B-183096, MAR 18, 1975

B-183096: Mar 18, 1975

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

ACCOMPANIED BY BID BOND IN NAME OF JOINT VENTURE CONSISTING OF CORPORATION AND AN INDIVIDUAL NAMED HOYER MUST BE REJECTED EVEN THOUGH INDIVIDUAL JOINED CORPORATION IN SIGNING BID SINCE BID WAS SUBMITTED IN NAME OF CORPORATION ONLY. DEFECT CANNOT BE WAIVED AS BID BOND REQUIREMENT IS MATERIAL. PARAGRAPH 4 OF SF-22 PROVIDES IN PERTINENT PART: "WHERE A BID GUARANTEE IS REQUIRED BY THE INVITATION FOR BID. PARAGRAPH A OF SF-20 STATES IN PERTINENT PART: "EACH BIDDER SHALL SUBMIT WITH HIS BID A BID BOND (STANDARD FORM 24) WITH GOOD AND SUFFICIENT SURETY OR SURETIES ACCEPTABLE TO THE GOVERNMENT. ***" THE APPARENT LOW BID WAS SUBMITTED IN THE NAME OF "HOYER CONSTRUCTION COMPANY. INCORPORATED" AND WAS SIGNED BY LANNY WHITE.

B-183096, MAR 18, 1975

BID OF HOYER CONSTRUCTION COMPANY, ACCOMPANIED BY BID BOND IN NAME OF JOINT VENTURE CONSISTING OF CORPORATION AND AN INDIVIDUAL NAMED HOYER MUST BE REJECTED EVEN THOUGH INDIVIDUAL JOINED CORPORATION IN SIGNING BID SINCE BID WAS SUBMITTED IN NAME OF CORPORATION ONLY. DEFECT CANNOT BE WAIVED AS BID BOND REQUIREMENT IS MATERIAL, AND THE MISTAKE IN SUBMITTING BID IN CORPORATE CAPACITY ONLY CANNOT BE CORRECTED AS THAT DEFECT RENDERS BID NONRESPONSIVE.

HOYER CONSTRUCTION COMPANY/K.D. HOYER, A JOINT VENTURE:

BY ITS LETTER OF JANUARY 17, 1975, HOYER CONSTRUCTION COMPANY/K.D. HOYER, A JOINT VENTURE (HOYER) PROTESTS THE ARMY CORPS OF ENGINEERS' PROPOSED AWARD TO JIM COOLEY CONSTRUCTION COMPANY (COOLEY) UNDER INVITATION FOR BIDS (IFB) NO. DACA 63-75-B-0038 FOR "ADD TO AND ALTER HAZARDOUS MATERIALS STORAGE FACILITY." THE IFB, ISSUED OCTOBER 17, 1974, BY THE U.S. ARMY ENGINEER DISTRICT, FORT WORTH, INCLUDED STANDARD FORMS (SF) 20 AND 22. PARAGRAPH 4 OF SF-22 PROVIDES IN PERTINENT PART:

"WHERE A BID GUARANTEE IS REQUIRED BY THE INVITATION FOR BID, FAILURE TO FURNISH A BID GUARANTEE IN THE PROPER FORM AND AMOUNT, BY THE TIME SET FOR OPENING OF BIDS, MAY BE CAUSE FOR REJECTION OF THE BID."

PARAGRAPH A OF SF-20 STATES IN PERTINENT PART:

"EACH BIDDER SHALL SUBMIT WITH HIS BID A BID BOND (STANDARD FORM 24) WITH GOOD AND SUFFICIENT SURETY OR SURETIES ACCEPTABLE TO THE GOVERNMENT. ***"

THE APPARENT LOW BID WAS SUBMITTED IN THE NAME OF "HOYER CONSTRUCTION COMPANY, INCORPORATED" AND WAS SIGNED BY LANNY WHITE, VICE PRESIDENT, AS WELL AS BY K.D. HOYER. ON STANDARD FORM SF-19-B, "REPRESENTATIONS AND CERTIFICATIONS", THE BIDDER IDENTIFIED ITSELF AS HOYER CONSTRUCTION COMPANY, INCORPORATED, A CORPORATION INCORPORATED IN THE STATE OF OKLAHOMA. THE ACCOMPANYING BID BOND IDENTIFIES ITS PRINCIPAL AS "HOYER CONSTRUCTION COMPANY, INCORPORATED AND K.D. HOYER, A JOINT VENTURE." THE APPROPRIATE SPACE PROVIDED ON THE BID BOND, THE PROTESTER AGAIN INDICATED ITS ORGANIZATIONAL TYPE AS A JOINT VENTURE. THAT FORM IS SIGNED BY LANNY WHITE, MANAGER, AND K.D. HOYER JOINTLY AS PRINCIPAL TO THE SURETY AGREEMENT. BECAUSE OF THE DISCREPANCY BETWEEN THE BID AND THE BID BOND THE ARMY DETERMINED THE PROTESTER'S BID TO BE NONRESPONSIVE AND PROPOSED AWARD TO COOLEY AS THE NEXT LOW BIDDER. THIS PROTEST FOLLOWED.

