B-148309, MAR. 19, 1962

B-148309: Mar 19, 1962

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DEPARTMENT OF THE INTERIOR: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 27. IS RESPONSIVE TO THE INVITATION FOR BIDS ON SPECIFICATION NO. SEVEN BIDS WERE RECEIVED FOR 84 ITEMS OF MATERIALS AND WORK INVOLVED IN THE CONSTRUCTION OF CEDAR BLUFF CANAL. THE BIDS WERE OPENED ON FEBRUARY 13. 480.80 WAS LOW AND THE BID OF HARRY HENERY. 964.30 WAS SECOND LOW. 480.80 FROM HUNTER WAS ACCOMPANIED BY A PURPORTED BID BOND IN THE AMOUNT OF $66. OR LABOR AND MATERIAL BONDS HAVE BEEN EXECUTED. THAT THE AFOREMENTIONED AUTHORITY DOES NOT EMBRACE ANY BOND GUARANTEEING ANY PROPOSAL WHERE THE ESTIMATED AMOUNT OF THE PROPOSAL IS IN EXCESS OF FIVE HUNDRED THOUSAND ($500. NOR ANY CONTRACT AWARDED WHERE THE CONTRACT PRICE IS IN EXCESS OF FIVE HUNDRED THOUSAND ($500.

B-148309, MAR. 19, 1962

TO ASSISTANT COMMISSIONER AND CHIEF ENGINEER, BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 27, 1962, REQUESTING A DECISION WHETHER THE BID OF HUNTER CONSTRUCTION COMPANY, INC., HAYS, KANSAS, IS RESPONSIVE TO THE INVITATION FOR BIDS ON SPECIFICATION NO. DC- 5726, ISSUED DECEMBER 29, 1961, BY YOUR OFFICE.

SEVEN BIDS WERE RECEIVED FOR 84 ITEMS OF MATERIALS AND WORK INVOLVED IN THE CONSTRUCTION OF CEDAR BLUFF CANAL, STATION 569/00 TO STATION 954/00, AND CEDAR BLUFF LATERAL SYSTEM, MISSOURI RIVER BASIN PROJECT, AS DESCRIBED IN THE INVITATION. THE BIDS WERE OPENED ON FEBRUARY 13, 1962, AT STOCKTON, KANSAS. HUNTER'S BID OF $651,480.80 WAS LOW AND THE BID OF HARRY HENERY, INC., HERINGTON, KANSAS, IN THE AMOUNT OF $652,964.30 WAS SECOND LOW. OTHER BIDS RANGED UP TO A HIGH OF $779,992.65.

THE INVITATION REQUIRED EACH BIDDER TO SUBMIT A BID GUARANTEE OF NOT LESS THAN 20 PERCENT OF THE AMOUNT BID. PARAGRAPH 4 OF THE INSTRUCTIONS TO BIDDERS PROVIDES THAT FAILURE TO FURNISH THE REQUIRED BID GUARANTEE IN THE PROPER FORM AND AMOUNT, BY THE TIME SET FOR BID OPENING, MAY BE CAUSE FOR REJECTION OF THE BID. THE LOW BID OF $651,480.80 FROM HUNTER WAS ACCOMPANIED BY A PURPORTED BID BOND IN THE AMOUNT OF $66,800 AND A CERTIFIED COPY OF THE POWER OF ATTORNEY OF ONE JAMES H. NEELY, THE AGENT AND ATTORNEY-IN-FACT WHO SIGNED THE BOND ON BEHALF OF THE SURETY COMPANY. THE POWER OF ATTORNEY APPOINTED MR. NEELY AS AGENT AND ATTORNEY-IN-FACT FOR THE SURETY COMPANY TO EXECUTE:

"ANY AND ALL PROPOSALS, PERFORMANCE OR LABOR AND MATERIAL BONDS ON BEHALF OF HUNTER CONSTRUCTION COMPANY, INC. OF HAYS, KANSAS, GUARANTEEING THE PERFORMANCE OF CONTRACTS FOR THE CONSTRUCTION OF PUBLIC OR PRIVATE IMPROVEMENTS, AND ALSO TO CONSENT TO ANY AND ALL CHANGE ORDERS OR SUPPLEMENTAL AGREEMENTS NECESSARY IN THE PERFORMANCE OF CONTRACTS FOR WHICH PROPOSAL, PERFORMANCE, OR LABOR AND MATERIAL BONDS HAVE BEEN EXECUTED, PROVIDED, THAT THE AFOREMENTIONED AUTHORITY DOES NOT EMBRACE ANY BOND GUARANTEEING ANY PROPOSAL WHERE THE ESTIMATED AMOUNT OF THE PROPOSAL IS IN EXCESS OF FIVE HUNDRED THOUSAND ($500,000) DOLLARS, NOR ANY CONTRACT AWARDED WHERE THE CONTRACT PRICE IS IN EXCESS OF FIVE HUNDRED THOUSAND ($500,000) DOLLARS, NOR CONSENT TO CHANGE ORDER OR SUPPLEMENTAL AGREEMENT INVOLVING A CHANGE IN THE CONTRACT PRICE IN EXCESS OF FIVE HUNDRED THOUSAND ($500,000) DOLLARS.'

