B-168420 (2), FEB. 13, 1970

B-168420 (2), FEB. 13, 1970

BID PROTEST--SMALL BUSINESS SET-ASIDE--PROPRIETY DECISION DENYING PROTEST ON BEHALF OF UNITED INDUSTRIES, INC. AGAINST SMALL BUSINESS SET-ASIDE. WHERE THREE SMALL BUSINESS CONCERNS SUBMITTED BIDS AND ONE BID WAS NONRESPONSIVE, ANOTHER MUCH HIGHER AND THE LOW BID PRICE CONSIDERED REASONABLE IT CANNOT BE HELD THAT THE SMALL BUSINESS SET-ASIDE PREVENTED MEANINGFUL COMPETITION TO BE IN VIOLATION OF ASPR 1-706.5 (A) (1).

TO HALIFAX ENGINEERING, INCORPORATED:

REFERENCE IS MADE TO THE LETTERS OF NOVEMBER 21, 1969, AND DECEMBER 5, 1969, PROTESTING AGAINST THE REJECTION OF YOUR BID TO ADVERTISED SOLICITATION NO. F04606-70-B-0040, DATED SEPTEMBER 26, 1969, ISSUED BY THE SACRAMENTO AIR MATERIEL AREA, DIRECTORATE OF PROCUREMENT AND PRODUCTION, MCCLELLAN AIR FORCE BASE, CALIFORNIA. THE PROCUREMENT, WHICH WAS EXCLUSIVELY SET-ASIDE FOR SMALL BUSINESS PARTICIPATION, WAS FOR:

"* * * DEPOT LEVEL MAINTENANCE (DLM) AND REPAIR SERVICES INCLUDING EMERGENCY TECHNICAL ASSISTANCE OF GOVERNMENT OWNED RADOMES UTILIZED WITH GROUND COMMUNICATIONS-ELECTRONICS METEOROLOGICAL (CEM) EQUIPMENT LOCATED AT SITES AND INSTALLATIONS WORLD-WIDE, EXCEPT IN CANADA PERFORMANCE IS LIMITED TO AIR STATIONS SAGLEK, MELVILLE, AND STEPHENVILLE IN NORTHEAST CANADA IN ACCORDANCE WITH APPENDIX 'A' (FILE NO. SMNLP-5800-3-70-1) AND APPENDIX 'B' (FILE NO. SMNL/5800/70/5) DATED 69 AUG 1 AND T.O. 31-1-69 DATED 67 MAY 12 * * *"

BIDS, WHICH WERE OPENED ON NOVEMBER 14, 1969, WERE RECEIVED FROM THREE SMALL BUSINESS CONCERNS AS FOLLOWS:

1. CENTURY, INCORPORATED - $ 433,000

2. HALIFAX ENGINEERING, - $ 410,000

INCORPORATED

3. ELECTRONIC SPACE SYSTEMS - $1,434,513

CORPORATION (ESSCO)

YOUR BID WAS REJECTED AS NONRESPONSIVE FOR FAILURE TO FURNISH A BID BOND WITH YOUR BID AND YOU PROTESTED AGAINST THIS DETERMINATION. AWARD WAS MADE TO CENTURY, INCORPORATED, AFTER RECEIPT OF YOUR PROTEST, SINCE IT WAS DETERMINED THAT THE SUBJECT OF THE PROCUREMENT WAS URGENTLY REQUIRED. HAS BEEN DETERMINED THAT THE PRICES IN CENTURY'S BID ARE REASONABLE.

THE BASIS FOR THE PROTEST IS THAT THE FAILURE TO FURNISH A BID BOND WITH THE BID WAS DUE TO UNFORESEEN CIRCUMSTANCES AND SHOULD HAVE BEEN WAIVED AS A MINOR INFORMALITY. YOUR LETTER INDICATES THAT THE BUYER WAS ADVISED AFTER BID OPENING BUT PRIOR TO AWARD THAT YOU WERE IN A POSITION TO FURNISH A BID BOND BUT YOU WERE NOT PERMITTED TO DO THIS. ALSO, YOU HAVE ADVISED THAT PRIOR TO BID OPENING YOU REQUESTED AN EXTENSION OF THE BID OPENING TIME TO ENABLE YOU TO OBTAIN A BID BOND BUT THAT THIS REQUEST WAS DENIED.

THE CONTRACTING OFFICER'S REPORT STATES THAT ON NOVEMBER 12, 1969, WHICH WAS TWO DAYS BEFORE THE SCHEDULED BID OPENING AS AMENDED, HE RECEIVED A TELEPHONED REQUEST FROM YOUR CONCERN THAT THE BID OPENING BE POSTPONED FOR ONE WEEK TO ENABLE YOU TO OBTAIN A BID BOND. THE REPORT STATES THAT THIS REQUEST WAS DENIED.

