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Reverse auctions should stop

Do business ethics matter? The answer is yes. According to data compiled by   the American Subcontractors Association, subcontractors ranked bid shopping   as the greatest obstacle to marketing their companies in 2002. Many construction   industry organizations, including ASA, have policies against the practice. Whether   the business of construction is conducted in an ethical manner makes a real   difference. In recent years, electronic reverse auctions have raised ethical   questions. In September, the ASA took a firm stand against electronic reverse   auctions by issuing a statement blasting them as just another "form of   bid shopping."


The statement said: "ASA believes that electronic reverse auctions are   a form of bid shopping. ASA reaffirms its abhorrence of bid shopping and bid   peddling as unethical practices. Thus, ASA supports legislation and regulation   that would prohibit the use of reverse auctions on public and private work."


In an electronic reverse auction, the buyer of construction services establishes   an online forum where bidders abandon the bids they prepared according to job   requirements and instead submit new bids based primarily on the guesswork of   what price reductions their companies can afford to make.


ASA is leading the construction industry’s opposition to reverse auctions by   supporting legislation in Congress that would equally prohibit all forms of   bid shopping on federal construction, including online reverse auctions. The   Construction Management Association of America is among the groups that endorse   the legislation.


The bill states that no party, including the government, prime contractors   and subcontractors, shall engage in bid shopping or will face penalties of liquidated   damages or, in the case of three or more violations within a five-year period,   possible debarment. The legislation defines bid shopping as "the practice   of divulging a contractor’s or subcontractor’s bid or proposal or requiring   a contractor or subcontractor to divulge its bid or proposal to another prospective   contractor or subcontractor before the award of a contract or subcontract in   order to secure a lower bid or proposal."


ASA counsels specialty trade contractors to contact their representative   in the U.S. House of Representatives and ask him or her to co-sponsor H.R. 1348,   the Construction Quality Assurance Act. To obtain contact information for members   of the House of Representatives, go to www.house.gov.   ASA’s Government Relations Department is available to help make the contact.   Call 708-684-3450, Ext. 1321, or visit the Web   site.

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