It's not like that. The lowest bidder is common sense, because they are all offering the same thing. The only sensible alternative is to set a price for the project, and choose from the contractors willing to meet that price. The problem with that is that the contractors will still do the job for the same costs, the only difference is that the company will make more money from the project. The plus side is that you can choose a more reputable contractor.
They don't skimp on materials, that's where lawsuits come from. They skimp on labor costs, and build a bridge that barely meets the minimum standards set forth. If they are asked to build a bridge that will support 2 tons, they don't make one that will support 3.
Capitalism isn't perfect, but neither are the alternatives. It's not pure capitalism now, and as tragic as the event was, it will lead to an improvement to the current system in more than just Minnesota.