B-175395, JUN 16, 1972, 51 COMP GEN 814

B-175395: Jun 16, 1972

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - SUBCONTRACTS - BID SHOPPING - SUBCONTRACTOR SUBSTITUTION PRIOR TO AWARD THE LISTING OF A JOINT VENTURE - TWO RESPONSIBLE ELECTRICAL SUBCONTRACTORS - THAT DID NOT MEET THE EXPERIENCE AND PERCENTAGE MANUFACTURE REQUIREMENTS OF THE SUBCONTRACTOR QUALIFICATION CLAUSE PERTAINING TO THE BUILDING CONTROL AND MONITORING CATEGORY OF WORK THAT WAS CONTAINED IN AN INVITATION FOR BIDS (IFB) TO CONSTRUCT THE SUPERSTRUCTURE OF A FEDERAL OFFICE BUILDING DOES NOT REQUIRE REJECTION OF THE BID AS SUBSTITUTION OF A QUALIFIED FIRST-TIER SUBCONTRACTOR IS PERMISSIBLE UNDER THE TERMS OF THE IFB AND APPLICABLE REGULATIONS. THE LISTING DEFECT DOES NOT MATERIALLY AFFECT THE RESPONSIVENESS OF THE BID AS IT RELATES TO THE PRIMARY PURPOSE OF THE LISTING REQUIREMENT - ANTIBID SHOPPING - AND THE QUALIFICATION CLAUSE WHICH IS REGARDED AS SIMILAR TO A COMPETENCY OF BIDDER CLAUSE IS CONSIDERED AS RELATING SOLELY TO THE RESPONSIBILITY OF THE LISTED SUBCONTRACTORS.

B-175395, JUN 16, 1972, 51 COMP GEN 814

BIDS - BUY AMERICAN ACT - CONSTRUCTION CONTRACTS - STATEMENT OF FOREIGN MATERIALS A BIDDER RESPONDING TO AN INVITATION FOR BIDS TO CONSTRUCT THE SUPERSTRUCTURE OF A FEDERAL OFFICE BUILDING THAT CONTAINED BUY AMERICAN ACT PROVISIONS (10 U.S.C. 10A-10D) IN ACCORDANCE WITH SECTIONS 1-18.604 AND 1-18.605 OF THE FEDERAL PROCUREMENT REGULATIONS - PROVISIONS AMPLIFIED IN A PREBID CONFERENCE - WHO FAILED TO SUBMIT INFORMATION CONCERNING THE AMOUNT OF NON-DOMESTIC STRUCTURAL STEEL PROPOSED TO BE USED AND TO PROVIDE DATA TO DEMONSTRATE THAT THE COST OF DOMESTIC STRUCTURAL STEEL WOULD EXCEED BY MORE THAN 6 PERCENT THE COST OF COMPARABLE FOREIGN STEEL, OMITTED INFORMATION THAT GOES TO THE RESPONSIVENESS OF THE BID, AND IT WOULD BE PREJUDICIAL TO OTHER BIDDERS AND DETRIMENTAL TO THE COMPETITIVE BIDDING SYSTEM TO PERMIT CORRECTION OF THE NONRESPONSIVE BID AFTER BID OPENING. CONTRACTS - SUBCONTRACTS - BID SHOPPING - SUBCONTRACTOR SUBSTITUTION PRIOR TO AWARD THE LISTING OF A JOINT VENTURE - TWO RESPONSIBLE ELECTRICAL SUBCONTRACTORS - THAT DID NOT MEET THE EXPERIENCE AND PERCENTAGE MANUFACTURE REQUIREMENTS OF THE SUBCONTRACTOR QUALIFICATION CLAUSE PERTAINING TO THE BUILDING CONTROL AND MONITORING CATEGORY OF WORK THAT WAS CONTAINED IN AN INVITATION FOR BIDS (IFB) TO CONSTRUCT THE SUPERSTRUCTURE OF A FEDERAL OFFICE BUILDING DOES NOT REQUIRE REJECTION OF THE BID AS SUBSTITUTION OF A QUALIFIED FIRST-TIER SUBCONTRACTOR IS PERMISSIBLE UNDER THE TERMS OF THE IFB AND APPLICABLE REGULATIONS, THE LISTING DEFECT DOES NOT MATERIALLY AFFECT THE RESPONSIVENESS OF THE BID AS IT RELATES TO THE PRIMARY PURPOSE OF THE LISTING REQUIREMENT - ANTIBID SHOPPING - AND THE QUALIFICATION CLAUSE WHICH IS REGARDED AS SIMILAR TO A COMPETENCY OF BIDDER CLAUSE IS CONSIDERED AS RELATING SOLELY TO THE RESPONSIBILITY OF THE LISTED SUBCONTRACTORS.

TO THE ACTING ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, JUNE 16, 1972:

REFERENCE IS MADE TO A LETTER DATED MAY 3, 1972, FROM YOUR GENERAL COUNSEL, AND PRIOR CORRESPONDENCE, REPORTING ON THE PROTESTS OF PERINI CORPORATION-BAUGH CONSTRUCTION COMPANY (PERINI-BAUGH) AND THE MASSART COMPANY (MASSART), A LISTED SUBCONTRACTOR OF PERINI-BAUGH, AGAINST ANY AWARD TO HUBER, HUNT & NICHOLS, INC. (HUBER), OR HOFFMAN CONSTRUCTION COMPANY (HOFFMAN) UNDER AN INVITATION FOR BIDS (IFB) COVERING PROJECT NO. 45902, ISSUED BY THE PUBLIC BUILDINGS SERVICE, REGION 10, FOR THE CONSTRUCTION OF THE SUPERSTRUCTURE OF THE FEDERAL OFFICE BUILDING, SEATTLE, WASHINGTON. IN ADDITION, YOUR GENERAL COUNSEL REPORTED ON THE PROTEST OF HOFFMAN AGAINST ANY PROPOSED AWARD OF THE CONTRACT TO HUBER.

