B-169717, JUN. 9, 1970

B-169717: Jun 9, 1970

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SUCH REQUIREMENT BEING PERMITTED UNDER ARMED SERVICES PROCUREMENT REGULATION 10-102.2 ONLY WHEN PERFORMANCE BONDS ARE ALSO REQUIRED. CHIEF OF NAVAL MATERIAL HAD DETERMINED PERFORMANCE BONDS WERE REQUIRED FOR SUBJECT TYPE PROCUREMENTS. WITHOUT DIRECT VIOLATION OF ASPR 2-404.2 (H) AND IT IS NOT EXCEPTED UNDER ASPR 10 102.5. INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM RECEIVED MAY 5. FAILED TO SUBMIT BID BONDS WITH THEIR BIDS AS WAS REQUIRED BY PARAGRAPH 7 OF SECTION F ENTITLED "SPECIAL PROVISIONS" OF THE IFB. THESE THREE BIDS HAVE BEEN DETERMINED TO BE NONRESPONSIVE. AN AWARD IS RECOMMENDED BY THE DEPARTMENT OF THE NAVY TO THE UNIFLITE CORPORATION. WHILE YOU ADMIT YOUR COMPANY WAS UNABLE TO FURNISH A BID BOND IN TIME FOR THE BID OPENING.

B-169717, JUN. 9, 1970

CONTRACTS--SPECIFICATIONS--FAILURE TO FURNISH SOMETHING REQUIRED--BID BOND WHERE UNDER INVITATION FOR BIDS ON CONSTRUCTION OF VESSELS 26 FEET IN LENGTH, OMISSION OF REQUIRED BID BOND RESULTED IN FINDING OF NONRESPONSIVENESS--SUCH REQUIREMENT BEING PERMITTED UNDER ARMED SERVICES PROCUREMENT REGULATION 10-102.2 ONLY WHEN PERFORMANCE BONDS ARE ALSO REQUIRED, BUT UNDER AUTHORITY IN ASPR 10-104.2, CHIEF OF NAVAL MATERIAL HAD DETERMINED PERFORMANCE BONDS WERE REQUIRED FOR SUBJECT TYPE PROCUREMENTS--SUCH REQUIREMENT COULD NOT BE WAIVED, WITHOUT DIRECT VIOLATION OF ASPR 2-404.2 (H) AND IT IS NOT EXCEPTED UNDER ASPR 10 102.5. MOREOVER, GAO HAS CONSISTENTLY HELD SUCH WAIVER WOULD TEND TO COMPROMISE INTEGRITY OF COMPETITIVE BID SYSTEM. SEE COMP. GEN. DECS. CITED.

TO MEYER LABORATORIES, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM RECEIVED MAY 5, 1970, PROTESTING AWARD OF A CONTRACT TO ANY OTHER BIDDER UNDER INVITATION FOR BIDS NO. N00024-70-0579, ISSUED BY THE U. S. NAVY PURCHASING OFFICE, WASHINGTON NAVY YARD, WASHINGTON, D. C.

THE SUBJECT INVITATION, ISSUED ON MARCH 16, 1970, CALLED FOR BIDS FOR THE CONSTRUCTION OF 56 MOTOR WHALEBOATS WITH OPTIONS FOR 10 ADDITIONAL ONES.

OF THE SIX BIDS RECEIVED, THREE BIDDERS, INCLUDING YOUR COMPANY, FAILED TO SUBMIT BID BONDS WITH THEIR BIDS AS WAS REQUIRED BY PARAGRAPH 7 OF SECTION F ENTITLED "SPECIAL PROVISIONS" OF THE IFB. ACCORDINGLY, THESE THREE BIDS HAVE BEEN DETERMINED TO BE NONRESPONSIVE, AND AN AWARD IS RECOMMENDED BY THE DEPARTMENT OF THE NAVY TO THE UNIFLITE CORPORATION, THE THIRD LOW CONFORMING BIDDER.

WHILE YOU ADMIT YOUR COMPANY WAS UNABLE TO FURNISH A BID BOND IN TIME FOR THE BID OPENING, IT IS YOUR FIRM'S CONTENTION THAT:

"A BID BOND SHOULD NOT HAVE BEEN REQUIRED AS ASPR (ARMED SERVICES PROCUREMENT REGULATION) 10-102.2 LIMITS BID BONDS TO THOSE SOLICITATIONS REQUIRING PERFORMANCE AND PAYMENT BONDS. FURTHER ASPR 10 103.1 REQUIRES THAT PERFORMANCE BONDS WILL NOT BE INCORPORATED IN BID REQUIREMENTS UNLESS APPROVED SPECIFICALLY FOR THE NAVY BY THE CHIEF OF NAVAL MATERIAL OR THE GOVERNMENT'S EXPERIENCE WITH THE PROCUREMENT OF THE PARTICULAR SUPPLY OR SERVICE IS SUCH AS TO INDICATE THE NEED FOR A PERFORMANCE BOND."

