B-158227, JUN. 22, 1966, 45 COMP. GEN. 829

B-158227, JUN. 22, 1966, 45 COMP. GEN. 829

CONTRACTS - SUBCONTRACTS - BID SHOPPING - SUBCONTRACTOR SUBSTITUTION AFTER AWARD THE FACT THAT A BIDDER ERRONEOUSLY LISTED A PROPOSED SUBCONTRACTOR UNDER THE REASONABLE ASSUMPTION THE SUBCONTRACTOR WAS QUALIFIED TO PERFORM AND THAT HE ESTIMATED THE COST OF THE SUBCONTRACTING WORK DOES NOT REQUIRE CANCELLATION OF THE CONTRACT AWARDED, AND THE NAME OF AN ACCEPTABLE SUBCONTRACTOR MAY BE SUBSTITUTED, THE RECORD EVIDENCING NO INTENT--- A QUESTION OF MAJOR SIGNIFICANCE--- BY THE CONTRACTOR TO BID SHOP AFTER AWARD, BUT AN INTENT TO COME INTO AGREEMENT WITH THE LISTED SUBCONTRACTOR, AND THAT RATHER THAN GAINING A WINDFALL, THE CONTRACTOR WILL INCUR A MONETARY DISADVANTAGE, WORKSHEETS SHOWING A LESSER AMOUNT FOR THE SUBCONTRACTING THAN WAS QUOTED BY A SUBCONTRACTOR PRIOR TO BID OPENING BUT TOO LATE FOR BID CHANGE, AND ABSENT A TAINT OF BID SHOPPING, AND A REQUIREMENT THAT A BIDDER MUST HAVE A COMMITMENT OR QUOTATION FROM A PROPOSED SUBCONTRACTOR PRIOR TO AWARD, THE SUBCONTRACTOR LISTING OBJECTIVE TO PREVENT BID SHOPPING CAN BE ACHIEVED WITHOUT RESORTING TO CONTRACT CANCELLATION, EVEN THOUGH AWARD WAS MADE WITHOUT THE BENEFIT OF SUBSEQUENTLY ADDUCED INFORMATION.

TO HUDSON AND CREYKE, JUNE 22, 1966:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 14, 1966, AND SUBSEQUENT COMMUNICATIONS, CONCERNING THE PROTEST OF CARPENTER BROTHERS, INC., AGAINST AWARD OF A CONTRACT TO MIKE BRADFORD AND COMPANY, INC., FOR CONSTRUCTION OF THE SOUTHERN UTILIZATION RESEARCH LABORATORY, NEW ORLEANS, LOUISIANA, GSA PROJECT 16076.

THE BIDS WERE OPENED AT 3:00 P.M., CST, ON DECEMBER 2, 1965, AND, OF THE SIX BIDS RECEIVED, THE LOW BID WAS SUBMITTED BY MIKE BRADFORD AND COMPANY, INC., MIAMI, FLORIDA, IN THE AMOUNT OF $1,139,000, REPRESENTING A BASE BID OF $989,000 AND $150,000 ADDITIONAL FOR ALTERNATE "A.' THE SECOND LOW BID WAS THAT OF CARPENTER BROTHERS, INC., DALLAS, TEXAS, IN THE AMOUNT OF $1,189,000, REPRESENTING A BASE BID OF $1,054,000 PLUS $135,000 FOR ALTERNATE "A.'

PURSUANT TO SECTION 5B-2.202-70 OF THE FEDERAL PROCUREMENT REGULATIONS, THE SPECIAL CONDITIONS OF THE INVITATION FOR BIDS INCLUDED THE FOLLOWING PROVISIONS:

2-09 LISTING OF SUBCONTRACTORS

A. FOR EACH OF THE CATEGORIES OF WORK CONTAINED IN THE LIST INCLUDED AS PART OF THE BID FORM, THE BIDDER SHALL SUBMIT THE NAME AND ADDRESS OF THE FIRM TO WHOM HE PROPOSES TO SUBCONTRACT THE WORK. THE LIST MAY BE SUBMITTED WITH THE BID OR SEPARATELY BY TELEGRAPH, MAIL, OR OTHERWISE. SENT SEPARATELY, THE ENVELOPE MUST BE SEALED, IDENTIFIED AS TO CONTENT, AND ADDRESSED IN THE SAME MANNER AS PRESCRIBED FOR SUBMISSION OF BIDS. 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 PURPOSE OF THIS REQUIREMENT SHALL MEAN THE INDIVIDUAL OR FIRM WITH WHOM THE BIDDER PROPOSES TO ENTER INTO A SUBCONTRACT FOR A LISTED CATEGORY OF WORK OR MATERIAL. IF SUBCONTRACTS ARE TO BE MADE WITH MORE THAN ONE SUBCONTRACTOR FOR A CATEGORY OF WORK OR MATERIAL, EACH PROPOSED SUBCONTRACTOR SHALL BE LISTED WITH A STATEMENT OF THE SERVICE TO BE FURNISHED BY EACH.

