B-135599, MAY 22, 1958, 37 COMP. GEN. 782

B-135599, MAY 22, 1958, 37 COMP. GEN. 782

CONTRACTS - SPECIFICATIONS - FAILURE TO FURNISH SOMETHING REQUIRED - BID BOND THE FAILURE OF A LOW BIDDER TO SUBMIT A BID BOND WITH HIS BID AS REQUIRED BY THE INVITATION OR TO FURNISH THE BID BOND TOGETHER WITH AN EXPLANATION OF THE DELAY DURING A 27-DAY PERIOD AFTER OPENING OF THE BIDS JUSTIFIES REJECTION OF THE BID AS NONRESPONSIVE, AND AWARD TO THE SECOND LOW BIDDER WHO FURNISHED THE REQUIRED BID BOND WILL NOT BE OBJECTED TO EVEN THOUGH THERE IS A CONSIDERABLE DIFFERENCE BETWEEN THE BID PRICES OF LOW BIDDER AND THE SECOND LOW BIDDER.

TO JOSEPH B. ULICNY, MAY 22, 1958:

A REPORT HAS BEEN RECEIVED FROM THE DEPARTMENT OF THE ARMY RELATIVE TO YOUR PROTEST AGAINST THE REJECTION BY THE OFFICE OF THE DISTRICT ENGINEER, U.S. ARMY ENGINEER DISTRICT, PHILADELPHIA, PENNSYLVANIA, OF A BID SUBMITTED BY YOUR COMPANY IN RESPONSE TO INVITATION FOR BIDS NO. CIVENG-36 -109-58-60, WHICH REQUESTED BIDS FOR THE CONSTRUCTION AND DELIVERY OF ONE DIESEL-ELECTRIC SEAGOING HOPPER DREDGE.

FOUR BIDS IN THE AMOUNTS OF $8,857,714, $9,976,000, $11,391,000 AND $11,699,800 WERE RECEIVED IN RESPONSE TO THE GOVERNMENT'S INVITATION FOR BIDS. THE LOWEST BID WAS SUBMITTED BY THE PUSEY AND JONES CORPORATION AND THE SECOND LOWEST BID WAS SUBMITTED BY AVONDALE MARINE WAYS, INC., NEW ORLEANS, LOUISIANA. PARAGRAPH 4 OF THE INVITATION PROVIDED THAT " BID BOND ON U.S. STANDARD FORM NO. 24 IN A PENAL SUM NOT LESS THAN ONE-FIFTH OF THE FULL AMOUNT OF THE BID, OR $1,000,000 WHICHEVER IS THE LESSER AMOUNT WILL BE REQUIRED WITH EACH BID.' THE SECOND LOWEST BIDDER FURNISHED A BID BOND IN THE PENAL SUM OF $1,000,000 BUT NO SUCH BOND WAS SUBMITTED WITH THE BID OF THE PUSEY AND JONES CORPORATION.

IT IS REPORTED THAT BIDS WERE OPENED ON MARCH 5, 1958, AND THAT ABOUT ONE HOUR BEFORE THE BIDS WERE OPENED YOU CALLED THE CONTRACTING OFFICER AND TOLD HIM THAT THE REQUIRED BID BOND HAD NOT BEEN OBTAINED. YOU REQUESTED ADVICE AS TO WHETHER THE CORPORATION'S BID WOULD BE CONSIDERED WITHOUT SUCH BOND. YOU WERE INFORMED OF THE REQUIREMENT IN THE INVITATION THAT A BID BOND MUST BE SUBMITTED WITH THE BID. ON THE FOLLOWING DAY YOU WERE INFORMED THAT THE BID OF THE CORPORATION WOULD BE CONSIDERED PROVIDED THE REQUIRED BID BOND WERE FURNISHED PROMPTLY, TOGETHER WITH A STATEMENT EXPLAINING THE FAILURE TO FURNISH THE BOND WITH THE BID. YOU REPLIED THAT BOTH THE STATEMENT AND THE BOND WOULD BE IN THE DISTRICT OFFICE BY THE END OF THE WEEK. ON MONDAY, MARCH 10, THE CORPORATION WAS REQUESTED BY TELETYPE TO FURNISH THE BOND WITHOUT FURTHER DELAY. DONALD W. HEDGES, ATTORNEY FOR THE PUSEY AND JONES CORPORATION, THEN CALLED THE PHILADELPHIA DISTRICT AND REPORTED THAT IT WOULD BE WELL INTO THE WEEK BEFORE THE BOND WOULD BE FURNISHED. ON FRIDAY, MARCH 14, THE FOLLOWING TELETYPE WAS DISPATCHED TO THE PUSEY AND JONES CORPORATION:

THE CONTRACTING OFFICER MUST CONSTRUE YOUR CONTINUED FAILURE TO COMPLY WITH THE BID BOND REQUIREMENT, AS SET FORTH IN THE INVITATION FOR BIDS, AS OBVIOUS INABILITY ON THE PART OF YOUR FIRM TO COMPLY THEREWITH, THEREBY MAKING YOUR BID NON-RESPONSIVE. I, AS CONTRACTING OFFICER, PROPOSE TO REJECT YOUR BID ON 17 MARCH 1958.

ON FRIDAY, MARCH 21, THE PUSEY AND JONES CORPORATION WAS ADVISED BY TELETYPE THAT ITS BID WAS CONSIDERED NON-RESPONSIVE BECAUSE OF ITS FAILURE TO FURNISH THE BID BOND REQUIRED BY THE INVITATION. THE PHILADELPHIA DISTRICT THEN REQUESTED AUTHORITY FROM THE NORTH ATLANTIC DIVISION ENGINEER TO MAKE THE AWARD TO AVONDALE MARINE WAYS, INC. MR. WILLIAM A. CONSODINE, REPRESENTING THE PUSEY AND JONES CORPORATION, MADE AN ORAL PROTEST TO OUR OFFICE ON MARCH 24, AGAINST THE REJECTION OF THE CORPORATION'S BID AND ON THAT DATE THE OFFICE OF THE CHIEF OF ENGINEERS WAS INFORMED OF SUCH PROTEST. THE PHILADELPHIA DISTRICT WAS INSTRUCTED BY THE OFFICE OF THE CHIEF OF ENGINEERS NOT TO MAKE THE AWARD UNTIL APRIL 1, GIVING THE PUSEY AND JONES CORPORATION ADDITIONAL TIME IN WHICH TO FURNISH THE REQUIRED BID BOND. THE CONTRACTING OFFICER DETERMINED THAT REJECTION OF ALL BIDS WOULD NOT BE IN THE BEST INTERESTS OF THE UNITED STATES AND THAT THE BID OF AVONDALE MARINE WAYS, INC., WAS REASONABLE. AS OF APRIL 1, NO BID BOND HAD BEEN FURNISHED BY THE PUSEY AND JONES CORPORATION, AND, ACCORDINGLY, THE CONTRACT WAS AWARDED ON THAT DATE TO AVONDALE MARINE WAYS, INC., THE SECOND LOWEST BIDDER.

ALTHOUGH YOUR TELEGRAM OF MARCH 24, 1958, TO OUR OFFICE, IN CONFIRMATION OF THE ORAL PROTEST MADE BY MR. CONSODINE, STATES THAT: " PERFORMANCE BOND, DELAYED BY THREE-DAY SNOW BLIZZARD, WILL BE FILED THIS WEEK," THE DEPARTMENT OF THE ARMY HAS REPORTED THAT NO BONDS OF ANY KIND WERE FURNISHED BY THE PUSEY AND JONES CORPORATION PRIOR TO OR SINCE THE AWARD TO AVONDALE MARINE WAYS, INC.

