B-146539, AUGUST 10, 1961, 41 COMP. GEN. 106

B-146539: Aug 10, 1961

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- SUBCONTRACTS - BID SHOPPING A PROVISION IN A CONSTRUCTION INVITATION WHICH LIMITS THE AMOUNT OF SUBCONTRACTING AND REQUIRES THE BIDDER TO FURNISH WITH THE BID INFORMATION AS TO THE WORK TO BE PERFORMED BY HIS OWN ORGANIZATION IS DESIGNED TO PRECLUDE AWARD TO OTHER THAN BONA FIDE CONSTRUCTION CONTRACTORS WHOSE CHIEF PURPOSE IN BIDDING IS FOR "BID SHOPPING" AND. SUCH INFORMATION FURNISHING REQUIREMENT IS REGARDED AS HAVING BEEN DESIGNED TO ASSIST THE PROCUREMENT AGENCY IN THE DETERMINATION OF THE BIDDER'S RESPONSIBILITY RATHER THAN IN THE DETERMINATION OF THE RESPONSIVENESS OF THE BID. DOES NOT OBLIGATE THE BIDDERS TO PERFORM THOSE SEGMENTS OF THE WORK LISTED IN THEIR BIDS IS NOT SUCH A MATERIAL REQUIREMENT THAT FAILURE TO SUBMIT THE INFORMATION WITH THE BID WOULD BE FATAL TO CONSIDERATION OF THE BID FOR AWARD AND.

B-146539, AUGUST 10, 1961, 41 COMP. GEN. 106

BIDDERS - QUALIFICATIONS - AS BID EVALUATION FACTOR--- CONTRACTS - SPECIFICATIONS - FAILURE TO FURNISH SOMETHING REQUIRED - INFORMATION--- SUBCONTRACTS - BID SHOPPING A PROVISION IN A CONSTRUCTION INVITATION WHICH LIMITS THE AMOUNT OF SUBCONTRACTING AND REQUIRES THE BIDDER TO FURNISH WITH THE BID INFORMATION AS TO THE WORK TO BE PERFORMED BY HIS OWN ORGANIZATION IS DESIGNED TO PRECLUDE AWARD TO OTHER THAN BONA FIDE CONSTRUCTION CONTRACTORS WHOSE CHIEF PURPOSE IN BIDDING IS FOR "BID SHOPPING" AND, THEREFORE, SUCH INFORMATION FURNISHING REQUIREMENT IS REGARDED AS HAVING BEEN DESIGNED TO ASSIST THE PROCUREMENT AGENCY IN THE DETERMINATION OF THE BIDDER'S RESPONSIBILITY RATHER THAN IN THE DETERMINATION OF THE RESPONSIVENESS OF THE BID. A CONSTRUCTION INVITATION WHICH REQUIRES BIDDERS TO FURNISH WITH THEIR BIDS A DESCRIPTION OF THE WORK TO BE PERFORMED BY THEIR OWN ORGANIZATION BUT, EXCEPT FOR A LIMITATION ON THE TOTAL AMOUNT OF WORK WHICH MAY BE SUBCONTRACTED, DOES NOT OBLIGATE THE BIDDERS TO PERFORM THOSE SEGMENTS OF THE WORK LISTED IN THEIR BIDS IS NOT SUCH A MATERIAL REQUIREMENT THAT FAILURE TO SUBMIT THE INFORMATION WITH THE BID WOULD BE FATAL TO CONSIDERATION OF THE BID FOR AWARD AND, THEREFORE, A LOW BIDDER WAS PROPERLY PERMITTED TO FURNISH THE INFORMATION AFTER BID OPENING AND HIS BID MAY BE CONSIDERED FOR AWARD. A LOW BIDDER WHO IS PERMITTED, AFTER BID OPENING, TO FURNISH A DESCRIPTION OF THE WORK TO BE PERFORMED WITH HIS OWN ORGANIZATION BUT WHO, REGARDLESS OF WHETHER HE FURNISHES THE INFORMATION, IS OBLIGATED TO PERFORM IN ACCORDANCE WITH THE SPECIFICATIONS, INCLUDING THE LIMITATION ON SUBCONTRACT WORK, IS NOT CONSIDERED AS HAVING BEEN GIVEN AN OPTION TO AVOID AN AWARD, THE POSSIBILITY OF OPTIONS ARISING WHERE THE BIDDER DOES NOT COMMIT HIMSELF TO PERFORM IN ACCORDANCE WITH THE SPECIFICATIONS BUT MAKES A COUNTEROFFER WHICH HE MAY OR MAY NOT ACCEPT. UNDER AN INVITATION WHICH PERMITTED BIDDERS TO CHANGE THE PORTIONS OF WORK WHICH COULD BE SUBCONTRACTED UP TO THE MINIMUM LIMITATION, A LOW BIDDER WHO WAS PERMITTED, AFTER BID OPENING, TO FURNISH A DESCRIPTION OF THE WORK TO BE PERFORMED BY HIS OWN ORGANIZATION DOES NOT HAVE ANY ADVANTAGE OVER OTHER BIDDERS TO "BID SHOP; " HOWEVER, IF THERE IS NO REAL NEED FOR SUCH WORK INFORMATION, THE REQUIREMENT SHOULD BE ELIMINATED IN FUTURE INVITATIONS.

