The dramatic origin of the CCA code of good practice

I first became aware of “bid peddling” shortly after I joined the CCA staff in the fall of 1946. My boss had signed the second page of a letter but had left instructions about changing the first page. In his absence, his secretary asked me to proofread it. I did so and asked her how “bed peddling” applied to the letter. Flustered, she said it was a typo and hurried to correct it. However, in her haste, she corrected the wrong word and the phrase came back as “bed piddling”!

A graphic example soon presented itself. The association was anxious that I become familiar with construction procedures. As a starter, arrangements were made for me to sit in at a general contractor’s tender closing for a major federal building project in Ottawa. It was a hectic and seemingly chaotic scene to witness as numerous telephone bids came in and often affected the sub-contractors’ prices for each trade. Finally, a cut-off time was announced, the prices were all added up and then the president reduced the total by some 15%.

The firm was an industry leader with a good reputation for being well organized and for paying subs promptly. It also prided itself in not “bid shopping”. The president explained to me: “All that we have to do is wait until subs come around to peddle lower prices.” True, it was a gamble, but evidently an educated one, for he not only was the successful bidder but also made money on the contract.

By the mid-1950s bid shopping and bid peddling were so prevalent that relationships between general and trade contractors, and between trade contractors and their subs, were in a terrible state and the whole tendering system was in danger of breaking down. The problem was that sub-bids were not kept confidential – a sub-bidder could find out from a friendly contractor what his competitors were bidding and bid accordingly. Or, a not-so-friendly contractor would “shop” for lower prices, often citing fictitious bids that had to be beaten. Then, to cap it all, there was an alleged practice whereby one firm with dual-trade coverage would find out from a friendly general contractor the lowest electrical and mechanical bids and then submit a combined bid at, say, 3% less than the sum of the two separate trade prices.

In 1954, the Ontario associations representing electrical and mechanical contractors passed resolutions whereby their members pledged to submit tenders only to architects rather than to general contractors. The Ontario Association of Architects, however, declined to have its members participate in this arrangement.

A delegation of electrical and mechanical contractors from Toronto and Montreal came to Ottawa to discuss their plight with CCA president Raymond Brunet. They were remarkably candid in their comments. One delegate from Toronto stated that: “Like a good plumber, I’ve got a pipeline into several general contractors’ offices,” but he wanted to change all that. Similarly, an electrical contractor from Montreal confessed that he found it less costly to have an expense account at Ruby Foo’s famed restaurant-motel than it was to employ an estimating staff, but he wanted to change his ways. “We need a bidding system that will protect us from ourselves” was a statement by one that received general support.

The CCA’s quick response was to appoint a Contractor Relations Committee with a mandate to study bidding practices and to bring in recommendations for improvements. The stakes were high. Just south of the border, New York State called separate trade tenders and provided a Clerk of the Works to coordinate their activities. General and trade contractors’ associations were spending large sums against each other in advocating general contracting and separate trade contracting to legislators in Washington, D.C., and in state capitals.

The establishment of the CCA committee enabled the electrical and mechanical contractors’ associations to rescind their resolutions and to resume bidding to general contractors. The committee was relatively small, comprised of an equal number of experienced general and trade contractors, with a neutral chairman in the person of Dr. Robert Legget, Director of Building Research in the National Research Council. He was widely respected and had previously worked as a consulting engineer on construction projects.

Legget laid down several basic rules. The committee would meet frequently; all discussions were to be completely confidential; and any support of a suggested ‘code of ethics’ was to be avoided. On the last point, he noted that construction was a highly competitive industry and that innovative procedures were frequently branded as “unethical”.

My job as committee secretary was simple – all that the minutes stated were that the committee had met on such a date and that another meeting had been scheduled. The discussions, however, were frank and fascinating. For example, it was revealed that one trade contractor member had a standing arrangement with a general contractor member that his bid could always be discounted by 10%. This was possible because the latter was very efficient and paid promptly; in short, he was cheaper to work for than other firms.

The committee produced a “Code of Good Practice” covering bidding and payment procedures, which was approved at the CCA’s annual meeting. It was also adopted by many regional construction associations. Copies suitable for framing were widely distributed. The code had 10 clauses and was often referred to as the industry’s “Ten Commandments”.

The CCA Code of Good Practice provided a valuable guide to all contractors and the industry’s bidding system was retained. Today, the essence of the 1954 code is contained in the second paragraph of the CCA Code of Ethics (posted in the Member Login section of the CCA website).