B-141037, NOV. 6, 1959

B-141037, NOV. 6, 1959

TO MR. GRANT BLOODGOOD, ASSISTANT COMMISSIONER AND CHIEF ENGINEER, BUREAU OF RECLAMATION:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 15, 1959, REQUESTING A DECISION AS TO THE ACTION THAT SHOULD BE TAKEN WITH RESPECT TO THE BID OF KEYSTONE CONSTRUCTION COMPANY, INC. AND ASSOCIATES OF PRINEVILLE, OREGON, SUBMITTED IN RESPONSE TO INVITATIONS FOR BIDS UNDER SPECIFICATIONS NO. DC- 5232.

THE INVITATION REQUESTED BIDS FOR THE CONSTRUCTION OF EARTHWORK, STRUCTURES AND SURFACING FOR THE RELOCATION OF OREGON HIGHWAY 27 TO ACCOMMODATE PRINEVILLE RESERVOIR OF THE CROOKED RIVER PROJECT, OREGON. THE INVITATION REQUIRED BIDDERS TO SUBMIT A BID GUARANTY OF NOT LESS THAN TEN PERCENT OF THE AMOUNT OF THE BID AND IT WAS PROVIDED THAT THE REQUIREMENT FOR THE RECEIPT OF THE BID GUARANTY PRIOR TO THE BID OPENING TIME WOULD NOT BE WAIVED.

SIXTEEN BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION, THE LOW BID BEING SUBMITTED BY KEYSTONE CONSTRUCTION CO. INC. AND ASSOCIATES OF PRINEVILLE, OREGON. THE LOW BIDDER, HEREINAFTER REFERRED TO AS KEYSTONE, SIGNED THE BID ON STANDARD FORM 21 IN THE NAME OF "KEYSTONE CONST CO. INC. AND ASSOC" BY ONE L. KAY WALDRON AS PROJECTS ENGINEER, WHO THEREIN REPRESENTED THE BIDDER TO BE A CORPORATION INCORPORATED IN THE STATE OF OREGON. THE BID IS DATED OCTOBER 1, 1959. THE BID WAS ACCOMPANIED BY BID BOND, ON STANDARD FORM 24, ALSO DATED OCTOBER 1, 1959. THE BID BOND SHOWS THE NAME OF THE PRINCIPAL IN THE SAME MANNER AS IT IS SHOWN IN THE BID AND REFERS TO A BID DATED OCTOBER 1, 1959, ON "CROOKED RIVER PROJECT, RELOCATION OF HIGHWAY 27, 20 MILES SOUTH AND EAST OF PRINEVILLE, OREGON, SPECIFICATION NO. DC-5232.' THE BOND IS SIGNED ON BEHALF OF KEYSTONE CONSTRUCTION COMPANY, INC. AND ASSOCIATES BY ONE OTIS VAN BLARUOM (?) "BUS MGR.' THIS SIGNATURE IS NOT ATTESTED TO NOR IS THERE A CORPORATE SEAL AFFIXED AND THE "CERTIFICATE AS TO CORPORATE PRINCIPAL" ON THE REVERSE SIDE OF STANDARD FORM 24 IS NOT EXECUTED. THE SURETY ON THE BOND IS THE GENERAL INSURANCE COMPANY OF AMERICA AND THE BOND HAS BEEN PROPERLY AND COMPLETELY SIGNED, WITNESSED AND SEALED BY THE SURETY.

IT IS REPORTED THAT YOUR OFFICE HAS A PARTIALLY PERFORMED CONTRACT (14-06 -D-3091, SPECIFICATIONS NO. DC-5047) DATED OCTOBER 14, 1958, FOR CONSTRUCTION WORK ON PRINEVILLE DAM WITH KEYSTONE CONSTRUCTION COMPANY, INC. AND ASSOCIATES, A JOINT VENTURE CONSISTING OF THE KEYSTONE CONSTRUCTION COMPANY, INC., AN OREGON CORPORATION, AND FIVE INDIVIDUAL PARTIES, NONE OF WHOM IS MR. WALDRON OR MR. VAN BLARUOM. IT IS STATED THAT YOU HAVE NO INFORMATION AS TO WHETHER THOSE JOINT VENTURERS ARE INTENDED AS COMPRISING THE BIDDER, KEYSTONE, ON THE INSTANT INVITATION. CONSEQUENTLY, IT IS STATED THAT IT CANNOT BE ASCERTAINED FROM THE BID OR ITS ACCOMPANYING DOCUMENTS WHETHER KEYSTONE IS A CORPORATION, A JOINT VENTURE, OR SOME OTHER ORGANIZATION, OR IF EITHER OF THE TWO LATTER, THE LEGAL ENTITY OR ENTITIES RESPONSIBLE IN CONNECTION THEREWITH.

