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B-176138, OCT 19, 1972, 52 COMP GEN 223

B-176138 Oct 19, 1972
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WHO WAS JOINED IN THE SECOND-STEP BY A CONSTRUCTION FIRM WHO HAD NOT PARTICIPATED IN THE FIRST STEP - AN INVITATION REQUIREMENT - BUT WAS THE ONLY PRINCIPAL NAMED IN THE BID BOND. WAS PROPERLY REJECTED SINCE THE CONSTRUCTION COMPANY. THE BID BOND COVERAGE BEING INCOMPLETE WAS DEFECTIVE. WHICH WAS ERRONEOUSLY HELD TO HAVE NO LEGAL SIGNIFICANCE. STEP I OF THE IFB WAS ISSUED NOVEMBER 29. SIX BIDDERS SUBMITTED TECHNICAL PROPOSALS WHICH WERE DETERMINED ACCEPTABLE. THE PROPOSAL HERE IN QUESTION WAS SUBMITTED IN THE NAME OF "AECON INTERNATIONAL. THE FOLLOWING STATEMENT ACCOMPANIED THE PROPOSAL: AECON INTERNATIONAL IS AN ORGANIZATION CONSISTING OF REGISTERED ARCHITECTS. COMPONENT HOME MANUFACTURERS NATIONAL GENERAL CONTRACTORS AND THEIR SUBCONTRACTORS" AECON INTERNATIONAL WILL SUBMIT A PROPOSAL UNDER STEP TWO WHICH WILL BE A TURN KEY PFOJECT ***.

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B-176138, OCT 19, 1972, 52 COMP GEN 223

BIDS - TWO-STEP PROCUREMENT - BOND REQUIREMENT - COVENTURERS THE SECOND-STEP BID, A TURNKEY PROJECT, SUBMITTED UNDER A TWO-STEP INVITATION FOR BIDS TO DESIGN AND CONSTRUCT FAMILY HOUSING BY A GROUP COMPOSED OF ARCHITECTS, ENGINEERS, LAND PLANNERS, AND BUILDERS, WHO WAS JOINED IN THE SECOND-STEP BY A CONSTRUCTION FIRM WHO HAD NOT PARTICIPATED IN THE FIRST STEP - AN INVITATION REQUIREMENT - BUT WAS THE ONLY PRINCIPAL NAMED IN THE BID BOND, WAS PROPERLY REJECTED SINCE THE CONSTRUCTION COMPANY, A SEPARATE LEGAL ENTITY, HAD NO AUTHORITY TO BIND THE COVENTURERS RESPONSIBLE FOR DESIGN, AND THE BID BOND COVERAGE BEING INCOMPLETE WAS DEFECTIVE. FURTHERMORE, INFORMATION SUBMITTED PRIOR TO THE SECOND-STEP BID IDENTIFYING THE CONSTRUCTION COMPANY AS A CONVENTURER, WHICH WAS ERRONEOUSLY HELD TO HAVE NO LEGAL SIGNIFICANCE, SERVED NOTICE THE CONSTRUCTION FIRM HAD NO AUTHORITY TO BIND ITS COVENTURERS.

TO THE AECON INTERNATIONAL TEAM, OCTOBER 19, 1972:

WE REFER TO YOUR TELEFAX OF JUNE 5, 1972, AND SUBSEQUENT CORRESPONDENCE, PROTESTING THE REJECTION OF YOUR BID AS NONRESPONSIVE UNDER THE SECOND STEP OF TWO-STEP FORMALLY ADVERTISED INVITATION FOR BIDS (IFB) 77-17-72, ISSUED BY THE U.S. COAST GUARD, DEPARTMENT OF TRANSPORTATION (DOT).

STEP I OF THE IFB WAS ISSUED NOVEMBER 29, 1971, SOLICITING TECHNICAL PROPOSALS FOR THE DESIGN AND CONSTRUCTION OF 75 UNITS (66 BASE AND 9 ADDITIVE) OF FAMILY HOUSING, INCLUDING PLANS AND CONSTRUCTION FOR ALL UTILITIES, ROADS, LANDSCAPING AND SITE DEVELOPMENT.