AS REQUIRED BY THE IFB, THE FIVE BIDDERS RESPONDING THERETO SUBMITTED PRICES FOR A BASE BID, 11 ADDITIVE AND DEDUCTIVE ALTERNATES AND ONE OPTION. THE CONTRACTING OFFICE REPORTS THAT, SINCE NO FINAL DECISION HAS BEEN MADE AS TO WHICH ALTERNATES WILL BE SELECTED, THE LOW BIDDER CANNOT BE DETERMINED AT THIS TIME. BUT, IT IS REPORTED THAT EITHER HUBER OR HOFFMAN WILL BE THE LOW EVALUATED BIDDER DEPENDING ON THE ALTERNATES SELECTED. IN THE EVENT THAT THE HUBER AND HOFFMAN BIDS ARE DISQUALIFIED, EITHER PERINI-BAUGH OR PETER KIEWITT SONS & CO. WOULD BE THE LOW EVALUATED BIDDER DEPENDING AGAIN UPON WHICH ALTERNATES ARE SELECTED.

IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 1-18.604 AND 1-18.605 OF THE FEDERAL PROCUREMENT REGULATIONS (FPR), THE IFB CONTAINED THE FOLLOWING CLAUSES:

INFORMATION REGARDING BUY AMERICAN ACT

(A) THE BUY AMERICAN ACT (41 U.S.C. 10A-10D) GENERALLY REQUIRES THAT ONLY DOMESTIC CONSTRUCTION MATERIAL BE USED IN THE PERFORMANCE OF THIS CONTRACT. (SEE THE CLAUSE ENTITLED "BUY AMERICAN" IN STANDARD FORM 23A, GENERAL PROVISIONS, CONSTRUCTION CONTRACTS.) THIS REQUIREMENT DOES NOT APPLY TO THE CONSTRUCTION MATERIAL OR COMPONENTS LISTED IN THE CLAUSE ENTITLED "BUY AMERICAN ACT" OF GSA FORM 1139, GENERAL CONDITIONS, SECTION 1 OF THE CONTRACT.

(B) (1) FURTHERMORE, BIDS OR PROPOSALS OFFERING USE OF ADDITIONAL NONDOMESTIC CONSTRUCTION MATERIAL MAY BE ACCEPTABLE FOR AWARD IF THE GOVERNMENT DETERMINES THAT USE OF COMPARABLE DOMESTIC CONSTRUCTION MATERIAL IS IMPRACTICABLE OR WOULD UNREASONABLY INCREASE THE COST OR THAT DOMESTIC CONSTRUCTION MATERIAL (IN SUFFICIENT AND REASONABLE AVAILABLE COMMERCIAL QUANTITIES AND OF A SATISFACTORY QUALITY) IS UNAVAILABLE. RELIABLE EVIDENCE SHALL BE FURNISHED JUSTIFYING SUCH USE OF ADDITIONAL NONDOMESTIC CONSTRUCTION MATERIAL.

(2) WHERE IT IS ALLEGED THAT USE OF DOMESTIC CONSTRUCTION MATERIAL WOULD UNREASONABLY INCREASE THE COST:

(I) DATA SHALL BE INCLUDED, BASED ON A REASONABLE CANVASS OF SUPPLIERS, DEMONSTRATING THAT THE COST OF EACH SUCH DOMESTIC CONSTRUCTION MATERIAL WOULD EXCEED BY MORE THAN 6 PERCENT THE COST OF COMPARABLE NONDOMESTIC CONSTRUCTION MATERIAL. (ALL COSTS OF DELIVERY TO THE CONSTRUCTION SITE SHALL BE INCLUDED, AS WELL AS ANY APPLICABLE DUTY.)

(II) FOR EVALUATION PURPOSES, 6 PERCENT OF THE COST OF ALL ADDITIONAL NONDOMESTIC CONSTRUCTION MATERIAL, WHICH QUALIFIES UNDER PARAGRAPH (I) ABOVE, WILL BE ADDED TO THE BID OR PROPOSAL.

(3) WHEN OFFERING ADDITIONAL NONDOMESTIC CONSTRUCTION MATERIAL, BIDS OR PROPOSALS MAY ALSO OFFER, AT STATED PRICES, ANY AVAILABLE COMPARABLE DOMESTIC CONSTRUCTION MATERIAL, SO AS TO AVOID THE POSSIBILITY THAT FAILURE OF A NONDOMESTIC CONSTRUCTION MATERIAL TO BE ACCEPTABLE, UNDER (1) ABOVE, WILL CAUSE REJECTION OF THE ENTIRE BID.

