Just as the federal government employs a variety of procurement methods, state governments have many means of acquiring the products and services they need. While no two state governments are the same, the following methods are common to most states.

Sealed bids

Sealed bids are used to ensure competition, especially on large contracts. A request for bids is publicly issued in one or more ways: phone or mail solicitation to vendors on a bidder's list; posting at a government-maintained website; an advertisement in the public notices section of local newspapers; or phone calls to businesses believed to be qualified.

The dollar amount threshold for formal sealed bidding varies by state. In some states it is as low as $15,000; for others it can range up to $100,000. With few exceptions, sealed bids at the state level are awarded to the low bidder.

Informal bids

Many states have a streamlined procurement process for contracts expected to be below a certain dollar amount. In such cases, the procurement officer can fulfill the competition requirement simply by calling three or more potential vendors and asking for a verbal or written price quote. The contract is awarded to the low bidder. Typical thresholds for this type of procurement are from $5,000 to $30,000 for products and construction, and $50,000 to $100,000 (or more) for services. Contracts above the threshold would use the sealed bid method.

Direct purchase (noncompetitive)

Almost all states allow designated program managers to make small purchases (typically the threshold is under $5,000) using their best judgment. The buyer can contact (or be contacted by) a single vendor and, if the offer and price appears to be fair and reasonable, the buyer makes the purchase without competitive bidding. Such purchases are often paid at the time of purchase using a credit card. Alternatively, a simple purchase order can be issued for the vendor to bill against.

Consolidated purchasing

Just as the General Services Administration of the federal government administers government-wide contracts for certain classes of goods, the central purchasing office of each state makes consolidated purchases to serve the needs of all state agencies.

Consolidated purchasing at the state level can take many forms. Some states such as California model a Multiple Award Schedule (MAS) after the federal General Services Administration MAS. Companies that sell products to the federal government on GSA Schedule can easily make their products available to the state government (and even local governments within the state) according to the same prices and terms of the federal contract. Individual state agencies can make purchases from these contracts using their best judgement to determine which vendor offers the best value to meet their specific needs.

Regardless of whether a state coordinates schedules with GSA, all states have government-wide purchasing contracts for commonly used supplies, equipment and services. Such contracts are generally awarded by competitive bid. The winning bidder or bidders become the state's designated supplier(s) for the product or service for the period of time specified in the contract.

Another consolidated purchasing vehicle involves aggregation of requisitions. The central purchasing office will combine the needs of several agencies into a single contract to get the best price and streamline the procurement process. This differs from an MAS in that the contract is to deliver a specific quantity of goods or services at a specific time rather than to provide the items as needed over a specified period of time.

Electronic bidding

In order to expedite the procurement process and involve a maximum number of bidders, many states have moved certain procurement functions to the Internet. Bidders can visit the website to register as a vendor, search for opportunities, and submit bids or proposals electronically. Websites for these electronic procurement initiatives are listed by state here.

Note: Many states use the NIGP Numerical Commodity Code Listing system (NIGP Code) when classifying products for procurement purposes. To find out whether your state uses this system, visit the central procurement website (listed here). If the state uses this system, it will have a code look-up page on its website.

Some states, corporations, and federal agencies use a reverse auction approach whereby prequalified bidders are invited to attend an online bidding conference. Bidders submit bids electronically, but have the ability to revise their bids lower during the auction, with the lowest bidder at the end winning.

Cooperative purchasing

Many state governments offer cooperative purchasing programs which local government entities can use to procure goods and services at the same prices and terms negotiated by the state government. Usually the permission of the vendor is required before the state will include the products in the cooperative program. Vendors participating in the program can use it to facilitate sales to city and county governments, educational systems, special-purpose entities, and other participating buyers.

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