Arizona Contractors License Practice Exam

Bid shopping refers to the practice in the contracting industry where a general contractor solicits bids from multiple subcontractors to find the lowest price for a project. This often occurs after a contractor has obtained a bid from a subcontractor that they intend to use. The general contractor then discloses this subcontractor's bid to other subcontractors, asking them to beat that price.

This practice can lead to several issues, including undermining the original subcontractor’s ability to maintain reasonable profit margins, creating a culture of distrust among subcontractors, and leading to potentially lower quality work if subcontractors cut corners to meet lower prices. Bid shopping can be viewed as an unfair practice because it takes advantage of the competitive nature of bidding without a fair and transparent process, ultimately affecting the relations among contractors and subcontractors and the quality of the work being done.

The other options do not accurately capture the essence of bid shopping. Offering the best price to clients and discounting bids for projects at the last minute do not reflect the competitive dynamics and ethical concerns raised by bid shopping. Buying bids directly from subcontractors sounds like a straightforward transaction, which doesn't involve the competitive and often exploitative nature of bid shopping.