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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!


Thank you for these very practical questions!
This post was sent to Rabbi Moshe Weiner in Israel, the author of "Sefer Sheva Mitzvot HaShem" (The Book of Seven Divine Commandments) and "The Divine Code." Here are the answers he returned:

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 competitor's pricing levels on bid day, assuming they are doing the same thing?

It seems that this is not a case of actual theft on the part of the bidders and their vendors. Furthermore, since it is the known and accepted nature of that business, in that particular location, it is permitted for those who decide to enter into that bidding process.

3) Is it acceptable to cut your price to the contractor after the 3:00 PM bid time?

As long as no one firmly committed himself with a contract [or any legal procedure that one cannot retract] that he won't do this, then each bidder can retract his bid and offer a new one.

Note from the Director: this answer is not addressing the actions of people within the contracting company that is soliciting the bids. Here is one more point on this matter of bidding on contracts, that was provided by Rabbi Moshe Weiner (author of "The Divine Code"):

If the one calling for the bids makes a legally binding promise that the bids are supposed to be secret (i.e. that he won't share the amount of one bid with another bidder, so the second bidder can knowingly undercut the first), then he's not allowed to do that (even though it doesn't involve an actual theft). This also applies to employees who know that their boss or their company has made this binding promise. They are not allowed to subvert their company's contractual obligation by divulging bid amounts that are supposed to be secret during the bidding process, if the bids were submitted under a legally binding confidentiality agreement.
Dear sir,

I got placed as a Business analyst in a company in India. Later I am going to enter the somewhat foggy regions of investment banking or consultancy. Now these areas of employment are, I have heard, not always ethical. I am particularly curious about futures and derivative trading in which I was thinking to apply as a prop trader. These job profiles are based on keeping ahead of the others and competition. It is generally argued that the line between ethics and sins are blurred in these jobs specially when large money or labours are involved.  Individual morality can wither due to the demands of the client.
Professional duty can conflict with company demands.
Please refer these sites to know what I am concerned about:

As a person who comes from a poor state of India, Bihar and is hoping to build his life and career in these financial sectors; my question is, " Is it an appropriate job? Investment banking, prop trading, security trading, speculation?" I am a Baniya from Bihar and have a natural inclination for these jobs. Many of my cousin-brothers are involved in such jobs. I am just starting my career. So, also please give me some tips on succeeding in these jobs while also following the laws and obligations of G-d Almighty.

May He bless us all!

The article you referenced brings attention to these issues in the finance industry:

1.- Usurious practices.
2.- Speculative banking.
3.- Financing arms manufacturing and trade.
4.- Financing and supporting totalitarian regimes.
5.- Financing of companies with little or no commitment to social responsibility.
6.- Ecological Impact.
7.- Financing, donations, and sponsorships contrary to the good of the family.
8.- Involvement in social enterprise.

The author of the article claims that his company is watching out for those issues and exercising selectivity of investment, rather than just blindly treating money as any other commodity. But many other commodities have the same issues! Addressing any of those issues based on a system of trendy "ethics", if it is coming from an anti-Torah perspective, could be just as bad or worse than ignoring the ethical questions altogether.

If you are looking for a career in the finance industry and these issues concern you, you should first learn the moral principles and the do's and don'ts of the Torah-based Noahide Code. Many things that are prohibited in the Noahide Code will also be illegal under the system of secular laws, so you should make clear to your employer that you are not going to participate in illegal financial investment activities.

Beyond that, you could look for employment at a company that specifically limits itself to follow the proper system of ethics (this might apply for some Orthodox Jewish investment companies in Israel), or that offers its clients a distinct line of investment strategies in which a team of trained advisers gathers information about the potential investors and investments, and operates selectively based on principles that are consisted with Torah-based ethics and the Noahide Code. As a Noahide, maybe you could be the one who will trailblaze a line of investments that have no problems or concerns from a Torah perspective, and that could even be used to finance developments in the world that are truly positive (in G-d's eyes).
Dear Sir,

I keep coming to this thread and reading it repeatedly. Thanks for your wonderful guidance!! It will help me during my job!

