I was going to start out by saying there is an unwritten rule in the Purchasing profession that Buyers always want to get a minimum of three bids. Actually, it is usually a written rule in large companies with a formal Purchasing Departments.
If a Buyer is not able to obtain three bids, he or she is required to provide documentation for the records to explain why the standard operating procedures are not being met. One reason may be that a particular item is only manufactured by one source due to patent rights such as in the technology or pharmaceutical industries. Another possibility in a service situation may be that a certain supplier has a geographical monopoly.
Why is three the magic number? When comparing prices, having three bids instantly provides a high, bid, low bid, and medium bid. It also allows the Buyer to calculate an average of the bidders prices to be used in negotiations. If there were only two bidders, the Buyer could not share an average or range with either of them because it would be easy for each to figure out the competitor's pricing and that would be a violation of the Non-Disclosure Agreement.
Buyers will certainly want to start out the process with more than three bidders if available. They should work hard to insure at least three whenever possible.
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