B-167260, JUL. 1, 1969

B-167260: Jul 1, 1969

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BUMGARNER: REFERENCE IS MADE TO YOUR LETTER OF JUNE 16. FOUR BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON JUNE 9. 678.40 WAS SUBMITTED BY JOHNSON'S REMODELING COMPANY AND CABINET SHOP. WHERE A BID GUARANTEE IS REQUIRED BY THE INVITATION FOR BIDS. SUBMITTED IN LIEU OF A BID GUARANTEE WAS A LETTER FROM INSURANCE SERVICES. ADDRESSED TO THE CONTRACTING OFFICER WHICH STATED: "WE HAVE LOOKED OVER THE PLANS AND SPECIFICATIONS AND THE BID TO BE SUBMITTED ($70. THE TIME ALLOWED US WAS TOO SHORT TO COMPLETE THE FORMALITIES OF PREPARING THE BID BOND. IF THE BID IS AWARDED TO JOHNSON'S REMODELING WILL FACTOR THE COMPLETION BOND.'. WE SINCE THE REQUIRED BID GUARANTEE WAS NOT FURNISHED. JOHNSON'S BID WAS DECLARED NONRESPONSIVE.

B-167260, JUL. 1, 1969

TO MR. RAY Q. BUMGARNER:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 16, 1969, TRANSMITTING A LETTER FROM THE CONTRACTING OFFICER CONCERNING HIS INTENTION TO DECLARE THE BID SUBMITTED BY JOHNSON'S REMODELING COMPANY AND CABINET SHOP UNDER PROJECT NO. 34-5294 FOR CONSTRUCTION OF A SURGICAL INTENSIVE CARE UNIT NONRESPONSIVE.

FOUR BIDS WERE RECEIVED AND OPENED AS SCHEDULED ON JUNE 9, 1969. BID PRICES RANGED FROM $70,678.40 TO $78,850. THE LOW BID OF $70,678.40 WAS SUBMITTED BY JOHNSON'S REMODELING COMPANY AND CABINET SHOP. THE INVITATION REQUIRED A BID GUARANTEE IN THE AMOUNT OF 20 PERCENT OF THE TOTAL BID PRICE IN ACCORDANCE WITH 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.'

THE BID OF JOHNSON'S REMODELING COMPANY AND CABINET SHOP DID NOT INCLUDE A BID GUARANTEE IN ACCORDANCE WITH THE REQUIREMENTS AS STATED IN CLAUSE 4 OF STANDARD FORM 22, QUOTED ABOVE, AND PARAGRAPH (F) OF STANDARD FORM 20 (JANUARY 1961 ED.). SUBMITTED IN LIEU OF A BID GUARANTEE WAS A LETTER FROM INSURANCE SERVICES, CHICAGO, ILLINOIS, ADDRESSED TO THE CONTRACTING OFFICER WHICH STATED:

"WE HAVE LOOKED OVER THE PLANS AND SPECIFICATIONS AND THE BID TO BE SUBMITTED ($70,678.40) SEVENTY THOUSAND, SIX HUNDRED SEVENTY-EIGHT DOLLARS AND FORTY CENTS FOR THE RENOVATION OF THE ABOVE SHOWN FACILITY. THE TIME ALLOWED US WAS TOO SHORT TO COMPLETE THE FORMALITIES OF PREPARING THE BID BOND. IF THE BID IS AWARDED TO JOHNSON'S REMODELING WILL FACTOR THE COMPLETION BOND.' COMPANY AND CABINET SHOP, 1933 WEST THIRD STREET, DAYTON, OHIO, WE

SINCE THE REQUIRED BID GUARANTEE WAS NOT FURNISHED, JOHNSON'S BID WAS DECLARED NONRESPONSIVE. BY LETTER OF JUNE 12, 1969, JOHNSON'S REMODELING COMPANY AND CABINET SHOP PROTESTED THE CONTRACTING OFFICER'S DECISION. THUS, THE QUESTION PRESENTED IS WHETHER THE LETTER FROM INSURANCE SERVICES CAN BE CONSIDERED AS A BID GUARANTEE FOR PURPOSES OF MAKING AN AWARD TO JOHNSON'S REMODELING COMPANY AND CABINET SHOP.

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 SECTION 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. FPR SECTION 1-10.102-2 DEFINES "BID GUARANTEE" AS OLLOWS:

"BID GUARANTEE- MEANS A FIRM COMMITMENT, SUCH AS A BID BOND, POSTAL MONEY ORDER, CERTIFIED CHECK, CASHIER'S CHECK, IRREVOCABLE LETTER OF CREDIT, OR CERTAIN BONDS OR NOTES OF THE UNITED STATES, ACCOMPANYING A BID AS ASSURANCE THAT THE BIDDER WILL, UPON ACCEPTANCE OF HIS BID, EXECUTE SUCH CONTRACTUAL DOCUMENTS AS MAY BE REQUIRED, IF ANY, AND GIVE BOND/S) WITHIN THE TIME SPECIFIED AFTER THE FORMS ARE PRESENTED TO HIM.'

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 ., 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 TATED:

"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 SECTION 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 THE 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.

SINCE JOHNSON'S REMODELING COMPANY AND CABINET SHOP DID NOT SUBMIT A BID GUARANTEE IN PROPER FORM AS REQUIRED BY THE REGULATIONS QUOTED ABOVE, ITS BID MUST BE REJECTED AS NONRESPONSIVE.