TITLE:  Kemper Construction Company, Inc., B-283286.2, November 29, 1999
BNUMBER:  B-283286.2
DATE:  November 29, 1999
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Kemper Construction Company, Inc., B-283286.2, November 29, 1999

Decision

                    Matter of:Kemper Construction Company, Inc.

File:B-283286.2

Date:November 29, 1999

Stephen R. Remsberg, Esq., Lemle & Kelleher, for the protester.

Edward Goldstein, Esq., Army Corps of Engineers, for the agency.

Jennifer D. Westfall-McGrail, Esq., and Christine S. Melody, Esq., Office of
the General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Where bidder submitted a bid bond accompanied by a faxed copy of a power of
attorney, and the bid documents did not establish that the surety would be
bound by such a power of attorney, the bond was unacceptable and the bid
nonresponsive.

DECISION

Kemper Construction Company, Inc. protests the rejection of its bid under
invitation for bids (IFB) No. DACW29-99-B-0069, issued by the Army Corps of
Engineers for construction of a shop and garage building at the Mississippi
River Spillway, St. Charles Parish, Louisiana. The agency rejected Kemper?s
bid as nonresponsive because the power of attorney attached to its bid bond
was a faxed copy. The protester contends that the copy was sufficient to
bind the surety and thus should have been accepted.

We deny the protest.

The IFB, which was issued on June 15, 1999, required bidders to submit with
their bids a bid bond in the amount of 20 percent of the bid price. Five
bids were received by the bid opening time on July 15. Kemper was the
apparent low bidder; Julius A. Payne Company, Inc. and Cooper Construction
were second and third low, respectively; and DeLoach Corp. was fourth low.
On July 16, DeLoach filed an agency-level protest, contending that the bids
of Kemper, Payne, and Cooper should all be rejected as nonresponsive and
that award should be made to DeLoach. The contracting officer agreed with
DeLoach that Cooper?s bid was nonresponsive, but denied the protest with
regard to Kemper?s and Payne?s bids.

Upon learning that its agency-level protest had been denied, DeLoach
protested to our Office. DeLoach argued, among other things, that the powers
of attorney that accompanied Kemper?s and Payne?s bid bonds were not
original documents. Upon investigation, the agency determined that both
Kemper and Payne had in fact submitted faxed copies of powers of attorney
with their bid bonds. Agency counsel further determined that because the
powers of attorney were copies, the bids were nonresponsive. The agency
notified all three bidders that the bids of Kemper and Payne had been
determined nonresponsive and that award would be made to DeLoach, whereupon
DeLoach withdrew its protest, and Kemper and Payne filed protests of their
own. [1]

Kemper?s bond was signed by the attorney-in-fact for the National Fire
Insurance Company of Hartford, and the surety company?s seal was crimped
over the attorney-in-fact?s signature. The bond was accompanied by a faxed
copy of a power of attorney appointing the individual as attorney-in-fact
for the above-named surety company with "full power and authority . . . to
sign, seal and execute for and on [its] behalf bonds undertakings and other
obligatory instruments of similar nature . . . In Unlimited Amounts." A
certificate at the bottom of the power of attorney provided that it was
still in force; the date "July 15, 1999" had been handwritten onto the
certificate. On the reverse side of the power of attorney, the following
statement appeared:

          This Power of Attorney is signed and sealed by facsimile under and
          by the authority of the following Resolution adopted by the Board
          of Directors of the Company at a meeting duly called and held on
          the 17th day of February, 1993.

          RESOLVED: That the signature of the President, an Executive Vice
          President or any Senior or Group Vice President and the seal of
          the Corporation may be affixed by facsimile on any power of
          attorney granted pursuant to the Resolution adopted by this Board
          of Directors on February 17, 1993 and the signature of a Secretary
          or an Assistant Secretary and the seal of the Corporation may be
          affixed by facsimile to any certificate of any such power, and any
          power or certificate bearing such facsimile signature and seal
          shall be valid and binding on the Corporation. Any such power so
          executed and sealed and certified by certificate so executed and
          sealed, shall with respect to any bond or undertaking to which its
          is attached, continue to be valid and binding on the Corporation.

The protester contends that the power of attorney accompanying its bid bond,
although a facsimile copy, was valid, and that its bid was thus responsive.
Specifically, the protester argues that a facsimile power of attorney is
acceptable where it is apparent from the bid bond documents that the surety
intends to be bound by a facsimile version. Kemper maintains that it was
apparent from language on the reverse side of the power of attorney
authorizing the signing and sealing of a power of attorney by facsimile and
from the presence of the surety?s original crimped seal on the bid bond
itself that the surety intended to be bound by the facsimile.

A bid bond is a form of guarantee designed to protect the government?s
interest in the event of default; that is, if a bidder fails to honor its
bid in any respect, the bid bond secures a surety?s liability for all
reprocurement costs. 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. Collins Cos., B-274765, Dec. 27, 1996,
96-2 CPD para. 243 at 2.

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. A faxed bid guarantee document, which
is an electronically transmitted copy, is subject to the same uncertainty.
Id.

Here, we think that the agency correctly determined that the bid bond
documents submitted by Kemper did not definitely establish that its surety
would be bound in the event Kemper failed to meet its obligations.
Specifically, the power of attorney was not clearly valid, because it was a
faxed copy. To the extent that the protester believes that the power of
attorney was valid because the language printed on its reverse stated that
the surety consented to be bound by a facsimile copy, we disagree. While the
power of attorney provided that the signatures of designated corporate
officers and the seal of the Corporation might be "affixed by facsimile" on
a power of attorney or certificate, we believe that this phrase refers to
signatures produced by mechanical means (for example, stamped or printed
signatures), not to faxed (or photocopied) documents. Collins Cos., supra,
at 3; Frank and Son Paving, Inc., B-272179, Sept. 5, 1996, 96-2 CPD para. 106 at
3. In other words, the phrase "affixed by facsimile" refers to signatures
created mechanically, not to documents (whether or not they include
signatures) transmitted by a fax machine. [2]

Further, the presence of the surety?s original crimped seal on the bid bond
was not sufficient to render the bond acceptable. While the raised corporate
seal does constitute evidence of the authenticity of a bond, Daley
Corp.-California Commercial Asphalt Corp., J.V., B-274203.2, Dec. 9, 1996,
96-2 CPD para. 217 at 4, it is not a substitute for an express indication that
the surety intends to be bound by the bond even without the original
signature of its authorized representative. Brothers Constr. Co., Inc.,
B-278042, Nov. 10, 1997, 97-2 CPD para. 135 at 2.

The protest is denied.

Comptroller General
of the United States

Notes

1. On October 7, we dismissed Payne?s protest for failure to comment on the
agency report. See Bid Protest Regulations, 4 C.F.R. sect. 21.3(i) (1999).

2. In support of its position, the protester relies on Ray Ward Constr. Co.,
B-256374, June 14, 1994, 94-1 CPD para. 367, and Services Alliance Sys., Inc.,
B-255361, Feb. 22, 1994, 94-1 CPD para. 137. To the extent these cases suggest
that the phrase "affixed by facsimile" refers to signatures transmitted by
fax machine, they will no longer be followed.