19. BUY AMERICAN

(A) AGREEMENT. IN ACCORDANCE WITH THE BUY AMERICAN ACT (41 U.S.C. 10A- 10D), AND EXECUTIVE ORDER 10582, DECEMBER 17, 1954 (3 CFR, 1954-58 COMP., P. 230), AS AMENDED BY EXECUTIVE ORDER 11051, SEPTEMBER 27, 1962 (3 CFR, 1959-63 COMP., P. 635), THE CONTRACTOR AGREES THAT ONLY DOMESTIC CONSTRUCTION MATERIAL WILL BE USED (BY THE CONTRACTOR, SUBCONTRACTORS, MATERIALMEN, AND SUPPLIERS) IN THE PERFORMANCE OF THIS CONTRACT, EXCEPT FOR NONDOMESTIC MATERIAL LISTED IN THE CONTRACT.

ALL PROSPECTIVE CONTRACTORS, INCLUDING THE FIVE BIDDERS, WERE FORWARDED A SUMMARY OF THE PREBID CONFERENCE WHICH WAS ATTENDED BY REPRESENTATIVES OF THE BIDDERS. AMONG OTHERS, THE FOLLOWING QUESTIONS AND ANSWERS CONCERNING THE BUY AMERICAN ACT WERE INCLUDED IN THE SUMMARY:

1. MAY NONDOMESTIC STRUCTURAL STEEL BE USED ON THE PROJECT?

YES, PROVIDED THE BID STATES THAT IT IS BASED ON THE USE OF SPECIFIED NONDOMESTIC CONSTRUCTION MATERIALS AND PROVIDED ALSO THAT SUCH USE MEETS THE CRITERIA OF FPR SUBPART 1-18.6 (COPY ATTACHED).

6. MAY A BID BE BASED ON USE OF A SPECIFIED PORTION OF NONDOMESTIC STRUCTURAL STEEL?

YES, PROVIDED THE PORTION IS IDENTIFIED SPECIFICALLY SO THAT THE CRITERIA SET OUT IN SECTION 1-18.603 MAY BE APPLIED. AN IDENTIFICATION BY PERCENTAGE WOULD NOT BE A SATISFACTORY IDENTIFICATION.

HUBER INSERTED THE FOLLOWING ENTRY UNDER THE STRUCTURAL STEEL CATEGORY OF THE SUBCONTRACTOR LISTING PORTION OF ITS BID:

SAN JOSE STEEL

S.J., CAL.

PARTLY NON-DOMESTIC IN ACCORDANCE

WITH B.A. ACT.

THE HUBER BID DID NOT INCLUDE INFORMATION PERTAINING TO THE PORTION OF FOREIGN STRUCTURAL STEEL PROPOSED TO BE USED. IN ADDITION, ITS BID FAILED TO PROVIDE ANY DATA TO DEMONSTRATE THAT THE COST OF DOMESTIC STRUCTURAL STEEL WOULD EXCEED BY MORE THAN 6 PERCENT THE COST OF COMPARABLE FOREIGN STRUCTURAL STEEL. POST-BID-OPENING INFORMATION SUPPLIED BY THE SUBCONTRACTOR LISTED BY HUBER DISCLOSES THAT THE COST OF FOREIGN MATERIAL OR NONDOMESTIC STRUCTURAL STEEL INCLUDED IN THE BASE BID ALONE AMOUNTED TO $2,145,515.

YOUR GENERAL COUNSEL, PERINI-BAUGH, AND HOFFMAN ARGUE THAT THE HUBER BID SHOULD BE REJECTED AS NONRESPONSIVE ON ACCOUNT OF ITS FAILURE TO IDENTIFY THE AMOUNT OF NONDOMESTIC STRUCTURAL STEEL PROPOSED TO BE USED OR DATA FOR USE IN COMPARING THE RELATIVE COSTS OF COMPARABLE DOMESTIC AND NONDOMESTIC STEEL. IT IS CONTENDED THAT SUCH FAILURE LEAVES THE GOVERNMENT INCAPABLE OF DETERMINING WHETHER THE COST OF DOMESTIC STEEL WOULD UNREASONABLY INCREASE THE COST OF THE PROJECT. MOREOVER, IT IS ARGUED, TO PERMIT SUCH INFORMATION AND DATA TO BE SUPPLIED SUBSEQUENT TO THE OPENING OF BIDS AND THE EXPOSURE OF BID PRICES WOULD BE PREJUDICIAL TO OTHER BIDDERS AND SERIOUSLY DETRIMENTAL TO THE COMPETITIVE BIDDING PROCESS.

HUBER CLAIMS THAT THE ABOVE-QUOTED NOTATION IN ITS BID COMPLIES WITH THE REQUIREMENTS OF THE BUY AMERICAN ACT, 41 U.S.C. 10A, THE RELATED EXECUTIVE ORDERS, AND DECISIONS OF OUR OFFICE, WHICH, IN ITS OPINION, REQUIRE ONLY NOTICE OF THE INTENDED USE OF NONDOMESTIC MATERIALS, AND PERMIT THE SUBMISSION OF APPROPRIATE DATA FOR EVALUATION AFTER BID OPENING. MOREOVER, HUBER STATES THAT NO CHANGE CAN BE MADE IN THE QUANTITIES OR PERCENTAGES OF FOREIGN AND DOMESTIC MATERIALS IN ITS BID SINCE IT WAS CONTRACTUALLY BOUND TO THE LISTED SUBCONTRACTOR-SUPPLIER AT BID OPENING.

UPON CONSIDERATION OF THE RECORD BEFORE US, AS SUPPLEMENTED BY COUNSEL FOR THE RESPECTIVE PARTIES AND YOUR GENERAL COUNSEL, WE CONCLUDE THAT THE HUBER BID SHOULD BE REJECTED AS NONRESPONSIVE.

