B-144530, DEC. 22, 1960

B-144530, DEC. 22, 1960

TO HONORABLE L. H. HEWITT, COMMISSIONER, INTERNATIONAL BOUNDARY AND WATER COMMISSION, UNITED STATES AND MEXICO:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 25, 1960, WITH ENCLOSURES, REPORTING THAT RECENTLY YOUR OFFICE ISSUED AN INVITATION FOR BIDS FOR THE PERFORMANCE OF CERTAIN SERVICES, THERE BEING INCLUDED THEREIN SPECIAL INSTRUCTIONS THE LAST PARAGRAPH OF WHICH PROVIDES FOR THE SUBMISSION, UPON REQUEST, OF CERTAIN INFORMATION FOR THE PURPOSE OF DETERMINING THE RESPONSIBILITY OF THE BIDDER. YOU STATE THAT THE LOW BIDDER HAS BEEN REQUESTED TO SUBMIT THE DESIRED INFORMATION BUT HAS MADE NO RESPONSE THERETO; THAT A SECOND REQUEST IS BEING MADE FOR THE INFORMATION AND THAT IF NO REPLY IS RECEIVED YOU FEEL THAT YOUR OFFICE WOULD BE JUSTIFIED IN AWARDING THE CONTRACT TO THE NEXT LOW RESPONSIBLE BIDDER. YOU THEN INQUIRE AS TO WHETHER THE BIDDER, BY HIS FAILURE TO FURNISH THE REQUIRED INFORMATION WILL MAKE HIMSELF AND HIS SURETY LIABLE UNDER THE BID BOND, SHOULD AN AWARD BE MADE TO THE NEXT LOW RESPONSIBLE BIDDER.

INFORMATION RECEIVED INFORMALLY FROM THE DEPARTMENT OF STATE IS TO THE EFFECT THAT DURING A TELEPHONE CONVERSATION WITH YOUR OFFICE ON DECEMBER 7, 1960, IT WAS LEARNED THAT THERE HAD BEEN RECEIVED THE INFORMATION REGARDING EXPERIENCE AND FINANCIAL RESPONSIBILITY WHICH YOU HAD REQUESTED OF THE LOW BIDDER; THAT THE LOW BIDDER APPEARED TO BE A RESPONSIBLE BIDDER AND THAT AN AWARD OF THE CONTRACT WOULD BE MADE ACCORDINGLY. IT WAS REPORTED, HOWEVER, THAT NOTWITHSTANDING THE FOREGOING FACTS, YOUR OFFICE STILL DESIRES A FULL REPLY TO THE MATTERS SET FORTH IN YOUR LETTER OF NOVEMBER 25, 1960, SINCE IT WOULD BE HELPFUL IN FUTURE CASES.

RESPONDING TO THE SPECIFIC INQUIRY IN YOUR LETTER, IT APPEARS THAT IN THE ABSENCE OF AN AWARD OF A CONTRACT TO HIM THE LOW BIDDER IN THIS CASE IS WITHOUT LEGAL LIABILITY. IT IS CLEAR FROM THE LANGUAGE OF THE BID BOND THAT IT WAS THE INTENTION OF THE SURETY TO OBLIGATE ITSELF TO THE EXTENT OF TEN PERCENT OF THE BID IN THE EVENT THE BIDDER FAILED TO ENTER INTO A CONTRACT AND FURNISH THE REQUIRED PERFORMANCE BOND. HOWEVER, THE OBLIGATION TO THE SURETY WAS TO ARISE ONLY AFTER AN AWARD OF A CONTRACT, IT BEING NOTED THAT SUCH LIABILITY WAS TO ARISE IF THE BIDDER FAILED TO EXECUTE SUCH FURTHER CONTRACTUAL DOCUMENTS, IF ANY, AS MAY BE REQUIRED BY THE TERMS OF THE BID AS ACCEPTED, AND TO FURNISH A PERFORMANCE BOND.