SIX BIDDERS SUBMITTED TECHNICAL PROPOSALS WHICH WERE DETERMINED ACCEPTABLE. THE PROPOSAL HERE IN QUESTION WAS SUBMITTED IN THE NAME OF "AECON INTERNATIONAL, C/O GRIMBALL, GRIMBALL, GORRONDONA, KEARNEY AND SAVOYE, ARCHITECTS, ENGINEERS, AND PLANNERS, INC.," AND SIGNED BY HENRY G. GRIMBALL, ARCHITECT. THE FOLLOWING STATEMENT ACCOMPANIED THE PROPOSAL:

AECON INTERNATIONAL IS AN ORGANIZATION CONSISTING OF REGISTERED ARCHITECTS, PROFESSIONAL ENGINEERS, LAND PLANNERS, AND CONTRACTORS OFFERING SITING, BUILDING, DESIGN, CONSTRUCTION DEVELOPMENT AND SUPERVISION OF PLANNED RESIDENTIAL COMMUNITIES.

SPECIFICALLY, IT INCLUDES THE FOLLOWING:

"GRIMBALL, GRIMBALL, GORRONDONA, KEARNEY, & SAVOYE ARCHITECTS, ENGINEERS, AND PLANNERS, INC.

COMPONENT HOME MANUFACTURERS

NATIONAL GENERAL CONTRACTORS AND THEIR SUBCONTRACTORS"

AECON INTERNATIONAL WILL SUBMIT A PROPOSAL UNDER STEP TWO WHICH WILL BE A TURN KEY PFOJECT ***.

THE STEP II PRICE COMPETITION, ISSUED FEBRUARY 3, 1972, PROVIDED THAT "EACH BID IN THIS STEP #2 MUST BE BASED ON THE BIDDING SCHEDULE AND THE BIDDER'S OWN TECHNICAL PROPOSAL ***." FURTHER, THE IFB REQUIRED BID, PAYMENT AND PERFORMANCE BONDS.

AMONG THE BIDS RECEIVED WAS ONE FROM "AECON INTERNATIONAL, 20TH CENTURY CONSTRUCTION CO., INC.," SIGNED BY MORRIS A. SARSHIK, PRESIDENT. THE ACCOMPANYING REPRESENTATIONS AND CERTIFICATIONS ALSO NAMED THE BIDDER AS "AECON INTERNATIONAL, 20TH CENTURY CONSTRUCTION CO., INC.," A NEW JERSEY CORPORATION. THE BID BOND IN THE REQUIRED PENAL SUM NAMED THE PRINCIPAL AS "20TH CENTURY CONSTRUCTION CO., INC.," A NEW JERSEY CORPORATION, AND WAS SIGNED BY MORRIS A. SARSHIK, PRESIDENT. THE BOND IDENTIFIED THE IFB BY NUMBER AND DESCRIPTION.

THE AECON INTERNATIONAL BID OF $1,782,028 FOR THE BASE BID AND ADDITIVES BECAME THE LOW BID AFTER THE BID OF BROWN PROFESSIONAL ENGINEERS, INC., WAS REJECTED AS NONRESPONSIVE FOR FAILURE TO SUBMIT A BID BOND. HOWEVER, BY LETTER OF APRIL 7, 1972, NASCO PRODUCTS COMPANY, THE NEXT LOW BIDDER AT $1,950,806, QUESTIONED THE AECON INTERNATIONAL BID ON THE GROUNDS THAT 20TH CENTURY CONSTRUCTION CO., INC., WAS A SEPARATE LEGAL ENTITY FROM GRIMBALL, GRIMBALL, GORRONDONA, KEARNEY & SAVOYE (GRIMBALL) AND HAD NOT SUBMITTED A TECHNICAL PROPOSAL UNDER STEP I. THE CONTRACTING OFFICER REJECTED THE BID FOR THE REASON SUGGESTED BY NASCO. THEREAFTER, REPRESENTATIVES OF GRIMBALL AND 20TH CENTURY CONTENDED THAT AECON INTERNATIONAL SUBMITTED THE BID IN STEP II AS A TEAM AND THAT THE BID SHOULD NOT HAVE BEEN REJECTED. HOWEVER, THE CONTRACTING OFFICER CONTINUED TO VIEW THE BID AS A 20TH CENTURY BID AND SUSTAINED THE REJECTION ON THE BASIS THAT 20TH CENTURY HAD NOT SUBMITTED A FIRST STEP PROPOSAL.

