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Low-Ball Bingo

Competitive Bid and What Really Happens at Bid Lettings

I am a building contractor. You’d think that would be punishment enough. But the problem with being a contractor while discussing the subject of competitive bid is that anything disparaging I say against this entrenched and universally wielded construction award vehicle runs an inherent risk of sounding like sour grapes. The reader may assume I’ve gotten beat a few times at the bid table and now I’m only here to shoot the messenger.

    

Well that is simply not the case, dear readers. I’m not here to shoot the messenger, I’m here to give the messenger an ultra, high-impact, mega-eye-watering, atomic wedgie. (I may even use a crane.) Then, just for good measure, I’m going to tease the messenger unmercifully until he runs crying home to his momma (who never loved the messenger anyway) until only later the authorities find him curled up in a fetal position on the kitchen floor while momma’s at the race track with a new Mr. Messenger. That’s how much I dislike the messenger.

    

But I digress. Sorry. Back to competitive bid. My readers, I have been actively involved in construction contracting for over 40 years—seven umedicated, and in that time I have come to witness the horrifying misapplication and misappropriation of competitive bid in countless tragic situations. But before we go further, we should set some backdrop. First, what exactly is competitive bid? Well, as it pertains to our industry, Merriam Webster (he’s this guy I know) defines competitive bid as follows: “The pitting of two or more laid-off automobile factory workers with Chevy pickup trucks (i.e., ‘contracting firms’) against two or more other laid-off automobile factory workers with Ford pickup trucks in a no-holds barred, cage-match, blind pricing competition for a construction project that no respectable contractor will touch because every respectable contractor is up to their ever-lovin’, luxury-skybox, season-ticketed ears in lucrative, negotiated work and don’t need to scrimp and scrounge with open competitive bid nonsense.”

    

The bidding combatants work from identical bid packages consisting of architectural working drawings with no dimensions, a boiler-plate specification manual from post-WWII Portugal, and accompanying, relevant information such as addenda, finish schedules and 3,127 pages on liquidated damages. The participants then spend the entire bid period analyzing documents, assigning costs, shooting rubber-band missiles into the ceiling tile and imagining they’re the lead singer for Nine Inch Nails.

    

Finally and fatefully, bid day arrives, and in a ceremony that can only be described as a combination of profound frustration, bitter contempt and utter disgust for the entire architectural and engineering community, the bidders stuff their eraser-marked bid-forms into big, shiny yellow envelopes that cost $21.30 each before tax. They then speed upward of 812 mph along the crowded city streets to deliver their yellow envelopes to a specified bid place before a specified bid deadline. The event they’re all speeding to is known as a “bid letting.” The pedestrians encountered on the way are known as “victims.”

    

If it’s an open letting, the bids are read aloud and with few exceptions, the lowest responsible bidder is inevitably awarded the work. (A closed letting is where bids are opened and evaluated in private as a bald, reclusive super-villain monitors the proceedings via closed-circuit TV, suggestively stroking his cat.) From that point on, well gosh, everyone just gets along with one another, the building project is finished without a hitch, everyone’s happy and the lucky owners are bursting with delight over the way the whole darn thing played out. No wait. Sorry. That was a Disney® movie I saw once. Construction projects that result from CB are much worse. How? Well, there is nowhere near enough time or room in this magazine to address everything wrong with CB. Our hearts simply wouldn’t take it. So the best we can do is break our pain down into doable doses. So for this session, let’s examine one of the more critical elements of the CB system: the bid letting itself.


Bid Lettings

A new building project is being bid. It’s a new city hall addition, and the architect’s budget is $1 million. Here’s what everyone thinks happens at the bid letting:


  • HammerTacker Construction has a base bid of $1,023,000.
  • Toenail Contractors has a base bid of $1,048,000.
  • DingleDirt Brothers Co. has a base bid of $ 999,900.
  • B, H & Y Builders has a base bid of $1,002,000.
  • Ringshank Building Group has a base bid of $1,016,000.


    

Honest competition, tight bids, right on budget, everyone holding hands and singing songs around a campfire. Perfection, right?

    

Wrong.

    

Here’s what really happens at bid lettings: The bids for the city hall addition are due at 2 p.m. At 1:54 p.m., 127 highly stressed, pre-diabetic and exhausted bidders compress their collective and considerable mass into a dark, moldy room designed to hold 12. You dart out of the way milliseconds before a stampede of potential bidding hopefuls force their way to the front of the room, each with half-sealed proposals in hand. Fresh puddles of saliva spring up in front of the main table, after-wash of the hastily moistened envelopes that now rest in a pile awaiting their fate.

    

The “let-tors” are the sterile, erect cast of characters (the clients) perched regally behind the antique walnut table. The “let-tees” are facing the table and all doing their level best to balance their broad, awkward, builder-shaped bodies on tiny, torturously rock-hard folding chairs. The clock strikes 2 and the most criminally over-dressed occupant of the table regally announces that bidding is closed. Herman Frail (Frail Construction) lies weeping and dejected in a molten mass on the floor just a few feet from the front table clutching a wrinkled, yellow envelope. The poor sap didn’t make it.

    

The A/C is broken. The A/C is always broken. The room is suffocating and torridly hot. The windows were painted shut during the last renovation, and there’s a permanent and aromatic combination of black-mold and gym socks in the air. You make a conscious decision to breathe through your mouth for the remainder of the proceeding. Everyone soldiers on. Keep in mind now that the architect’s budget for the project (the concise, calculated projected cost for construction created at the beginning of the project with the sole purpose of getting the mayor to sign the design contract) is still $1 million. The numbers are read aloud:


  • HammerTacker Construction: $1,452,000.
  • Toenail Contractors: $1,983,800.
  • DingleDirt Brothers Co.: $596,111.32.
  • B, H & Y Builders: $2,695,200.
  • Ringshank Building Group: $14,710,000.


