B-142824, JUNE 10, 1960, 39 COMP. GEN. 827

B-142824: Jun 10, 1960

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WHICH WAS ISSUED MARCH 25. BIDS WERE OPENED IN ACCORDANCE WITH THE TERMS OF THE INVITATION ON APRIL 20. THE LOW BID FOR THE ENTIRE PROJECT WAS SUBMITTED BY THE GIL CONSTRUCTION COMPANY AT $1. WAS SUBMITTED BY THE JAMES E. EACH BID WAS REQUIRED TO BE ACCOMPANIED BY A BID BOND IN THE AMOUNT OF 20 PERCENT OF THE LARGEST AMOUNT FOR WHICH AWARD COULD BE MADE (ITEM NO. 3). THE LOW BID WAS ACCOMPANIED BY A BID BOND COVERING ONLY 10 PERCENT OF THE AMOUNT. WERE ADVISED IN THE LETTER OF MAY 20. WE ARE FURTHER ADVISED THAT UPON BID OPENING. WHEN THE VARIATION FROM THE BID BOND REQUIREMENT WAS NOTED. WHICH WE ARE TOLD WAS FILLED IN BY THE SURETY. " AND THIS WAS SIGNED BY THE BIDDER.). PARAGRAPH 26.2 OF THE THE SPECIFICATIONS STATES: 26.2 BID GUARANTEE WILL BE REQUIRED AS STIPULATED ON REVERSE SIDE OF U.S.

B-142824, JUNE 10, 1960, 39 COMP. GEN. 827

CONTRACTS - FAILURE TO COMPLY WITH SPECIFICATIONS - BID BOND SUFFICIENCY THE FAILURE OF A LOW BIDDER TO SUBMIT A BID BOND IN THE AMOUNT REQUIRED IN THE INVITATION DUE TO A CLERICAL ERROR BY THE SURETY DOES NOT WARRANT AN EXCEPTION TO THE RULE THAT FAILURE TO COMPLY WITH A BID BOND REQUIREMENT IN AN INVITATION REPRESENTS A MATERIAL DEVIATION WHICH CANNOT BE WAIVED ADMINISTRATIVELY AND, THEREFORE, THE LOW BID MAY NOT BE CONSIDERED FOR AWARD.

TO THE SECRETARY OF THE NAVY, JUNE 10, 1960:

WE REFER TO A LETTER OF MAY 20, 1960, WITH ENCLOSURES, SIGNED BY THE DEPUTY CHIEF, BUREAU OF YARDS AND DOCKS, FURNISHING, IN RESPONSE TO OUR REQUEST OF MAY 12, A REPORT ON THE PENDING AWARD UNDER CONTRACT NBY 22892 FOR THE REHABILITATION AND CONVERSION TO PUBLIC QUARTERS OF THE WHERRY HOUSING PROJECT AT THE NAVAL POST GRADUATE SCHOOL, MONTEREY, CALIFORNIA.

THE INVITATION, WHICH WAS ISSUED MARCH 25, 1960, SOLICITS BIDS FOR EIGHT ITEMS. ACCORDING TO THE APPLICABLE SPECIFICATIONS, NAVDOCKS SPECIFICATION NO. 22892/59 ( REV.) ITEM NO. 1 CALLS FOR 850 CUBIC YARDS OF BASE COURSE; ITEM NO. 3 COVERS THE ENTIRE PROJECT; AND THE REMAINING ITEMS COVER THE WHOLE PROJECT WITH VARIOUS DELETIONS.

BIDS WERE OPENED IN ACCORDANCE WITH THE TERMS OF THE INVITATION ON APRIL 20, 1960. THE LOW BID FOR THE ENTIRE PROJECT WAS SUBMITTED BY THE GIL CONSTRUCTION COMPANY AT $1,138,385. THE NEXT LOW BID FOR THE ENTIRE PROJECT, IN THE AMOUNT OF $1,158,000, WAS SUBMITTED BY THE JAMES E. ROBERTS COMPANY. BY THE TERMS OF THE INVITATION, EACH BID WAS REQUIRED TO BE ACCOMPANIED BY A BID BOND IN THE AMOUNT OF 20 PERCENT OF THE LARGEST AMOUNT FOR WHICH AWARD COULD BE MADE (ITEM NO. 3). HOWEVER, THE LOW BID WAS ACCOMPANIED BY A BID BOND COVERING ONLY 10 PERCENT OF THE AMOUNT. WERE ADVISED IN THE LETTER OF MAY 20, 1960, THAT THE BUREAU OF YARDS AND DOCKS PROPOSES TO MAKE AN AWARD FOR ITEM NO. 3 TO THE LOW BIDDER.

