B-166006, FEB. 11, 1969

B-166006: Feb 11, 1969

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JAY SMITH CONSTRUCTION CO.: REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 23 AND SUPPLEMENTING LETTER OF JANUARY 30. EACH BIDDER WAS REQUIRED TO SUBMIT WITH ITS BID A LIST CONTAINING THE NAMES AND ADDRESSES OF ITS PROPOSED SUBCONTRACTORS FOR EACH SPECIFIED CATEGORY OF WORK. THE SUCCESSFUL BIDDER AGREES THAT HE WILL NOT HAVE ANY OF THE LISTED CATEGORIES OF WORK INVOLVED IN THE PERFORMANCE OF THIS CONTRACT PERFORMED BY ANY SUBCONTRACTOR OTHER THAN THE SUBCONTRACTOR NAMED FOR THE PERFORMANCE OF SUCH WORK. "/B) THE TERM -SUBCONTRACTOR- FOR THE PURPOSES OF THIS REQUIREMENT SHALL MEAN AN INDIVIDUAL OR FIRM WHO PERFORMS ACTIVE DUTIES ON THE WORK SITE. (2) FABRICATION AND/OR INSTALLATION OF MATERIALS OR ITEMS OF EQUIPMENT IN CONNECTION WITH ONE OR MORE OF THE CATEGORIES OF WORK CONTAINED IN THE LIST OF SUBCONTRACTORS INCLUDED AS PART OF THE BID FORM AND SHALL NOT INCLUDE SUPPLIERS UNLESS THE SUPPLIER AND INSTALLER ARE ONE INDIVIDUAL OR FIRM BY REASON OF CONSTRUCTION PRACTICE. "/C) THE BIDDER SHALL LIST HIMSELF FOR EACH OF THOSE LISTED CATEGORIES OF WORK WHICH HE INTENDS TO PERFORM.

B-166006, FEB. 11, 1969

TO E. JAY SMITH CONSTRUCTION CO.:

REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 23 AND SUPPLEMENTING LETTER OF JANUARY 30, 1969, PROTESTING THE REJECTION OF YOUR BID AS NONRESPONSIVE BY THE NATIONAL PARK SERVICE, DEPARTMENT OF THE INTERIOR,UNDER INVITATION FOR BIDS NO. 14-10-7:991-194.

THE INVITATION SOUGHT BIDS FOR THE CONSTRUCTION OF THE FILENE CENTER AMPHITHEATER AUDITORIUM FOR THE PERFORMING ARTS, AND CERTAIN SITE IMPROVEMENTS TO WOLF TRAP FARM PARK, VIENNA, FAIRFAX COUNTY, VIRGINIA. EACH BIDDER WAS REQUIRED TO SUBMIT WITH ITS BID A LIST CONTAINING THE NAMES AND ADDRESSES OF ITS PROPOSED SUBCONTRACTORS FOR EACH SPECIFIED CATEGORY OF WORK. GENERAL PROVISION 55 OF THE INVITATION PROVIDED FOR LISTING OF SUBCONTRACTORS AS FOLLOWS:

"/A) FOR EACH OF THE CATEGORIES OF WORK CONTAINED IN THE LIST INCLUDED AS AN ATTACHMENT OF THE BID FORM, SF 21, THE BIDDER SHALL SUBMIT THE NAME AND ADDRESS OF THE FIRM TO WHOM HE PROPOSES TO SUBCONTRACT THE WORK TO BE PERFORMED ON THE SITE. FAILURE TO SUBMIT THE LIST BY THE TIME SET FOR BID OPENING SHALL CAUSE THE BID TO BE CONSIDERED NONRESPONSIVE EXCEPT IN ACCORDANCE WITH INSTRUCTION NO. 7 OF THE INSTRUCTIONS TO BIDDERS (STANDARD FORM 22). EXCEPT AS OTHERWISE PROVIDED HEREIN, THE SUCCESSFUL BIDDER AGREES THAT HE WILL NOT HAVE ANY OF THE LISTED CATEGORIES OF WORK INVOLVED IN THE PERFORMANCE OF THIS CONTRACT PERFORMED BY ANY SUBCONTRACTOR OTHER THAN THE SUBCONTRACTOR NAMED FOR THE PERFORMANCE OF SUCH WORK.

