Legal Question in Business Law in Oklahoma
One contractor has an unfair advantage
We are based in Austin, TX. We build signs. Our biggest client is in Oklahoma City. Our biggest sign compeditor is located a few miles from our client. Our client freely admits that the bidding process is unfair...that one sign contractor has a huge advantage in the bidding process over all others.
The Oklahoma City based contractor does not bear the burden of transportation and shipping. It is cheaper for them to ship to central Texas where we are based.
Since the client has partially empty trucks going to the job site and since our compeditor is just minutes...the trucks swing by and pick up the signs then transport them free of charge.
This free tranportation is not available to any other contactor.
Our client demands that in spite of this advantage other bidders have to have a lower bid to be awarded the contract. The client is of course only concerned about the lowest overall price in spite of this transportation windfall.
Looking at it logically that is like opening a job to bid but telling all bidders that one particular bidder will be supplied with some form of free consideration i.e. manpower, materials or transpotation by the client.
Question...is this a legal/legitimate business practice?
2 Answers from Attorneys
Re: One contractor has an unfair advantage
The arrangement does not appear to violate any unfair trade practices law in Oklahoma. I wonder however whether this practice unlawfully avoids a tax liability that would otherwise be imposed. It certainly appears to represent a benefit which the IRS might impute a value to for income tax purposes. Nothing is free to the IRS. At the same time the Common Carrier licensing people might not think that the service fits within the type of authorized licensing which is held by the company in the use of their trucks. Think outside the box.
Re: One contractor has an unfair advantage
It's perfectly legal. And certainly a fair reason to seek out another client who'd appreciate your services at a fair price.
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