INITIALLY, WE BELIEVE THAT THE ABOVE-QUOTED PORTION OF THE IFB ENTITLED "INFORMATION REGARDING BUY AMERICAN ACT," AS AMPLIFIED BY THE ANSWERS TO QUESTIONS 1 AND 6 IN THE PREBID CONFERENCE, REQUIRED BIDDERS TO EXPLICITLY IDENTIFY THE SPECIFIC PORTION OF NONDOMESTIC STRUCTURAL STEEL TO BE USED AND TO FURNISH COST DATA JUSTIFYING THE USE OF NONDOMESTIC STRUCTURAL STEEL. NOTWITHSTANDING THESE REQUIREMENTS, COUNSEL FOR HUBER ARGUES THAT THE PROVISIONS OF THE BUY AMERICAN ACT, THE RELATED EXECUTIVE ORDERS AND OUR DECISIONS EXCUSE TECHNICAL NONCOMPLIANCE WITH THESE TERMS OF THE IFB. COUNSEL CITES OUR DECISION AT 39 COMP. GEN. 695 (1960) WHEREIN WE FOUND THAT A BIDDER'S FAILURE, AS REQUIRED BY THE TERMS OF AN IFB, TO COMPUTE THE PERCENTAGE OF FOREIGN PRODUCT COST, NEED NOT CAUSE REJECTION OF THE BID. HOWEVER, WE ENUNCIATED THE FOLLOWING PRINCIPLES RESPECTING BIDDERS' OBLIGATIONS UNDER THE BUY AMERICAN ACT (PAGES 698-699):

IT IS, OF COURSE, ESSENTIAL THAT A BIDDER CLAIMING THE PREFERENCE ACCORDED A DOMESTIC BIDDER ESTABLISH THAT THE COST OF FOREIGN PRODUCTS IN HIS BID IS LESS THAN THE COST OF DOMESTIC PRODUCTS. SUFFICIENT INFORMATION ON THIS POINT SHOULD BE SUBMITTED WITH THE BID TO PRECLUDE ANY CHANGE, AFTER BID OPENING, IN THE CLAIMED PERCENTAGES OF FOREIGN AND DOMESTIC PRODUCTS WHICH WOULD AFFECT EITHER THE RELATIVE STANDING OF HIS BID OR ITS STATUS AS A DOMESTIC BID. HOWEVER, WE DO NOT BELIEVE THAT THE DETAILED COST INFORMATION REQUIRED TO ESTABLISH THE FOREIGN OR DOMESTIC STATUS OF A BID NEED BE MADE PUBLIC AS A PART OF THE BID. IT IS SUFFICIENT, IN OUR OPINION, FOR THE PROCURING AGENCY TO REQUIRE THE BIDDER TO SUBMIT WITH HIS BID A STATEMENT LISTING ANY FOREIGN MATERIALS, PRODUCTS, OR COMPONENTS ENTERING INTO THE SUPPLIES TO BE FURNISHED, WITH A STATEMENT OF THE PERCENTAGE OF THE COST OF ALL MATERIALS, PRODUCTS, OR COMPONENTS REPRESENTED BY SUCH FOREIGN ITEMS, SUBJECT TO VERIFICATION BY THE AGENCY BEFORE AWARD. IN THE CASE OF AWARD TO A DOMESTIC BIDDER PROPOSING TO USE A SUBSTANTIAL PERCENTAGE OF FOREIGN PRODUCTS, THE USE OF FOREIGN PRODUCTS OTHER THAN THOSE DISCLOSED IN ITS BID MIGHT PROPERLY BE PROHIBITED UNDER PENALTY OF PRICE REDUCTION, LIQUIDATED DAMAGES, OR OTHER SANCTIONS.

IN THIS REGARD, THE INFORMATION AND DATA CALLED FOR BY THE INSTANT IFB IN NO WAY WOULD RESULT IN AN EVALUATION INCONSISTENT WITH THE TERMS OF THE BUY AMERICAN ACT AND THE RELATED EXECUTIVE ORDERS. THEREFORE, WE BELIEVE THAT THE CONTRACTING AGENCY PROPERLY REQUIRED THAT THE INFORMATION AND DATA BE SUBMITTED WITH THE BID AS A MATTER OF BID RESPONSIVENESS.

BEYOND THIS, THERE REMAINS THE QUESTION OF THE PROPRIETY OF ALLOWING HUBER TO SUBMIT BUY AMERICAN ACT INFORMATION AND DATA SUBSEQUENT TO BID OPENING. THE HUBER BID CLEARLY INDICATED AN INTENTION TO USE AN UNDISCLOSED QUANTITY OF NONDOMESTIC STRUCTURAL STEEL. UNDER FPR SECTION 1 -18.602-1, NONDOMESTIC CONSTRUCTION MATERIAL CAN BE USED ONLY IF THE REQUIREMENT FOR THE USE OF DOMESTIC MATERIAL IS DETERMINED TO UNREASONABLY INCREASE THE COST. THAT DETERMINATION CAN BE MADE WHERE (1) A BID OFFERS NONDOMESTIC CONSTRUCTION MATERIAL, THE COST OF WHICH, PLUS 6 PERCENT THEREOF, IS LESS THAN THE COST OF COMPARABLE DOMESTIC CONSTRUCTION MATERIAL, AND (2) THE BID IS THE LOW BID AFTER ADDING FOR EVALUATION PURPOSES 6 PERCENT OF THE COST OF ALL QUALIFYING NONDOMESTIC MATERIAL. SEE FPR SECTION 1-18.603.

