BNUMBER: B-274203.2
DATE: December 9, 1996
TITLE: Daley Corporation-California Commercial Asphalt Corporation,
J.V.
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Matter of:Daley Corporation-California Commercial Asphalt Corporation,
J.V.
File: B-274203.2
Date:December 9, 1996
Davide Golia, Esq., Marks & Golia, LLP, for the protester.
Frank K. Kotarski, Esq., Christopher M. Bellomy, Esq., and George N.
Brezna, Esq., Department of the Navy, 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
Agency improperly rejected bid on the basis of minor irregularities in
power of attorney to execute bid bond where the attached power of
attorney certificate was properly executed by the surety's corporate
officers, and the certificate was embossed with the surety's original
seal.
DECISION
Daley Corporation-California Commercial Asphalt Corporation, J.V.
(Daley-CCAC) protests the rejection of its bid as nonresponsive for
lack of a valid bid bond under invitation for bids (IFB) No.
N68711-94-B-1587, issued by the Department of the Navy for certain
construction at the Marine Corps Air Station at Miramar, California.
The protester contends that the agency unreasonably concluded that
Daley-CCAC's bid bond was defective.
We sustain the protest.
The IFB, which required submission of a bid guarantee, was issued on
July 1, 1996. At bid opening on August 1, the low bid was rejected as
nonresponsive because it failed to offer the required 120-day bid
acceptance period. Daley-CCAC, the second low bidder, included in its
bid package a bid guarantee in the form of a bid bond, dated July 30,
1996, from American Motorists Insurance Company (AMIC) signed by K. R.
Viodes as attorney-in-fact. Accompanying the bid bond was a power of
attorney, dated July 30, 1996, appointing K. R. Viodes as AMIC's
attorney-in-fact. The power of attorney is certified by the facsimile
signature of W.A. Grauzas, Secretary, and executed by the facsimile
signature of J. S. Kemper III, Executive Vice President.
On the back of the power of attorney is an undated notary
certification that states in part:
"I, Irene Klewer, a Notary Public, do hereby certify that
J.S. Kemper, III and F.C. McCullough personally known to me to be
the same persons whose names are respectively as Exec. Vice
President and Secretary of the American Motorists Insurance
Company, a Corporation of the State of Illinois, subscribed to
the foregoing instrument."
Beneath the notary certification was a certification dated July 30,
1996, and executed by N. J. Zarada as secretary which states in part:
"I, N.J. Zarada, Secretary of the American Motorists Insurance
Company, do hereby certify that the attached Power of Attorney
dated July 26, 1993 on behalf of the person(s) as listed on the
reverse side is a true and correct copy and that the same has
been in full force and effect since the date thereof and is in
full force and effect on the date of this certificate; and I do
further certify that the said J.S. Kemper, III and W.A. Grauzas
who executed the Power of Attorney as Exec. Vice President and
Secretary respectively were on the date of the execution of the
attached Power of Attorney the duly elected Exec. Vice President
and Secretary of the American Motorists Insurance Company."
The Navy, after examining the power of attorney, concluded that it
contained numerous irregularities that raised uncertainties regarding
the validity of the power of attorney, and therefore the validity of
the bond itself. Specifically, the Navy considered the power of
attorney appointment attested to by a facsimile signature of W. A.
Grauzas as Corporate Secretary and dated July 30, 1996, to be
inconsistent with the certification on the same date by N. J. Zarada,
also as secretary. The Navy also noted that the undated notary
certification, which referred to F.C. McCullough as secretary, and the
July 30, 1996 certification signed by N. J. Zarada, as secretary, that
the power of attorney was in full force which referred to a power of
attorney dated July 26, 1993 added further uncertainty. On the basis
of these perceived discrepancies, the Navy rejected the protester's
bid as nonresponsive.
A bid guarantee is a form of security that assures the government that
a bidder will not withdraw its bid within the period specified for
acceptance and, if required, will execute a written contract and
furnish required performance and payment bonds. Federal Acquisition
Regulation (FAR) sec. 28.001. The bid guarantee secures the surety's
liability to the government, thereby providing funds to cover the
excess costs of awarding to the next eligible bidder in the event that
the awardee fails to fulfill these obligations. A.W. and Assocs.,
Inc., 69 Comp. Gen. 737 (1990), 90-2 CPD para. 254.
When required by a solicitation, a bid guarantee is a material part of
the bid, and a valid guarantee must be furnished with the bid in order
for it to be responsive. A.D. Roe Co., Inc., 54 Comp. Gen. 271
(1974), 74-2 CPD para. 194. Where a bid bond is submitted as a bid
guarantee and the bond is accompanied by a power of attorney that on
its face does not establish unequivocally that the person signing was
authorized to bind the surety, the bid must generally be rejected as
nonresponsive. Quantum Constr., Inc., B-255049, Dec. 1, 1993, 93-2
CPD para. 304. This is so because a power of attorney authorizes the
agent to act for the principal and only a valid power of attorney
would indicate that the surety expressly agreed to be bound to pay the
bond signed by the attorney-in-fact. See Fred Winegar, B-243557, Aug.
