B-170694, DEC 3, 1970

B-170694: Dec 3, 1970

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CONCLUDING THAT DUE TO THE PRESENT POSTURE OF THE CONSTRUCTION THERE IS NO WAY TO CORRECT SITUATION. A BID BOND ADEQUATE IN ALL RESPECTS EXCEPT THAT THE OBLIGEE NAMED ON THE BOND WAS THE STATE OF ALASKA RATHER THAN THE UNITED STATES OF AMERICA SUCH AN ERROR IS A MATERIAL DEFECT BUT SUCH BOND WAS ADEQUATE FOR ACCOMPLISHING ITS STATED PURPOSE AND COULD HAVE BEEN ENFORCED AGAINST THE SURETY BY THE U.S. BECAUSE THE INTENDED TRUE OBLIGEE WAS ASCERTAINABLE FROM THE INFORMATION SUPPLIED BY THE BOND. STRACHAN & HOGE: THIS IS IN REPLY TO YOUR LETTER OF AUGUST 24. CHAMER COMPANY SUBMITTED WITH ITS BID A STATE OF ALASKA BID BOND FORM WHICH WAS ADEQUATE IN ALL RESPECTS EXCEPT THAT THE OBLIGEE NAMED ON THE BOND WAS THE STATE OF ALASKA RATHER THAN THE UNITED STATES OF AMERICA.

B-170694, DEC 3, 1970

BID PROTEST - BID BOND DECISION ACCEPTING LOW BIDDER'S PROTEST AGAINST AWARD OF CONTRACT BY SEVENTEENTH COAST GUARD DISTRICT JUNEAU, ALASKA, FOR CONSTRUCTION OF A NAVIGATION RANGE AT POINT WORONZOF, ALASKA, TO A HIGHER BIDDER, BUT CONCLUDING THAT DUE TO THE PRESENT POSTURE OF THE CONSTRUCTION THERE IS NO WAY TO CORRECT SITUATION. WHERE INVITATION FOR BIDS REQUIRED EACH BIDDER TO SUBMIT, AND PROTESTANT SUBMITTED, A BID BOND ADEQUATE IN ALL RESPECTS EXCEPT THAT THE OBLIGEE NAMED ON THE BOND WAS THE STATE OF ALASKA RATHER THAN THE UNITED STATES OF AMERICA SUCH AN ERROR IS A MATERIAL DEFECT BUT SUCH BOND WAS ADEQUATE FOR ACCOMPLISHING ITS STATED PURPOSE AND COULD HAVE BEEN ENFORCED AGAINST THE SURETY BY THE U.S., BECAUSE THE INTENDED TRUE OBLIGEE WAS ASCERTAINABLE FROM THE INFORMATION SUPPLIED BY THE BOND. THEREFORE, WHILE THE CONTRACTING OFFICER ERRED IN REFUSING TO ACCEPT PROTESTANT'S BID THE WORK UNDER THE CONTRACT BEING 99% COMPLETE PREVENTS ANY CORRECTION AT THIS TIME.

TO ROBISON, MCCASKEY, STRACHAN & HOGE:

THIS IS IN REPLY TO YOUR LETTER OF AUGUST 24, 1970, PROTESTING ON BEHALF OF THE CHAMER COMPANY AGAINST THE AWARD OF A CONTRACT TO A HIGHER BIDDER UNDER INVITATION FOR BIDS NO. 17-2-71, ISSUED BY THE SEVENTEENTH COAST GUARD DISTRICT, JUNEAU, ALASKA.

THE INVITATION REQUESTED BIDS FOR THE CONSTRUCTION OF A NAVIGATION RANGE AT POINT WORONZOF AS SPECIFIED THEREIN, AND IT REQUIRED EACH BIDDER TO SUBMIT A BID BOND WITH ITS BID. FROM OUR REVIEW OF THE REPORT RECEIVED BY THIS OFFICE ON OCTOBER 13, 1970, FROM THE U.S. COAST GUARD COMPTROLLER, IT APPEARS THAT, DUE TO A CLERICAL ERROR BY ITS SURETY, CHAMER COMPANY SUBMITTED WITH ITS BID A STATE OF ALASKA BID BOND FORM WHICH WAS ADEQUATE IN ALL RESPECTS EXCEPT THAT THE OBLIGEE NAMED ON THE BOND WAS THE STATE OF ALASKA RATHER THAN THE UNITED STATES OF AMERICA. THE CONTRACTING OFFICER NOTIFIED CHAMER OF ITS BOND DISCREPANCY AFTER BIDS WERE OPENED ON AUGUST 11, 1970. A NEW BID BOND ON STANDARD FORM 24 WAS FURNISHED THE CONTRACTING OFFICER ON AUGUST 13, 1970, AND CHAMER ALSO PROTESTED TO THE CONTRACTING OFFICER BY WIRE OF THAT DATE ANY AWARD OF THE CONTRACT TO A HIGHER BIDDER.

