B-170361, JUL. 27, 1970

B-170361: Jul 27, 1970

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AS THEY ARE SEPARATE ENTITIES. SINCE THE BID IS NONRESPONSIVE AND CORRECTION MAY NOT BE PERMITTED. DEAN: REFERENCE IS MADE TO YOUR LETTER OF JULY 15. BIDS ON THE SUBJECT PROJECT WERE SOLICITED ON MAY 20. THE BID WAS ACCOMPANIED BY A BID BOND IN THE REQUIRED AMOUNT NAMING "BLOUNT-BARFELL DENNEHY. WHETHER THERE WAS COMPLIANCE DEPENDS ON THE SUFFICIENCY OF THE BID BOND. WE HAVE HELD A BID BOND PRIMA FACIE DEFICIENT WHERE THE NAMED PRINCIPAL IS DIFFERENT FROM THE NAMED BIDDER. 44 COMP. WE STATED THE FOLLOWING IN THE CITED CASE: " *** IT IS A GENERAL RULE OF THE LAW OF SURETYSHIP THAT NO ONE INCURS A LIABILITY TO PAY A DEBT OR PERFORM A DUTY FOR ANOTHER UNLESS HE EXPRESSLY AGREES TO BE SO BOUND.

B-170361, JUL. 27, 1970

CONTRACTS -- BID BOND SUFFICIENCY DECISION TO CONTRACTING OFFICER, VETERANS' ADMIN. CONCLUDING THAT BID OF BLOUNT-BARFELL-DENNEHY, INC., MUST BE REJECTED AS NONRESPONSIVE BECAUSE OF INCONSISTENT BID BOND. LOW BIDDER WHO SUBMITS A BID IN THE NAME OF A CORPORATION ACCOMPANIED BY A BID BOND IN THE NAME OF THE CORPORATION AND ANOTHER AS A JOINT VENTURE HAS SUBMITTED A DEFICIENT BID BOND SINCE THE SURETY'S LIABILITY TO THE NAMED PRINCIPAL, A JOINT VENTURE, MAY NOT BE IMPUTED TO THE BIDDER, A CORPORATION, AS THEY ARE SEPARATE ENTITIES. THEREFORE, SINCE THE BID IS NONRESPONSIVE AND CORRECTION MAY NOT BE PERMITTED, IT MUST BE REJECTED.

TO MR. DEAN:

REFERENCE IS MADE TO YOUR LETTER OF JULY 15, 1970, WITH ENCLOSURES, REQUESTING AN ADVANCE DECISION AS TO THE SUFFICIENCY OF THE BID BOND SUBMITTED BY BLOUNT-BARFELL-DENNEHY, INCORPORATED, WITH ITS BID ON PROJECT NO. 35-5126, FOR AN ADDITION TO THE VETERANS ADMINISTRATION HOSPITAL IN OKLAHOMA CITY, OKLAHOMA.

BIDS ON THE SUBJECT PROJECT WERE SOLICITED ON MAY 20, 1970, AND OPENED ON JULY 9, 1970. THE INVITATION FOR BIDS INCLUDED A REQUIREMENT FOR A BID BOND IN THE AMOUNT OF 20 PERCENT OF THE BID PRICE AND PROVIDED THAT FAILURE TO FURNISH THE BID BOND IN THE PROPER FORM AND AMOUNT MIGHT REQUIRE REJECTION OF THE BID AS NONRESPONSIVE. THE LOW BID NAMED BLOUNT- BARFELL-DENNEHY, INCORPORATED, AS BIDDER. THE BID WAS ACCOMPANIED BY A BID BOND IN THE REQUIRED AMOUNT NAMING "BLOUNT-BARFELL DENNEHY, INCORPORATED, AND WM. V. MONTIN (A JOINT VENTURE)" AS THE PRINCIPAL.

UNDER FEDERAL PROCUREMENT REGULATIONS (FPR) 1-10.103.4, WHERE AN INVITATION FOR BIDS REQUIRES THAT A BID BE SUPPORTED BY A BID GUARANTEE AND NON COMPLIANCE OCCURS, THE BID MUST BE REJECTED, EXCEPT IN CERTAIN SITUATIONS NOT APPLICABLE HERE. WHETHER THERE WAS COMPLIANCE DEPENDS ON THE SUFFICIENCY OF THE BID BOND. WE HAVE HELD A BID BOND PRIMA FACIE DEFICIENT WHERE THE NAMED PRINCIPAL IS DIFFERENT FROM THE NAMED BIDDER. 44 COMP. GEN. 495 (1965). THE DEFICIENCY MAY NOT BE WAIVED AS A MINOR TECHNICALITY WHERE THE SURETY'S OBLIGATION TO THE PRINCIPAL MAY NOT BE IMPUTED TO THE BIDDER. WITH RESPECT TO THE LIABILITY OF A SURETY, WE STATED THE FOLLOWING IN THE CITED CASE:

" *** IT IS A GENERAL RULE OF THE LAW OF SURETYSHIP THAT NO ONE INCURS A LIABILITY TO PAY A DEBT OR PERFORM A DUTY FOR ANOTHER UNLESS HE EXPRESSLY AGREES TO BE SO BOUND, FOR THE LAW DOES NOT CREATE RELATIONSHIPS OF THIS CHARACTER BY MERE IMPLICATION. SURETYSHIP, THEREFORE, GENERALLY ARISES ONLY BY EXPRESS CONTRACT OF THE PARTIES."

HERE, AS IN THE CITED CASE, THE SURETY'S LIABILITY TO THE NAMED PRINCIPAL, A JOINT VENTURE, COULD NOT BE IMPUTED TO THE BIDDER, A CORPORATION, AS THEY ARE SEPARATE LEGAL ENTITIES. SEE SECTION 4.14, STEARNS LAW OF SURETYSHIPS, WHERE THE RULE IS STATED:

"A GUARANTOR OF A JOINT ENTERPRISE MAY STAND STRICTLY UPON HIS CONTRACT AND WILL NOT BE LIABLE EXCEPT FOR ADVANCES MADE JOINTLY TO THE PRINCIPALS WHO ARE NAMED IN THE INSTRUMENT." ALSO, SEE 72 CJS PRINCIPAL AND SURETY, SEC. 91.

IF THE BID CONTAINED NO EVIDENCE, SUCH AS WAS PRESENT IN B-169369, APRIL 7, 1970, TO MAKE IT A BID OF THE JOINT VENTURE, THE BID BOND IS DEFECTIVE. SINCE THE BID AS SUBMITTED WOULD THUS BE NONRESPONSIVE, AND CORRECTION MAY NOT BE PERMITTED, FPR 1-2.406-3, IT MUST BE REJECTED.