SUBSEQUENT TO THE OPENING OF BIDS, HUNTER ALLEGED THAT A BID BOND IN THE AMOUNT OF 10 PERCENT WAS INADVERTENTLY SUBMITTED INSTEAD OF ONE IN THE AMOUNT OF 20 PERCENT AND ASKED PERMISSION TO REPLACE THE INSUFFICIENT BOND WITH AN ACCEPTABLE ONE BEFORE ANY DECISION ON AWARD OF A CONTRACT. LETTER OF FEBRUARY 14, 1962, RECEIVED AT YOUR OFFICE ON THE FOLLOWING DAY, HUNTER SUBMITTED A BOND IN THE AMOUNT OF $133,600 SIGNED BY THE SAME ATTORNEY-IN-FACT AND ACCOMPANIED BY A COPY OF THE SAME POWER OF ATTORNEY LIMITING THE AUTHORITY OF THE ATTORNEY IN-FACT TO EXECUTION OF BONDS ON PROPOSALS NOT IN EXCESS OF $500,000. BY LETTER OF FEBRUARY 17, 1962, HUNTER FORWARDED ANOTHER BOND FROM THE SAME SURETY COMPANY, ALSO IN THE AMOUNT OF $133,600 SIGNED BY A DIFFERENT ATTORNEY-IN-FACT WHOSE AUTHORITY EXTENDS TO "ANY AND ALL BONDS AND UNDERTAKINGS.'

THE POWER OF ATTORNEY UNDER WHICH MR. NEELY ACTED ON BEHALF OF THE SURETY COMPANY DID NOT EXTEND TO GUARANTEEING ANY PROPOSAL IN EXCESS OF $500,000. AS A CONSEQUENCE, HIS SIGNATURE ON THE BID BOND FORM ACCOMPANYING HUNTER'S BID OF $651,480.80 COULD NOT BIND THE SURETY COMPANY. THE GENERAL RULE PRESCRIBED BY SECTION 1-10.102-5 OF THE FEDERAL PROCUREMENT REGULATIONS THAT A BIDDER'S NONCOMPLIANCE WITH THE BID BOND PROVISION REQUIRES REJECTION OF HIS BID AS NONRESPONSIVE. AN EXCEPTION TO THIS RULE IS STATED IN SECTION 1-10.102-5 (B), FEDERAL PROCUREMENT REGULATIONS, WHICH PROVIDES THAT REJECTION OF A BID IS NOT REQUIRED "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.' WE DO NOT REGARD THIS EXCEPTION TO BE APPLICABLE TO THE PRESENT CASE SINCE THE EXCEPTION CONTEMPLATES A SITUATION IN WHICH A VALID AND BINDING BID GUARANTEE HAS BEEN SUBMITTED, THE ONLY DEFICIENCY BEING THE AMOUNT OF THE GUARANTEE. IN THE PRESENT CASE, THE DEFICIENCY IS PRIMARILY IN THE FACT THAT THE AGENT FOR THE SURETY COMPANY HAD NO AUTHORITY TO BIND THE COMPANY TO A BID GUARANTEE OF ANY AMOUNT ON A BID THAT EXCEEDED $500,000. IN EFFECT, HUNTER SUBMITTED NO BID GUARANTEE WITH HIS BID, SINCE THE BID BOND FORM SIGNED BY MR. NEELY IS INSUFFICIENT TO BIND THE SURETY COMPANY AND DOES NOT AFFORD THE GOVERNMENT THE PROTECTION DEEMED NECESSARY WHEN THE BID GUARANTEE PROVISION WAS INCLUDED IN THE INVITATION. IT IS OUR OPINION, THEREFORE, THAT THE BID SUBMITTED BY HUNTER MUST BE CONSIDERED NONRESPONSIVE.

THE ACTIONS OF HUNTER IN FORWARDING ADDITIONAL BID BONDS AFTER THE BIDS WERE OPENED CONSTITUTE ATTEMPTS TO CURE THE DEFICIENCY OF THE ORIGINAL BID GUARANTEE AND CHANGE THE NONRESPONSIVE BID TO RESPONSIVE ONE. ASIDE FROM THE FACT THAT THE SECOND BID BOND FORM SIGNED BY MR. NEELY SUFFERS FROM THE SAME DEFICIENCY AS THE FIRST IN VIEW OF HIS LACK OF AUTHORITY, THE SUBMISSION OF ANY BID BOND BY HUNTER AFTER BID OPENING CANNOT BE PERMITTED UNDER THE RULE THAT A BID MUST COMPLY WITH THE REQUIREMENTS IN THE INVITATION AT THE TIME OF BID OPENING IN ORDER TO BE CONSIDERED FOR AWARD. WE HAVE CONSISTENTLY HELD THAT TO PERMIT A BIDDER TO MAKE HIS BID RESPONSIVE BY CHANGING OR ADDING TO A MATERIAL PART OF THE BID AFTER BID OPENING WOULD BE TANTAMOUNT TO PERMITTING A BIDDER TO SUBMIT A NEW BID, SINCE A NONRESPONSIVE BID DOES NOT CONSTITUTE AN OFFER WHICH MAY PROPERLY BE ACCEPTED. 38 COMP. GEN. 819; 30 ID. 179.

FOR THE REASONS STATED, IT IS OUR OPINION THAT HUNTER'S BID AS ORIGINALLY SUBMITTED IS NONRESPONSIVE AND MAY NOT BE CORRECTED IN ORDER TO ALLOW IT TO BE CONSIDERED FOR AWARD. THE ENCLOSURES TO YOUR LETTER OF FEBRUARY 27, 1962, ARE RETURNED IN ACCORDANCE WITH YOUR REQUEST.