B-146296, AUGUST 3, 1961, 41 COMP. GEN. 74

B-146296: Aug 3, 1961

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BONDS - BID - SUFFICIENCY A BID BOND WHICH WAS STATED IN THE CORRECT AMOUNT WHEN SUBMITTED BY LOW BIDDER PRIOR TO AN AMENDMENT TO THE INVITATION INCREASING THE QUANTITY OF A MILITARY PROCUREMENT BUT WHICH. WAS GREATER THAN THE DIFFERENCE BETWEEN THE PRICE STATED BY THE LOW BIDDER AND THE PRICE STATED BY THE NEXT HIGHER ACCEPTABLE BIDDER IS A DEFICIENT BID BOND WITHIN THE EXCEPTION IN PARAGRAPH 10.102.5 OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH PERMITS THE CONTRACTING OFFICER TO WAIVE THE MANDATORY BID BOND REQUIREMENTS IN CASE THE DEFICIENT BID BOND IS EQUAL TO OR GREATER THAN THE DIFFERENCE BETWEEN THE PRICES IN THE LOW AND THE NEXT HIGHER ACCEPTABLE BIDS. 1961: REFERENCE IS MADE TO LETTER DATED JULY 5.

B-146296, AUGUST 3, 1961, 41 COMP. GEN. 74

BONDS - BID - SUFFICIENCY A BID BOND WHICH WAS STATED IN THE CORRECT AMOUNT WHEN SUBMITTED BY LOW BIDDER PRIOR TO AN AMENDMENT TO THE INVITATION INCREASING THE QUANTITY OF A MILITARY PROCUREMENT BUT WHICH, EVEN THOUGH DEFICIENT WHEN BASED ON THE TOTAL PROCUREMENT, WAS GREATER THAN THE DIFFERENCE BETWEEN THE PRICE STATED BY THE LOW BIDDER AND THE PRICE STATED BY THE NEXT HIGHER ACCEPTABLE BIDDER IS A DEFICIENT BID BOND WITHIN THE EXCEPTION IN PARAGRAPH 10.102.5 OF THE ARMED SERVICES PROCUREMENT REGULATION WHICH PERMITS THE CONTRACTING OFFICER TO WAIVE THE MANDATORY BID BOND REQUIREMENTS IN CASE THE DEFICIENT BID BOND IS EQUAL TO OR GREATER THAN THE DIFFERENCE BETWEEN THE PRICES IN THE LOW AND THE NEXT HIGHER ACCEPTABLE BIDS; THEREFORE, THE DEFICIENT BID BOND DOES NOT AFFORD A BASIS FOR OBJECTION TO AN AWARD TO SUCH LOW BIDDER.

TO THE SOCIETY BRAND HAT COMPANY, AUGUST 3, 1961:

REFERENCE IS MADE TO LETTER DATED JULY 5, 1961, FROM YOUR ATTORNEY, PROTESTING IN YOUR BEHALF THE CONTEMPLATED AWARD OF A CONTRACT TO THE LOW BIDDER UNDER INVITATION FOR BIDS NO. QM/CTM/-36-243-61-934 ISSUED BY THE MILITARY CLOTHING AND TEXTILE SUPPLY AGENCY, PHILADELPHIA, PENNSYLVANIA, ISSUED ON MAY 31, 1961.