THEREAFTER, THE CONTRACTING OFFICER REJECTED CHAMER'S LOW BID SINCE HE BELIEVED IT WAS NONRESPONSIVE TO THE INVITATION'S REQUIREMENT FOR A BID BOND BINDING THAT COMPANY AND THE SURETY TO THE UNITED STATES OF AMERICA. AWARD WAS MADE TO A HIGHER BIDDER ON AUGUST 17, 1970. THE CONTRACTING OFFICER CITES IN SUPPORT OF HIS ACTION, AND HIS SUBSEQUENT DENIAL OF CHAMER'S PROTEST, OUR DECISION 44 COMP. GEN. 495 (1965), WHEREIN WE HELD THAT THE SURETY'S INSERTION OF THE WRONG PRINCIPAL ON THE BOND WAS A MATERIAL DEFECT AND COULD NOT BE CORRECTED AFTER BID OPENING.

WHERE A BID GUARANTEE IS REQUIRED AND A BIDDER FAILS TO FURNISH IT IN ACCORDANCE WITH THE REQUIREMENTS OF THE INVITATION FOR BIDS, FEDERAL PROCUREMENT REGULATIONS (FPR) SEC 1-2.404-2(F), PROVIDES THAT THE BID MUST BE REJECTED (WITH CERTAIN EXCEPTIONS NOT MATERIAL HERE). HOWEVER, SINCE CHAMER FURNISHED A BID BOND THE PRIMARY QUESTION CONCERNING ITS ACCEPTABILITY IS WHETHER THAT BOND, SHOWING THE STATE OF ALASKA AS THE OBLIGEE INSTEAD OF THE INTENDED UNITED STATES OF AMERICA, WAS ADEQUATE FOR ACCOMPLISHING ITS INTENDED PURPOSE AND COULD HAVE BEEN ENFORCED AGAINST THE SURETY BY THE UNITED STATES IN THE EVENT CHAMER FAILED TO EXECUTE THE CONTRACTUAL DOCUMENTS AND GIVE THE OTHER REQUIRED BONDS. WE BELIEVE THAT THE QUESTION MAY BE ANSWERED IN THE AFFIRMATIVE.

WHILE THE BID BOND DID NOT LIST THE UNITED STATES AS THE OBLIGEE IT IDENTIFIED THE CORRECT PRINCIPAL AND THE BID CONCERNED. IT ALSO LISTED THE CORRECT NAME AND LOCATION OF THE FEDERAL PROJECT INVOLVED; IT REFERENCED THE GOVERNMENT'S CORRECT INVITATION FOR BIDS NUMBER ASSIGNED BY THE COAST GUARD; AND WAS IN ALL OTHER RESPECTS ACCEPTABLE.

WE FEEL THIS SITUATION IS DISTINGUISHABLE FROM THAT CONSIDERED IN 44 COMP. GEN. 495 (1965), SINCE IN THAT CASE THE INTENDED PRINCIPAL COULD NOT BE ASCERTAINED FROM INFORMATION CONTAINED IN THE BOND. IN THE INSTANT CASE THE INTENTION OF THE SURETY AND THE PRINCIPAL TO BE BOUND IN THE AMOUNT OF THE BOND UPON ACCEPTANCE OF THE BID SPECIFIED THEREIN, IS CLEARLY SHOWN BY THE BOND ITSELF, AND THE IDENTITY OF THE UNITED STATES AS THE INTENDED AND TRUE OBLIGEE IS LIKEWISE ASCERTAINABLE FROM THE INFORMATION SUPPLIED BY THE BOND. UNDER SUCH CIRCUMSTANCES WE DO NOT BELIEVE THAT THE SURETY COULD SUCCESSFULLY DEFEND A SUIT BY THE UNITED STATES ON THE BOND. THE BASIC LAW APPLICABLE TO SUCH SITUATIONS APPEARS TO BE STATED IN 11 C.J.S. BONDS, SEC 106(A) AS "WHERE THE NAME OF THE OBLIGEE IS INCORRECTLY STATED IN THE BOND, HE MAY SUE IN HIS TRUE NAME ***." SEE STINE V SOUTHWEST BANK OF ST. LOUIS, 108 S.W. (2D) 633, 635, WHICH CITED SIMILAR PROVISIONS IN 9 C.J. 12, AND 9 C.J. 86, AND STATED IN RESOLVING A SOMEWHAT COMPARABLE SITUATION "THE ONLY QUESTION IS, DOES THE IDENTITY OF THE BANK AS THE TRUE OBLIGEE APPEAR BY REASONABLE INTENDMENT FROM THE FACE OF THE INSTRUMENT ITSELF?"

IN VIEW OF THE FOREGOING, IT IS OUR OPINION THAT THE BOND COULD HAVE BEEN ENFORCED BY THE GOVERNMENT, AND THAT THE CONTRACTING OFFICER THEREFORE, ERRED IN REFUSING TO ACCEPT CHAMER'S BID.

WITH RESPECT TO YOUR SUGGESTION THAT THE AWARD SHOULD NOW BE MADE TO CHAMER OR, IN THE ALTERNATIVE, BIDS BE RESOLICITED, WE WERE INFORMALLY ADVISED BY THE COAST GUARD ON OCTOBER 14 THAT THE WORK UNDER CONTRACT WAS 99 PERCENT COMPLETED. IN VIEW THEREOF, AND SINCE WE WERE NOT IN A POSITION TO REACH THE CONCLUSIONS SET OUT ABOVE PRIOR TO OCTOBER 13, AT WHICH TIME THE COAST GUARD'S REPORT WAS RECEIVED IN OUR OFFICE, WE MUST REGRETFULLY CONCLUDE THAT WE SEE NO WAY TO CORRECT THE SITUATION AT THIS TIME.