What is bid shopping in the context of contracting?

Bid shopping refers to the practice in contracting where a contractor reveals a subcontractor's bid to other potential subcontractors with the intention of negotiating lower bids. This tactic is often employed by general contractors after having received a bid from a subcontractor, with the expectation that by disclosing the original bid, they can encourage competitive pricing among other bidders.

The reason this practice raises ethical concerns is that it can undermine trust between contractors and subcontractors. Subcontractors invest significant time and resources in preparing detailed bids, and if their figures can be leveraged against them, it may deter them from participating in future tendering processes. This can lead to a reduction in quality and competition in the market, as subcontractors may seek to protect their interests by either refraining from participating in bids or inflating their prices to compensate for the risk of bid shopping.

Understanding bid shopping is crucial for professionals in contracting, as it reflects on the broader issues of fairness and transparency in the bidding process.