B-164067, JUN. 13, 1968

B-164067: Jun 13, 1968

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SECRETARY: REFERENCE IS MADE TO A REPORT DATED MAY 7. THE PROTEST IS BASED ON THE INCONSISTENCY IN THE BID BOND SUBMITTED BY TAB WITH ITS BID. BIDS WERE OPENED AS SCHEDULED ON APRIL 2. ON THESE DESIRED SCHEDULES WAS IN THE AGGREGATE AMOUNT OF $727. WHERE A BID GUARANTEE IS REQUIRED BY THE INVITATION FOR BIDS. TAB SUBMITTED WITH ITS BID A BID BOND ON STANDARD FORM 24 WHICH STATED THE PENAL SUM OF THE BOND AS 20 PERCENT OF THE BID PRICE BUT THE PENAL SUM WAS STATED IN AN "AMOUNT NOT TO EXCEED" $35. THE OBLIGATION OF THE SURETY UNDER THE BID BOND WAS LIMITED TO $35. IT IS REPORTED THAT WHEN THE INSUFFICIENCY IN THE BID BOND WAS CALLED TO THE ATTENTION OF THE OFFICER WHO SIGNED THE BID ON BEHALF OF TAB.

B-164067, JUN. 13, 1968

TO MR. SECRETARY:

REFERENCE IS MADE TO A REPORT DATED MAY 7, 1968, FROM THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, CONCERNING THE PROTEST OF A. TEICHERT AND SON, INC., AGAINST THE POSSIBLE AWARD OF A CONTRACT BY THE NATIONAL PARK SERVICE TO TAB CONSTRUCTION, INC. (TAB), ON PROJECT NO. LM- S218 FOR CONSTRUCTION WORK AT LAKE MEAD NATIONAL RECREATION AREA IN NEVADA. THE PROTEST IS BASED ON THE INCONSISTENCY IN THE BID BOND SUBMITTED BY TAB WITH ITS BID.

BIDS WERE OPENED AS SCHEDULED ON APRIL 2, 1968, AND IT APPEARS THAT TAB SUBMITTED THE LOWEST BID FOR THAT PART OF THE SCHEDULES DESIRED BY THE PARK SERVICE IN THE AGGREGATE AMOUNT OF $658,581.85. THE NEXT LOW BID BY A. TEICHERT AND SON, INC., ON THESE DESIRED SCHEDULES WAS IN THE AGGREGATE AMOUNT OF $727,577.40, OR $68,995.55 GREATER THAN THE TAB BID. THE INVITATION REQUIRED A BID GUARANTEE IN THE SUM OF 20 PERCENT OF THE TOTAL BID PRICE IN ACCORDANCE WITH THE REQUIREMENTS OF CLAUSE 4 OF THE INSTRUCTIONS TO BIDDERS, STANDARD FORM 22 (JUNE 1964 ED.), WHICH PROVIDES, IN PART, AS FOLLOWS:

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

TAB SUBMITTED WITH ITS BID A BID BOND ON STANDARD FORM 24 WHICH STATED THE PENAL SUM OF THE BOND AS 20 PERCENT OF THE BID PRICE BUT THE PENAL SUM WAS STATED IN AN "AMOUNT NOT TO EXCEED" $35,000. THUS, THE OBLIGATION OF THE SURETY UNDER THE BID BOND WAS LIMITED TO $35,000. IT IS REPORTED THAT WHEN THE INSUFFICIENCY IN THE BID BOND WAS CALLED TO THE ATTENTION OF THE OFFICER WHO SIGNED THE BID ON BEHALF OF TAB, HE STATED THAT HE HAD NOT EXAMINED THE BOND PRIOR TO SIGNING AND ATTACHING IT TO THE BID. TAB HAS ADVISED OUR OFFICE THAT ITS LOCAL BOND AGENT MADE AN INNOCENT AND HONEST ERROR BY INSERTING A PENAL SUM OF $35,000 INSTEAD OF $135,000. TAB CONTENDS THAT IT WAS THE ORIGINAL INTENT OF THE BONDING COMPANY TO FILE A BID BOND FOR $135,000 -- THE DIGIT "1" HAVING BEEN INADVERTENTLY DROPPED - - AND THERE WAS NEVER ANY INTENTION TO RESTRICT THE DOLLAR LIMITATION OF THE BOND TO ANY SUM LESS THAN 20 PERCENT OF $675,000, OR $135,000. TAB REQUESTS THAT ITS BID NOT BE DISQUALIFIED BECAUSE OF THE INCONSISTENCY APPEARING IN ITS BID BOND.

THUS, THE QUESTION IS PRESENTED WHETHER THE BID BOND MAY NOW BE CORRECTED AND ACCEPTED AND CONTRACT AWARD MADE TO TAB, OR, CONVERSELY, WHETHER THE TAB BID IS FATALLY DEFECTIVE AND MUST BE REJECTED AS NONRESPONSIVE.

