B-167297, MARCH 2, 1970, 49 COMP. GEN. 527

B-167297: Mar 2, 1970

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WHERE THE POWER OF ATTORNEY FROM THE RECEIVER AUTHORIZING THE PRESIDENT TO SIGN THE BID WAS SUBMITTED AFTER BID OPENING. IS NEVERTHELESS A RESPONSIVE BID. THE RULE THAT EVIDENCE OF AGENCY MUST BE SUBMITTED BEFORE BIDS ARE OPENED IS TOOL RESTRICTIVE IN VIEW OF THE FACT THAT SHOULD A PRINCIPAL ESTABLISH A BID WAS SUBMITTED ON HIS BEHALF BY AN UNAUTHORIZED INDIVIDUAL THE GOVERNMENT NOT ONLY WOULD HAVE A POSSIBLE CAUSE OF ACTION AGAINST THAT INDIVIDUAL. INDIVIDUAL SURETIES V CORPORATION THE FACT THAT INDIVIDUAL SURETIES ARE ON A BOND RATHER THAN A CORPORATION DOES NOT MAKE THE BOND SUBMITTED WITH A LOW BID UNACCEPTABLE. INDIVIDUAL SURETIES ARE PERMITTED PURSUANT TO PARAGRAPH 10-201.2 OF THE ARMED SERVICES PROCUREMENT REGULATION.

B-167297, MARCH 2, 1970, 49 COMP. GEN. 527

AGENTS -- OF PRIVATE PARTIES -- EVIDENCE -- TIME FOR SUBMITTING A LOW BID SIGNED BY THE PRESIDENT OF A COMPANY IN RECEIVERSHIP, WHERE THE POWER OF ATTORNEY FROM THE RECEIVER AUTHORIZING THE PRESIDENT TO SIGN THE BID WAS SUBMITTED AFTER BID OPENING, IS NEVERTHELESS A RESPONSIVE BID. THE RULE THAT EVIDENCE OF AGENCY MUST BE SUBMITTED BEFORE BIDS ARE OPENED IS TOOL RESTRICTIVE IN VIEW OF THE FACT THAT SHOULD A PRINCIPAL ESTABLISH A BID WAS SUBMITTED ON HIS BEHALF BY AN UNAUTHORIZED INDIVIDUAL THE GOVERNMENT NOT ONLY WOULD HAVE A POSSIBLE CAUSE OF ACTION AGAINST THAT INDIVIDUAL, WHO NO DOUBT WOULD CHALLENGE A FALSE DISAVOWAL OF HIS AUTHORITY, BUT IN ADDITION HAS AMPLE MEANS TO PROTECT ITSELF AGAINST FRAUDULENT PRACTICES BY BIDDERS. HOWEVER, EVIDENCE OF AGENCY SUBMITTED BEFORE BID OPENING WOULD AVOID CHALLENGES OF PROOF OF AGENCY. 48 COMP. GEN. 369, MODIFIED. BONDS -- BID -- INDIVIDUAL SURETIES V CORPORATION THE FACT THAT INDIVIDUAL SURETIES ARE ON A BOND RATHER THAN A CORPORATION DOES NOT MAKE THE BOND SUBMITTED WITH A LOW BID UNACCEPTABLE. INDIVIDUAL SURETIES ARE PERMITTED PURSUANT TO PARAGRAPH 10-201.2 OF THE ARMED SERVICES PROCUREMENT REGULATION, PROVIDED THEY ARE FINANCIALLY RESPONSIBLE PERSONS, AND, THEREFORE, WHERE THE INDIVIDUAL SURETIES ON THE BID BOND FURNISHED BY THE LOW BIDDER ARE SOLVENT AND HAVE UNDERTAKEN TO GUARANTEE THAT THE PRINCIPAL NAMED IN THE BOND WILL EXECUTE THE CONTRACT IDENTIFIED IN THE BOND IF ACCEPTED BY THE GOVERNMENT, THE BID BOND IS CONSIDERED SUFFICIENT ON THE STRENGTH OF THE INDIVIDUAL SURETIES.

TO THE SECRETARY OF THE ARMY, MARCH 2, 1970:

WE REFER TO THE REPORT DATED AUGUST 22, 1969, FROM YOUR DEPARTMENT CONCERNING THE PROTEST BY SQUARE DEAL TRUCKING COMPANY, INCORPORATED, AGAINST THE PROPOSED AWARD OF A CONTRACT TO BALDWIN TRASH COMPANY UNDER INVITATION FOR BIDS NO. DABGO3-69-B-0049 ISSUED MAY 7, 1969.

