BNUMBER:  B-266147; B-270153
DATE:  January 23, 1996
TITLE:  Western Management Services, Inc.; Mac-Bestos, Inc.

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Matter of:Western Management Services, Inc.; Mac-Bestos, Inc.

File:     B-266147; B-270153

Date:     January 23, 1996

Stan B. Williams, Esq., for Western Management Services, Inc.; and Jim 
J. Rivas, Jr., for Mac-Bestos, Inc., the protesters.
Col. Nicholas P. Retson, and Lt. Col. David S. Franke, Department of 
the Army, for the agency.
Jeanne W. Isrin, Esq., and David A. Ashen, Esq., Office of the General 
Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Material defect in a bid bond cannot be corrected after bid 
opening since this would afford a bidder the option of accepting or 
rejecting the award by either correcting or not correcting the bond 
deficiency and therefore would be inconsistent with the integrity of 
the sealed bidding system.

2.  Protest against rejection of bid as nonresponsive on the basis of 
a defective bid bond is denied where the language of a rider to the 
bond limits the liability of the surety and bidder under the 
performance and payment bonds required in the event of award.

DECISION

Western Management Services, Inc. (WMS) and Mac-Bestos, Inc. protest 
the rejection of their respective bids as nonresponsive under 
invitation for bids (IFB) No. DAKF06-95-B-0048, issued by the 
Department of the Army for the removal, disposal, and remediation of 
underground storage tanks at Fort Carson, Colorado.

We deny the protests.

The IFB contemplated a firm, fixed-price, indefinite 
delivery/indefinite quantity contract for a base period beginning with 
the date of award through September 30, 1996, and two 1-year option 
periods.  The IFB required that a bid guarantee be submitted with the 
bid in the amount of "twenty percent (20%) of the bid price or 
$3,000,000, whichever is lesser."  It warned that "[f]ailure 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."  The 
procurement was restricted to small disadvantaged business concerns 
under the section 8(a) program which were serviced by the Small 
Business Administration (SBA) district office in Denver, Colorado.

Eight bids were received at bid opening.  Although WMS submitted the 
apparent low bid of $3,435,713, the bid was rejected as nonresponsive 
because its bid guarantee of $10 was deemed inadequate.  The second 
low bidder was an 8(a) contractor not serviced by the Denver SBA 
office, and thus was ineligible for award.  Mac-Bestos submitted the 
third low bid, but the bid was rejected as nonresponsive because it 
contained a bid bond which was subject to a rider whose conditions 
limited the liability of the surety and bidder.  WMS and Mac-Bestos 
thereupon filed these protests with our Office.

WMS' PROTEST

WMS argues that the IFB was ambiguous as to whether the relevant price 
upon which to base the amount of the required bid guarantee was the 
base period price only or the base period price plus the prices for 
the 2 option years; WMS claims that due to the alleged ambiguity it 
was unable to determine the proper bid bond amount by the bid opening 
date.  Further, WMS claims that a bid guarantee is not ordinarily 
required or necessary in 8(a)-restricted procurements because, since 
SBA is the prime contractor in these procurements, it is unlikely that 
a contract would not be executed.  In any case, argues WMS, the agency 
either should have waived any deficiency in its bid bond or permitted 
it to cure the deficiency by posting an adequate bond subsequent to 
bid opening.      

A bid guarantee is a material part of a bid and when a bond is 
required, it must be furnished with the bid package.  Hugo Key & Son, 
Inc.; Alco Envtl. Servs., Inc.,     B-251053.4; B-251053.5, July 15, 
1993, 93-2 CPD  para.  21, aff'd, B-251053.6, Sept. 27, 1993, 93-2 CPD  para.  
192.  Federal Acquisition Regulation (FAR)  sec.  28.101-4(a) requires 
rejection of a bid that does not comply with a solicitation 
requirement for a bid guarantee, unless the deficiency can be waived 
under FAR  sec.  28.101-4(c).  

