B-163884, APR. 16, 1968

B-163884: Apr 16, 1968

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YOU REQUESTED OUR DECISION AS TO WHETHER AWARD MAY BE MADE UNDER INVITATION FOR BIDS N00024-68-B-0623 TO BUCK SMITH BOATS IF THAT LOW BIDDER IS DETERMINED TO BE RESPONSIVE TO THE INVITATION. THE INVITATION WAS ISSUED ON MARCH 4. BIDS WERE OPENED AND. THE LOW BID WAS SUBMITTED BY BUCK SMITH BOATS IN THE TOTAL AMOUNT OF $43. YOU REPORT THAT THE RESPONSIVENESS OF BUCK SMITH BOATS' BID IS IN QUESTION BECAUSE OF (1) ITS FAILURE TO SIGN THE BID. SINCE WE BELIEVE THAT THE BID OF BUCK SMITH BOATS IS NONRESPONSIVE TO THE BID BOND REQUIREMENTS OF THE INVITATION. IT IS NOT NECESSARY TO CONSIDER THE OTHER TWO INSTANCES OF BID DEVIATION. STANDARD FORM NO. 24 IN THE PENAL SUM EQUAL TO 20 PERCENT OF THE TOTAL PRICE OR BY OTHER LAWFUL SECURITY IN THE SAME AMOUNT TO PROVIDE THE GOVERNMENT ASSURANCE THAT THE OFFEROR (I) WILL NOT WITHDRAW HIS OFFER WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE.

B-163884, APR. 16, 1968

TO CAPTAIN DIGGLE:

BY LETTER DATED MARCH 25, 1968, REFERENCE SER 00J1-9, WITH ENCLOSURES, YOU REQUESTED OUR DECISION AS TO WHETHER AWARD MAY BE MADE UNDER INVITATION FOR BIDS N00024-68-B-0623 TO BUCK SMITH BOATS IF THAT LOW BIDDER IS DETERMINED TO BE RESPONSIVE TO THE INVITATION.

THE INVITATION WAS ISSUED ON MARCH 4, 1968, BY THE NAVAL SHIP SYSTEMS COMMAND, WASHINGTON, .C., AND REQUESTED BIDS FOR 70 FOURTEEN FOOT PUNTS, INCLUDING CERTAIN TECHNICAL DATA REQUIREMENTS. ON MARCH 19, 1968, BIDS WERE OPENED AND, OF THE EIGHT BIDS RECEIVED, THE LOW BID WAS SUBMITTED BY BUCK SMITH BOATS IN THE TOTAL AMOUNT OF $43,890 FOR 70 BOATS. YOU REPORT THAT THE RESPONSIVENESS OF BUCK SMITH BOATS' BID IS IN QUESTION BECAUSE OF (1) ITS FAILURE TO SIGN THE BID; (2) THE LANGUAGE OF THE BID GUARANTEE SECURITY ACCOMPANYING ITS BID; AND (3) THE FAILURE TO SET FORTH IN ITS BID THE ESTIMATE OF THE PRICE GROUP INDICATORS IN DD FORM 1423 AS REQUIRED BY PARAGRAPH 23 OF ATTACHMENT "A" TO THE INVITATION.

SINCE WE BELIEVE THAT THE BID OF BUCK SMITH BOATS IS NONRESPONSIVE TO THE BID BOND REQUIREMENTS OF THE INVITATION, IT IS NOT NECESSARY TO CONSIDER THE OTHER TWO INSTANCES OF BID DEVIATION.

SECTION "F," PARAGRAPH 6, OF THE BID SCHEDULE, STANDARD FORM 36, PROVIDED AS FOLLOWS:

"BID BOND: (A) YOUR OFFER MUST BE ACCOMPANIED BY EITHER A BID BOND ON U.S. STANDARD FORM NO. 24 IN THE PENAL SUM EQUAL TO 20 PERCENT OF THE TOTAL PRICE OR BY OTHER LAWFUL SECURITY IN THE SAME AMOUNT TO PROVIDE THE GOVERNMENT ASSURANCE THAT THE OFFEROR (I) WILL NOT WITHDRAW HIS OFFER WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE, AND (II) WILL EXECUTE A WRITTEN CONTRACT AND FURNISH THE PERFORMANCE AND PAYMENT BONDS REQUIRED BY CLAUSE 58 OF THE ADDITIONAL ALTERATIONS IN GENERAL PROVISIONS WITHIN THE PERIOD SPECIFIED IN THE OFFER (UNLESS A LONGER PERIOD IS ALLOWED) AFTER RECEIPT OF THE SPECIFIED FORMS.'