THE INVITATION SOLICITED BIDS--- TO BE OPENED JUNE 28, 1961--- FOR FURNISHING 128,480 WOOL SERVICE CAPS, F.O.B. VARIOUS DESTINATIONS. JUNE 16, 1961, AMENDMENT NO. 1 WAS ISSUED WHICH INCREASED THE QUANTITY BY 3,600 UNITS. THREE BIDS WERE RECEIVED. BANCROFT CAP COMPANY SUBMITTED 2 ENVELOPES WHICH WERE RECEIVED PRIOR TO THE DATE OF BID OPENING. IN ONE ENVELOPE WAS THE ORIGINAL INVITATION AND SIGNED BID QUOTING A PRICE OF $3.275 EACH FOR 128,480 CAPS, ALL OR NONE, WITH DISCOUNT FOR PROMPT PAYMENT OF ONE-TENTH OF 1 PERCENT 10 DAYS AND ONE TWENTIETH OF 1 PERCENT FOR PAYMENT WITHIN 20 DAYS. THIS BID WAS ACCOMPANIED BY AN EXECUTED BID BOND IN THE PENAL SUM OF "50 PERCENT OF THE TOTAL BID PRICE FOR UP TO 128,480 UNITS.' IN THE SECOND ENVELOPE WERE SIGNED COPIES OF AMENDMENT NO. 1 TO THE INVITATION TOGETHER WITH A COVERING LETTER WHICH STATED AS FOLLOWS:

THIS LETTER WILL BECOME PART OF OUR BID ON INVITATION NUMBER QM (CTM) 36- 243-61-934. SINCE OUR BID HAS ALREADY BEEN SUBMITTED, COMPLETE WITH NECESSARY BID BONDS PRIOR TO THE RECEIPT OF AMENDMENT NUMBER 1, WE ARE HEREWITH RETURNING THE SIGNED AMENDMENT AND ASK THAT THE FOLLOWING REVISION BE MADE IN OUR BID. WE NOW WISH TO BID A TOTAL CONTRACT QUANTITY OF 132,080 CAPS; ALL OR NONE, AT THE SINGLE UNIT PRICE OF $3.275 EACH.

WE HAVE NOTIFIED OUR BONDING COMPANY OF THIS CHANGE AND HAVE BEEN GRANTED PERMISSION TO MAKE THIS REVISION. OUR BID SHOULD NOT BE SUBMITTED AS FOLLOWS:

132.080 UNITS ALL OR NONE AT $3.275 EACH; A TOTAL OF $432,562.00.

ON JULY 3, 1961, AN ADDITIONAL BOND FOR "50 PERCENT OF THE TOTAL BID FOR UP TO 3,600 UNITS" WAS RECEIVED.

YOU SUBMITTED A BID FOR THE FULL QUANTITY OF THE ORIGINAL INVITATION, NAMELY 128,480 CAPS, ALL OR NONE AT $3.299 EACH, WITH DISCOUNT OF ONE- TENTH OF 1 PERCENT 10 DAYS AND ONE-TWENTIETH OF 1 PERCENT 20 DAYS. YOU FURNISHED AN ACKNOWLEDGED COPY OF AMENDMENT NO. 1 TO THE INVITATION AND A BID BOND IN THE PENAL SUM OF " FIFTY PERCENT OF THE TOTAL BID PRICE FOR UP TO 132,080 UNITS IN INV. QM/CTM/36-243-61 934 (50).' THUS, WHILE YOU FAILED TO INCREASE THE QUANTITIES FOR EACH DESTINATION IN YOUR BID, AND BID ONLY ON THE ORIGINAL QUANTITY OF 128,480 UNITS, YOU FURNISHED A BID BOND FOR THE TOTAL PROCUREMENT. THE THIRD BIDDER SHOWED ITS INCREASED QUANTITIES FOR EACH DESTINATION AND FURNISHED A BID BOND FOR "50 PERCENT OF THE TOTAL BID PRICE FOR UP TO 132,080 UNITS.'

YOU PROTEST THE CONTEMPLATED AWARD TO BANCROFT CAP COMPANY ON THE GROUND THAT ITS BID IS NOT RESPONSIVE TO THE INVITATION IN THAT ITS BID BOND FAILED, BY A SUBSTANTIAL AMOUNT, TO COVER THE MINIMUM BID GUARANTEE REQUIRED BY THE ALLEGED MANDATORY TERMS OF THE INVITATION.