UNLIKE THE EVALUATION OF A BID UNDER AN IFB FOR A SUPPLY CONTRACT, THE EVALUATION OF A BID FOR A CONSTRUCTION CONTRACT UNDER THE BUY AMERICAN ACT TAKES INTO CONSIDERATION EACH PARTICULAR ITEM OF CONSTRUCTION MATERIAL TO BE BROUGHT TO THE CONSTRUCTION SITE FOR INCORPORATION IN THE BUILDING OR WORK. SEE FPR SECTIONS 1-6.104-4 AND 1-18.603-1. THE ABSTRACT OF BIDS REVEALS THAT THE HUBER BID AND THAT OF HOFFMAN, THE TWO LOW BIDDERS, ARE QUITE CLOSE ON THE BASE BID, THE ALTERNATES AND THE OPTION. TAKING, FOR PURPOSES OF EXAMPLE, THE POST-BID-OPENING FIGURE OF $2,145,515, PROPOSED AS THE COST OF NONDOMESTIC STRUCTURAL STEEL BY THE HUBER SUPPLIER, WOULD RESULT, AFTER APPLICATION OF THE 6 PERCENT DIFFERENTIAL, IN THE ADDITION OF A FACTOR IN EXCESS OF $128,000 TO THE HUBER BID.

MOREOVER, WE ARE NOT CONVINCED BY HUBER'S ARGUMENT THAT IT HAD A PREBID BINDING AGREEMENT WITH ITS STRUCTURAL STEEL SUBCONTRACTOR WHICH WAS ADEQUATE TO IDENTIFY COSTS AND PROPORTIONS OF NONDOMESTIC AND DOMESTIC STEEL. HOWEVER, THIS POST-BID-OPENING INFORMATION MAY NOT BE RELIED UPON TO CURE THE DEFICIENCIES IN HUBER'S BID SO FAR AS BUY AMERICAN ACT EVALUATION IS CONCERNED. UNDER THE PRINCIPLES OF FORMAL ADVERTISING, IT WOULD BE MANIFESTLY UNFAIR TO PERMIT A BIDDER TO SUPPLEMENT HIS OPENED BID TO PROVIDE INFORMATION WHICH WOULD GOVERN THE EVALUATION OF HIS BID FOR PURPOSES OF DETERMINING THE LOWEST EVALUATED BIDDER.

WE BELIEVE THAT COUNSEL FOR HUBER MISPLACES RELIANCE ON 48 COMP. GEN. 142 (1968), WHERE, AFTER BID OPENING, WE ALLOWED A BIDDER TO CHANGE ITS OFFER OF A DOMESTIC TO A FOREIGN SUPPLY PRODUCT. THERE, UNLIKE HERE, THE BIDDER WAS CLEARLY RESPONSIVE TO THE TERMS OF THE INVITATION AND ITS BID COULD BE EVALUATED UNDER THE BUY AMERICAN ACT WITHOUT REFERENCE TO ANY QUESTION RELATING TO BID RESPONSIVENESS. SEE B 169279, JUNE 1, 1970.

THE PERINI-BAUGH AND ITS LISTED SUBCONTRACTOR, MASSART, PROTESTS RELATE TO A CLAIMED NONRESPONSIVENESS OF THE HUBER AND HOFFMAN BIDS RELATING TO THEIR LISTING OF SUBCONTRACTORS. THE IFB INCLUDED THE SUBCONTRACTOR LISTING CLAUSE PRESCRIBED BY GENERAL SERVICES ADMINISTRATION PROCUREMENT REGULATIONS (GSPR) 5B-2.202-70(E). THAT CLAUSE PROVIDES FOR THE LISTING OF SUBCONTRACTORS BY BIDDERS FOR VARIOUS SPECIFIED CATEGORIES OF WORK SET FORTH ON A SEPARATE LISTING FORM, ONE OF WHICH WAS "BUILDING CONTROL AND MONITORING (ALL WORK IN DIVISION 17)." THE CLAUSE FURTHER REQUIRES BIDDERS, AS TO EACH CATEGORY ON THE LISTING FORM, TO SUBMIT THE NAME AND ADDRESS OF THE INDIVIDUAL OR FIRM WITH WHOM SUBCONTRACTING IS PROPOSED FOR THE PERFORMANCE OF SUCH CATEGORY. ALSO, UNDER THE CLAUSE, THE BIDDER AGREES THAT NONE OF THE LISTED CATEGORIES WILL BE PERFORMED BY AN INDIVIDUAL OR FIRM OTHER THAN THOSE NAMED. A SUBCONTRACTOR IS DEFINED THEREUNDER AS THE INDIVIDUAL OR FIRM WITH WHOM THE BIDDER PROPOSES TO ENTER INTO A SUBCONTRACT FOR MANUFACTURE, FABRICATING, INSTALLING, OR OTHERWISE PERFORMING WORK UNDER THE CONTRACT PURSUANT TO THE SPECIFICATIONS APPLICABLE TO ANY CATEGORY ON THE LIST. IN ADDITION, THE CLAUSE WARNS BIDDERS THAT THE FAILURE TO LIST SUBCONTRACTORS FOR EVERY CATEGORY WOULD RESULT IN REJECTION OF THE BID AS NONRESPONSIVE. FOR THE WORK TO BE PERFORMED IN DIVISION 17, HUBER AND HOFFMAN LISTED A JOINT VENTURE, CONSISTING OF TWO RESPONSIBLE ELECTRICAL SUBCONTRACTORS. ADDITION, FOR THE SUBCONTRACTOR LISTING CATEGORY OF "PRECAST CONCRETE SKIN," REQUIRED IF TWO OF THE ALTERNATES ARE SELECTED, HUBER LISTED THE NAME OF A COMPANY FOR INSTALLATION WHICH THE CONTRACTING OFFICE IS UNABLE TO IDENTIFY. IN VIEW OF OUR OPINION THAT THE HUBER BID IS NONRESPONSIVE TO THE BUY AMERICAN ACT REQUIREMENTS, WE DO NOT FEEL IT IS NECESSARY TO CONSIDER THE RESPONSIVENESS OF THE HUBER BID IN THIS LATTER REGARD.

