Link: GAO Decision
Protestor: Bob Cummins Construction Company
Agency: U.S. Army Corps of Engineers
Disposition: Protest Denied.
Protester’s proposal was properly rejected where agency reasonably determined that the bid guarantee was defective because the surety may not be liable in the event that the protester failed to furnish a required payment bond after contract award.
General Counsel PC Highlight:
Bob Cummins Construction Company protested the rejection of its proposal for the construction of a new resident engineer office at East Branch Lake in Elk County, Pennsylvania. Offerors were required to submit a bid guarantee with their proposals for 20 percent of their proposed price, or $3 million, whichever was less. The RFP included standard FAR clause 52.228-1, Bid Guarantee, and warned offerors that failure to furnish the required bid guarantee on the proper form would result in the rejection of the offer. The agency determined that Cummins’ commercial bid bond was defective, because it did not provide that the surety was liable if Cummins failed to furnish the required payment bond.
The GAO agreed with the agency that the liability of Cummins’ surety was uncertain, such that the bid guarantee was defective. It rejected Cummins’ argument that the agency should have addressed any ambiguity by holding “negotiations” (i.e. discussions) because the acquisition was conducted as a negotiated procurement; the RFP explicitly stated that the agency would make award without conducting discussions.
When submitting a proposal in a procurement in which offerors must provide a bid guarantee, offerors must ensure that their bid guarantee corresponds with the rights and obligations of the parties as set forth in FAR standard form 24. The sufficiency of a bond does not depend on its form, but on whether it clearly establishes the liability of the surety. If an offeror elects to provide a commercial bid guarantee, rather than a guarantee on the standard government form, that offeror risks having its guarantee rejected as defective if it does not clearly indicate liability.