YOU ALSO CONTEND THAT YOU ARE UNAWARE OF A SPECIFIC REASON FOR THE INCORPORATION OF THE PERFORMANCE BOND REQUIREMENT IN THE SUBJECT PROCUREMENT AND FEEL THAT IT IS IN THE BEST INTEREST OF THE GOVERNMENT NOT TO REQUIRE SUCH A BOND.

WHILE ASPR 10-102.2 DOES PROVIDE THAT BID BONDS SHALL NOT BE REQUIRED UNLESS A SOLICITATION ALSO REQUIRES AT LEAST A PERFORMANCE BOND, ASPR 10- 104.2 (WHICH WAS SECTION 10-103.1 IN THE 1960 EDITION OF ASPR CITED BY YOU IN YOUR TELEGRAM) PERMITS THE REQUIREMENT OF PERFORMANCE BONDS IN INDIVIDUAL PROCUREMENTS WHEN IT IS DETERMINED THAT UNDER CIRCUMSTANCES APPLICABLE TO A PARTICULAR PROCUREMENT PERFORMANCE BOND IS NECESSARY TO PROTECT THE INTERESTS OF THE GOVERNMENT. IN KEEPING WITH THIS POLICY, DETERMINATIONS MAY BE MADE THAT PERFORMANCE BONDS WILL BE REQUIRED IN SPECIFIC CLASSES OF CASES (E.G. FOR PARTICULAR TYPES OF SUPPLIES OR SERVICES) FOR THE NAVY BY THE CHIEF OF NAVAL MATERIAL. UNDER THIS AUTHORITY, THE CHIEF OF NAVAL MATERIAL ON SEPTEMBER 15, 1959, EXECUTED A WRITTEN DETERMINATION THAT PERFORMANCE BONDS WOULD BE REQUIRED IN ALL PROCUREMENTS OF SMALL SHIPS OR BOATS (200 FEET OR LESS). THE VESSELS INVOLVED IN THE INSTANT PROCUREMENT ARE 26 FEET IN LENGTH, AND THUS FALL WITHIN THE SCOPE OF THE DETERMINATION THAT PERFORMANCE BONDS ARE REQUIRED. ACCORDINGLY, A BID BOND, PURSUANT TO ASPR 10-102, WAS A PROPER REQUIREMENT TO BE INCLUDED IN THIS SOLICITATION.

BEGINNING WITH OUR DECISION RENDERED 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 THE PROCURING AGENCY 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. THE BASIS FOR THIS RULE WAS STATED IN THAT DECISION AS FOLLOWS:

" ... PERMITTING WAIVER OF A BID BOND REQUIREMENT STATED IN AN INVITATION FOR BIDS WOULD HAVE A TENDENCY TO COMPROMISE THE INTEGRITY OF THE COMPETITIVE BID SYSTEM BY (1) MAKING IT POSSIBLE FOR A BIDDER TO DECIDE AFTER OPENING WHETHER OR NOT TO TRY TO HAVE HIS BID REJECTED, (2) CAUSING UNDUE DELAY IN EFFECTING PROCUREMENTS, AND (3) CREATING, BY THE NECESSARY SUBJECTIVE DETERMINATIONS BY DIFFERENT CONTRACTING OFFICERS, INCONSISTENCIES IN THE TREATMENT OF BIDDERS ... THIS RESULT WOULD HARDLY SERVE THE BEST INTERESTS OF THE UNITED STATES."

IT HAS BEEN CONSISTENTLY HELD BY OUR OFFICE THAT UNDER THE COMPETITIVE BID PROCEDURE A BID TO BE CONSIDERED FOR AWARD MUST COMPLY WITH THE REQUIREMENTS OF THE INVITATION AT THE TIME OF BID OPENING. A BIDDER MAY NOT BE PERMITTED TO CHANGE OR MODIFY ITS BID AFTER THE OPENING AND IT DOES NOT MATTER WHETHER THE FAILURE TO COMPLY WAS DUE TO INADVERTENCE, MISTAKE OR OTHERWISE. 38 COMP. GEN. 819 (1959); 42 COMP. GEN. 725 (1963). ALSO, WE HAVE OFTEN STATED, THAT THE MAINTENANCE OF THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM IS INFINITELY MORE IN THE PUBLIC INTEREST THAN A FINANCIAL SAVING IN AN INDIVIDUAL CASE. 17 COMP. GEN. 554 (1938).

FURTHERMORE, THE FACT MAY NOT BE OVERLOOKED THAT WAIVER OF THE BID BOND REQUIREMENT IN THE INSTANT CASE WOULD BE IN DIRECT VIOLATION OF THE APPLICABLE REGULATIONS, WHICH HAVE THE FORCE AND EFFECT OF LAW. 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, STATED ABOVE, NONE OF THE ENUMERATED EXCEPTIONS ARE APPLICABLE TO THIS CASE.

FOR THE FOREGOING REASONS THE REJECTION OF YOUR BID AS BEING NONRESPONSIVE WAS PROPER, AND YOUR PROTEST MUST THEREFORE BE DENIED.