B-130513, FEBRUARY 20, 1957, 36 COMP. GEN. 599

B-130513: Feb 20, 1957

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BIDS - FOREIGN CONSTRUCTION PROJECT - SURETIES' BONDS - ACCEPTABLE THE FAILURE OF A LOW BIDDER TO FURNISH A BID BOND WITH HIS BID FOR THE CONSTRUCTION OF A HIGHWAY PROJECT IN A FOREIGN COUNTRY IS NOT A MATERIAL DEVIATION AFFECTING THE PRICE. IS AN INFORMALITY WHICH MAY BE WAIVED BY THE CONTRACTING OFFICER WHEN SUCH ACTION IS DETERMINED TO BE IN THE INTEREST OF THE GOVERNMENT. A DETERMINATION BY A CONTRACTING OFFICER THAT A SURETY NOT ON THE TREASURY LIST OF AUTHORIZED SURETIES IS AN ACCEPTABLE SURETY ON PERFORMANCE AND PAYMENT BONDS FURNISHED BY A LOW BIDDER FOR A HIGHWAY CONSTRUCTION PROJECT TO BE PERFORMED IN A FOREIGN COUNTRY SATISFIES THE REQUIREMENTS OF THE INVITATION FOR "GOOD AND SUFFICIENT" SURETIES AND OVERCOMES THE INSTRUCTION ON GOVERNMENT BOND FORMS TO THE EFFECT THAT AN ACCEPTABLE SURETY IS ANY CORPORATION APPEARING ON THE TREASURY LIST.

B-130513, FEBRUARY 20, 1957, 36 COMP. GEN. 599

BIDS - FOREIGN CONSTRUCTION PROJECT - SURETIES' BONDS - ACCEPTABLE THE FAILURE OF A LOW BIDDER TO FURNISH A BID BOND WITH HIS BID FOR THE CONSTRUCTION OF A HIGHWAY PROJECT IN A FOREIGN COUNTRY IS NOT A MATERIAL DEVIATION AFFECTING THE PRICE, QUALITY OR QUANTITY OF THE PROCUREMENT, BUT IS AN INFORMALITY WHICH MAY BE WAIVED BY THE CONTRACTING OFFICER WHEN SUCH ACTION IS DETERMINED TO BE IN THE INTEREST OF THE GOVERNMENT. A DETERMINATION BY A CONTRACTING OFFICER THAT A SURETY NOT ON THE TREASURY LIST OF AUTHORIZED SURETIES IS AN ACCEPTABLE SURETY ON PERFORMANCE AND PAYMENT BONDS FURNISHED BY A LOW BIDDER FOR A HIGHWAY CONSTRUCTION PROJECT TO BE PERFORMED IN A FOREIGN COUNTRY SATISFIES THE REQUIREMENTS OF THE INVITATION FOR "GOOD AND SUFFICIENT" SURETIES AND OVERCOMES THE INSTRUCTION ON GOVERNMENT BOND FORMS TO THE EFFECT THAT AN ACCEPTABLE SURETY IS ANY CORPORATION APPEARING ON THE TREASURY LIST.

TO DOUGLAS G. MODE, FEBRUARY 20, 1957:

REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 31, 1957, IN WHICH YOU CONTEND THAT THE INVITATION ISSUED BY THE BUREAU OF PUBLIC ROADS ON THE INTER-AMERICAN HIGHWAY, COSTA RICA PROJECT NO. 75-56-5, SHOULD BE READVERTISED SINCE "SUBSTANTIAL AND MATERIAL BASIC CHANGES HAVE BEEN MADE IN THE BIDDING CONDITIONS SUBSEQUENT TO THE FILING OF BIDS.'

A REPORT ON THE MATTER FROM THE COMMISSIONER OF PUBLIC ROADS, DATED FEBRUARY 8, 1957, INDICATES THAT THE PROJECT WAS ADVERTISED FOR BIDS ON OCTOBER 11, 1956. THE INVITATION PROVIDED, UNDER THE HEADING " INFORMATION REGARDING BIDDING MATERIAL, BID GUARANTEE AND BONDS" THAT:

BID BOND WILL BE REQUIRED WITH EACH BID IN AN AMOUNT NOT LESS THAN 5 PERCENT OF THE TOTAL AMOUNT BID.

PERFORMANCE AND PAYMENT BONDS, EACH IN AN AMOUNT NOT LESS THAN 50 PERCENT OF THE ORIGINAL TOTAL CONTRACT PRICE WILL BE REQUIRED.

