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.