B-160738, JAN. 27, 1967

B-160738, JAN. 27, 1967

TO OFFICE OF CONSOLIDATED SERVICES:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 18, 1967, FILE REFERENCE PROPERTY AND SUPPLY, INVITATION FOR BIDS BIA-0699-67-45, HOUSING RELOCATION, REQUESTING A DECISION AS TO WHETHER, UNDER THE CIRCUMSTANCES SET FORTH BELOW, A CONTRACT MAY BE AWARDED TO BURKE DALTON INC.

INVITATION FOR BIDS NO. BIA-0699-67-45, DATED NOVEMBER 23, 1966, USING STANDARD FORM 33, REQUESTED BIDS FOR RELOCATION OF HOUSES TO THE ZUNI AND JICARILLA AGENCIES. PAGE 5 OF THE INVITATION CONTAINED THE PROVISION THAT A BID GUARANTEE IN AN AMOUNT EQUAL TO 20 PERCENT OF THE BID PRICE MUST BE SUBMITTED WITH THE BID. PAGE 6 OF THE INVITATION PROVIDED THAT THE SUCCESSFUL CONTRACTOR MUST FURNISH PERFORMANCE AND PAYMENT BONDS. ADDENDUM NO. 2, ISSUED NOVEMBER 29, 1966, DELETED THE REQUIREMENT OF THE ORIGINAL INVITATION FOR FURNISHING PERFORMANCE AND PAYMENT BONDS. THREE BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND WERE OPENED ON DECEMBER 6, 1966. BURKE-DALTON INC. SUBMITTED THE LOW BID IN THE AMOUNT OF $49,804.77 BUT DID NOT FURNISH A BID GUARANTEE AS SPECIFIED IN THE INVITATION. THE SECOND LOW BID WAS SUBMITTED BY HOMER BENNETT TRUCKING CO. INC. IN THE AMOUNT OF $64,375 ACCOMPANIED BY AN ACCEPTABLE BID GUARANTEE IN THE FORM OF A LETTER OF CREDIT FOR $13,000 AS REQUIRED BY THE INVITATION.

IN A LETTER DATED JANUARY 11, 1967, BURKE-DALTON INC. WAS NOTIFIED THAT ITS BID WAS CONSIDERED NONRESPONSIVE BECAUSE IT FAILED TO SUBMIT THE BID GUARANTEE. BY LETTER DATED JANUARY 11, 1967, BURKE-DALTON INC., THROUGH ITS ATTORNEY, PROTESTED THE REJECTION OF ITS BID CONTENDING THAT, PRIOR TO SUBMITTING ITS BID, ON OR ABOUT NOVEMBER 30, 1966, A REPRESENTATIVE OF THE FIRM HAD DISCUSSED THE REQUIREMENTS OF THE BID BOND AND WAS GIVEN A COPY OF TELEGRAPHIC ADDENDUM NO. 2 ON WHICH THERE WAS HANDWRITTEN "THIS WAIVES BID GUARANTEE.' IT IS CONTENDED THAT THIS WAIVER WAS RELIED ON BY BURKE- DALTON INC. IN SUBMITTING ITS BID.

41 CFR 1-10.102-2 PROVIDES THAT A BID GUARANTEE IS REQUIRED IN GOVERNMENT PROCUREMENT AS ASSURANCE THAT THE BIDDER WILL, UPON ACCEPTANCE OF HIS BID, EXECUTE SUCH CONTRACTUAL DOCUMENTS AS MAY BE REQUIRED, IF ANY, AND GIVE BONDS WITHIN THE TIME SPECIFIED AFTER THE FORMS ARE PRESENTED TO HIM. CFR 1-10.103-1 (A) PROVIDES THAT A BID GUARANTEE MAY BE REQUIRED ONLY WHEN THE INVITATION FOR BIDS SPECIFIES THAT A CONTRACT MUST BE SUPPORTED BY A PERFORMANCE BOND OR BY PERFORMANCE AND PAYMENT BONDS.