THE SUBJECT INVITATION COVERS REFUSE COLLECTION AT THE FORT LESLEY J. MCNAIR INSTALLATION FOR FISCAL YEAR 1970. BIDS WERE OPENED ON JUNE 3, 1969, AND THE LOW BID WAS SUBMITTED BY BALDWIN TRASH COMPANY, INCORPORATED, IN THE AMOUNT OF $27,000. THE SECOND LOW BID WAS SUBMITTED BY SQUARE DEAL IN THE AMOUNT OF $29,400.

ON JUNE 4, 1969, THE DAY AFTER THE BID OPENING, SQUARE DEAL PROTESTED AGAINST AWARD TO THE LOW BIDDER, BALDWIN, BASED ON THE FACT THAT THE BIDDER WAS IN RECEIVERSHIP. IT APPEARS THAT ON JANUARY 31, 1969, A RECEIVER WAS APPOINTED BY THE UNITED STATES DISTRICT COURT, DISTRICT OF COLUMBIA, FOR THE BALDWIN TRASH COMPANY. THE RECORD ALSO SHOWS THAT BY A NOTARIZED POWER OF ATTORNEY DATED MAY 16, 1969, THE RECEIVER AUTHORIZED MR. HORACE G. BALDWIN TO SIGN GOVERNMENT BIDS FOR THE BALDWIN TRASH COMPANY. HOWEVER, THIS INFORMATION CAME TO THE ATTENTION OF YOUR DEPARTMENT AFTER THE BID OPENING. THE BALDWIN BID DATED MAY 21, 1969, AND THE ACCOMPANYING BID BOND, WERE SIGNED BY HORACE G. BALDWIN AS PRESIDENT OF THE BALDWIN TRASH COMPANY, INC., AND A SIGNED STATEMENT WAS FURNISHED BY THE SECRETARY OF THE BALDWIN FIRM ATTESTING TO MR. HORACE G. BALDWIN'S AUTHORITY TO SIGN THE BID IN QUESTION. BUT THE MAY 16 POWER OF ATTORNEY FROM THE RECEIVER AUTHORIZING MR. BALDWIN TO SIGN THE BID WAS NOT INCLUDED WITH THE BID, AND IT IS REPORTED BY YOUR DEPARTMENT THAT THE CONTRACTING OFFICER WAS NOT AWARE OF THE BALDWIN RECEIVERSHIP UNTIL AFTER THE BID OPENING, WHEN SQUARE DEAL FILED ITS PROTEST. IT IS FURTHER REPORTED THAT THE BALDWIN RECEIVERSHIP WAS NOT COMMUNICATED TO THE CONTRACTING OFFICER WHILE TWO OTHER CONTRACTS WITH BALDWIN WERE BEING PERFORMED. ON THOSE TWO EXISTING CONTRACTS, YOUR DEPARTMENT ADVISES THAT PAYMENT WAS MADE TO THE BALDWIN TRASH COMPANY, AND PROBLEMS WHICH DEVELOPED ON THE CONTRACTS WERE CORRECTED BY MR. HORACE G. BALDWIN. IN ADDITION, IT IS REPORTED THAT THE REQUIRED REFUSE SERVICES AT FORT MCNAIR ARE BEING PERFORMED BY THE INCUMBENT CONTRACTOR, BALDWIN TRASH COMPANY, PENDING THIS PROTEST.

SQUARE DEAL REFERS TO PARAGRAPH 2(B) OF THE INVITATION INSTRUCTIONS AND CONDITIONS (GSA STANDARD FORM 33A JULY 1966) WHICH STATES THAT "OFFERS SIGNED BY AN AGENT ARE TO BE ACCOMPANIED BY EVIDENCE OF HIS AUTHORITY UNLESS SUCH EVIDENCE HAS BEEN PREVIOUSLY FURNISHED TO THE ISSUING OFFICE." IT CONTENDS THAT BALDWIN'S BID IS NONRESPONSIVE BECAUSE MR. BALDWIN'S AUTHORITY TO SIGN THE BID IN QUESTION WAS NOT ESTABLISHED PRIOR TO BID OPENING AS REQUIRED BY PARAGRAPH 2B, AND THAT THE COMPANY'S BID BOND NEITHER BINDS A PROPER PRINCIPAL NOR PROVIDES PROPER PROTECTION BY A SURETY CORPORATION.

