B-157811, OCT. 22, 1965

B-157811, OCT. 22, 1965

TO THE HONORABLE WILLIAM J. DRIVER, ADMINISTRATOR OF VETERANS AFFAIRS, VETERANS ADMINISTRATION:

WE REFER TO A LETTER DATED OCTOBER 6, 1965, REFERENCE 134C, FROM THE CHIEF MEDICAL DIRECTOR, DEPARTMENT OF MEDICINE AND SURGERY, VETERANS ADMINISTRATION, REQUESTING OUR DECISION WHETHER THE BID OF WESTERN WATERPROOFING COMPANY, INCORPORATED, MAY BE CONSIDERED.

ON AUGUST 20, 1965, THE CHIEF, SUPPLY DIVISION, VETERANS ADMINISTRATION HOSPITAL, 1200 ANASTASIA AVENUE, CORAL GABLES, FLORIDA, ISSUED INVITATION FOR PROJECT NO. C.P. 495-542, FOR FURNISHING THE LABOR, MATERIAL, AND EQUIPMENT REQUIRED TO MOISTURE-PROOF, RESURFACE, AND PROCESS-PAINT BUILDING NO. 1 AT THE ABOVE HOSPITAL IN ACCORDANCE WITH SPECIFICATION NO. 5197/167. THE INVITATION STATED THAT THE BID OPENING WOULD BE AT 1:30 P.M., E.S.T., ON SEPTEMBER 8, 1965. IN THIS CONNECTION WE ARE ADVISED THAT THE BID OPENING WAS EXTENDED TO 1:30 P.M., E.S.T., SEPTEMBER 9, 1965, SINCE THE PROCURING HOSPITAL WAS CLOSED ON SEPTEMBER 8 BECAUSE OF HURRICANE ,BETSY.' PURSUANT TO THIS INVITATION TWO BIDS WERE RECEIVED AS FOLLOWS:

WESTERN WATERPROOFING COMPANY, INC. $19,124.00

GRANULITE OF SOUTH FLORIDA, INC. $28,992.00

PAGE 1 OF THE SPECIFICATIONS OF THE INSTANT INVITATION STATES:

"BID GUARANTY IS REQUIRED IN ACCORDANCE WITH ARTICLE 4 OF THE INSTRUCTIONS TO BIDDERS IN AN AMOUNT NOT LESS THAN 25 PERCENT OF THE AMOUNT OF THE BID, BUT SHALL NOT EXCEED $3,000,000.

"NONCOMPLIANCE WITH THE REQUIREMENT THAT A BID BOND OR OTHER BID SECURITY BE SUBMITTED IN THE AMOUNT SPECIFIED, WITH THE BID WILL BE HELD TO REQUIRE REJECTION OF THE BID AS NONRESPONSIVE.'

ARTICLE 4 OF THE INSTRUCTIONS TO BIDDERS (CONSTRUCTION CONTRACT)ENTITLED "BID GUARANTEE" PROVIDES IN PART:

"WHERE A BID GUARANTEE IS REQUIRED BY THE INVITATION FOR BIDS, FAILURE TO FURNISH A BID GUARANTEE IN THE PROPER FOR AND AMOUNT, BY THE TIME SET FOR OPENING OF BIDS, MAY BE CAUSE FOR REJECTION OF THE BID. * * *"

THE BID OF WESTERN, SUBMITTED ON SEPTEMBER 7, 1965, WAS NOT ACCOMPANIED BY A BID BOND. IN THE SPACE PROVIDED IN THE INVITATION FOR FILING IN THE TYPE OF BID GUARANTY AND THE AMOUNT, WESTERN INSERTED "*/BID BOND ORDERED FROM TRAVELERS INSURANCE CO.).' WESTERN INSERTED "25 PERCENT" AS THE AMOUNT OF THE BID BOND.

YOUR DEPARTMENT HAS BEEN ADVISED BY WESTERN THAT THE BID BOND WAS IN THE POSSESSION OF WESTERN'S REPRESENTATIVE IN TAMPA, FLORIDA, ON SEPTEMBER 8, 1965, AND THAT THIS REPRESENTATIVE INTENDED TO HAND CARRY THE BID BOND TO THE PROCURING OFFICE. WESTERN HAS ALSO ADVISED THAT BECAUSE OF HURRICANE "BETSY," WESTERN'S REPRESENTATIVE COULD NOT GET TRANSPORTATION FROM TAMPA TO CORAL GABLES. WESTERN'S REPRESENTATIVE,ON SEPTEMBER 8, 1965, MAILED THE BID BOND TO ANOTHER REPRESENTATIVE OF THAT COMPANY IN MIAMI BEACH, FLORIDA. THE CONTRACTING OFFICER DID NOT RECEIVE WESTERN'S BID BOND UNTIL AFTER BID OPENING ON SEPTEMBER 9, 1965. THERE IS SOME INDICATION THAT OFFICIALS OF THE PROCURING OFFICE WERE VERBALLY ADVISED BEFORE BID OPENING THAT WESTERN'S REPRESENTATIVES HAD THE INTENTION OF BRINGING THE BID BOND TO CORAL GABLES.

