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01/28/2010

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I believe full disclosure of the subs should be mandatory. We are typically a third-tier sub and we are constantly being shopped. It is not only frustrating knowing that we have put in the time up front, as did the general, but the fact that they used our number going in and then decided to put that out on the street. It's the same story, a lack of ethics in this business.

In regards to the MBE/WBE set asides, that whole program just needs to go away. It is long over it's useful purpose except for abuse. Eliminate it and put everyone on equal turf.

I believe it it's good practice in theory; to list subs, but it could cause many problems. One example is with proprietary specified products. Ironically( or not ) it is in these cases where it is most commonly used as bid requirement here in the sunshine state.
Proprietary products or contracting, for that matter should be reversed from it's current trend which leans toward corruption.
Of course the trend of alternate delivery methods(other than hard bid)is due to a high level of incompetence in the field of general contracting, which is embarrassing in it's own right JWS

With less work and more bidders, we are seeing an increase in bid shopping of our subcontract quotes. One GC essentially is having reverse auctions, stopping just short of doing them on line. They are off our list to quote. We probably will see more taken off that list for the same practice. Perhaps bid listing could stop this but I choose to stop it by building a reputation of building quality work on difficult & high risk jobs, not bidding to bid shoppers, and do not support bid listing. I'm a big boy and can take care of myself.

As a subcontractor, it is appealing in theory but kind of impractical for the General Contractors or Prime Bidders who are receiving 20-100 quotes on a project right up to the time of bidding. Due to bid shopping, we try to release our quotes at the latest possible time in order to not allow time for bid shopping to take place before the bid. Since each sub-bidder can price the project covering different scopes, it makes it very difficult for the GC to 100% commit to a particular sub at time of bidding until they perform a thorough scope review after they land the project. The GC needs some flexibility to be able to change subcontractors, but if they achieve savings after the bid, it ought to be passed on to the Owner. The bid shopping usually comes into play after a GC lands a project based on reliable subcontractor's quotes and then receives lower quotes from riskier subs after the fact. Depending on the spread between the quotes, the GC has to weigh whether they potentially have enough savings to cover the problems that might arise due to using the riskier subs. Having to pass on potential savings from a lower quote would discourage this practice. The risky sub and GC could try to get around this by signing a contract at an inflated price and then get a kickback after job completion, but the other unsuccessful bidders (especially the 2nd and 3rd place GC bidder) would be able to watch out for this practice because most of them get the same prices from the majority of the subs. The runner up GC bidders can usually spot when something underhanded is taking place and they ought to be given the chance to convince the Owner that the low bidder is bid shopping.

I believe disclosure is appropriate and my reasoning is on the other side. What if there is a sub the project owner has had a less than positive experience with. The prime could be risking the relationship by choosing that sub.

As far as MBE/WBE goes,the turf is still not equal. Just as the same unethical people are not keeping the playing field level.

There is no required listing of subs on federal work. We will only bid federal work as generals or to generals with whom we have an existing rapport.

As to subs calling in their bids too close to bid time: tough cheese. The general goes in with those folks who got in soon enough to review their scope of work or they take a chance on getting burned with a non-responsive bid. Darwin weeds out the dumb ones. And the crooked ones, but not before they take a lot of subs with them.

Chuck has it ALL wrong. WBE/DBE's should be mandated because in a lot of cases that is the only way they will get utilized. Some parts of the country have a "good ole boy" network in place where they freeze everyone out except those in their "network". I personally know of a case where a WBE was listed on bid date to satisfy a 5% participation goal. After the 5% was reached, the general threw them out and used one of his "boys" to finish the job even though the WBE's performance was satisfactory.

This is a great post and i absolutely agree that the information should be posted. The more disclosure the better, but without effective oversight more disclosure just means more paper.

On the issue with WBE/MBE, obvisouly the playing field is not level when bid-shopping is a constant state of practice, so it stays for now.

