E-Bids

[wingm]

We recently went through an E-bid process for a good sized project for an Automotive supplier. There were 2 other 'potentials' and we had a good idea of who they were.

All three of us are similar in size and capabilities and consistantly 'facing off' against each other.
The long and short of it is, our final bid was well below our 'threshold' that we had established and we still lost the job.

The question I have is how can a company in today's economy expect someone to bid on a job knowing that the party who won the contract potentially lost money just to get the job? I realize that with an E-bid you can back out at any time, but is this as common as I fear it might be? Are we as a supplier expected to lose money so that we can get business?? Where's the economic sense in that?

 

[Sparkyonline]

Sadly enough, the scenario you have laid out is not uncommon. While the Owner and his representatives establish a projected budget for the project, realistic or not, with the current economic times, they are able to shop bids much easier than previously.

With quality projects, or any projects at times, at a premium, many competitors come out of the woodwork with much lower overhead. And, as you have noted, some contractors will actually take a job at below cost in order to keep their operation together. However, these kinds of tactics do catch up if played too long. Recently, I have seen it backfire on the very party low-balling every bid...why the sudden name change????

Still, very frustrating. Good luck.

 

[IRstuff]

This is a not-uncommon practice in lots of industries, particularly on bigger jobs. The stakes are higher and there is the trade that if you don't low-ball, you need to lose even more money or lose critical personnel.

In many cases, the decision to lowball is absurdly easy.

TTFN

 

[GregLocock]

While I'm very glad to be working for an OEM and not a tier one supplier, I'd just point out that there are sound strategic reasons for low-balling, in some cases.

Supposing there are two long term suppliers for a given system, to the whole industry. If one of then can low ball enough of the others business, then it may eliminate its only competition. I've seen this, although the carrot wasn't price so much as technical expertise. That is, the preferred supplier could offer better technology for the same price.

Another one I've seen is where a third, smaller company is bought by a cash rich conglomerate. They then low-ball, consistently, in the hopes that one of the major players will buy them out. This is win-win, since a more aggressive attitude may actually result in a better product.

I'm sure you can think of many other examples.



Cheers

Greg Locock