WE ARE FURTHER ADVISED THAT UPON BID OPENING, WHEN THE VARIATION FROM THE BID BOND REQUIREMENT WAS NOTED, THE LOW BIDDER PROMPTLY FURNISHED A BID BOND IN THE CORRECT AMOUNT, TOGETHER WITH A LETTER FROM THE SURETY'S AGENT INDICATING THAT A 20 PERCENT BID BOND HAD BEEN ORDERED BY THE BIDDER BUT THAT THE 10 PERCENT BOND HAD BEEN FURNISHED DUE TO A CLERICAL ERROR BY THE SURETY. (WE NOTE, HOWEVER, IN PASSING, THAT THE LOW BID ITSELF, WHICH WE ARE TOLD WAS FILLED IN BY THE SURETY, INCLUDED A STATEMENT THAT THE BID GUARANTY ENCLOSED CONSISTED OF " BID BOND FOR TEN PERCENT OF THE AMOUNT BID (10 PERCENT)," AND THIS WAS SIGNED BY THE BIDDER.) THE SPECIFICATIONS PROVIDE AT PARAGRAPH 26.1 THAT THE INSTRUCTIONS ON STANDARD FORM 20 SHOULD BE OBSERVED IN THE PREPARATION OF BIDS. PARAGRAPH 26.2 OF BE OBSERVED IN THE PREPARATION OF BIDS. PARAGRAPH 26.2 OF THE THE SPECIFICATIONS STATES:

26.2 BID GUARANTEE WILL BE REQUIRED AS STIPULATED ON REVERSE SIDE OF U.S. STANDARD FORM 20.

STANDARD FORM 20 PROVIDES ON THE REVERSE SIDE:

2. BID GUARANTEE.--- TO INSURE THE EXECUTION OF THE CONTRACT AND PERFORMANCE AND PAYMENT BONDS, EACH BIDDER SHALL SUBMIT WITH HIS BID A GUARANTEE BOND ( U.S. STANDARD FORM NO. 24) EXECUTED BY A SURETY COMPANY HOLDING A CERTIFICATE OF AUTHORITY FROM THE SECRETARY OF THE TREASURY AS AN ACCEPTABLE SURETY OR OTHER SECURITY AS PROVIDED IN PARAGRAPH 4 OF INSTRUCTIONS TO BIDDERS, STANDARD FORM NO. 22. SECURITY SHALL BE IN THE SUM OF 20 PERCENT OF THE LARGEST AMOUNT FOR WHICH AWARD CAN BE MADE UNDER THE BID SUBMITTED, BUT IN NO CASE TO EXCEED $1,000,000.

STANDARD FORM 22 PROVIDES AT PARAGRAPH 4 THAT: "WHERE SECURITY IS REQUIRED, FAILURE TO SUBMIT THE SAME WITH THE BID MAY BE CAUSE FOR REJECTION.'

WE THINK THAT THE LANGUAGE OF THE INVITATION AND SPECIFICATIONS QUOTED ABOVE CLEARLY INFORMED THE BIDDERS THAT A BID DEPOSIT IN THE PRESCRIBED FORM AND AMOUNT WAS REQUIRED TO BE FURNISHED WITH EACH BID. IN OUR DECISION AT 38 COMP. GEN. 532 WE ADVISED THE HEADS OF DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS, AGENCIES, AND OTHERS, THAT IN THE CASE OF AN INVITATION ISSUED MORE THAN 60 DAYS AFTER FEBRUARY 5, 1959, NONCOMPLIANCE WITH A REQUIREMENT IN THE INVITATION THAT BID SECURITY BE SUBMITTED WITH THE BID WOULD BE HELD TO REQUIRE REJECTION OF THE BID AS NONRESPONSIVE. WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL, THAT DETERMINATION HAS BEEN CONSISTENTLY FOLLOWED SINCE THAT TIME.