C. THE BIDDER SHALL LIST HIMSELF IF IT IS HIS INTENTION TO PERFORM ONE OR MORE OF THE LISTED CATEGORIES OF WORK. IN THIS CASE, ALL PERSONNEL PERFORMING SUCH WORK AT THE SITE SHALL BE CARRIED ON HIS OWN PAYROLL. EQUIPMENT IS LEASED WITH OPERATORS, THE OPERATORS NEED NOT BE CARRIED ON BIDDER'S PAYROLL.

D. NOTHING CONTAINED IN THE CLAUSE SHALL BE CONSTRUED AS CHANGING THE PERCENTAGE REQUIREMENT IN THE GENERAL CONDITIONS FOR THE CONTRACTOR TO PERFORM WORK WITH HIS OWN FORCES.

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

F. NO 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.

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; HE SHALL HAVE THE RIGHT TO REQUIRE ANY INFORMATION CONCERNING THE COST OF PERFORMANCE OF THIS CONTRACT BY ANY SUBCONTRACTOR LISTED OR PROPOSED AS A SUBSTITUTE FOR A LISTED SUBCONTRACTOR, AS WELL AS THE RIGHT TO REQUIRE ANY OTHER INFORMATION HE DEEMS NECESSARY CONCERNING ANY LISTED SUBCONTRACTOR OR SUBCONTRACTOR PROPOSED AS A SUBSTITUTE. IMPOSITION OF ANY REQUIREMENTS UNDER THIS SUBPARAGRAPH SHALL NOT GIVE RISE TO ANY COURSE 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 EITHER (1) TO IDENTIFY THE SUBCONTRACTORS AS REQUIRED BY SUBPARAGRAPH A., OR (2) TO COMPLY WITH SUBPARAGRAPH C., THE BID WILL BE REJECTED AS NONRESPONSIVE TO THE INVITATION.

J. IN ORDER TO EFFECTIVELY IMPLEMENT THE OBJECTIVES OF THE FOREGOING PROVISIONS AND TO ASSURE 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.

BRADFORD LISTED ELECTROLINE NATIONAL, INC., A SUBSIDIARY OF BRADFORD, AS THE PROPOSED SUBCONTRACTOR FOR THE ELECTRICAL WORK. HOWEVER, ON DECEMBER 13, 1965, FISCHBACH AND MOORE, INC., ELECTRICAL CONTRACTORS, ADDRESSED THE FOLLOWING LETTER TO MR. ROBERT D. CARPENTER OF CARPENTER BROTHERS:

AS YOU ARE PROBABLY AWARE, PARAGRAPH 2-09 OF THE SPECIAL CONDITIONS OF THE SPECIFICATIONS FOR THE ABOVE JOB REQUIRE THE GENERAL CONTRACTOR TO NAME HIS SUBCONTRACTORS. YOU MIGHT BE INTERESTED TO KNOW THAT MIKE BRADFORD AND COMPANY, WHO ARE THE APPARENT LOW BIDDERS, OFFERED TO JOB TO US. THE PRICE OFFERED WAS CONSIDERABLY BELOW THE FIGURE WE QUOTED YOU SO WE COULD NOT ACCEPT THEIR OFFER. THIS SEEMS STRANGE, SINCE WE DID NOT QUOTE THEM AT BID TIME. THEY COULD NOT HAVE USED OUR NAME IN THEIR PROPOSAL.

UPON RECEIPT OF THIS LETTER CARPENTER BROTHERS, BY LETTER OF DECEMBER 14, 1965, TO GSA, SUPPLEMENTED BY YOUR LETTER OF DECEMBER 23, 1965, TO THIS OFFICE, PROTESTED AWARD TO BRADFORD ON THE GROUNDS OF NONCOMPLIANCE WITH THE REQUIREMENTS OF SECTION 2-09 OF THE SPECIAL CONDITIONS OF THE IFB, FOR THE ALLEGED REASON THAT BRADFORD HAD EVERY INTENTION, IN THE EVENT OF AWARD, OF BID SHOPPING ON THE ELECTRICAL AND POSSIBLY THE MECHANICAL WORK UNDER THE CONTRACT, AND NO INTENTION OF USING ELECTROLINE FOR THE ELECTRICAL WORK, UNLESS IT WAS NOT POSSIBLE TO OBTAIN A BETTER PRICE ELSEWHERE. THIS PROTEST WAS DENIED BY OUR DECISION OF JANUARY 28, 1966, B -158227, FOR THE REASONS STATED THEREIN, NAMELY, THAT (1) BRADFORD'S BID WAS RESPONSIVE ON ITS FACE; (2) THE IFB PROVIDES A PROCEDURE FOR SUBSTITUTION OF SUBCONTRACTORS, WHERE JUSTIFIED, AND UPON APPROVAL OF THE CONTRACTING OFFICER; AND (3) THE FACT THAT ANOTHER ELECTRICAL BID WAS SOLICITED AFTER BID OPENING WAS NOT, OF ITSELF, PROOF OF BAD FAITH.

