Matter of: Fiore Construction Company File: B-256429 Date: June 23, 1994

Matter of: Fiore Construction Company File: B-256429 Date: June 23, 1994

DIGEST

Attorneys

DECISION

We deny the protest.

The IFB required each bidder to provide a bid bond in an amount equal to 20 percent of its bid price or $3 million, whichever was lesser. C-Q, the low bidder, furnished a bond in the correct amount designating Fidelity and Deposit Company of Maryland as its surety. The bond was signed by C-Q's president, as principal, and by the surety's attorney-
in-fact, Diane M. Kelly; in addition, it bore the corporate seals of both
companies. An accompanying power of attorney stated that on February 10,
1992, Fidelity, by one of its vice presidents and with the concurrence of
one of its assistant secretaries, had appointed Diane M. Kelly as an
attorney-in-fact to execute bonds on its behalf as surety.

Fiore contends that the power of attorney was defective because the
signature of the vice president who had appointed Diane M. Kelly as
attorney-in-fact was a facsimile (i.e., mechanically reproduced)
signature. In this regard, the protester argues that the power of
attorney explicitly provided that the facsimile or mechanically
reproduced signature of any assistant secretary of the company, wherever
appearing upon a certified copy of any power of attorney issued by the
company, would be valid and binding upon the company with the same force
and effect as though manually affixed, but that it did not recognize the
validity of a facsimile signature of a vice president. The protester
also alleges that Fidelity filled in Diane M. Kelly's name, her
appointment date, and the date on which her appointment was certified as
continuing to be in full force and effect after the cognizant company
officials had signed the power of attorney, thereby casting doubt upon
the enforceability of the surety's commitment.

A bid bond is a form of security submitted to assure the government that
a successful bidder will not withdraw its bid within the period specified
for acceptance and, if required, will execute a written contract and
furnish performance and payment bonds. See Federal Acquisition
Regulation (FAR) Sec. 28.001. The purpose of a bid bond is to secure the
liability to the government for excess reprocurement costs in the event
the successful bidder defaults by failing to execute the necessary
contractual documents or to furnish the required payment and performance
bonds. See FAR Sec. 52.228-1(c); Desert Dry Waterproofing Contractors,
B-219996, Sept. 4, 1985, 85-2 CPD Para. 268. A bid bond, even if in the
proper amount, is defective and renders the bid nonresponsive if it is
not clear that it will bind the surety. Baldi Bros. Constructors,
B-224843, Oct. 9, 1986, 86-2 CPD Para. 418. Determining whether the
surety is clearly bound is essential because under the law of suretyship,
no one incurs a liability to pay the debts or to perform the duties of
another unless that person expressly agrees to be bound. Anderson
Constr. Co.; Rapp Constructors, Inc., 63 Comp.Gen. 248 (1984), 84-1 CPD
Para. 279.

Here, we think that Fidelity's power of attorney unequivocally
established that Diane M. Kelly was authorized to bind the surety, and
that C-Q's bid was therefore responsive. At the bottom of the copy of
the power of attorney furnished with C-Q's bid bond, an assistant
secretary of Fidelity had certified that the original power of attorney
appointing Diane M. Kelly was in full force and effect on the date of bid
opening.[1] This certification was sufficient to establish that the
power of attorney was current and valid. Ray Ward Constr. Co., supra.

Furthermore, although the power of attorney did not expressly state that
the facsimile signature of a vice president would bind the company,
Fidelity had previously submitted to the U.S. Army Bonds Team a copy of a
resolution adopted by its Board of Directors on May 10, 1990, which
provided that the facsimile or mechanically reproduced signature of any
vice president, secretary, or assistant secretary of the company,
wherever appearing upon a certified copy of any power of attorney issued
by the company, would be valid and binding upon the company with the same
force and effect as though manually affixed.[2] Where a surety has
authorized the execution of documents by facsimile signature and has
furnished evidence of such authorization to the agency, there can be no
doubt as to the enforceability of the surety's obligation. See FAR Sec.
14.405(c)(2), which authorizes mechanically reproduced signatures on bids
where the firm has formally adopted or authorized, before the date set
for opening of bids, the execution of documents by typewritten, printed,
or stamped signature and submits evidence of such authorization.

With regard to the protester's second argument, we do not think that the
evidence that it submitted supports its contention that Fiore photocopied
a signed power of attorney and then filled in the names of the
individuals being appointed as attorneys-in-fact, their appointment date,
and the date of certification. Fiore bases this allegation on a
comparison of two different powers of attorney issued by Fidelity: one,
executed on February 10, 1992, appointing Diane M. Kelly and seven other
individuals from Boston, Massachusetts as attorneys-in-fact, and the
other, executed on January 20, 1992, appointing three individuals from
Seattle, Washington. The protester claims that the signatures on these
two documents "line up exactly," demonstrating that both forms were
photocopied from the same original and that the other information was
added later.

We have compared the two powers of attorney furnished by the protester
and disagree with its contention that the signatures "line up exactly."
The signatures are identical--as one would expect, given that they are
mechanically reproduced signatures--but their placement on the form is
not precisely the same. Thus, we find no evidence that the names of the
attorneys-in-fact were added after the power of attorney had been signed.

The protest is denied.

1. Although the signature of the assistant secretary who made the certification was also a facsimile signature, its validity is not in dispute, since, as previously noted, the certification expressly recognized the validity of facsimile signatures of the company's assistant secretaries. The authenticity of the document is confirmed by the fact that an original corporate seal was affixed to it. See Ray Ward Constr. Co., B-256374, June 14, 1994, 94-1 CPD Para. .

2. Fidelity had furnished a copy of the resolution to the Contract Appeals Division of the U.S. Army Bonds Team after receiving a letter from that office instructing that if it intended to use facsimile seals and signatures and its powers of attorney did not expressly state these were acceptable, it must furnish documentary evidence authorizing facsimile seals and signatures from its Board of Directors.