Legal, Ethical, and Practical Considerations of Postbid Negotiations in the Award of Building Construction Subcontracts

Abstract

The literature is lacking an operational framework for understanding the relationship between postbid negotiation and resulting project performance measures (e.g., cost, schedule, quality, safety, and relationships). Similarly, no attempt has been made to propose a model for the buyout process that respects the full spectrum of variables constraining general contractor (GC) purchasing decisions. Postbid negotiations, including the practices of bid shopping and bid peddling, are reviewed in the context of both legal and ethical limitations. Through synthesis of the applicable case law, legislative statues, and scholarly research on the topic, several thought-provoking problem statements are put forth along with an operational framework for their resolution. Previous work on the distinction between project buyout and bid shopping is extended. A model buyout approach is proposed that respects the various contingent parameters at work. Academicians can benefit through thoughtful consideration of the conceptual framework and the suggested research agenda. Likewise, industry participants can benefit by gaining a broader understanding of the legal, ethical, and practical aspects of postbid negotiation.