THE ENVELOPE WHICH CONTAINED WESTERN'S BID BOND SHOWS THAT WESTERN'S BID BOND WAS SENT BY REGULAR MAIL AND WAS POSTMARKED,"PM 8 SEP 1965 TAMPA, FLA.' THE ENVELOPE ALSO SHOWS THAT IT WAS NOT ADDRESSED TO THE PROCURING OFFICE BUT TO NORTH MIAMI BEACH, FLORIDA. WESTERN'S BID BOND INDICATES IT WAS EXECUTED ON SEPTEMBER 7, 1965, IN THE PENAL SUM OF 25 PERCENT OF THE BID PRICE OF THE INSTANT INVITATION.

FEDERAL PROCUREMENT REGULATIONS SECTION 1-10.103-4 PROVIDES:

"WHERE AN INVITATION FOR BIDS REQUIRES THAT A BID BE SUPPORTED BY A BID GUARANTEE AND NONCOMPLIANCE OCCURS, THE BID SHALL BE REJECTED, * * *.'

SECTIONS (A) THROUGH (D) OF THE CITED REGULATION PROVIDE FOR SITUATIONS WHEN THE NONCOMPLIANCE PROVISION MAY BE WAIVED AS FOLLOWS:

"/A) WHERE ONLY A SINGLE BID IS RECEIVED. IN SUCH CASES, HOWEVER, THE GOVERNMENT MAY OR MAY NOT REQUIRE THE FURNISHING OF THE BID GUARANTEE BEFORE AWARD.

"/B) 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.

"/C) WHERE THE BID GUARANTEE IS RECEIVED LATE AND THE LATE RECEIPT MAY BE WAIVED UNDER THE RULES ESTABLISHED IN SEC. 1-2.303 FOR CONSIDERATION OF LATE BIDS.

"/D) WHERE A BID GUARANTEE CEASES TO MEET THE REQUIREMENTS OF PARAGRAPH (B) OF THIS SEC. 1-10.103-4 AS A RESULT OF THE CORRECTION OF A MISTAKE IN BID UNDER SEC. 1-2.406.'

THE FACTS OF THIS CASE SHOW THAT WESTERN'S REPRESENTATIVE IN CORAL GABLES SENT THE BID BOND BY REGULAR MAIL BEFORE BID OPENING TO ANOTHER REPRESENTATIVE OF THAT COMPANY IN MIAMI BEACH, FLORIDA. A QUESTION HERE MIGHT ARISE WHETHER THE MAILING OF WESTERN'S BID BOND BEFORE BID OPENING COULD CONSTITUTE A BASIS FOR THE APPLICATION OF THE WAIVER PROVISION OF SECTION (C) OF FEDERAL PROCUREMENT REGULATIONS SECTION 1 10.103-4. THE ANSWER TO THIS QUESTION MUST BE NO SINCE THE BID BOND WAS NOT SENT DIRECTLY TO THE PROCURING OFFICE. IN VIEW OF THE RECORD PRESENTED WE FIND THAT WESTERN'S ACTIONS CONSTITUTED A CONTINUING ATTEMPT TO HAND-DELIVER A BID BOND.

THE QUESTION IS WHETHER WESTERN'S UNSUCCESSFUL ATTEMPT TO HAND DELIVER THE BID BOND IN THE CIRCUMSTANCES OF THIS CASE COULD CONSTITUTE A BASIS FOR WAIVING THE PROVISION OF FPR 1-10.103-4, WHICH REQUIRES THAT REJECTION OF A BID WHICH DOES NOT COMPLY WITH AN INVITATION REQUIREMENT FOR FURNISHING A BID BOND. IN THIS CONNECTION SEE 42 COMP. GEN. 725, WHICH ALSO CONCERNED A SITUATION WHERE REPRESENTATIVES OF THE LOW BIDDER VERBALLY ADVISED THE BID OPENING OFFICER PRIOR TO BID OPENING OF THE LOW BIDDER'S INTENTION TO FURNISH A BID BOND. THE FACTS SHOWED THAT THE BID BOND WAS CONTAINED IN THE LUGGAGE OF ONE OF THE REPRESENTATIVES OF THE LOW BIDDER WHO WAS HAND CARRYING THE BID BOND TO THE PROCURING OFFICE. THIS LUGGAGE WAS MISPLACED IN TRANSIT BY THE AIRLINE TRANSPORTING THE LOW BIDDER'S REPRESENTATIVE; CONSEQUENTLY, THE BID BOND WAS NOT RECEIVED BY THE CONTRACTING OFFICER UNTIL AFTER BID OPENING. WE HELD THAT THE LOW BID WAS NONRESPONSIVE AND MUST BE REJECTED BASED ON THE FOLLOWING RATIONALS:

"WE HELD IN DECISION 38 COMP. GEN. 532 THAT UNDER INVITATIONS FOR BIDS WHICH REQUIRE BIDDERS TO SUBMIT BID BONDS PRIOR TO THE BID OPENING, THE BID BOND REQUIREMENT IS A MATERIAL PART OF THE INVITATION WHICH CANNOT BE WAIVED AND NONCOMPLIANCE WITH THE BID BOND PROVISION REQUIRES THE REJECTION OF THE BID AS NONRESPONSIVE. THE BASIS FOR THIS RULE WAS STATED IN THE DECISION AS FOLLOWS:

"* * * PERMITTING WAIVER OF A BID BOND REQUIREMENT STATED IN AN INVITATION FOR BIDS WOULD HAVE A TENDENCY TO COMPROMISE THE INTEGRITY OF THE COMPETITIVE BID SYSTEM BY (1) MAKING IT POSSIBLE FOR A BIDDER TO DECIDE AFTER OPENING WHETHER OR NOT TO TRY TO HAVE HIS BID REJECTED, (A) CAUSING UNDUE DELAY IN EFFECTING PROCUREMENTS, AND (3) CREATING, BY THE NECESSARY SUBJECTIVE DETERMINATIONS BY DIFFERENT CONTRACTING OFFICERS, INCONSISTENCIES IN THE TREATMENT OF BIDDERS. THIS RESULT COULD HARDLY BE SAID TO SERVE THE BEST INTERESTS OF THE UNITED STATES. CF. 14 COMP. GEN. 559.'

"IT CONSISTENTLY HAS BEEN HELD THAT UNDER THE COMPETITIVE BID PROCEDURE A BID TO BE CONSIDERED FOR AWARD MUST COMPLY WITH THE REQUIREMENTS OF THE INVITATION AT THE TIME OF BID OPENING. A BIDDER MAY NOT BE PERMITTED TO CHANGE OR MODIFY ITS BID AFTER THE OPENING AND IT DOES NOT MATTER WHETHER THE FAILURE TO COMPLY WAS DUE TO INADVERTENCE, MISTAKE OR OTHERWISE. COMP. GEN. 819, 36 ID. 535, 30 ID. 179.'

IN OTHER WORDS, THE HOLDING OF THE ABOVE DECISION WAS THAT THE LATE SUBMISSION OF A HAND-CARRIED BID BOND DUE TO CAUSES NOT RELATED TO DELAYS IN THE MAIL OR OTHERWISE EXCUSABLE UNDER FEDERAL PROCUREMENT REGULATIONS SECTION 1-10.103-4 IS REPRESENTATIVE OF THE SITUATION WHICH OUR DECISION REPORTED AT 38 COMP. GEN. 532 SOUGHT TO REMEDY. IN THE INSTANT CASE THE CAUSE FOR THE LATE SUBMISSION OF WESTERN'S BID BOND WOULD NOT BE A BASIS FOR THE APPLICATION OF ANY OF THE WAIVER PROVISIONS, (SECTIONS (A) THROUGH (D) (, QUOTED ABOVE, OF FEDERAL PROCUREMENT REGULATIONS SECTION 1-10.103- 4. IN ACCORDANCE WITH OUR DECISION AT 42 COMP. GEN. 725, THE PROVISION OF FEDERAL PROCUREMENT REGULATIONS 1-10.103-4, WHICH REQUIRES THE REJECTION OF BIDS WHICH DO NOT COMPLY WITH A REQUIREMENT IN AN INVITATION FOR A BID GUARANTEE, WOULD THEREFORE BE APPLICABLE TO THE INSTANT CASE.

THE FINAL QUESTION RELATES TO THE EFFECT OF WESTERN'S INSERTION ON ITS BID "*/BID BOND ORDERED FROM TRAVELERS INSURANCE CO.)" AND THE INSERTION THAT THE BID BOND WAS TO BE IN THE AMOUNT OF "25 PERCENT.' IT SHOULD BE NOTED THAT THIS INSERTION WOULD NOT CREATE A SURETYSHIP CONTRACT BETWEEN TRAVELERS AND WESTERN. IT IS AN ESTABLISHED RULE OF THE LAW OF SURETYSHIP THAT NO ONE INCURS A LIABILITY TO PAY A DEBT OR PERFORM A DUTY FOR ANOTHER UNLESS HE EXPRESSLY AGREES TO BE SO BOUND. SEE B-155837, FEBRUARY 17, 1965, 44 COMP. GEN. - . TO PERMIT WESTERN TO ESTABLISH ITS SURETYSHIP RELATIONSHIP AFTER BID OPENING IN THE CIRCUMSTANCES OF THIS CASE WOULD BE TO PERMIT WESTERN TO CHANGE OR MODIFY ITS BID AS SUBMITTED IN A MATERIAL RESPECT AFTER THE BID OPENING. THIS HAS BEEN CONSISTENTLY PROHIBITED BY OUR OFFICE IN OUR INTEREST IN THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. SEE 38 COMP. GEN. 819; 36 ID. 535; 30 ID. 179.

FOR THESE REASONS WESTERN'S BID MUST BE REJECTED. WE ARE RETURNING THE ENCLOSURES TRANSMITTED WITH THE SUBMISSION AS REQUESTED.