TO DANZANSKY AND DICKEY, AUGUST 10, 1961:

WE HAVE YOUR LETTER OF JULY 25, 1961, ON BEHALF OF THE JORDAN COMPANY OF COLUMBUS, GEORGIA, PROTESTING THE PROPOSED ACCEPTANCE OF THE LOW BID SUBMITTED BY THE BARNEY WILKERSON CONSTRUCTION COMPANY IN RESPONSE TO AN INVITATION ISSUED MAY 18, 1961, FOR THE REPAIR AND ALTERATION OF CERTAIN HOUSING AT THE NAVAL ORDNANCE TEST STATION, CHINA LAKE, CALIFORNIA.

BIDS WERE OPENED ON JULY 18, 1961. THE LOW BID FROM THE WILKERSON COMPANY FOR THE ENTIRE PROJECT WAS IN THE AMOUNT OF $1,643,000. THE NEXT LOW BIDDER, THE JORDAN COMPANY, BID $1,799,800. THE BID FORM INCLUDED THE FOLLOWING IN A NOTE:

THE UNDERSIGNED AGREES TO PERFORM ON SITE AND WITH HIS OWN FORCES AT LEAST 20 PERCENT OF CONTRACT PRICE. THE BIDDER SHALL SUBMIT WITH HIS BID A DESCRIPTION OF THE WORK WHICH HE WILL PERFORM WITH HIS OWN ORGANIZATION (E.G. EARTHWORK, PAVING, BRICKWORK, OR ROOFING), THE PERCENTAGE OF THE TOTAL WORK THIS REPRESENTS, AND THE ESTIMATED COST THEREOF, * * * IN ADDITION, PARAGRAPH 1-32 OF THE SPECIFICATION PROVIDED:

1-32 PERFORMANCE OF WORK BY CONTRACTOR. THE CONTRACTOR SHALL PERFORM ON THE SITE, AND WITH HIS OWN ORGANIZATION, WORK EQUIVALENT TO AT LEAST TWENTY PERCENT (20 PERCENT) OF THE TOTAL AMOUNT OF THE WORK TO BE PERFORMED UNDER THE CONTRACT. IF DURING THE PROGRESS OF THE WORK HERE- UNDER, THE CONTRACTOR REQUESTS A REDUCTION IN SUCH PERCENTAGE, AND THE CONTRACTING OFFICER DETERMINES THAT IT WOULD BE TO THE GOVERNMENT'S ADVANTAGE, THE PERCENTAGE OF THE WORK REQUIRED TO BE PERFORMED BY THE CONTRACTOR MAY BE REDUCED; PROVIDED, WRITTEN APPROVAL OF SUCH REDUCTION IS OBTAINED BY THE CONTRACTOR FROM THE CONTRACTING OFFICER.

