TITLE:  Harris Excavating, B-284820, June 12, 2000
BNUMBER:  B-284820
DATE:  June 12, 2000
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Harris Excavating, B-284820, June 12, 2000

Decision

Matter of: Harris Excavating

File: B-284820

Date: June 12, 2000

Darcy V. Hennessy, Esq., Moore Hennessy & Freeman, for the protester.

Richard A. Say, Esq., U.S. Army Corps of Engineers, for the agency.

Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protester's bid is responsive, despite a discrepancy in the name of the
bidder as identified on the bid and the name of the principal identified in
the required bid bond, where reasonably available extrinsic evidence in
existence at the time of bid opening establishes that the bidder and
principal are the same entity, such that there is no doubt that the surety
will be liable under the bond to the government on the bidder's behalf.

DECISION

Harris Excavating protests the rejection of its bid and the award of a
contract to Smoky Hill LLC under invitation for bids (IFB) No.
DACW41-00-B-0001, issued as a total small business set-aside, by the U.S.
Army Corps of Engineers, Kansas City District, for construction services.
The Corps rejected Harris's bid because the names of the bidding entity and
of the principal on the required bid bond were different.

We sustain the protest.

The IFB required bidders to submit a bid guarantee in the amount of 20
percent of their bid price. IFB at 1, 00100-1. The solicitation included the
required clause at Federal Acquisition Regulation (FAR) sect. 52.228-1(a), which
informed bidders that the failure to furnish a bid guarantee in the proper
form and amount may result in the rejection of the bid. IFB at 00700-80,
00700-81.

The protester submitted the apparent low bid, identifying itself as "Harris
Excavating." Agency Report, Tab 1, Harris Bid, at 2. The bid was signed by
"Larry Harris," who identified himself as president. Id. In the bid
representations and certifications, the bidder's Taxpayer Identification
Number (TIN) was stated, and it was indicated that the bidder was a sole
proprietorship that was not owned or controlled by a common parent and that:

It operates as [ ] a corporation incorporated under the laws of the State of
Kansas, [X] an individual, [ ] a partnership, [ ] a nonprofit organization,
or [ ] a joint venture.

Id. at 00600-2, 00600-3, 00600-5.

The bid bond submitted with the bid by the protester contained a blank space
that was to contain the name of the principal, but was signed by "R.L.
Harris," who was identified as the principal and whose title was listed as
owner. In addition, the bid bond did not contain the solicitation number but
specifically described the IFB work.

The Corps rejected the protester's bid because the discrepancy in the names
of the identified bidding entity and principal identified in the bond
assertedly created doubt as to whether the surety would be bound to the
government on behalf of the protester. Contracting Officer's Statement at
2-3; Legal Memorandum at 5. Also, the agency states that there was "doubt
regarding the nature of the bidder's organization"; that is, the bid was
signed by an individual identified as president, which the Corps argues
indicates a corporate entity, while the bond principal was identified as
owner, which indicates a sole proprietorship. Contracting Officer's
Statement at 2-3. Although, prior to rejecting Harris's bid, the agency
requested information from the protester concerning its responsibility, the
agency did not inquire as to the discrepancy between the names of the
bidding entity and bond principal. Id. 1-2.

Award was made to Smoky Hill LLC, a higher-priced bidder, and this protest
followed. Performance has been stayed pending our decision in this matter.

Harris contends that the entities identified in the bid and bid bond are one
and the same, an individual doing business variously as Harris Excavating or
R.L. Harris or Larry Harris. Protest at 3. The protester complains that the
agency made no inquiry as to the identity of the bidding and bond principal
and argues, citing a number of our decisions, e.g., Jack B. Imperiale Fence
Co., Inc., B-203261, Oct. 26, 1981, 81-2 CPD para. 339 and Lamari Elec. Co.,
B-216397, Dec. 24, 1984, 84-2 CPD para. 689, that information demonstrating that
the named bidder and bid bond principal are the same entity can be submitted
after bid opening where the information is reasonably available at the time
of bid opening.

