They were bidding against someone. They were bidding with Kolbs Agent. It doesn't matter one bit if no other teams were involved. To say they were bidding against no one is a fallacy, because they were bidding against a one year rental.
Maybe Flynn didn't get all that good of a deal because a very QB needy NFL was far, far skeptical of this kids ability. It isn't even a certainty that Flynn will be their starter. PFT alludes to much of this - http://profootballtalk.nbcsports.com/2012/03/18/flynn-picks-the-seahawks/
I mean seriously, in a QB needy NFL all this so called next good QB could get was a 3 year deal worth 19 mill. The only way he could get up to 26 mill is if he meets incentives. Like you said this guy wasn't going to leave money on the table so if that is the best deal he could get, then what does that say about what the NFL thought of him.
Thanks Joe!