THE BIDDER SHALL SUBMIT WITH HIS BID A DESCRIPTION OF THE WORK WHICH HE WILL PERFORM WITH HIS OWN ORGANIZATION (E.G. EARTHWORK, PAVING, BRICKWORK, OR ROOFING), THE PERCENTAGE OF THE TOTAL WORK THIS REPRESENTS, AND THE ESTIMATED COST THEREOF. THE LOW BIDDER DID NOT INCLUDE WITH HIS BID THE DESCRIPTION OF THE WORK WHICH HE PROPOSED TO PERFORM WITH HIS OWN ORGANIZATION. HOWEVER, HE WAS PERMITTED BY THE CONTRACTING OFFICER TO, AND IN FACT DID, FURNISH THE INFORMATION IN ACCEPTABLE FORM AFTER OPENING.

IT IS YOUR POSITION THAT THE LOW BID SHOULD BE REJECTED AS NONRESPONSIVE TO A CLEAR REQUIREMENT OF THE INVITATION AND THAT INFORMATION FURNISHED AFTER BID OPENING SHOULD NOT BE REGARDED AS MEETING THE REQUIREMENT FOR THE DESCRIPTION OF THE WORK THE BIDDER PROPOSED TO PERFORM WITH HIS OWN ORGANIZATION. YOU STATE THAT IF THE GOVERNMENT ONLY WANTED ASSURANCE THAT A MINIMUM OF 20 PERCENT OF THE WORK WOULD BE PERFORMED BY THE CONTRACTOR, ONLY A STATEMENT TO THAT EFFECT WOULD BE REQUIRED. THE FACT THAT A DESCRIPTION OF THE WORK TO BE PERFORMED BY THE CONTRACTOR'S OWN ORGANIZATION WAS ALSO REQUIRED SHOWS AN INTENT THAT THE BIDDER COMMIT HIMSELF TO THE TYPE AND AMOUNT OF WORK HIS OWN ORGANIZATION WOULD PERFORM SO THAT THE GOVERNMENT COULD SATISFY ITSELF THAT THE BIDDER COULD AND WOULD DO SUCH WORK WITH HIS OWN FORCES.

THE CONTRACTING AGENCY, ON THE OTHER HAND, CONTENDS THAT THE FAILURE OF A LOW BIDDER TO SUBMIT THE INFORMATION WITH HIS BID MAY BE WAIVED AS A MINOR INFORMALITY.

IN 36 COMP. GEN. 376 WE RECOGNIZED THE RIGHT OF CONTRACTING AGENCIES TO REQUIRE THAT BIDS BE ACCOMPANIED BY CERTAIN KINDS OF INFORMATION. STATED IN THE CITED CASE, AT PAGE 378, THAT WHERE THE INFORMATION IS DEEMED ESSENTIAL THE INVITATION SHOULD CONTAIN AN AFFIRMATIVE STATEMENT TO THE EFFECT THAT FAILURE TO CONFORM WILL RESULT IN REJECTION OF THE BID. THE CONCEPT HAS BEEN EXPANDED TO THE POINT THAT WHERE DESIGNATED INFORMATION IS BY THE TERMS OF THE INVITATION REQUIRED TO BE SUBMITTED WITH THE BID THE INFERENCE ARISES THAT THE INFORMATION IS REGARDED AS MATERIAL AND FAILURE TO CONFORM RESULTS IN REJECTION OF THE BID. 39 COMP. GEN. 247, 249. THAT RULE, HOWEVER, APPLIES ONLY WHERE THE INFORMATION GOES TO THE RESPONSIVENESS OF THE BID. WHERE THE INFORMATION IS INTENDED FOR USE IN DETERMINING THE BIDDER'S RESPONSIBILITY, IT MAY BE CHANGED OR PROVIDED SUBSEQUENT TO BID OPENING WITHOUT PREJUDICE TO CONSIDERATION OF THE BID EVEN WHERE THE INVITATION WARNS THAT FAILURE TO CONFORM MAY RESULT IN BID REJECTION. 39 COMP. GEN. 655, 658; ID. 881, 883.