Pretty special, huh? Oh, but you haven’t heard the punchline yet: The project gets awarded to the DingleDirts! The architect even pats the mayor on the back as they walk out of the letting, congratulating him on being under budget, before racing like a greyhound on caffeine to his tiny electric foreign car. The mayor is starting to get a sick feeling in his stomach.


Let the Games Begin

The horrifying and all-to-familiar events that unfold in the following weeks are an experience one simply must live through to fully appreciate. It goes a little like this:

    

Having left $987,688 “on the table,” Donny and Danny DingleDirt (the DingleDirt Brothers) head directly from the bid letting to Arnie’s Pub & Eatery (“Gyros Bigger than Your Head!”).

    

Everyone at Arnie’s has the most amazing time because there are two crazy contractors buying everyone Jaeger® shots and gyros. They keep mumbling something about their lives being over and one of them (Danny) keeps confessing his love for the coat rack in the corner. Now it’s just getting awkward.

    

The total bar bill is $6,287, which also covers a new stuffed moose rear-end. It’s best if you don’t ask.

    

Three days later, Danny (the eldest) calls the project architect “to discuss the project.” During the conversation he cautiously but repeatedly floats out there that “there may have been a mathematical error” in their bid. The architect holds his ground for all of one nanosecond before caving entirely (he’s not good with confrontation) and the negotiating door swings wide open for the DingleDirts.

    

In the end, the project ends up costing the city $1,916,512. The final count is 217 change orders, 91 intense meetings, 1,816 threats of litigation/strangulation, six punch lists and one mayoral impeachment hearing.

    

Two and half years after closeout there is still no door on the women’s bathroom, and no one can figure out where that dead-animal smell is coming from. In an unrelated note, no one has seen Donny DingleDirt’s ferret “Mr. Scuppers” since early on in the building project.

    

The tax-paying public is predictably outraged by the cost over-runs and the gross incompetence of the construction team. Investigations are conducted, meetings are held, councilmen are piously outraged, and walnut gavels are pounded on lecterns. Meanwhile, Donny & Danny DingleDirt popping PBR’s and tease alligators aboard their custom-fitted airboat located in a popular Louisiana swamp.

    

OK, maybe I’ve embellished a little, but it’s only to illustrate a point. I’m betting that, as a building contractor, there’s much in the sordid tale of the DingleDirts that resonates with your personal experience. I’m also guessing that we’ve all felt at times that the traditional competitive bid award system is a severely damaged vehicle—as in secondhand-Yugo-in-a-demolition-derby damaged. But if that indeed is the case, then we have to ask ourselves, How did we get here?’


How Did We Get Here?

Well, there are many reasons ranging from unrealistic expectations, to innocent incompetence, to outright greed and corruption. And like so many human debacles that only get addressed after things have gone sideways, the real culprit turns out not to be a single reason but instead many disparate, crippling causes. Our bid0letting saga is only one small cog in a great big, dysfunctional competitive bid mechanism. I mean, don’t even get me started on how competitive bid:


  • Is by its very nature is adversarial. From the moment a contract is signed, the construction process (as a result of competitive bid) turns all the participants into manic, frenzied ‘money-grabbing’ trolls where owner, general contractor, architect, engineer, sub-contractor and material supplier scratch, scrap, cheat and steal to accumulate as large a share as possible from the available and finite construction funds.
  • Like an ethical black hole, sucks everyone involved into what can often turn out to be less than desirable strategies to gain “success,” thus turning what should be a mutually beneficial business arrangement into a cage-match mentality that starts the moment after the contract is signed and lingers long after punchlist.
  • Makes the incredibly foolish assumption that all bidders in a competitive bid situations receive and bid off of complete, accurate and professional construction bid documents when the reality is that nothing could be further from the truth. I’d estimate that less than 10 percent of the plan/spec packages from which I prepare bids are complete and concise enough to genuinely offer the owner an “apples to apples” competition. Twenty-five percent are pure folly and the remaining percentage makes up the middle ground between the best and worst. This means that more often than we’d like to admit, the low bid on a CB project has likely been arrived at through a means other than a thorough and precise understanding of the construction documents—and I’m sure this is hardly the way our construction founding fathers intended the process to play out.


What Else Is Out There?

But whatever the actual combination of causes, in the end there is one unavoidable and undeniable common denominator: people. And anyone who has spent more than two minutes in the construction business knows that when you start introducing personalities into any situation, things can go awry in a hurry.

    

In fact, I have a theory: I’m pretty sure this human element is the very reason aliens haven’t yet made contact with our species. I’m guessing they’ve already been here, looked around, listened to 30 seconds of talk radio or the E! channel and said (or beeped or clicked, whatever they do), “Oh, you have got to be kidding me” and high-tailed it for home.

    

Hmmm. I wonder if they have construction on their planet. I wonder if they suffer the same problems and issues we do. I wonder if they’re hiring.


S.S. Saucerman is a full-time commercial construction estimator and project manager for a large upper-Midwest general contractor. He is also an established freelance writer and author whose work spans 20 years. In addition to construction and writing, Saucerman also taught building construction technology part-time for 11 years at Rock Valley College in Rockford, Ill.

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