5. Bid Shopping

"Bid shopping" or "contractor swapping" commonly refers to the practice of changing subcontractors after an overlying contract is won and signed, in this case between a utility and a prime contractor. The practice permits the prime contractor to make extraordinary profits by offering the substitute subcontractor less than the contract commits to the original subcontractor. However the question is not only whether utilities shop for bids, but also whether their bidders do so after bid opening. Such bidder practices allow the bidder to lower their own cost - and to motivate their subcontractors to cut corners - without passing the savings on to the utilities or to the utility ratepayers.

In response to the Commission's directive for each utility to describe construction contracting procedures, no utility reported using bid shopping. No party proposes a rule to address bid shopping at this time. We therefore do not adopt one.

Because no utility appears to use this procedure and no party proposes we address it, we decline to state any policy or rule on bid shopping at this time. We may reconsider this practice at a later date if circumstances change.