AWARD WAS THEREFORE MADE TO MIKE BRADFORD AND COMPANY ON FEBRUARY 11, 1966, AND ON THE DAY OF AWARD THE CONTRACTING OFFICER WAS ADVISED BY MR. RAY E. PUTFARK, MANAGING DIRECTOR OF THE PILE DRIVING CONTRACTORS ASSOCIATION OF NEW ORLEANS, INC., AND EXECUTIVE DIRECTOR OF THE CONSTRUCTION INDUSTRY ASSOCIATION OF NEW ORLEANS, INC., THAT BELDEN CONCRETE PRODUCTS, INC., WHICH WAS LISTED BY BRADFORD AS THE PROPOSED SUBCONTRACTOR TO DRIVE THE FOUNDATION PILES, WAS A MANUFACTURER OF PRECAST CONCRETE PRODUCTS AND NOT A PILE DRIVING CONTRACTOR. IMMEDIATELY THEREAFTER THE PILE DRIVING CONTRACTORS ASSOCIATION REQUESTED REVOCATION OF THE CONTRACT WITH BRADFORD, AND YOU RENEWED YOUR PROTEST AGAINST AWARD TO BRADFORD BECAUSE OF APPARENT BAD FAITH IN LISTING BELDEN AND BID SHOPPING FOR PERFORMANCE OF THE PILE DRIVING WORK.

THE RECORD SUBMITTED BY GSA SHOWS THAT MIKE BRADFORD AND COMPANY HAD PREPARED ITS BID, LISTING BELDEN AS A SUBCONTRACTOR, SUBSTANTIALLY IN ADVANCE OF THE DECEMBER 2 BID OPENING DATE, SINCE THE BID WAS RECEIVED IN THE CONTRACTING OFFICE ON NOVEMBER 29. FURTHER, REPRESENTATIVES OF BRADFORD WERE IN NEW ORLEANS JUST PRIOR TO BID OPENING AND AGAIN DURING THE WEEK OF FEBRUARY 7, 1966, JUST PRIOR TO AWARD, SOLICITING BIDS FOR THE PILE DRIVING WORK FROM MEMBERS OF THE PILE DRIVING CONTRACTORS ASSOCIATION, BUT ON NEITHER OCCASION WAS A BID SOLICITED FROM BELDEN. THE FIRST CONTACT WITH BELDEN BY A REPRESENTATIVE OF BRADFORD APPEARS TO HAVE ON FEBRUARY 23, 1966. THE RECORD ALSO DISCLOSES THAT MR. EDWARD P. EDNEY JR., THE CONTRACTING OFFICER'S REPRESENTATIVE, CONTACTED BELDEN BY TELEPHONE ON OR ABOUT DECEMBER 6, 1965, TO CHECK ON THE FIRM'S TECHNICAL QUALIFICATIONS, AND TALKED WITH MR. RAY SCHULER, ESTIMATOR FOR BELDEN. MR. EDNEY ADVISED MR. SCHULER THAT BELDEN HAD BEEN LISTED BY THE APPARENT LOW BIDDER, MIKE BRADFORD AND COMPANY,"AS THEIR PROPOSED PILING SUBCONTRACTOR," BUT IN THE COURSE OF THE CONVERSATION IT APPARENTLY WAS NEVER UNDERSTOOD BY MR. EDNEY THAT BELDEN WAS NOT A PILE DRIVING CONTRACTOR, OR UNDERSTOOD BY MR. SCHULER THAT BELDEN WAS EXPECTED TO DO THE PILE DRIVING.

IN EXPLANATION OF ITS ACTION IN LISTING BELDEN AS THE PILE DRIVING SUBCONTRACTOR, BRADFORD'S GENERAL MANAGER, MR. ROBERT COTTRELL, HAS STATED THAT IT WAS ASSUMED, FROM ADVERTISING AND PREVIOUS EXPERIENCE, THAT BELDEN WAS A PILE DRIVING CONTRACTOR AND MR. COTTRELL INFERS THAT THE ONLY FIRM BID FOR THIS WORK PRIOR TO BID OPENING WAS RECEIVED BY TELEPHONE FROM GURTLER, HEBERT COMPANY IN BRADFORD'S MIAMI OFFICE 30 MINUTES BEFORE BID OPENING, WHICH WAS TOO LATE TO CHANGE THE BID, IN THAT IT HAD ALREADY BEEN SENT TO DALLAS. IN A LETTER DATED MARCH 5, 1966, TO THE CONTRACTING OFFICER, MR. COTTRELL FURTHER STATED AS FOLLOWS:

UPON RECEIPT OF AWARD OF CONTRACT I CONTACTED MR. BELDEN, AT WHICH TIME I WAS INFORMED THAT AT THE REQUEST OF THE PILE DRIVERS ASSOCIATION OF NEW ORLEANS, A LETTER PREPARED BY THE ASSOCIATION, DIRECTED TO THE WASHINGTON OFFICE OF THE GENERAL SERVICES ADMINISTRATION, STATING THAT BELDEN CONCRETE PRODUCTS, INC. WERE NOT IN THE PILE DRIVING BUSINESS AND WERE SUPPLIERS ONLY, HAS BEEN SIGNED BY MR. BELDEN AND FORWARDED TO WASHINGTON, D.C. HE SAID, DURING THE COURSE OF THIS CONVERSATION, THAT HAD HE BEEN CONTACTED PREVIOUSLY, HE WOULD HAVE WORKED WITH US, AND THAT EVEN AT THIS TIME, HE WOULD STILL TRY TO ARRANGE TO PERFORM THIS WORK FOR US AS A SUB- CONTRACTOR. HE FURTHER STATED HE WOULD REVIEW THE PLANS AND SPECIFICATIONS AND WOULD CALL ME THE FOLLOWING DAY GIVING ME HIS DECISION. THE FOLLOWING DAY, MR. CARL JOHNSON, PROJECT MANAGER, AND MR. R. S. HINES WERE INFORMED BY MR. BELDEN THAT HE WOULD BE UNABLE TO PERFORM IN THE CAPACITY AS A SUB-CONTRACTOR ON OUR PROJECT. MR. R. L. BELDEN, PRESIDENT OF BELDEN CONCRETE PRODUCTS, VERIFIED THAT HE WAS FIRST CONTACTED ON FEBRUARY 23, 1966, BY TELEPHONE FROM FLORIDA, APPARENTLY BY MR. COTTRELL, AND THAT HE ADVISED MR. COTTRELL THAT HIS FIRM WAS NOT A PILE DRIVING CONTRACTOR BUT THAT HE WOULD INVESTIGATE THE MATTER AND GET BACK IN TOUCH WITH HIM. MR. BELDEN LATER ADVISED MR. CARL JOHNSON, OF THE BRADFORD COMPANY, THAT HE COULD NOT DO THE JOB. BELDEN HAD PREVIOUSLY ADVISED THIS OFFICE BY LETTER OF FEBRUARY 19, 1966, THAT IT WAS NOT A PILE DRIVING CONTRACTOR AND HAD NO INTENTION OF ENTERING INTO AN AGREEMENT WITH BRADFORD FOR THE WORK.

GSA'S INITIAL REPORT OF APRIL 12, 1966, REFERS TO BRADFORD'S RECEIPT OF THE GURTLER, HEBERT BID 30 MINUTES BEFORE BID OPENING AND SUGGESTS THAT IN THE ABSENCE OF ANY EVIDENCE THAT BRADFORD WAS AWARE THAT BELDEN WAS NOT A PILE DRIVING CONTRACTOR, IT APPEARS THAT BRADFORD PURSUED THE ONLY COURSE AVAILABLE TO HIM, IF HE WANTED TO BE CERTAIN THAT HIS BID WAS RECEIVED BY GSA BEFORE OPENING, NAMELY, THAT HE MADE HIS OWN ESTIMATE OF COST OF THE PILING WORK AND LISTED AS HIS SUBCONTRACTOR A NEW ORLEANS FIRM WHOM HE HAD REASONABLE GROUNDS TO BELIEVE WAS A PILE DRIVING SUBCONTRACTOR. HOWEVER, ON MAY 27, 1966, WE WERE FURNISHED BY MR. PUTFARK WITH A COPY OF THE SOUTHERN BELL TELEPHONE AND TELEGRAPH COMPANY'S RECORD OF THE ABOVE CALL SHOWING THAT GURTLER, HEBERT CALLED BRADFORD AT 11:34 A.M., CST, ON DECEMBER 2, 1965, WHICH WAS 3 HOURS AND 26 MINUTES BEFORE BID OPENING. ALSO, YOU HAVE CALLED ATTENTION TO A TELEGRAPHIC MODIFICATION BY BRADFORD, REDUCING ITS BASE BID BY $496,000 AND INCREASING ALTERNATE "A" BY $90,000, WHICH TELEGRAM RECEIVED CONSIDERATION IN MAKING THE AWARD, AND WHICH WAS SENT AT 1:25 P.M., CST, ON DECEMBER 2, 1965, OR 1 HOUR AND 51 MINUTES AFTER RECEIPT OF THE CALL FROM GURTLER, HEBERT, AND WHICH YOU CONTEND COULD HAVE INCLUDED A SUBSTITUTION OF GURTLER, HEBERT FOR BELDEN AND ANY NECESSARY ADDITIONAL ADJUSTMENT OF THE BID PRICE. THE RECORD ALSO REVEALS THAT BIDS FOR THE PILE DRIVING WORK WERE SUBMITTED TO BRADFORD ON DECEMBER 2, 1965, BY BINNINGS CONSTRUCTION COMPANY AND BY S. K. WHITTY AND COMPANY, THE FORMER BY TELEGRAM AND THE LATTER BY TELEPHONE.