SECTION 1-2.404-2 (F) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) 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 SEC. 1-10.103 4.' FPR SEC. 1- 10.103-4, WHICH PERTAINS TO THE FAILURE TO SUBMIT A PROPER BID GUARANTEE, PROVIDES IN PERTINENT PART AS FOLLOWS:

"WHERE AN INVITATION FOR BIDS REQUIRES THAT A BID BE SUPPORTED BY A BID GUARANTEE AND NONCOMPLIANCE OCCURS, THE BID SHALL BE REJECTED * * *.' THE SECTION GOES ON TO PROVIDE FOUR EXCEPTIONS TO THE RULE REQUIRING REJECTION; HOWEVER, THE IMMEDIATE SITUATION HERE DOES NOT COME WITHIN ANY OF THE ENUMERATED EXCEPTIONS.

BEGINNING WITH OUR DECISION IN 1959 AT 38 COMP. GEN. 532, OUR OFFICE HAS CONSISTENTLY HELD THAT THE BID BOND REQUIREMENT MUST BE CONSIDERED AS A MATERIAL PART OF THE INVITATION AND THAT THE CONTRACTING OFFICER CANNOT WAIVE THE FAILURE TO COMPLY WITH THE REQUIREMENT BUT MUST REJECT AS NONRESPONSIVE A BID NOT ACCOMPANIED BY THE REQUIRED BOND. IN THE CASE OF BROOKFIELD CONSTRUCTION CO., INC. V STEWART, 234 F.SUPP. 94 (1964), THE COURT UPHELD A DECISION OF OUR OFFICE WHICH REQUIRED REJECTION OF A BID WHICH WAS ACCOMPANIED BY A BID BOND DEFICIENT IN AMOUNT ($1,100,000 INSTEAD OF $1,173,500) DESPITE THE FACT THAT AN ADEQUATE BOND WAS OFFERED AFTER BID OPENING. THE COURT STATED:

"THIS COURT MAY NOT SET ASIDE THE DECISION OF THE COMPTROLLER GENERAL, FIRST, BECAUSE IT IS NOT ERRONEOUS AS A MATTER OF LAW, BUT MERELY REFUSES TO MAKE AN EXCEPTION TO A RIGID RULE; AND ALSO, BECAUSE NO JUSTICIABLE CONTROVERSY IS PRESENTED * * *.' IT SHOULD BE NOTED THAT THE REGULATIONS PROMULGATED AS A RESULT OF OUR DECISION IN 1959, E.G., FPR SEC. 1-10.103- 4, WERE NOT APPLICABLE IN THE ABOVE-CITED BROOKFIELD CASE.

SECTION 1-10.103-4 OF THE FPR DOES, HOWEVER, APPLY TO THE INSTANT PROCUREMENT AND PROVIDES THAT WHERE AN INVITATION FOR BIDS REQUIRES THE SUBMISSION OF A BID BOND, THE BID SHALL BE REJECTED FOR NONCOMPLIANCE, EXCEPT IN FOUR NAMED SITUATIONS, NONE OF WHICH IS APPLICABLE HERE. MOREOVER, OUR OFFICE HAS HELD THAT THE STATEMENT IN THE BID GUARANTEE REQUIREMENT THAT FAILURE TO COMPLY "MAY BE CAUSE FOR REJECTION" IS JUST AS COMPELLING AND MATERIAL AS IF MORE POSITIVE LANGUAGE WERE EMPLOYED. 153036, FEBRUARY 19, 1965, AND CITATIONS THEREIN.

THIS CASE IS SIMILAR TO THE CASE REPORTED IN 39 COMP. GEN. 827. THE BIDDER THERE SUBMITTED A BID BOND IN AN AMOUNT LESS THAN REQUIRED BY THE INVITATION DUE TO A PURPORTED CLERICAL ERROR BY THE SURETY. WE HELD THAT THE FAILURE TO COMPLY WITH THE BOND REQUIREMENT WAS A MATERIAL DEVIATION WHICH COULD NOT BE WAIVED. IN THE PARTICULAR CIRCUMSTANCES PRESENT HERE, WE BELIEVE THAT THE BID OF TAB MUST BE REGARDED AS NONRESPONSIVE TO THE INVITATION AND THAT TO ALLOW A CORRECTION TO MAKE ITS BID RESPONSIVE WOULD BE CONTRARY TO THE ESTABLISHED RULE OF FORMAL COMPETITIVE PROCUREMENT THAT BIDS MAY NOT BE CHANGED AFTER PUBLIC OPENING OR CORRECTED TO CURE A FACTOR OF NONRESPONSIVENESS. 38 COMP. GEN. 819. TO THE SAME EFFECT, SEE FPR SEC. 1-2.406-3 WHICH PROVIDES, IN PERTINENT PART, THAT:

"* * * THE AUTHORITY CONTAINED HEREIN TO PERMIT CORRECTION OF BIDS IS LIMITED TO BIDS WHICH, AS SUBMITTED, ARE RESPONSIVE TO THE INVITATION FOR BIDS, AND MAY NOT BE USED TO PERMIT CORRECTION OF BIDS TO MAKE THEM RESPONSIVE. * * *"

ACCORDINGLY, THE BID OF TAB MUST BE REJECTED AS NONRESPONSIVE. THE DOCUMENTS WHICH ACCOMPANIED THE ADMINISTRATIVE REPORT ARE RETURNED AS REQUESTED.