Matter of: E&R, Inc. File: B-255868 Date: March 29, 1994 94-1 CPD Para. 218

Matter of: E&R, Inc. File: B-255868 Date: March 29, 1994 94-1 CPD Para. 218

PROCUREMENT Bid Protests Interested parties Agents Experts/consultants A consultant may represent an interested party in a protest before the General Accounting Office, where the consultant has been authorized to act for the interested party. PROCUREMENT Sealed Bidding Bid guarantees Responsiveness Signatures Powers of attorney The awardee's bid was nonresponsive and could not properly be accepted by the procuring agency where the awardee's bid guarantee was executed 2 months after the date which the power of attorney identified as the expiration of the authority of the attorney-in-fact to bind the surety; the authority of the attorney-in-fact to bind the surety must be established from the face of the bid documents at bid opening.

Attorneys

DECISION

We sustain the protest.

The IFB, issued July 13, 1993, sought runway power improvement services to be performed within 360 calendar days after award. The solicitation required the submission of performance and payment bonds, as well as bid guarantees. The bid guarantee was required to "be accompanied by a verifax or other facsimile copy of the agent's authority to sign bonds for the surety company." Bidders were cautioned that the failure to furnish a proper bid guarantee could result in the rejection of the bid.

Seven bids were received at the September 13 bid opening. East Bay submitted the low bid of $307,962, while E&R's $315,375 bid was second low. East Bay submitted the required bid guarantee, signed by Kathy McGee as attorney-in-fact on behalf of the corporate surety and dated September 13. Included with the awardee's bid guarantee was a power of attorney, signed by the surety's president, authorizing Ms. McGee to bind the corporate surety; the power of attorney stated, however, that it was "invalid for any instrument dated after July 1, 1993."

E&R, through its authorized representative, Federal Contract Specialists, Inc., challenged the validity of East Bay's bid guarantee in a protest filed with the agency.[1] The Navy dismissed the protest because Federal Contract Specialists had not provided evidence to indicate authority to act on E&R's behalf and was not itself an interested party eligible to protest the award to East Bay. The Navy did not inform Federal Contract Specialists, prior to dismissing E&R's protest, that the agency questioned the consultant's authority to act for E&R in that bidder's protest. E&R then timely filed its protest with our Office.

As an initial matter, the Navy argues that Federal Contract Specialists is not an interested party to challenge East Bay's bid guarantee and bid bond, because Federal Contract Specialists did not provide proof of its authority to file a protest on E&R's behalf and Federal Contract Specialists was not itself a bidder under the IFB. In its protest filings to the Navy and our Office, Federal Contract Specialists represented that it was acting on E&R's behalf and submitted to our Office a letter signed by the vice president of E&R (the same person that signed E&R's bid under the IFB) stating that Federal Contract Specialists
had been authorized to file the protests on E&R's behalf. A consultant,
such as Federal Contract Specialists, may represent an interested party
in a protest filed with our Office where, as here, the consultant has
been authorized to act for that interested party. See Windet Hotel
Corp., B-220987, Feb. 6, 1986, 86-1 CPD Para. 138; Systems and
Facilities Corp., B-220580.2, Feb. 4, 1986, 86-1 CPD Para. 125.
Therefore, Federal Contract Specialists' protest on behalf of E&R will be
considered by our Office.

E&R contends that East Bay's bid is nonresponsive to the IFB's
requirement for a bid guarantee. Specifically, E&R complains that since
the power of attorney submitted with East Bay's bid and bid guarantee
states that it was invalid for instruments executed after July 1, 1993,
the bid papers do not demonstrate that the attorney-in-fact had authority
to sign for the surety on September 13, 1993, the date of the bid bond.

The Navy responds that at the time of bid opening the contracting officer
knew that Ms. McGee had actual authority to act as attorney-in-fact for
the surety because the contracting officer had received a valid bid
guarantee and power of attorney from Ms. McGee and the same surety on
another unrelated procurement prior to bid opening under the IFB. The
agency also asserts that the expiration date stated on the face of the
power of attorney in this procurement was obviously erroneous, inasmuch
as the surety's corporate secretary attested that the power of attorney
was "in full force and effect" on September 13--2 months after the
document was by its express terms invalid; the agency argues that this
obviously erroneous date could be waived by the contracting officer.
Finally, the agency argues that there is no requirement that bid
guarantees be supported by a power of attorney and therefore the
submission of an invalid power of attorney is not a matter of bid
responsiveness.