ADDITIONALLY, GSA STATES ITS BELIEF THAT THE QUESTION OF INTENT IS OF MAJOR SIGNIFICANCE AND THAT, WHILE BRADFORD'S INTENTION TO SUBCONTRACT THE PILE DRIVING TO BELDEN IS UNSUPPORTED BY AN OFFER FROM BELDEN TO BRADFORD PRIOR TO SUBMISSION OF THE BID, THE INTENT IS SUPPORTED BY SUBSEQUENT EFFORTS OF BRADFORD TO COME INTO AGREEMENT WITH BELDEN FOR PERFORMANCE OF THE WORK. GSA FURTHER BELIEVES THAT ITS PROCEDURES WITH RESPECT TO AUTHORIZING SUBSTITUTIONS ARE ADEQUATE TO ENSURE THAT THE OBJECTIVE OF PREVENTING BID SHOPPING CAN BE ACHIEVED WITHOUT RESORT TO THE DRASTIC ACTION OF CANCELING OR REVOKING THE CONTRACT AND THAT SINCE GURTLER, HEBERT'S PRICE FOR THE PILE DRIVING WAS $46,484, WHEREAS BRADFORD'S WORKSHEETS SHOW THAT THE AMOUNT OF $37,440 WAS INCLUDED FOR THIS CATEGORY OF WORK, SUBSTITUTION APPARENTLY WOULD NOT RESULT IN A WINDFALL TO BRADFORD AT THE EXPENSE OF THE GOVERNMENT OR ANY SUBCONTRACTOR AND NO TAINT OF BID SHOPPING IS PERCEIVED IN THE REQUEST FOR SUBSTITUTING GURTLER, HEBERT FOR BELDEN. IN SUPPORT OF ITS RECOMMENDATION THAT BRADFORD BE ALLOWED TO PROCEED, GSA REFERS TO 39 COMP. GEN. 503, WHICH INVOLVED AN ERRONEOUS EVALUATION BY THE CONTRACTING OFFICER RESULTING IN AWARD TO OTHER THAN THE LOW BIDDER, BUT IT WAS CONCLUDED THAT THE BID WAS RESPONSIVE, THAT A COURT WOULD BE LIKELY TO HOLD THAT ITS ACCEPTANCE IN GOOD FAITH BROUGHT INTO EXISTENCE A VALID OBLIGATION BINDING ON THE PARTIES, AND THAT SINCE THE COMPANY RECEIVING THE AWARD WAS REPORTED TO HAVE INCURRED COSTS IN THE ESTIMATED AMOUNT OF $14,500 IN PREPARING FOR PRODUCTION, IT WOULD BE IN THE BEST INTEREST OF THE GOVERNMENT TO ALLOW THE CONTRACT TO STAND. REFERENCE IS ALSO MADE BY GSA TO 40 COMP. GEN. 339, WHERE AWARDS WERE MADE TO OTHER THAN THE LOWEST BIDDERS BECAUSE OF A QUESTIONABLE DETERMINATION OF NONRESPONSIBILITY BASED ON CRITERIA NOT SET FORTH IN THE INVITATION, AND WHILE THERE WAS CONSIDERABLE ADDITIONAL COST TO THE GOVERNMENT AND WE EXPRESSED CONCERN OVER THE FAILURE TO FOLLOW PROPER PROCUREMENT PRACTICES, WE DECIDED NOT TO DISTURB THE AWARDS MADE.

YOU AGREE WITH GSA THAT THE QUESTION OF INTENT IS OF MAJOR SIGNIFICANCE AND IT IS YOUR CONTENTION THAT IT IS IMPLICIT IN THE SUBCONTRACTOR LISTING REQUIREMENT, AND IN RECENT DECISIONS OF THIS OFFICE, THAT THERE BE AN AGREEMENT, PRIOR TO SUBMISSION OF BIDS, BETWEEN THE BIDDER AND THE PROPOSED SUBCONTRACTOR TO DO THE WORK FOR WHICH THE SUBCONTRACTOR IS LISTED BY THE BIDDER; THAT THIS AGREEMENT IS NECESSARY TO ESTABLISH THE REQUIRED INTENT OF THE BIDDER TO USE THE LISTED SUBCONTRACTOR FOR THE LISTED WORK; AND THAT OTHERWISE THE REQUIREMENT TO LIST SUBCONTRACTORS IS MEANINGLESS. YOU POINT OUT FURTHER THAT BRADFORD NOT ONLY HAD NO AGREEMENT WITH BELDEN BUT DID NOT EVEN CONTACT BELDEN TO SEE IF HE COULD DO THE WORK, WHICH EASILY COULD AND SHOULD HAVE BEEN DONE AND WHICH WOULD HAVE ELIMINATED THE NEED FOR ANY ASSUMPTIONS IN THIS REGARD.

