[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4012 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 4012

To assure quality construction and prevent certain abusive contracting 
practices by requiring each bidder for a Federal construction contract 
 to identify the subcontractors that the contractor intends to use to 
             perform the contract, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 16, 2000

  Mr. Kanjorski (for himself, Mr. Horn, Mrs. Maloney of New York, Mr. 
  Kucinich, and Mr. Hinchey) introduced the following bill; which was 
             referred to the Committee on Government Reform

_______________________________________________________________________

                                 A BILL


 
To assure quality construction and prevent certain abusive contracting 
practices by requiring each bidder for a Federal construction contract 
 to identify the subcontractors that the contractor intends to use to 
             perform the contract, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Construction Quality Assurance Act 
of 2000''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) In the construction industry, specialty subcontractors 
        now perform the majority of construction work, in certain cases 
        100 percent of the work, under the management of a prime 
        contractor, making the subcontractors' price and performance 
        the key determinant in the overall cost of construction 
        projects, including those performed for the Federal Government.
            (2) Detrimental practices known as ``bid shopping'' and 
        ``bid peddling'' exist in the construction industry, including 
        construction projects for the Federal Government.
            (3) ``Bid shopping'' occurs when a contractor, after award 
        of a contract, contracts with subcontractors at a price less 
        than the quoted price of the subcontractor upon which the 
        contractor's fixed bid price was based, in order to increase 
        the contractor's profit on the project without any benefit to 
        the entity for which the contract is being performed.
            (4) ``Bid peddling'' occurs when a subcontractor that is 
        not selected for inclusion in a contractor's team seeks to 
        induce the contractor, after award of the contract, to 
        substitute the subcontractor for another subcontractor whose 
        bid price was reflected in the successful bid of the contractor 
        by offering to reduce its price for performance of the 
        specified work, suggesting that the previous offer of the 
        subcontractor was padded or incorrect.
            (5) Bid shopping and bid peddling--
                    (A) threaten the integrity of the competitive bid 
                system for construction that benefits the Federal 
                Government, the construction industry, and the economy 
                of the United States as a whole;
                    (B) deprive taxpayers of the benefits of full and 
                open competition among prospective contractors and 
                subcontractors for the performance of Federal 
                construction projects;
                    (C) expose Federal construction projects to the 
                dangers of substandard performance, substitution of 
                lower quality materials, and other detrimental cost-
                cutting practices by an unscrupulous substituted 
                subcontractor; and
                    (D) can be effectively deterred in Federal 
                construction by modifying the Federal Acquisition 
                Regulation to require bid listing, which is the 
                practice of requiring each offeror for a Federal 
                construction contract to list the subcontractors whose 
                performance is reflected in the bid price, procedures 
                for the substitution of listed subcontractors for good 
                cause, and other deterrents to abuse.

SEC. 3. IMPLEMENTATION THROUGH THE GOVERNMENT-WIDE PROCUREMENT 
              REGULATIONS.

    (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 
comment.
    (b) Final Regulations.--Final regulations shall be published not 
less than 180 days after the date of enactment of this Act and shall be 
effective on the date that is 30 days after the date of publication.

SEC. 4. REQUIREMENTS REGARDING SUBCONTRACTORS FOR FEDERAL CONTRACTORS 
              ON CONSTRUCTION PROJECTS.