Interesting enough, the Colorado Department of Transportation does not support Form 714 which is required with each bid. This form clearly states that all subcontractors must be listed that supplied quotes for the project. I recently ran into Bid Listing on a project and brought it to the State's attention only to have it rejected by the State. Their response was quote "The prime contractor is not required to list all subcontract quotes on Form 714". I know this statement seems incorrect, however check into for yourself. I have a formal response from the State supporting my statements. How or why this is their response, I do not understand. I thought creating an even playing field was the goal of the State, however this behavior seems to contradict that very thing. When this type of unethical behavior is allowed to occur, it affects bid pricing and fair competition between all contractors. (jsl)

Subs cannot work on FHWA jobs unless they are approved and listed. Full disclosure is best practice. California's actions are to be respected. It is time to stop Primes from seeking to pocket M/W/DBE dollars by putting forth false plans. Think about the ecconomic impact of that $200,000.00 if it had gone into the M/WBE business. Instead the Prime wanted to simple pocket it.

I deal with both sides of this issue, we do work as a GC but more often as a sub. I do not agree with listing subs in advance, things change after bid time and you should not be locked in to one particular sub. I have been shopped as a sub so I try to bid to honest GCs; but if they can get a lower bid without shopping my number, that is the American way.
M/WBE, I hate. The GC is forced to chase and find subs to give work to. As a sub it is my responsibility to find and bid the work. It is tough enough for a GC to find good subs without being forced to use someone from a list that you have never heard of and have no history with, just to make the government feel good. I do not have a problem with giving anyone an opportunity, but they need to show innitive and come to me, not the opposite. It might be worth it to me to pay someone more money if I know I can sell their work. Get rid of it.

As a GC I am on both sides of this issuse, I hate trying to look though all the bids and find if they included or excluded everything in their scope of work in the last minutes of a bid, because they're scared to turn in the bid early. If the subs think the GC is shopping their bid, DON'T Bid that GC, it only hurts the honest ones. However if we don't list the subs then the GCs that bid shop will get the bid because they know they can lower the price. The subs have to quit bidding those GCs that are asking them to always lower their price, and they know which ones they are!!

We are an electrical subcontractor and we try to get our bids in early so that GCs can review our scope. Problem is the lighting suppliers in our area ALWAYS hold their bids until the last minute so we can't complete our bid until the last minute. Our solution has been to send a "Scope Letter" in advance of our actual bid so the GC has an opportunity to see what we are bidding. Increases our work but when someone controls a section of the market and you have to work with them you do what you have to do. We don't bid to GCs who shop and don't like MBE/WBE projects because it rewards race or gender instead of hardwork and integrity.

The American Subcontractors Association has long advocated for bid listing as a way to curb bid shopping and bid peddling. We support legislation currently in the U.S. House of Representatives to institute bid listing on federal construction. The bill, H.R. 3492, the Construction Quality Assurance Act of 2009, was introduced by Rep. Paul Kanjorski of Pennsylvania in July of last year. This bill would require prime contractors bidding on projects valued at more than $1 million to list subcontractors they intend to use for $100,000 or more of the work at bid time. If a prime replaces a sub without the permission of the contracting officer, the prime will face a penalty and possible suspension or debarment. Visit http://www.asaonline.com/Web/subcontractor_advocacy/asa_federal_advocacy.aspx for more information on this important legislation. ASA and other specialty trade groups are currently seeking co-sponsors for the legislation, so contact your member of Congress if you support bid listing for federal construction.

As an Architect I don't have a real problem with bid shopping as a practice. However there two problems that can arise from it that need to be dealt with. One, very often the start of projects is delayed or shop drawings are turned in late because the GC is holding out for the best deal from the subs. Two, the sub who has the lowest price almost always misses scope items in their bid and causes more work for everyone on site.