THE REGIONAL OFFICE REPORTS THAT THE BUILDING CONTROL AND MONITORING WORK (DIVISION 17) INVOLVES THE FURNISHING OF A PROTOTYPE SYSTEM TO INCLUDE USUAL BUILDING CONTROLS INTEGRATED WITH A CENTRAL MONITORING AND CONTROL SYSTEM DESIGNED TO PROVIDE ADDITIONAL SAFETY IN CASE OF FIRE OR OTHER EMERGENCY. TO ASSURE COORDINATION AMONG THE COMPONENTS OF THE SYSTEM, WHICH ARE NOT NOVEL, THE SPECIFICATION SET FORTH THE FOLLOWING CLAUSE:

CONTRACTOR QUALIFICATIONS

A. THE CONTROL AND MONITORING SYSTEMS CONTRACTOR SHALL HAVE BEEN IN BUSINESS AT LEAST FIVE YEARS, SHALL MANUFACTURE AT LEAST 40 PERCENT OF THE COMPONENTS OF THE ENTIRE SYSTEM, INCLUDING THE CENTRAL CONTROL CONSOLE, AND SHALL ACCEPT SINGLE RESPONSIBILITY FOR THE COMPLETE CONTROL AND MONITORING SYSTEMS ASSEMBLY AND INSTALLATION DESCRIBED HEREIN. THIS CONTRACTOR SHALL EMPLOY FACTORY-TRAINED ENGINEERS FULLY CAPABLE OF RENDERING TRAINING, INSTRUCTION, AND ROUTINE AND EMERGENCY MAINTENANCE SERVICE AND SHALL HAVE A LOCAL SERVICE ORGANIZATION CAPABLE OF MAINTAINING ALL THE EQUIPMENT PROVIDED IN THIS DIVISION 17.

THE LISTING OF AN ELECTRICAL SUBCONTRACTOR FOR THE CATEGORY IN QUESTION APPEARS TO BE UNDERSTANDABLE IN VIEW OF THE HISTORY OF SUCH WORK. THE REGIONAL OFFICE REPORTS, IN THIS REGARD, AS FOLLOWS:

THE CONTROL CATEGORY WAS INCLUDED IN THE LISTINGS TO AVOID OTHER PROBLEMS INHERENT IN SUBCONTRACTOR LISTING. CONTROL WORK IS NORMALLY A PART OF THE ELECTRICAL OR MECHANICAL SUBCONTRACT, AND IS FURTHER SUBCONTRACTED AT THE SECOND TIER. IT WOULD BE VERY RARE, IN THE USUAL CASE, FOR A GENERAL CONTRACTOR TO SUBCONTRACT DIRECTLY WITH THE CONTROLS CONTRACTOR. HERE, HOWEVER, BECAUSE OF THE SOPHISTICATED NATURE OF THE SYSTEM IT WAS CONSIDERED LIKELY THAT THE CONTROLS SUBCONTRACT WOULD BE AT THE FIRST TIER. THEREFORE, A CONTROLS CATEGORY WAS INCLUDED TO AVOID A DEFECTIVE LISTING OF MORE THAN ONE SUBCONTRACTOR FOR THE ELECTRICAL OR MECHANICAL CATEGORY.

PERINI-BAUGH AND MASSART (ITS LISTED SUBCONTRACTOR) ASSERT THAT THE LISTED JOINT VENTURE FOR DIVISION 17 WORK DOES NOT MEET THE EXPERIENCE AND PERCENTAGE MANUFACTURE REQUIREMENTS OF THE ABOVE-QUOTED CONTRACTOR QUALIFICATION CLAUSE. THE REGIONAL OFFICE AGREES WITH THIS ASSERTION. THEREFORE, IT IS ARGUED THAT THE LISTING IS DEFECTIVE AND REQUIRES REJECTION OF THE HOFFMAN BID. HOFFMAN COUNTERS WITH THE CLAIM THAT IT IS CUSTOMARY IN THE INDUSTRY AND PERMISSIBLE UNDER THE IFB TO SUBCONTRACT THE WORK, WHICH IT INTENDS TO DO WITH AN ADMITTEDLY RESPONSIBLE CONTROLS CONTRACTOR, WHICH TWO OTHER BIDDERS LISTED AS A SUBCONTRACTOR. HOFFMAN FURTHER CONTENDS THAT THE LISTED JOINT VENTURE QUALIFIES AS A MANUFACTURER.

