Tuesday, June 25, 2013

Is it Bid Shopping if a Contractor Substitutes for a Higher Priced Subcontractor?

Bid shopping occurs when a contractor bidding a construction project takes a subcontract bid price, and attempts to get another subcontractor to lower their bid price below the original price received by the contractor.

Anti-bid shopping law:  The purpose of Washington state law (RCW 39.30.60) is to discourage bid shopping by requiring the listing with the bid of subcontractors for HVAC, plumbing, and electrical work on projects estimated to cost $1 million or more. 

When is substitution not bid shopping?  There was recently an interesting court case in which a subcontractor (ETCO Services, LLC) named with the bid was later substituted by the contractor (Killian Construction Company).  ETCO as the substituted subcontractor filed a lawsuit seeking $1 million in damages against the Killian as the contractor.  But because ETCO had made an error in their bid by not bidding all the work, Killian eventually used a higher priced subcontractor whose price included all the work.  The court ruled that using a higher price for a new subcontractor did not constitute bid shopping.

Paul Cressman, Jr.
More details:  Seattle construction attorney Paul Cressman, Jr., from the law firm of Ahlers Cressman PLLC, recently wrote an excellent summary of this court case on the firm's blog.   
  • Click here to read Mr. Cressman's comments with additional details about this case.   
  • Click here to read the court decision from the 9th Circuit Court of Appeals.
Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC 

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