"/B) THE TERM -SUBCONTRACTOR- FOR THE PURPOSES OF THIS REQUIREMENT SHALL MEAN AN INDIVIDUAL OR FIRM WHO PERFORMS ACTIVE DUTIES ON THE WORK SITE, INVOLVING (1) CONSTRUCTION, (2) FABRICATION AND/OR INSTALLATION OF MATERIALS OR ITEMS OF EQUIPMENT IN CONNECTION WITH ONE OR MORE OF THE CATEGORIES OF WORK CONTAINED IN THE LIST OF SUBCONTRACTORS INCLUDED AS PART OF THE BID FORM AND SHALL NOT INCLUDE SUPPLIERS UNLESS THE SUPPLIER AND INSTALLER ARE ONE INDIVIDUAL OR FIRM BY REASON OF CONSTRUCTION PRACTICE.

"/C) THE BIDDER SHALL LIST HIMSELF FOR EACH OF THOSE LISTED CATEGORIES OF WORK WHICH HE INTENDS TO PERFORM. IN SUCH INSTANCES ALL PERSONNEL PERFORMING SUCH WORK SHALL BE CARRIED ON HIS OWN PAYROLL. EQUIPMENT MAY BE SELF-OWNED OR LEASED. IF MORE THAN ONE SUBCONTRACTOR WILL PERFORM A SINGLE CATEGORY OF WORK, THE PORTION TO BE PERFORMED BY EACH SHALL BE SPECIFIED.

"/D) NOTHING CONTAINED IN THIS CLAUSE SHALL BE CONSTRUED AS CHANGING ANY PROVISIONS IN THE CONTRACT REQUIRING THE CONTRACTOR TO PERFORM WORK WITH HIS OWN FORCES.

"/E) THE CONTRACTOR SHALL BE RESPONSIBLE FOR ALL WORK PERFORMED BY SUBCONTRACTORS.

"/F) NO ADDITIONS TO OR SUBSTITUTIONS FOR THE FIRMS NAMED WILL BE PERMITTED EXCEPT IN UNUSUAL SITUATIONS AND THEN ONLY UPON THE SUBMISSION IN WRITING TO THE CONTRACTING OFFICER OF A COMPLETE JUSTIFICATION THEREFOR AND RECEIPT OF THE CONTRACTING OFFICER'S WRITTEN APPROVAL. IN THE EVENT THE CONTRACTING OFFICER FINDS THAT SUBSTITUTION IS NOT JUSTIFIED, THE CONTRACTOR'S FAILURE OR REFUSAL TO PROCEED WITH THE WORK BY OR THROUGH THE NAMED SUBCONTRACTOR SHALL BE GROUNDS FOR TERMINATION OF THE CONTRACT UNDER THE PROVISIONS OF CLAUSE 5 OF THE GENERAL PROVISIONS.

"/G) NOTWITHSTANDING ANY OF THE PROVISIONS OF THIS CLAUSE, THE CONTRACTING OFFICER SHALL HAVE AUTHORITY TO DISAPPROVE OR REJECT THE EMPLOYMENT OF ANY SUBCONTRACTOR HE HAS DETERMINED NONRESPONSIBLE. SHALL HAVE THE RIGHT TO REQUIRE ANY INFORMATION AND SUPPORTING EVIDENCE HE MAY DEEM RELEVANT AND NECESSARY IN CONNECTION WITH THE APPROVAL OR DISAPPROVAL OF A REQUEST FOR SUBSTITUTION AND THE APPROPRIATE ADJUSTMENT OF THE CONTRACT PRICE IN THE EVENT SUBSTITUTION IS APPROVED, INCLUDING BUT NOT LIMITED TO CERTIFIED COPIES OF THE ORIGINAL WORKSHEETS USED IN THE PREPARATION OF THE BID ON THE PRIME CONTRACT, CERTIFIED COPIES OF THE OFFERS SUBMITTED TO THE SUCCESSFUL BIDDER BY THE NAMED SUBCONTRACTOR AND THE PROPOSED SUBSTITUTE, AND AFFIDAVITS AS TO THE CIRCUMSTANCES RELATING TO THE REQUEST FOR SUBSTITUTION OR THE ESTIMATED COST OF PERFORMANCE BY ANY SUBCONTRACTOR NAMED OR PROPOSED AS SUBSTITUTE. THE CONTRACTOR'S FAILURE OR REFUSAL TO PROCEED WITH THE WORK BY OR THROUGH A NAMED SUBCONTRACTOR AFTER FAILING OR REFUSING FOR ANY UNREASONABLE PERIOD OF TIME TO FURNISH INFORMATION AND SUPPORTING EVIDENCE AS REQUIRED BY THE CONTRACTING OFFICER IN CONNECTION WITH A REQUEST FOR APPROVAL FOR A SUBSTITUTION SHALL BE GROUNDS FOR TERMINATION UNDER THE PROVISION OF CLAUSE 5 OF THE GENERAL PROVISIONS. IMPOSITION OF ANY REQUIREMENTS UNDER THIS SUBPARAGRAPH SHALL NOT GIVE RISE TO ANY CAUSE OF ACTION AGAINST THE GOVERNMENT BY THE SUCCESSFUL BIDDER OR BY ANY SUBCONTRACTOR ENGAGED OR PROPOSED TO BE ENGAGED HEREUNDER.

