I 

111TH CONGRESS 

1ST SESSION H. R. 3492 

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 

JULY 31, 2009 

Mr. KANJORSKI 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 2009’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) In the construction industry, specialty sub9 contractors now perform the majority of construc10 tion work, in certain cases 100 percent of the work, 


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1 under the management of a prime contractor, mak2 ing the subcontractors’ price and performance the 

3 key determinant in the overall cost of construction 

4 projects, including those performed for the Federal 

5 Government. 

6 (2) Detrimental practices known as ‘‘bid shop7 ping’’ and ‘‘bid peddling’’ exist in the construction 

8 industry, including construction projects for the 

9 Federal Government. 

10 (3) ‘‘Bid shopping’’ occurs when a contractor, 

11 after award of a contract, contracts with subcontrac12 tors at a price less than the quoted price of the sub13 contractor upon which the contractor’s fixed bid 

14 price was based, in order to increase the contractor’s 

15 profit on the project without any benefit to the enti16 ty for which the contract is being performed. 

17 (4) ‘‘Bid peddling’’ occurs when a subcontractor 

18 that is not selected for inclusion in a contractor’s 

19 team seeks to induce the contractor, after award of 

20 the contract, to substitute the subcontractor for an21 other subcontractor whose bid price was reflected in 

22 the successful bid of the contractor by offering to re23 duce its price for performance of the specified work, 

24 suggesting that the previous offer of the subcon25 tractor was padded or incorrect. 


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1 (5) Bid shopping and bid peddling— 

2 (A) threaten the integrity of the competi3 tive bid system for construction that benefits 

4 the Federal Government, the construction in5 dustry, and the economy of the United States 

6 as a whole; 

7 (B) compromise national security by pro8 moting uncertainty about which contractors ac9 tually perform work on critical infrastructure 

10 projects; 

11 (C) deprive taxpayers of the benefits of full 

12 and open competition among prospective con13 tractors and subcontractors for the performance 

14 of Federal construction projects; 

15 (D) expose Federal construction projects to 

16 the dangers of substandard performance, sub17 stitution of lower quality materials, and other 

18 detrimental cost-cutting practices by an unscru19 pulous substituted subcontractor; and 

20 (E) can be effectively deterred in Federal 

21 construction by modifying the Federal Acquisi22 tion Regulation to require bid listing, which is 

23 the practice of requiring each offeror for a Fed24 eral construction contract to list the sub25 contractors whose performance is reflected in 


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1 the bid price, procedures for the substitution of 

2 listed subcontractors for good cause, and other 

3 deterrents to abuse. 

4 SEC. 3. DEFINITIONS. 

5 In this Act: 

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

7 any contract with the Federal Government, exceed8 ing $1,000,000 in amount, for the construction, al9 teration, or repair of any public building or public 

10 work of the United States. 

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

12 means an individual or entity that has been awarded 

13 or is seeking to be awarded a construction contract 

14 by the Federal Government. 

15 (3) SUBCONTRACTOR.—The term ‘‘subcon16 tractor’’ means an individual or entity that sub17 contracts with a contractor in an amount in excess 

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

19 SEC. 4. REQUIREMENTS REGARDING SUBCONTRACTORS 

20 FOR FEDERAL CONTRACTORS ON CONSTRUC21 TION PROJECTS. 

22 (a) REQUIREMENT TO LIST SUBCONTRACTORS.— 

23 (1) IN GENERAL.—Each solicitation by an exec24 utive agency for the procurement of construction in 

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


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

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

3 work of each subcontractor with whom the bidder, if 

4 awarded the contract, will subcontract for work in 

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

6 (2) REQUIREMENTS FOR SPECIFIC CAT7 EGORIES.— 

8 (A) Except as provided in subparagraphs 

9 (B) and (C), the bidder shall list only one sub10 contractor for each category of work as defined 

11 by the bidder in its bid or proposal. 

12 (B) A bidder may list multiple subcontrac13 tors for a category of work if each such subcon14 tractor is listed to perform a discrete portion of 

15 the work within a category. 

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

17 of work under the contract, which shall be 

18 deemed a representation by the bidder that it is 

19 fully qualified to perform that portion of the 

20 work itself and that the bidder will perform 

21 that portion itself. 

22 (3) RESULT OF FAILURE TO LIST SUBCONTRAC23 TORS.—An executive agency shall consider any bid24 der that fails to list subcontractors in accordance 

25 with this Act and the regulations promulgated purVerDate Nov 24 2008 04:13 Aug 04, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3492.IH H3492

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1 suant to section 7 of this Act to be non-responsive 

2 and bids by such bidders shall not be considered. 

3 (b) PROCEDURES FOR SUBSTITUTION OF A LISTED

4 SUBCONTRACTOR.— 

5 (1) CONSENT AND GOOD CAUSE REQUIRED.— 

6 No contractor shall substitute a subcontractor in 

7 place of the subcontractor listed in the original bid 

8 or proposal, except with the consent of the con9 tracting officer for good cause. 

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

11 under paragraph (1) shall include the following: 

12 (A) Failure of the subcontractor to execute 

13 a written contract after a reasonable period if 

14 such written contract, based upon the terms, 

15 conditions, plans, and specifications of the con16 tract and the terms of the subcontractor’s bid 

17 or proposal, is presented to the subcontractor 

18 by the contractor. 

19 (B) Bankruptcy of the subcontractor. 

20 (C) The death or physical disability of the 

21 subcontractor, if the subcontractor is an indi22 vidual. 

23 (D) Dissolution of the subcontractor, if the 

24 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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