It doesn’t pass the smell test

The trouble with suspicion is that it is so easily aroused and so hard to put to bed. Here is a contract process that highlights this problem.

The engineering company identified a serious problem in an small seven-year-old low-rise condo apartment building. Water was penetrating the building envelope because of poor water drainage from the balconies.

The engineering company specified the work that had to be done and specified that the bids had to be sent to the corporation by mail in sealed envelopes.

The property management company tendered the contract and received three quotes by fax. The three quotes were submitted to the board.

Quote 1

Quote 2

Notice how these two quotes, from two different companies, are identical in every detail.

Quote 3

This bid is 10% cheaper than the other two so unsurprisingly, the board awarded this company the contract by a vote of four to one.

(The one dissenting director thought that something did not seem right with the bidding process and wanted to put the contract up for new bids.)

Since the companies that bid on contracts have to pay the same for the materials and any equipment that they need to rent, and usually their labour costs are fairly close, a board should expect competing bids to vary between 5-10%. The lowest cost bid for this job is within 10% of the other two bids.

However, it does seem odd that the two higher bids came in at exactly the same price and the breakdown of the separate prices are identical in every category.

Check the dates

This quote was dated December 7, 2011 but the faxed quote was received at the property management office on Dec 06, 2011. Again, a small point but it is another indication that something may not be right.

Is this common?
I asked experienced property managers and construction superintendents if they ever saw identical quotes submitted for a $1.6 or $1.8 million project. They have never seen this before.

What should have happened?
The consensus is that the job should have been re-tendered, with other contractors, with strict instructions for sealed bids to be mailed directly to the corporation's board of directors.

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