IT IS YOUR POSITION THAT THE DECISIONS OF THIS OFFICE CITED ABOVE ARE DISTINGUISHABLE FROM THE PRESENT CASE IN THAT THE COMPTROLLER GENERAL WAS INFLUENCED IN THE CITED CASES BY THE FACT THAT WORK WAS SUBSTANTIALLY UNDER WAY AND THERE WOULD BE CONSIDERABLE COST TO THE GOVERNMENT, AT LEAST IN THE ONE CASE, IF THE CONTRACTORS WERE CHANGED, WHEREAS WORK WAS SUSPENDED PROMPTLY IN THE PRESENT CASE AND BRADFORD COULD NOT YET HAVE INCURRED SUBSTANTIAL COSTS. YOU SUGGEST FURTHER THAT THE AWARDS IN THE CITED CASES WERE MADE BECAUSE OF GOVERNMENT ERROR AND NOT THROUGH THE ACTIONS OF THE SUCCESSFUL BIDDERS, WHEREAS THE PRESENT ERRONEOUS AWARD WAS DUE PRIMARILY TO THE FACT THAT BRADFORD'S NONCOMPLIANCE WITH THE BIDDING REQUIREMENT INDUCED THE AWARD.

IN ITS SUPPLEMENTAL REPORT OF MAY 18, 1966, GSA STATES THAT THE BRADFORD BID WAS NOT FULLY RESPONSIVE TO THE SUBCONTRACTOR LISTING REQUIREMENTS OF THE INVITATION, BUT THAT THIS DEFECT WAS NOT DISCOVERED PRIOR TO AWARD; THAT IN AWARDING THE CONTRACT TO BRADFORD, GSA MADE A DETERMINATION AS TO THE RESPONSIBILITY OF THE BIDDER AND THE RESPONSIVENESS OF THE BID ON THE BASIS OF INFORMATION AVAILABLE AT THE TIME; AND THAT THE ONLY QUESTION APPARENTLY PRESENTED AT THIS TIME IS WHETHER THE AWARD SHOULD BE PERMITTED TO STAND.

THE PURPOSE OF THE SUBCONTRACTOR LISTING REQUIREMENT, AS STATED BY GSA, IS PREVENTION OF BID SHOPPING, FROM WHICH THE SUCCESSFUL BIDDER SEEKS TO BENEFIT AT THE EXPENSE OF SUBCONTRACTORS AND THE GOVERNMENT BY INDUCING A POTENTIAL SUBCONTRACTOR TO PERFORM WORK AT A PRICE LESS THAN THE PRICE WHICH WAS INITIALLY PROPOSED FOR PERFORMANCE OF THE WORK AND WHICH PRESUMABLY FORMED THE BASIS FOR THE SUCCESSFUL BIDDER'S BID PRICE TO THE GOVERNMENT. IT REMAINS THE VIEW OF GSA, IN THE PARTICULAR CIRCUMSTANCES OF THIS CASE, THAT ALTHOUGH AN AWARD WAS MADE WITHOUT BENEFIT OF ALL THE INFORMATION ADDUCED SUBSEQUENT TO AWARD, THE SUBCONTRACTOR LISTING OBJECTIVE CAN STILL BE ACHIEVED WITHOUT RESORT TO CANCELLATION OF THE CONTRACT, AND THAT BRADFORD, RATHER THAN GAINING AN ADVANTAGE FROM ITS DEFECTIVE SUBCONTRACTOR LISTING, WILL INCUR A MONETARY DISADVANTAGE IF THE CONTRACT IS ALLOWED TO STAND, AND NEITHER THE GOVERNMENT, NOR THE OTHER BIDDERS, NOR THE PILING SUBCONTRACTORS WILL HAVE SUFFERED ANY DETRIMENT. THE DISADVANTAGE REFERRED TO IS THE DIFFERENCE BETWEEN THE SUM OF $37,440 SHOWN BY BRADFORD'S WORKSHEETS AS HAVING BEEN INCLUDED IN ITS BID PRICE FOR THE COST OF THE PILING WORK AND THE SUM OF $46,484 BID BY GURTLER, HEBERT FOR THIS WORK. IN REAFFIRMING ITS RECOMMENDATION THAT THE AWARD NOT BE OVERTURNED, GSA (1) NOTES A STATEMENT IN THE APRIL 23 LETTER FROM THE PILE DRIVING CONTRACTORS ASSOCIATION WHICH PURPORTEDLY REFERS TO "AN AGREEMENT FOR THE PAST FEW YEARS THAT MEMBERS WILL REFRAIN FROM SUBMITTING OFFERS TO PRIME CONTRACT BIDDERS UNTIL THREE HOURS BEFORE BID OPENING; " AND (2) STATES THAT SUCH A PRACTICE MAKES COMPLIANCE WITH THE SUBCONTRACTOR LISTING REQUIREMENT EXCEEDINGLY DIFFICULT, PERHAPS IMPOSSIBLE, FOR THOSE PRIME CONTRACT BIDDERS WHO DO NOT MAINTAIN A REPRESENTATIVE IN THE LOCALITY, THAT TO THAT EXTENT THE PRACTICE WOULD TEND TO REDUCE COMPETITION, AND THAT SINCE THE PRACTICE MAY HAVE CONTRIBUTED TO THE PRESENT SITUATION,THEY ARE LESS INCLINED TO FAVOR CANCELLATION THAN THEY MIGHT BE UNDER DIFFERENT CIRCUMSTANCES.

