with this Act and the regulations promulgated pur-
suant to section 7 of this Act to be non-responsive 
and bids by such bidders shall not be considered. 
(b) PROCEDURES FOR SUBSTITUTION OF A LISTED 
SUBCONTRACTOR.— 
(1) CONSENT AND GOOD CAUSE REQUIRED.— 
No contractor shall substitute a subcontractor in 
place of the subcontractor listed in the original bid 
or proposal, except with the consent of the con-
tracting officer for good cause. 
(2) EXAMPLES OF GOOD CAUSE.—Good cause 
under paragraph (1) shall include the following: 
(A) Failure of the subcontractor to execute 
a written contract after a reasonable period if 
such written contract, based upon the terms, 
conditions, plans, and specifications of the con-
tract and the terms of the subcontractor’s bid 
or proposal, is presented to the subcontractor 
by the contractor. 
(B) Bankruptcy of the subcontractor. 
(C) The death or physical disability of the 
subcontractor, if the subcontractor is an indi-
vidual. 
(D) Dissolution of the subcontractor, if the 
subcontractor is a corporation or partnership. 
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(E) Failure of a subcontractor to meet the 
surety bond requirements specified by the bid-
der as a condition of the subcontractor to per-
form on the contract, if awarded to the bidder. 
(F) The subcontractor is ineligible to per-
form on the subcontract because the subcon-
tractor is suspended, debarred, or otherwise in-
eligible to perform. 
(G) A series of failures by the subcon-
tractor to perform in accordance with the speci-
fication, terms, and conditions of its sub-
contract 
resulting 
in 
the 
withholding 
of 
amounts requested by the subcontractor in ac-
cordance with section 3905 of title 31, United 
States Code, and the regulations implementing 
such section. 
(H) Failure of the subcontractor to comply 
with a requirement of law applicable to the sub-
contractor. 
(I) Failure or refusal of the subcontractor 
to perform the subcontract. 
(3) REQUESTS FOR SUBSTITUTION.—A request 
of a contractor for a substitution of a listed subcon-
tractor shall be submitted in writing to the con-
tracting officer and shall include the reasons for the 
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request. The contractor shall provide a copy of its 
request for substitution to the listed subcontractor 
by any means that provides written third-party 
verification of delivery to the last known address of 
the subcontractor. A subcontractor who has been so 
notified shall have five working days within which to 
submit written objections to the substitution to the 
contracting officer. Failure to file such written ob-
jections shall constitute the consent of the listed 
subcontractor to the substitution. 
(c) LIMITATION
ON ASSIGNMENT, TRANSFER, OR 
SUBSTITUTION.— 
(1) LIMITATION
ON
ASSIGNMENT
OR
TRANS-
FER.—No contractor shall permit any subcontract to 
be voluntarily assigned or transferred or to be per-
formed by any entity other than the subcontractor 
listed in the bid or proposal without the consent of 
the contracting officer. Consent of the contracting 
officer to a contractor for a substitution shall— 
(A) be promptly made in writing; and 
(B) be included in the contract file. 
(2) LIMITATION ON SUBSTITUTION.—No con-
tractor that listed itself for a portion of the work 
under the contract shall subcontract any portion of 
the work for which it listed itself, unless authorized 
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by the contracting officer to substitute one or more 
subcontractors to perform such work. 
SEC. 5. PENALTIES. 
(a) IN GENERAL.— 
(1) A contractor shall be subject to penalties if, 
without obtaining the approval of the contracting of-
ficer, the contractor— 
(A) replaces a listed subcontractor for a 
contract with an executive agency; or 
(B) awards a subcontract to a subcon-
tractor to perform work which the contractor 
had identified as work to be performed directly 
by the contractor. 
(2) A subcontractor shall also be subject to pen-
alties if the subcontractor is determined to have 
knowingly participated in the failure of the con-
tractor to comply with the regulatory provisions re-
lating to the substitution of a listed subcontractor. 
(b) AMOUNT OF PENALTIES TO BE IMPOSED.—The 
amount of penalties imposed under this section shall be 
equal to the greater of— 
(1) 10 percent of the amount of the bid by the 
listed subcontractor; 
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(2) the difference between the amount of the 
bid by the listed subcontractor and the amount of 
the bid by the substituted subcontractor; or 
(3) the difference between the amount of the 
bid by a substituted subcontractor and the dollar 
value specified by the contractor for the work which 
the contractor had listed for its own performance. 
(c) SOURCE OF FUNDS FOR PENALTIES.—Penalties 
assessed pursuant to this section shall be deducted from 
the remaining unpaid contract balance and deposited into 
the fund from which the contract was awarded. 
SEC. 6. GROUNDS FOR SUSPENSION OR DEBARMENT. 
The imposition of penalties on a contractor or sub-
contractor for failure to comply with the procedures for 
the substitution of subcontractors on 2 contracts within 
a 3-year period shall be deemed to be adequate evidence 
of the commission of an offense indicating a lack of busi-
ness integrity or business honesty that seriously and di-
rectly affects the present responsibility of a Government 
contractor within the meaning of part 9.4 of the Federal 
Acquisition Regulation (Debarment, Suspension, and Eli-
gibility) (48 CFR 9.4). 
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SEC. 7. IMPLEMENTATION THROUGH THE FEDERAL ACQUI-
SITION REGULATION. 
(a) PROPOSED REVISIONS.—Proposed revisions to 
the Government-wide Federal Acquisition Regulation to 
implement the provisions in this Act shall be published not 
later than 120 days after the date of the enactment of 
this Act and provide not less than 60 days for public com-
ment. 
(b) FINAL REGULATIONS.—Final regulations shall be 
published not less than 180 days after the date of the en-
actment of this Act and shall be effective on the date that 
is 30 days after the date of publication. 
Æ 
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