IT WAS FURTHER PROVIDED THAT OFFERS NOT ACCOMPANIED BY SUCH BID BOND OR OTHER LAWFUL SECURITY IN THE REQUIRED AMOUNT SHALL BE REJECTED WITHOUT FURTHER CONSIDERATION, EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH 10-102.5 OF THE ARMED SERVICES PROCUREMENT REGULATION. BIDDER'S ATTENTION WAS DIRECTED TO THE BID GUARANTEE REQUIREMENTS SET OUT IN ASPR 10-102.4, REV. 11, DATED JUNE 1, 1965. ALSO, THE BID GUARANTEE CLAUSE OF THE INVITATION PROVIDED THAT FAILURE TO FURNISH A BID GUARANTEE IN THE PROPER FORM AND AMOUNT BY THE TIME SET FOR OPENING OF OFFERS MAY BE CAUSE FOR REJECTION OF THE OFFER. THE BID GUARANTEE WAS REQUIRED TO BE IN THE FORM OF A FIRM COMMITMENT, SUCH AS A BID BOND, POSTAL MONEY ORDER, CERTIFIED CHECK, CASHIER'S CHECK, IRREVOCABLE LETTER OF CREDIT, OR, IN ACCORDANCE WITH TREASURY DEPARTMENT REGULATIONS, CERTAIN BONDS OR NOTES OF THE UNITED STATES.

BUCK SMITH BOATS CHOSE TO SUBMIT A 30-DAY IRREVOCABLE LETTER OF CREDIT AS ITS BID GUARANTEE SECURITY IN LIEU OF A BID BOND. IN THIS REGARD, THE INVITATION WARNED BIDDERS THAT BIDS OFFERING LESS THAN 60 DAYS FOR ACCEPTANCE WILL BE CONSIDERED NONRESPONSIVE AND WILL BE REJECTED. THE LETTER OF CREDIT AUTHORIZED THE UNITED STATES NAVY PURCHASING OFFICE, WASHINGTON NAVY YARD, WASHINGTON, D.C., TO DRAW ON THE BANK OF CALIFORNIA N.A., LOS ANGELES, AT SIGHT, FOR ACCOUNT OF BUCK SMITH BOATS, BY ORDER OF GREENFIELD STATE BANK, BAKERSFIELD, CALIFORNIA, FOR ANY SUM OR SUMS NOT EXCEEDING $8,778 (20 PERCENT OF THE BID PRICE). THE LETTER OF CREDIT PROVIDES FURTHER THAT THE GOVERNMENT IS AUTHORIZED TO DRAW SUMS NOT EXCEEDING $8,778 IF: "ACCOMPANIED BY: YOUR WRITTEN STATEMENT TO THE EFFECT THAT YOU HAVE ACCEPTED THE 14 FT. PUNT BID OF BUCK SMITH BOATS, REGARDING: "REQUISITION PURCHASE REQUEST NO. PR PM'S 84-81417 SOLICITATION NO. N00024 -68-B-0623.

* * * * * * * "THIS CREDIT IS SUBJECT TO THE -UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1962 REVISION), INTERNATIONAL CHAMBER OF COMMERCE, BROCHURE NO. 222.-"

YOU STATE THAT THE TWO BANKS WHICH PREPARED THE LETTER OF CREDIT WERE CONTACTED AND THE FOLLOWING INFORMATION WAS OBTAINED:

"/A) THE GREENFIELD BANK DECIDED TO UTILIZE A LETTER OF CREDIT RATHER THAN A BID BOND FOR ITS CUSTOMER, THE OFFEROR, BECAUSE OF TIME LIMITATIONS. ITS CORRESPONDENT, BANK OF CALIFORNIA, N.A. PREPARED THE LETTER.

"/B) THE BANK OF CALIFORNIA SUGGESTED THE CONDITION IN THE LETTER OF CREDIT BECAUSE OF COST AND ADMINISTRATIVE SAVINGS THEY BELIEVED WOULD ARISE. THERE IS NO EVIDENCE TO INDICATE THE OFFEROR WAS ADVISED OF THIS ACTION.

"/C) BOTH BANKS AGREE THE CONDITION IS PRECEDENT TO THE ACCEPTANCE OF ANY DRAFT.