AS NOTED IN YOUR LETTER, THE CHIEF PURPOSE OF THE LIMITATION ON SUBCONTRACTING AND THE REQUIRED INFORMATION AS TO THE WORK TO BE PERFORMED BY THE BIDDER'S OWN ORGANIZATION IS TO LIMIT AWARD TO BONA FIDE CONTRACTORS AND TO PRECLUDE AWARD TO THOSE FIRMS WHOSE CHIEF PURPOSE IN BIDDING IS TO ACQUIRE A VALUABLE ASSET, THE CONTRACT, WHICH IN EFFECT MAY BE "PEDDLED" TO OTHERS INTERESTED IN PERFORMING THE WORK CALLED FOR. OUR JUDGMENT, THEREFORE, THE PURPOSE OF THE INFORMATION IS TO DETERMINE THE RESPONSIBILITY OF THE BIDDER.

IN TERMS OF THE WORK TO BE PERFORMED BY THE CONTRACTOR, THE ONLY REQUIREMENT OF THE CONTRACT IS THAT A MINIMUM OF 20 PERCENT BE DONE WITH HIS OWN FORCES. APPARENTLY, THIS MINIMUM AMOUNT MAY BE PERFORMED IN ANY SEGMENT OR COMBINATION OF SEGMENTS OF THE WORK, PARAGRAPH 1-32 OF THE SPECIFICATION PROVIDED FOR THE REDUCTION AFTER AWARD OF THE MINIMUM PERCENTAGE WITH THE APPROVAL OF THE CONTRACTING OFFICER. SUCH A REDUCTION WOULD NECESSARILY IMPLY A CHANGE IN ONE OR MORE OF THE SEGMENTS MAKING UP THE 20 PERCENT QUANTITY. YET THE SPECIFICATION IS SILENT AS TO ANY CHANGES IN THE COMPONENTS WITHOUT CHANGE IN THE OVERALL PERCENTAGE. IT IS NOT REASONABLE TO CONCLUDE THAT THE OVERALL PERCENTAGE MAY BE CHANGED BUT NO CHANGE IS PERMITTED IN THE COMPONENTS MAKING UP THE TOTAL. A MORE REASONABLE INTERPRETATION IS THAT THERE IS NO LIMITATION ON INTERNAL CHANGES NOT AFFECTING THE OVERALL TOTAL. THIS TENDS TO BE BORNE OUT BY THE ABSENCE OF ANY LANGUAGE IN THE SPECIFICATION OR ELSEWHERE IN THE INVITATION DOCUMENTS HOLDING THE CONTRACTOR TO PERFORMANCE BY HIS OWN ORGANIZATION OF THOSE SEGMENTS OF THE WORK LISTED IN HIS BID.

IF, AS APPEARS REASONABLE, THE CONTRACT IS GIVEN THE ABOVE INTERPRETATION, THE LIST TO BE FURNISHED BY THE BIDDER WITH HIS BID WOULD SERVE NO PURPOSE SINCE HE COULD CHANGE THE LIST AT WILL SO LONG AS THE 20 PERCENT MINIMUM WAS MAINTAINED. SEE 39 COMP. GEN. 247, 248, WHERE WE STATED IN HOLDING THAT FAILURE TO SUBMIT THE INFORMATION WITH THE BID IN ACCORDANCE WITH THE LANGUAGE OF THE INVITATION WAS NOT FATAL TO CONSIDERATION OF THE BID FOR AWARD:

* * * IF THE BIDDER COULD NEVERTHELESS AMEND THE LIST AFTER BID OPENING, THE REQUIREMENT COULD SERVE NO USEFUL PURPOSE AND WOULD ESTABLISH AN ANOMALY WHEREBY A BID COULD BE REJECTED FOR FAILURE TO FURNISH INFORMATION WHICH THE BIDDER COULD CHANGE AFTER OPENING.

