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
6 Comments
You are killing me with this over-simplistic so-called “solution” to bid shopping by putting yet another onerous requiement on the GCs.
The reality is that there is not enough time now to accurately handle all the bid day/bid form requirements, with the multitude of unit prices, alternates, and analyzation of dozens and dozens of literally last second major sub-bids.
All we need is to add yet another bid form requirement to list a bunch of subs who may or may not really be low bidders, while it is impossible to be sure with their 4 to 6 pages of fine print qualifications and alternative bid items. Sheesh.
If the SUBS would bid in a reasonable time frame and refuse to participate in the post bid games, the preponderance of the problem would go away.
Here is another comment I received…
Another stupid law which will cost the taxpayer $$$$$. Most of the bid shopping occurs before the bids go in anyway. It is impossible to qualify a $100,000.00 sub bid minutes before your bid goes in anyway. Listing subs just makes the bid process more difficult and creates a lot of paperwork when subs back out of bids (which they do all the time on public bids. This law is a bad idea…..40 year estimator.
Here is a comment I received via email.
GREAT YOU WANT ANOTHER LAYER OF DEAD BEATS BEATING HONEST CONTRACTORS TO DEATH. WE ALREADY HAVE LAWS IN PLACE THAT “TAKE CARE OF THIS”
I think requiring All Sub Contractors to Be qualified and Licensed is the first step.. there are too many Numbers thrown on bid day by well intentioned subs that do not have the Experience or the Qualifications to do the Project.
It is staggering to hear the GC Estimators pawn off their own unethical and irresponsible behaviour on subs. Bis Shopping is unethical and should be ILLEGAL. If a sub is unqualified FIRE THEM or replace them . If you dont linke the frantic mess before bid time – Hey – here is a wild idea – TRY PUTTING A PREBID DEADLINE ON SUB QUOTES!!!
Thanks – and by the way – I bet youd be singing a different tune if you were the ones being bid shopped