[Federal Register Volume 69, Number 162 (Monday, August 23, 2004)]
[Proposed Rules]
[Pages 51936-51937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19234]



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Part IV





Department of Defense

General Services Administration

National Aeronautics and Space Administration





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48 CFR Part 28



Federal Acquisition Regulation; Powers of Attorney for Bid Bonds; 
Proposed Rule

  Federal Register / Vol. 69, No. 162 / Monday, August 23, 2004 / 
Proposed Rules  

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 28

FAR Case 2003-029
RIN 9000-AK01


Federal Acquisition Regulation; Powers of Attorney for Bid Bonds

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Proposed rule with request for comments.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to establish that a copy of an 
original power of attorney, including a photocopy or facsimile copy, 
when submitted in support of a bid bond, is sufficient evidence of the 
authority to bind the surety. The authenticity and enforceability of 
the power of attorney at the time of the bid opening will be treated as 
a matter of responsibility.

DATES: Interested parties should submit comments in writing on or 
before October 22, 2004, to be considered in the formulation of a final 
rule.

ADDRESSES: Submit comments identified by FAR case 2003-029 by any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency Web Site: http://www.acqnet.gov/far/ProposedRules/proposed.htm. Click on the FAR case number to submit comments.
     E-mail: [email protected]. Include FAR case 2003-
029 in the subject line of the message.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (V), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2003-
029 in all correspondence related to this case. All comments received 
will be posted without change to http://www.acqnet.gov/far/ProposedRules/proposed.htm, including any personal information 
provided.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755 
for information pertaining to status or publication schedules. For 
clarification of content, contact Ms. Cecelia Davis, Procurement 
Analyst, at (202) 219-0202. Please cite FAR case 2003-029.

SUPPLEMENTARY INFORMATION:

A. Background

    This FAR rule proposes to revise the policy relating to acceptance 
of copies of powers of attorneys accompanying bid bonds. There has been 
a significant level of controversy surrounding contracting officers' 
decisions regarding the evaluation of bid bonds and accompanying powers 
of attorney.
    Since 1999, a series of GAO decisions has rejected telefaxed as 
well as photocopied powers of attorney. Then in All Seasons 
Construction, Inc., B-291166.2, Dec. 6, 2002, GAO sustained the 
Government's decision to reject a low bidder's power of attorney 
because the signatures were generated by computer as part of the 
document. This decision has been interpreted by industry and procuring 
agencies to require a contracting officer to inspect the power of 
attorney at bid opening to ascertain that the signatures are original. 
The requirement for an original power of attorney, combined with the 
requirement for an original ``wet'' signature after the generation of 
the document, has become costly and unworkable for the surety industry.
    Furthermore, most recently, on January 9, 2004, the U.S. Court of 
Federal Claims (COFC), in Hawaiian Dredging Constr., Co. v. U.S., No. 
03-2763C, issued a ruling opposing the Government's decision to reject 
a low bidder's power of attorney because the signatures were not 
original. In this decision, the COFC indicated that the FAR does not 
require an original signature on the document that serves as evidence 
of authority to bind the surety. Moreover, the COFC held that the 
contracting officer was unreasonable in relying on All Seasons to 
require original signatures and was critical of certain aspects of 
GAO's reasoning in the decision. The Hawaiian Dredging case has created 
a division of opinion in the bid protest forums in regards to the 
standards for acceptability of powers of attorney.
    Another problem is that it has become even more difficult for the 
contracting officer to determine at bid opening the authenticity and 
enforceability of the power of attorney. Commercial practice would 
permit a quick check to determine if the power of attorney was in fact 
authentic and enforceable. However, in our current procurement process, 
if the contracting officer is unable to determine with unequivocal 
certainty that the surety would be bound by the bid bond and associated 
documents, then the bid must be rejected as nonresponsive. This may not 
be in the best interest of the Government, if the power of attorney was 
actually authentic and enforceable. Only after the rejected bidder 
challenges the contracting officer decision in a bid protest are the 
facts established through testimony and representations of the surety 
company as to whether the document was indeed authentic. If doubt about 
the power of attorney becomes a matter of responsibility rather than 
responsiveness, then the surety can confirm whether the attorney-in-
fact is actually authorized to represent the company before the 
contracting officer rejects the bid.
    The objective of the proposed rule is to establish clear and 
uniform standards for powers of attorney accompanying bid bonds that 
safeguard the integrity of the procurement process but are not unduly 
onerous to both industry and Government. Accordingly, the Councils 
propose a rule that will allow a copy of an original power of attorney, 
including a photocopy or facsimile copy, as sufficient evidence of 
authority for a person signing a bid bond to bind the surety as an 
attorney-in-fact. Providing the bid bond with evidence of power of 
attorney is still a matter of responsiveness, but if there is any 
reason to doubt the authenticity and enforceability of a power of 
attorney at the time of the bid opening, the rule provides that the 
contracting officer will handle this after the bid opening as a matter 
of responsibility. The proposed rule is consistent with commercial 
practices, decreases the burden on industry, and will allow the 
contracting officer to make more informed decisions that are in the 
best interest of the Government.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies to 
this rule, because the proposed change to FAR Part 28 may have a 
significant beneficial economic impact on a substantial number of small 
entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 
601, et seq. This rule establishes very simple and uniform standards 
for providing evidence of

