Last month we talked about why bid listing laws are a good thing. In summary, general contractors use bid shopping to take profit from the subcontractors and keep those profits for themselves. Bid listing laws are a very effective way of stopping post-award bid shopping. 


To my knowledge, the following states have some sort of bid listing laws: Arkansas, California, Connecticut, Delaware, Florida, Massachusetts, New Mexico, New York, Oregon, South Carolina and Washington. It has recently come to my attention that Tennessee also may have a bid listing law. 


If you are not a subcontractor in one of these states, you may still be able to get bid listing legislation in your state. There are quite a few resources available to help with this effort. A contractor’s association, such as the National Electrical Contractors Association (NECA), is one of the first places to seek help. 


Another great resource for all subcontractors is the American Subcontractors Association (ASA), which is involved in getting bid listing legislation (for federal contracts) passed on a federal level. 


Additionally, don’t forget to include the associations of all of the trades in your efforts, because bid shopping affects all subcontractors, not just electrical. Your grassroots efforts can be successful with the help of a powerful coalition of subcontractors and trade associations.


A great example


In California, the ASA of California, NECA and the California Association of Sheet Metal and Air Conditioning Contractors (CAL SMACNA) worked together with State Assembly member Das Williams to fix loopholes in a previous bill meant to cap retention at 5 percent. Their efforts were successful, and California Gov. Jerry Brown signed the bill. During this effort, more than 50 subcontractors sent letters to the governor, including several electrical contractors. These subcontractors included representatives from about 20 trades.


Getting started


The first job will be to gather facts about the current bidding practices and laws in your state. What rights do the various parties—including government agencies, general contractors and subcontractors—have now? How many times in the last year was your bid shopped? Do subcontractors in your area inflate their prices when they fear they will be shopped? Would you give lower prices if you knew you would not be shopped? 


Use this data when you meet with legislators and government policy-makers. For greater emphasis, present this data visually. A chart or any other visual display can have a great impact in describing your problems. Have this information in an easy-to-understand format for greater emphasis. Legislators will appreciate the format and be impressed by the factual way you present your case for action. You can also tell the legislators how bid shopping negatively affects you. Tell them that the government, as well as subcontractors, lose out when general contractors improve their profit margins by bid shopping, that other states have bid listing laws that work, and why you want action in your state now.


Not a piece of cake


I do not want you to think getting bid listing legislation in your state will be easy. The amount of effort required will be proportional to the resistance in your state, and there will certainly be resistance. The general contractors that participate in bid shopping stand to lose significant profits. They will fight back. The following are some of the arguments you may see:


• Bid shopping is not a one-way street. Why do subcontractors cooperate? Answer: The general contractor has all the power to select subcontractors. Subcontractors must submit to bid shopping to survive.


• If bid shopping is so abhorrent, as stated by the Associated General Contractors (AGC), why does it continue? Answer: In my opinion, it’s like the saying: “Follow the money.” The general contractors make a lot of profit by participating in bid shopping.


• The general contractors are responsible for determining the price of a project. They should be allowed to determine that cost as they see fit. Answer: Historically, general contractors used to hire workers to do various portions of the work. Today, more than 80 percent of the work is done by subcontractors, and they determine the price of a project.


• General contractors often have a difficult time analyzing and comparing subcontractors’ bids for the timely preparation of their own bids. Bid listing will create even more problems. Answer: Nonsense. The simple practice of subcontractors submitting preliminary proposals without pricing a day or two early gives the general contractor plenty of time to analyze the proposals.