IN YOUR LETTER OF MAY 26, 1966, YOU CONTEND THAT SINCE BRADFORD'S BID WAS ADMITTEDLY NOT FULLY RESPONSIVE TO THE INVITATION, THE AWARD SHOULD NOT BE PERMITTED TO STAND. ADDITIONALLY, YOU POINT OUT THAT THE AGREEMENT OF THE MEMBERS OF THE PILE DRIVING CONTRACTORS ASSOCIATION IS NOT, AS STATED BY GSA, TO REFRAIN FROM SUBMITTING OFFERS UNTIL 3 HOURS BEFORE BID OPENING, BUT TO SUBMIT PRICES "NO LATER" THAN 3 HOURS PRIOR TO OPENING, AND THAT THE PURPOSE OF THIS AGREEMENT IS TO ASSURE THAT BIDDING PRIMES WILL RECEIVE THE SUBCONTRACTOR'S PRICES IN TIME TO MAKE ANY NECESSARY CHANGES IN THE BID ITSELF IF THEY HAVE A REPRESENTATIVE AT THE SCENE OF THE OPENING, OR TO MAKE AMENDMENTS BY TELEGRAM IF THEY DO NOT. YOU FURTHER SUGGEST THAT THE SUBMISSION OF PRICES BY SUBCONTRACTORS ONLY A FEW HOURS PRIOR TO BID OPENING IS ONE OF THE REALITIES OF GOVERNMENT CONTRACTING, THAT ALL BIDDERS ON THE PRIME CONTRACT ARE OPERATING, UNDER THE SAME CONDITIONS, AND THAT THERE IS NOTHING PECULIAR ABOUT THE PARTICULAR CIRCUMSTANCES OF THIS CASE WHICH WOULD JUSTIFY SPECIAL CONSIDERATION. CONCLUSION, YOU REPEAT THAT THE OVERRIDING CONSIDERATION IS THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM, WHICH WOULD BE VIOLATED BY PERMITTING BRADFORD TO KEEP THE JOB. IN THIS YOU ARE JOINED BY THE PILE DRIVING CONTRACTORS ASSOCIATION OF NEW ORLEANS, AND APPARENTLY BY OTHER INTERESTED CONTRACTORS' ASSOCIATIONS.

THE PROCEDURE REQUIRING BIDDERS ON CERTAIN GSA 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. STATED THEREIN, HEARINGS HAD PREVIOUSLY BEEN HELD ON PROPOSED FEDERAL LEGISLATION REQUIRING THE LISTING OF SUBCONTRACTORS, AND, WHILE THESE BILLS FAILED OF PASSAGE, THE STATEMENTS BY VARIOUS NATIONAL ASSOCIATIONS OF ELECTRICAL AND MECHANICAL SPECIALTY CONTRACTORS AND BY OFFICIALS OF MEMBER ORGANIZATIONS WERE TO THE EFFECT THAT REQUIRING THE LISTING OF SUBCONTRACTORS WOULD BE VERY HELPFUL IN ELIMINATING BID SHOPPING AND WOULD INCREASE COMPETITION, SINCE IT WOULD ENCOURAGE SUBBIDS FROM THAT SUBSTANTIAL NUMBER OF CONTRACTORS WHO HAD NOT BEEN BIDDING BECAUSE THEY HAD NO ASSURANCE OF RECEIVING THE CONTRACT EVEN IF THEIRS WAS THE LOWEST RESPONSIBLE BID. THE PRINCIPAL OBJECTIVES, THEREFORE, IN ADDITION TO SECURING A QUALITY JOB FOR THE GOVERNMENT, ARE TO PROTECT THE SUBCONTRACTORS FROM HAVING THEIR BID PRICES BEATEN DOWN AND TO GIVE THE ORIGINAL LOW SUBCONTRACTOR SOME GUARANTEE OF RECEIVING THE CONTRACT.

