Study on the present state of excessively low-priced bidding for public works and its countermeasures

Abstract

Excessively low-priced bidding for public works has long been a frequent subject of discussion, and various measures have been taken to meet the situation. The number of such unfavorable bidding began an extreme upward trend for FY 2005 MLIT projects. After two sets of urgent measures were implemented by the end of 2006, the situation began to be restored to its normal state.This study first outlines the countermeasures against very low price bidding taken after the open tendering was introduced as well as the circumstances in which the current low-priced bid checking system was established. Second, it summarizes ill effects of excessively low-priced bidding that may cause quality loss of projects and exhaustion of the construction industry after giving a background to the recent emergence of such low-priced bidding. Third, it overviews the present status of the tendering and contracting system of prefectural and municipal governments. Fourth, it discusses how the 2006 urgent countermeasures were designed, focusing on the significance of the proposed construction-process checking system as part of the comprehensive evaluation and also the low-priced bid special checking system.The problem of lower prices has roots in the cost-based system where lowest bidder is always awarded a contract. In that sense, this study confirms that the policy of seeking value for money should be brought into shape as stated in the Act for Promoting Quality Assurance in Public Works, 2005.