The proposed Construction Quality Assurance Act of 2009 (HR 3492) is in the House of Representatives. This act would require contractors to list all major subcontractors on federal projects over $1 million. It would affect subcontractors with values over $100,000. With a few exceptions, it would prohibit substituting subcontractors. Some construction organizations are in favor of this act and others are opposed.
I happen to support the concept behind the Act. I believe these unsavory practices are not only unethical but contrary to sound business practices and successful projects. The federal government does not consider them as being unethical or even illegal. Many end users do not even know it occurs on their projects. Bid shopping and bid peddling are two situations undertaken by less than honorable contractors and subcontractors. It is a way of business they engage in to pad their own pockets to the detriment of their competitors and ultimately the end purchaser of the services.
When contractors and subcontractors submit their competitive based bids they are turning in their “best prices” to win the work. A host of factors influence this final bid amount decision. One of them is the desire to get the work at the lowest possible price and still make a profit. The bid shopping and peddling takes work away from the lowest reasonable cost and awards the did to the lowest dollar value, without regard to the unknown costs that will be experienced on the project.
The contractors and subcontractors involved with these practices are cutting their prices in advance of knowing their costs on the project. The alleged cost savings go into the pockets of the contractors, not their clients. Since money is cut before the costs are incurred, operations during the project can suffer. This may be in the purchasing of non-conforming materials or instituting “time saving” practices that lessen the quality of the workmanship.
Eliminating the practices of bid shopping and bid peddling with legislation will only make it a bit more difficult for the irresponsible bidders to circumvent the rules. However, it is a start. It will take the responsible contractors, subcontractors, owners and their respective organizations to stamp out these practices. The entire industry will benefit! Check out HR 3492 at http://www.govtrack.us/congress/bill.xpd?bill=h111-3492
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The U.S. House of Representatives will consider an amendment this week to institute bid listing on federal construction contracts of $1 million or more. ASA is calling on opponents of bid shopping to contact their House members to support the Kanjorski Amendment to H.R. 5013. See http://bit.ly/97Mo0O.
I strongly agree that these unethical practices should be controlled or eliminated. It is difficult however to legislate morals and ethics. Just look at the age old problem of prostitution. I do not like the idea of listing any subs execpt those of the MP&E trades. A typical bid day is hard enough as it is and adding another list of major subs is very troublesome. It erodes the precious time we have in the bidding process on bid day. We do not always agree with the lowest sub prices on certain trades and will plug in our own estimate. We will then negotiate with the lowest sub after award. With complicated combo bids and incompete scopes on sub bids it is extremely difficult on a busy bid day to be sure you made the right decision. We will cooperate and offer to give a sub list 24 hours later after the bid opening if we are the low bidder. This gives us a chance to shake out the combo bids and clear the scope with the low subs.
If you are going to mandate by law ethics concerning this matter then why not go a little further and demand that all sub bids be closed one hour before bid time to the GC’s or Prime’s and date, sealed and notarized. Any sub bids received after that deadline would not even be considered and tossed in the trash. Many years ago we did just this but the changing nature of construction bidding forced us to change if we wanted to stay in business. We are not bid shoppers. WE just do not agree with having to list subs based on our arguement above. We will not support this bill unless some real teeth are in it and not just more listing. This will not stop bid shopping.