B-151644, JUL. 19, 1963

B-151644, JUL. 19, 1963

TO JOS. DYSON AND SONS, INC.:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM DATED MAY 24, 1963, AND LETTER DATED MAY 27, 1963, PROTESTING THE REJECTION OF YOUR BID ON ONE OF THE TWO SCHEDULES OF INVITATION FOR BIDS NO. DS-5919 ISSUED ON MARCH 18, 1963, BY THE DENVER, COLORADO, OFFICE OF THE BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR. THE INVITATION REQUESTED BIDS ON ONE LOT OF ANCHOR BOLTS (SCHEDULE NO. 1), AND ONE LOT OF EMBEDDED METALWORK (SCHEDULE NO. 2), FOR USE AT THE NORTON DAM ON THE ALMENA UNIT, KANSAS, MISSOURI RIVER BASIN PROJECT; AND A CONTRACT COVERING BOTH SCHEDULES WAS AWARDED TO THE ROCKWELL ENGINEERING COMPANY, BLUE ISLAND, ILLINOIS, ON MAY 17, 1963.

YOUR COMPANY BID ONLY ON SCHEDULE NO. 1 OF THE INVITATION FOR WHICH A PRICE OF $6,534.45 WAS QUOTED. THE BID WAS ACCOMPANIED BY A BID BOND IN THE AMOUNT OF $1,299 OR $7.89 LESS THAN THE REQUIRED BID GUARANTEE OF $1,306.89, REPRESENTING 20 PERCENT OF YOUR BID PRICE FOR SCHEDULE NO. 1. THE CONTRACTING OFFICER DETERMINED THAT THE DEFICIENCY IN BID GUARANTEE COULD NOT BE WAIVED UNDER THE PROVISIONS OF SUBSECTION 1 10.102-5 OF THE FEDERAL PROCUREMENT REGULATIONS WHICH REQUIRES A STRICT ENFORCEMENT OF THE BID GUARANTEE PROVISIONS OF AN ADVERTISEMENT FOR BIDS EXCEPT IN THE FOLLOWING SITUATIONS: (A) WHERE ONLY A SINGLE BID IS RECEIVED; (B) WHERE THE AMOUNT OF THE BID GUARANTEE SUBMITTED, THOUGH LESS THAN THE AMOUNT REQUIRED BY THE INVITATION FOR BIDS, IS EQUAL TO OR GREATER THAN THE DIFFERENCE BETWEEN THE PRICE STATED IN THE BID AND THE PRICE STATED IN THE NEXT HIGHER ACCEPTABLE BID; (C) WHERE THE BID GUARANTEE IS RECEIVED LATE AND THE LATE RECEIPT MAY BE WAIVED UNDER THE RULES ESTABLISHED FOR THE CONSIDERATION OF LATE BIDS; AND (D) WHERE AN OTHERWISE ADEQUATE BID GUARANTEE BECOMES INADEQUATE AS THE RESULT OF THE CORRECTION OF A MISTAKE IN BID, IF THE BIDDER WILL INCREASE THE AMOUNT OF THE BID GUARANTEE IN PROPORTION TO THE AUTHORIZED BID CORRECTION.

YOU CONTEND THAT IT WOULD HAVE BEEN IN THE BEST INTEREST OF THE GOVERNMENT TO WAIVE THE RELATIVELY SLIGHT DEFICIENCY IN THE AMOUNT OF YOUR BID BOND SINCE THERE WAS A CONSIDERABLE DIFFERENCE ($2,460.55) BETWEEN THE TWO LOWEST BID PRICES ON SCHEDULE NO. 1 OF THE INVITATION. HOWEVER, BEGINNING WITH A DECISION RENDERED ON FEBRUARY 5, 1959, 38 COMP. GEN. 532, THE DECISIONS OF OUR OFFICE CONCERNING REQUIRED BID GUARANTEES ARE TO THE EFFECT THAT A BID GUARANTEE REQUIREMENT IS AN INVITATION FOR BIDS IS A MATERIAL PART OF THE INVITATION; AND THAT A CONTRACTING OFFICER THEREFORE CANNOT, AS A GENERAL RULE, WAIVE A FAILURE TO COMPLY WITH THE REQUIREMENT BUT MUST REJECT AS NONRESPONSIVE A BID NOT ACCOMPANIED BY A BID GUARANTEE OR ONE WHICH IS ACCOMPANIED BY AN INSUFFICIENT BID GUARANTEE. IT REMAINS OUR OPINION THAT THE BID GUARANTEE PROVISIONS OF AN INVITATION FOR BIDS SHOULD BE STRICTLY ENFORCED UNLESS IT CLEARLY APPEARS THAT A WAIVER OF THE PROVISIONS IN FAVOR OF ONE BIDDER WILL NOT BE PREJUDICIAL TO THE RIGHTS OF OTHER BIDDERS WHO HAVE SUBMITTED FULLY RESPONSIVE BIDS.

