A-42431, MAY 21, 1932, 11 COMP. GEN. 440

A-42431: May 21, 1932

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WAS UNABLE TO PROCURE A PERFORMANCE BOND. 1932: I HAVE YOUR LETTER OF MAY 12. WHEN THE BIDS WERE OPENED AT 2:15 P.M. IT WAS FOUND THAT THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY. WAS THE LOWEST BIDDER. THIS BID WAS ACCOMPANIED BY A GUARANTEE IN THE FORM OF A CERTIFIED CHECK FOR $323.60. THE NEXT LOWEST BIDDER WAS SUSSMAN AND COOPER. THE BID OF THE CHERRY CONSTRUCTION COMPANY WAS ACCEPTED AND CONTRACT AND BOND FORMS WERE PREPARED AND FORWARDED TO THE COMPANY. THERE ARE INCLOSED COPIES OF LETTERS RECEIVED FROM THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY AND THE COMMISSIONER OF IMMIGRATION AT ELLIS ISLAND IN REGARD TO THE MATTER. IT IS RESPECTFULLY REQUESTED THAT THE DEPARTMENT BE ADVISED AS TO THE ACTION TO BE TAKEN WITH REGARD TO THE BID OF THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY.

A-42431, MAY 21, 1932, 11 COMP. GEN. 440

BIDDERS - DEPOSITS - PERFORMANCE BONDS WHERE THE ADVERTISEMENT FOR BIDS FOR CERTAIN REPAIR WORK FOR THE GOVERNMENT ADVISED ALL BIDDERS THAT A GUARANTY WOULD BE REQUIRED WITH EACH BID IN THE AMOUNT OF 10 PERCENT OF THE TOTAL OF THE BID, AND THAT A PERFORMANCE BOND OF NOT LESS THAN 50 PERCENT OF THE TOTAL AMOUNT OF THE BID WOULD BE REQUIRED, AND THE LOW BIDDER COMPLIED WITH THE FIRST REQUIREMENT BY FURNISHING A CERTIFIED CHECK FOR 10 PERCENT OF THE AMOUNT OF HIS BID, BUT WAS UNABLE TO PROCURE A PERFORMANCE BOND, SAID LOW BIDDER MAY BE PERMITTED TO PERFORM THE CONTRACT WITHOUT EXECUTING A PERFORMANCE BOND, THE CERTIFIED CHECK TO BE HELD AS A GUARANTY OF PERFORMANCE, AND THE AMOUNT OF THE PREMIUM ON A PERFORMANCE BOND TO BE DEDUCTED FROM THE CONTRACT PRICE.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF LABOR, MAY 21, 1932:

I HAVE YOUR LETTER OF MAY 12, 1932, AS FOLLOWS:

ON MARCH 21, 1932, THE COMMISSIONER OF IMMIGRATION AT ELLIS ISLAND, N.Y.H., SOLICITED BIDS FOR REPAIRS TO COVERED WALKWAYS, BETWEEN FERRY HOUSE AND ISLANDS NOS. 2 AND 3. WHEN THE BIDS WERE OPENED AT 2:15 P.M. ON APRIL 6, IT WAS FOUND THAT THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY, 263 BROOME STREET, NEW YORK CITY, WAS THE LOWEST BIDDER, ITS BID BEING $3,227.46. THIS BID WAS ACCOMPANIED BY A GUARANTEE IN THE FORM OF A CERTIFIED CHECK FOR $323.60. THE NEXT LOWEST BIDDER WAS SUSSMAN AND COOPER, 3816 PRATT AVE., BRONX, NEW YORK CITY, ITS BID BEING $6,475.00.

THE BID OF THE CHERRY CONSTRUCTION COMPANY WAS ACCEPTED AND CONTRACT AND BOND FORMS WERE PREPARED AND FORWARDED TO THE COMPANY. HOWEVER, ON MAY 6 A REPRESENTATIVE OF THE FIRM CALLED AT ELLIS ISLAND AND STATED THAT THEY COULD NOT PRODUCE A BOND AS THE OTHER BIDS DIFFERED TO SUCH AN EXTENT THAT THE "BONDING COMPANIES" WOULD NOT GIVE THEM A BOND.