The IFB required a bid guarantee of 20 percent of the bid price or 
$3,000,000, whichever was lesser.  To the extent that WMS believed the 
IFB to be ambiguous as to whether to base the amount of the required 
bid guarantee on the base period price only or on the base period 
price plus the option prices, its protest in this regard is untimely; 
our Bid Protest Regulations require that protests based upon such 
alleged improprieties in a solicitation which are apparent prior to 
bid opening shall be filed prior to bid opening.  4 C.F.R.  sec.  
21.2(a)(1) (1995).  In any case, the amount of WMS' bid guarantee 
($10) was less than 20 percent ($279,178) of WMS' base bid 
($1,395,891), as well as  20 percent ($687,142) of its aggregate bid 
($3,435,713).  Further, WMS' argument that a bid guarantee requirement 
is not appropriate in an 8(a) procurement is also untimely; since the 
requirement for a bid guarantee was clearly stated on the face of the 
IFB, any objection to it had to be raised prior to bid opening in 
order to be timely.  4 C.F.R.  sec.  21.2(a)(1).  As for WMS' offer to 
correct any deficiency with respect to the bond after bid opening, 
this could not be considered by the contracting activity; affording a 
bidder the option of accepting or rejecting the award by either 
correcting or not correcting a bond deficiency would be inconsistent 
with the sealed bidding system.  See Drill Constr. Co., Inc., 
B-239783, June 7, 1990, 90-1 CPD  para.  538.  Since none of the waiver 
provisions in FAR  sec.  28.101-4(c) were applicable, WMS' bid was properly 
rejected. 

MAC-BESTOS's PROTEST

Mac-Bestos's bid bond as submitted consisted of a standard form 24 bid 
bond to which the surety had attached a "Rider to Bond Involving Toxic 
Material," which stated that the bond was "subject to the following 
conditions which shall survive the release and discharge of Surety 
from any further liability of its performance and payment obligations 
required under its bond."  The rider's conditions provided that the 
bond is not a substitute for insurance; restricted the time for suits 
against Mac-Bestos or the surety under the bond; limited any right of 
action to the obligee (the government); and exclude the surety from 
liability for any negligence of Mac-Bestos and its agents resulting in 
personal injuries or property damage.  The agency interpreted these 
conditions as limiting the surety's liability under the bid bond such 
that the bond did not satisfy the requirement for an unrestricted bid 
guarantee.

Mac-Bestos argues that its bid was improperly rejected as 
nonresponsive because the rider to the bid bond was removed after bid 
opening.  In any case, asserts Mac-Bestos, the same rider has been 
attached to bid guarantees it has submitted for numerous federal 
contracts it has received, and the rider was never questioned.

A bid guarantee assures that the bidder will, if required, execute a 
written contract and furnish performance and payment bonds.  Curry 
Envtl. Servs., Inc., B-228214, Dec. 9, 1987, 87-2 CPD  para.  570.  When the 
guarantee is in the form of a bid bond, it secures the liability of a 
surety to the government if the bidder fails to fulfill its 
obligations.  Id.  When required, a bid guarantee is a material part 
of the bid and by its terms must clearly establish the requisite 
liability of the surety or the bid must be rejected as nonresponsive.  
Id.  

The agency properly rejected Mac-Bestos's bid as nonresponsive on the 
basis of a defective bond.  By stating its conditions in terms of 
survival of release and discharge of the surety, and given its 
reference to performance and payment obligations, the bond rider 
indicates an intent to limit materially the liability of Mac-Bestos 
and its surety under the required performance and payment bonds.  Our 
Office has previously recognized that an agency therefore may 
reasonably reject a bid as nonresponsive where the required bid bond 
is subject to such a rider.  See Curry Envtl. Servs., Inc., supra; 
Environmental Management Servs., Inc., B-244784, Aug. 26, 1991, 91-2 
CPD  para.  198.  Further, even if, as Mac-Bestos claims, the same rider has 
been attached to bonds for other successful bids it has submitted, 
this did not require acceptance of the bid bond here; each procurement 
action is a separate transaction and the action taken under one is not 
relevant to the propriety of the action taken under another 
procurement for the purposes of a bid protest.  Westbrook Indus., 
Inc., B-248854, Sept. 28, 1992, 92-2 CPD  para.  213.  Furthermore, the 
removal of the rider after bid opening did not render Mac-Bestos's bid 
acceptable; as noted above, a material defect in a bid bond cannot be 
corrected after opening since affording a bidder the option of 
accepting or rejecting the award by either correcting or not 
correcting a bond deficiency would be inconsistent with the sealed 
bidding system.  Hugo Key & Son, Inc.; Alco Envtl. Servs., Inc., 
supra.

The protests are denied.

Comptroller General
of the United States