A bid guarantee is a form of security that assures that a bidder will not
withdraw its bid within the period specified for acceptance and, if
required, will execute a written contract and furnish required
performance and payment bonds. Federal Acquisition Regulation (FAR) Sec.
28.001. The bid guarantee secures the surety's liability to the
government thereby providing funds to cover the excess costs of awarding
to the next eligible bidder in the event that the bidder awarded the
contract fails to fulfill these obligations. A.W. and Assocs., Inc., 69
Comp.Gen. 737 (1990), 90-2 CPD Para. 254; Hydro-Dredge Corp., B-214408,
Apr. 9, 1984, 84-1 CPD Para. 400. The sufficiency of a bid guarantee
depends on whether the surety is clearly bound by its terms; when the
liability of the surety is not clear, the bond is defective. Techno
Eng'g & Constr., Inc., B-243932, July 23, 1991, 91-2 CPD Para. 87. Under
the law of suretyship, no one incurs a liability to pay the debts or
perform the duties of another unless that person has expressly agreed to
do so. Andersen Constr. Co.; Rapp Constructors, Inc., 63 Comp.Gen. 248
(1984), 84-1 CPD Para. 279.

When required by a solicitation, a bid guarantee is a material part of
the bid and must be furnished with it. A.D. Roe Co., Inc., 54 Comp.Gen.
271 (1974), 74-2 CPD Para. 194; 38 Comp.Gen. 532 (1959). Noncompliance
with a solicitation requirement for a bid guarantee generally renders the
bid nonresponsive and requires the rejection of the bid. FAR Sec.
28.101-4(a); A.W. and Assocs., Inc., supra.

A bid guarantee submitted with an invalid power of attorney renders the
bid nonresponsive.[2] See, e.g., Fred Winegar, B-243557, Aug. 1, 1991,
91-2 CPD Para. 111; Baldi Bros. Constructors, B-224843, Oct. 9, 1986,
86-2 CPD Para. 418; Nova Group, Inc., B-220626, Jan. 23, 1986, 86-1 CPD
Para. 80. This is so because a power of attorney authorizes an agent to
act for the surety and only a valid power of attorney would indicate that
the surety expressly agreed to be bound to pay the bond signed by the
attorney-in-fact. This express agreement to be bound is required under
the law of suretyship. See Andersen Constr. Co.; Rapp Constructors,
Inc., supra. A power of attorney is to be strictly construed. See J.W.
Bateson Co., Inc., B-189848, Dec. 16, 1977, 77-2 CPD Para. 472. The
surety's power of attorney must establish unequivocally that the
attorney-in-fact who signed the surety's bond was authorized to bind the
surety. Quantum Constr., Inc., B-255049, Dec. 1, 1993, 93-2 CPD Para.
304; Standard Roofing USA, Inc., B-245776, Jan. 30, 1992, 92-1 CPD Para.
127. We will not convert ambiguous aspects of powers of attorney into
mere matters of form which can be explained away and waived. A.W. and
Assocs., Inc., supra.

Here, the power of attorney submitted with East Bay's bid guarantee
failed to unequivocally establish that the attorney-in-fact who signed
the bond was authorized to bind the surety, given the fact that on the
date of execution of the bid bond the power of attorney indicated that
the authority of the attorney-in-fact to bind the surety had expired.

While the surety's corporate secretary attested that the power of
attorney was in "full force and effect" on the date that the bid bond was
signed on the surety's behalf, the corporate secretary could not, by the
express terms of the power of attorney, extend the authority of the named
attorneys-in-fact to bind the surety; the power of attorney states that
only the surety's president has the authority to appoint or remove
attorneys-in-fact. Thus, Ms. McGee's authority to bind the surety on
instruments executed after July 1, 1993, could not be extended by the
corporate secretary, and by the terms of this instrument expired on July
1, prior to the signing of the bid guarantee at issue here. See A.W. and
Assocs., Inc., supra.