THE USE OF A BID BOND REQUIREMENT IN THE VAST MAJORITY OF CASES IS NOT REQUIRED BY STATUTE, BUT IS SOLELY A MATTER OF ADMINISTRATIVE JUDGMENT. PRESUMABLY, IT IS DETERMINED IN EACH INSTANCE THAT THE REQUIREMENT SHOULD BE IMPOSED FOR THE GOVERNMENT'S PROTECTION.

IT IS CONTENDED IN THIS INSTANCE, AND WE ARE WILLING TO CONCEDE, THAT THE FAILURE OF THE LOW BIDDER TO COMPLY WITH THE BID BOND REQUIREMENT RESULTED FROM AN INADVERTENCE AND DOES NOT REFLECT ON THE BIDDER'S ABILITY TO QUALIFY FOR SUCH BOND. THIS, HOWEVER, IS THE PRECISE TYPE OF SITUATION TO WHICH THE DECISION OF FEBRUARY 5, 1959, WAS DIRECTED. IF THE FACTS WERE OTHERWISE THE DEFICIENCY IN THE BID COULD NOT PROPERLY HAVE BEEN WAIVED EVEN PRIOR TO THAT DECISION. IN LINE WITH THE RULE THEREIN ADOPTED, WE HAVE HELD SPECIFICALLY THAT A BID BOND WHICH IS SUBMITTED IN AN ADEQUATE AMOUNT SOLELY BECAUSE OF A CLERICAL ERROR MAY NOT NORMALLY BE WAIVED. SEE B-140624, NOVEMBER 23, 1959, IN WHICH IT IS STATED:

* * * IT IS OUR VIEW THAT THE CONTRACTING OFFICER MAY BY THE TERMS OF THE INVITATION IMPOSE UPON THE BIDDERS ANY REQUIREMENT REASONABLY RELATED TO THE PURPOSES OF THE PROCUREMENT PROVIDED THE REQUIREMENT AND THE CONSEQUENCES OF FAILURE TO CONFORM THERETO ARE CLEARLY SET FORTH IN THE INVITATION. THE LANGUAGE OF THE INVITATION CLEARLY REQUIRES NOT MERELY THE SUBMISSION OF A BID BOND BUT OF A BID BOND IN NOT LESS THAN THE INDICATED AMOUNT. IF THE REQUIREMENT FOR SUBMISSION OF A BID BOND BY THE TERMS OF THE INVITATION IS TO BE REGARDED AS MATERIAL IT LOGICALLY FOLLOWS THAT THE REQUIREMENT AS TO THE AMOUNT OF THE BID IS EQUALLY MATERIAL.

AS INDICATED ABOVE, SHOULD THE BID BOND REQUIREMENT AS STATED IN THE INVITATION FOR BIDS OR AS INCLUDED THEREIN BY REFERENCE ESTABLISH EXCEPTIONS, WE WOULD BE OF THE VIEW THAT SUCH PROVISIONS SHOULD BE APPLIED IN ACCORDANCE WITH THEIR TERMS.

THE RULE ANNOUNCED IN 38 COMP. GEN. 532 WAS ADOPTED ONLY AFTER THOROUGH AND CAREFUL DELIBERATION, AND GAVE EFFECT TO LONG-ACCUMULATED AND REPEATED REPRESENTATIONS BY THE PROCURING AGENCIES THAT THE PREVIOUSLY REQUIRED CONSIDERATION OF THE MERITS OF THE EXCUSES OFFERED FOR DEFECTIVE OR OMITTED BID BONDS PRESENTED INTOLERABLE ADMINISTRATIVE BURDENS. WHILE THERE MAY APPEAR FROM TIME TO TIME INDIVIDUAL INSTANCES AND PECULIAR CIRCUMSTANCES WHICH WOULD JUSTIFY EXCEPTIONS TO THE APPLICATION OF THE RULE, WE CAN SEE IN THE PRESENT INSTANCE NO SUCH CIRCUMSTANCES. FAILURE TO APPLY THE RULE HERE WOULD AMOUNT TO A COMPLETE ABROGATION OF IT, RATHER THAN AN EXCEPTION.

WE CONCLUDE IN ACCORDANCE WITH THE FOREGOING THAT THE LOW BID MAY NOT BE CONSIDERED FOR AWARD.