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Is bid-rigging still blighting construction?

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Comments

  1. The term “cover pricing” is a misnomer when applied to bidders getting together to fix a bid price. This is fraud and as such deserves all the punishment the law provides.

    Cover pricing is when I, as a contractor, am unable/unwilling to submit a bid on a given project, and this can be for many legitimate reasons. Its to big for me to finance; to small for me to be competitive; my estimating department does not have the manpower; I am to busy and cannot possibly do the work at the time requested; this is not the type of work I am geared up to undertake; the schedule is to tight; i cannot complete with contractor X; etc etc etc. I am sure that others can think of many equally compelling reasons to want to decline.

    And theres the rub. We want to decline for very genuine reasons, most of which would affect our ability to successfully complete the project and result in a lose/lose situation, but on the other hand we cannot afford to upset the client, especially if he has been a good client in the past and there is the prospect of future work

    So what to do? Depending upon our relationship with this client, we should either write or have a senior person, preferably one with a personal relationship with someone from the client explain exactly why we wish to decline, showing our estimating load, our work load, our financial situation etc or whatever is pertinent and pointing out that it is to avoid a potential lose/lose situation. This should be done immediately upon receipt of the enquiry, so the client has the opportunity to invite a replacement contractor.

    You may argue I am being naive to believe contractors would do this, but I believe any responsible client would appreciate this and not penalize the contractor for his honesty and openness, and would not jeopardize the prospect of future work. At least the contractor will not be breaking the law and can sleep easy at night!

  2. Bid-rigging is wrong as it is straightforward collusion. Cover pricing is not in the same category and often helps hard pressed contractors. It can also help employers with sufficient prices. Pity the baby has to be thrown out with the bathwater. These days everything has to be squeaky clean and so PC. A sign of the times I guess.

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