process to international competition, ICB also encourages the involvement of experienced contractors and fosters global trade and cooperation. Additionally, it helps prevent favoritism and corruption by requiring a formal, competitive approach.
For governments, ICB can lead to the best possible deal for taxpayers, while for businesses, it provides an opportunity to expand into new markets and win large international contracts.
Understanding international competitive bidding through an example
Imagine a city government planning to build a new highway and decides to use international competitive bidding to find the best contractor. The government issues an international tender, inviting companies from various countries to submit their proposals for the construction project. Companies in the U.S., Germany, China, and other countries each submit their bids, which include their pricing, timelines, and qualifications. The government reviews all the proposals, selects the best bid, and awards the contract to the company that offers the best value, based on quality and price.
In another example, a global corporation might use international competitive bidding to find a supplier for raw materials required in manufacturing. The corporation invites bids from suppliers worldwide, and after reviewing all the proposals, it selects the one that offers the best combination of cost, quality, and reliability.
An example of an international competitive bidding clause
Here’s how an international competitive bidding clause might appear in a contract or agreement:
“The procurement process for this project shall follow the principles of international competitive bidding (ICB). All interested parties are invited to submit sealed bids, which must include details on pricing, timelines, and technical specifications. Bids will be reviewed based on their compliance with the terms outlined in the Request for Proposal (RFP) and the bidder’s ability to meet the project requirements. The contract will be awarded to the lowest priced, technically acceptable bidder.”
Conclusion
International competitive bidding is a key process in global procurement, allowing organizations and governments to select the best suppliers or contractors through an open and competitive approach. By inviting bids from companies around the world, ICB promotes transparency, ensures fair competition, and helps secure the best possible value for money. Whether used in construction, procurement, or manufacturing, international competitive bidding fosters efficiency, global cooperation, and economic growth.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.