SECTION 2-09 (B) OF THE SPECIAL CONDITIONS OF THE IFB DEFINES "SUBCONTRACTOR" AS THE INDIVIDUAL OR FIRM WITH WHOM THE BIDDER PROPOSES TO ENTER INTO A SUBCONTRACT FOR A LISTED CATEGORY OF WORK. SECTION 2 09 (J) REQUESTS BIDDERS TO URGE SUBCONTRACTORS TO SUBMIT A PROPOSAL, WITH OR WITHOUT PRICE, AT LEAST 48 HOURS IN ADVANCE OF THE BID OPENING, OUTLINING IN DETAIL THE WORK THEY PROPOSE TO DO. HOWEVER, THERE IS NO REQUIREMENT THAT A BIDDER MUST HAVE A COMMITMENT OR A QUOTATION FROM PROPOSED SUBCONTRACTOR, NOR ARE WE AWARE OF ANY DECISIONS OF THIS OFFICE WHICH SPECIFICALLY SO HOLD. ADDITIONALLY, IT DOES APPEAR THAT THE WORK CATEGORY "FOUNDATION (PILES)," FOR WHICH BELDEN WAS LISTED AS THE SUBCONTRACTOR, DID INCLUDE BOTH PILING AND PILE DRIVING, AND FROM THE PUBLICITY GIVEN BELDEN FOR LARGE JOBS ON WHICH THE PILING WAS SUPPLIED, IT MIGHT REASONABLY HAVE BEEN ASSUMED THAT BELDEN WAS A PILE DRIVING CONTRACTOR. IN ANY EVENT, THE RECORD DOES NOT ESTABLISH THAT MIKE BRADFORD AND COMPANY DID NOT, AT THE TIME IT SUBMITTED ITS BID, PROPOSE TO USE BELDEN AS THE SUBCONTRACTOR FOR PILINGS AND PILE DRIVING, OR THAT IT WOULD NOT HAVE USED BELDEN IF BELDEN HAD SUBMITTED A SUBCONTRACT BID PRICE AND BEEN APPROVED BY THE CONTRACTING AGENCY. IN THIS CONNECTION, WE ARE IMPRESSED BY THE FACT THAT THE CONTRACTING OFFICER, HAD HE BEEN PROPERLY INFORMED PRIOR TO AWARD, COULD HAVE FOUND BELDEN TO BE NONRESPONSIBLE UNDER 2-09 (G) OF THE SPECIAL CONDITIONS, AND COULD THEN HAVE PERMITTED MIKE BRADFORD TO SUBSTITUTE AN ACCEPTABLE SUBCONTRACTOR, SUCH AS GURTLER, HEBERT COMPANY. SEE 45 COMP. GEN. 84. IN VIEW THEREOF, AND SINCE SUCH OVERSIGHT AS MAY HAVE OCCURRED WAS COMPOUNDED BY THE CONTRACTING AGENCY IN FAILING TO ASCERTAIN, WHILE CHECKING BELDEN'S TECHNICAL QUALIFICATIONS ON OR ABOUT DECEMBER 6, 1965, THAT BELDEN WAS NOT A PILE DRIVING CONTRACTOR, WE ARE UNABLE TO CONCLUDE THAT THE ERRONEOUS LISTING OF BELDEN AS THE SUBCONTRACTOR FOR "FOUNDATION (PILES)" PRESENTS A PROPER BASIS FOR CANCELLATION OF THE CONTRACT AWARDED TO MIKE BRADFORD AND COMPANY.

WHILE IT MAY BE CORRECT, AS YOU HAVE STATED, THAT THE USE OF THE FIGURE $37,440 FOR THE PILING WORK DID RESULT IN A LOWER BID BY BRADFORD, EVEN IF GURTLER, HEBERT'S PRICE OF $46,484 HAD BEEN USED, BRADFORD'S BID WOULD STILL HAVE BEEN LOW BY APPROXIMATELY $40,000. ADDITIONALLY, IF THE CONTRACT IS PERMITTED TO STAND AND GURTLER, HEBERT IS SUBSTITUTED FOR BELDEN, THE PILING WORK WILL BE PERFORMED BY THE LOW RESPONSIBLE SUBCONTRACTOR, AND AT THE PRICE ORIGINALLY QUOTED, WHICH IS THE PRIMARY OBJECTIVE OF THE LISTING REQUIREMENT.

IN VIEW OF THE FOREGOING, AND SINCE THE AWARD WAS MADE IN GOOD FAITH BY THE CONTRACTING OFFICER BASED ON INFORMATION AVAILABLE TO HIM, AND BAD FAITH ON THE PART OF BRADFORD DOES NOT APPEAR TO HAVE BEEN ESTABLISHED, WE DO NOT BELIEVE THAT THE AWARD SHOULD BE DISTURBED. YOUR PROTEST IS DENIED.