THE REGIONAL OFFICE, AS CONCURRED IN BY YOUR GENERAL COUNSEL, URGES THAT THE SUBCONTRACTOR LISTING BY HUBER AND HOFFMAN WAS RESPONSIVE TO THE TERMS OF THE IFB, BUT PROPOSES TO REJECT THE USE OF THE LISTED JOINT VENTURE, AND PERMIT THE SUBSTITUTION OF A QUALIFIED FIRST-TIER SUBCONTRACTOR. ALSO, IT IS ARGUED THAT THE CONTRACTOR QUALIFICATION CLAUSE IS NOTHING MORE THAN A COMPETENCY OF BIDDER CLAUSE DEALING WITH MATTERS OF RESPONSIBILITY. THE REGIONAL OFFICE, IN SUPPORT THEREOF, POINTS TO THE FOLLOWING PARAGRAPH FROM THE SUBCONTRACTOR LISTING CLAUSE (SUBPARAGRAPH "J"):

SUBCONTRACTOR REJECTION: 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 OR WHO DOES NOT MEET THE REQUIREMENTS OF AN APPLICABLE SPECIALIST OR COMPETENCY OF BIDDER CLAUSE.

SIMILARLY, THE LISTING FORM CONTAINS THE FOLLOWING STATEMENT:

NOTE: THE LISTING OF AN INDIVIDUAL OR FIRM (WHETHER A SUBCONTRACTOR OR THE BIDDER) WHO DOES NOT MEET THE REQUIREMENTS OF THE SPECIALIST OR COMPETENCY OF BIDDERS CLAUSES IN THE SPECIFICATIONS, WHEREVER APPLICABLE, MAY BE GROUNDS FOR REJECTION OF THE BID.

FURTHER, THE REGIONAL OFFICE INVITES OUR ATTENTION TO GSPR 5B-2.404 70, WHICH STATES, IN PERTINENT PART, AS FOLLOWS:

WHEN AN INVITATION FOR BIDS CONTAINS THE LISTING OF SUBCONTRACTORS CLAUSE PRESCRIBED IN SEC 5B-2.202-70(E), BIDS SHALL BE REJECTED IF:

(C) A NAMED SUBCONTRACTOR DOES NOT MEET THE STANDARDS OF RESPONSIBILITY PRESCRIBED IN SEC 1-1.310-5, UNLESS THE CONTRACTING OFFICER FINDS THAT SUBSTITUTION IS JUSTIFIABLE UNDER THE CONDITIONS PRESCRIBED IN SEC 5B- 53.7010-3(A)(8), OR

(D) AN INDIVIDUAL OR FIRM NAMED ON THE LIST DOES NOT MEET THE SPECIFIED REQUIREMENTS OF AN APPLICABLE SPECIALIST OR COMPETENCY OF BIDDER CLAUSE, UNLESS THE CONTRACTING OFFICER FINDS THAT SUBSTITUTION IS JUSTIFIABLE UNDER THE CONDITIONS PRESCRIBED IN SEC 5B-53.7010 3(A)(9) OR THAT THE DEFICIENCY IN QUALIFICATIONS IS SO MINOR AS NOT TO BE CONSIDERED SUBSTANTIVE (E.G., A LACK OF ONE MONTH OF A REQUIRED 3 YEARS' EXPERIENCE).

THESE PORTIONS OF THE GSPR 5B-53.7010-3 CLAUSE REFERRED TO IN THE PRECEDING QUOTE ARE QUOTED BELOW:

(A) THE CONTRACTING OFFICER MAY PERMIT SUBSTITUTION OF A SUBCONTRACTOR FOR ONE NAMED IN A BID PURSUANT TO THE LISTING OF SUBCONTRACTORS PROVISION PRESCRIBED IN SEC 5B-2.202-70(E), IN UNUSUAL SITUATIONS, UPON SUBMISSION BY THE CONTRACTOR OR BIDDER OF A COMPLETE JUSTIFICATION THEREFOR. THE TERM "UNUSUAL SITUATIONS" INCLUDES (BUT IS NOT LIMITED TO) A SUBCONTRACTOR'S:

(8) FAILURE TO MEET ANY CRITERIA OF RESPONSIBILITY SET OUT IN SEC 1 1.310 -5, BUT ONLY WHEN THE CONTRACTING OFFICER, IN THE EXERCISE OF SOUND DISCRETION, FINDS THAT SUBSTITUTION FOR THIS CAUSE WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT (I.E., THAT IT WOULD NOT BE PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS AND THAT THE CONTRACTOR OR BIDDER HAS NOT ATTEMPTED TO CIRCUMVENT THE RESTRAINT ON BID SHOPPING BY LISTING A NONRESPONSIBLE SUBCONTRACTOR IN ORDER TO GAIN AN OPPORTUNITY TO BID SHOP PRIOR TO MAKING THE REQUESTED SUBSTITUTION); OR

(9) FAILURE TO MEET THE QUALIFICATIONS REQUIREMENTS OF AN APPLICABLE SPECIALIST OR COMPETENCY OF BIDDER CLAUSE, BUT ONLY WHEN THE CONTRACTING OFFICER, IN THE EXERCISE OF SOUND DISCRETION, AFTER DISCUSSION WITH THE CONTRACTOR OR BIDDER AND, IF APPROPRIATE, THE NAMED SUBCONTRACTOR, FINDS THAT SUBSTITUTION FOR THIS CAUSE WOULD BE IN THE BEST INTERESTS OF THE GOVERNMENT AS SPECIFIED IN SEC 5B-53.7010 3(A)(8).

