I 

112TH CONGRESS 

1ST SESSION H. R. 1778 

To assure quality and best value with respect to Federal construction projects 

by prohibiting the practice known as bid shopping. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 5, 2011 

Mrs. MALONEY (for herself and Ms. HIRONO) introduced the following bill; 

which was referred to the Committee on Oversight and Government Reform 

A BILL 

To assure quality and best value with respect to Federal 

construction projects by prohibiting the practice known 

as bid shopping. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Construction Quality 

5 Assurance Act of 2011’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Federal construction project sealed bid con9 tractor selection procedure is a valuable project acVerDate Mar 15 2010 04:16 May 10, 2011 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1778.IH H1778

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1 quisition method that should be preserved and 

2 strengthened for projects of appropriate scope. 

3 (2) Federal procurement data trends indicate 

4 that agencies increasingly are relying on other nego5 tiated contractor selection procedures, rather than 

6 price-only selection procedures. 

7 (3) Requirements for Federal agencies to use 

8 major subcontractor bid listing on price-only prime 

9 contractor selection procedures would restore the 

10 balance in use of low-bid and competitive negotia11 tions, which has proven results in other public pro12 curement systems. 

13 (4) Bid shopping occurs when the successful 

14 prime contract low bidder, after project award, uses 

15 the successful subcontract low bids as the beginning 

16 point for a post-award auction to the same or other 

17 subcontractors to agree to perform the subcontract 

18 work at an even lower price, with the savings accru19 ing only to the benefit of the low-bid prime con20 tractor, not the agency program, the project, or the 

21 taxpayer. 

22 (5) Bid peddling occurs when other subcontrac23 tors approach the successful prime contractor bidder 

24 after award of the prime contract and offer to per25 form the subcontract work at a lower price than subVerDate Mar 15 2010 04:16 May 10, 2011 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1778.IH H1778

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1 mitted by the subcontractor whose sub-bid price was 

2 relied on by the successful prime contractor, again 

3 with the ostensible savings accruing to the prime 

4 contract low bidder only, not the agency program, 

5 the project, or the taxpayers. 

6 (6) Listing of major subcontract bids in the 

7 prime contractor’s sealed bid by agencies will effec8 tively stem the detrimental and inequitable practices 

9 of bid shopping and bid peddling on direct Federal 

10 construction contracts that are detrimental to the 

11 taxpayers’ interest in government procurement 

12 transparency, sound public contract administration, 

13 and successful construction project completion. 

14 (7) Agencies will receive better project perform15 ance, by restoring integrity to the low-bid selection 

16 system for both prime contractors and major sub17 contractors, as abusive selection procedures often 

18 lead to greater project disputes, claims, changes, 

19 product and material substitutions, and in some 

20 cases even contractor defaults—again, all to the det21 riment of the agency program, the project, and the 

22 taxpayers generally. 

23 (8) Restoring equitable safeguards in the low24 bid system will assure that agency practice will con25 form to the highest standards adhered to by indusVerDate Mar 15 2010 04:16 May 10, 2011 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1778.IH H1778

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1 try professionals and contractor associations, and 

2 will reflect best practices followed by a great many 

3 other public procurement systems nationally and 

4 internationally. 

5 SEC. 3. DEFINITIONS. 

6 In this Act: 

7 (1) CONTRACT.—The term ‘‘contract’’ means 

8 any contract with the Federal Government, exceed9 ing $1,000,000 in amount, for the construction, al10 teration, or repair of any public building or public 

11 work of the United States. 

12 (2) CONTRACTOR.—The term ‘‘contractor’’ 

13 means an individual or entity that has been awarded 

14 or is seeking to be awarded a construction contract 

15 by the Federal Government. 

16 (3) SUBCONTRACTOR.—The term ‘‘subcon17 tractor’’ means an individual or entity that sub18 contracts with a contractor in an amount in excess 

19 of $100,000 for work on a contract. 