HOWEVER, EVEN IF WE CONSIDER THAT THE BID WAS AN AECON INTERNATIONAL BID, WE WOULD HAVE TO CONCLUDE THAT IT SHOULD BE REJECTED. THE IFB WAS ISSUED ON FEBRUARY 3, 1972, WITH A MARCH 22, 1972, BID OPENING DATE. IN THE INTERIM, A LETTER OF MARCH 8, 1972, SIGNED BY HENRY G. GRIMBALL, AS PRESIDENT OF GRIMBALL, AND HAROLD B. SARSHIK, AS VICE PRESIDENT OF 20TH CENTURY, WAS RECEIVED BY THE CONTRACTING OFFICER. THAT LETTER, REFERENCING THE IFB NUMBER AND PROJECT DESCRIPTION, ADVISED THAT THE PARTIES WOULD BE ACTING AS A TEAM UNDER THE NAME OF AECON INTERNATIONAL IN SUBMITTING A STEP II PROPOSAL. THE LETTER WENT ON TO DELINEATE THE SEPARATE RESPONSIBILITIES THAT EACH PARTY IN THE TEAM WOULD HAVE. THE INDIVIDUAL RESPONSIBILITIES OF GRIMBALL WERE LISTED AS PREPARATION AND SUBMISSION OF THE STEP I TECHNICAL PROPOSAL, PREPARATION OF WORKING DRAWING AND SPECIFICATIONS FOR CONSTRUCTION AND SUPERVISION OF CONSTRUCTION. ON THE OTHER HAND, IT WAS INDICATED THAT 20TH CENTURY WAS TO BE THE GENERAL CONTRACTOR ON THE PROJECT AND THAT IT WOULD PREPARE AND SUBMIT THE STEP II BID. IT WAS INDICATED FURTHER THAT BONDS WOULD BE PREPARED IN THE NAME OF 20TH CENTURY AS THE GENERAL CONTRACTOR FOR THE PROJECT AND THAT IT WOULD EXECUTE THE CONSTRUCTION CONTRACT.

THE CONTRACTING OFFICER ACCORDED THE LETTER NO LEGAL SIGNIFICANCE. HOWEVER, OUR OFFICE HAS HELD THAT ALL DOCUMENTS RECEIVED PRIOR TO BID OPENING CONSTITUTE A PART OF THE BID. 45 COMP. GEN. 397, 399(1966); B 160659, JUNE 9, 1967. IT IS OUR OPINION THAT THE LETTER WAS A PART OF THE BID AND PROVIDED A CLEAR INDICATION AS TO THE IDENTITY OF AECON INTERNATIONAL.

HOWEVER, NO BID BOND WAS RECEIVED FROM AECON INTERNATIONAL AS INDICATED ABOVE; THE ONLY BID BOND RECEIVED WAS FROM 20TH CENTURY. WE BELIEVE IT IS CLEAR FROM THE MARCH 8 LETTER THAT 20TH CENTURY WAS ONLY RESPONSIBLE FOR SUBMITTING BONDS FOR ITSELF AS GENERAL CONTRACTOR. HOWEVER, THE CONTRACT TO BE AWARDED IS NOT RESTRICTED TO CONSTRUCTION, BUT INCLUDES DESIGN AS WELL. THE LATTER ASPECT OF THE WORK IS THE RESPONSIBILITY OF GRIMBALL. THEREFORE, IF AECON INTERNATIONAL CONSISTS OF GRIMBALL AND 20TH CENTURY, THE BID BOND COVERAGE IS INCOMPLETE.

