Lowball Madness

Vince Bailey / August 2019

You better come back around to the sad old truth—the dirty low down…—from “The Weight” by Robbie Robertson

They say if you let a dog eat the scraps from under the table, it won’t be long before he’s after your meal. This adage is analogous with a certain element in our construction marketplace. Activity in the commercial construction industry has been burgeoning for quite a few years now, creating a market in which fair-minded, competing subs can all share in enjoying plenty of jobs in progress, a healthy backlog and a comfortable profit margin. In fact, all of this prosperity almost compensates for the nightmarish austerity of yesteryear—almost. It is unfortunate but predictable that when prosperity flourishes, certain parasites reappear, so we should not act too surprised when an assault comes from the lowest reaches of our industry. The larger problem is, whether surprised or not, very little can be done to retaliate when a low-baller blows up an otherwise attractive bid opportunity, crushing the possible prospects for valid and qualified bidders. The best one can do, it seems, is wait for the bottom-feeders to self-destruct. But in the meantime, there is no question that chronic low-ballers drag the level of the field down to a lower tier. Futility notwithstanding, a general awareness (or, the dirty low down) on the nature of these sub scoundrels can be beneficial, or at least entertaining.
    
This critical scrutiny isn’t focused on qualified competitors who wind up on the low end of the number cluster on several successive bids, nor is it about any legitimate adversary who is absorbing the pain of a bid bust. An honest error can happen to anyone. My complaint is aimed at rogue contractors who consistently beleaguer the market with outlier-low numbers through devious means and not through mistake or sheer ignorance. Clearly, a more culpable source that’s unabashedly accountable for raiding and undercutting the market status is that small but unscrupulous set of players who seek to infiltrate settled communities of exchange by flouting the rules of fair play; in other words, dogs at the dinner table. The estimate groupings in which these swindlers bend the accepted protocols to the breaking point include labor, means-and-methods and materials. The evidence that these manipulations are deliberate and calculated lies in the fact that the ill-gotten savings are built into the estimate up front. But then that’s the point, isn’t it—to be the low bidder and capture the award.
    
With all the regulation and scrutiny directed toward labor these days, one might assume this division of performance would be more or less impervious to deceptive practices. Recent policy developments, such as the federal government’s E-Verify program, have made it difficult for subcontractors to hire undocumented workers in order to pay a substandard wage.
    
But there are still a number of creative ways of gaming the system. For instance, it is common practice in some parts of the country for a subcontractor to utilize labor brokers or, in the vernacular, “farm out” the labor portion of a project. Some offenders cut corners by implementing non-conforming means and methods and/or by using materials that fall below the specified grade. Again, the very fact that these miscreants build their ill-considered savings into their bids is evidence of deliberate intent and anticipation of cheating from the get-go.
    
Routine deceptions of the materials and methods sort are as damaging to the commercial drywall industry as the ruses associated with labor. For example, utilizing a lighter gauge framing component than that which is specified, or a lesser galvanized coating than is required, tend to be a common practices among wall-and-ceiling rogues. I once watched with amazement while a competitor built an entire metal-framed condo project using 20-gauge EQ drywall studs on the exterior skin! Other deliberate omissions might include welding, expansion anchors, deflection track, bridging, strapping and clips. Note that virtually all of these components (or lack thereof) will be concealed within the wall cavity once the drywall and sheathing are installed. While the risk of getting caught is high and the consequences may be dire, many schemers weigh the risk versus the potential benefit, and take the gamble. Some take advantage of ambiguities in the bid documents to cut their corners. Accelerated schedules provide a healthy environment for cheaters, as their exposure time is lessened by the rush to get the skin on and get the walls covered up. Ignorance too, on the part of some GCs, plays a role in these blatant deceptions.
    
In all fairness, though, most GCs go to great lengths to screen out unqualified bidders. Thoroughly detailed scope sheets, pre-qualification forms and bonding requirements provide some pretty tough obstacles for incompetent low-ballers. Then too, a stringent submittal process, pre-con inquisitions and third-party inspectors may give potential cheaters pause as these measures increase the risk of exposing shortcuts.
    
Still, as formidable as these deterrents may seem, too many rogue subcontractors continue to get in under the fence and spoil the grazing field for others in spite of all the screening. And consider that in some instances, GCs are bound by low, out-of-date budgets. Sometimes the bottom line is all that matters. Sometimes cheaters win. And that, my fellow bidmeisters, is the dirty low down.

Vince Bailey is an estimator/project manager working in the Phoenix area.