B-167787, NOV. 4, 1969

B-167787: Nov 4, 1969

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IS MATERIAL PART OF INVITATION WHICH CANNOT BE WAIVED BY CONTRACTING OFFICER. BID BOND EXECUTED BY TWO SURETIES WITH AFFIDAVIT SUBMITTED ONE WEEK AFTER BID OPENING REQUIRED REJECTION OF LOW BID AS NONRESPONSIVE EVEN THOUGH SUCH FAILURE WAS DUE TO INADVERTENCE. MISTAKE OR OTHERWISE OR MONETARY SAVINGS MIGHT ACCRUE TO GOVERNMENT BY CONSIDERATION OF SUBSTITUTE BOND SINCE IT IS INFINITELY MORE IN PUBLIC INTEREST TO MAINTAIN ESTABLISHED PRINCIPLES OF FORMAL COMPETITIVE PROCUREMENT THAN FOR GOVT. INC.: REFERENCE IS MADE TO A TELEGRAM DATED AUGUST 25. AFTER BIDS WERE OPENED ON AUGUST 14. HE THEREFORE DETERMINED THAT YOUR BID WAS NONRESPONSIVE TO THE REQUIREMENTS STATED IN INSTRUCTION NO. 4 (B).

B-167787, NOV. 4, 1969

BONDS--BID--VARIANCE FROM REQUIREMENTS--SURETIES INASMUCH AS INVITATION REQUIREMENT FOR SUBMISSION OF BID BOND EXECUTED BY TWO INDIVIDUALS, TOGETHER WITH AFFIDAVIT OF FINANCIAL STATUS, IS MATERIAL PART OF INVITATION WHICH CANNOT BE WAIVED BY CONTRACTING OFFICER, NONCOMPLIANCE REQUIRING BID REJECTION AS NONRESPONSIVE, BID BOND EXECUTED BY TWO SURETIES WITH AFFIDAVIT SUBMITTED ONE WEEK AFTER BID OPENING REQUIRED REJECTION OF LOW BID AS NONRESPONSIVE EVEN THOUGH SUCH FAILURE WAS DUE TO INADVERTENCE, MISTAKE OR OTHERWISE OR MONETARY SAVINGS MIGHT ACCRUE TO GOVERNMENT BY CONSIDERATION OF SUBSTITUTE BOND SINCE IT IS INFINITELY MORE IN PUBLIC INTEREST TO MAINTAIN ESTABLISHED PRINCIPLES OF FORMAL COMPETITIVE PROCUREMENT THAN FOR GOVT. TO OBTAIN PECUNIARY ADVANTAGE THROUGH VIOLATION OF RULES.

TO BRUCE K. REDDING, INC.:

REFERENCE IS MADE TO A TELEGRAM DATED AUGUST 25, 1969, AND SUBSEQUENT CORRESPONDENCE CONCERNING YOUR PROTEST AGAINST THE REJECTION BY THE GENERAL SERVICES ADMINISTRATION (GSA) OF YOUR LOW BID ON GSA PROJECT NO. 36287, CONSTRUCTION OF THE FOOD AND DRUG ADMINISTRATION'S DISTRICT OFFICE AND LABORATORY IN PHILADELPHIA, PENNSYLVANIA. AFTER BIDS WERE OPENED ON AUGUST 14, PURSUANT TO INVITATION FOR BIDS ISSUED ON JULY 7, 1969, THE CONTRACTING OFFICER NOTED THAT YOU HAD FURNISHED A BID BOND EXECUTED BY ONLY A SINGLE INDIVIDUAL AS SURETY, AND HE THEREFORE DETERMINED THAT YOUR BID WAS NONRESPONSIVE TO THE REQUIREMENTS STATED IN INSTRUCTION NO. 4 (B), WHICH WAS SET FORTH ON THE REVERSE SIDE OF THE BOND, STANDARD FORM (SF) 24, AS FOLLOWS:

"/B) WHERE INDIVIDUAL SURETIES EXECUTE THE BOND, THEY SHALL BE TWO OR MORE RESPONSIBLE PERSONS. A COMPLETED AFFIDAVIT OF INDIVIDUAL SURETY (STANDARD FORM 28), FOR EACH INDIVIDUAL SURETY, SHALL ACCOMPANY THE BOND. SUCH SURETIES MAY BE REQUIRED TO FURNISH ADDITIONAL SUBSTANTIATING INFORMATION CONCERNING THEIR ASSETS AND FINANCIAL CAPABILITY AS THE GOVERNMENT MAY REQUIRE.' ADDITIONALLY, YOUR BID BOND WAS NOT ACCOMPANIED BY THE REQUIRED AFFIDAVIT OF INDIVIDUAL SURETY (SF 28). SUCH OMISSION MADE IT IMPOSSIBLE FOR THE CONTRACTING OFFICER TO DETERMINE THE FINANCIAL ACCEPTABILITY OF THIS INDIVIDUAL SURETY AS REQUIRED BY FEDERAL PROCUREMENT REGULATION (FPR) 1-10.203 (A).