IN ACCORDANCE WITH THE FOREGOING, WE CONCLUDE THAT THE LOW BIDDER IN THIS INSTANCE WAS PROPERLY PERMITTED TO FURNISH THE INFORMATION AFTER BID OPENING, AND HIS BID MAY BE CONSIDERED FOR AWARD.

YOU ALSO CONTEND IN YOUR LETTER THAT THE LOW BIDDER HAS BEEN PUT IN A POSITION TO ENJOY "TWO BITES AT THE APPLE" SINCE HE COULD AVOID AWARD BY REFUSING TO FURNISH THE INFORMATION AFTER BID OPENING IF, AT THE TIME, SUCH ACTION APPEARED MOST TO HIS ADVANTAGE IN LIGHT OF THE OTHER BIDS AND RELATED INFORMATION NOT AVAILABLE WHEN HIS BID WAS SUBMITTED. IN OUR VIEW THE BIDDER WOULD RECEIVE NO SUCH OPTION SINCE, WHETHER OR NOT HE FURNISHED THE INFORMATION WITH HIS BID, HE COULD BE REQUIRED TO PERFORM THE CONTRACT IN ACCORDANCE WITH THE SPECIFICATIONS INCLUDING THE MINIMUM OF 20 PERCENT WITH HIS OWN ORGANIZATION. THE POSSIBILITY OF AN OPTION NORMALLY ARISES IN THOSE INSTANCES WHERE THE BIDDER DOES NOT COMMIT HIMSELF TO PERFORM IN ACCORDANCE WITH THE SPECIFICATIONS, THUS MAKING THE PURPORTED AWARD A COUNTEROFFER WHICH HE MAY OR MAY NOT ACCEPT. THE REASON FOR THE RULE IS NOT APPLICABLE TO THIS CASE. THERE ARE OTHER SPECIAL CIRCUMSTANCES WHERE AN OPTION MAY BE AFFORDED BUT THAT KIND OF SITUATION DOES NOT PRESENT ITSELF HERE. CF. 38 COMP. GEN. 532.

FINALLY, YOU STATE IN YOUR LETTER THAT THE BIDDER WHO DOES NOT FURNISH THE INFORMATION IN QUESTION IN HIS BID LEAVES HIMSELF AN ADVANTAGE BECAUSE AFTER AWARD HE CAN SHOP AMONG POSSIBLE SUBCONTRACTORS FOR THE LOWEST COSTS WITHOUT REGARD TO ANY COMMITMENT CONCERNING THE PORTION OF THE WORK HE IS TO PERFORM WITH HIS OWN FORCES. IF, AS WE HAVE INDICATED ABOVE, THE PORTIONS OF WORK MAKING UP THE 20 PERCENT TOTAL MAY BE CHANGED BY THE CONTRACTOR AT WILL, THE LOW BIDDER IN THIS CASE WILL HAVE NO SUCH ADVANTAGE. IN GENERAL, HOWEVER, IT IS OUR POSITION THAT NO INFORMATION SHOULD BE REQUIRED IN THE BID UNLESS A REAL NEED FOR IT CAN BE DEMONSTRATED. AS INDICATED ABOVE, WE HAVE NOT BEEN MADE AWARE OF THE NEED TO OBTAIN THE INFORMATION WITH THE BID IN THIS CASE. ACCORDINGLY, WE ARE SUGGESTING TO THE SECRETARY OF THE NAVY THAT THE NEED FOR THE INFORMATION BE REVIEWED AND THAT CONSIDERATION BE GIVEN TO ELIMINATING THE REQUIREMENT FOR ITS SUBMISSION FROM FUTURE INVITATIONS.