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ConstructionPro Week, Volume: 2 - Issue: 18 - 05/03/2013

Is Bid Listing a One-Way Street for Subcontractors?

By Bruce Jervis

 

In the solicitation of bids for public contracts, it is common to require bidders to list their intended subcontractors for major components of the work, usually trade by trade. If the bid is accepted, the successful bidder -- now the prime contractor -- may not substitute for a listed subcontractor without the consent of the project owner. Sometimes, permissible grounds for substitution are stipulated in the solicitation.

 

Bid listing of subcontractors is frequently mandated by state or local procurement law. It may also simply be imposed by the project owner under the terms of the contract documents. Many owners believe it gives them greater project control and protects against “bid shopping” -- the practice of contract awardees shopping trade work around to the lowest bidder regardless of reputation or reliability. In theory, bid listing should protect subcontractors. In practice, many find it a one-way street.

 

In a recent Missouri case, a bidder on a public works contract listed an electrical subcontractor in its bid. The bidder was awarded the contract but used a different company for the electrical work. The would-be sub sued for breach of contract and promissory estoppel. The suit was dismissed. The listing of the subcontractor was a promise running from the bidder to the project owner. No promise had been extended to the listed electrical contractor. The jilted sub had no recourse.

 

As trade contractors well know, had the electrical contractor in this situation backed out of the project, the prime contractor, in all likelihood, could have held it responsible for any increase in the cost of the electrical work. Yet the trade contractor had incurred the cost of pricing the work for the prime. Its price had been used in successfully bidding the prime contract, but the prime could jettison the trade contractor with impunity. Some bid listing statutes provide a remedy for listed subcontractors. Most do not. Is this fair? What steps can trade contractors take to protect themselves? I invite your comments.

 

COMMENTS

a statement included in the proposal from the subcontractor can protect the sub by nullifying or voiding the proposal if the prime contractor does not engage with the company or uses a different contractor

" xyz prime contractor will use ABC subcontractor if awarded contract from owner and will indemnify ABC 4 cost of estimate on or Lost profits if a different subcontractor is used during the execution of the master contract with the owner"
Posted by: robert sanchez - Friday, May 03, 2013 11:19 AM


The electrical sub can request a letter or document stating the prime will use you as the sub if awarded the project. In addition, some states laws protect the sub in this instance.
Posted by: Nickolas Lombardi - Friday, May 03, 2013 11:27 AM


Lobby your elected officials for legislation and BLACKLIST the GC amongst your fellow tradesmen. Subs look down on that behavior.
Posted by: Jerry Kieffer - Friday, May 03, 2013 11:29 AM


Subcontractors/Sub-consultants have minimal control, especially if the government agency has limited compliance monitoring programs. Even if the agency does secure tracking reports, non-compliance identification is often too late in the project cycle to make changes on behalf of the subs. Many subs end up on the cutting room floor once contracts are awarded with no recourse.
Posted by: Nancy Myers - Friday, May 03, 2013 11:45 AM


As an architect I have had to battle with contractors on public work for substituting subcontractors and suppliers after the bid. I am considering a paragraph in the specifications that would require the successful contractor from substituting another subcontractor for a listed subcontractor.
Posted by: Raymond C. Harris - Friday, May 03, 2013 11:46 AM


As a sub-contractor who aspires to become a G.C. one day I believe it is in everyone's best interest that if a particular sub's estimate/numbers are used then that said sub should be given first priority for award of the sub-contract. It is in the interest of not only fairness but transparency and ethics that the bid chain be maintained. The owner selects a G.C. based on their bid which inlcudes all of their chosen subs...if those same chosen subs are not used or even given the option of acquiring the work in question then I believe its up to the owner to step in and force the G.C. to use the subs that they submitted unless they can come up with verifiable reasons why this sub cannot complete the project. We all realize a lot of time can pass between bid date and project award, however, this should not be used as an excuse for G.C.'s to get in bed with sub's for convenience sake only to divorce them later because it is expedient to do so from a business stand point.
Posted by: Bart Butler - Friday, May 03, 2013 1:29 PM


I am really surprised to hear that it is that easy to replace a sub on a public works project. In my jurisdiction it near requires an act of congress to replace a listed sub and if any work exceeding 1% of the project is performed by an unlisted sub, I as the owners rep can access a penalty of up to 50% against that portion of the work, and we do.
Posted by: Doug McKellar - Friday, May 03, 2013 5:27 PM


We are mechanical contractors and therefore do plumbing and HVAC. I closed a job where the GC contractor called me afterwards and wanted to remove the HVAC from the quote and only do the plumbing. I refused and we never did the job. I now do not quote to this general contractor.
Posted by: Ben Boers - Friday, May 03, 2013 7:55 PM


In the state I primarily do public work it mandatory to list the major subs GC, Plumbing, HVAC, Steel, Electrical if not self performing. Many of the public agencies stand behind it, some not so much. Like any law to be effective it has to be enforced.

It suprises me that the Missouri case was dismissed. It seemed implied that the listed sub should expect a contract. While I'm not familiar with all the verbage of the bid it seems to me for an owner to ignore a mandate in his specifications opens them up to protest from other bidders, because the low biidder obviously did not need to follow the same rules, and the one thing that bid laws are to do is create an even playing field. This obviously did not.

My take is that listing a sub afords the owner the benifit of best price driven by the GC desire to negotiate best price on bid day as opposed to shopping later and the GC gaining all the benifit. If owners choose to ignore the listing, in the long run they are hurting them selves.
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