BY LETTER OF AUGUST 19, 1969, THE CONTRACTING OFFICER NOTIFIED YOU OF THE REJECTION OF YOUR BID BECAUSE OF THE ABOVE DEFICIENCY. ON AUGUST 22, 1969, YOU SUBMITTED ANOTHER BID BOND TO THE CONTRACTING OFFICER WHICH WAS EXECUTED BY TWO INDIVIDUAL SURETIES, TOGETHER WITH AN AFFIDAVIT, AND STATED THAT YOU HAD NOT BEEN FURNISHED WITH COPIES OF SF 28. THIS AFFIDAVIT, DATED AUGUST 12, 1969, FAILED TO LIST ANY SUCH INFORMATION AS IS REQUIRED TO BE SET FORTH ON SF 28 CONCERNING THE FINANCIAL STATUS OF THE INDIVIDUAL SURETIES. ON AUGUST 26, 1969, YOU WERE FORMALLY ADVISED BY GSA THAT THESE DOCUMENTS COULD NOT BE ACCEPTED SINCE CONSIDERATION OF SUCH INFORMATION AFTER BID OPENING WOULD BE TANTAMOUNT TO ALLOWING YOU THE PRIVILEGE OF DECIDING WHETHER OR NOT TO "STAND BY YOUR BID.' IN VIEW THEREOF, GSA CONSIDERS YOUR BID NONRESPONSIVE IN ACCORDANCE WITH THE FOLLOWING FPR REGULATIONS: "SEC. 1-2.404-2 (F) 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.'"SEC. 1-10.103-4 FAILURE TO SUBMIT PROPER BID GUARANTEE.

WHERE AN INVITATION FOR BIDS REQUIRES THAT A BID BE SUPPORTED BY A BID GUARANTEE AND NONCOMPLIANCE OCCURS, THE BID SHALL BE REJECTED, EXCEPT IN THE FOLLOWING SITUATIONS WHEN THE NONCOMPLIANCE SHALL BE WAIVED UNLESS THERE ARE COMPELLING REASONS CONTRARY:

(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.'

YOU HAVE ADVANCED SEVERAL ARGUMENTS TO PERMIT CONSIDERATION OF YOUR BID WHICH ARE SUMMARIZED AS FOLLOWS: (1) A PROPERLY EXECUTED BID BOND, WHICH CONFORMED IN ALL RESPECTS WITH THE INSTRUCTIONS CONTAINED ON SF 24, WAS PREPARED, BUT THROUGH AN OVERSIGHT THIS BOND WAS NOT FORWARDED WITH YOUR BID; (2) THE DEFECT IN YOUR BOND WAS OF TRIVIAL IMPORTANCE COMPARED TO THE MONETARY SAVINGS WHICH THE GOVERNMENT COULD ACHIEVE BY WAIVING SUCH DEFECT AND ALLOWING CONSIDERATION OF THE BOND YOU SUBMITTED AFTER BID OPENING; (3) AT BID OPENING THE CONTRACTING OFFICER ANNOUNCED THAT YOUR CONCERN WAS THE LOW BIDDER ELIGIBLE FOR AWARD AND THEREFORE WAIVED ANY DEFECT IN YOUR OFFER.

PRIOR TO 1958 IT WAS HELD IN A NUMBER OF CASES THAT THE REQUIREMENT FOR A BID BOND IN ADVERTISED PROCUREMENTS MIGHT BE WAIVED IF THE CONTRACTING OFFICER DETERMINED IT TO BE IN THE INTEREST OF THE GOVERNMENT TO DO SO. 7 COMP. GEN. 568 (1928); 16 ID. 493 (1936); ID. 809 (1936); 26 ID. 49 (1946).