20 SEC. 4. REQUIREMENTS REGARDING SUBCONTRACTORS 

21 FOR FEDERAL CONTRACTORS ON CONSTRUC22 TION PROJECTS. 

23 (a) REQUIREMENT TO LIST SUBCONTRACTORS.— 

24 (1) IN GENERAL.—Each solicitation by an exec25 utive agency for the procurement of construction in 


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1 an amount in excess of $1,000,000 shall require 

2 each bidder to submit as part of its bid the name, 

3 location of the place of business, and nature of the 

4 work of each subcontractor with whom the bidder, if 

5 awarded the contract, will subcontract for work in 

6 an amount in excess of $100,000 on the contract. 

7 (2) REQUIREMENTS FOR SPECIFIC CAT8 EGORIES.— 

9 (A) Except as provided in subparagraphs 

10 (B) and (C), the bidder shall list only one sub11 contractor for each category of work as defined 

12 by the bidder in its bid or proposal. 

13 (B) A bidder may list multiple subcontrac14 tors for a category of work if each such subcon15 tractor is listed to perform a discrete portion of 

16 the work within a category. 

17 (C) A bidder may list itself for any portion 

18 of work under the contract, which shall be 

19 deemed a representation by the bidder that it is 

20 fully qualified to perform that portion of the 

21 work itself and that the bidder will perform 

22 that portion itself. 

23 (3) RESULT OF FAILURE TO LIST SUBCONTRAC24 TORS.—An executive agency shall consider any bid25 der that fails to list subcontractors in accordance 


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1 with this Act and the regulations promulgated pur2 suant to section 7 of this Act to be non-responsive 

3 and bids by such bidders shall not be considered. 

4 (b) PROCEDURES FOR SUBSTITUTION OF A LISTED

5 SUBCONTRACTOR.— 

6 (1) CONSENT AND GOOD CAUSE REQUIRED.— 

7 No contractor shall substitute a subcontractor in 

8 place of the subcontractor listed in the original bid 

9 or proposal, except with the consent of the con10 tracting officer for good cause. 

11 (2) EXAMPLES OF GOOD CAUSE.—Good cause 

12 under paragraph (1) shall include the following: 

13 (A) Failure of the subcontractor to execute 

14 a written contract after a reasonable period if 

15 such written contract, based upon the terms, 

16 conditions, plans, and specifications of the con17 tract and the terms of the subcontractor’s bid 

18 or proposal, is presented to the subcontractor 

19 by the contractor. 

20 (B) Bankruptcy of the subcontractor. 

21 (C) The death or physical disability of the 

22 subcontractor, if the subcontractor is an indi23 vidual. 

24 (D) Dissolution of the subcontractor, if the 

25 subcontractor is a corporation or partnership. 


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1 (E) Failure of a subcontractor to meet the 

2 surety bond requirements specified by the bid3 der as a condition of the subcontractor to per4 form on the contract, if awarded to the bidder. 

5 (F) The subcontractor is ineligible to per6 form on the subcontract because the subcon7 tractor is suspended, debarred, or otherwise in8 eligible to perform. 

9 (G) A series of failures by the subcon10 tractor to perform in accordance with the speci11 fication, terms, and conditions of its sub12 contract resulting in the withholding of 

13 amounts requested by the subcontractor in ac14 cordance with section 3905 of title 31, United 

15 States Code, and the regulations implementing 

16 such section. 

17 (H) Failure of the subcontractor to comply 

18 with a requirement of law applicable to the sub19 contractor. 

20 (I) Failure or refusal of the subcontractor 

21 to perform the subcontract. 

22 (3) REQUESTS FOR SUBSTITUTION.—A request 

23 of a contractor for a substitution of a listed subcon24 tractor shall be submitted in writing to the con25 tracting officer and shall include the reasons for the 


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1 request. The contractor shall provide a copy of its 

2 request for substitution to the listed subcontractor 

3 by any means that provides written third-party 

4 verification of delivery to the last known address of 

5 the subcontractor. A subcontractor who has been so 

6 notified shall have five working days within which to 

7 submit written objections to the substitution to the 

8 contracting officer. Failure to file such written ob9 jections shall constitute the consent of the listed 

10 subcontractor to the substitution. 

