B-147303, OCT. 12, 1961

B-147303: Oct 12, 1961

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BUREAU OF RECLAMATION: WE HAVE YOUR LETTER OF SEPTEMBER 27. - GUARANTEE WILL BE REQUIRED WITH EACH BID IN AN AMOUNT NOT LESS THAN 20 PERCENT OF THE TOTAL PRICE BID. * * * FAILURE TO FURNISH A REQUIRED BID GUARANTEE IN THE PROPER AMOUNT. THE LOW BID OF CONTROL PANEL CORPORATION WAS IN THE AMOUNT OF $120. WHILE THE SECOND LOW BID WAS $121. 985 AND THE ENGINEER'S ESTIMATE WAS $131. CONTROL PANEL CORPORATION'S BID WAS SIGNED BY H. CONTAINED THE FOLLOWING STATEMENT: "ENCLOSED IS SECURITY AS REQUIRED. IT WAS EXECUTED AND WITNESSED ON BEHALF OF A QUALIFIED CORPORATE SURETY AND THE SURETY'S CORPORATE SEAL WAS IMPRESSED ON THE BLOCK DESIGNATED IN THE FORM. ITS ADDRESS WERE TYPED IN THE APPROPRIATE EXECUTION BLOCK FOR THE CORPORATE PRINCIPAL.

B-147303, OCT. 12, 1961

TO MR. GRANT BLOODGOOD, BUREAU OF RECLAMATION:

WE HAVE YOUR LETTER OF SEPTEMBER 27, 1961, YOUR REFERENCE D-150, REQUESTING AN ADVANCE DECISION ON WHAT ACTION TO TAKE WITH RESPECT TO THE BID OF CONTROL PANEL CORPORATION, CHICAGO, ILLINOIS, UNDER INVITATION NO. DS-5628 FOR FURNISHING TWO CONTROL BOARDS FOR THE FLAMING GORGE POWERPLANT, COLORADO RIVER STORAGE PROJECT.

THE INVITATION STATED, WITH REGARD TO BID SECURITY, AS FOLLOWS:

"BID SECURITY--- GUARANTEE WILL BE REQUIRED WITH EACH BID IN AN AMOUNT NOT LESS THAN 20 PERCENT OF THE TOTAL PRICE BID. * * * FAILURE TO FURNISH A REQUIRED BID GUARANTEE IN THE PROPER AMOUNT, BY THE TIME SET FORTH FOR OPENING OF BIDS, MAY BE CAUSE FOR REJECTION OF THE BID.'

IN SUBPARAGRAPH 8 (B) OF THE TERMS AND CONDITIONS OF THE INVITATION FOR BIDS, THE GOVERNMENT RESERVED THE RIGHT TO WAIVE INFORMALITIES AND MINOR IRREGULARITIES IN BIDS RECEIVED.

THE LOW BID OF CONTROL PANEL CORPORATION WAS IN THE AMOUNT OF $120,693, WHILE THE SECOND LOW BID WAS $121,985 AND THE ENGINEER'S ESTIMATE WAS $131,000. CONTROL PANEL CORPORATION'S BID WAS SIGNED BY H. A. HART, TREASURER, AND CONTAINED THE FOLLOWING STATEMENT:

"ENCLOSED IS SECURITY AS REQUIRED, CONSISTING OF BID BOND 75-07-816 5.'

A STANDARD FORM 24 BID BOND IN THE AMOUNT OF 20 PERCENT OF THE TOTAL BID PRICE, PROPERLY DATED AND BEARING NUMBER 75-07-816-5 ACCOMPANIED THE BID. IT WAS EXECUTED AND WITNESSED ON BEHALF OF A QUALIFIED CORPORATE SURETY AND THE SURETY'S CORPORATE SEAL WAS IMPRESSED ON THE BLOCK DESIGNATED IN THE FORM. THE NAME OF THE BIDDER, CONTROL PANEL CORPORATION, AND ITS ADDRESS WERE TYPED IN THE APPROPRIATE EXECUTION BLOCK FOR THE CORPORATE PRINCIPAL, BUT NO SIGNATURE OR SEAL APPEARED IN THE BLOCK. ON THE REVERSE SIDE OF THE BOND, THE CERTIFICATE AS TO CORPORATE PRINCIPAL WAS LEFT ENTIRELY BLANK. THE BOND STATED THAT THE PRINCIPAL AND SURETY AGREED TO BIND THEMSELVES JOINTLY AND SEVERALLY TO PERFORM THE CONDITIONS STATED THEREIN.

