A client of ours called up wondering how his competitors were getting his prices. I told him it was pretty simple – someone was shopping his bid to his competitor(s). I also let him know this practice is becoming more prevalent as the construction economy continues to stumble into a bigger black hole.
He asked how to figure out who was divulging his numbers. One of the easy ways is to start asking around. This can have mixed results. Another method is to determine the reputation of the firms you quote. A common practice is to quote each of the firms on bid day a different number to see which one gets released to the competition. This can result in more than one number released.
Once the source is known, how to prevent the bid shopping is the next question. The only sure way to do this is to not bid the unethical bidders. Keep bidding only to the ones that do not shop your bid. An alternate method is to give out higher numbers to those that shop your number. However, in mind the federal government and many private owners do not think bid shopping is unethical or illegal. Also keep in mind the feds may want to prosecute you for bidding the inflated number!
Of course the follow up question was, “What if I do not have anyone to submit a bid to on bid day?” While unlikely, it is still possible. In a case like this my recommendation is to pass on bidding the project. It may hurt in the near term but it can payoff big in the long run. Word will get out that you don’t participate in the bid shopping game and you will attract a higher class of contractors to bid to on bid day – those that respect honorable and ethical bidding practices and procedures. They also treat their clients better!
Oh by the Way… Too bad the feds don’t know the difference between setting the price on a refrigerator or a car is far different from setting a price on a construction contract! Once they figure this out bid shopping may get declared illegal.