IT IS THE PROTESTER'S CONTENTION THAT THE APPEARANCE OF THE NAMES OF BOTH MESSRS. WHITE AND HOYER ON THE BID FORM EVIDENCES AN INTENT TO BIND THE JOINT VENTURE AND THEREFORE BINDS THE SURETY UPON THE BID BOND. SPECIFICALLY, HOYER'S ARGUMENT IS AS FOLLOWS:

"IT IS RECOGNIZED THAT THERE WAS A SLIGHT ERROR IN THE BID, AS ACTUALLY FILED, IN THAT IT DID NOT SPELL OUT THE STATUS OF HOYER CONSTRUCTION COMPANY, INCORPORATED, AND K.D. HOYER, BY WHOM THE BID WAS SIGNED, AS A JOINT VENTURE; AND THE VENTURE RESPECTFULLY SUBMITS THAT, WITH ALL NECESSARY SIGNATURES ON THE BID, THE INTENT WAS OBVIOUS TO THE EXTENT THAT IT WOULD BE IMPOSSIBLE FOR THE SURETY UPON THE BID BOND TO ESCAPE LIABILITY THEREON, UPON THE GROUND THAT THE BID, AS ACTUALLY SUBMITTED, INVOLVED A CORPORATION ONLY, WHERE THE INDIVIDUAL MEMBER OF THE JOINT VENTURE ACTUALLY SIGNED THE BID, UNDER THE CORPORATE NAME OF HOYER CONSTRUCTION COMPANY, INCORPORATED PROPERLY SIGNED BY LANNY WHITE, ITS VICE PRESIDENT; AND WITH THE SIGNATURE OF BOTH MEMBERS OF THE JOINT VENTURE ACTUALLY APPEARING UPON THE BID, THERE WOULD BE NO WAY THE SURETY UPON THE BID BOND COULD AVOID LIABILITY UPON ANY ALLEGED GROUND THE VENTURE ITSELF HAD NOT SIGNED THE BID, SIMPLY BECAUSE THE FORMAL DESIGNATION OF 'A JOINT VENTURE' DID NOT ACCOMPANY THE NAMES OF THE CORPORATION AND THE INDIVIDUAL MEMBER."

IT IS HOYER'S CONTENTION THAT THE DISCREPANCY BETWEEN THE NAME AND DESIGNATION OF THE LEGAL ENTITY ON THE BID AND THE BID BOND IS EITHER A MINOR INFORMALITY OR IRREGULARITY WHICH MAY BE WAIVED OR CORRECTED UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 2-405 OR A MISTAKE SUBJECT TO CORRECTION UNDER EITHER ASPR 2-406.2 OR 2-406.3.

BOTH ARGUMENTS POSED BY THE PROTESTER WERE RECENTLY ADDRESSED AT CONSIDERABLE LENGTH IN OUR DECISION IN THE MATTER OF A.D. ROE COMPANY, INCORPORATED, 54 COMP. GEN. , B-181692, OCTOBER 8, 1974. THAT CASE SIMILARLY INVOLVED A BID SUBMITTED IN THE NAME OF A CORPORATE ENTITY ALONE WHICH WAS ACCOMPANIED BY A BID BOND WHICH IDENTIFIED ITS PRINCIPAL AS THAT CORPORATE ENTITY AND NAMED INDIVIDUALS, "A JOINT VENTURE." WE THERE CONFIRMED OUR PRIOR HOLDING THAT THE BID BOND REQUIREMENTS MUST BE CONSIDERED A MATERIAL PART OF THE IFB AND THAT THE CONTRACTING OFFICER CANNOT WAIVE THE FAILURE TO COMPLY WITH THESE REQUIREMENTS. SEE 38 COMP. GEN. 532 (1959); 50 COMP. GEN. 530 (1971); 52 COMP. GEN. 223 (1972).