IN 38 COMP. GEN. 532, WE HELD THAT UNDER AN INVITATION REQUIRING BIDDERS TO SUBMIT BID BONDS, THE REQUIREMENT FOR A BID BOND IS A MATERIAL PART OF THE INVITATION WHICH CANNOT BE WAIVED BY CONTRACTING OFFICERS AND NONCOMPLIANCE WITH THE BID BOND PROVISION WILL REQUIRE REJECTION OF THE BID AS NONRESPONSIVE. IN THAT CASE, HOWEVER, NO BID BOND WAS SUBMITTED UNTIL 28 MINUTES AFTER THE TIME SCHEDULED FOR BID OPENING. IN THIS CASE, THE BID BOND WAS SUBMITTED WITH THE BID PRIOR TO OPENING AND THE ONLY QUESTION FOR CONSIDERATION IS THE SUFFICIENCY OF THE BOND SUBMITTED.

THE RULE OF LAW FOLLOWED IN THE FEDERAL COURTS IS THAT IF THE PRINCIPAL IN A BOND WOULD BE LIABLE WITHOUT REFERENCE TO THE BOND FOR THE ACTS CONSTITUTING THE BREACH, AND BY THE TERMS OF THE BOND THE PARTIES BIND THEMSELVES SEVERALLY AS WELL AS JOINTLY TO PERFORM ITS CONDITIONS, THE FAILURE OF THE PRINCIPAL TO SIGN THE BOND DOES NOT RENDER THE BOND VOID AS TO THE SURETY AND DOES NOT RELEASE THE SURETY FROM LIABILITY THEREON. MAROTTA V. AMERICAN SURETY CO., 64 F.2D 77; EMPIRE STATE SURETY CO. V. CARROLL COUNTY, 194 F. 593; UNITED STATES FIDELITY AND GUARANTY CO. V. HAGGART, 163 F. 801; AND ST. LOUIS BREWING ASSOCIATION V. HAYES, 97 F. 859. IN THIS CASE, THE LIABILITY OF THE BIDDER CAN BE DETERMINED FROM HIS BID AND FROM THE STATUTES AND REGULATIONS APPLICABLE TO GOVERNMENT PROCUREMENT. SEE REFINING ASSOCIATES INC. V. UNITED STATES, 109 F.SUPP. 259, 124 CT.CL. 115. THE CONDITIONS SET FORTH IN THE BOND ARE MERELY RESTATEMENTS OF SOME OF THE CONDITIONS ACCEPTED BY THE BIDDER IN SUBMITTING HIS BID AND SINCE IT IS NOT NECESSARY TO REFER TO THE BOND TO ESTABLISH THE BIDDER'S LIABILITY, THE BIDDER'S FAILURE TO SIGN THE BOND AS PRINCIPAL DOES NOT RELEASE THE SURETY FROM HIS LIABILITY.

WE BELIEVE THE BOND IN THIS CASE IS SUFFICIENT TO PROVIDE THE PROTECTION TO THE GOVERNMENT THAT WAS DEEMED NECESSARY WHEN THE BID BOND REQUIREMENT WAS PLACED IN THE INVITATION. SINCE IT IS OUR OPINION THAT CONTROL PANEL CORPORATION'S FAILURE TO SIGN THE BOND HAD NO EFFECT ON ITS LIABILITY OR THAT OF THE SURETY, WE HAVE NO OBJECTION TO TREATMENT OF THE DEFICIENCY AS A MINOR IRREGULARITY WHICH MAY BE WAIVED IN ORDER FOR THE GOVERNMENT TO CONSIDER THE BID SUBMITTED BY CONTROL PANEL CORPORATION.

THE COPIES OF THE INVITATION, BID, BID BOND, AND ABSTRACT OF BIDS WHICH WERE FORWARDED WITH YOUR LETTER ARE RETURNED AS REQUESTED.