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constantinople_gw

Competitive Bid Ethics

16 years ago

In the process of bidding out new construction, I had the architect's plans distributed to 4 builders for competitive bidding. Included were cut book, scope of work expectations and drawings from architect for a level playing field.

After the first round of bids were received, significant changes to the original plan were agreed upon with architect, requiring another round of bidding. Same process.

Now, upon review of the second set of bids, I wonder if it is ethical to share a builders competitive bid specs, drawings, etc. with another builder who is part of the bidding process, if those materials were given to me by potential builders, not "purchased" as part of the bidding process. In other words, I didn't pay for any of the bids or materials received.

Since the bidding process requires significant time from each potential builder, I wish to respect their investment, but am not sure if such sharing would actually be unethical.

Thanks.

Comments (10)

  • 16 years ago

    As someone who works for a builder, I will answer with that in mind.

    We would never ask for that info other than in broad terms. We would like to know the ball park number that we are off and maybe the areas of the bid that we are off on significantly.

    That kind of detailed bidding sheet should have leveled the playing field already. If you want builders to give you detailed bids and numbers that can reveal their costs you need to show some respect and not give that information to their competitors.

  • 16 years ago

    jamgill,

    Thanks for the feedback. Just to be clear, it is not them asking, but I was wondering if I should offer. Based on your comments, I guess not.

  • 16 years ago

    What do you mean by "a builders competitive bid specs, drawings, etc."? Is this a design-build project?

  • 16 years ago

    We would not take it if offered. We have very good relationships with most of our competitors and would not want to jeopardize that.

    If a contractor is at all good, trustworthy and ethical they should already have a very good idea of why their bid is different from their closest competitors.

    If the bidding docs and specs are good and detailed then the numbers should be very close anyways. If they are wildly different than you need to figure out why.

    Is the builder low balling to get the job and going to hit you with change orders later?
    Has he found a loop hole in your bid documents that will allow him to use cheaper materials?
    Is the builder actually carrying all the insurance required?

  • 16 years ago

    Macv, no this is a design-bid-build project. I was referring to the bid components and whether or not those should be regarded as secret. For example, in my case, I provided cad drawings from the architect and distributed it to the builders. One builder then re-input original cad data into his own cad/estimating system, which he then gave me as part of the bid package for my review. I wondered if it was appropriate to share some of that data with another builder to ensure equivalent spec bids. The reason for sharing said data was that in re-inputing the original cad data, one builder made a few dimensional alterations to the architects original drawings. Are those changes now his property?

  • 16 years ago

    No changes should be allowed to the bid documents unless authorized by the Owner through an Addenda. Any supplemental information given to one bidder must be issued to all other bidders in writing. If a bidder bases his bid on a different source of information he should be informed that only the original design documents will be referenced by the contract. If you want to use supplemental information from a bidder you would need his permission and it would become part of a bid addendum issued to all bidders.

    Distributing information informally or allowing a bidder to supplement the bid documents is a sure way to render the final bids meaningless.

  • 16 years ago

    Homewners and homebuilders sometimes lose touch with the purpose of a bidding process and want to treat each bidder as a separate opportunity to negotiate a contract (kind of a multiple-negotiation process). This is essentially "shopping" the job and can lead to unresponsive/uncompetitive bidding or the loss of good bidders.

    But everything depends on what the local market will bear. If the market is desperate to put up with job shopping I would prefer to find the best contractor, negotiate the fee of a Cost of the Work contract, and let him help in the design process.

  • 16 years ago

    Macv, you are probably right, there is some shopping around. On the other hand, in my case, I delivered one set of architectural plans, a bidders guide with specs and expectations and a cut book detailing desired finishes. Even with all that specific information, I found that most builders bidding on the project disregarded some, most or all of the bidders spec guide and finishes in the cut book and specified whatever they thought would deliver the best price. That was done even though we asked them to strictly follow the bid materials. And the conclusion, as you might expect was that the bids vary widely because everyone did their own thing, to a great extent.

  • 16 years ago

    My experience has been that if you don't have someone's complete and full attention during the bidding phase...and they aren't listening to the owner or bidding on the information submitted- then there is no way they are going to listen/build to spec once they "win" the job.

    When we first sent the plans out to three parties and the numbers were all over the place, it was a red flag that someone was wrong. We tightened everything up, refused to accept changes and the bids were much, much closer the second time around.

  • 16 years ago

    In a traditional formal bidding process serious deviations from the bid documents would be considered "unresponsive" and the bid would be rejected. Obviously the bidders are inviting you to a negotiate with them even though that would render the bidding process worthless.

    Home builders are a special breed; they usually want to be the designer of the project so they can control the project from start to finish. If you allow that during the bidding process you might as well scrap the bids and negotiate with the best qualified contractors using his suggestions if yo like them. You will pay a premium for that but with unresponsive bidders you have no choice; you can't negotiate with all of them with different designs.

    Negotiating with the current low bidder in this situation would be the worst option.