Molly had been employed by Xert Contractors for almost 10 years. She had spent virtually all that time in the field. Later, when she wanted to have a family, she requested a position in the main office that would not entail constant uprooting from project to project. In her new position, she quickly became assistant chief estimator. One day, as she was beginning to review the bidding documents on a project, she got a call from a competitor. The call was from Hank, the chief estimator for Viking Erectors, and it involved an unusual request. Hank said, “I was wondering if Xert was going to bid on the Bristal Hotel project in Rabstown.” Molly said, “Yes, Hank. In fact, I was just starting to review the plans this morning. I expect you will be sharpening your pencil on this one, too.” Hank responded, “That’s why I’m calling. We just got that school job in Spring and won’t be able to take on any more work.” Molly then said, “That should make you pleased. I wish we had been so fortunate. So what’s the problem?” Then Hank asked, “I was wondering if I could get a courtesy bid or complimentary bid price from you.” Molly inquired, “Hank, you’ll have to explain this. I haven’t been estimating that long. What is a complimentary bid?” Then Hank said, “You probably know that we have done several jobs in the past for the Bristal hotels in our region of the country. They are an excellent company to work for. And we had to work hard to get on the select bidder’s list. They are real particular about their contractors. But once you start to work with them, they want you to stay with them. If they don’t receive a bid from us on this project, Viking will most likely be taken off the bidder’s list. So I really want to put in a bid on this job, but I don’t want to get the job. What I would like to get from you, on bid day, is a price that looks serious but that is well above your price. Can I count on you to give me a price?” Molly started to think, Is this being honest to the Bristal hotels? However, Molly realized that this would give Xert a bit of an advantage, since one of the bidders would be under her control. Discuss the ethics of submitting a courtesy or complimentary bid. Discuss the ethics of providing a price for another company to use in a complimentary bid.
Hinze, Jimmie. Construction Contracts (Page 386). McGraw-Hill Higher Education -A. Kindle Edition.
The text includes a segment on "courtesy bids". It is a somewhat common practice in the industry, even though it is legality is questionable.
How do you feel about this type of practice?
Sample Solution