A BID BOND REQUIREMENT IS A MATERIAL PART OF THE IFB AND NONCOMPLIANCE RENDERS A BID NONRESPONSIVE. 38 COMP. GEN. 532(1959). A BID BOND WHICH NAMES A PRINCIPAL DIFFERENT THAN THE NOMINAL BIDDER IS DEFICIENT AND THE DEFECT MAY NOT BE WAIVED AS A MINOR INFORMALITY. B 170361, JULY 27, 1970. THIS VIEW IS PROMPTED BY THE RULE OF THE LAW OF SURETYSHIP THAT NO ONE INCURS A LIABILITY TO PAY THE DEBTS OR PERFORM A DUTY OF ANOTHER UNLESS HE EXPRESSLY AGREES TO BE BOUND. THE LAW DOES NOT CREATE RELATIONSHIPS OF THIS CHARACTER BY MERE IMPLICATION. 44 COMP. GEN. 495(1965).

IN THIS CASE AECON INTERNATIONAL APPEARS TO BE A JOINT VENTURE. RECOGNIZE THAT EACH MEMBER OF A JOINT VENTURE ACTS AS BOTH PRINCIPAL AND AGENT OF HIS COVENTURERS AND EACH OF SEVERAL JOINT VENTURERS HAS THE POWER TO SUBJECT THE OTHERS TO LIABILITY TO THIRD PARTIES WITHIN THE SCOPE OF THE JOINT VENTURE. HOWEVER, ONE MEMBER OF A JOINT VENTURE, BY ACTS IN CONTRAVENTION OF A RESTRICTION ON HIS AUTHORITY, CANNOT BIND HIS COVENTURERS TO THIRD PARTIES WHO HAVE KNOWLEDGE OF THE LIMITATION OF HIS AUTHORITY. WOOD V. WESTERN BEEF FACTORY, INC., 378 F.2D 96(10TH CIR. 1967). IN OUR VIEW, THE MARCH 8 LETTER SERVED AS NOTICE OF THE LIMITATION OF THE AUTHORITY OF 20TH CENTURY.

THE DETERMINATION OF THE SUFFICIENCY OF A BID BOND RELATES TO WHETHER THE GOVERNMENT WILL RECEIVE THE FULL AND COMPLETE PROTECTION IT CONTEMPLATED IN THE EVENT OF A FAILURE OF A BIDDER TO EXECUTE ANY REQUIRED CONTRACTUAL DOCUMENTS OR BONDS. B-176787, NOVEMBER 4, 1969. OUR OFFICE WILL NOT APPLY AN OVERLY TECHNICAL INTERPRETATION OF THE APPLICABLE REGULATIONS TO DEFEAT THE BID BOND WHERE THE GOVERNMENT WILL RECEIVE THE PROTECTION SOUGHT. THUS, WHERE A BID BOND NAMED COVENTURERS AS PRINCIPAL, BUT ONLY ONE WAS INDICATED ON THE BID AS BIDDER, WE CONCLUDED THAT THE GOVERNMENT WOULD RECEIVE FULL PROTECTION. THERE, THE BID DOCUMENTS THEMSELVES ESTABLISHED THE RELATIONSHIP BETWEEN THE BID BOND PRINCIPALS AND INTENDED BIDDER SO AS TO SUBJECT THE SURETY TO LIABILITY IN THE EVENT THE BIDDER FAILED TO EXECUTE THE REQUIRED CONTRACTUAL DOCUMENTS OR BONDS. B-176321, AUGUST 25, 1972; B-169369, APRIL 7, 1970. IN THE PRESENT CASE, THE GOVERNMENT WOULD NOT BE SIMILARLY PROTECTED.

IN VIEW OF THE FACT THAT THE IFB REQUIRED BOTH DESIGN AND CONSTRUCTION SERVICES, IT IS OUR OPINION THAT THE DISCREPANCY BETWEEN THE BID BOND PRINCIPAL AND NOMINAL BIDDER IS A MATERIAL DEVIATION FROM THE REQUIREMENTS OF THE IFB REQUIRING REJECTION OF THE AECON INTERNATIONAL BID AS NONRESPONSIVE.

ACCORDINGLY, THE PROTEST IS DENIED.

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