YOUR DEPARTMENT BELIEVES THE PROTEST HAS MERIT. IT CONCLUDES THAT EVEN IF MR. BALDWIN HAD AUTHORITY TO BIND THE RECEIVER TO THE BID, HE HAD NO SUCH AUTHORITY UNDER THE MAY 16 POWER OF ATTORNEY WITH RESPECT TO THE BID BOND. ON THIS MATTER, YOUR DEPARTMENT CITES OUR DECISION B 167282, AUGUST 11, 1969, INVOLVING A BID BOND SIGNED BY MR. BALDWIN FOR BALDWIN TRASH COMPANY UNDER A NAVY PROCUREMENT ISSUED MAY 22, 1969. AS NOTED BY YOUR DEPARTMENT, WE STATED IN THAT DECISION TO BALDWIN TRASH COMPANY THAT THE RECEIVER'S FAILURE TO SIGN THE BOND "WOULD APPEAR TO BE SUFFICIENT IN ITSELF TO WARRANT A CONCLUSION THAT THE BID, AS SUBMITTED, WAS NOT RESPONSIVE TO THE INVITATION FOR BIDS IN A MATERIAL RESPECT."

WE DO NOT BELIEVE, HOWEVER, THAT OUR PRIOR DECISION SHOULD BE CONSIDERED CONTROLLING ON THE BID BOND ISSUE. THE NAVY IN THAT CASE HAD REJECTED ALL BIDS ON THE BASIS THAT THE BID PRICES WERE EXCESSIVE. BALDWIN PROTESTED, CONTENDING THAT ITS BID PRICE WAS NOT EXCESSIVE. WE REJECTED BALDWIN'S CONTENTION AND, AS AN ADDITIONAL RESPONSE TO BALDWIN, WE MADE THE STATEMENT QUOTED ABOVE. IN THE PRECEDING COMMENTS, WE STATED IN EFFECT THAT EVEN IF THE NAVY HAD NOT CANCELED THE INVITATION, THERE WOULD BE THE QUESTION WHETHER BALDWIN'S BID BOND WOULD HAVE BEEN SUFFICIENT IN VIEW OF THE FACT THAT THE RECEIVER HAD NOT SIGNED THE BID. THUS, IT IS CLEAR FROM THE FULL CONTEXT OF THE DECISION THAT OUR STATEMENT REGARDING THE BID BOND WAS NOT IN THE NATURE OF A HOLDING AND SHOULD NOT BE CONSIDERED BINDING IN THIS CASE. (IT SHOULD ALSO BE NOTED THAT B-167282 HAS BEEN REOPENED AT THE REQUEST OF BALDWIN.) WE ARE OF THE OPINION THAT BALDWIN'S BID BOND MAY BE REGARDED AS SUFFICIENT ON THE STRENGTH OF THE INDIVIDUAL SURETIES. SQUARE DEAL HAS CORRECTLY NOTED THAT THE SURETY ON THE BOND IS NOT A CORPORATION. HOWEVER, INDIVIDUAL SURETIES ARE PERMITTED, PROVIDING THEY ARE FINANCIALLY RESPONSIBLE PERSONS. SEE ARMED SERVICES PROCUREMENT REGULATION 10-201.2. WE ARE ADVISED BY YOUR DEPARTMENT THAT THE SURETIES ON THE BALDWIN BID BOND ARE SOLVENT. THEY HAVE UNDERTAKEN TO GUARANTEE THAT THE PRINCIPAL NAMED IN THE BOND (BALDWIN TRASH COMPANY), WILL EXECUTE THE CONTRACT IDENTIFIED IN THE BOND, IF ACCEPTED BY THE GOVERNMENT. SEE NO REASON WHY THIS BOND IS NOT ACCEPTABLE.

THE MORE TROUBLESOME QUESTION, IN OUR OPINION, CONCERNS THE SUFFICIENCY OF THE BALDWIN BID. ON THIS QUESTION WE ARE REFERRED BY SQUARE DEAL TO OUR DECISION AT 48 COMP. GEN. 369 (1968). IN THAT DECISION WE UPHELD THE RIGHT OF A CONTRACTING OFFICER TO REJECT A LOW BID SIGNED BY AN INDIVIDUAL IN THE CAPACITY OF AN AGENT, IN THE ABSENCE OF EVIDENCE SUBMITTED WITH THE BID OF THE AGENT'S AUTHORITY TO BIND THE PRINCIPAL TO THE BID. AFTER THE BID OPENING THE AGENT DID ESTABLISH THAT HE WAS AUTHORIZED TO BID FOR THE PRINCIPAL. NEVERTHELESS, WE CONCLUDED THAT, AS PROVIDED BY PARAGRAPH 2B OF SF 33A, SUCH EVIDENCE MUST BE SUBMITTED BY BID OPENING. WE STATED THAT IF EVIDENCE OF THE AGENCY WERE ALLOWED TO BE SUBMITTED AFTER BID OPENING, THE PRINCIPAL WOULD BE IN A POSITION TO MAKE AN ELECTION EITHER TO AFFIRM THE BID OR TO CLAIM THAT THE BID WAS SUBMITTED IN ERROR BY A PERSON NOT AUTHORIZED TO ENTER INTO CONTRACTS ON HIS BEHALF. IN ORDER TO AVOID SUCH A SITUATION, WE CONCLUDED THAT EVIDENCE OF AGENCY MUST BE SUBMITTED BEFORE BIDS ARE OPENED.

