B-175355, APR 11, 1972

B-175355, APR 11, 1972

PROCUREMENT LAW - RESPONSIVENESS - IRREGULARITY IN BID BOND - SURETY'S INTENT CONCERNING THE RESPONSIVENESS OF A BID SUBMITTED BY VIPOND AND VIPOND, INC., UNDER AN IFB FOR THE CONSTRUCTION OF A ROADWAY AND PARKING FACILITIES AT ALLEGHENY NATIONAL FOREST, MCKEAN COUNTY, PA. THE SUFFICIENCY OF A BID BOND MAY BE DETERMINED BY WHETHER THE SURETY HAS OBJECTIVELY MANIFESTED ITS INTENT TO BE OBLIGATED FOR A SUM CERTAIN. THE PRESENT CASE, IT APPEARS THAT OMISSION OF THE PENAL SUM FROM THE BOND WAS A CLERICAL OVERSIGHT. VIPOND'S SURETY, THE AETNA CASUALTY AND SURETY COMPANY, HAS STATED THAT AT ALL TIMES IT HAS FULLY INTENDED TO BE BOUND UNDER THE BOND IN THE AMOUNT APPROPRIATE TO VIPOND'S BID. SINCE THE SURETY'S INTENT IS CLEAR, IT IS RECOMMENDED THAT VIPOND'S BID MAY BE PROPERLY CONSIDERED FOR AWARD.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTERS DATED MARCH 1 AND 20, 1972, WITH ENCLOSURES, FROM THE CHIEF OF PROCUREMENT MANAGEMENT, ADMINISTRATIVE SERVICES, FOREST SERVICE, REQUESTING A DECISION AS TO WHETHER THERE MAY BE CONSIDERED FOR AWARD THE BID SUBMITTED BY VIPOND AND VIPOND, INC., UNDER INVITATION FOR BIDS NO. R9-72-16, COVERING THE CONSTRUCTION OF THREE MILES OF ROADWAY AND PARKING FACILITIES AT THE SUGAR BAY RECREATION AREA, ALLEGHENY NATIONAL FOREST, MCKEAN COUNTY, PENNSYLVANIA, IN VIEW OF AN IRREGULARITY IN THE BID BOND.

VIPOND PROTESTS THE PROPOSED REJECTION OF ITS LOW BID AS NONRESPONSIVE BECAUSE NO PENAL SUM, IN AN AMOUNT OR A PERCENTAGE, HAD BEEN INSERTED IN THE BID BOND ACCOMPANYING ITS BID AS REQUIRED BY THE INVITATION.

THE NEXT LOWEST BIDDER, GAL CONSTRUCTION, INC., HAS PROTESTED TO OUR OFFICE, THROUGH ITS ATTORNEYS, AGAINST ANY ACCEPTANCE OF THE LOW BID SUBMITTED BY VIPOND ON THE GROUND THAT THE BID IS DEFECTIVE AND IN VIOLATION OF THE BID REQUIREMENTS IN THAT THE BID BOND SUBMITTED BY VIPOND WAS INCOMPLETE AND UNENFORCEABLE AS SUCH SINCE IT FAILED TO INCLUDE ANY SUM IN THE PENAL AMOUNT OF THE BOND. GAL CONSTRUCTION CONTENDS THAT TO HONOR THIS TYPE OF DEFECTIVE BID BOND WOULD BE TO PENALIZE THOSE WHO EXPEND THE TIME, EFFORT, AND MONEY TO COMPLY WITH THE BIDDING REQUIREMENTS AND TO ACTUALLY REWARD THOSE WHO DO NOT. GAL CONSTRUCTION MAINTAINS THAT IF VIPOND'S BID WAS TOO LOW, IT COULD SIMPLY REFUSE TO PERFORM AND, AT THE VERY LEAST, PUT THE GOVERNMENT TO EXPENSIVE LITIGATION TO TEST THE ENFORCEABILITY OF THE BID BOND OR TO RECOVER DAMAGES FOR VIPOND'S FAILURE TO ACCEPT THE CONTRACT AND COMPLETE IT. GAL CONSTRUCTION REQUESTS THAT THE LOW BID OF VIPOND BE REJECTED BECAUSE OF THE INCOMPLETE BID BOND AND THAT THE CONTRACT BE AWARDED TO IT.

VIPOND HAS SUBMITTED AN AFFIDAVIT DATED MARCH 8, 1972, JOINTLY EXECUTED BY THE CORPORATION AND THE AGENT FOR THE SURETY COMPANY, IN WHICH ARE STATED THE FACTS CONCERNING THE OMISSION OF THE PENAL SUM FROM THE BID BOND. THE FILE CONTAINS A LETTER DATED MARCH 8, 1972, FROM THE AETNA CASUALTY AND SURETY COMPANY, VIPOND'S SURETY, TO THE CONTRACTING OFFICER, IN WHICH THE SURETY STATES THAT AT ALL TIMES IT HAS FULLY INTENDED TO BE BOUND BY THE BOND IN QUESTION AND THAT IT DOES RECOGNIZE ITS LIABILITY UNDER SUCH BOND IN THE AMOUNT APPROPRIATE TO VIPOND'S BID. THE SURETY STATED THAT THE OMISSION OF THE PENAL SUM FROM THE BOND WAS A CLERICAL OVERSIGHT. WE BELIEVE THAT VIPOND'S PROTEST HAS MERIT AND THAT THE PROPOSED REJECTION OF ITS BID, UNDER THE CIRCUMSTANCES HERE PRESENT, WOULD BE IMPROPER.

WE ARE OF THE OPINION, WITH RESPECT TO THE REQUIREMENT FOR SUBMISSION OF A BID BOND WITH A BID, THAT THE SUFFICIENCY OF THE SUBMITTED BOND IS TO BE ASCERTAINED BY TWO CRITERIA. FIRST, THE SURETY MUST HAVE INTENDED TO BE OBLIGATED FOR A SUM CERTAIN AND, SECOND, SUCH INTENT MUST BE OBJECTIVELY MANIFESTED.

IN THE PRESENT CASE, THE LOW BIDDER OBTAINED FROM THE SURETY AND SUBMITTED WITH ITS BID A BID BOND, SIGNED AND SEALED BY THE SURETY, WHICH REFERENCED THE SPECIFIC INVITATION ON WHICH THE BID WAS SUBMITTED. IN THE CIRCUMSTANCES, WE CONCLUDE THAT THE SURETY KNEW THE EXTENT OF THE OBLIGATION IT WAS UNDERTAKING AND THAT BY ISSUING THE BOND IT MANIFESTED ITS INTENT TO BE BOUND. TO REACH A CONTRARY CONCLUSION WOULD REQUIRE US TO IGNORE THE FACT OF BOND ISSUANCE AND THE PRECEDING PRELIMINARY ACTS ON THE PARTS OF THE SURETY SUCH AS SIGNING AND SEALING THE BOND FORM AND ATTACHING THERETO A POWER OF ATTORNEY SHOWING THE AUTHORITY OF ITS ATTORNEY-IN-FACT. GIVEN THE SURETY'S PRIOR KNOWLEDGE OF THE AMOUNT REQUIRED, THESE ACTIONS MUST BE ASSIGNED A REASONABLE SIGNIFICANCE WHICH WE TAKE TO BE THAT THE SURETY INTENDED TO BE BOUND IN THE REQUIRED PENAL SUM. SEE B-174754, FEBRUARY 16, 1972, 51 COMP. GEN .

ACCORDINGLY, WE RECOMMEND THAT THE VIPOND BID BE CONSIDERED FOR AWARD.