WHAT GOES AROUND . . . COMES AROUND
Whether it is an owner shopping general contractor bids or a general contractor shopping sub-bids, bid peddling or any number of terms the industry has dubbed these practices, the principle is the same and the practice is wrong. To honor the low qualified bid is the standard in the industry for design-bid-build projects. Whenever the terms “low bidder”, “low qualified bidder” or “lowest responsible bidder” are used in the industry, they are understood to mean, the low qualified, responsible, and responsive bidder.
Therefore, all who are concerned with the preparation, acceptance or disposition of bids should honor the lowest responsible bid, provided that it is in accordance with the contract documents and refrain from any action which would cause the contract to be awarded in violation of this principle. Further, bidding contractors should also honor these principles and resist the temptation to violate or be pressured to participate in efforts that undermine the principle of honoring the low qualified bid.
As it pertains specifically to the bidding and award of specialty contracts, the Manual of Recommended Procedures for Competitive Bidding and Award of Building Contracts endorsed by Master Builders of Iowa and other associations recommends as follows:
- Proposals should not be invited from anyone who is known to be unqualified to perform the proposed work or to render the proper service.
- The figures of one competitor shall not be made known to another before the award of the subcontract, nor should they be used by the Contractor to secure a lower proposal from another bidder.
- The contractor should be awarded to the lowest bidder if that bidder is qualified to perform the contract. If the award is made to another bidder, it should be at the amount of the latter’s bid. (The statement “latter’s bid” meaning the next higher bid.)
- When the Contractor has been paid by an Owner for work or material he should make payment promptly, and in just proportion, to subcontractors and others.
- It is unethical and detrimental to good competition for a Contractor, prior to the opening of bids or the awarding of the contract, to disclose the amount of a subbid or quotation obtained in confidence for the preparation of his bid.
In summary, at the heart of these recommendations is that ethical competition is good for everyone. Conversely, unethical competition hurts the industry, drives profitability down and gives legs to that often used phrase of “what goes around comes around.”
