When I was bidding private jobs, where everyone was playing with their own money (as opposed to government entities or publicly held companies), the rules were a lot looser.
Sometimes they didn’t go to bid at all, and sometimes the preferred vendor got “last look”, if they weren’t the low bid they’d be given an opportunity to match it.
It sucked not be the preferred vendor, but if everyone in the “money chain”—— owner, builder and subcontractor —- knew what was going on, I never saw it as particularly unethical. When I was in the high end home construction, the builder had “teams” of subs and vendors that frequently worked together, the builder knew they worked well together and did a good job, and every effort was made to get all the team members contracted on the job. But sometimes that led to preferred team members being less price conscious than they should’ve been, so the builder would solicit a few other bids to keep their pencils sharp.
Now if everyone in the “money chain” didn’t know what was going on, if the contractor concealed the fact he was giving preferential treatment to his preferred vendor from the owner, then you might have an ethics issue.
I much preferred private work, because selling stuff when the price point is always the deciding factor in who wins doesn’t take much skill, and it’s boring.
I know of one small buyer who did the opposite. He got an extremely lowball quote from someone who knew he wasn’t going to get the sale, and took it to the “preferred vendor” who took a bath on it, actually losing money in an effort to get their foot in the door Or other vendors who would submit a money-losing bid to get their foot in the door, knowing that made them a preferred vendor and they’d make the money back (hopefully) in future sales.
With this sort of behaviour, nobody wins in the long run.
Some projects, particularly Federal, have a Time and Materials clause that helps protect against this.
You have to disclose hours worked (with certified payroll reports for some jobs) and provide actual materials cost, to which a set markup is added.
Lying or severely going under or over your bid price will get you disqualified from bidding on other projects. Especially if they’re country, state or federal.
If you’re bidding on a City of Stockton project and you want to be notified of changes, clarifications, and answers to questions, you sign into a Planholders’ List. The Planholders’ List is available online to anyone who wants to look at it.
Now, that doesn’t mean that every plan holder will bid, but they’re interested in the project. So you can see that.
After bids are opened, a Bid Comparison Sheet is developed that shows all the cost details of all of the bids and of the engineer’s estimate. This includes all unit prices, corrections where the unit prices weren’t multiplied properly, and a subcontractors list. The subcontractors included are those being paid over a certain amount. The Bid Comparison Sheet is posted online.
Last time I was estimating, Caltrans had lists of unit prices for materials and equipment from their projects for the last year. Their projects are usually larger than ours, so they’d mostly get lower unit prices.
The industry I was in was rather small and tight knit, and if someone did that I’d call their bluff. Which actually did happen a couple of times.
But usually I’d warn my customers ( we were friendly, I was a preferred vendor for a reason) that I thought the bid was off and that I suspected the other vendor had made a mistake.
Usually they didn’t want to take advantage of a bad bid, even if it was low. It’s probably worth noting that the product and service packages I was selling were not fungible at all, they involved lots of highly specialized engineering and technical services, and the customer would be in for a nightmare if they weren’t done right. If it was a fungible product the calculus would be different.