When a GC submits his number to the Owner of a project it is typically an estimate. The GC is entitled to send out the package for actual numbers once he is awarded the project. That is not bid shopping. The true definition of bid shopping is the practice in which a contractor discloses the bid price of one subcontractor to another in an attempt to obtain a lower bid price. If the GC has not done that there is no wrong in what he's doing. Owner's rebid to GC;s all the time if they are not happy with the original numbers. The best way for Subs to ensure they will win the subcontract is to provide the best number in the first place. That's the whole point of a competitive bid.

It seems the subcontracting community considers themselves above all this. My experience as a GC tells me subs shop numbers after the bid as much as any GC does and typically when they hear that they are not in the running to get the work are usually very quick to offer a reduced price themselves. Why aren't the GC's getting the sub's "best & final" numbers right off the bat? Amber Creekmur's comment is right on, a GC's bid is just an estimate and requires extensive scoping after the fact to find the right subs for the job at the right price.

You will never change the practice of bid shopping or even unethical use of sub quotes and MWBE participation as long as the owner or governmental unit always relies on awarding the job to the lowest bidder. When you focus on the lowest dollar rather than the qualifications of the companies that will execute the work, then the desire to drive the cost down at the expense of the subcontractors will not change. The owner needs to look at a collection of bids and determine who has the BEST VALUE for the project based upon cost and quality of the project team. As long as we attempt to make things "fair" we will only encourage unethical behavior as it proves to be the only way around the system to get ahead. Once we focus on quality and value, then the ethics will return as the reward goes to those who do a good job rather than getting a lower number.

Depends on the arena. A Complete set of plans on a hard bid, public opening, such as a school, there is no doubt the GC depends totally on the specialty subcontractor trades (not done in house) such as mechanical,electrical sitework, etc and when turning in a bid based on the subcontractor's number that subcontractor possibly has a legal obligation to take the project as bid. On the flip side, the GC is only held by ethical behavior to subcontract with the subcontractor who got him the job in the first place (unless the GC is legitimately concerned the subcontractor cannot perform or bond if needed.) Listing subcontractors is a way to level the playing field a bit, though there are ways to get around this as mentioned above with captive subs pre listed.

The point of bid listing (or bid naming)the subs in public contract bidding is to change the timing of the subs' price competition. From post-bid and award, when the GC pockets the savings as added profit. To pre-bid, when the savings is reflected in a lower bid price by the GC and thereby passed on to the public owner and its taxpayers. (The feds used to do it, but stopped. Yet another reason for the deficit.) Also,any sub should qualify its pre-bid price quote to a GC bidder to the effect that if you use my price and win the award, you've agreed to use me.

As a GC, the requirement to list subs is impractical for two reasons. First, as referenced in a number of responses above, the last minute submission of subs creates excessive opportunity for error in the GC bid. The flurry of bids to review in the last ten minutes prior to submission is utterly absurd. Second, the lack of promissory estoppel in our state relieves the subcontractor of the liability honoring a bid forcing the GC to assume the financial burden.

I do not advocate bid shopping, but allowing enough time to thoroughly review the bids and determine the lowest responsive bidder is not bid shopping. Besides, if the subcontractors are holding their bids until the last minute awaiting quotes from their suppliers, haven't they been doing some shopping of their own.

Why not submit this information within 4 hours of the bid opening by the 3 or 4 apparent low bidders?

Mandatory bid listing on public works contracts does not constrain legitimate competition. This week, the U.S. House of Representatives will consider an amendment to H.R. 5013, a defense acquisition reform bill, that would require bid listing on federal contracts of $1 million or more. See ASA's call to action at http://bit.ly/97Mo0O for more information.

Can a class A prime list a B license contractor to perform numerous C specialty work for a public contract. All specialty contracts are all above .005% of the project.

If this is possible, building work items such as electrical, HVAC and other major items could be shopped post bid by simply listing a " General Building contractor". This will allow the subcontractor, who is really a general to shop post bid for better pricing on major items of work.


What steps can a GC take to keep his subs from bid shopping. In CA the GC is responsible down to the 3 tier. What are other GCs doing?

Any suggestions?


Thanks

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