(B) WHERE THE CONTRACTING OFFICER ASCERTAINS THAT A PROPOSED SUBSTITUTION IS JUSTIFIED, THE SUBSTITUTION SHALL BE AUTHORIZED AT NO INCREASE IN THE BID OR CONTRACT PRICE OR, IF THE PROPOSED SUBSTITUTE OFFERS THE CONTRACTOR OR BIDDER A LOWER PRICE THAN THE NAMED SUBCONTRACTOR, AT A REDUCTION IN THE BID OR CONTRACT PRICE.

OUR REVIEW OF THE RECORD, AS SUPPLEMENTED BY THE BRIEFS OF COUNSEL, LEADS US TO THE CONCLUSION THAT THE PROPOSED SUBSTITUTION OF A QUALIFIED FIRST- TIER SUBCONTRACTOR IS PERMISSIBLE UNDER THE TERMS OF THE INVITATION AND APPLICABLE REGULATIONS.

THE PRACTICE OF REJECTING A BID FOR FAILURE TO COMPLY WITH SUBCONTRACTOR LISTING REQUIREMENTS STEMS FROM OUR AGREEMENT (43 COMP. GEN. 206 (1963)) WITH YOUR ADMINISTRATION THAT SUCH LISTING REQUIREMENTS BE CONSIDERED MATERIAL INVITATION REQUIREMENTS IN ORDER TO CONTROL THE UNDESIRABLE PRACTICE OF BID SHOPPING BY PRIME CONTRACTORS. SEE 50 COMP. GEN. 839, 842 (1971). HOWEVER, WE BELIEVE THAT THE DEFECT IN THE LISTING OF THE JOINT VENTURE BY HOFFMAN DOES NOT MATERIALLY AFFECT THE RESPONSIVENESS OF ITS BID INSOFAR AS IT RELATES TO THE PRIMARY PURPOSE OF THE LISTING REQUIREMENT - ANTIBID SHOPPING.

THE INABILITY OF HOFFMAN'S PROPOSED SUBCONTRACTOR UNDER DIVISION 17 TO MEET EXPERIENCE AND MANUFACTURE REQUIREMENTS RELATES TO THE JOINT VENTURE'S RESPONSIBILITY. WE HAVE HELD THAT EXPERIENCE QUALIFICATION CLAUSES FACILITATE THE CONTRACTING OFFICER'S DETERMINATION OF RESPONSIBILITY INVOLVING THE CONSIDERATION OF ORGANIZATION, TECHNICAL EXPERIENCE, KNOWLEDGE, SKILLS, "KNOW-HOW," TECHNICAL EQUIPMENT AND FACILITIES. SEE 45 COMP. GEN. 4, 7 (1965).

SUCH BEING THE CASE, WE AGREE THAT THE INSTANT CONTRACTOR QUALIFICATION CLAUSE SHOULD BE REGARDED AS SIMILAR TO A COMPETENCY OF BIDDERS CLAUSE AND AS RELATING SOLELY TO THE RESPONSIBILITY OF LISTED SUBCONTRACTORS. THUS, THE FAILURE OF THE JOINT VENTURE LISTED BY HOFFMAN TO SATISFY CRITERIA NEED NOT BE REGARDED ADMINISTRATIVELY AS FATAL TO CONSIDERATION OF THE BID.

NO EVIDENCE HAS BEEN PRESENTED TO QUESTION THE GOOD FAITH LISTING BY HOFFMAN. AS WE STATED ABOVE, THE LISTING WAS UNDERSTANDABLE, AND IT IS SIGNIFICANT TO NOTE THAT TWO BIDDERS CHOSE TO LIST THE SAME JOINT VENTURE SUBCONTRACTOR. IN THIS REGARD, WE HAVE NO BASIS TO DISPUTE HOFFMAN'S STATEMENT THAT ITS BID WAS BASED UPON INFORMATION AND PROPOSALS OBTAINED FROM SECOND-TIER SUBCONTRACTORS INCLUDING THE CONTROLS SUBCONTRACTOR LISTED BY TWO OTHER BIDDERS AND CONSIDERED TO BE RESPONSIBLE BY THE REGIONAL OFFICE. MOREOVER, NONE OF THE PROTESTING PARTIES HAVE ESTABLISHED THAT SUBSTITUTION OF A QUALIFIED SUBCONTRACTOR FOR THE JOINT VENTURE PROPOSED FOR DIVISION 17 WORK WOULD BE PREJUDICIAL TO OTHER BIDDERS. THE REGIONAL OFFICE ON THIS POINT STATES THAT:

A NUMBER OF INDEPENDENT SOURCES HAVE FURNISHED US REPORTS AS TO THE VARIOUS SUBCONTRACTOR BIDS INVOLVING THE MECHANICAL, ELECTRICAL AND CONTROLS SUBCONTRACTS, AND COMBINATIONS THEREOF. FROM THESE WE HAVE DETERMINED THAT ANY DIFFERING INTERPRETATIONS OF THE SUBCONTRACTOR LISTING PROVISIONS, AS TO CONTROLS, COULD NOT HAVE AFFECTED THE RELATIVE STANDING OF THE BIDDERS. THEREFORE, PERMITTING THE SUBSTITUTION WOULD NOT BE PREJUDICIAL TO OTHER BIDDERS.

WE THEREFORE CONCLUDE THAT THE HOFFMAN BID IS RESPONSIVE TO THE SUBCONTRACTOR LISTING REQUIREMENTS OF THE IFB. AS REQUESTED, THE ENCLOSURES FORWARDED WITH THE GENERAL COUNSEL'S LETTER OF APRIL 4, 1972, ARE RETURNED.