Bid-Shopping

Oppose Unsound Bid Shopping Legislation

Background:

• The Associated General Contractors of America is resolutely opposed to the practice of bid shopping. In 1995 AGC, the American Subcontractors Association, and the Associated Specialty Contractors issued this joint statement on the issue of bid shopping and bid peddling: "Bid shopping or bid peddling are abhorrent business practices that threaten the integrity of the competitive bidding system that serves the construction industry and the economy so well." AGC strongly believes that bid shopping and bid peddling cannot sustain long-term working relationships between prime and subcontractors. However, AGC has serious reservations about this particular legislative solution to the practice.

AGC Message:

• No Evidence to Support Assertions that the Practice is Widespread. Legislation designed to constrain bid shopping on the federal level is unnecessary. The need for such legislation is not supported by any federal government study, nor has the legislation been requested by any federal entity. The construction industry does not consider bid shopping a common practice in federal government contracting.
• Mandatory Bid Listing is Not the Solution. Mandatory bid listing would require a general contractor to list all subcontractors when a bid is submitted and would only allow substitution with permission of the government's contracting officer. Mandatory bid listing undermines the government's attempts to streamline procurement, removes the flexibility of the prime contractor to manage projects, and does not improve the quality or decrease the cost of construction projects. Not only would this be a huge administrative and paperwork burden on contractors, but even more so on the part of our chronically understaffed and overworked federal agency partners.
• The Solution Proposed Has Empirically Failed Before. The legislation proposes the practice of bid listing as the solution, yet that practice has already been found to be net worse. Previous attempts to require bid listing created a morass in the administration of federal construction contracts, including delays in awards of contracts, rejected low bids, project delays, and higher procurement costs. The General Services Administration (GSA) previously required bid listing, but eliminated this requirement in 1983 on the belief that "bidding problems and protests related to the 'listing of subcontractors' requirement adversely affected the GSA construction program". By eliminating the bid listing requirement, the GSA stated the change would "simplify procurement procedures, reduce paperwork burdens associated with procurement... and eliminate potential delays and financial losses experienced as a result of the listing requirement."
• Existing Framework of Federal Rules and Regulations Solves Better. The contracting community believes that the solution is a strong commitment to ethical conduct by the professionals who work within the construction industry. Federal construction contractors hold themselves, and are held, to the highest ethical standards. There are also several mechanisms already in place to ensure contractors do not engage in such practices such as the False Claims Act and the Federal contractor Ethics and Compliance Rules. Grafting a new mechanism onto the system (which has failed in the past) to prevent this practice, is not only unnecessary, but is also net worse for the system than the practice which the mechanism is designed to solve.