YOU REQUESTED IN THE TELEGRAM TO OUR OFFICE THAT ALL BIDS BE REJECTED "IN INTEREST OF GOVERNMENT ECONOMY AND AVOIDANCE OF RED TAPE THAT COSTS TAXPAYERS MONEY.' WE DO NOT BELIEVE, HOWEVER, THAT A REQUIREMENT OF A BID BOND IS A TRIVIAL MATTER OR THAT A READVERTISEMENT FOR BIDS SHOULD BE REQUIRED SOLELY BY REASON OF A CONSIDERABLE DIFFERENCE BETWEEN THE BID PRICES OF THE LOWEST AND SECOND LOWEST BIDDER, WHERE THE LOWEST BIDDER HAS FAILED TO FURNISH A BID BOND. THE REQUIREMENT OF A BID BOND IS ONE OF THE MEANS WHICH A CONTRACTING AGENCY OF THE GOVERNMENT HAS OF DETERMINING BIDDERS' RESPONSIBILITY AND BIDDERS WHO HAVE COMPLIED WITH SUCH A REQUIREMENT, AND SUBMITTED OTHERWISE ACCEPTABLE BIDS, SHOULD NOT ORDINARILY BE PLACED IN THE POSITION OF HAVING TO REBID AFTER THE CONTENTS OF THEIR ORIGINAL PROPOSALS HAVE BEEN PUBLICLY DISCLOSED. IN ANY EVENT, THE QUESTION AS TO WHETHER IT WOULD HAVE BEEN IN THE BEST INTERESTS OF THE UNITED STATES TO READVERTISE FOR BIDS IN THE PRESENT CASE WAS PROPERLY A MATTER FOR DECISION BY THE DEPARTMENT OF THE ARMY AND NOT BY OUR OFFICE. IT IS PROVIDED IN SECTION 2305 (B) OF TITLE 10, U.S.C. ARMED FORCES, THAT "ALL BIDS MAY BE REJECTED IF THE HEAD OF THE AGENCY DETERMINES THAT REJECTION IS IN THE PUBLIC TEREST.'

IT WOULD APPEAR THAT EVERY REASONABLE ACTION WAS TAKEN BY THE DEPARTMENT OF THE ARMY IN AN EFFORT TO ENABLE FAVORABLE CONSIDERATION OF THE BID OF YOUR COMPANY. THE CONTRACTING OFFICER'S REQUEST THAT THE BID BOND BE FURNISHED AFTER OPENING OF BIDS, TOGETHER WITH AN EXPLANATION AS TO WHY THE BOND HAD NOT BEEN SUBMITTED WITH THE BID, WAS CONSISTENT WITH A DECISION RENDERED BY OUR OFFICE, 31 COMP. GEN. 20. IT WAS HELD IN THAT DECISION THAT THE CORRECTION OF A DEFICIENCY IN FAILING TO FURNISH A BID BOND SHOULD BE PERMITTED ONLY AFTER AN INVESTIGATION WHICH ESTABLISHES CLEARLY THAT THE DEFICIENCY WAS DUE SOLELY TO OVERSIGHT OR TO SOME OTHER EXCUSABLE CAUSE AND NOT DUE TO THE BIDDER'S INABILITY TO OBTAIN A BID BOND BECAUSE OF ITS FINANCIAL STATUS OR OTHER SIMILAR REASON.

IN A MORE RECENT DECISION, 36 COMP. GEN. 599, THERE WAS CONSIDERED THE CASE OF A BIDDER WHO HAD FAILED TO FURNISH A BID BOND BUT FURNISHED AFTER THE BID OPENING FULLY EXECUTED PERFORMANCE AND PAYMENT BONDS. WE FOUND NO LEGAL OBJECTION TO AN AWARD OF A CONTRACT TO THAT BIDDER, INASMUCH AS THE INSTRUCTIONS TO BIDDERS WERE TO THE EFFECT THAT THE CONTRACTING OFFICER "MAY" ACCEPT A BID, NOTWITHSTANDING THE ABSENCE OF A BID BOND, AND THAT THE GOVERNMENT COULD WAIVE ANY INFORMALITY IN BIDS WHEN SUCH WAIVER IS IN THE GOVERNMENT'S INTEREST.

ALTHOUGH IDENTICAL PROVISIONS ARE CONTAINED IN THE INSTRUCTIONS APPLICABLE TO INVITATION CIVENG-36-109-58-60, THE FACTS OF THE PRESENT CASE ARE ESSENTIALLY DIFFERENT FROM THOSE CONSIDERED IN 36 COMP. GEN. 599. SEVERAL REQUESTS WERE MADE BY THE CORPS OF ENGINEERS FOR COMPLIANCE WITH THE BID BOND REQUIREMENT OF THE INVITATION BUT NO BOND OF ANY KIND APPEARS TO HAVE BEEN FURNISHED BY YOUR COMPANY DURING A 27 DAY PERIOD FOLLOWING THE OPENING OF BIDS.

ON THE RECORD PRESENTLY BEFORE US THERE APPEARS TO BE NO LEGAL BASIS UPON WHICH WE WOULD BE WARRANTED IN TAKING EXCEPTION TO THE REJECTION OF THE BID OF YOUR COMPANY AND THE AWARD OF A CONTRACT TO THE SECOND LOWEST BIDDER UNDER INVITATION NO. CIVENG-36-109-58-60.