Which method involves selecting an underwriter through the submission of bids?

The method that involves selecting an underwriter through the submission of bids is competitive sale. In this approach, the issuer provides a notice of sale inviting underwriters to submit bids to purchase the bonds. The bids are submitted during a specified time period, and the issuer typically awards the bonds to the underwriter offering the lowest interest cost. This process promotes transparency and can potentially lead to better pricing as multiple underwriters are competing against each other.

Negotiated sale differs in that the issuer selects an underwriter before offering the bonds, often based on qualifications and relationships, rather than through competitive bidding. Direct placement and private placement involve selling securities directly to a single investor or a limited number of investors, which does not include a bidding process for underwriters. Thus, competitive sale is clearly the method distinguished by the requirement for bids from underwriters.