WITH REGARD TO THE SUBMISSION OF BID GUARANTEES THE INVITATION PROVIDED THAT---

BID GUARANTEE. EACH BIDDER MUST SUBMIT WITH ITS BID A BID GUARANTEE EQUAL TO 50 PERCENT OF THE TOTAL BID PRICE (INCLUDING THE VALUE OF GOVERNMENT PROPERTY). A BID GUARANTEE MAY BE IN THE FORM OF A BID BOND, POSTAL MONEY ORDER, CERTIFIED CHECK, CASHIER'S CHECK, IRREVOCABLE LETTER OF CREDIT OR, IN ACCORDANCE WITH TREASURY DEPARTMENT REGULATIONS, BONDS OR NOTES OF THE UNITED STATES.

IF THE BID GUARANTEE IS IN THE FORM OF A BID BOND, THE BID BOND MUST BE SUBMITTED, IN DUPLICATE, ON STANDARD FORM 24, NOVEMBER 1950, PROPERLY EXECUTED BY ITSELF AND AN ACCEPTABLE SURETY. THE PENAL SUM OF THE BID BOND SHOULD NOT BE EXPRESSED IN WORDS AND FIGURES AS A SPECIFIC NUMBER OF DOLLARS BUT SHALL BE EXPRESSED IN WORDS AND FIGURES AS A PERCENTAGE OF THE TOTAL BID PRICE (I.E., "50 PERCENT OF THE TOTAL BID PRICE FOR UP TO (SPECIFY MAXIMUM NUMBER OF UNITS IN I/B NO. ------ - (INSERT APPLICABLE INVITATION FOR BIDS NUMBER) ).' ( BIDDER MAY PLACE ON FILE AN ANNUAL BID BOND, STANDARD FORM 34, NOVEMBER 1950, SECURING ALL BIDS SUBMITTED DURING A SPECIFIED PERIOD. STANDARD FORMS 24 AND 34 WILL BE FURNISHED BY THE GOVERNMENT UPON REQUEST.)

BID GUARANTEES, OTHER THAN BID BONDS, WILL BE RETURNED (1) TO UNSUCCESSFUL BIDDERS AS SOON AS PRACTICABLE AFTER THE OPENING OF BIDS, AND (2) TO THE SUCCESSFUL BIDDER UPON EXECUTION OF SUCH FURTHER CONTRACTUAL DOCUMENTS AND BONDS AS MAY BE REQUIRED BY THE BID AS ACCEPTED.

IF THE SUCCESSFUL BIDDER WITHDRAWS HIS BID WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE OR, UPON ACCEPTANCE THEREOF BY THE GOVERNMENT, FAILS TO ENTER INTO THE CONTRACT AND GIVE BONDS WITHIN 10 DAYS AFTER RECEIPT OF THE FORMAL CONTRACTUAL DOCUMENT, HE SHALL BE LIABLE FOR ANY DIFFERENCE BY WHICH THE COST OF PROCURING THE WORK EXCEEDS THE AMOUNT OF HIS BID, AND THE BID GUARANTEE SHALL BE AVAILABLE TOWARD OFFSETTING SUCH DIFFERENCE.

FAILURE TO FURNISH A REQUIRED BID GUARANTEE IN THE PROPER AMOUNT, BY THE TIME SET FOR OPENING OF BIDS OR PROPOSALS, MAY BE CAUSE FOR REJECTION OF THE BID OR PROPOSAL.

YOU APPEAR TO STRESS THE FACT THAT THE WORD "MUST" IN THE FIRST SENTENCE OF THE QUOTED INVITATION PROVISION DOES NOT PERMIT THE CONTRACTING OFFICER TO WAIVE THE LOW BIDDER'S ALLEGED FAILURE TO FURNISH A BID BOND IN THE FULL AMOUNT STIPULATED IN THE INVITATION. YOU REFER TO PARAGRAPH 10- 102.5, ARMED SERVICES PROCUREMENT REGULATION, WHICH REQUIRES REJECTION OF A BID FOR NONCOMPLIANCE WITH THE REQUIREMENT THAT A BID GUARANTEE IN A CERTAIN AMOUNT ACCOMPANY A BID BUT WHICH RECOGNIZES CERTAIN EXCEPTIONS THERETO. THAT PARAGRAPH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

