B-168525, DEC. 12, 1969

B-168525, DEC. 12, 1969

BONDS--BID--SUFFICIENCY UNDER INVITATION REQUIRING BID GUARANTEE OF 20 PERCENT OF BID PRICE, LOW BIDDER WHO SUBMITTED WITH $37,250 BID BOND OF $3,000 WAS NOT RESPONSIVE BIDDER SINCE SEC. 1-2.404-2 (F) OF FEDERAL PROCUREMENT REGULATIONS (FPR) PROVIDES THAT WHERE BIDDER FAILS TO FURNISH BID GUARANTEE IN ACCORDANCE WITH REQUIREMENT OF INVITATION BID MUST BE REJECTED AND, WHILE FPR SEC. 1- 10.103-4 PROVIDES FOUR EXCEPTIONS TO RULE REQUIRING REJECTION, IMMEDIATE SITUATION DOES NOT COME WITHIN ENUMERATED EXCEPTIONS AND LOW BID MUST BE REJECTED AS NONRESPONSIVE. SEE 39 COMP. GEN. 532 (1959) AND 827 (1960).

TO MR. KUNZIG:

REFERENCE IS MADE TO A LETTER OF DECEMBER 2, 1969, SIGNED BY YOUR GENERAL COUNSEL, CONCERNING THE BID SUBMITTED BY STORM CONSTRUCTION CORPORATION OF ELM GROVE, WISCONSIN, IN CONNECTION WITH AIR CONDITIONING AND MISCELLANEOUS IMPROVEMENTS AT THE UNITED STATES POST OFFICE, WEST ALLIS BRANCH, MILWAUKEE, WISCONSIN, UNDER PROJECT NO. W.O. 60175, CONTRACT NO. GS-05BC-8346. AT ISSUE IS THE ADEQUACY OF STORM'S BID BOND.

BIDS WERE OPENED AS SCHEDULED ON NOVEMBER 13, 1969. STORM SUBMITTED THE LOWEST BID AT $37,250. THE NEXT LOW BID, BY DEPENDABLE HEATING AND SHEET METAL, INCORPORATED, WAS $40,963, OR $3,713 HIGHER. THE INVITATION (STANDARD FORM 20) CONTAINS THE FOLLOWING REQUIREMENT: "BID GUARANTEE IS REQUIRED WITH ANY BID IN EXCESS OF $2,000. BID GUARANTEE IN THE AMOUNT OF 20 PERCENT OF THE AMOUNT OF THE BID, INCLUDING ALL ADD ALTERNATES (IF ANY), OR $3,000,000, WHICHEVER IS LESS.'

SECTION 2-7A OF THE SPECIAL CONDITIONS OF THE SPECIFICATIONS REQUIRES A BID GUARANTEE AS PROVIDED IN THE INVITATION. ADDITIONALLY CLAUSE 4 OF THE INSTRUCTIONS TO BIDDERS, STANDARD FORM 22 (JUNE 1964 ED.) PROVIDES, IN PART, AS FOLLOWS:

"BID GUARANTEE. WHEN A BID GUARANTEE IS REQUIRED BY THE INVITATION FOR BIDS, FAILURE TO FURNISH A BID GUARANTEE IN THE PROPER FORM AND AMOUNT, BY THE TIME SET FOR OPENING OF BIDS, MAY BE CAUSE FOR REJECTION OF THE BID.'

STORM SUBMITTED WITH ITS BID A BID BOND ON STANDARD FORM 24 IN THE AMOUNT OF $3,000. UNDER THE REQUIREMENTS OF THE INVITATION, THE BOND SHOULD HAVE BEEN $7,450 (20 PERCENT OF THE BID PRICE). THE QUESTION PRESENTED IS WHETHER STORM'S BID MUST BE REJECTED BECAUSE OF ITS FAILURE TO FURNISH AN ADEQUATE BID BOND.

SECTION 1-2.404-2 (F) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) PROVIDES AS FOLLOWS:

"WHERE A BID GUARANTEE IS REQUIRED AND A BIDDER FAILS TO FURNISH IT IN ACCORDANCE WITH THE REQUIREMENTS OF THE INVITATION FOR BIDS, THE BID SHALL BE REJECTED EXCEPT AS OTHERWISE PROVIDED IN 1-10.103-4.' FPR SECTION 1- 10.103-4, WHICH PERTAINS TO THE FAILURE TO SUBMIT A PROPER BID GUARANTEE, PROVIDES IN PERTINENT PART AS FOLLOWS: "WHERE AN INVITATION FOR BIDS REQUIRES THAT A BID BE SUPPORTED BY A BID GUARANTEE AND NONCOMPLIANCE OCCURS, THE BID SHALL BE REJECTED * * *.' THE SECTION GOES ON TO PROVIDE FOUR EXCEPTIONS TO THE RULE REQUIRING REJECTION; HOWEVER, THE IMMEDIATE SITUATION DOES NOT COME WITHIN ANY OF THE ENUMERATED EXCEPTIONS.

BEGINNING WITH OUR DECISION RENDERED TO THE SECRETARY OF THE ARMY ON FEBRUARY 5, 1959, 39 COMP. GEN. 532, OUR OFFICE HAS CONSISTENTLY TAKEN THE POSITION THAT A BID GUARANTEE REQUIREMENT IN AN INVITATION FOR BIDS IS MATERIAL AND THE PROCURING AGENCY CANNOT WAIVE A FAILURE TO COMPLY WITH THE REQUIREMENT BUT MUST REJECT AS NONRESPONSIVE A BID NOT ACCOMPANIED BY A BID GUARANTEE IN THE FORM AND AMOUNT REQUIRED. THE BASIS FOR THIS RULE WAS STATED IN THAT DECISION AS FOLLOWS: "* * * PERMITTING WAIVER OF A BID BOND REQUIREMENT STATED IN AN INVITATION FOR BIDS WOULD HAVE A TENDENCY TO COMPROMISE THE INTEGRITY OF THE COMPETITIVE BID SYSTEM BY (1) MAKING IT POSSIBLE FOR A BIDDER TO DECIDE AFTER OPENING WHETHER OR NOT TO TRY TO HAVE HIS BID REJECTED, (2) CAUSING UNDUE DELAY IN EFFECTING PROCUREMENTS, AND (3) CREATING, BY THE NECESSARY SUBJECTIVE DETERMINATIONS BY DIFFERENT CONTRACTING OFFICERS, INCONSISTENCIES IN THE TREATMENT OF BIDDERS. * * * THIS RESULT WOULD HARDLY BE SAID TO SERVE THE BEST INTERESTS OF THE UNITED STATES * * *.'

AS STATED IN 39 COMP. GEN. 827, 829 (1960), THE RULE ANNOUNCED IN 38 COMP. GEN. 532 (1959) WAS ADOPTED ONLY AFTER THOROUGH AND CAREFUL CONSIDERATION. FURTHERMORE, THE REGULATIONS PROMULGATED AS A RESULT OF OUR 1959 CASE, E.G. FPR SECTION 1-10.103-4 (QUOTED ABOVE), WHICH HAVE THE FORCE AND EFFECT OF LAW, REQUIRE REJECTION OF A BID AS NONRESPONSIVE FOR FAILURE TO COMPLY WITH THE INVITATION'S BID BOND REQUIREMENTS.

ACCORDINGLY, STORM'S BID MUST BE REJECTED AS NONRESPONSIVE. THE DOCUMENTS WHICH ACCOMPANIED THE ADMINISTRATIVE REPORT ARE RETURNED AS REQUESTED.