IN THAT CASE WE FURTHER HELD THAT A BID BOND WHICH NAMES A PRINCIPAL DIFFERENT FROM THE NOMINAL BIDDER IS DEFICIENT AND THAT THE DEFECT MAY NOT BE WAIVED AS A MINOR INFORMALITY UNDER THE PROVISIONS THEREFOR AT ASPR 2- 405. SEE 44 COMP. GEN. 494 (1965); 52 COMP. GEN. 223, SUPRA. THIS RULE IS PROMPTED BY THE RULE OF SURETYSHIP THAT NO ONE INCURS A LIABILITY TO PAY THE DEBTS OR PERFORM THE DUTY OF ANOTHER UNLESS HE EXPRESSLY AGREES TO BE BOUND. SEE 72 C.J.S. PRINCIPAL AND SURETY, SEC. 91 (1951). NEITHER IS IT A MISTAKE WHICH MAY BE CORRECTED UNDER ASPR 2 406, INASMUCH AS A DEFECT OF THIS NATURE RENDERS THE BID NONRESPONSIVE. UNDER ASPR 2-406.2 AND 2-406.3 AN ALLEGED MISTAKE MAY PROPERLY BE CONSIDERED FOR CORRECTION ONLY WHEN THE BID AS SUBMITTED IS RESPONSIVE. 51 COMP. GEN. 836 (1972).

IN EXPLAINING THE RATIONALE OF OUR HOLDING IN 54 COMP. GEN. SUPRA, WE STATED:

"THE DETERMINATION OF THE SUFFICIENCY OF A BID BOND RELATES TO WHETHER THE GOVERNMENT WILL RECEIVE THE FULL AND COMPLETE PROTECTION IT CONTEMPLATED IN THE EVENT THE BIDDER FAILS TO EXECUTE THE REQUIRED CONTRACT DOCUMENTS AND DELIVER THE REQUIRED PERFORMANCE AND PAYMENT BONDS. SEE 39 COMP. GEN. 60; 52 COMP. GEN. 223. IN THE PRESENT CASE, THE SURETY'S LIABILITY UNDER THE BOND IS CONTINGENT UPON THE BID BEING IN THE NAME OF THE ENTITY LISTED ON THE BID BOND, I.E., 'A.D. ROE COMPANY, INCORPORATED AND A.D. ROE AND JAMES E. MCCUBBIN, JR., A JOINT VENTURE.' THEREFORE, WE ARE UNABLE TO CONCLUDE ON THE BASIS OF THE INFORMATION ROE SUBMITTED WITH ITS BID THAT THE SURETY WOULD BE BOUND IN THE EVENT OF THE FAILURE OF ROE TO EXECUTE THE CONTRACT UPON ACCEPTANCE OF ITS BID. SEE B- 170361, JULY 27, 1970; 50 COMP. GEN. 530, 534; 51 COMP. GEN. SUPRA; B- 177890, SUPRA; B-178796, SUPRA. ROE CANNOT BE EXCEPTED FROM THE BID BOND REQUIREMENTS BY VIRTUE OF THE FACT THAT IT IS A PROVEN RESPONSIBLE CONTRACTOR, SINCE ALL BIDDERS MUST MEET THE MATERIAL REQUIREMENTS OF THE IFB IN ORDER FOR IT TO BE SAID THAT THEY ARE COMPETING ON AN EQUAL BASIS. SEE 52 COMP. GEN. 265.

"ROE ALSO ARGUES THAT UNDER SURETYSHIP LAW THE TERMS OF THE CONTRACT OF WHICH THE SURETY PROMISES PERFORMANCE MUST BE READ INTO THE SURETY'S CONTRACT WITH THE PRINCIPAL, I.E., THE BOND, AND THAT THE TWO CONTRACTS MUST BE CONSTRUED TOGETHER AS ONE INSTRUMENT. ROE STATES THAT, THEREFORE, THE BID FORM (SF-21) AND THE BID BOND (SF-24) MUST BE CONSTRUED TOGETHER AS THE SURETYSHIP CONTRACT, WHICH UNDER THE CIRCUMSTANCES OF THE PRESENT CASE MUST BE CONSIDERED AMBIGUOUS. ROE GOES ON TO ARGUE THAT INASMUCH AS UNDER SURETYSHIP LAW RECOURSE MAY BE HAD TO EXTRANEOUS EVIDENCE IN ORDER TO RESOLVE ANY UNCERTAINTY AS TO THE INTENT OF THE PARTIES UNDER THE SURETYSHIP CONTRACT, IT IS CLEAR FROM THE PROMPT AFFIRMATIONS OF ROE AND ITS SURETY THAT THE PARTIES INTENDED TO RECOGNIZE THE 'A.D. ROE COMPANY, INCORPORATED' AS THE BIDDER/PRINCIPAL, AND THAT THE INCLUSION OF THE OTHER PARTIES ON THE BID BOND WAS A MERE CLERICAL ERROR.

