Suicide bidding is a response to a

tendering An invitation to tender (ITT, otherwise known as a call for bids or a request for tenders) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business ...

exercise in which a potential supplier, anxious to win business, submits a proposal to carry out the work for less than it will cost. These procurement processes are typically modelled as

reverse Reverse or reversing may refer to: Arts and media * ''Reverse'' (Eldritch album), 2001 * ''Reverse'' (2009 film), a Polish comedy-drama film * ''Reverse'' (2019 film), an Iranian crime-drama film * ''Reverse'' (Morandi album), 2005 * ''Reverse'' ...

sealed-bid auctions with the lowest bid winning. The motive for such bidding is to keep the company's

skilled labour Skill is a measure of the amount of worker's expertise, specialization, wages, and supervisory capacity. Skilled workers are generally more trained, higher paid, and have more responsibilities than unskilled workers. Skilled workers have long had ...

employed, even if the project only breaks even or makes a loss. This can result in poor quality work, poor service and debates over

loophole A loophole is an ambiguity or inadequacy in a system, such as a law or security, which can be used to circumvent or otherwise avoid the purpose, implied or explicitly stated, of the system. Originally, the word meant an arrowslit, a narrow verti ...

s in

contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

wording in attempts to charge clients extra, or even insolvency on the part of the contractor. The practice has particularly been noted in

construction bidding Construction bidding is the process of submitting a proposal ( tender) to undertake, or manage the undertaking of a construction project. The process starts with a cost estimate from blueprints and material take offs. The tender is treated as an o ...

. Around 2010, suicide bidding was widespread due to the

economic crisis An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the p ...

and strong competition. 2010 survey by the Chartered Institute of Building found that 82% of respondents believed that “suicide bidding” existed within the industry. It was considered to have contributed to the financial collapse of British firms

Connaught plc Connaught plc was a company in the United Kingdom, operating in the social housing, public sector and compliance markets. A constituent of the FTSE 250 Index, it went into administration in October 2010. History The business was founded by Wil ...

and

Rok plc Rok plc was a British construction company, based in Exeter. Rok went into administration in 2010. History The company, which began as Exeter Building Contractors Ltd, was formed in 1939 to take on government contracts at the start of the Secon ...

in 2010. The

Civil Engineering Civil engineering is a professional engineering discipline that deals with the design, construction, and maintenance of the physical and naturally built environment, including public works such as roads, bridges, canals, dams, airports, sewage ...

Contractors Association acknowledged that the practice had become "rife" in the desperate competition for work during the

late-2000s recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...

, but blamed the public sector procurement process for focussing on the lowest price rather than

best value Best Value was government policy in the United Kingdom affecting the provision of public services in England and Wales. In Wales, Best Value is known as the Wales Programme for Improvement. A statutory duty of Best Value applies in Scotland.Audi ...

. Some commissioning bodies, such as

Crossrail Crossrail is a railway construction project mainly in central London. Its aim is to provide a high-frequency hybrid commuter rail and rapid transit system crossing the capital from suburbs on the west to east, by connecting two major railway ...

, openly discourage the practice. In 2011, some

housing association In Ireland and the United Kingdom, housing associations are private, Non-profit organization, non-profit making organisations that provide low-cost "Public housing in the United Kingdom, social housing" for people in need of a home. Any budge ...

s began including specific terms in tenders to protect them from legal challenge in the event of refusing to award the contract according to the lowest tender.

References

{{Procurement requests Procurement Ethically disputed business practices Insolvency Construction industry Bidding strategy

See also

References