Q = Question; A = Answer
A. We strongly recommend you not adopt the approach of conducting negotiations with the low bidder. The sealed bidding process is designed to maximize the competitive incentive to offer the best price initially. Any system that changes the finality of the bids compromises this bidding incentive and becomes counterproductive.
When a Federal Government contracting officer finds it necessary to reject all bids after first determining that the prices are unreasonably high, FAR 14.404-1(c)(6), (e)(1) and (f)(1) allows the contracting officer to conduct negotiations with all bidders (not just the low bidder) in lieu of re-soliciting. If all bids received were too high, it would indicate there was a problem with the specifications or other terms and conditions that was responsible for the pricing problem, and that discussions/negotiations might clarify the situation. While grantees are not required to follow the FAR this is offered for information only. (Revised: September 4, 2009)