The Low Bid Trap

"As building service contractors, we have come to accept the competitive bidding process as a way of life. While there is nothing inherently wrong with the competitive bid, often the way in which it is administered puts the responsible cleaning contractor at a disadvantage. For example, it would not be considered good business to:
   1. Look in the Yellow Pages to find phone numbers;
   2. Call several different auto dealers whom we know nothing about;
   3. Ask those random dealers "How much would you charge me for a new car today?"; and then
   4. Order the car with the lowest price.
Yet many Building Managers, when they do not pre-qualify their bidders or specify the services, level of cleanliness, or frequencies they desire, call for cleaning bids in just that way!

"As long as there are less-than-honest cleaning contractors to quote jobs unresponsively low, building owners who consistently take low bid will quickly develop a poor opinion of our profession. It should be part of the services offered by the members of this Association, as leaders in our profession, to provide information on the dangers of blindly accepting

"THE UNREASONABLE LOW BID:    In order to make his profit, the contractor skips hard to detect but necessary cleaning tasks. Nothing one can really put their finger on, but the building quickly takes on a worn or tired look due to all the little tasks being skipped.    The contractor, because of his low bid, does not have a large enough budget to adequately staff the building. He constantly "robs Peter to pay Paul", shifting his personnel resources in response to tenant complaints. He puts out one fire only to have another ignite in a different area. The Building Manager's office is constantly fielding tenant complaints.    Quite often the Building Manager is told that the "problem" is not covered in the specifications bid upon, but the contractor can do it for more money.    When the contractor cuts corners to make his profit, the manager increases his supervision. This results in the manager spending more in increased management time than it would have cost him to pay a responsible bidder in the first place.    This scenario almost always ends up with the manager changing contractors (usually with hard feelings on both sides). This normally necessitates a new bid request, time for a formal walk through with the new bidders, and possibly costly initial work to correct the deficiencies which resulted in the termination. If not amended, the cycle starts all over again.

"HOW TO AVOID THE UNREASONABLY LOW BID: The key word here is "unreasonably". A little home work by the Building Manager will result in a very handsome profit in customer satisfaction when he selects the best qualified low bid!

1. If possible, pre-qualify the bid invitation list to eliminate disreputable or incompetent contractors ahead of time. An easy and effective method is to invite all custodial firms (at least those who wish to present a proposal) to submit the names of two or more accounts of equal size and tenant make-up which they have maintained for a minimum of one year. Check the references and invite only those who have proven ability to submit a bid.

2. To compare apples to apples, structure bid specifications and frequencies carefully - NEVER allow each contractor to set his own cleaning standards.

3. Require all bidders to submit in the same format (either cost per square foot, a monthly total, or yearly).

4. Never announce your intention to award to the low bid (even if it is). Instead, warn of strict contractual compliance requirements. This usually will scare any "low-ballers" who managed to make it through the pre-bid screening.

5. Assess fair market price of the services desired and then award the bid to the contractor who meets price and service compatibility requirements

6. The bid process is always a good way to determine market value. Once this information is at hand, one can select a reputable contractor and negotiate the job with him."

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