"/D) NEITHER BANK APPARENTLY CONSIDERED THE 30 DAY LIMITATION ON THE LETTER OF CREDIT COULD BE CONSTRUED AS A REDUCTION IN THE TIME THE OFFER WAS TO REMAIN OPEN.

"/E) PERFORMANCE BONDS ARE BEING PREPARED. THE CONDITION IN THE LETTER OF CREDIT WAS NOT INTENDED TO BE TAKEN AS A LIMITATION ON THE FINANCIAL POSITION OF THE OFFEROR.'

SECTION "F," PARAGRAPH 6, OF THE SCHEDULE REQUIRED THAT OFFERS MUST BE ACCOMPANIED BY EITHER A BID BOND OR OTHER LAWFUL SECURITY TO PROVIDE THE GOVERNMENT ASSURANCE THAT THE OFFEROR WILL NOT WITHDRAW HIS OFFER WITHIN THE PERIOD SPECIFIED THEREIN FOR ACCEPTANCE. THE INVITATION REQUIRED THAT OFFERORS ALLOW 60 DAYS FOR ACCEPTANCE; HOWEVER, THE LETTER OF CREDIT BY ITS TERMS WAS EFFECTIVE FOR ONLY 30 DAYS. THUS, THE LIMITATION IN THE LETTER OF CREDIT IS IN DEROGATION OF THE CONDITION IN THE INVITATION THAT OFFERORS WOULD NOT WITHDRAW THEIR OFFERS FOR A PERIOD OF 60 DAYS FROM THE DATE BIDS WERE OPENED.

MOREOVER, THE LETTER OF CREDIT ACCOMPANYING THE OFFER OF BUCK SMITH BOATS IS SUBJECT TO CERTAIN UNDISCLOSED UNIFORM CUSTOMS AND PRACTICES APPLICABLE TO COMMERCIAL LETTERS OF CREDIT. THE LEGAL EFFECT OF THESE CUSTOMS AND PRACTICES IS NOT KNOWN, BUT THE UNCERTAINTY THUS CREATED IS SUFFICIENT TO RENDER THE LETTER OF CREDIT UNACCEPTABLE AS A "FIRM COMMITMENT" WITHIN THE MEANING OF THE BID GUARANTEE CLAUSE OF THE INVITATION.

BEGINNING WITH A DECISION RENDERED TO THE SECRETARY OF THE ARMY ON FEBRUARY 5, 1959, 38 COMP. GEN. 532, THE DECISIONS OF OUR OFFICE CONCERNING REQUIRED BID GUARANTEES ARE TO THE EFFECT THAT A BID GUARANTEE REQUIREMENT IN AN INVITATION FOR BIDS IS A MATERIAL PART OF THE INVITATION AND THAT A CONTRACTING OFFICER CANNOT, AS A GENERAL RULE, WAIVE A FAILURE TO COMPLY WITH THE REQUIREMENT BUT MUST REJECT AS NONRESPONSIVE A BID NOT ACCOMPANIED BY A BID GUARANTEE OR ONE WHICH IS ACCOMPANIED BY AN INSUFFICIENT BID GUARANTEE. ASPR 2-404.2 (H) PROVIDES AS FOLLOWS:

"WHERE A BID GUARANTEE IS REQUIRED AND A BIDDER FAILS TO FURNISH IT IN ACCORDANCE WITH THE REQUIREMENTS OF THE INVITATION FOR BIDS, THE BID SHALL BE REJECTED EXCEPT AS OTHERWISE PROVIDED IN 10-102.5.'

WHILE ASPR 10-102.5 PROVIDES SIX EXCEPTIONS TO THE GENERAL RULE THAT A NONCOMPLYING BID BOND RENDERS THE BID NONRESPONSIVE, NONE OF THE ENUMERATED EXCEPTIONS IS APPLICABLE TO THIS CASE.

FOR THE FOREGOING REASONS, THE LOW BID OF BUCK SMITH BOATS SHOULD BE REJECTED AS NONRESPONSIVE TO THE BID BOND GUARANTEE PROVISIONS OF THE INVITATION. SEE B-160846, APRIL 11, 1967.

ACCORDINGLY, ON THE RECORD BEFORE US AWARD MAY NOT BE MADE TO BUCK SMITH BOATS UNDER INVITATION N00024-68-B-0623.