In this regard, Harris has submitted a number of documents that predate the
bid opening date to demonstrate that the bidder and bond principal are the
same entity. For example, Harris has submitted a 1994 Internal Revenue Form
1099-MISC, prepared by the Corps's Omaha District, which is addressed to
"R.L. Harris DBA Harris Excavating" and which identifies as the recipient's
identification number the same TIN as in Harris's bid. Protest, exh. E.
Harris also submitted a 1995 Employer's Annual Federal Unemployment Tax
Return, IRS Form 940-EZ, which uses a preprinted IRS mailing label that
identifies the taxpayer as Robert L. Harris and Harris Excavating, and is
signed by R.L. Harris, as owner. Id., exh. H. Also, Harris Excavating
submitted a 1989 Certificate of Insurance, which identifies the insured as
"Harris Excavation DBA Larry Harris." Id., exh. F. Harris also submitted a
Dun & Bradstreet Report for R.L Harris and Harris Excavating identifying
Robert L. Harris as owner, which apparently reflects information in Dun
& Bradstreet's files extant as of bid opening. Id., exh. K.

The Corps argues that the protester's bid should be rejected because the
name of the bidder and the bid bond principal are not the same, such that it
is not clear that the bond will bind the surety. The Corps notes that the
documents provided by the protester were not submitted with the protester's
bid, were not available to the contracting officer, and allegedly did not
resolve the discrepancy between Harris's bid and bid bond. In this regard,
the Corps states, citing Atlas Contractors, Inc./Norman T. Hardee, a Joint
Venture, B-208332, Jan. 19, 1983, 83-1 CPD para. 69 at 4, that the contracting
officer is not required "to interpret an inartfully prepared bid, by
sequential logical deductions and inferences, to make it responsive."

A bid guarantee is a form of security that ensures 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. FAR sect. 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 bidder
awarded the contract fails to fulfill these obligations. A.W. and Assocs.,
Inc., B-239740, Sept. 25, 1990, 90-2 CPD para. 254 at 2. When required by a
solicitation, a bid guarantee is a material part of the bid and must be
furnished with it. A.D. Roe Co., Inc., B-181692, Oct. 8, 1974, 74-2 CPD para.
194 at 3; 38 Comp. Gen. 532, 537 (1959). Noncompliance with a solicitation
requirement for a bid guarantee generally renders the bid nonresponsive and
requires the rejection of the bid. FAR sect. 28.101-4(a); A.W. and Assocs.,
Inc., supra, at 2.

The sufficiency of a bid guarantee depends on whether the surety is clearly
bound
by its terms; when the liability of the surety is not clear, the bond is
defective. Techno Eng'g & Constr., Ltd., B-243932, July 23, 1991, 91-2 CPD para.
87 at 2. Under the law of suretyship, no one incurs a liability to pay the
debts or perform the duties of another unless that person has expressly
agreed to do so. [1] Andersen Constr. Co.; Rapp Constructors, Inc.,
B-213955, B-213955.2, Mar. 9, 1984, 84-1 CPD para. 279 at 4. Thus, generally, a
bid bond which names a principal different from the bidder is deficient, and
the bid must be rejected unless it can be established that the different
names identify the same entity. Goss Fire Protection, Inc., B-253036, Aug.
13, 1993, 93-2 CPD para. 97 at 4; A.D. Roe Co., Inc., supra, at 4-5.

On the other hand, where the entity that submitted the bid and that is
identified as the bid bond principal are exactly the same, any discrepancy
between the bidder's and bid bond principal's names is merely a matter of
form that does not require rejection of the bid. See K-W Constr., Inc.,
B-194480, June 29, 1979, 79-1 CPD para. 475 at 2. Extrinsic evidence that is
reasonably or publicly available and in existence at the time of bid opening
may be provided to establish the identity of the bidder and bid bond
principal as the same entity. [2] Gem Eng'g Co., B-251644, Mar. 29, 1993,
93-1 CPD para. 303 at 2 (award to second-low bidder properly terminated where
corporate records and Dun & Bradstreet report resolved discrepancy in the
name of the low bidder and bid bond principal); Lamari Elec. Co., supra, at
2 (entity submitting the bid and identified as the bid bond principal was
the same, an individual using different trade names); Jack B. Imperiale
Fence Co., Inc., supra, at 2-3 (discrepancy in corporate names used in bid
and bid bond resolved through submission of corporation records, tax forms,
bid bonds, insurance papers, loan documents, and contract documents); K-W
Constr., Inc., supra, at 2 (bidder's and bid bond principal's identity
established through submission of corporate documents).