"ASSUMING ARGUENDO THAT ROE'S STATEMENT AND APPLICATION OF THE LAW OF SURETYSHIP IS CORRECT, IT STILL MUST BE CONCLUDED THAT ROE'S BID AS SUBMITTED IS, AT BEST, AMBIGUOUS. BY READING THE BID AND BID BOND TOGETHER, WE HAVE FOUND BIDS TO BE RESPONSIVE, EVEN THOUGH THEY NAMED DIFFERENT PRINCIPALS ON THE BONDS THAN THOSE NAMED ON THE BID FORMS, IN CASES WHERE WE WERE ABLE TO CONCLUDE FROM THE BID ITSELF THAT THE INTENDED BIDDER WAS THE SAME LEGAL ENTITY AS THE PRINCIPAL NAMED ON THE BID BOND. SEE B-169369, APRIL 7, 1970; B-176321, AUGUST 25, 1972. HOWEVER, IT IS WELL-SETTLED THAT AN AMBIGUOUS BID MAY NOT BE EXPLAINED AFTER BID OPENING WITH EXTRANEOUS EVIDENCE IN ORDER TO MAKE IT RESPONSIVE TO THE IFB'S REQUIREMENTS, SINCE THE BIDDER WOULD THEN, IN EFFECT, HAVE AN ELECTION AS TO WHETHER OR NOT HE WISHED TO HAVE HIS BID CONSIDERED. 40 COMP. GEN. 393 (1961); 50 COMP. GEN. 302 (1970); ID. 379 (1970)."

THE ABOVE-DISCUSSED DECISION DIFFERS FROM THE MATTER BEFORE US ONLY INSOFAR AS THE BID FORM SUBMITTED BY HOYER CONSTRUCTION COMPANY WAS SIGNED BY THE PARTIES TO THE JOINT VENTURE WHO ALSO EXECUTED THE BID BOND. THE PROTESTER URGES THAT THIS DISTINCTION IS CRITICAL AND THAT THE DUAL SIGNATURE APPEARING ON THE BID ESTABLISHES ITS SUBMISSION BY A "DE FACTO JOINT VENTURE" - ESSENTIALLY THE SAME LEGAL ENTITY THAT IS NAMED AS PRINCIPAL ON THE BID BOND. WHILE THE SIGNATURES OF BOTH MESSRS. WHITE AND HOYER APPEAR ON THE BID, THEY APPEAR UNDER SPACES FOR THE BIDDER'S NAME AND ADDRESS WHEREIN THE BIDDER CLEARLY REPRESENTS ITSELF AS HOYER CONSTRUCTION COMPANY. IN ADDITION, THE BID, AS SUBMITTED, CONTAINS AN "X" IN THE BOX INDICATING THAT THE BIDDER OPERATES AS A CORPORATION, AND CONTAINS THE BIDDER'S COMPLETION OF A STATEMENT INDICATING THAT IT IS A CORPORATION INCORPORATED IN THE STATE OF OKLAHOMA. WHILE THE TITLE "VICE PRESIDENT" APPEARS BELOW MR. WHITE'S SIGNATURE, THE BID CONTAINS NOTHING TO INDICATE IN WHAT CAPACITY MR. HOYER JOINED IN ITS SIGNING. THE FACT THAT HE SIGNED THE BID DOES NOT NECESSARILY ESTABLISH AN INTENT TO BIND THE JOINT VENTURE. IN OUR OPINION IT DOES NOT OVERRIDE THE EXPRESS REPRESENTATION THAT THE BIDDER IS HOYER CONSTRUCTION COMPANY ACTING IN ITS CORPORATE CAPACITY. AS INDICATED IN THE ABOVE QUOTATION FROM 54 COMP. GEN. SUPRA, WE HAVE FOUND BIDS RESPONSIVE, EVEN THOUGH THE BID BOND NAMED DIFFERENT PRINCIPALS. BUT THOSE FINDINGS WERE MADE ONLY WHERE WE WERE ABLE TO CONCLUDE FROM THE BID ITSELF THAT THE INTENDED BIDDER WAS THE SAME LEGAL ENTITY AS THAT NAMED AS PRINCIPAL ON THE BID BOND. IN THIS CASE, SUCH A FINDING CANNOT BE MADE FROM THE BID ITSELF AND WE THEREFORE FIND THAT THE ARMY CORRECTLY REJECTED THE PROTESTER'S BID AS NONRESPONSIVE.