B-164255, JUN. 20, 1968

B-164255: Jun 20, 1968

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EFFORT TO OBTAIN REDUCTIONS FROM THE PRICES WHICH WERE ORIGINALLY QUOTED TO HIM BY HIS PROSPECTIVE SUBCONTRACTORS SO THAT THE PRIME CONTRACTOR COULD COMPUTE A REALISTIC BID. PRIOR TO 1963 THERE WERE NO GENERAL LIMITATIONS OR RESTRICTIONS ATTEMPTED TO BE IMPOSED BY THE GOVERNMENT ON THE PRACTICE OF "BID SHOPPING" BY ITS CONTRACTORS FOR CONSTRUCTION WORK. FOR YOUR INFORMATION THERE ARE ENCLOSED COPIES OF OUR DECISIONS OF AUGUST 22. HAS TAKEN THE POSITION THAT IT DOES NOT DESIRE AND WILL NOT ATTEMPT TO CONTROL "BID SHOPPING" AMONG CONTRACTORS AND SUBCONTRACTORS. SINCE IT BELIEVES THIS PROBLEM IS A MATTER FOR THE INDUSTRY TO REGULATE. SINCE THERE WAS NO SUBCONTRACTOR LISTING REQUIREMENT IN THE ADVERTISED PROCUREMENT YOU REFERENCED.

B-164255, JUN. 20, 1968

TO GOLDEN KEY HOMES, INC.:

BY LETTER OF MAY 6, 1968, YOU ASKED US WHETHER THE GOVERNMENT DERIVES ANY FINANCIAL BENEFIT FROM A PRIME CONTRACTOR'S SUCCESSFUL, POST-AWARD, EFFORT TO OBTAIN REDUCTIONS FROM THE PRICES WHICH WERE ORIGINALLY QUOTED TO HIM BY HIS PROSPECTIVE SUBCONTRACTORS SO THAT THE PRIME CONTRACTOR COULD COMPUTE A REALISTIC BID. YOUR QUESTION RELATED TO A RECENTLY ADVERTISED HOUSING PROJECT AT ANDREWS AIR FORCE BASE AWARDED BY THE CORPS OF ENGINEERS (DEPARTMENT OF THE ARMY), IN WHICH YOU COMPLAIN THAT THE SUCCESSFUL PRIME CONTRACTOR ATTEMPTED TO SECURE REDUCTIONS FROM THE PRICES ORIGINALLY QUOTED HIM BY YOUR COMPANY PRIOR TO BID SUBMISSION.

PRIOR TO 1963 THERE WERE NO GENERAL LIMITATIONS OR RESTRICTIONS ATTEMPTED TO BE IMPOSED BY THE GOVERNMENT ON THE PRACTICE OF "BID SHOPPING" BY ITS CONTRACTORS FOR CONSTRUCTION WORK, AND BILLS INTRODUCED IN THE CONGRESS TO ACCOMPLISH THAT END HAD NEVER BEEN ENACTED. IN 1963 THE GENERAL SERVICES ADMINISTRATION (GSA) ATTEMPTED TO CONTROL THIS PRACTICE ON CONSTRUCTION AND ALTERATION CONTRACTS IN EXCESS OF $150,000 BY REQUIRING BIDDERS TO LIST THE SUBCONTRACTORS WHOM THEY PROMISED TO ENGAGE AFTER AWARD. FOR YOUR INFORMATION THERE ARE ENCLOSED COPIES OF OUR DECISIONS OF AUGUST 22, 1966, 46 COMP. GEN. 156, AND AUGUST 22, 1963, 43 COMP. GEN. 206, IN WHICH WE CONSIDERED THE EFFECT OF SUCH A REQUIREMENT. THE DEFENSE DEPARTMENT, HOWEVER, HAS NOT FOLLOWED THE LEAD OF GSA, BUT HAS TAKEN THE POSITION THAT IT DOES NOT DESIRE AND WILL NOT ATTEMPT TO CONTROL "BID SHOPPING" AMONG CONTRACTORS AND SUBCONTRACTORS, SINCE IT BELIEVES THIS PROBLEM IS A MATTER FOR THE INDUSTRY TO REGULATE. SEE 40 COMP. GEN. 688, COPY ENCLOSED.

SINCE THERE WAS NO SUBCONTRACTOR LISTING REQUIREMENT IN THE ADVERTISED PROCUREMENT YOU REFERENCED, THE CORPS OF ENGINEERS HAD NO MEANS TO COMPEL THE SUCCESSFUL CONTRACTOR TO CHOOSE THE SUBCONTRACTOR WHO ORIGINALLY SUPPLIED THE PRIME CONTRACTOR WITH PRICING DATA, OR TO RECOUP THE VALUE OF ANY PRICE REDUCTIONS OBTAINED BY THE PRIME CONTRACTOR FROM A PROSPECTIVE SUBCONTRACTOR SUBSEQUENT TO AWARD. SINCE THE CONTRACT CONSTITUTED AN UNCONDITIONAL OBLIGATION ON THE PART OF THE GOVERNMENT TO PAY A FIXED PRICE FOR THE WORK DESCRIBED, AND ON THE PART OF THE CONTRACTOR TO PERFORM THE WORK FOR THAT PRICE, ANY RISKS OF INCREASED COSTS FELL UPON THE CONTRACTOR, AND ANY SAVINGS FROM DECREASED COSTS INURED TO HIS BENEFIT. CONTRACT MAY NOT BE MODIFIED TO PROVIDE ADDITIONAL CONSIDERATION TO A CONTRACTOR WITHOUT THE PRESENCE OF COMMENSURATE BENEFITS FLOWING TO THE GOVERNMENT. SEE 46 COMP. GEN. 874, COPY ENCLOSED. CONVERSELY, THE GOVERNMENT IS NOT ENTITLED TO THE BENEFIT OF A CONTRACTOR'S SAVING OF COSTS WHICH IT ANTICIPATED AND ALLOWED FOR IN ITS BID BUT DOES NOT HAVE TO PAY. SEE CITY OF BIRMINGHAM V. THOMPSON, 200 F.2D 505, 507.

YOU HAVE ALSO ASKED WHETHER FINAL BID FIGURES ARE PUBLIC KNOWLEDGE. UNDER ARMED SERVICES PROCUREMENT REGULATION 2-403 THE PRICES BID ON ADVERTISED PROCUREMENTS ARE AVAILABLE FOR PUBLIC INSPECTION, EXCEPT IN THE CASE OF CLASSIFIED PROCUREMENTS. YOUR REQUEST FOR SUCH INFORMATION SHOULD BE ADDRESSED TO THE PROCURING ACTIVITY.

WITH RESPECT TO YOUR FINAL QUESTION, SINCE WE DO NOT BELIEVE THE CIRCUMSTANCES DESCRIBED IN YOUR COMMUNICATIONS CONSTITUTE ANY VIOLATION OF APPLICABLE LAWS OR REGULATIONS, WE SEE NO REASON WHY COPIES OF THE CORRESPONDENCE SUBMITTED WITH YOUR LETTER SHOULD BE FORWARDED TO THE CORPS OF ENGINEERS, BUT YOU ARE FREE TO TAKE SUCH ACTION IF YOU WISH.