Louisiana Contractors License Practice Exam

What does "bid shopping" refer to in contracting?

1. Directly selecting subcontractors based on past performance

2. Revealing a subcontractor's bid to obtain a lower price from another subcontractor

3. Shopping for the lowest overall project cost

4. Negotiating material costs with suppliers

The correct answer is: Revealing a subcontractor's bid to obtain a lower price from another subcontractor

Bid shopping refers to the practice of revealing a subcontractor's bid to other subcontractors or potential bidders in an effort to obtain a lower price. This practice is generally frowned upon in the industry because it undermines the competitive bidding process and can lead to distrust among subcontractors. When a contractor shares a bid with others to negotiate a lower price, it can harm the original bidder's chances of being awarded the contract, as other bidders may undercut them without factoring in the quality of service or reliability. This practice can create ethical concerns as well, as it might pressure subcontractors to provide lower bids that could compromise the quality of work or materials. Understanding bid shopping is crucial in the contracting field because it not only reflects on the contractor’s integrity but also impacts the overall project dynamics and relationships within the contracting community.