B-144356, NOVEMBER 23, 1960, 40 COMP. GEN. 314

B-144356: Nov 23, 1960

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WHICH EVIDENCE INCLUDES A STATEMENT IN THE BID THAT A BID BOND IN THE AMOUNT OF FIVE PERCENT OF THE BID WAS BEING SUBMITTED AND A STATEMENT BY THE SURETY THAT IT WAS ITS INTENTION TO BE OBLIGATED IN THE AMOUNT OF FIVE PERCENT OF THE BID. 1960: REFERENCE IS MADE TO A LETTER DATED OCTOBER 27. IT WAS STATED THAT PURSUANT TO REGULATIONS JOINTLY APPROVED BY THE SECRETARY OF COMMERCE AND THE SECRETARY OF THE INTERIOR. IT IS THE RESPONSIBILITY OF THE BUREAU OF PUBLIC ROADS TO ADVERTISE AND RECEIVE BIDS ON PROJECTS OF THIS KIND AND TO THEN MAKE A RECOMMENDATION AS TO THE AWARD ACTION TO BE TAKEN. THERE WAS SUBSEQUENTLY RECEIVED A LETTER DATED NOVEMBER 7. IT WAS REPORTED THAT THE BIDS RECEIVED IN THIS CASE WERE OPENED IN ACCORDANCE WITH THE TERMS OF THE INVITATION AT THE OFFICE OF THE BUREAU OF PUBLIC ROADS IN FLORENCE.

B-144356, NOVEMBER 23, 1960, 40 COMP. GEN. 314

CONTRACTS - BID BONDS - DEFICIENCIES - INTENTION OF PARTIES EVIDENCE SUBMITTED BY A LOW BIDDER WHO FAILED TO INSERT THE PENAL SUM OF A BID BOND PURSUANT TO THE AUTHORITY GIVEN BY THE SURETY, WHICH EVIDENCE INCLUDES A STATEMENT IN THE BID THAT A BID BOND IN THE AMOUNT OF FIVE PERCENT OF THE BID WAS BEING SUBMITTED AND A STATEMENT BY THE SURETY THAT IT WAS ITS INTENTION TO BE OBLIGATED IN THE AMOUNT OF FIVE PERCENT OF THE BID, ESTABLISHES THE INTENTION OF THE PARTIES WITH RESPECT TO THE BOND SO THAT THE BOND MAY BE CONSIDERED A VALID BOND AND AWARD OF THE CONTRACT MADE TO THE LOW BIDDER.

TO THE SECRETARY OF COMMERCE, NOVEMBER 23, 1960:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 27, 1960, ( FILE REFERENCE NO. 26-31), WITH ENCLOSURES, FROM THE ASSISTANT COMMISSIONER FOR OPERATIONS, BUREAU OF PUBLIC ROADS, REQUESTING OUR DECISION AS TO THE ACTION TO BE TAKEN BY THAT BUREAU IN MAKING A RECOMMENDATION OF AWARD TO THE NATIONAL PARK SERVICE, DEPARTMENT OF THE INTERIOR, CONCERNING A CONTRACT FOR THE CONSTRUCTION OF THE NATCHEZ TRACE PARKWAY PROJECT IF5-1G6 IN THE STATE OF TENNESSEE. IN CONNECTION WITH THE FOREGOING REQUEST, IT WAS STATED THAT PURSUANT TO REGULATIONS JOINTLY APPROVED BY THE SECRETARY OF COMMERCE AND THE SECRETARY OF THE INTERIOR, IT IS THE RESPONSIBILITY OF THE BUREAU OF PUBLIC ROADS TO ADVERTISE AND RECEIVE BIDS ON PROJECTS OF THIS KIND AND TO THEN MAKE A RECOMMENDATION AS TO THE AWARD ACTION TO BE TAKEN. THERE WAS SUBSEQUENTLY RECEIVED A LETTER DATED NOVEMBER 7, 1960, FROM R. M. CHAMBERS, ESQUIRE, ACTING ASSISTANT GENERAL COUNSEL, TRANSMITTING ADDITIONAL CORRESPONDENCE RELATING TO THIS MATTER.

IT WAS REPORTED THAT THE BIDS RECEIVED IN THIS CASE WERE OPENED IN ACCORDANCE WITH THE TERMS OF THE INVITATION AT THE OFFICE OF THE BUREAU OF PUBLIC ROADS IN FLORENCE, ALABAMA, ON SEPTEMBER 29, 1960, FIVE BIDS BEING RECEIVED. THE LOW BID SUBMITTED BY THE BOWYER AND JOHNSON CONSTRUCTION COMPANY, INC., OF JACKSON, TENNESSEE, IN THE AMOUNT OF $159,276.25, WAS NOT READ AT THE BID OPENING BECAUSE THE PENAL SUM WAS NOT ENTERED ON THE BID BOND. THE LOWEST OF THE FOUR BIDS WHICH WERE READ WAS SUBMITTED BY THE BALLEW AND ROBERTS CONSTRUCTION COMPANY IN THE AMOUNT OF $177,086.50, OR $17,810.25 HIGHER THAN THE UNREAD BID OF THE BOWYER AND JOHNSON CONSTRUCTION COMPANY, INC.

