Bid Shopping Ban on Federal Construction Gains Support in Congress - Prohibition Would Include Online Reverse Auctions
American Subcontractors Association, Inc.

WASHINGTON - A large majority of people working in the construction industry believe that the practice of "bid shopping" is unethical, and there is growing support in Congress to put a stop to the practice on federal contracts. The American Subcontractors Association (ASA) hailed the Construction Quality Assurance Act of 2005 (H.R. 2834) introduced on June 9 by Rep. Paul Kanjorski, D-Pa., and seven co-sponsors, as a solution that would bring much-needed reform within the federal procurement arena. The legislation has picked up the support of six more members of Congress since then.

Kanjorski introduced the Construction Quality Assurance Act in the U.S. House of Representatives to spare construction subcontractors and prime contractors from the deceptive practice of bid shopping on federal government construction contracts over $1 million. He explained the significance of the legislation: "The goal of the Construction Quality Assurance Act is to ensure that bid shopping is eliminated from the federal construction contracting process. Ending this practice will ensure that the taxpayers receive the value and quality they deserve for their hard-earned tax dollars. The Construction Quality Assurance Act would remove the financial incentive of bid shopping by penalizing the contractors that participate in the deceptive practice."

Since ASA's Construction Industry Legislative Institute, which took place June 12-14, the legislation has gained six co-sponsors. During the Legislative Institute, subcontractors visited Capitol Hill to ask representatives to co-sponsor the legislation. ASA is leading a grassroots lobbying effort to enact the Construction Quality Assurance Act.

According to a survey published by FMI Corporation in 2004, nearly two-thirds of people working in the construction industry see bid shopping as an unethical practice. The Construction Quality Assurance Act states that no party, including the government, prime contractors and subcontractors, shall engage in bid shopping, or will face penalties of liquidated damages in the amount of the shopped bid or contract price. 

"Construction owners often are leaders of change in the construction industry, and the federal government should act as a responsible owner and end 'bid shopping' on its projects," said ASA President-elect Vincent Terraferma, PE, KSW Mechanical Services Inc., Long Island City, N.Y. "When taxpayers' money is spent to fund construction, whether it is military housing or courthouses, the integrity of the procurement process is extremely important. Bid shopping threatens that integrity."

The Construction Quality Assurance Act of 2005 defines bid shopping as "the practice of divulging, or causing to be divulged, 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."

Kanjorski introduced similar legislation in the 108th Congress.

Learn more about empowering your company to advocate the best possible subcontract terms through ASA's Stand Up! Web page. Click on the Stand Up! image on the ASA home page www.asaonline.com