BNUMBER:  B-271236.3
DATE:  September 10, 1996
TITLE:  Jay Jackson & Associates

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Matter of:Jay Jackson & Associates

File:     B-271236.3

Date:September 10, 1996

Jay R. Jackson for the protester.
Lila Hamblin, Department of Agriculture, for the agency.
Linda C. Glass, Esq., and Paul I. Lieberman, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where bidder failed, after being given repeated opportunities, to 
furnish documentation which adequately supported the acceptability of 
proposed individual surety, the agency reasonably found the surety 
unacceptable and properly rejected the bid.

DECISION

Jay Jackson & Associates (JJA) protests the rejection of its bid and 
the award of a contract to Harvest Construction Company under 
invitation for bids (IFB) No. R3-12-96-04, issued by the Department of 
Agriculture for the construction of a  road at Simpson Lake.  JJA 
asserts that its bid was improperly rejected on the basis that its 
proposed individual bid bond surety was unacceptable.[1]

We deny the protest.

The IFB required that bidders submit a bid bond in an amount equal to 
20 percent of the bid price.  Bids were opened on December 14, 1995.  
The low bid submitted by Schuck Development Company was rejected as 
nonresponsive.  JJA, the second low bidder, submitted a bid bond in 
the amount of $61,750 executed by an individual surety, Jason Jackson.  
As required, the bid contained a completed Affidavit of Individual 
Surety (Standard Form (SF) 28) on which the surety listed as assets 
pledged to the government in support of the bond a "lien on real 
estate," which was described as "lode mining claims."  Also included 
was a report from Land Title Company of Grant County which listed 
various encumbrances, judgments and state, federal, and city tax 
liens, which were attached to the property.

In reviewing the documents attached to Mr. Jackson's SF 28, the 
contracting officer questioned, among other things, whether the asset 
pledged, entitled The Dixie Meadow Group Mining Claims, was 
speculative and unacceptable, the failure of JJA to provide evidence 
of title in the form of a certificate of title prepared by a title 
insurance company approved by the Department of Justice, the lack of 
evidence of the amounts due under the listed encumbrances and liens, 
and the failure to provide a current real estate tax assessment of the 
property or a current appraisal by a professional appraiser.  The 
protester was notified of these deficiencies in a letter which it 
received on January 26, 1996, and was requested to provide corrections 
within 5 days after receipt.  The protester was also advised that 
assets could be substituted, but that he could not provide a 
substitute surety.

Rather than attempting to remedy the deficiencies, on February 5, the 
protester requested that the bid bond requirement be waived in return 
for its promise to provide corporate payment and performance bonds 
after the contract was awarded.  The protester was advised that 
noncompliance with the bid bond requirement of the IFB could not be 
waived.  

Thereupon, in an attempt to correct the deficiencies, the protester 
provided various   individual releases, property tax records, and more 
preliminary reports and lot book service reports from Land Title 
Company of Grant County, Ticor Title, and Chicago Title (a company 
approved by the Department of Justice).  The information on these 
reports was substantially the same as that which had been previously 
provided, and the reports did not show the release of all of the 
numerous liens and encumbrances.

The protester was notified by letter dated February 8, that its bid 
bond was unacceptable.  Thereupon, the protester submitted additional 
evidence of title from Chicago Title.  After reviewing this new 
information and determining that it did not contain any new acceptable 
evidence of sufficiency of pledged assets, the contracting officer 
again determined that JJA's bid was unacceptable.  

JJA asserts that its bid bond should be deemed acceptable because the 
property pledged has an assessed value that exceeds that required for 
a bid bond and because it believes that any other problems were 
"manageable."  However, the protester does not specifically address 
the various defects identified by the agency.

The contracting officer is vested with a wide degree of discretion and 
business judgment in determining the acceptability of an individual 
surety, and we will not question such a determination so long as it is 
reasonable.  Santurce Constr. Corp., 70 Comp. Gen. 133 (1990), 90-2 
CPD  para.  469.  It is the surety's obligation to provide the contracting 
officer with sufficient information to clearly establish the surety's 
acceptability.  Southern California Eng'g Co., Inc., 69 Comp. Gen. 387 
(1990), 90-1 CPD  para.  365.  Nevertheless, agencies may not automatically 
reject a bidder for unacceptable individual sureties because the SF 28 
and supporting documentation contain minor defects that might easily 
be remedied.  Gene Quigley, Jr., 70 Comp. Gen. 273 (1991), 91-1 CPD  para.  
182.  Since these matters concern bidder responsibility, absent any 
evidence that sureties lacked integrity or credibility, the agency 
should give the bidder the opportunity to have its sureties provide 
satisfactory explanations or pledge sufficient and acceptable assets.  
Id.  The procuring agency, however, is not required to indefinitely 
delay an award to allow a bidder to show that its surety is 
responsible.  Id.  

Here, the agency afforded JJA ample opportunity to establish the 
acceptability of its individual surety, but the information furnished 
by JJA failed to do so.  As discussed above, the contracting officer 
found numerous deficiencies in the documents supporting JJA's 
individual surety; the key deficiency involved the acceptability of 
the asset pledged in support of the bid bond, which at all times was 
identified by legal description as a "perfected lode mining claim" (a 
portion of which extended into National Forest Land), an asset which 
the contracting officer determined was speculative in nature.  The 
record shows that in this regard, during a February 2 discussion 
between the contracting officer and the title officer of the original 
title company involved, Land Title Company of Grant County, the 
contracting officer was advised that the surety, Jason Jackson, had 
sold the real property in late December 1995 to another party, and in 
its various communications with the agency, the protester never 
identified the property as anything other than a mining claim.  
Federal Acquisition Regulation (FAR)  sec.  28.203-2(c) provides that 
unacceptable assets for purposes of bid bonds include speculative 
assets such as mineral rights.  In its comments to our Office, the 
protester states that the property pledged also has value based on 
cattle grazing and merchantable timber rights, but provides no 
substantiation for having any such interests and never claimed these 
interests in its communications with the agency.  Accordingly, we 
think the contracting officer properly considered the pledged asset to 
be speculative and unacceptable, and therefore properly rejected JJA's 
bid.  

The protest is denied.

Comptroller General
of the United States  

1. We previously dismissed JJA's protest for failure to file comments 
on the agency report, or request an extension within 14 calendar days 
after receipt of the report as required by our Bid Protest 
Regulations, 4 C.F.R.  sec.  21.3(h) (1996).  While we had received a 
letter from the protester dated after the report due date, it appeared 
to seek only general guidance regarding the use of individual sureties 
and did not directly address the material presented in the agency 
report.  The protester subsequently explained that it had intended the 
May 6 letter to constitute its comments on the report.  Under these 
circumstances, we will consider the merits of the protest.