Question received: I know that it is important in Judaism not to encroach on another person's livelihood. Many businesses in my area have hired maintenance companies which do many tasks. I want to offer a specific specialized style of service in one particular thing, which seems to be in demand, but the maintenance companies don not offer that. Is it ideal, then, to ask each of these companies if I may work with it to do a freelance-type of job at their client properties, which would enable them to get a percentage of my wages from the job? And also to offer to train them for free in this different style of service which has been less common in the business so far? I thought this seemed like a good solution but I don not know what the Torah-law considerations might be. As always, I care not only about what is permissible but also about what is ideal.

Answer: Here are some precepts for Gentiles / Noahides in similar situations, from The Divine Code, Part VII (The Prohibition of Theft), Chapter 8 on Stealing or Encroaching on Real Estate Property and related topics.

8:15. If a worker was trying to make an arrangement to work for an employer, and a second worker comes and knowingly makes this arrangement before and in place of the first worker, then the second worker has transgressed the prohibition against encroachment on the rights of another person to property and livelihood. He is called a wicked person [by the Sages of the Talmud], since with a small amount of effort, he could have made the same arrangement with another employer, and instead he is taking away another person’s livelihood without justification.
Likewise, if one is negotiating to rent or buy land, a house, or movable objects, and a second person comes and precedes him to buy or rent it, this action is immoral, and the second person is called a wicked person. This only applies if the second person could find a similar item or property, even if it will require a little more effort, and he is deliberately grabbing the opportunity from the first person. But if there are no available opportunities [to rent or buy] comparable to those being offered to the first person, or if the deal is very advantageous, he is not called evil for trying to procure that opportunity for himself, even though his action is detrimental to the other person who was trying to obtain it.
Also, this only applies if the other parties had already completed a verbal agreement, but had not made a legally binding contract or signed an agreement to formalize the deal. If there was no agreement yet between those parties, another person is morally allowed to put forth a competing offer in order that the renter or seller will accept his terms, and he will receive the business agreement or the purchase.[1]

8:17. It is permissible to open a new store next to the store of another person, even though it will cause the other person to have this new local competition in his business. Even if the new store lowers the prices and gives out gifts to the customers in order to draw in more business, this is not considered encroachment on property rights, because the owner of the new store can say to the other store owner that he is free to do the same thing as well.[2]
Although the above mentioned practices ... are permitted, a pious person will nevertheless distance himself from these practices or anything similar, and he will not encroach upon the business of another person at all.[3] The Sages [of the Talmud] have commented that the verse[4] - [he] who has done his fellowman no evil - refers to one who does not encroach upon another’s business. Thus, doing such a thing in any way is called evil.

[1] Shulchan Aruch Choshen Mishpat ch. 237.
[2] Rema Choshen Mishpat 156:5.
[3] Rambam, Laws of Ethics, end of ch. 5.
[4] Psalms 15:3.

-----end quote-----

From this we see that in your case, it would be forbidden to go a maintenance service company and convince them to hire you if it would be at the expense of the company letting go one of their workers, in order to make his position open for you to take over.
But if you go and ask to be hired to fill a job opening, it is OK for you to promote your special skill, so the company would decide to hire you instead of other applicants. It would even be permitted for you to take the position of someone else who had been verbally promised the position, but had not yet signed a contract, but that would be an immoral [i.e. evil] thing to do.
It is also permitted for you to go into open business competition with the maintenance companies, for the particular service you want to offer. It would be immoral [i.e. evil] to take away existing contracts that the maintenance companies had already procured, but it would not be immoral for you to compete with them for new contracts.
I do not see a gain of any moral advantage to you from training your competitor's workers for free in your unique skill, so they would be able to compete with you in that area. It also doesn't make any sense from a business perspective. That would be like opening a new store with a new product that no other stores carry, and then giving away your product to other stores so they could compete with you. Why would you do that?? It could be part of a business plan to both offer your services to clients, and let other companies hire you to train their workers, but you might well find that in a relatively short time, the other companies will take over the market in that area, and you will have no buyers for your service (unless you resort to more aggressive price competition, or other perks), and there will be nobody left to train (because the trained workers at the other companies can then do the training for new workers who get hired by their companies).

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