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powers of attorney, which remove a costly and unworkable requirement 
from all sureties and attorneys-in-fact. An Initial Regulatory 
Flexibility Analysis (IRFA) has been prepared and is summarized as 
follows:
    The objective of this proposed rule is to establish clear and 
uniform standards for powers of attorney accompanying bid bonds and 
to allow the contracting officer to make more informed decisions 
that are in the best interest of the Government. The proposed rule 
applies to all offerors in Federal acquisitions that require bid 
bonds, and the associated sureties and attorneys-in-fact. The 
proposed rule will reduce the information collection requirement by 
simplifying the standards for an acceptable evidence of power of 
attorney in support of a bid bond. There are no significant 
alternatives to the proposed rule that accomplish the stated 
objectives. This rule will have a beneficial impact on small 
entities, which are offerors in Federal acquisitions that require 
bid bonds, as well as the associated sureties and attorneys-in-fact.
    A copy of the IRFA has been submitted to the Chief Counsel for 
Advocacy of the Small Business Administration. Interested parties may 
obtain a copy of the IRFA from the FAR Secretariat. We invite comments 
from small businesses and other interested parties. The Councils will 
consider comments from small entities concerning the affected FAR Part 
in accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 601, et seq. FAR case 
2003-029, in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does apply; however, these changes to 
the FAR do not impose additional information collection requirements to 
the paperwork burden previously approved under OMB Control Number 9000-
0045. The Councils estimate that this revision will decrease the actual 
burden because it will reduce the number of hours that industry must 
expend in providing original powers of attorney.

List of Subjects in 48 CFR Part 28

    Government procurement.

    Dated: August 17, 2004.
Laura Auletta,
Director, Contract Policy Division.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR part 28 as 
set forth below:

PART 28--BONDS AND INSURANCE

    1. The authority citation for 48 CFR part 28 is revised to read as 
follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).
    2. Add section 28.101-3 to read as follows:


28.101-3  Authority of an Attorney-in-Fact for a Bid Bond.

    (a) Any person signing a bid bond as an attorney-in-fact shall 
include with the bid bond evidence of authority to bind the surety.
    (b) An original or photocopy, or facsimile of an original power of 
attorney is sufficient evidence of such authority.
    (c) The contracting officer shall--
    (1) Treat the failure to provide a signed and dated power of 
attorney at the time of bid opening as a matter of responsiveness; and
    (2) Treat questions regarding the authenticity and enforceability 
of the power of attorney at the time of bid opening as a matter of 
responsibility. These questions are handled after bid opening.
[FR Doc. 04-19234 Filed 8-20-04; 8:45 am]
BILLING CODE 6820-EP-S