[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3492 Introduced in House (IH)]

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.

    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 2009''.

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) compromise national security by promoting 
                uncertainty about which contractors actually perform 
                work on critical infrastructure projects;
                    (C) deprive taxpayers of the benefits of full and 
                open competition among prospective contractors and 
                subcontractors for the performance of Federal 
                construction projects;
                    (D) 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
                    (E) 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. DEFINITIONS.

    In this Act:
            (1) Contract.--The term ``contract'' means any contract 
        with the Federal Government, exceeding $1,000,000 in amount, 
        for the construction, alteration, or repair of any public 
        building or public work of the United States.
            (2) Contractor.--The term ``contractor'' means an 
        individual or entity that has been awarded or is seeking to be 
        awarded a construction contract by the Federal Government.
            (3) Subcontractor.--The term ``subcontractor'' means an 
        individual or entity that subcontracts with a contractor in an 
        amount in excess of $100,000 for work on a contract.

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

    (a) Requirement To List Subcontractors.--
            (1) In general.--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 discrete 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 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 
        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.

SEC. 5. PENALTIES.

    (a) In General.--
            (1) A contractor shall be subject to penalties if, without 
        obtaining the approval of the contracting officer, the 
        contractor--
                    (A) replaces a listed subcontractor for a contract 
                with an executive agency; or
                    (B) awards a subcontract to a subcontractor 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 penalties 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.
    (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;
            (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 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) (48 CFR 9.4).

SEC. 7. IMPLEMENTATION THROUGH THE FEDERAL ACQUISITION 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 
comment.
    (b) Final Regulations.--Final regulations shall be published not 
less than 180 days after the date of the enactment of this Act and 
shall be effective on the date that is 30 days after the date of 
publication.
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