Thread Rating:
  • 1 Vote(s) - 3 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Business Ethics - bidding, competition, etc.
A question regarding business ethics for Noahides in the construction industry:

In the commercial construction industry today, the typical bid process works as follows:

1) A set of plans & specifications are issued by an architect acting on behalf of the owner.
2) Multiple General Contractors will turn in an official bid for the project at a given time on a given date. (Let us say 3:00 PM on Wednesday as an example).
3) Multiple sub-contractors (mechanical, electrical, roofing, etc.) will turn in bids to the general contractor to have their price included in bid the general contractor turns into the architect.
4) Multiple vendors will turn in bids to the various sub-contractors on the project to have their product included as part of their bid to the general contractor.

In a perfect world, the process would work as follows:

1) Each sub-contractor selects the lowest priced vendor that has turned in a bid to them, and then turns this price in as part of his bid to the general contractor(s).
2) The general contractor(s) will select the lowest bid from amongst the sub-contractors that turned in a bid to them.
3) The architect will select the lowest priced general contractor to be awarded the project.

Typically the architect & owner will choose the lowest priced General Contractor (assuming they have a reputation for reliable work).

It is assumed that the winning General Contractor will use the sub-contractors that he used when formulating his bid. (i.e. if he used the $25,000 price from ACME electrical contractors as part of his total bid price, he will use ACME electrical contractors for the electrical portion of the job.)

Working further down the chain, it is assumed that each sub-contractor will use the vendors that he used to formulate his total bid price.

IN REALITY, the process works much closer to this:

On the giving bid day (3:00 PM on Wednesday in our example), the day looks more like this:

1) As soon as ACME contractors turns in prices earlier that morning before bid time (say 11:00 AM, 4 hours before bid time), their competitors are trying to find out that pricing from any general contractor that will fish out ACME's price to them. The reasoning is simple: If they are able to get the pricing of ACME before the firm bid time, they can cut their price below that and possibly win the job without having to cut too low from their original price.
2) ACME does the same thing. They try to find out their competitors pricing.
3) After the job bids, and the winning contractors are announced, vendors and sub-contractors begin trying to cut their price after the fact if they aren't the low price at bid time.

This probably sounds like a very hard-nosed business enviroment, and it is. However, it is definitely the nature of the construction business today. (Especially during this recession.)

I had read in a book on Jewish ethics that it is not acceptable to try to swoop after the fact and "steal" business from a competitor that he almost had a contract on. On the one hand, that is what this entire process appears to be doing. On the other hand, if these are the de facto "rules of engagement" amongst all the competition, it doesn't seem to fit the bill of "stealing business away" entirely.

My questions are as follows:

1) Is it acceptable for a Noahide to take part in this process as either a vendor or sub-contractor?
2) Is it acceptable to try and find out your competitors pricing levels on bid day, assuming they are doing the same thing.
3) Is it acceptable to cut your price to the contractor after the 3:00 PM bid time?

Sorry for the drawn out posting!



Messages In This Thread
Business Ethics - bidding, competition, etc. - by Finch - 12-14-2009, 08:30 AM

Forum Jump:

Users browsing this thread: 1 Guest(s)