When construction professionals resort to bid shopping, it affects everyone. To ensure construction projects are worthwhile for every professional and to avoid any unnecessary legal dispute, avoid bid shopping. Our Jacksonville construction attorneys will define bid shopping and discuss its different forms.
What is Bid Shopping?
Bid shopping is the unethical practice of securing a lower bid than the one originally obtained by disclosing the bid of contractors or subcontractors to other bidding contractors or subcontractors (competitors). If a competitor agrees to beat the original bidder’s price, the general contractor awards the that bidder with the contract. Contractors participate in this practice after they have been awarded a contract. It is simply of means of pressuring subcontractors to lower their bids.
Bid peddling is a similar deceptive practice that is essentially bid shopping in reverse. When a subcontractor or vendor is not selected for a contract, they may approach the general contractor with an offer to perform the work for less than the original bidder’s price in hopes that the general contractor will substitute their company instead of the original winning bidder.
A reverse auction is a form of bidding that takes place online to drive down pricing. During this live online process, competing bidders submit their bid and the lowest one wins. Where the traditional bid drives up costs and produces higher bids, a reverse auction bid is believed to drive costs down resulting in lower bids. While some in the industry support reverse auctions believing that it saves time and money as compared to traditional bids, others see it as a form of bid shopping.
Bid shopping can easily lead to a subcontractor having to cut corners in order to meet the lower cost they have agreed to. If you have not already, read part one, part two, and part three. In part five, we will conclude our series by focusing on the implications of bid shopping.
If you would like to speak with a Jacksonville construction lawyer, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.