Alabama Contractors License Practice Exam

What is the term for revealing bids to create more competition?

1. Bid rigging

2. Bid package

3. Bid shopping

4. None of the above

The correct answer is: Bid shopping

The term "bid shopping" refers specifically to the practice of soliciting or revealing bids to potential contractors after already receiving a lower bid. This action is intended to encourage competition among contractors to lower their prices, which can ultimately lead to cost savings on a project. It can create an environment where the original bidder's competitive advantage is compromised as they may adjust their pricing based on what they perceive others have bid. In contrast, bid rigging involves collusion among bidders to set prices or coordinate their bids, which is illegal and unethical. A bid package is merely a collection of documents provided to potential bidders that detail the project requirements and specifications, but it does not inherently involve the practice of revealing bids to increase competition. Therefore, bid shopping fits the definition for increasing competition through the strategy of discussing or disclosing bids. This understanding is essential in construction and contracting to ensure fair practices and competitive pricing.