SQUARE DEAL CONTENDS THAT THE RULE IN 48 COMP. GEN. 369 IS EQUALLY APPLICABLE IN THIS CASE. IT POINTS OUT THAT UNDER THE COURT ORDER CONTROL OF THE BALDWIN TRASH COMPANY WAS PLACED IN THE HANDS OF THE RECEIVER. FURTHER POINTS OUT THAT, WHILE MR. HORACE C. BALDWIN WAS AUTHORIZED BY THE RECEIVER TO ACT AS AN AGENT FOR THE CORPORATION IN SIGNING GOVERNMENT BIDS, EVIDENCE OF THIS AUTHORITY WAS NOT FURNISHED TO THE GOVERNMENT UNTIL AFTER THE BID OPENING. THUS IT CONCLUDES THAT THE BALDWIN BID MAY NOT BE ACCEPTED.

WE BELIEVE THE RULE STATED IN 48 COMP. GEN. 369 MAY BE TOO RESTRICTIVE. WE SEE NO REASON TO PROHIBIT THE FURNISHING OF PROOF OF AGENCY AFTER BID OPENING. IN THAT CASE WE EXPRESSED A FEAR THAT SOME PRINCIPALS MIGHT TAKE ADVANTAGE OF SUCH A RULE. WE NOW BELIEVE THIS FEAR IS UNFOUNDED. IF A PRINCIPAL SHOULD ESTABLISH THAT A BID WAS SUBMITTED ON HIS BEHALF BY AN INDIVIDUAL NOT AUTHORIZED TO ENTER INTO CONTRACTS FOR HIM, THE GOVERNMENT WOULD HAVE A POSSIBLE CAUSE OF ACTION AGAINST SUCH UNAUTHORIZED INDIVIDUAL. SEE RESTATEMENT OF AGENCY, SECTION 329, 330. THEREFORE, IT CAN BE EXPECTED THAT ANY FALSE DISAVOWALS OF AN AGENT'S AUTHORITY BY HIS PRINCIPAL WOULD NOT GO UNCHALLENGED BY THE AGENT. IN ANY CASE, THE GOVERNMENT HAS AMPLE MEANS TO PROTECT ITSELF AGAINST FRAUDULENT PRACTICES BY BIDDERS. OUR RULE AT 48 COMP. GEN. 369 IS ACCORDINGLY MODIFIED.

HOWEVER, WE STILL ADVISE AGENTS SIGNING BIDS TO COMPLY WITH THE PROVISION IN PARAGRAPH 2(B) OF SF 33A, BY SUBMITTING PROOF OF AGENCY BEFORE BID OPENING. BY FOLLOWING THIS PROCEDURE, THE BIDDER AND HIS AGENT CAN AVOID CHALLENGES FROM OTHER BIDDERS AND PROBLEMS OF PROOF BEFORE THE CONTRACTING OFFICER. IF, FOR EXAMPLE, AN AGENCY RELATIONSHIP IS BASED ON AN ORAL AGREEMENT, THE BIDDER MAY NOT BE ABLE TO ESTABLISH TO THE CONTRACTING OFFICER'S SATISFACTION THAT THE INDIVIDUAL SIGNING THE BID WAS AUTHORIZED TO DO SO AT THE TIME OF BIDDING. IN THE INSTANT CASE, HOWEVER, THIS BURDEN OF PROOF HAS BEEN MET BY BALDWIN TRASH COMPANY. WE THEREFORE CONCLUDE THAT THE LOW BID MAY BE ACCEPTED.

IN VIEW OF OUR CONCLUSION, THERE IS NO NEED TO CONSIDER WHETHER SQUARE DEAL QUALIFIES FOR THIS PROCUREMENT AS A SMALL BUSINESS CONCERN.