B-245818, Sep 27, 1991

B-245818: Sep 27, 1991

Additional Materials:

Contact:

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

 

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

The agency correctly determined the bond was defective and properly rejected bid as nonresponsive. Since there was no evidence at the time of bid opening that surety would be bound. Which was the apparent low bid at bid opening. Was accompanied by a bid bond naming Ohio Casualty Insurance Company as its corporate surety. The bond was signed on behalf of the insurance company by JoAnne Tonani. Who was identified on the bond as the "attorney-in-fact.". The protester states that although Tonani's name was not listed on the power of attorney form as an attorney-in-fact designated by its corporate surety to bind that company. Prairie Land contends that the failure to list Tonani on the power of attorney form (which form the protester claims was not even required by the solicitation) was an unintentional error which it should be able to cure after bid opening and prior to award.

B-245818, Sep 27, 1991

DIGEST: Where corporate surety's power of attorney form attached to bid bond failed to designate the individual who signed the bond on behalf of the surety as an attorney-in-fact authorized to bind the surety, the agency correctly determined the bond was defective and properly rejected bid as nonresponsive, since there was no evidence at the time of bid opening that surety would be bound.

Attorneys

Prairie Land & Timber Company:

Prairie Land & Timber Company protests the rejection of its bid as nonresponsive under invitation for bids (IFB) No. RI-17-91-30, issued by the United States Forest Service. The Forest Service rejected Prairie Land's bid because the surety's power of attorney form attached to the bid bond failed to designate the individual who signed the bond on behalf of the surety as an attorney-in-fact authorized to bind the surety.

We dismiss the protest.

The IFB required the submission of a bid bond in the proper form by bid opening. Prairie Land's bid, which was the apparent low bid at bid opening, was accompanied by a bid bond naming Ohio Casualty Insurance Company as its corporate surety. The bond was signed on behalf of the insurance company by JoAnne Tonani, who was identified on the bond as the "attorney-in-fact." The power of attorney form attached to the bond, however, did not identify Tonani as an attorney-in-fact designated by Ohio Casualty Insurance Company to bind the company. The Forest Service rejected Prairie Land's bid as nonresponsive because the power of attorney form failed to designate Tonani as an attorney-in fact authorized to bind the corporate surety, rendering the bond defective.

The protester states that although Tonani's name was not listed on the power of attorney form as an attorney-in-fact designated by its corporate surety to bind that company, Tonani properly signed the bid bond pursuant to her authority to bind Ohio Casualty Insurance Company. Prairie Land contends that the failure to list Tonani on the power of attorney form (which form the protester claims was not even required by the solicitation) was an unintentional error which it should be able to cure after bid opening and prior to award. Prairie Land submitted a letter to the agency after bid opening from Ohio Casualty Insurance Company which states that Tonani has the authority to act as an attorney-in-fact for that company. Tonani has submitted an affidavit in which she explains that the wrong power of attorney form from Ohio Casualty Insurance Company (which lists the names of seven individuals as attorney-in-facts for the company but fails to list Tonani) was submitted with Prairie Land's bid and that a different form listing Tonani as an attorney-in-fact was inadvertently omitted. The protester further contends that the Forest Service should have known Tonani was an authorized attorney-in-fact for the insurance company because Prairie Land has submitted other bid bonds signed by Tonani to the same contracting office which were approved by the
agency.

A bid bond is a form of security submitted to assure the government that
a successful bidder will not withdraw its bid within the period specified
for acceptance and, if required, will execute a written contract and
furnish performance and payment bonds.
See Federal Acquisition Regulation
(FAR) Sec. 28.001.
The purpose of a bid bond is to secure the liability
to the government for excess reprocurement costs in the event the
successful bidder defaults by failing to execute the necessary contractual
documents or to furnish the required payment and performance bonds.
See
FAR Sec. 52.228-1(c); Desert Dry Waterproofing Contractors, B-219996,
Sept. 4, 1985, 85-2 CPD Para. 268.
A bid bond, even if in the proper
amount, is defective and renders the bid nonresponsive if it is not clear
that it will bind the surety.
Baldi Bros. Constructors, B-224843, Oct. 9,
1986, 86-2 CPD Para. 418.
Determining whether the surety is clearly bound
is essential because under the law of suretyship, no one incurs a
liability to pay the debts or to perform the duties of another unless that
person expressly agrees to be bound.
Andersen Constr.
Co.; Rapp
Constructors, Inc., 63 Comp.Gen. 248 (1984), 84-1 CPD Para. 279.
Whether
the individual who signed as the alleged attorney-in-fact had actual
authority to bind the surety is not dispositive; rather, the issue is
whether it appeared from the face of the bid documents that the
individual's signature on behalf of the corporate surety was authorized
and binding.
Techno Eng'g & Constr., Ltd., B-243932, July 23, 1991, 91-2
CPD Para. 87.

The protester contends that a power of attorney form was not required for
corporate sureties since the IFB only instructed bidders to submit such a
form for any "person" acting as a surety on the bid bond.
We do not find
this argument persuasive.
The IFB required bidders to furnish a proper
bid bond with their bids.
Under the principles of suretyship, a legally
sufficient bid bond must show that the surety (whether an individual or
corporate surety) expressly agrees to be bound to its surety obligations.
Andersen Constr. Co.; Rapp Constructors, Inc., supra. Here, the surety's
power of attorney form attached to the bond failed to designate Tonani as
the attorney-in-fact authorized to bind Ohio Casualty Insurance Company.
This omission created an uncertainty as to whether Tonani was duly
authorized to bind the surety, thereby rendering the bond defective and
Prairie Land's bid nonresponsive.
Id.; Baldi Bros. Constructors,
B-224843, supra.

Although Prairie Land attempted to correct the defective power of
attorney after bid opening by submitting a letter evidencing Tonani's
authority to bind the insurance company, such extrinsic evidence cannot be
considered in determining the responsiveness of the protester's bid.
/1/
See Langaker Marine, Inc., B-220556, Dec. 3, 1985, 85-2 CPD Para. 623.
This determination must be based solely upon the documents Prairie Land
submitted with its bid prior to bid opening.
Techno Eng'g & Constr.,
Ltd., B-243932, supra. The Forest Service was not required to investigate
Tonani's authority-- by contacting Ohio Casualty Insurance Company or by
reviewing other bid bonds submitted by Prairie Land under different
solicitations (which might only have shown, as the protester suggests,
that Tonani was an authorized attorney-in-fact for the insurance company
at the time those other bid bonds were submitted.)
Accordingly, the
agency correctly determined that the bond was defective based solely on
the bid documents, and thus properly rejected Prairie Land's bid as
nonresponsive.

The protest is dismissed.

/1/ In Danish Arctic Contractors, B-225807, June 12, 1987, 87-1 CPD Para. 590, we allowed extrinsic evidence to confirm the attorney-in fact's identity, not his authority, which is not at issue here. This distinction was made in that case.