IN THE INSTANT CASE THE STANDARD FORM 33 UTILIZED WAS SUCH THAT, UPON SUBMISSION OF THE BID, NO FURTHER CONTRACT DOCUMENTS WERE REQUIRED TO BE EXECUTED BY THE BIDDER. FURTHERMORE, WHEN THE PERFORMANCE AND PAYMENT BONDS REQUIREMENTS WERE DELETED BY ADDENDUM NO. 2, THE BID GUARANTEE REQUIREMENT ALSO SHOULD HAVE BEEN DELETED IN ORDER TO COMPLY WITH THE PROVISIONS OF 41 CFR 1-10.103-1 (A).

WE HELD IN 38 COMP. GEN. 532 THAT UNDER INVITATIONS FOR BIDS WHICH REQUIRE BIDDERS TO SUBMIT BID BONDS PRIOR TO BID OPENING, THE BID BOND REQUIREMENT IS A MATERIAL PART OF THE INVITATION WHICH CANNOT BE WAIVED AND NONCOMPLIANCE WITH THE PROVISION REQUIRES REJECTION OF THE BID AS NONRESPONSIVE. HOWEVER, THE DECISION IN THAT CASE WAS BASED ON THE PREMISE THAT THE BID BOND WAS PROPERLY REQUIRED TO PROTECT THE INTERESTS OF THE GOVERNMENT. HERE, NOT ONLY WAS THERE NO USEFUL PURPOSE TO BE SERVED BY REQUIRING A BID GUARANTEE BUT ALSO THE REQUIREMENT WAS CONTRARY TO THE FEDERAL PROCUREMENT REGULATIONS. CONSEQUENTLY, IT IS OUR VIEW THAT THIS CASE IS NOT GOVERNED BY OUR CITED DECISION.

WE THINK THAT SINCE THE BID GUARANTEE WAS IMPROPERLY REQUIRED TWO COURSES APPEAR AVAILABLE, THAT IS, REJECTION OF ALL BIDS AND READVERTISING, OR ACCEPTANCE OF THE LOW BID BY WAIVING THE BID GUARANTEE REQUIREMENT. THE PRIMARY MATTER REQUIRING CONSIDERATION IS THE PUBLIC INTEREST AND WHETHER, IN VIEW THEREOF, THE FAILURE OF THE LOW BIDDER TO SUBMIT A BID GUARANTEE WITH ITS BID MAY BE WAIVED. IN SUCH CONSIDERATION, THE DIFFERENCE IN THE AMOUNT OF THE BIDS, THE CIRCUMSTANCES SURROUNDING THE FAILURE TO SUBMIT THE BID GUARANTEE AND WHETHER WAIVER WOULD PREJUDICE OTHER BIDDERS BECOME CONTROLLING. IT DOES NOT APPEAR THAT THE FURNISHING OF A BID GUARANTEE MEASURABLY AFFECTS THE COST OF THE SERVICES BEING OBTAINED BY THE GOVERNMENT. CONSIDERING THIS FACT TOGETHER WITH THE FACT THAT THE DIFFERENCE IN PRICE BETWEEN THE LOW BID AND THE NEXT LOW BID IS IN EXCESS OF $14,000 IT OBVIOUSLY WOULD BE IN THE INTEREST OF THE GOVERNMENT TO ACCEPT THE LOW BID. FURTHERMORE, IT DOES NOT APPEAR THAT THE ACCEPTANCE OF THE LOW BID WOULD BE PREJUDICIAL TO THE SECOND LOW BIDDER. IT COULD HARDLY BE SAID THAT THE BID OF THE SECOND LOW BIDDER WOULD HAVE BEEN THE LOW BID RECEIVED AND AS SUCH CONSIDERED FOR ACCEPTANCE IF IT HAD NOT COMPLIED WITH THE BID GUARANTEE REQUIREMENT OF THE INVITATION.

ACCORDINGLY, AWARD OF THE CONTRACT MAY BE MADE TO BURKE-DALTON INC. AS YOUR RECOMMEND.