SIX BIDS WERE RECEIVED AND OPENED ON NOVEMBER 20, 1956. THE LOW BID OF $4,791,695.50 WAS SUBMITTED BY BEECHE AND FAIT, LTDA. AND COMPANIA CONSTRUCTORS QUIROS AND ULATE, A JOINT VENTURE. THE SECOND LOW BID IN THE AMOUNT OF $4,995,991.50 WAS SUBMITTED BY EMPRESA CONSTRUCTORS RAFAEL HERRERA, LTDA. AND L. R. SOMMERS, THE PROTESTING BIDDERS. ACCOMPANYING THE LOW BID WAS A STATEMENT BEARING THE SEAL OF THE COSTA RICA EMBASSY IN WASHINGTON, D.C., TO THE EFFECT THAT A BID BOND WAS TO BE FURNISHED THROUGH THE INSTITUTO NACIONAL DE SEGUROS OF COSTA RICA, AN AGENCY OF THE COSTA RICA GOVERNMENT. SUBSEQUENTLY, CORRESPONDENCE WAS RECEIVED BY THE BUREAU OF PUBLIC ROADS FROM THE COSTA RICAN EMBASSY PROPOSING TO COMPLETE THE BID BOND. AT THAT TIME IT WAS DETERMINED THAT BEECHE AND ULATE HAD SUBMITTED THE LOW BID WHICH APPEARED REGULAR AND IN FULL RESPONSE TO THE INVITATION EXCEPT FOR THE ABSENCE OF THE BID BOND. THE FAILURE TO SUBMIT THE BID BOND WITH THE BID WAS REGARDED BY THE BUREAU OF THE PUBLIC ROADS AS AN INFORMALITY WHICH COULD BE WAIVED IN THE INTEREST OF THE UNITED STATES, AND, THEREFORE, THE LOW BIDDERS WERE REQUESTED TO PROVIDE PERFORMANCE AND PAYMENT BONDS. THE INSTITUTO NACIONAL DE SERGUROS HAS FURNISHED FULLY EXECUTED PERFORMANCE AND PAYMENT BONDS WHICH APPEAR TO MEET LEGAL REQUIREMENTS AND HAS APPOINTED AN AGENT IN WASHINGTON, D.C., SATISFACTORY TO THE BUREAU OF PUBLIC ROADS FOR SERVICE OF PROCESS. THE INSTITUTO, HOWEVER, DOES NOT APPEAR ON THE LIST OF APPROVED SURETIES ISSUED BY THE SECRETARY OF THE TREASURY. NO AWARD HAS YET BEEN MADE.

YOU CONTEND THAT AN AWARD SHOULD NOT BE MADE TO THE LOW BIDDERS BECAUSE THEY FAILED TO SUBMIT A BID BOND WITH THEIR BID AS REQUIRED BY THE TERMS OF THE INVITATION AND BECAUSE THE SURETY ON THE PERFORMANCE AND PAYMENT BONDS PROVIDED DOES NOT APPEAR ON THE LIST OF AUTHORIZED SURETIES ISSUED BY THE SECRETARY OF THE TREASURY.

IN REGARD TO THE FAILURE TO SUPPLY A BID BOND, PARAGRAPH 4 OF THE INSTRUCTIONS TO BIDDERS PROVIDES THAT "WHERE SECURITY IS REQUIRED, FAILURE TO SUBMIT THE SAME WITH THE BID MAY BE CAUSE FOR REJECTION.' THE USE OF THE WORD "MAY" CLEARLY INDICATES THAT THE CONTRACTING OFFICER MAY ACCEPT A BID NOTWITHSTANDING THE ABSENCE OF A BID BOND. PARAGRAPH 11 (B) OF THE INSTRUCTIONS RESERVES TO THE GOVERNMENT THE RIGHT TO WAIVE ANY INFORMALITY IN BIDS WHEN SUCH WAIVER IS IN THE INTEREST OF THE GOVERNMENT.

FAILURE TO FURNISH A BID BOND WITH THE BID IS NOT A MATERIAL DEVIATION SINCE IT DOES NOT GO TO THE PRICE, QUANTITY, OR QUALITY OF THE PROCUREMENT. 30 COMP. GEN. 179. THE FAILURE TO PROVIDE SUCH BOND IS AN INFORMALITY WHICH MAY BE WAIVED IN ACCORDANCE WITH THE PROVISIONS OF THE INVITATION QUOTED ABOVE WHEN IT IS DETERMINED TO BE IN THE INTEREST OF THE GOVERNMENT TO DO SO. ADELHARDT CONSTR. CO. V. UNITED STATES, 123 C.1CLS. 456; 31 COMP. GEN. 20; 26 COMP. GEN. 49.