WE CONSIDER THE CURRENT PROVISIONS OF THE FEDERAL PROCUREMENT REGULATIONS TO BE REASONABLE IN THAT RESPECT AND THAT THE CONTRACTING OFFICER HAD NO ALTERNATIVE BUT TO REJECT YOUR BID AS NONRESPONSIVE SINCE THE CIRCUMSTANCES ATTENDING THE DEFICIENCY IN THE AMOUNT OF YOUR BID BOND DO NOT COME WITHIN ANY OF THE STATED PERMISSIBLE EXCEPTIONS TO THE RULE INVOLVED.

ALTHOUGH YOUR BID PRICE ON SCHEDULE NO. 1 WAS CONSIDERABLY LOWER THAN THAT OF THE SUCCESSFUL BIDDER, OUR OFFICE HAS CONSISTENTLY ADHERED TO THE RULE THAT IT IS MORE IN THE PUBLIC INTEREST TO MAINTAIN THE ESTABLISHED RULES OF FORMAL COMPETITIVE PROCUREMENT THAN FOR THE GOVERNMENT TO OBTAIN A PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY A VIOLATION OF THE RULES. SEE UNITED STATES V. BROOKRIDGE FARM, 111 F.2D 461, 463; AND CITY OF CHICAGO V. MOHR, 74 N.E. 1056.

YOU HAVE INDICATED THAT THE MISTAKE IN COMPUTING THE AMOUNT OF YOUR BID BOND WAS DUE IN PART TO THE FACT THAT YOU WERE REQUIRED TO INCLUDE IN YOUR BID PRICE AN AMOUNT TO COVER THE COST OF A PERFORMANCE BOND PREMIUM, AND THE QUESTION HAS BEEN RAISED AS TO WHAT A PERFORMANCE BOND WOULD BE REQUIRED IN THE CASE OF AN AWARD OF A SUPPLY CONTRACT.

PERFORMANCE BONDS ARE REQUIRED BY LAW TO BE FURNISHED TO THE UNITED STATES IN CONNECTION WITH THE AWARD OF ANY CONTRACT, EXCEEDING $2,000 IN AMOUNT, FOR THE CONSTRUCTION, ALTERATION AND REPAIR OF ANY PUBLIC BUILDING OR PUBLIC WORK OF THE UNITED STATES. 40 U.S.C. 270A. PERFORMANCE BONDS GENERALLY ARE NOT REQUIRED BY STATUTE TO BE FURNISHED TO THE GOVERNMENT IS CONNECTION WITH AWARDS OF SUPPLY OR SERVICE CONTRACTS. HOWEVER, A SUPPLY OR SERVICE CONTRACTOR MAY BE REQUIRED TO FURNISH A PERFORMANCE BOND WHEN IT IS ADMINISTRATIVELY DETERMINED THAT THE FURNISHING OF SUCH A BOND IS REASONABLY NECESSARY TO PROTECT THE INTERESTS OF THE GOVERNMENT. THUS, IN SUBSECTION 5 10.5003-3 OF THE FEDERAL PROCUREMENT REGULATIONS, IT IS PROVIDED THAT PERFORMANCE BONDS MAY BE REQUIRED IN INDIVIDUAL PROCUREMENTS WHEN THE CONTRACTING OFFICER DETERMINES THE NEED THEREFOR.

IT IS THE POLICY OF THE BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR, TO REQUIRE PERFORMANCE ON MAJOR SUPPLY PROCUREMENTS EXCEPT WHERE THE SUCCESSFUL BIDDERS ARE DOMESTIC CONCERNS WHICH HAVE DEMONSTRATED THEIR ABILITY AND FINANCIAL RESPONSIBILITY UNDER PREVIOUS GOVERNMENT CONTRACTS. CONSISTENT WITH THAT POLICY AND IN ORDER TO MEET THE REQUIREMENT THAT ADVERTISED SPECIFICATIONS BE PREPARED SO THAT ALL BIDDERS WILL BE COMPETING ON A COMMON BASIS, THE SPECIAL CONDITIONS OF MAJOR SUPPLY INVITATIONS FOR BIDS ISSUED BY THE BUREAU PROVIDE, AS IN THIS CASE, THAT EACH BIDDER SHALL SPECIFY AND INCLUDE IN HIS BID PRICE AN AMOUNT TO COVER THE COST OF A PERFORMANCE BOND PREMIUM; AND THAT THE APPLICABLE BOND PREMIUM AMOUNT WILL BE DEDUCTED FROM THE CONTRACT AMOUNT IF THE CONTRACTING OFFICER DECIDES TO WAIVE THE PERFORMANCE BOND REQUIREMENT UPON MAKING THE CONTRACT AWARD TO THE SUCCESSFUL BIDDER.

IN THE CIRCUMSTANCES, IT IS OUR OPINION THAT YOUR FAILURE TO INCLUDE 20 PERCENT OF THE COST OF A PERFORMANCE BOND PREMIUM IN THE COMPUTATION OF THE AMOUNT OF YOUR BID SHOULD HAVE NO BEARING UPON A DETERMINATION OF THE QUESTION AS TO WHETHER OR NOT YOUR BID WAS PROPERLY REJECTED BECAUSE OF THE BID BOND DEFICIENCY.

ACCORDINGLY, YOUR PROTEST TO OUR OFFICE IN THE MATTER MUST BE, AND IS, DENIED.