THE BID BOND SUBMITTED WITH THE BID BY BOWYER AND JOHNSON WAS ON STANDARD FORM 24 AND WAS COMPLETED AND SATISFACTORY IN ALL RESPECTS THAT THE PENAL SUM OF THE BOND WAS OMITTED. THE RECORD INDICATES THAT MR. GEORGE H. KIMES, SECRETARY-1TREASURER OF THE BOWYER AND JOHNSON CONSTRUCTION COMPANY, INC., WAS PRESENT AT THE BID OPENING AND STATED AT THAT TIME THAT THE OMISSION WAS AN OVERSIGHT AND ENTIRELY UNINTENTIONAL. IT WAS POINTED OUT IN THE LETTER OF OCTOBER 27, 1960, THAT MR. KIMES EXECUTED THE " CERTIFICATE AS TO CORPORATE PRINCIPAL" ON THE REVERSE SIDE OF THE BID BOND. THE BID BOND, WHICH WAS ATTACHED TO THE BID, WAS DATED SEPTEMBER 29, 1960, AS WAS THE BID, AND FULLY IDENTIFIED THE PARTIES AND THE BID INVOLVED BOTH BY DATE AND DESCRIPTION OF THE PROJECT. ON THE REVERSE SIDE OF THE BID FORM INFORMATION WAS INSERTED IN WRITING IN THE SPACES PROVIDED THEREFOR THAT,"1ENCLOSED IS BID GUARANTEE, CONSISTING OF BID BOND IN THE AMOUNTS OF FIVE PERCENT (5 PERCENT) OF AMOUNT BID.' ( ITALICS SUPPLIED.) THIS WAS IN ACCORDANCE WITH THE REQUIREMENTS OF THE INVITATION.

IN THE LETTER OF OCTOBER 27, 1960, THE ASSISTANT COMMISSIONER FOR OPERATIONS EXPRESSED THE VIEW THAT ALTHOUGH THE PENAL SUM OF THE BOND WAS NOT STATED ON THE FACE THEREOF, THE CHARACTER AND EXTENT OF THE SURETY'S LIABILITY ARE CLEARLY ASCERTAINABLE FROM AN INSPECTION OF THE BID AS A WHOLE. IT WAS ALSO STATED IT IS UNDERSTOOD THAT SOME BID BONDS ARE ISSUED GRATUITOUSLY, BUT THAT IN THIS CASE IT IS SHOWN THAT BOWYER AND JOHNSON PURCHASED THE BOND FROM THE CONTINENTAL CASUALTY COMPANY AND PAID A PREMIUM OF FIVE DOLLARS.

WITH THE LETTER OF NOVEMBER 7, 1960, THERE WAS TRANSMITTED AN ORIGINAL LETTER DATED NOVEMBER 3, 1960, FROM BOWYER AND JOHNSON, STATING, AMONG OTHER THINGS, THAT THE BID BOND IN QUESTION WAS FURNISHED BY THE CONTINENTAL CASUALTY COMPANY WITH THE UNDERSTANDING THAT THE AMOUNT OF THE BOND WOULD BE FILLED IN BY THE BIDDER, BUT THAT THROUGH OVERSIGHT THE AMOUNT WAS UNINTENTIONALLY OMITTED FROM THE BID BOND. THERE WAS ALSO ENCLOSED AN ORIGINAL LETTER DATED NOVEMBER 3, 1960, FROM THE CONTINENTAL CASUALTY COMPANY, STATING THAT IN FURNISHING THE BID BOND THE PENAL SUM WAS DELIBERATELY LEFT BLANK FOR THE CONTRACTOR TO COMPLETE AND THAT IT WAS THE INTENTION OF THE SURETY TO ACCEPT LIABILITY IN THE AMOUNT OF FIVE PERCENT OF THE BID SUBMITTED BY THE BOWYER AND JOHNSON CONSTRUCTION COMPANY, INC.

