Johnson Controls, Inc.

B-270036 Jan 19, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Agency properly determined that the validity of a bid bond was uncertain. The power of attorney was signed by the president and secretary of Safeco and was dated February 12. This certificate was signed by the secretary of Safeco and Safeco's corporate seal was affixed next to this signature. The space for inserting the date of the certificate was blank. The Navy thus determined that the validity of the bid bond was uncertain and that Johnson's bid was nonresponsive. Johnson alleges that the power of attorney was properly executed and that the certificate. Was signed by a corporate officer of the surety. The surety was bound under the bond executed by its designated attorney-in-fact. Johnson concludes that the validity of the bid bond is certain and that its bid is responsive. View Decision Matter of: Johnson Controls, Inc. File: B-270036 Date: January 19, 1996 Agency properly determined that the validity of a bid bond was uncertain, and the bid therefore nonresponsive, where the surety's power of attorney authorizing the named attorney-in-fact to sign the bid bond on the surety's behalf contained an undated certification that the power of attorney had not been revoked. Attorneys DECISION Johnson Controls, Inc. protests the rejection of its bid under invitation for bids (IFB) No. N44255-94-B-7523, issued by the Department of the Navy for a direct digital control system for the Trident Training Facility, Naval Submarine Base, Bangor, Silverdale, Washington. Johnson protests that the Navy improperly rejected its bid as nonresponsive. We deny the protest. The Navy received eight bids at bid opening on August 29, 1995. Johnson submitted the apparent low bid of $309,096. Along with its bid, Johnson submitted the required bid bond on a standard form 24, dated August 28 and signed by Janis M. Muccio, attorney-in-fact for the surety, Safeco Insurance Company of America. A power of attorney submitted with the bond authorized Ms. Muccio to act as attorney-in-fact for, and execute bonds on behalf of, Safeco. The power of attorney was signed by the president and secretary of Safeco and was dated February 12, 1993. The bottom half of the power of attorney constituted a certificate which, when completed, certified that the power of attorney remained in full force and effect as initially executed, and had not been revoked. This certificate was signed by the secretary of Safeco and Safeco's corporate seal was affixed next to this signature; however, the space for inserting the date of the certificate was blank. The Navy concluded that, with an undated certificate, the surety could disclaim liability simply by stating that the power of attorney had been revoked prior to the execution of the bid bond. The Navy thus determined that the validity of the bid bond was uncertain and that Johnson's bid was nonresponsive. By letter of September 25, the Navy informed Johnson that it had rejected Johnson's bid and had awarded the contract to Christenson Electric for $402,972. This protest followed. Johnson alleges that the power of attorney was properly executed and that the certificate, although not dated, was signed by a corporate officer of the surety; thus, the surety was bound under the bond executed by its designated attorney-in-fact. Johnson concludes that the validity of the bid bond is certain and that its bid is responsive. A bond is a written instrument executed by a principal party (i.e., the bidder or contractor) and a second party surety to assure fulfillment of the principal's obligations to a third party (i.e., the government). Federal Acquisition Regulation (FAR) Sec. 28.001. A bid bond assures the surety's liability to the government for the excess cost of awarding to the next eligible bidder in the event that the awardee (i.e., the principal) fails to fulfill its obligations. A.W. and Assocs., Inc., 69 Comp.Gen. 737 (1990), 90-2 CPD Para. 254; Shackelford Mechanical, Inc., B-261948, Nov. 1, 1995, 95-2 CPD Para. 203. When required by a solicitation, a bid bond is a material part of the bid and a valid bid bond 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 accompanied by a power of attorney that on its face does not establish unequivocally that the person signing on behalf of the surety has the authority to bind the surety, such a power of attorney creates doubt as to whether the surety is bound by the bid bond under the law of suretyship, and therefore renders the bid nonresponsive. A.W. and Assocs., Inc., supra; Shackelford Mechanical, Inc., supra. Where a power of attorney is dated in advance of a bid bond, there exists the possibility that the surety may have revoked the power of attorney prior to the execution of the bid bond. Shackelford Mechanical, Inc., supra; Quantum Constr., Inc., B-255049, Dec.