10-102.5 FAILURE TO SUBMIT PROPER BID GUARANTEE. WHERE AN INVITATION FOR BIDS REQUIRES THAT BIDS BE SUPPORTED BY A BID GUARANTEE, NONCOMPLIANCE WITH SUCH REQUIREMENT WILL REQUIRE REJECTION OF THE BID, EXCEPT THAT REJECTION OF THE BID IS NOT REQUIRED IN THESE SITUATIONS:

(II) WHERE THE AMOUNT OF THE BID GUARANTEE SUBMITTED, THOUGH LESS THAN THE AMOUNT REQUIRED BY THE INVITATION FOR BIDS, IS EQUAL TO OR GREATER THAN THE DIFFERENCE BETWEEN THE PRICE STATED IN THE BID AND THE PRICE STATED IN THE NEXT HIGHER ACCEPTABLE BID;

THE BID BOND FURNISHED BY BANCROFT AT TIME OF BID OPENING, WHEN CONVERTED INTO DOLLARS, AMOUNTED TO $210,386, BASED ON A QUANTITY OF 128,480 CAPS. THE AMOUNT OF THE BOND REQUIRED, TAKING INTO ACCOUNT THE 3,600 CAPS COVERED BY AMENDMENT NO. 1, IS $216,281 OR A DIFFERENCE OF $5,895. THE DIFFERENCE IN PRICES BID BETWEEN BANCROFT FOR THE ENTIRE QUANTITY, AND YOUR BID ON 128,480 CAPS AND THE BALANCE OF 3,600 CAPS WHICH MIGHT BE AWARDED TO THE THIRD BIDDER, IS ABOUT $3,700. THIS LAST AMOUNT IS SUBSTANTIALLY LESS THAN THE AMOUNT OF THE BID BOND OF $210,386 FURNISHED BY BANCROFT PRIOR TO BID OPENING. UNDER THE QUOTED PROVISIONS OF ASPR 10- 102.5 (II) REJECTION OF BANCROFT'S BID IS NOT REQUIRED BY THE CONTRACTING OFFICER IN THIS CASE AND HE HAS RECOMMENDED THAT ITS BID BE ACCEPTED.

IN 40 COMP. GEN. 561, WHICH IS REFERRED TO IN THE LETTER OF JULY 5, 1961, OUR OFFICE CONSIDERED A PROVISION OF THE FEDERAL PROCUREMENT REGULATIONS SIMILAR TO THE PROVISION OF ASPR APPLICABLE HERE. WE HELD THAT THE PROVISIONS GAVE THE CONTRACTING OFFICER THE RIGHT TO WAIVE THE DEFICIENCY IN THE AMOUNT OF THE BOND. THE OTHER DECISIONS OF OUR OFFICE CITED IN THE LETTER OF JULY 5, 1961, WERE ALL RENDERED BEFORE ASPR WAS REVISED ON JANUARY 31, 1961, TO INCLUDE THE ABOVE-QUOTED SUBPARAGRAPH (II) OF PARAGRAPH 10-102.5, AND THEREFORE DID NOT TAKE INTO ACCOUNT THE PROVISIONS OF SUBPARAGRAPH (II).

SINCE THE EXCEPTIONS TO THE REQUIRED REJECTION OF BIDS FOR NONCOMPLIANCE WITH THE BID BOND REQUIREMENT AS STATED IN ASPR 10-102.5 INCLUDE A SITUATION WHERE AS HERE THE AMOUNT OF THE BID BOND IS GREATER THAN THE DIFFERENCE BETWEEN THE PRICE STATED IN BANCROFT'S BID AND THE PRICE STATED IN THE NEXT HIGHER ACCEPTABLE BID, WE FIND NO BASIS FOR OBJECTING TO THE CONTEMPLATED AWARD TO BANCROFT.