BNUMBER: B-274765
DATE: December 27, 1996
TITLE: Collins Companies
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Matter of:Collins Companies
File: B-274765
Date:December 27, 1996
Joel S. Rubenstein, Esq., Bell, Boyd & Lloyd, for the protester.
Col. Nicholas P. Retson, Department of the Army, for the agency.
Robert Arsenoff, Esq., and Paul I. Lieberman, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
Bid which included only a facsimile copy of a required bid bond and
power of attorney was properly rejected as nonresponsive.
DECISION
Collins Companies protests the rejection of its low bid as
nonresponsive under invitation for bids (IFB) No. DAKF57-96-B-0027,
issued by the Department of the Army to replace siding on military
housing units at Fort Lewis, Washington. The Army rejected Collins's
bid as nonresponsive because it contained only facsimile bid bond
documents; the Army viewed such documents as not establishing that the
surety would be bound to honor the bond in the event of default.
Collins argues that its facsimile bid bond was authorized and binding
and that therefore rejection of its bid was improper.
We deny the protest.
The IFB, which was issued on August 14, 1996, with bid opening on
September 13, required bidders to submit a bid bond in the amount of
20 percent of the bid price or $3,000,000, whichever was less. On the
day of bid opening, a representative of Collins called the contracting
specialist to ascertain whether its bid package had been received;
upon being informed that it had not been received, the representative
asked whether a telefacsimile bid would be acceptable. The protester
asserts that in the ensuing conversation with the contracting
specialist, it was informed that it would be acceptable to "fax
everything over." According to the contract specialist's sworn
account of the conversation, she informed the representative that a
telefaxed bid would be unacceptable because the Army needed original
signatures on all documents. Further, according to the specialist's
statement, when Collins's representative asked if a copy could be
telefaxed to an associate of the firm located in the area of the bid
opening and then signed and hand delivered, she informed the
representative that this would be an acceptable method of transmission
if the bid documents all bore original signatures of persons
authorized to bind the firm and if they were delivered in a sealed
envelope prior to the time set for bid opening.
The package received from Collins by the time set for bid opening
contained a bid with the original signature of an authorized
representative on the cover page. All documents relating to the bid
bond were, however, telefaxed copies which bore no original
signatures. As a result, the contracting officer rejected Collins's
bid as nonresponsive and this protest followed.
A bid bond is a form of guarantee designed to protect the government's
interest in the event of default; if a bidder fails to honor its bid
in any respect, the bid bond secures a surety's liability for all
reprocurement costs. As such, a required bid bond is a material
condition of an IFB with which there must be compliance at the time of
bid opening; when a bidder submits a defective bid bond, the bid
itself is rendered defective and must be rejected as nonresponsive.
The determinative question as to the acceptability of a bid bond is
whether the bid documents, including the power of attorney appointing
an attorney-in-fact with authority to bind the surety, establish
unequivocally at the time of bid opening that the bond is enforceable
against the surety should the bidder fail to meet its obligations. If
the agency cannot determine definitely from the documents submitted
with the bid that the surety would be bound, the bid is nonresponsive
and must be rejected. Morrison Constr. Servs., B-266233; B-266234,
Jan. 26, 1996, 96-1 CPD para. 26.
Photocopies of bid guarantee documents generally do not satisfy the
requirement for a bid guarantee since there is no way, other than by
referring to the
originals after bid opening, to be certain that there had not been
alterations to which the surety had not consented, and that the
government would therefore be secured. Id. A telefaxed bid guarantee
document, which is an electronically transmitted copy, is subject to
the same uncertainty as a photocopy transmitted by mail; since it is
not the original, there is no way to be certain that unauthorized
alterations have not been made without referring to the original
documents after bid opening. Global Eng'g, B-250558, Jan. 11, 1993,
93-1 CPD para. 31[1].
Collins first asserts that, based on the September 13 conversation
between its representative and the contracting specialist concerning
telefaxed bids, the agency is estopped from rejecting its bid since,
according to Collins, the specialist authorized the electronic method
of transmission. As indicated above, in the contracting specialist's
statement recounting the conversation she denies that such advice was
given. In any event, even if we were to accept Collins's version,
oral advice concerning the acceptability of photocopied (or telefaxed)
bid bonds is not binding; a contractor relies on oral advice with
respect to solicitation requirements at its own risk. Pollution
Control Indus. of Am., B-236329, Nov. 22, 1989, 89-2 CPD para. 489.
Collins next argues that the telefaxed bid bond package, when read as
a whole, establishes that the surety would be bound to honor the bond
in the event of default. For the reasons set forth below, we
disagree.
The power of attorney form contained in the package contained the
following statement in the left margin:
"WARNING
THIS IS NOT A VALID POWER OF ATTORNEY IF THIS STATEMENT DOES NOT
APPEAR IN RED INK"
In the telefaxed copy submitted to the Army in Collins's bond package,
the quoted warning appeared in black print. This fact would appear to
make the power of attorney invalid on its face, thus calling into
question the authority of the purported attorney-in-fact named in the
document. Global Eng'g, supra. Collins argues that other language
contained in the power of attorney form obviates this apparent
invalidity. In particular, Collins refers to the following excerpt
from a resolution of the surety's board of directors quoted on the
form:
". . . the signatures of [designated corporate officers] and the
seal of [the surety] may be affixed to any such power of attorney
or to any certificate relating thereto by facsimile. . . . "
(Emphasis added.)
We have expressly considered this argument on other occasions where a
telefaxed or photocopied power of attorney contained virtually
identical language. It is our view that phrases such as "affixed by
facsimile" do not refer to telefaxed or photocopied documents, but
rather to signatures produced by mechanical means, for example,
stamped, printed or typewritten signatures. In short, the language
does not reasonably suggest that the surety consented to be bound by
bid bonds which, after leaving the surety's hands, had been
photocopied or telefaxed. Frank and Son Paving, Inc., B-272179, Sept.
5, 1996, 96-2 CPD para. 106; Morrison Constr. Servs., supra; Global Eng'g,
supra.
Collins attempts to distinguish its situation by arguing that another
document contained in its telefaxed bid bond package authorizes
transmission of bond documents by electronic means. Specifically, the
protester points to a telefaxed letter dated September 13 and signed
by the purported attorney-in-fact which states: "This letter
authorizes Collins Companies to use in place of the original bid bond
and power of attorney a fax copy of the same." The problem with this
reasoning is that the individual purporting to bind the surety under a
telefax authorization is himself authorized by a power of attorney
form which, as discussed above, is legally invalid on its face. Under
these circumstances, this individual's letter has no legal effect.
Since the telefaxed bid bond package contained in Collins's bid did
not unequivocally establish that the surety would be bound to honor
the bond in the event of default, the bid was properly rejected as
nonresponsive. Morrison Constr. Servs., supra.
The protest is denied.
Comptroller General
of the United States
1. Here, the agency properly refused to consider documents submitted
by Collins after bid opening which were intended to establish the
responsiveness of its bid.