The Navy asserts that the surety has now confirmed that Ms. McGee had
actual authority to bind the surety. The responsiveness of a bid must be
determined solely from the bid documents; thus, the fact that extrinsic
evidence may establish that the attorney-in-fact's signature was
authorized is of no consequence, notwithstanding the fact that the
evidence was in existence at the time of bid opening. See Baldi Bros.
Constructors, supra; Nova Group, Inc., supra; Hydro-Dredge Corp., supra.
As noted above, the bid documents here do not establish Ms. McGee's
authority to act for the surety.

The Navy also argues that it knew on the date of bid opening from a power
of attorney submitted with the bid guarantee in an unrelated procurement
that Ms. McGee had actual authority to bind the surety. As noted above,
this extrinsic evidence could not be considered as establishing the
responsiveness of East Bay's bid. In any event, the earlier submitted
power of attorney, while indicating that Ms. McGee's authority to act for
the surety in these matters would not expire until 1995, does not
establish that Ms. McGee had the authority to bind the surety on
September 13, 1993, the date of the bid bond's execution. The powers of
attorney submitted with the awardee's bid guarantee under this IFB and
under the unrelated earlier procurement are revocable instruments and
reserve to the surety the power to terminate at will the authority of
named attorneys-in-fact to act on the surety's behalf.[3] Since the
authority of Ms. McGee could have been revoked after the date of the
unrelated and earlier submitted power of attorney, the earlier power of
attorney does not establish the authority of Ms. McGee to bind the surety
to the bid bond submitted under this IFB. See Fred Winegar, supra; Baldi
Bros. Constructors, supra.

Finally, the Navy asserts that the "obviously erroneous" expiration date
can be waived under FAR Sec. 28.101-4(c)(8), which provides that a
contracting officer may waive the noncompliance of "[a]n otherwise
acceptable bid bond [that] is erroneously dated or bears no date at
all." We disagree. This regulation expressly provides for the waiver of
erroneous or omitted dates that do not affect the acceptability of the
bid bond. Here, the assertedly erroneous date concerns the expiration of
the attorney-in-fact's authority and goes to the heart of the validity
and acceptability of the bid bond. Since the bid bond is not "otherwise
acceptable" apart from the expiration of the attorney-in-fact's
authority, this regulation provides no basis for the waiver of the stated
expiration period. See Nova Group, Inc., supra.

In sum, since East Bay's bid guarantee was supported by an invalid power
of attorney, its bid was nonresponsive and could not properly be accepted
by the Navy. Because performance of the 1-year contract has continued
for nearly 6 months, it is impracticable to recommend termination of the
contract for the convenience of the government. Accordingly, we find that
E&R is entitled to its costs of bid preparation and of filing and
pursuing the protest. 4 C.F.R. Sec. 21.6(d) (1993). E&R must file its
certified claim for its costs directly with the agency within 60 working
days after receipt of this decision. 4 C.F.R. Sec. 21.6(f)(1).

The protest is sustained.

The Honorable John H. Dalton
The Secretary of the Navy

Dear Mr. Secretary:

Enclosed is a copy of our decision of today sustaining the protest of
E&R, Inc. against the award of a contract to East Bay Electric, Inc.
under invitation for bids No. N62470-93-B-2366, issued by the Naval
Facilities Engineering Command, Department of the Navy, for construction
services at the Marine Corps Air Station, Cherry Point, North Carolina.

We sustained the protest because we found that since East Bay's bid
guarantee was not supported by a valid power of attorney, East Bay's bid
was nonresponsive and could not properly be accepted by the agency.
Because performance of the 1-year contract has continued for nearly 6
months, we do not recommend termination of the contract for the
convenience of the government. We do find, however, that the protester
is entitled to its costs of bid preparation and of filing and pursuing
the protest.

1. Federal Contract Specialists, among other things, assists and represents firms and individuals in bidding or proposing for government contracts, in filing contract claims and in challenging contract awards.

2. A power of attorney is a written authorization used to evidence an agent's authority to a third person. 3 Am. Jur. 2d Agency Sec. 23 (1964).

3. It is for this reason that a valid power of attorney must be provided for each bid guarantee, establishing the continued authority of the named attorney-in-fact to bind the surety. Absent this express evidence of authority, the government cannot be certain that it has received the required security.