Informal Bids and Business Ethics

When the bidding process is a little loosey-goosey, confusion about the relationships can trigger conflicts. Here's a case example. August 7, 2006

I recently became aware of a really nice residential project ready to start. I was trying to find the architect, etc, and insinuate myself into things in hope of doing this work. The first - and only - builder to get plans gave the architect a number without asking subs/vendors to supply their respective numbers. The architect thought the number too high, so asked builder # 2 to bid the project.

Builder # 2 asks our shop to bid part of the woodwork, and tells us that we will only get part of the work - not all of it, and of course, only if he gets the contract. I am put off by this, but soldier on.

The architect calls me on shop drawings for another job, so I inquire if there are other builders (beyond 1 and 2) that may have a set of prints. I explain that if I am going to generate a bid, I prefer giving it to anyone bidding the project rather than just one builder. He responds that only # 2 got the plans, but he would appreciate me sending him my numbers. When I did commercial work, it was common practice to send bids out to every GC bidding the project, and to get this info from the architect.

I relay to Builder # 2 that he is the only one with plans since he was unsure of that when I asked previously. He asks how I know, talked to architect, etc, and he hits the roof. "Dance with the one that brought you!" and "you asked two ugly girls to the dance." While I protested, he claims I was totally unethical and disloyal in what I did. This same builder (18% of our work), demands that our name not be on any work we send to his jobs, and will not tell his homeowners that we are doing the work. In fact, today he said that he wants the owner to think his company is the one making the wood products. It goes far enough to where he sees nothing wrong with telling the owner that his company actually makes the doors, though I'm pointing out that would be considered dishonest. He says I don't understand.

So, what is right here? Did I cross the line? Was I unethical? Aggressive? Too aggressive?

Forum Responses
(Business Forum)
From contributor A:
A few years ago I had a designer try to pull the same thing with me, demanding that I not have any identifying signage on my work. His demand went so far as to require no signs on our truck, clothes or anywhere near the projects. All contacts from the work were to be through him, even if he was not the designer on that other project. In short, he wanted to own us. I went to work for myself to get away from guys like him. For him, my pricing went through the roof as a headache tax, and I have not heard from him since. Your case is a bit different. If the architect called you, then there was no contact initiated by you, and you're off the hook. I suppose you're response should be dictated by how much you want to work with this guy.

And if the question is strictly about ethics, he's being the unethical one. You're trying to grow your business and develop the relationships that can lead to that end result. He is doing the same, but by trying to bully you in the process.

From contributor B:

Relax - you have the moral high ground here. I would strive to replace that 18% of business if you can. I know it ain't easy, but I'd rather find some other business than have someone lay claim to my good work and try to hush me up for it. You aren't anything in this business without a good reputation and you get that by doing excellent work and putting your name on it - not his.

From contributor C:
I've seen this kind of thing before - not in regards to woodwork, but regarding certain kinds of construction contracts. The cases I'm used to are where the contract is for the whole building/project and the owner doesn't want to have a lot of hassle. The contract/bid package will say put together your team with your price and that's it. The GC decides all the subs/material vendors and all.

Where the owner wants more involvement, the bid package will say line out everything separately, what's GC, Management, subs, materials, sub-materials, vendors, shipping companies, etc. Then they will pick and choose. In this case you send your bid to everyone and the owner and selected, GC negotiate the project team together. The GC gets chosen on the "management of the project" rather than on the "best price".

From contributor D:
I think the other posts give some good advice. If I'm reading your post correctly the architect called you on a different project and you brought up this project? If that's the case and you’re giving him information on the price I can see why the GC would be upset. He is hiring you as a subcontractor and adding a percentage to what you charge for the final bid. He sees what you are doing as going behind his back, possibly trying to undermine his bid. In this situation you are being "employed" by the builder and should go through him - unless you want to try to get the work directly through the architect, in which case you should be upfront with the builder and let him know you’re competing with him.

As far as doing the work without being credited for it, that I don't personally believe in. I know it's common in many businesses to do it, but I believe if you build the cabinets your name should be on them. I think contributor B has the right idea about replacing his business. If you can do it you may be better off in the long run. If you have a good relationship with the architect he may be able to replace that 18% when you cut ties with the builder.

From contributor E:
Been there! You are dealing with paranoids. Their paranoia will ultimately cause much bigger problems, not worth it!

From the original questioner:
Thanks for your considered responses so far - Keep 'em coming! To clarify, the architect called me about another project. The architect does not actually specify or decide who does what, unless I can be named in the drawings (in the future) as the supplier (a true plum!). I do want to get to be known by the architectural firm, but that is another matter, and not quite applicable here. The fact that the Architect asked me to forward my number to him is unusual - he may be checking on Builders # 1 and # 2, or he may be more involved in management than is typical for architects around here, or maybe just curious.
My motivation for asking the architect about the project was twofold: To determine if there are other GC's bidding so I could give them my number, and to find out for the builder that asked me to bid the project if he is the only one invited.

While I thought I was trying to help my customer, I now realize that it could be construed as sneaky stuff, and it is backfiring on me. I'm used to the paranoids in this business, but this one caught me by surprise.

From contributor F:
I have never received work from my local GCs and could not understand it. I was told by a supplier that the GCs have a favorite shop, and if my bid is lower, they will ask their favorite shop to match or beat it. I suspect there are kickbacks going on here but can't prove it. Today I won't even bother with them, and try to procure work on my own. Do what you feel is right and as the others have said, try to replace this GCs work with others.

From contributor G:
There is no exclusivity between yourself and the GC. Is there? You were called up at the head of the table and you showed up. It's all business. You asked for others bidders in an open game. It is all Business. I wonder if he found a less expensive woodworker, if he would jump ship. What if there were 2 x builders with plans and they both approached you? Are we going to say no because I am working with the other? There are no exclusive contracts drawn up. It is all business. As for the name - always put your name on your stuff. Stand by your creation.

From the original questioner:
I met with Builder #2 yesterday and he almost fell over himself with apologies. He said he was way over the line and he was sorry. Shaking my hand, shaking his head, the whole bit. I just mumble that I did not want to cause any trouble for anyone, etc. I gave him my pricing for the project in question, but only what he requested - not all the millwork. I had prepared another quote statement that was an "inability to quote" statement. I was ready to hand him one or the other quote depending upon his demeanor.

I will contact the architect and offer to introduce myself as a design/build resource, but refrain from giving him pricing. He doesn't handle money, but does influence selection of suppliers. As we all would agree, the wood can make or break a project. So the current crisis is over, but the builder remains, as one of you so aptly put it - a flake. Thanks for your considered responses and support.

From contributor D:
Glad to hear it worked out for you. I know this is common sense and I'm sure you have everything in place but figured I would throw it at you anyway. Make sure your contract with this guy is as tight as you can get it, just in case he is playing nice now and turns on you at the end of the job. He just sounds a bit sketchy to me.