Masonry Magazine March 1966 Page. 8
Congressman Robert L. Leggett Addresses Moton Contractors Association
Congressman Robert L. Leggett, 4th District, California, addressing the 1956 Moton Contractors Association of America Convention of the Sheraton-Park Hotel, Washington, D.C.
It is also stated that many responsible firms have withdrawn from competition for Government work on account of this lack of assurance, and that this is likely to be detrimental to the Government interest. Does this sound familiar?
The report cited was not on my pending bill but on H.R. 9921 passed out of the Committee on Expenditures in the Executive Departments on May 11, 1932, 72nd Congress. The measure was not brought to a vote, however, until 1938 when H.R. 146 was passed by both Houses of Congress and subsequently passed after a reconsideration vote in the Senate, only to be vetoed by President Franklin Roosevelt. The New Deal apparently extended to everybody but subcontractors.
My interest in this legislation has resulted from my legal representation of the Solano County Builders Exchange of California for a number of years, and also my work with a number of contractors on Capehart Housing Projects.
Frankly speaking, perhaps the bulk of the general contracting industry are reasonably fair to the subcontractors. However, there are a few who are scoundrels when a "buck is involved", and some estimate that there are more than a few.
This bill I have introduced is really a measure to save contractors from themselves and provide reasonable provisions to safeguard a subcontractor his contract when he has submitted a reasonable bid on federal work. Admittedly the bill which I have introduced is not as strong as the California legislation which has worked effectively now for almost twenty years there are political considerations of obtaining Agency and Departmental support which have dictated the form of the bill.
The bill, as filed, covers any Federal Public Works construction contract in excess of $5,000 and requires the federal government to disregard any such bids that do not include the name and address of all subcontractors of 5500 worth of work or material, together with a statement of the work to be performed. A finding of public emergency or necessity by the contracting officer would be the only exception to the procedure. The contracting officer would also have authority to approve substitute contractors if the listed contractor is unable or fails after a reasonbale time to execute a contract.
It has been suggested that this provision be modified to specifically give the subcontractor notice of the intended substitution and the reasons therefor.
Penalties provided would subject the violating contractor to contract cancellation and treble damages to the injured subcontractor for any loss of profits suffered plus reasonable attorney's fee. Federal court jurisdiction is provided. Exceptions to the procedure are also provided where a finding is made by a department that the national security would be affected.
Historically it might be prudent to review the California legislation and federal attempts in the field. (New York and Massachusetts also have listing protective legislation).
Ch. 1380, Calif. Statutes, 1945(Cal. Gov. Code Sec 4100 ct seq.)
Ch. 1380. Calif. Stats. 1945 regulates the process of subletting or subcontracting on state public works or improvement projects except projects for the construction, improvement or repair of streets, highways and bridges.
Briefly, the Act requires every general contractor bidding for such projects to specify in his bid the names and business address of each subcontractor who will perform work or labor or render service to the general contractor in or about the construction of the work or improvement in an amount in excess of 2 of 1% of the general contractor's total bid. In the event subcontractors are not so named, the act presumes that the general contractor agrees to perform that portion himself.
Upon the final acceptance of his bid, the general contractor is prohibited from substituting subcontractors or assigning, transferring or letting subcontracts without first securing the consent of the awarding authority.
Violations of the above provisions may result in the cancellation of the general contract by the awarding authority, and, shall result in a penalty of 20% of the amount of the subcontract involved.
One general contractor has alleged that the California provision has resulted in decreased competition for State jobs. This I do not believe to be a fact.
The Federal Code contains no restrictions or prohibitions corresponding to those set out in the California Code.
From time to time, however, attempts have been made to amend the Federal statutes for the purpose of imposing such restrictions and prohibitions as I have indicated.
Briefly, the reports, according to a Library of Congress report I have received, stated the purpose of such bills to be the elimination or curbing of a "vicious practice variously known as 'bid-shopping" or "bid-peddling on government contracts.
"Bid-shopping" or "bid-peddling" is a practice whereby a general contractor secures figures for the preparation of his bid from several subcontractors in each phase of the contract. Upon being awarded the contract on the basis of the submitted figures, the general contractor then goes to other subcontractors or a favored firm-for the purpose of re-subletting the subcontract to the person "shaving" the most from the figures submitted by the original subcontractor.
This practice notes the report creates a cut-throat competition which provides the general contractor with a larger margin of profit at the expense of the subcontractors who submitted their original figures in reliance upon the good faith of the general contractor to utilize their services in the event his bid was accepted for the project.
Opponents of these bills objected to their passage upon the ground that "the admitted evil cannot be removed by legislation, but only through better business ethics being adopted by the contractors themselves."
In his message accompanying his veto of H.R. 146, the President objected to its enactment principally upon the ground that "it is believed that this bill will have no tene (continued on page 27)
MASONRY.
March, 196