B-151847, AUG. 22, 1963, 43 COMP. GEN. 206

B-151847, AUG. 22, 1963, 43 COMP. GEN. 206

CONTRACTS - SUBCONTRACTS - BID SHOPPING. CONTRACTS - SPECIFICATIONS - FAILURE TO FURNISH SOMETHING REQUIRED - INFORMATION A PROVISION IN AN INVITATION FOR BIDS FOR CONSTRUCTION PROJECTS REQUIRING BIDDERS TO FURNISH WITH THEIR BIDS A LIST OF SUBCONTRACTORS TO PREVENT BID SHOPPING IS REGARDED AS A MATERIAL REQUIREMENT RELATING TO THE RESPONSIVENESS OF THE BIDS AND THE INCLUSION OF SUCH AN ANTI-BID SHOPPING PROVISION IN INVITATIONS IS SANCTIONED ON A TRIAL BASIS. THE FAILURE OF A LOW BIDDER FOR A CONSTRUCTION PROJECT TO FURNISH A LIST OF SUBCONTRACTORS AS REQUIRED BY THE INVITATION TO PREVENT "BID SHOPPING" IS A FAILURE TO MEET A MATERIAL REQUIREMENT OF THE INVITATION RELATING TO THE RESPONSIVENESS OF THE BID RATHER THAN TO THE RESPONSIBILITY OF THE BIDDER AND, THEREFORE, REJECTION OF THE BID IS PROPER.

TO BEERS CONSTRUCTION COMPANY, AUGUST 22, 1963:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 20, 1963, AND ENCLOSURE, PROTESTING THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER GENERAL SERVICES ADMINISTRATION PROJECT NO. 09911.

BIDS WERE REQUESTED FOR THE CONSTRUCTION OF A UNITED STATES POST OFFICE AND FEDERAL BUILDING AT MACON, GEORGIA. FIVE BIDS WERE RECEIVED AND OPENED ON JUNE 14, 1963, AND YOU WERE LOW BIDDER IN THE AMOUNT OF $2,995,000. HOWEVER, YOUR BID WAS REJECTED AS NONRESPONSIVE FOR FAILURE TO FURNISH CERTAIN REQUIRED INFORMATION, AND AWARD WAS MADE TO THE SECOND LOW BIDDER, A. R. BRIGGS CONSTRUCTION COMPANY, IN THE AMOUNT OF $3,020,000.

AMENDMENT NO. 2 TO THE SPECIFICATION WAS ISSUED MAY 27, 1963, AND PROVIDED, IN PART, AS OLLOWS:

2-13A LISTING OF SUBCONTRACTORS

A. THE BIDDER SHALL SUBMIT WITH HIS BID THE FIRM NAME AND ADDRESS OF EACH SUBCONTRACTOR TO WHOM HE PROPOSES TO SUBCONTRACT THE CATEGORIES OF THE WORK AS CONTAINED IN THE LIST INCLUDED AS A PART OF THE BID FORM. EXCEPT AS OTHERWISE PROVIDED HEREIN, THE SUCCESSFUL BIDDER AGREES THAT HE SHALL NOT CONTRACT TO HAVE ANY OF THE LISTED CATEGORIES OF WORK INVOLVED IN THE PERFORMANCE UNDER 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 SITE, INVOLVING CONSTRUCTION, FABRICATION, 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 A PART OF THE BID FORM AND SHALL NOT INCLUDE SUPPLIERS OF THESE ITEMS UNLESS LISTED OR SO STATED IN THE SPECIFICATIONS, OR THE SUPPLIER AND INSTALLER ARE ONE INDIVIDUAL OR FIRM BY REASON OF CONSTRUCTION PRACTICE.

C. THE BIDDER MAY 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 SHALL BE CARRIED ON HIS OWN PAYROLL. EQUIPMENT MAY BE SELF-OWNED OR LEASED.

D. NOTHING CONTAINED IN THIS PARAGRAPH SHALL BE CONSTRUED AS CHANGING THE REQUIREMENTS OF PARAGRAPH 1-11 OF THE GENERAL CONDITIONS.

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

F. NO SUBSTITUTIONS FOR THE NAMED SUBCONTRACTORS 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 OBTAINING THE CONTRACTING OFFICER'S WRITTEN APPROVAL THEREOF.

G. NEITHER THIS PARAGRAPH NOR COMPLIANCE WITH THE PROVISIONS THEREOF SHALL BE CONSTRUED TO PREVENT THE CONTRACTING OFFICER FROM REQUIRING, IN HIS DISCRETION, APPROVAL OR ACCEPTANCE BY HIM OF SUBCONTRACTORS ENGAGED OR TO BE ENGAGED BY THE SUCCESSFUL BIDDER HEREUNDER OR HIS MAKING ANY OTHER REQUIREMENTS HE DEEMS ADVISABLE, IN HIS DISCRETION, WITH RESPECT TO SUBCONTRACTORS ENGAGED OR TO BE ENGAGED BY THE SUCCESSFUL BIDDER HEREUNDER FOR THE PURPOSES OF THIS PARAGRAPH OR FROM REQUIRING ANY INFORMATION HE DEEMS ADVISABLE, IN HIS DISCRETION, AS TO THE COST OF PERFORMANCE OF THIS CONTRACT, NOR SHALL THE IMPOSITION OF SUCH REQUIREMENTS GIVE RISE TO ANY COURSE OF ACTION AGAINST THE GOVERNMENT BY THE SUCCESSFUL BIDDER OR BY ANY SUBCONTRACTORS ENGAGED BY THE SUCCESSFUL BIDDER HEREUNDER.

