Bid Listing/Anti-Bid Shopping
SMACNA supports legislation that protects against bid shopping and bid peddling and enforces strict penalties on prime contractors for bid shopping. The practice of bid shopping amounts to a financial incentive for prime contractors to cut corners on federal construction and undermines the government’s interest in obtaining full value for taxpayer dollars. Therefore, SMACNA supports The Construction Quality Assurance Act, H.R. 3854, introduced by Rep. Paul Kanjorski (D-11-PA) and six cosponsors in the 110th Congress. This legislation would require that each invitation to bid, or request for proposal issued by the government for construction contracts of $1 million or more, include language explicitly prohibiting the practice of bid shopping. The language also stipulated penalties for violating this prohibition. H.R. 3854 would make the practice of bid shopping terms for suspension and debarment from consideration on future federal contracts
Bid shopping occurs when prime contractors ask, require or otherwise pressure subcontractors to lower bids for subcontract work after winning prime contract. Prime contractors profit by awarding work to subs that provide bids lower than those listed on the contract, then pocket the difference.
- Bid shopping creates a windfall profit for the prime contractor on a job, while cheating the customer of full value for his construction dollar. On a federal project, bid shopping deprives taxpayers of the full benefits of fair competition.
- Bid shopping is a common practice on federal construction jobs. It is one of the major reasons why so few quality subcontractors are willing to submit bids on federal work. The ethical subcontractor not only loses out on a job on which he or she was the lowest responsible bidder but also loses out on the costs of preparing the estimate.
- Bid shopping cheats the government by creating cost-value disparity on the finished product. Reducing a bid price after bid day requires cutting costs primarily in the areas of materials and/or labor, two significant factors in determining a structure’s overall quality and value.
H.R. 3854 – The Construction Quality Assurance Act, introduced by Rep. Paul Kanjorski (D-11-PA) and 6 cosponsors was introduced on October 16, 2007, awaits action in the Committee on Government Oversight Subcommittee on Government Management, Organization and Procurement.
Updated September 2008