B-311305, Tip Top Construction Corporation, May 2, 2008

B-311305 May 02, 2008 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Tip Top Construction Corporation protests the rejection of its apparent low bid as nonresponsive for lack of a valid bid bond, under invitation for bids (IFB) No. DTFH71-08-B-00002, issued by the Department of Transportation, Federal Highway Administration (FHWA), for construction of a five-leg roundabout on the island of St. John, U.S. Virgin Islands. Tip Top contends that the FHWA unreasonably concluded that its bid bond was defective. We deny the protest. View Decision B-311305, Tip Top Construction Corporation, May 2, 2008 Decision Matter of: Tip Top Construction Corporation File: B-311305 Date: May 2, 2008 Michael A. Gordon, Esq., and Fran Baskin, Esq., Michael A. Gordon, PLLC, for the protester. Julia L. Perry, Esq., Department of Transportation, for the agency. Kenneth Kilgour, Esq., and Christine S. Melody, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest that agency improperly rejected bid as nonresponsive for lack of a valid bid bond is denied where the contracting officer reasonably determined that the assets pledged by the surety, which were incapable of being placed in escrow, were unacceptable. DECISION Tip Top Construction Corporation protests the rejection of its apparent low bid as nonresponsive for lack of a valid bid bond, under invitation for bids (IFB) No. DTFH71-08-B-00002, issued by the Department of Transportation, Federal Highway Administration (FHWA), for construction of a five-leg roundabout on the island of St. John, U.S. Virgin Islands. Tip Top contends that the FHWA unreasonably concluded that its bid bond was defective. We deny the protest. The IFB, issued November 1, 2007, required each bidder to submit with its bid a bid guarantee, or bid bond,[1] in the amount of not less than 20 percent of the bid price or $3 million, whichever is less. After bid opening, the protester was the apparent low bidder. The protester's bid contained an individual surety bid bond in the amount of $1.8 million, with E.C. Scarborough identified as the individual surety.[2] The assets were described as an –allocated portion of $191,350,000.00 of previously mined, extracted, stockpiled and marketable coal, located on the property of E.C. Scarborough, [followed by a precise description of the property location].— Bid Bond, Certificate of Pledged Assets. The contracting officer determined that the surety's assets did not meet the requirements of the FAR, Statement of Facts at 1, and notified the protester that its bid was rejected because the assets were unacceptable. The protester and the surety argue that the contracting officer abused her discretion when she rejected the bid bond on the basis that the surety's assets were unacceptable.[3] The contracting officer is vested with a wide degree of discretion and business judgment in determining the acceptability of an individual surety, including the adequacy of the surety's assets, and we will not question such a determination so long as it is reasonable. Santurce Constr. Corp., B-240728, Dec. 10, 1990, 90-2 CPD para. 469 at 4. We see no basis to question the contracting officer's determination here. The FAR states in pertinent part: 28.203-1 Security interests by an individual surety. (a) An individual surety is acceptable for all types of bonds except position schedule bonds. . . . (b) The value at which the contracting officer accepts the assets pledged must be equal to or greater than the aggregate penal amounts of the bonds required by the solicitation and may be provided by one or a combination of the following methods: (1) An escrow account[4] with a federally insured financial institution in the name of the contracting agency. . . . Acceptable securities for deposit in escrow are discussed in [FAR sect.] 28.203-2 [below]. While the offeror is responsible for establishing the escrow account, the terms and conditions must be acceptable to the contracting officer. . . . (2) A lien on real property, subject to the restrictions in [FAR sections] 28.203-2 and 28.203-3. 28.203-2 Acceptability of assets (a) The Government will accept only cash, readily marketable assets, or irrevocable letters of credit from a federally insured financial institution from individual sureties to satisfy the underlying bond obligations. (b) Acceptable assets include-- (1) Cash, or certificates of deposit, or other cash equivalents with a federally insured financial institution; (2) United States Government securities at market value. (An escrow account is not required if an individual surety offers Government securities held in book entry form at a depository institution. . . ); (3) Stocks and bonds actively traded on [eight named U.S. security exchanges] with certificates issued in the name of the individual surety. . .