IN 1958, HOWEVER, A CASE AROSE INVOLVING A BID INVITATION FORM WHICH WAS MORE EMPHATICALLY WORDED THAN USUAL IN THAT IT STATED THAT A BID BOND MUST BE FURNISHED WITH THE BID, AND THAT LATE BID BONDS WILL NOT BE ACCEPTED BUT WILL BE REJECTED AS NONRESPONSIVE. RELYING UPON THE LITERAL LANGUAGE OF THESE PROVISIONS, THE CONTRACTING OFFICER REJECTED A LOW BID FOR WHICH THE BID BOND HAD NOT BEEN SUBMITTED UNTIL 28 MINUTES AFTER THE SCHEDULED TIME FOR BID OPENING. THE LOW BIDDER PROTESTED, RELYING UPON PREVIOUS HOLDINGS THAT THE LATE SUBMISSION OF THE BOND WAS AN INFORMALITY WHICH SHOULD HAVE BEEN WAIVED. WE AGREED WITH THE CONTRACTING OFFICER IN 38 COMP. GEN. 532 (1959), AND OVERRULED OUR PRIOR DECISIONS PERMITTING WAIVER OF BID BOND REQUIREMENTS. THE NEW RULE ESTABLISHED BY THIS DECISION WAS THAT WHERE A BID BOND IS REQUIRED BY THE TERMS OF AN INVITATION, THE REQUIREMENT IS TO BE REGARDED AS A MATERIAL PART OF THE INVITATION, NONCOMPLIANCE WITH WHICH WILL RENDER A BID NONRESPONSIVE AND REQUIRE ITS REJECTION. THREE BASES WERE STATED IN SUPPORT OF THE NEW RULE:

1. IT IS A PROPER FUNCTION OF ADMINISTRATIVE AGENCIES TO IMPOSE UPON BIDDERS ANY REASONABLE CONDITION RELATING TO ELIGIBILITY FOR AWARD;

2. THE EFFECT OF THE OLD RULE ALLOWING WAIVER OF A BID GUARANTEE DEFICIENCY COMPROMISED THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM BY MAKING IT POSSIBLE FOR BIDDERS TO ELECT AFTER OPENING OF BIDS WHETHER OR NOT THEY WOULD MAKE THEMSELVES ELIGIBLE FOR AWARD BY FURNISHING A BOND, OR PREVENTING AWARD BY FAILING TO DO SO.

3. THE PROCESS OF WEIGHING EVIDENCE TO DETERMINE WHETHER UNDER THE OLD RULE A GUARANTEE DEFICIENCY SHOULD BE WAIVED COULD RESULT IN INCONSISTENT TREATMENT OF BIDDERS.

THIS RULE WAS SUBSTANTIALLY ADOPTED BY GSA IN PROMULGATING FPR 1 10.103- 4, QUOTED ABOVE, WHICH REQUIRES THE REJECTION OF ANY BID NOT SUPPORTED BY A BID BOND IN FULL COMPLIANCE WITH THE REQUIREMENTS OF THE IFB, EXCEPT FOR THE FOUR SITUATIONS LISTED THEREIN WHICH ARE NOT PERTINENT TO THE SUBJECT CASE. WHILE WE HAVE HELD THAT A PURELY FORMAL DEVIATION FROM THE INSTRUCTIONS ON THE REVERSE SIDE OF SF 24 DOES NOT AUTOMATICALLY REQUIRE BID REJECTION (B-152589, OCTOBER 18, 1963), THE DEVIATION MAY NOT BE OF SUCH A KIND AS WOULD RESULT IN THE GOVERNMENT OBTAINING LESS THAN THE SAME FULL AND COMPLETE PROTECTION AS IT WOULD HAVE UNDER A BOND IN COMPLETE CONFORMITY WITH SF 24. (39 COMP. GEN. 60 (1959) ). IN THE INSTANT CASE SF 24 INSTRUCTION NO. 4 (B) STATED CLEARLY AND WITHOUT ANY AMBIGUITY THE REQUIREMENT THAT THERE SHOULD BE TWO INDIVIDUAL SURETIES ON THE BOND IF A CORPORATE SURETY WAS NOT OBTAINED. SINCE THE BOND FURNISHED BY YOU WAS EXECUTED BY ONLY ONE INDIVIDUAL SURETY, IT CANNOT BE ACCEPTED AS PROVIDING THE GOVERNMENT WITH THE SAME PROTECTION AS THAT AFFORDED BY A BOND EXECUTED BY TWO INDIVIDUAL SURETIES.

WHILE YOU MAINTAIN THAT THIS DEFECT SHOULD BE WAIVED SINCE YOU INADVERTENTLY FAILED TO ATTACH A PROPERLY EXECUTED BOND WITH YOUR OFFER AND FURNISHED THE SECOND SURETY A WEEK AFTER BID OPENING, OUR OFFICE HAS CONSISTENTLY HELD THAT IT DOES NOT MATTER WHETHER THE FAILURE TO COMPLY WITH THE BID BOND REQUIREMENTS WAS DUE TO INADVERTENCE, MISTAKE OR OTHERWISE. 38 COMP. GEN. 819 (1959); B-146272, AUGUST 18, 1961. ALLOWING CONSIDERATION OF EXCUSES OF THIS NATURE WOULD CONFER ON BIDDERS THE ELECTION OF PRESENTING EVIDENCE OF A MISTAKE AND THEREBY BECOMING ELIGIBLE FOR AN AWARD OR ELECTING NOT TO PRESENT THIS EVIDENCE AND AVOIDING SUCH ELIGIBILITY. CONFERRING SUCH OPTION WOULD BE MANIFESTLY UNFAIR TO THOSE BIDDERS WHO BID IN STRICT CONFORMITY WITH THE INSTRUCTIONS OF SF 24.

