Dive Brief:
- Associated General Contractors of America wants the U.S. Department of Veterans Affairs to stop using a reverse auction process to give out construction contracts.
- AGC said it is particularly distressed by 14 construction awards with a total value of about $3 million.
- The reverse auction process, with sellers competing against one another by cutting prices during the open auction, is not appropriate for construction because it bids are for a process rather than a manufactured product, AGC argues.
Dive Insight:
It seems that a bidder who wants to build for the VA – or anyone – would have to have an unusually good handle on all the moving parts expected in a project, and all the subcontracting parties, to know how far was too far down in price. The process also seems to open a door for low-balling jobs with an unspoken plan to use change orders and "unforeseen" issues to bring the price back up to a profitable level.