11 (c) LIMITATION ON ASSIGNMENT, TRANSFER, OR

12 SUBSTITUTION.— 

13 (1) LIMITATION ON ASSIGNMENT OR TRANS14 FER.—No contractor shall permit any subcontract to 

15 be voluntarily assigned or transferred or to be per16 formed by any entity other than the subcontractor 

17 listed in the bid or proposal without the consent of 

18 the contracting officer. Consent of the contracting 

19 officer to a contractor for a substitution shall— 

20 (A) be promptly made in writing; and 

21 (B) be included in the contract file. 

22 (2) LIMITATION ON SUBSTITUTION.—No con23 tractor that listed itself for a portion of the work 

24 under the contract shall subcontract any portion of 

25 the work for which it listed itself, unless authorized 


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1 by the contracting officer to substitute one or more 

2 subcontractors to perform such work. 

3 SEC. 5. PENALTIES. 

4 (a) IN GENERAL.— 

5 (1) A contractor shall be subject to penalties if, 

6 without obtaining the approval of the contracting of7 ficer, the contractor— 

8 (A) replaces a listed subcontractor for a 

9 contract with an executive agency; or 

10 (B) awards a subcontract to a subcon11 tractor to perform work which the contractor 

12 had identified as work to be performed directly 

13 by the contractor. 

14 (2) A subcontractor shall also be subject to pen15 alties if the subcontractor is determined to have 

16 knowingly participated in the failure of the con17 tractor to comply with the regulatory provisions re18 lating to the substitution of a listed subcontractor. 

19 (b) AMOUNT OF PENALTIES TO BE IMPOSED.—The 

20 amount of penalties imposed under this section shall be 

21 equal to the greater of— 

22 (1) 10 percent of the amount of the bid by the 

23 listed subcontractor; 


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1 (2) the difference between the amount of the 

2 bid by the listed subcontractor and the amount of 

3 the bid by the substituted subcontractor; or 

4 (3) the difference between the amount of the 

5 bid by a substituted subcontractor and the dollar 

6 value specified by the contractor for the work which 

7 the contractor had listed for its own performance. 

8 (c) SOURCE OF FUNDS FOR PENALTIES.—Penalties 

9 assessed pursuant to this section shall be deducted from 

10 the remaining unpaid contract balance and deposited into 

11 the fund from which the contract was awarded. 

12 SEC. 6. GROUNDS FOR SUSPENSION OR DEBARMENT. 

13 The imposition of penalties on a contractor or sub14 contractor for failure to comply with the procedures for 

15 the substitution of subcontractors on 2 contracts within 

16 a 3-year period shall be deemed to be adequate evidence 

17 of the commission of an offense indicating a lack of busi18 ness integrity or business honesty that seriously and di19 rectly affects the present responsibility of a Government 

20 contractor within the meaning of part 9.4 of the Federal 

21 Acquisition Regulation (Debarment, Suspension, and Eli22 gibility) (48 CFR 9.4). 


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1 SEC. 7. IMPLEMENTATION THROUGH THE FEDERAL ACQUI2 SITION REGULATION. 

3 (a) PROPOSED REVISIONS.—Proposed revisions to 

4 the Government-wide Federal Acquisition Regulation to 

5 implement the provisions in this Act shall be published not 

6 later than 120 days after the date of the enactment of 

7 this Act and provide not less than 60 days for public com8 ment. 

9 (b) FINAL REGULATIONS.—Final regulations shall be 

10 published not less than 180 days after the date of the en11 actment of this Act and shall be effective on the date that 

12 is 30 days after the date of publication. 

Æ 


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