IN VIEW OF THE FOREGOING AND OF OUR DECISION OF FEBRUARY 5, 1959, B 137319, HOLDING THAT THE REQUIREMENT FOR FURNISHING A PROPER BID BOND IS A MATERIAL PART OF THE INVITATION WHICH CANNOT BE WAIVED,IT IS STATED THAT YOU ARE UNCERTAIN AS TO WHETHER YOU WOULD BE AUTHORIZED TO PERMIT KEYSTONE TO IDENTIFY THE LEGAL ENTITY OR ENTITIES COMPRISING IT, OR TO PERMIT IT TO SUPPLY A BID GUARANTY DOCUMENT CLEARLY IDENTIFYING SUCH ENTITIES AND PROPERLY EXECUTED BY THEM. IT IS FURTHER STATED THAT THE OMISSION ON THE SUBJECT BID AND ITS ACCOMPANYING PAPERS MAY BE SUCH THAT THE BID AND, ESPECIALLY, ITS ACCOMPANYING BID BOND ARE LEGALLY INSUFFICIENT TO CONSTITUTE OBLIGATIONS BINDING ON ANY PRESENTLY KNOWN PERSON.

ON THE BASIS OF THE FACTS PRESENTED IT APPEARS THAT THE BID AND BID BOND, AS SUBMITTED, CONSTITUTE VALID AND BINDING DOCUMENTS ON BEHALF OF KEYSTONE CONSTRUCTION COMPANY, INC., AN OREGON CORPORATION AND CERTAIN OTHER UNDISCLOSED PRINCIPALS. THE SURETY IN EXECUTING THE BOND RAISED NO QUESTION CONCERNING THE FAILURE OF KEYSTONE CONSTRUCTION COMPANY, INC., TO DISCLOSE ALL PRINCIPALS NOR DID IT QUESTION THE AUTHORITY OF THE PERSONS TO SIGN THE BID FOR THE BIDDER. SINCE THE CHARACTER AND EXTENT OF THE SURETY'S LIABILITY ARE CLEARLY ASCERTAINABLE, IT IS NOT BELIEVED THAT THE SURETY COULD ESCAPE RESPONSIBILITY ON THE BASIS OF AN AWARD TO KEYSTONE CONSTRUCTION COMPANY, INC. AND ASSOCIATES, WHICH WOULD AT LEAST BE BINDING ON KEYSTONE CONSTRUCTION COMPANY, INC., AN OREGON CORPORATION. THE FACT THAT THE SURETY MIGHT ALSO HAVE SOME UNDISCLOSED PRINCIPALS TO LOOK TO IN CASE KEYSTONE CONSTRUCTION COMPANY, INC., DEFAULTED WOULD NOT AFFECT THE SURETY'S LIABILITY TO THE UNITED STATES WITH REGARD TO KEYSTONE CONSTRUCTION COMPANY, INC.

IN THE CIRCUMSTANCES, IF IT BE DETERMINED THAT THE DISCLOSED PRINCIPAL KEYSTONE CONSTRUCTION COMPANY, INC., AN OREGON CORPORATION, IS RESPONSIBLE, THERE WOULD BE NO OBJECTION TO THE ACCEPTANCE OF THE BID AS SUBMITTED. FURTHERMORE SHOULD IT BE DEEMED DESIRABLE AND IN THE INTEREST OF THE GOVERNMENT THAT THE UNDISCLOSED PRINCIPALS BE IDENTIFIED AND MADE PARTIES TO THE ORIGINAL CONTRACT OR INCORPORATED LATER BY AMENDMENT THERE WOULD BE NO OBJECTION THERETO.