    (a) Requirement to List Subcontractors.--
            (1) In general.--(A) Each solicitation by an executive 
        agency for the procurement of construction in an amount in 
        excess of $1,000,000 shall require each bidder to submit as 
part of its bid the name, location of the place of business, and nature 
of the work of each subcontractor with whom the bidder, if awarded the 
contract, will subcontract for work in an amount in excess of $100,000 
on the contract.
            (2) Requirements for specific categories.--(A) Except as 
        provided in subparagraphs (B) and (C), the bidder shall list 
        only one subcontractor for each category of work as defined by 
        the bidder in its bid or proposal.
            (B) A bidder may list multiple subcontractors for a 
        category of work if each such subcontractor is listed to 
        perform a discreet portion of the work within a category.
            (C) A bidder may list itself for any portion of work under 
        the contract, which shall be deemed a representation by the 
        bidder that it is fully qualified to perform that portion of 
        the work itself and that the bidder will perform that portion 
        itself.
            (3) Result of failure to list subcontractors.--An executive 
        agency shall consider any bidder that fails to list 
        subcontractors in accordance with this Act and the regulations 
        promulgated pursuant to section 3 of this Act to be non 
        responsible.
    (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 
        contracting 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 contract 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 individual.
                    (D) Dissolution of the subcontractor, if the 
                subcontractor is a corporation or partnership.
                    (E) Failure of a subcontractor to meet the surety 
                bond requirements specified by the bidder as a 
                condition of the subcontractor to perform on the 
                contract, if awarded to the bidder.
                    (F) The subcontractor is ineligible to perform on 
                the subcontract because the subcontractor is suspended, 
                debarred, or otherwise ineligible to perform.
                    (G) A series of failures by the subcontractor to 
                perform in accordance with the specification, terms, 
                and conditions of its subcontract resulting in the 
                withholding of amounts requested by the subcontractor 
                in accordance 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 subcontractor.
                    (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 subcontractor shall be submitted 
        in writing to the contracting officer and shall include the 
        reasons for the 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 objections shall constitute the consent of the listed 
        subcontractor to the substitution.
    (c) Limitation on Assignment, Transfer, or Substitution.--
            (1) Limitation on assignment or transfer.--No contractor 
        shall permit any subcontract to be voluntarily assigned or 
        transferred or to be performed 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 contractor 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 by the contracting officer to substitute one 
        or more subcontractors to perform such work.
    (d) Imposition of Liquidated Damages.--
            (1) In general.--(A) A contractor shall be subject to 
        payment of liquidated damages if, without obtaining the 
        approval of the contracting officer, the contractor--
                    (i) replaces a listed subcontractor for a contract 
                with an executive agency; or
                    (ii) awards a subcontract to a subcontractor to 
                perform work which the contractor had identified as 
                work to be performed directly by the contractor.
            (B) A subcontractor shall also be subject to the payment of 
        liquidated damages if the subcontractor is determined to have 
        knowingly participated in the failure of the contractor to 
        comply with the regulatory provisions relating to the 
        substitution of a listed subcontractor.
            (2) Amount of damages to be imposed.--The amount of 
        liquidated damages imposed under this subsection shall be equal 
        to the greater of--
                    (A) 10 percent of the amount of the bid by the 
                listed subcontractor;
                    (B) the difference between the amount of the bid by 
                the listed subcontractor and the amount of the bid by 
                the substituted subcontractor; or
                    (C) the difference between the amount of the bid by 
                a substituted subcontractor and the dollar value 
                specified by the contractor for the work for which the 
                contractor had listed for its own performance.
    (e) Grounds for Suspension or Debarment.--The imposition of 
liquidated damages on a contractor or subcontractor 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 business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a Government contractor within the meaning of 
part 9.4 of the Federal Acquisition Regulation (Debarment, Suspension, 
and Eligibility) (49 CFR 9.4).
    (f) Modification of Federal Acquisition Regulation.--The 
Administrator for Federal Procurement Policy shall ensure that the 
Federal Acquisition Regulation is modified, in accordance with section 
25 of the Office of Federal Procurement Policy Act (41 U.S.C. 421), to 
carry out the requirements of this Act.

SEC. 5. DEFINITIONS.

    In this Act--
            (1) the term ``contractor'' means an entity that contracts 
        with an executive agency for the procurement of construction in 
        an amount in excess of $1,000,000; and
            (2) the term ``subcontract'' means an entity that 
        subcontracts with such a contractor in an amount in excess of 
        $100,000 for work on a construction contract with an executive 
        agency in an amount in excess of $1,000,000.
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