The Low Bid System Makes No Sense

The low bid system has shaped public construction procurement in the United States for more than a century, yet its consequences have been devastating for contractors and the industry at large. Rooted in outdated legislation, the process reduces construction to an auction where cost trumps value, pushing risk almost entirely onto contractors. This chapter traces the history of low bid contracting, its evolution through federal reforms, and the emergence of alternative delivery methods such as Construction Manager at Risk (CMAR), Design-Build, and Integrated Project Delivery. Despite these attempts, contractor failure rates remain among the highest of any industry, highlighting the systemic imbalance of risk allocation and the adversarial nature of non-negotiable contracts. The author argues that sustainable success requires recognizing construction as both a technical and a business enterprise, with equal importance placed on disciplined project execution and sound financial management. Ultimately, the chapter challenges the long-standing notion that “lowest price wins”, urging contractors to pursue controlled growth, disciplined project selection, and strategies that emphasize long-term profitability over short-term growth.