Link: GAO Opinion
Agency: Department of Veterans Affairs
Disposition: Protest sustained.
Keywords: Bid Bond; IFB
General Counsel P.C. Highlight: The sufficiency of a bid bond depends on whether the surety is clearly bound by its terms. A bid bond that names a principal different from the bidder is deficient, and the bid must be rejected, unless it can be established that the different names identify the same entity.
Hostetter, Keach & Cassada Construction, LLC (Hostetter) protests the rejection of its bid as nonresponsive under an invitation for bids (IFB) issued by the Department of Veterans Affairs (VA) for a construction project.
The IFB was issued as a service-disabled, veteran-owned small business concerns set-aside and required bids to include a bid guarantee in the amount of 20% of the bid or $3 million, whichever was the lesser amount. The IFB included FAR clause 52.228-1, informing bidders that the failure to furnish a bid guarantee in the proper form and amount may result in the rejection of the bid.
Hostetter submitted the apparent low bid, identifying itself as “Hostetter, Keach & Cassada, LLC” followed by its address and a Data Universal Numbering System (DUNS) number. The bid was signed by the vice president. Hostetter also provided a copy of its Online Representations & Certifications Application (ORCA), which indicated that Hostetter, Keach & Cassada Construction, LLC” was a partnership. Hostetter included a copy of its North Carolina articles of incorporation as a LLC for “Hostetter, Keach & Cassada Construction, LLC.” The bid bond submitted by Hostetter identified the principal to be “Hostetter, Keach & Cassada Construction, LLC,” located at the same address and signed by the same individual, but identified itself as a corporation.
In reviewing Hostetter’s bid, the contracting officer noted a discrepancy in the names of the bidder and bid bond principal, and noted that Hostetter identified itself as a partnership in ORCA, but as a corporation on the bid bond. The contracting officer rejected Hostetter’s bid.
GAO states that the sufficiency of a bid guarantee depends on whether the surety is clearly bound by its terms; when the liability of the surety is not clear, the bond is defective. No one incurs a liability to pay the debts or perform the duties of another unless that person has expressly agreed to do so. Thus, generally, a bid bond which names a principal different from the bidder is deficient, and the bid must be rejected unless it can be established that the different names identify the same entity. On the other hand, where the entity that submitted the bid and that is identified as the bid bond principal are exactly the same, any discrepancy between the bidder’s and bid bond principal’s names is merely a matter of form that does not require rejection of the bid. The question is whether the nominal bidder and bid bond principal are the same entity.
GAO states that Hostetter’s bid itself establishes that the bidder and the bid bond principal are the same entity. Although the bid identifies the bidder as “Hostetter, Keach & Cassada, LLC,” the bid also includes a DUNS number, ORCA representations and certifications, and certified articles for incorporation that identify the bidder to be “Hostetter, Keach & Cassada Construction, LLC.” Also, the address identified for the bidder and bid bond principal is the same, and the bid and bid bond are signed by the same individual, who identified himself as vice-president. The protest is sustained.