WITH RESPECT TO YOUR ALLEGATION THAT THE CORRECTED BID BOND YOU SUBMITTED AFTER BID OPENING SHOULD BE CONSIDERED, CONSIDERATION OF SUCH DATA WOULD BE OBVIOUSLY CONTRARY TO THE PRINCIPLES SET FORTH IN 17 COMP. GEN. 554 (1938) QUOTED IN PERTINENT PART AS FOLLOWS: "TO PERMIT PUBLIC OFFICERS TO ACCEPT BIDS NOT COMPLYING IN SUBSTANCE WITH THE ADVERTISED SPECIFICATIONS OR TO PERMIT BIDDERS TO VARY THEIR PROPOSALS AFTER THE BIDS ARE OPENED WOULD SOON REDUCE TO A FARCE THE WHOLE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS * * * AS WAS SAID BY THE COURT IN CITY OF CHICAGO V MOHR, 216 ILL. 320; 74 N.E. 1056 -- * * * WHERE A BID IS PERMITTED TO BE CHANGED (AFTER THE OPENING) IT IS NO LONGER THE SEALED BID SUBMITTED IN THE FIRST INSTANCE, AND, TO SAY THE LEAST, IS FAVORITISM, IF NOT FRAUD -- A DIRECT VIOLATION OF LAW -- AND CANNOT BE TOO STRONGLY CONDEMNED.' EVEN THOUGH CONSIDERABLE MONETARY SAVINGS MIGHT ACCRUE TO THE GOVERNMENT BY CONSIDERATION OF YOUR SUBSTITUTE BOND, WE HAVE HELD THAT IT IS INFINITELY MORE IN THE PUBLIC INTEREST TO MAINTAIN THE ESTABLISHED PRINCIPLES OF FORMAL COMPETITIVE PROCUREMENT BY GOVERNMENT AGENCIES THAN FOR THE GOVERNMENT TO OBTAIN A PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF THE RULES. 43 COMP. GEN. 268 (1963).

YOU ALSO CONTEND THAT GSA HAS WAIVED THE DEFECT IN YOUR BID BY ANNOUNCING YOUR CONCERN AS THE LOWEST BIDDER ELIGIBLE FOR AWARD AT THE TIME BIDS WERE OPENED. IN THIS REGARD GSA ADVISES THAT IT IS NOT THEIR PRACTICE TO ANNOUNCE THIS DECISION AT SUCH TIME SINCE THE LOWEST BIDDER ELIGIBLE FOR AWARD CAN ONLY BE DETERMINED AFTER A CLOSE REVIEW (USUALLY BY A COMMITTEE) OF THE BIDS WITH RESPECT TO THEIR RESPONSIVENESS AND AFTER RATHER EXTENSIVE INQUIRY INTO THE APPARENT LOW BIDDER'S RESPONSIBILITY. WE FIND NO INDICATION THAT ANYTHING MORE OCCURRED AT THE BID OPENING THAN THE OPENING AND READING OF THE AMOUNTS OF THE SEVERAL BIDS RECEIVED. THIS IS THE REQUIRED PROCEDURE, AND THE READING OF A BID DOES NOT REQUIRE OR CONSTITUTE ANY DETERMINATION AS TO ITS RESPONSIVENESS OR VALIDITY OR ELIGIBILITY FOR AWARD. FURTHERMORE, UNDER THE REGULATIONS QUOTED ABOVE THE CONTRACTING OFFICER HAS NO AUTHORITY TO WAIVE THE GIVING OF A PROPER BOND. CONSEQUENTLY, ANY ATTEMPT TO WAIVE SUCH DEFECT WOULD NOT BE BINDING ON THE GOVERNMENT. SEE FEDERAL CROP INSURANCE CORPORATION V MERRILL, 332 U.S. 380.

THE REGULATIONS AND APPLICABLE LEGAL PRINCIPLES STATED ABOVE HAVE BEEN ENFORCED AND APPLIED WITHOUT EXCEPTION FOR SOME YEARS, AND WE CAN SEE NO JUSTIFICATION FOR ANY RELAXATION THEREOF IN THIS INSTANCE, OR FOR ANY COMPLAINT THAT THEIR APPLICATION INVOLVES ANY BIAS OR PREJUDICE AGAINST YOU.

FOR THE REASONS SET FORTH ABOVE WE CANNOT CONCLUDE THAT GSA IMPROPERLY EXCLUDED CONSIDERATION OF YOUR BID AND THEREFORE YOUR PROTEST IS DENIED.