1, 1991, 91-2 CPD para. 111.
Accordingly, a bid must be rejected as nonresponsive where there is
some ambiguity about the authority of the person signing the bond on
behalf of the surety. Thus, the issue here is whether the bid
documents provided any reasonable basis to doubt the validity of the
power of attorney which is executed by a facsimile signature. Where
there is evidence submitted with the bid which unequivocally
demonstrates the surety's intent to be bound by a facsimile or
photocopy version, such a bid bond is acceptable. See Services
Alliance Sys., Inc., B-255361, Feb. 22, 1994, 94-1 CPD para. 137.
In this case, the power of attorney submitted by Daley-CCAC with its
bid bond is comprised of three parts. The first part authorizes the
named individual to act as attorney-in-fact for the surety; it is
attested to by a secretary and signed by an executive vice president
of the surety and affixed with a raised original corporate seal. The
second part is a notary public certification of the corporate
officers' signatures on the first part. The third part, captioned
"CERTIFICATION," is signed by another secretary of the surety who
certifies that the "attached" power of attorney dated July 26, 1993,
is a full, true, and correct copy and is in full force and effect.
The agency views the naming of three different secretaries in
different parts of the power of attorney as an irregularity that casts
doubt upon the validity of the secretarial certifications and,
therefore, the validity of the power of attorney. We think the
agency's concern is misplaced. While three different secretaries were
identified in different sections of the power of attorney, N. J.
Zarada certified that he was the secretary on July 30, 1996.
Moreover, the agency had information in its possession that identified
N. J. Zarada as AMIC's current secretary.[1] Thus, there should have
been no question that N. J. Zarada was the Secretary at the time the
bond was executed. Zarada certified that W. A. Grauzas and J.S.
Kemper, III were the Secretary and Executive Vice President on the
date of execution of the power of attorney. The certification also
refers to an "attached" July 26, 1993 power of attorney. Since the
"attached" power of attorney was essentially a reproduced form that
had the date of July 30, 1996 typed in, it appears that the typist
simply made a clerical error, which would explain why both Grauzas and
Zarada were identified as the secretary as of the same date. Of most
importance, however, the Zarada certification serves to validate the
authenticity and current validity of the Viodes appointment since
Zarada, as the current secretary, certified that K.R. Viodes was
properly appointed attorney-in-fact on July 26, 1993, and that this
appointment was still in effect.
Further, Zarada's certification is accompanied by an authorized
facsimile seal. The power of attorney specifically provides that the
surety fully intended to be bound by the facsimile signatures of its
corporate officers, and by a facsimile seal. In addition, the raised
corporate seal was affixed to the document. The corporate seal
establishes prima facie that an instrument is the duly authorized act
of the corporation and is not easily overcome. Fletcher Cyc. Corp., sec.
2470-2473 (Perm. Ed.); 18A Am. Jur. 2d 214, Corporations Sec. 304;
H.G. Hill Co. v. Taylor, 232 Ala. 471, 168 So. 693 (1936).
While as a general rule a contracting officer should not accept a bid
bond unless it is clear that the surety on the bond is obligated,
Quantum Constr., Inc., supra, in light of the certification by the
current secretary, we fail to see as a matter of law how the surety
would not be bound to the obligations of the bond. In these
circumstances, the agency's determination reflects concern with
technical deficiencies rather than any that would call into question
whether the surety was actually bound. See Hancon Assocs.--Recon.,
B-209446.2, Apr. 29, 1983, 83-1 CPD para. 460.
Accordingly, we conclude that the protester's bid should not have been
rejected, and we sustain the protest. Contract award has been
withheld pending resolution of this protest. We recommend that award
be made to the protester if it is otherwise eligible. We also
recommend that the protester be reimbursed its costs of filing and
pursuing its protest. Bid Protest Regulations, section 21.8(d)(1),
61 Fed. Reg. 39,039, 39,046, (July 26, 1996) (to be codified at 4
C.F.R. sec. 21.8(d)(1)). The protester should submit its certified claim
for costs to the contracting agency within 60 days of receiving this
decision. Section 21.8(f)(1), 61 Fed. Reg. supra.
The protest is sustained.
Comptroller General
of the United States
1. The agency provided what it considers to be a properly executed
AMIC power of attorney with the agency report. This power of attorney
was certified and executed by the facsimile signature of W. A.
Grauzas, Secretary, and J. S. Kemper III, Executive Vice President,
and was signed by N. J. Zarada, Secretary, in July 1996. An agency
should consider evidence, such as previously submitted bid bonds which
are in its possession at the time of bid opening, which serve to
establish the authority of the individual executing a bid bond.
Danish Arctic Contractors,
B-225807, June 12, 1987, 87-1 CPD para. 590.