PARAGRAPH 4 OF THE INSTRUCTIONS TO BIDDERS (CONSTRUCTION CONTRACT) PROVIDES AS FOLLOWS:

"WHERE A BID GUARANTEE IS REQUIRED BY THE INVITATION FOR BIDS, FAILURE TO FURNISH A BID GUARANTEE IN THE PROPER FORM AND AMOUNT, BY THE TIME SET FOR OPENING OF BIDS, MAY BE CAUSE FOR REJECTION OF THE BID."

PARAGRAPH 13 ON PAGE 8 OF THE SOLICITATION ENTITLED "BID BONDS" PROVIDES:

"* * * EACH BIDDER SHALL SUBMIT WITH HIS BID A BID BOND (STANDARD FORM 24) WITH GOOD AND SUFFICIENT SURETY OR SURETIES ACCEPTABLE TO THE GOVERNMENT, OR OTHER SECURITY AS PROVIDED IN PARAGRAPH 4 OF INSTRUCTIONS TO BIDDERS (STANDARD FORM 22) IN THE FORM OF TWENTY PERCENT (20%) OF THE BID PRICE OR $3,000,000.00, WHICHEVER IS LESSER. THE BID BOND PENALTY MAY BE EXPRESSED IN TERMS OF A PERCENTAGE OF THE BID PRICE OR MAY BE EXPRESSED IN DOLLARS AND CENTS."

ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-404.2 (H) PROVIDES THAT WHERE A BID GUARANTEE IS REQUIRED AND A BIDDER FAILS TO FURNISH IT IN ACCORDANCE WITH THE REQUIREMENTS OF THE INVITATION FOR BIDS, THE BID SHALL BE REJECTED EXCEPT AS OTHERWISE PROVIDED INASPR 10-102.5. ASPR 10-102.5 LISTS THOSE SITUATIONS WHERE NONCOMPLIANCE WITH THE BID BOND REQUIREMENT DOES NOT REQUIRE REJECTION OF THE BID; HOWEVER, THE INSTANT CASE DOES NOT FALL WITHIN ANY OF THESE EXCEPTIONS.

BEGINNING WITH 38 COMP. GEN. 532 (1959), WE HAVE CONSISTENTLY HELD THAT A BID BOND REQUIREMENT MUST BE CONSIDERED AS A MATERIAL PART OF THE INVITATION AND THAT THE CONTRACTING OFFICER CANNOT WAIVE THE FAILURE TO COMPLY WITH THE REQUIREMENT BUT MUST REJECT AS NONRESPONSIVE A BID NOT ACCOMPANIED BY THE REQUIRED BOND. IT HAS BEEN HELD THAT THE STATEMENT IN THE BID GUARANTEE REQUIREMENT THAT FAILURE TO COMPLY "MAY BE CAUSE FOR REJECTION" IS JUST AS COMPELLING AND MATERIAL AS IF MORE POSITIVE LANGUAGE WERE EMPLOYED. SEE B-160507, DECEMBER 27, 1966, AND CASES CITED THEREIN. IT HAS ALSO BEEN HELD THAT EVEN WHERE THE FAILURE TO FURNISH A BID BOND IS DUE TO INADVERTENCE, MISTAKE, OR OTHERWISE, THE BID MUST STILL BE REJECTED. SEE B-167787, NOVEMBER 4, 1969, AND CASES CITED THEREIN.

THE MATERIAL FACTS IN THIS CASE ARE THAT A BID BOND WAS REQUIRED, YOU FAILED TO COMPLY WITH THIS REQUIREMENT AND THE FAILURE DID NOT COME WITHIN ONE OF THE EXCEPTIONS PROVIDED BY THE REGULATION. IN THE CIRCUMSTANCES WE FIND NO BASIS TO QUESTION THE DETERMINATION THAT YOUR BID WAS NONRESPONSIVE. TO PERMIT YOU TO FURNISH A BID BOND AFTER BID OPENING WOULD COMPROMISE THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM; THEREFORE, THIS OFFER WAS PROPERLY REJECTED. WE CANNOT SAY THAT THE BUYER ABUSED HIS DISCRETION IN DENYING YOUR REQUEST THAT THE BID OPENING BE POSTPONED PARTICULARLY IN VIEW OF THE URGENCY OF THE PROCUREMENT AND THE STATEMENT IN THE CONTRACTING OFFICER'S REPORT THAT YOU MADE THIS REQUEST ONLY TWO DAYS BEFORE THE SCHEDULED OPENING AS AMENDED.