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

I. FAILURE TO COMPLY WITH ANY OF THE AFOREMENTIONED REQUIREMENTS APPLICABLE PRIOR TO AWARD WILL BE CAUSE FOR REJECTION OF THE BID.

THE BRIGGS COMPANY SUBMITTED WITH ITS BID A COMPLETE LIST OF SUBCONTRACTORS, WHEREAS YOU FAILED TO FURNISH SUCH INFORMATION, AS REQUIRED BY THE ABOVE AMENDMENT, AND YOUR BID WAS THEREFORE REJECTED AS NONRESPONSIVE.

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.

HEARINGS HAVE BEEN HELD IN RECENT YEARS ON PROPOSED FEDERAL LEGISLATION REQUIRING THE LISTING OF SUBCONTRACTORS BY GENERAL CONTRACTORS BIDDING ON GOVERNMENT CONSTRUCTION WORK. WHILE THESE BILLS FAILED OF PASSAGE, THE STATEMENTS SUBMITTED BY VARIOUS NATIONAL ASSOCIATIONS OF ELECTRICAL AND MECHANICAL SPECIALTY CONTRACTORS AND BY OFFICIALS OF MEMBER ORGANIZATIONS HAVE BEEN PREPONDERANTLY, IF NOT UNANIMOUSLY, TO THE EFFECT THAT BID SHOPPING IS QUITE PREVALENT AND THAT REQUIRING THE PRIME CONTRACTOR TO LIST SUBCONTRACTORS WOULD BE VERY HELPFUL IN ELIMINATING THIS UNDESIRABLE PRACTICE.

THE ABOVE HEARINGS INDICATED THAT A SUBSTANTIAL NUMBER OF CONTRACTORS DO NOT BID ON SUBCONTRACTS FOR FEDERAL CONSTRUCTION WORK BECAUSE THEY HAVE NO ASSURANCE OF RECEIVING THE CONTRACT EVEN IF THEIRS IS THE LOWEST RESPONSIBLE BID. THE PRESIDENT OF ONE CORPORATION ENGAGED IN MECHANICAL AND ELECTRICAL CONTRACTING WORK STATED THAT OVER A 6-MONTH PERIOD HIS FIRM SPENT APPROXIMATELY $20,000 IN PREPARING SUBBIDS ON FEDERAL PROJECTS ON WHICH IT WAS THE LOW BIDDER, BUT DID NOT RECEIVE A CONTRACT. GSA FEELS THAT IF A SUBCONTRACTOR HAS ASSURANCE THAT HIS BID WILL BE PROPERLY USED AND THAT HE WILL RECEIVE THE CONTRACT IF HE IS LOW BIDDER, THE GENERAL CONTRACTOR SHOULD BE ABLE TO SECURE AN ADEQUATE NUMBER OF COMPETITIVE BIDS FROM RESPONSIBLE SUBCONTRACTORS IN SUFFICIENT TIME TO PROPERLY EVALUATE THEM AND ESTIMATE HIS COSTS ON A BUSINESSLIKE BASIS.

THE GENERAL SERVICES ADMINISTRATION HAS STATED THAT THE USE OF PARAGRAPH 2-13A OF AMENDMENT NO. 2 IS BEING TESTED FOR PRACTICALITY AND FEASIBILITY ON SEVERAL PROJECTS. IF IT PROVES TO BE UNWORKABLE, DOES NOT ACCOMPLISH ITS DESIRED ENDS AND IS FOUND NOT TO BE IN THE BEST INTERESTS OF THE GOVERNMENT, ITS USE CAN AND WILL BE DISCONTINUED. WE HAVE TAKEN THE POSITION THAT INFORMATION REQUIRED BY A PROVISION IN AN INVITATION WHICH IS INTENDED FOR USE IN DETERMINING THE BIDDER'S RESPONSIBILITY RATHER THAN RESPONSIVENESS OF HIS BID MAY BE FURNISHED SUBSEQUENT TO BID OPENING WITHOUT PREJUDICE TO CONSIDERATION OF THE BID. IN VIEW OF THE INTENDED PURPOSES OF THE INVITATION PROVISION HERE IN QUESTION, HOWEVER, WE BELIEVE IT REASONABLY MAY BE REGARDED, ON THE PRESENT RECORD AT LEAST, AS IMPOSING A MATERIAL REQUIREMENT PERTAINING TO THE RESPONSIVENESS OF THE BIDS SUBMITTED UNDER THE INVITATION.

WE THEREFORE SEE NO LEGAL OBJECTION TO THE USE OF SUCH PROCEDURE ON A TRIAL BASIS BY GSA AND WE CONCLUDE THAT FAILURE TO FURNISH THE LIST OF SUBCONTRACTORS REQUIRED THEREBY RENDERED YOUR BID NONRESPONSIVE AND PROPERLY FOR REJECTION. YOUR PROTEST IS THEREFORE DENIED.