THERE ARE INCLOSED COPIES OF LETTERS RECEIVED FROM THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY AND THE COMMISSIONER OF IMMIGRATION AT ELLIS ISLAND IN REGARD TO THE MATTER; COPY OF REQUEST FOR BIDS; ABSTRACT OF BIDS RECEIVED; AND THE ORIGINAL BID OF THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY.

IT IS RESPECTFULLY REQUESTED THAT THE DEPARTMENT BE ADVISED AS TO THE ACTION TO BE TAKEN WITH REGARD TO THE BID OF THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY. SINCE IT IS ESSENTIAL THAT THE WORK BE COMPLETED AS PROMPTLY AS POSSIBLE IT WILL BE APPRECIATED IF YOU WILL FAVOR THE DEPARTMENT WITH AN EARLY RESPONSE.

IT APPEARS THAT THE ADVERTISEMENT FOR BIDS ADVISED ALL BIDDERS THAT A GUARANTY WOULD BE REQUIRED WITH EACH BID IN THE AMOUNT OF 10 PERCENT OF THE TOTAL OF THE BID, AND THAT A PERFORMANCE BOND OF NOT LESS THAN 50 PERCENT OF THE TOTAL AMOUNT OF THE BID WOULD BE REQUIRED. THE LOW BIDDER, THE CHERRY CONSTRUCTION AND ENGINEERING COMPANY, APPEARS TO HAVE COMPLIED WITH THE FIRST REQUIREMENT, AND FORWARDED WITH ITS BID A CERTIFIED CHECK IN THE SUM OF $323.60. HOWEVER, UPON BEING AWARDED THE CONTRACT AND UPON RECEIPT OF THE CONTRACT AND BOND FORMS, THE SAID BIDDER ADVISED--- LETTER OF MAY 7, 1932--- THAT BECAUSE OF THE DIFFERENCE BETWEEN ITS BID AND THE OTHER BIDS RECEIVED, THE "BONDING COMPANIES" WOULD NOT GIVE IT A BOND. SAID BIDDER REQUESTED THAT THE GOVERNMENT RETAIN POSSESSION OF THE CERTIFIED CHECK IN LIEU OF THE BOND UNTIL THE COMPLETION AND ACCEPTANCE OF THE WORK.

THE PROVISION IN THE ADVERTISEMENT FOR BIDS WITH RESPECT TO A BID GUARANTY AND A PERFORMANCE BOND WAS INSERTED FOR THE BENEFIT AND PROTECTION OF THE UNITED STATES.

THE NEXT LOWEST BIDDER SUBMITTED A BID OF $6,475, OR A DIFFERENCE OF $3,247.54 BETWEEN THE TWO BIDS. HOWEVER, THE SAID LOW BIDDER DOES NOT URGE MISTAKE IN THE SUBMISSION OF ITS BID BUT AGREES TO PERFORM THE WORK IF THE PROVISION OF THE ADVERTISEMENT WITH RESPECT TO REQUIREMENT OF BOND BE WAIVED, AND THE GUARANTY SUBMITTED WITH ITS BID (CERTIFIED CHECK FOR $323.60) BE SUBSTITUTED INSTEAD.

IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES, PARTICULARLY THE SAVING TO BE EFFECTED, THE CHARACTER OF THE WORK, AND THE SMALL AMOUNT INVOLVED, IT WOULD APPEAR TO BE IN THE INTEREST OF THE UNITED STATES TO PERMIT THE LOW BIDDER TO PERFORM THE CONTRACT AS PROPOSED WITHOUT EXECUTING A PERFORMANCE BOND, THE CERTIFIED CHECK IN THE SUM OF $323.60 TO BE HELD AS A GUARANTY OF PERFORMANCE. IT WOULD APPEAR, HOWEVER, THAT THE LOW BIDDER, AS WELL AS ALL OTHER BIDDERS INCLUDED IN THE PRICES QUOTED AN AMOUNT FOR A PREMIUM ON A PERFORMANCE BOND. THEREFORE, THE AMOUNT OF THE PREMIUM ON A BOND IN THE AGGREGATE OF 50 PERCENT OF THE SAID LOW BIDDER'S BID SHOULD BE DEDUCTED FROM PAYMENTS MADE TO SAID BIDDER UNDER THE CONTRACT.