"/H) NOTHING CONTAINED IN THIS CLAUSE SHALL IN ITSELF BE CONSTRUED TO CREATE ANY CONTRACT OR PROPERTY RIGHTS IN THE SUCCESSFUL BIDDER OR ANY SUBCONTRACTOR.

"/I) IN THE EVENT THE BIDDER FAILS IN CONNECTION WITH THIS BID (1) TO IDENTIFY THE SUBCONTRACTORS AS REQUIRED BY SUBPARAGRAPH (A), OR (2) TO COMPLY WITH SUBPARAGRAPH (C) IF THE BIDDER HIMSELF INTENDS TO PERFORM ONE OR MORE LISTED CATEGORIES OF WORK, THE BID WILL BE REJECTED AS NONRESPONSIVE TO THE INVITATION. CARE SHOULD BE TAKEN TO AVOID OMITTING AN ENTRY OF A NAME AND ADDRESS IN EACH SPACE OPPOSITE A DESIGNATION OF A CATEGORY LISTED IN THE ATTACHMENT TO BID FORM, SF 21.

"/J) TO PROMOTE THE OBJECTIVES OF THE FOREGOING PROVISIONS AND TO ASSURE THE TIMELY RECEIPT OF ACCURATE BIDS, THE BIDDER IS REQUESTED TO URGE ALL SUBCONTRACTORS INTENDING TO SUBMIT A PROPOSAL FOR WORK INVOLVED IN THE PROJECT TO SUBMIT TO ALL BIDDERS TO WHOM THEY INTEND TO BID A WRITTEN PROPOSAL (OR WRITTEN ABSTRACT) WITH OR WITHOUT PRICE, OUTLINING IN DETAIL THE SPECIFIC SECTIONS OF THE SPECIFICATIONS TO BE INCLUDED IN THEIR WORK AS WELL AS ANY EXCEPTIONS OR EXCLUSIONS THEREFROM. IT IS SUGGESTED THAT SUCH WRITTEN PROPOSAL BE SUBMITTED TO THE BIDDER AT LEAST 48 HOURS IN ADVANCE OF THE BID OPENING.'

THE WORK WAS DIVIDED INTO 12 GROUPS, CONSISTING OF VARIOUS COMBINATIONS, FOR BIDDING PURPOSES. OPENING OF BIDS WAS SCHEDULED FOR 3 P.M., LOCAL PREVAILING TIME, ON JANUARY 14, 1969. YOUR TOTAL BID WAS THE LOWEST SUBMITTED FOR GROUPS I THROUGH IV. HOWEVER, THE LISTING OF YOUR PROPOSED SUBCONTRACTORS OMITTED ENTRIES OF ANY KIND FOR FIVE CATEGORIES OF SUBCONTRACTING WORK INCLUDING STRUCTURAL STEEL, ORCHESTRA ENCLOSURE, STAGE EQUIPMENT, AUDITORIUM SEATING, AND BUILDING ELECTRICAL WORK.

YOU SUBMITTED A COMPLETED LIST OF SUBCONTRACTORS BY LETTER OF JANUARY 15, 1969, OR AFTER BID OPENING, AND EXPLAINED THAT THE OMISSIONS RESULTED FROM THE LENGTH OF THE BID FORM (18 PAGES) AND WERE DUE TO THE FACT THAT PRICES WERE STILL COMING INTO YOUR OFFICE UP TO BID TIME. YOUR LETTER OF JANUARY 30, 1969, PROTESTS THE APPLICATION OF THE REQUIREMENT FOR THE LISTING OF SUBCONTRACTORS AS "A SYSTEM WHICH HAS BEEN SET UP BY THE FEDERAL GOVERNMENT THAT COULD PREVENT ONE OR MORE CONTRACTORS FROM SUBMITTING A RESPONSIVE BID.' YOU ALLEGE FURTHER THAT "NO OTHER GENERAL CONTRACTORS EXCEPT NORAIR'S (2ND LOW BIDDER) BIDDING DOCUMENTS ARE COMPLETE WITH EVERY NAME AND AMOUNT TYPED IN. IN ORDER FOR THIS TO BE POSSIBLE NORAIR HAD TO HAVE PRICES AND NAMES MADE AVAILABLE TO THEM A GOOD DEAL SOONER THAN THIS INFORMATION WAS MADE AVAILABLE TO OUR COMPANY.'