RESPECTING THE AWARD OF A CONTRACT TO THE NEXT LOW BIDDER UNDER THE CIRCUMSTANCES SET FORTH IN YOUR LETTER, IT MAY BE SAID THAT YOUR LETTER AND THE ENCLOSURES FAIL TO GIVE CERTAIN INFORMATION WHICH SHOULD BE CONSIDERED IN DECIDING THE COURSE OF ACTION TO BE TAKEN. FOR EXAMPLE, WE ARE NOT INFORMED AS TO THE AMOUNT OF THE BID BOND SUBMITTED BY THE LOW BIDDER--- IT PURPORTS ONLY TO INDEMNIFY THE GOVERNMENT TO THE EXTENT OF TEN PERCENT OF THE BID--- AND NEITHER ARE WE ADVISED AS TO THE DIFFERENCE BETWEEN THE TWO LOW BIDS. IF THE DIFFERENCE BETWEEN THE TWO LOW BIDS WAS SUFFICIENT TO JUSTIFY SUCH ACTION, WE WOULD, IN A PROPER CASE, SUGGEST THAT CONSIDERATION BE GIVEN TO AWARDING THE CONTRACT TO THE LOW BIDDER NOTWITHSTANDING HIS FAILURE TO FURNISH INFORMATION AS TO HIS EXPERIENCE AND FINANCIAL RESPONSIBILITY. IN THIS CONNECTION, IT HAS BEEN NOTED THAT THE REQUIREMENT IN THE SPECIAL INSTRUCTIONS TO BIDDERS REGARDING THE FURNISHING OF SUCH INFORMATION IS OPTIONAL WITH THE GOVERNMENT. REALIZE THAT OTHER MATTERS SUCH AS THE URGENCY SHOULD BE MADE TO THE LOW BIDDER AND THEREAFTER HE FAILED TO EXECUTE A CONTRACT AND FURNISH A PERFORMANCE BOND, HIS SURETY WOULD BE LIABLE ON THE BID BOND.

THERE REMAINS FOR CONSIDERATION THE VIEW EXPRESSED IN YOUR LETTER TO THE EFFECT THAT IN THE EVENT THE LOW BIDDER FAILED TO FURNISH INFORMATION RESPECTING EXPERIENCE AND FINANCIAL RESPONSIBILITY YOUR OFFICE WOULD BE JUSTIFIED IN AWARDING A CONTRACT TO THE NEXT LOW RESPONSIBLE BIDDER. ASSUMING THAT YOUR COMMISSION IS SUBJECT TO THE REQUIREMENTS OF THE FEDERAL PROCUREMENT REGULATIONS, YOUR ATTENTION IS INVITED TO PARAGRAPH 1- 1.310-8 THEREOF ENTITLED "CAPACITY AND CREDIT OF SMALL BUSINESS CONCERNS," AS FOLLOWS:

"IN THE CASE OF A PROSPECTIVE CONTRACTOR WHICH IS A SMALL BUSINESS CONCERN, IF THE CONTRACTING OFFICER IS NOT SATISFIED THAT THE PROSPECTIVE CONTRACTOR MEETS THE STANDARDS IN SECTION 1-1.310-5 ONLY BECAUSE OF THE LACK OF ADEQUATE CAPACITY OR CREDIT, HE SHALL, BEFORE MAKING A RESPONSIBILITY DETERMINATION, COMPLY WITH THE REQUIREMENTS CONCERNING CERTIFICATES OF COMPETENCY ISSUED BY THE SMALL BUSINESS ADMINISTRATION (SEE SUBPART 1-1.7).'

ASSUMING FURTHER THAT THE LOW BIDDER IN THIS CASE IS A "SMALL BUSINESS CONCERN," THERE WOULD APPEAR TO BE FOR CONSIDERATION THE REQUIREMENTS SET FORTH IN THE QUOTED PARAGRAPH CONCERNING THE NECESSITY FOR A CERTIFICATE OF COMPETENCY ISSUED BY THE SMALL BUSINESS ADMINISTRATION. WE ARE ENCLOSING FOR YOUR INFORMATION A COPY OF OUR DECISION DATED AUGUST 22, 1960, B-142905, TO THE SECRETARY OF THE ARMY, REGARDING THE REQUIREMENT THAT CERTIFICATE OF COMPETENCY BE OBTAINED FROM SBA. IT WILL BE NOTED THAT UNDER THE PROVISIONS OF LAW CITED ON PAGE FIVE OF THE DECISION, THE ISSUANCE OF A CERTIFICATE OF COMPETENCY BY THE SMALL BUSINESS ADMINISTRATION IS CONCLUSIVE UPON GOVERNMENT PROCUREMENT OFFICERS WITH RESPECT TO THE COMPETENCY, AS TO CAPACITY AND CREDIT, OF ANY SMALL BUSINESS CONCERN TO PERFORM A GOVERNMENT CONTRACT.