AS STATED IN THE LETTER OF OCTOBER 27, 1960, THE QUESTION FOR CONSIDERATION IS WHETHER THE BID BOND SUBMITTED BY BOWYER AND JOHNSON COULD BE ENFORCED AGAINST THE SURETY IN THE EVENT AN AWARD SHOULD BE MADE TO BOWYER AND JOHNSON AND THAT CORPORATION THEREAFTER SHOULD REFUSE TO PROCEED FURTHER WITH PERFORMANCE, THAT IS TO SAY, TO ENTER INTO A CONTRACT AND FURNISH THE REQUIRED PERFORMANCE BOND.

IT APPEARS TO BE ESTABLISHED BY THE RECORD THAT THE SURETY AUTHORIZED BOWYER AND JOHNSON TO INSERT THE PENAL SUM IN THE BID BOND. EVEN WITHOUT THE CONFIRMATION OF THE SURETY IT WOULD APPEAR THAT SUCH AUTHORITY COULD BE INFERRED. SEE BUTLER V. UNITED STATES, 88 U.S. 272; CHICAGO V. GAGE, 73 GA. 59, 36 AM.REP. 182; WHITE V. DUGGAN, 140 MASS. 18, 2 N.E. 110; STEARNS, SURETYSHIP, SECT. 2.12. WE ARE THEREFORE OF THE OPINION THAT THE BOND, READ IN CONNECTION WITH THE BID TO WHICH IT IS ATTACHED, IS SUFFICIENTLY COMPLETE TO SUPPORT AN ACTION AGAINST THE SURETY IN CASE OF DEFAULT.

IN 8 AMER. JUR., BONDS, SECTION 37, DEALING WITH THE CONSTRUCTION AND OPERATION OF INSTRUMENTS UNDER SEAL, IT IS STATED THAT IN CONSTRUING SUCH INSTRUMENTS, ALTHOUGH THE COURTS GENERALLY ADHERE CLOSELY TO THE LETTER, THE PREVAILING RULE ALLOWS A COURT TO PLACE ITSELF IN THE POSITION OF THE CONTRACTING PARTIES AND TO CONSIDER, IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES SURROUNDING THE EXECUTION OF THE INSTRUMENT, WHAT THE PARTIES INTENDED, CITING THE CASES OF WESTERVELT V. MOHRENSTECHER, 76 F. 118; PLANTERS AND MERCHANTS BANK V. HILL, 18 AMER. DEC. 39; FIRST NATIONAL BANK V. GERKE, 13 A. 358; AND SNOW V. DUXSTAD, 147 P. 174. ADDITION, THERE IS SUBSTANTIAL AUTHORITY IN SUPPORT OF THE VIEW THAT THE GOVERNMENT AS OBLIGEE IN THE BOND HAS IMPLIED AUTHORITY TO FILL IN THE BLANK, ALTHOUGH THE DECISIONS ARE IN CONFLICT. SEE ANNOTATION AT 37 A.L.R. 1395.

IN THE CIRCUMSTANCES HERE PRESENTED WE BELIEVE THAT THE INTENTION OF THE PARTIES RESPECTING THE OBLIGATION OF THE SURETY IS SO CLEAR THAT A BINDING CONTRACT EXISTS. THE EVIDENCE, INCLUDING THE STATEMENT IN THE BID THAT A BID BOND IN THE AMOUNT OF FIVE PERCENT OF THE BID WAS BEING SUBMITTED THEREWITH, AND THE FURTHER STATEMENT BY THE SURETY IN ITS LETTER OF NOVEMBER 3, 1960, THAT IT WAS ITS INTENTION TO BE OBLIGATED IN THE INDICATED AMOUNT OF FIVE PERCENT OF THE BID, CLEARLY SHOWS THE INTENTIONS OF THE PARTIES IN THE MATTER. AS A MATER OF FACT, THERE APPEARS TO BE NO QUESTION AS TO THE INTENTION OF THE PARTIES--- THE DOUBT IN THIS CASE ARISES OUT OF THE FAILURE OF BOWYER AND JOHNSON TO COMPLETE THE BID BOND PURSUANT TO THE AUTHORITY GIVEN BY THE SURETY. FOR THE REASONS STATED WE CONCLUDE THAT THE DOUBT SHOULD BE RESOLVED IN FAVOR OF THE VALIDITY OF THE BOND.

YOU ARE THEREFORE ADVISED THAT THE BUREAU OF PUBLIC ROADS WOULD BE JUSTIFIED IN RECOMMENDING TO THE DEPARTMENT OF THE INTERIOR THAT AN AWARD BE MADE TO BOWYER AND JOHNSON ON THE BASIS OF THE BID SUBMITTED BY THAT CONCERN, IF SUCH ACTION IS OTHERWISE DEEMED PROPER.

THE ENCLOSURES TO THE LETTER OF OCTOBER 27, 1960, ARE RETURNED HEREWITH.