Contractors bidding on public construction projects would be required to name—and use—subcontractor listed in their bids, to prevent the practice of bid shopping, under a bill now under consideration by the House.
The Construction Quality Assurance Act of 2011 (H.R. 1778), introduced May 5 by Rep. Carolyn Maloney (D-NY), would require construction companies that bid on federal agency solicitations over $1 million to list each subcontractor they plan to use for $100,000 or more of the work.
After the contract award, if a prime contractor replaced a listed subcontractor without the permission of the contracting officer, the prime contractor would be subject to penalties.
The penalty would be the greater amount of:
• 10 percent of the amount of the subcontractor’s bid;
• The difference between the listed subcontractor’s bid and the replacement subcontractor’s bid; or
• The difference between the substitute subcontractor’s bid and the dollar value specified by the contractor to perform the work himself or herself.
“The bid-listing requirement would eliminate post-award price negotiations between contractors and subcontractors that can lead to corruption, wasteful spending, cutting corners, and can drive quality contractors and subcontractors out of federal construction markets,” says the American Subcontractors Association, which is vigorously supporting the bill.
“Bid shopping” occurs when a prime contractor divulges one subcontractor’s bid to obtain a lower bid from another sub.
“Bid shopping results in a windfall of profit to the ‘bid shopper,’ while depriving taxpayers and the federal government of the full value of their construction dollars,” said ASA president Timmy McLaughlin.
|ASA president Timmy McLaughlin called mandatory bid listing “the responsible solution” to bid shopping.|
The measure would also promote quality workmanship and security on federal projects, by publicly identifying major subcontractors and the types of work they would perform, ASA contends.
“Right now, federal agencies are forced to accept bids without any assurance of which subcontractors will actually perform the work on their projects,” McLaughlin said.
“This lack of oversight diminishes the quality and security of federal construction. Taxpayers deserve better, and mandatory bid listing is the responsible solution.”