The Corps does not disagree that extrinsic evidence may be provided to
resolve discrepancies between the nominal bidder's and bond principal's
names, but argues that the failure to fill in the space for the principal's
name at the top of the bid bond and the bond's failure to reference the IFB
number creates doubt as to the validity of the bond. These arguments are
meritless. First, the Corps acknowledges that the bond included a specific
and adequate description of the IFB work such that the failure to include
the IFB number would not alone render the bid nonresponsive. Legal
Memorandum at 6-7. Also, although Harris's bid bond did not fill in the
space for the principal's name at the top of the bond, the bond identifies
the principal as R.L. Harris, whose title is stated to be owner. Such an
irregularity in, or incompleteness of, the bond does not necessarily affect
the obligation of the surety to the government. See, e.g., General Ship and
Engine Works, Inc., B-184831, Oct. 31, 1975, 75-2 CPD para. 269 at 5 (obligation
of surety not affected by failure of named principal to sign bond). Here,
the bond identifies the principal and solicitation work and is duly executed
by the surety, so that the failure to name a principal in the designated
space at the top of the bond is immaterial.

The proper question to be considered is whether the nominal bidder and bid
bond principal are the same entity, such that it is certain that the surety
will be obligated under the bond to the government in the event that that
bidder withdraws its bid within the period specified for acceptance or fails
to execute a written contract or furnish required performance and payment
bonds.

As described above, the bidding entity is Harris Excavating, which certified
itself as a sole proprietorship [3] and which is owned by Larry Harris, [4]
and the bond principal is an individual, R.L. Harris. The protester has
submitted numerous documents and records that show that R.L. Harris, Larry
Harris, and Harris Excavating all refer to the same business entity.
Specifically, the protester submitted two tax records that reference the
same TIN as used by the protester in its bid and that jointly refer to the
taxpayer as "R.L. Harris" (the name of the bond principal) and "Harris
Excavating" (the bidder). A certificate of insurance shows the insured to be
"Harris Excavating DBA Larry Harris."

From this evidence, which was reasonably available to the contracting
officer if she had asked the bidder about the discrepancy, see Lamari Elec.
Co., supra, at 2 and Jack B. Imperiale Fence Co., Inc., supra, at 2-3, there
is no question that Harris Excavating, R.L. Harris, and Larry Harris refer
to the same entity and that the surety would be legally bound on the bid
bond. In considering this reasonably available extrinsic evidence, the
contracting officer would not be required "to interpret an inartfully
prepared bid, by sequential logical deductions and inferences, to make it
responsive," but could unambiguously establish that the nominal bidder and
bid bond principal were the same individual, such that there was no doubt
that the surety would be liable under the bid bond. Jack B. Imperiale Fence
Co., Inc., supra, at 2-3; cf. The Scotsman Group, Inc., B-245634, Jan. 13,
1992, 92-1 CPD para. 57 at 3-4 (extrinsic evidence did not establish that the
nominal bidder and bid bond principal were the same entity).

We recommend that the Corps terminate the contract awarded to Smoky Hill LLC
and make award to Harris Excavating, as the entity that submitted the lowest
responsive bid, if the protester is found to be responsible. We also
recommend that the Corps reimburse the protester the reasonable costs of
filing and pursuing the protest, including attorneys' fees. 4 C.F.R. sect.
21.8(d)(1). The protester should submit its certified claim for such costs,
detailing the time expended and the costs incurred, directly to the
contracting agency within 60 days after receipt of this decision.

The protest is sustained.

Comptroller General
of the United States

Notes

1. Suretyship is a contractual relationship where one person (the surety)
agrees to be answerable for the debt or default of another (the principal).
Restatement of Security sect. 82 (1941); 72 C.J.S. Principal and Surety sect. 2
(1974).

2. In K-W Constr., Inc., supra, at 2, we analogized this rule to the similar
rule allowing the authority of bid signers to be established by extrinsic
evidence after bid opening.

3. A sole proprietorship is a non-incorporated business owned by a single
individual, and there is no legal distinction between the individual and his
or her businesses. See William L. Cary and Melvin Aron Eisenberg,
Corporations 1 (6th ed. 1988).

4. The Corps suggests that, because the protester identified himself as
"president" of Harris Excavating, this indicates that Harris Excavating is a
corporation. Legal Memorandum at 3. This argument, however, ignores the
specific language of the protester's bid, which states that Harris
Excavating is a sole proprietorship.