THE REQUIREMENT FOR THE LISTING OF SUBCONTRACTORS WAS INCLUDED IN THE INVITATION PURSUANT TO DEPARTMENT OF THE INTERIOR REGULATIONS 14 7.602-50 (1), 33 FED. REG. 7432, WHICH PROVIDE, IN PERTINENT PART, AS FOLLOWS:

"/A) ALL CONTRACTS, ENTERED INTO BY NEGOTIATION OR FORMAL ADVERTISING, FOR BUILDING CONSTRUCTION AND ALTERATION WORK TO BE PERFORMED IN THE UNITED STATES AND ESTIMATED TO COST IN EXCESS OF $150,000 AND INVOLVING THE BUILDING TRADES SUBCONTRACTING ACTIVITIES, SHALL REQUIRE EACH BIDDER TO SUBMIT WITH HIS BID THE NAME AND ADDRESS OF EACH SUBCONTRACTOR (OR HIS OWN FIRM WHEN HE WILL PERFORM THE WORK) TO WHOM THE PROSPECTIVE CONTRACTOR PURPOSES TO SUBCONTRACT ANY OF THE CATEGORIES OF WORK LISTED ON AN ATTACHMENT TO THE BID FORM, SF 21 TITLED -LIST OF SUBCONTRACTORS.-

"/I) IN THE EVENT THE BIDDER FAILS IN CONNECTION WITH THIS BID (1) TO IDENTIFY THE SUBCONTRACTORS AS REQUIRED BY SUBPARAGRAPH (A), OR (2) TO COMPLY WITH SUBPARAGRAPH (C) IF THE BIDDER HIMSELF INTENDS TO PERFORM ONE OR MORE LISTED CATEGORIES OF WORK, THE BID WILL BE REJECTED AS NONRESPONSIVE TO THE INVITATION. CARE SHOULD BE TAKEN TO AVOID OMITTING AN ENTRY OF A NAME AND ADDRESS IN EACH SPACE OPPOSITE A DESIGNATION OF A CATEGORY LISTED IN THE ATTACHMENT TO BID FORM, SF 21.

"/J) TO PROMOTE THE OBJECTIVES OF THE FOREGOING PROVISIONS AND TO ASSURE THE TIMELY RECEIPT OF ACCURATE BIDS, THE BIDDER IS REQUESTED TO URGE ALL SUBCONTRACTORS INTENDING TO SUBMIT A PROPOSAL FOR WORK INVOLVED IN THE PROJECT TO SUBMIT TO ALL BIDDERS TO WHOM THEY INTEND TO BID A WRITTEN PROPOSAL (OR WRITTEN ABSTRACT) WITH OR WITHOUT PRICE, OUTLINING IN DETAIL THE SPECIFIC SECTIONS OF THE SPECIFICATIONS TO BE INCLUDED IN THEIR WORK AS WELL AS ANY EXCEPTIONS OR EXCLUSIONS THEREFROM. IT IS SUGGESTED THAT SUCH WRITTEN PROPOSAL BE SUBMITTED TO THE BIDDER AT LEAST 48 HOURS IN ADVANCE OF THE BID OPENING.'

THE PROCEDURE REQUIRING BIDDERS ON CERTAIN CONSTRUCTION PROJECTS TO FURNISH WITH THEIR BIDS A LIST OF PROPOSED SUBCONTRACTORS FOR THE PERFORMANCE OF SPECIFIED CATEGORIES OF WORK WAS APPROVED INITIALLY ON A TRIAL BASIS IN OUR DECISION OF AUGUST 22, 1963, 43 COMP. GEN. 206, WHERE WE HELD THAT FAILURE TO FURNISH A LIST OF SUBCONTRACTORS AS REQUIRED RENDERED THE BID NONRESPONSIVE. THE REASONING ADVANCED AT THAT TIME FOR THIS PROCEDURE WAS AS FOLLOWS:

"THE ABOVE-QUOTED PROVISION FOR LISTING SUBCONTRACTORS WAS AIMED PRIMARILY AT THE PRACTICE OF -BID SHOPPING, - WHICH IS REPORTED TO HAVE BEEN A MATTER OF GROWING CONCERN TO THE GENERAL SERVICES ADMINISTRATION (GSA) AND TO THE CONSTRUCTION INDUSTRY, OVER A PERIOD OF YEARS. IT IS REPORTED TO HAVE BEEN THE EXPERIENCE OF GSA THAT THE PRACTICE IN MANY INSTANCES HAS RESULTED IN PERFORMANCE OF WORK BY SUBCONTRACTORS WHOSE COMPETENCE AND RESPONSIBILITY ARE QUESTIONABLE. IN ADDITION, GSA BELIEVES THAT THE ELIMINATION OF BID SHOPPING WILL CREATE A TRUE COMPETITIVE MARKET AMONG CONSTRUCTION SUBCONTRACTORS, WITH RESULTANT SAVINGS ACCRUING TO THE BENEFIT OF THE GOVERNMENT.

"GSA HAS REPORTED TO US THAT, IN THE ABSENCE OF FIRM COMMITMENTS FOR THE SUBCONTRACTING WORK, THE GENERAL CONTRACTOR CAN AND FREQUENTLY DOES BID SHOP AND OBTAIN MORE FAVORABLE SUBCONTRACT PRICES THAN THOSE UPON WHICH HIS BID WAS BASED, WITH THE PROBABLE DUAL RESULT OF INFLATED COST TO THE GOVERNMENT AND SUBSTANDARD WORK BY THE SUBCONTRACTORS AT THEIR LOWER PRICES. ALSO, WE ARE INFORMED THAT UNDER THE PRESENT PRACTICES SUBBIDS ARE SUBMITTED AT THE LAST POSSIBLE MOMENT BEFORE PRIME BIDS ARE FINALLY SUBMITTED, IN ORDER TO MINIMIZE THE EXTENT OF BID SHOPPING BEFORE BID OPENING, AND ARE USUALLY INFLATED IN ORDER TO ALLOW FOR A LATER REDUCTION.'

THIS PROCEDURE WAS LATER EXTENDED TO ALL INVITATIONS ISSUED BY GSA FOR BIDS FOR CONSTRUCTION AND ALTERATION WORK ESTIMATED TO COST IN EXCESS OF $150,000 AND IS CURRENTLY COVERED BY SECTION 5B-2.202-70 OF THE GSA PROCUREMENT REGULATIONS (41 CFR 5B-2.202-70). THE DEPARTMENT OF THE INTERIOR REGULATIONS ON SUBCONTRACTOR LISTING WERE INCORPORATED INTO THE INSTANT INVITATION AND LIKEWISE MUST BE REGARDED AS A MATERIAL REQUIREMENT AFFECTING BID RESPONSIVENESS WHICH MAY NOT BE WAIVED IN INDIVIDUAL CASES. SEE 44 COMP. GEN. 526.

WHILE YOU ALLEGE THAT THE RECEIPT OF THE STEEL QUOTATION FROM BRISTOL STEEL AND IRON WORKS, C., A SHORT TIME BEFORE BID OPENING PREVENTED THE LISTING OF ALL SUBCONTRACTORS, IT IS NOTED THAT YOUR BID CONTAINED PRICES ON ALL WORK ITEMS WHICH YOU BID UPON AND PRESUMABLY SUCH PRICES REFLECTED YOUR SUBCONTRACTOR QUOTATIONS. WHILE YOUR PROTEST INFERS POSSIBLE COLLUSION BETWEEN ANOTHER BIDDER AND THE STEEL SUPPLIER TO REDUCE COMPETITION, THERE IS NOTHING OF RECORD WHICH WOULD INDICATE THE POSSIBILITY OF COLLUSION. THE DEPARTMENT OF THE INTERIOR HAS REPORTED THAT AN EXAMINATION OF ALL THE BIDDING DOCUMENTS REVEALS NOTHING TO INDICATE AN AGREEMENT BETWEEN ANY BIDDERS TO RESTRICT COMPETITION. RATHER, THE PRESENT RECORD SHOWS THAT THE LISTING OMISSION WAS AN OVERSIGHT ON YOUR PART SINCE YOU KNEW THE NAMES OF YOUR SUBCONTRACTORS WHEN YOU SUBMITTED YOUR BID.

IN THE CIRCUMSTANCES DISCLOSED BY THE RECORD, WE MUST CONCLUDE THAT THE ADMINISTRATIVE ACTION TAKEN IN REJECTING YOUR BID AS NONRESPONSIVE WAS PROPER AND WE ARE UNABLE TO FIND ANY LEGAL OBJECTION THERETO. YOUR PROTEST IS THEREFORE DENIED.