B-141458, DEC. 29, 1959

B-141458: Dec 29, 1959

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SMITH AND SON: REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 10 AND 15. IF THE BID PRICE WERE IN EXCESS OF $2. THE AMOUNTS OF THE BID BONDS SUBMITTED BY YOU WERE ONLY 20 PERCENT OF THE BID PRICES. YOU ADMIT THAT THE REJECTION OF YOUR BIDS WAS "LEGALLY CORRECT.'. YOU POINT OUT THAT THE GOVERNMENT IS PENALIZING ITSELF BY THE REJECTION OF THE LOW BIDS IN THE CASES BROUGHT TO OUR ATTENTION AND YOU STATE THAT YOU COULD HAVE CORRECTED THE MISTAKE IF YOU WOULD HAVE BEEN ADVISED OF THE MISTAKE. YOU INDICATE THAT MOST BID BONDS REQUIRED IN CONNECTION WITH WORK FOR DEPARTMENT OF THE AIR FORCE ARE IN THE AMOUNT OF 20 PERCENT OF THE BID PRICES AND YOU FAILED TO NOTICE THE DEVIATION FROM "STANDARD PRACTICE" BECAUSE THE ADMINISTRATIVE OFFICE IN EACH CASE FAILED TO INVITE PARTICULAR ATTENTION TO THE CHANGED REQUIREMENT.

B-141458, DEC. 29, 1959

TO HAROLD S. SMITH AND SON:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 10 AND 15, 1959, WITH ENCLOSURES, RELATIVE TO THE REJECTION OF YOUR BIDS SUBMITTED IN RESPONSE TO INVITATIONS FOR BIDS ISSUED BY THE DEPARTMENT OF THE AIR FORCE, EACH OF WHICH REQUIRED THAT A BID BOND IN THE AMOUNT OF 50 PERCENT OF THE BID PRICE BE SUBMITTED WITH THE BID, IF THE BID PRICE WERE IN EXCESS OF $2,000. THE AMOUNTS OF THE BID BONDS SUBMITTED BY YOU WERE ONLY 20 PERCENT OF THE BID PRICES.

YOU ADMIT THAT THE REJECTION OF YOUR BIDS WAS "LEGALLY CORRECT.' HOWEVER, YOU POINT OUT THAT THE GOVERNMENT IS PENALIZING ITSELF BY THE REJECTION OF THE LOW BIDS IN THE CASES BROUGHT TO OUR ATTENTION AND YOU STATE THAT YOU COULD HAVE CORRECTED THE MISTAKE IF YOU WOULD HAVE BEEN ADVISED OF THE MISTAKE. YOU INDICATE THAT MOST BID BONDS REQUIRED IN CONNECTION WITH WORK FOR DEPARTMENT OF THE AIR FORCE ARE IN THE AMOUNT OF 20 PERCENT OF THE BID PRICES AND YOU FAILED TO NOTICE THE DEVIATION FROM "STANDARD PRACTICE" BECAUSE THE ADMINISTRATIVE OFFICE IN EACH CASE FAILED TO INVITE PARTICULAR ATTENTION TO THE CHANGED REQUIREMENT. IN FACT, YOU ENCLOSE CORRESPONDENCE FROM A CONTRACTING OFFICER THAT THE THREE LOW BIDS OUT OF FOUR BIDS RECEIVED IN ONE CASE WERE REJECTED FOR THE REASON THAT THE BID BONDS WERE IN AN INSUFFICIENT AMOUNT.

THE REJECTION OF A BID AS BEING NONRESPONSIVE IN A CASE WHERE THE AMOUNT OF THE BID BOND IS IN A LESSER AMOUNT THAN THAT REQUIRED BY THE INVITATION FOR BIDS OR WHERE NO BID BOND HAS BEEN SUBMITTED WHERE REQUIRED WAS THE SUBJECT OF OUR DECISION IN 38 COMP. GEN. 532, B 137319, FEBRUARY 5, 1959.

IT IS OUR VIEW THAT A CONTRACTING OFFICER MAY IMPOSE UPON BIDDERS ANY REQUIREMENT REASONABLY RELATED TO THE PURPOSES OF THE PROCUREMENT PROVIDED THE REQUIREMENT IS CLEARLY SET FORTH IN THE INVITATION. THE LANGUAGE OF THE INVITATIONS INVOLVED IN THE TWO INSTANCES REFERRED TO IN YOUR LETTERS CLEARLY REQUIRES THE SUBMISSION OF BID BONDS IN THE AMOUNT OF 50 PERCENT OF THE BID PRICE IN EACH CASE, IF THE BID PRICE IS IN EXCESS OF $2,000. IF THE AMOUNT OF THE REQUIRED BID BOND HAS BEEN INCREASED RECENTLY, AS INDICATED BY YOU, IT WOULD HAVE BEEN APPROPRIATE FOR THE CONTRACTING OFFICES TO INVITE THE ATTENTION OF PROSPECTIVE BIDDERS TO THIS CHANGE SO AS TO AVOID THE SUBMISSION OF BIDS WITH BID BOND DEFICIENCIES. HOWEVER, WE FEEL THAT THE CONTRACTING AGENCIES SHOULD NOT BE REQUIRED TO ASCERTAIN THE CAUSES OF THE FAILURE TO MEET THE BID BOND REQUIREMENT IN DECIDING WHETHER A BID IS TO BE CONSIDERED FOR ACCEPTANCE. IF A BIDDER WERE ALLOWED TO CORRECT A BID BOND DEFICIENCY, IT WOULD TEND TO WEAKEN THE COMPETITIVE BID SYSTEM SINCE IT WOULD GIVE THE BIDDER AN OPTION AFTER OPENING OF BIDS TO DECIDE WHETHER HE WANTED TO MAKE HIS BID RESPONSIVE. ALSO, IT WOULD DELAY PROCUREMENTS BECAUSE IT WOULD REQUIRE AN INVESTIGATION OF THE CAUSES OF FAILURE TO COMPLY WITH THE BID BOND REQUIREMENT.

WHILE THE PROCEDURE FOLLOWED BY THE CONTRACTING OFFICERS IN REJECTING YOUR BIDS BECAUSE YOU FAILED TO COMPLY WITH THE BID BOND REQUIREMENT OF THE INVITATIONS APPEARS TO OPERATE TO YOUR DISADVANTAGE AND THE GOVERNMENT ALSO MAY BE OBLIGED TO INCUR INCREASED EXPENDITURES FOR SERVICES AND MATERIALS, IT IS BELIEVED THAT THIS PROCEDURE IS ESSENTIAL TO THE MAINTENANCE OF A TRULY COMPETITIVE BID SYSTEM AND WE CANNOT SUGGEST ANYTHING AT THIS TIME TO CORRECT OR AVOID THE ..END :