AS TO THE PERFORMANCE AND PAYMENT BONDS, THE BID FORM PROVIDES THAT THE BIDDER AGREES THAT UPON ACCEPTANCE OF THE BID, HE WILL GIVE SUCH BONDS WITH "GOOD AND SUFFICIENT SURETY OR SURETIES.' PARAGRAPH 2 OF THE INSTRUCTIONS APPEARING ON THE REVERSE SIDE OF THE PERFORMANCE AND PAYMENT BOND FORMS, STANDARD FORMS 25 AND 25A, RESPECTIVELY, PROVIDES " THE SURETY ON THE BOND MAY BE ANY CORPORATION AUTHORIZED BY THE SECRETARY OF THE TREASURY TO ACT AS SURETY, OR TWO RESPONSIBLE INDIVIDUAL SURETIES.' THE MILLER ACT REQUIRES THE EXECUTION OF PERFORMANCE AND PAYMENT BONDS BY A CONTRACTOR BEFORE AN AWARD OF A CONTRACT EXCEEDING $2,000 IN AMOUNT FOR THE CONSTRUCTION, ALTERATION OR REPAIR OF ANY PUBLIC BUILDING OR PUBLIC WORK OF THE UNITED STATES. HOWEVER, THE MILLER ACT ALSO PROVIDES, AT 40 U.S.C. 270A (B), AN EXCEPTION TO THE EFFECT THAT THE CONTRACTING OFFICER MAY WAIVE THE REQUIREMENTS FOR PERFORMANCE AND PAYMENT BONDS FOR WORK UNDER A CONTRACT WHICH IS TO BE PERFORMED IN A FOREIGN COUNTRY IF HE FEELS THAT IT IS IMPRACTICABLE FOR THE CONTRACTOR TO FURNISH SUCH BONDS. THE PERFORMANCE AND PAYMENT BONDS, THEREFORE, ARE REQUIRED NOT BY STATUTE BUT SOLELY BY THE TERMS OF THE INVITATION.

NOTHING IN THE INVITATION, HOWEVER, REQUIRES THAT THE SURETIES APPEAR ON THE TREASURY'S LIST OF AUTHORIZED SURETIES. THE ONLY REQUIREMENT IS THAT THE SURETY BE "GOOD AND SUFFICIENT.' THE PROVISION ON THE REVERSE SIDE OF THE BOND FORMS MERELY PROVIDES THAT ANY CORPORATION APPEARING ON THE TREASURY'S LIST OF AUTHORIZED SURETIES WILL BE ACCEPTABLE; THE LANGUAGE CLEARLY DOES NOT LIMIT ACCEPTABLE SURETIES TO CORPORATIONS APPEARING ON THE LIST. THE OBVIOUS INTENT OF THE INSTRUCTION IS TO ASSURE A CONTRACTOR IN ADVANCE THAT HIS BOND WILL BE FOUND TO BE ACCEPTABLE IF THE SURETY APPEARS ON THE TREASURY LIST. IF THE SURETY IS NOT ON THE LIST, THEN IT MUST BE DETERMINED THAT THE BOND WILL NEVERTHELESS BE GOOD AND SUFFICIENT. THIS IS A QUESTION OF FACT TO BE DETERMINED IN ACCORDANCE WITH THE PROCEDURE ESTABLISHED IN THE DISPUTES CLAUSE. SEE UNITED STATES V. IOVACCHINI, 116 F.2D 845. THE REPORT OF THE COMMISSIONER OF PUBLIC ROADS INDICATES THAT THE SURETY OF THE BONDS PRODUCED BY BEECHE AND ULATE IS CONSIDERED ACCEPTABLE. ACCORDINGLY, SINCE THE SURETY HAS BEEN DETERMINED BY THE CONTRACTING AGENCY TO BE ACCEPTABLE AND SINCE THE INVITATION DOES NOT REQUIRE THAT THE SURETY APPEAR ON THE TREASURY DEPARTMENT LIST, THE FACT THAT THE SURETY IS NOT SO LISTED IS IMMATERIAL.

IN YOUR TELEGRAM YOU STATE THAT THE INVITATION SPECIFIED AND "INSTRUCTIONS WERE GIVEN BY BUREAU PERSONNEL TO ALL BIDDERS THAT BONDS REQUIRED PURSUANT THERETO WERE TO BE SECURED FROM SURETY COMPANIES ON THE UNITED STATES TREASURY APPROVED LIST.' IN THIS REGARD, YOUR ATTENTION IS INVITED TO PARAGRAPH 1 OF THE INSTRUCTIONS TO BIDDERS WHICH PROVIDES " ORAL EXPLANATIONS OR INSTRUCTIONS GIVEN BEFORE THE AWARD OF A CONTRACT WILL NOT BE BINDING.' ACCORDINGLY, WE DO NOT CONSIDER THAT SUCH INSTRUCTIONS AS YOU ALLEGE TO HAVE BEEN MADE COULD HAVE THE EFFECT OF VARYING THE PROVISIONS OF THE INVITATION.

WE THEREFORE PERCEIVE NO LEGAL BASIS FOR OBJECTING TO THE AWARD OF THE CONTRACT TO BEECHE AND ULATE BECAUSE OF THE FAILURE TO ACCOMPANY THEIR BID WITH A BID BOND OR BECAUSE THE SURETY ON THE PERFORMANCE AND PAYMENT BONDS DOES NOT APPEAR ON THE LIST OF AUTHORIZED SURETIES PUBLISHED BY THE UNITED STATES TREASURY.