Hamilton Pacific Chamberlain, LLC

B-410955 Mar 30, 2015 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Hamilton Pacific Chamberlain, LLC, of Waldorf, MD, protests the rejection of its bid under invitation for bids (IFB) No. VA246-14-B-1143, issued by the Department of Veterans Affairs (VA) for the upgrade of a heating, ventilation, and air conditioning (HVAC) system. The protester argues that the agency improperly rejected its bid as noncompliant with the bid guarantee requirements in the solicitation. We deny the protest. We deny the protest. View Decision Decision Matter of: Hamilton Pacific Chamberlain, LLC File: B-410955 Date: March 30, 2015 Sean Milani-Nia, Esq., Fox Rothschild LLP, for the protester. Tyler W. Brown, Esq., Department of Veterans Affairs, for the agency. K. Nicole Willems, Esq., and Jennifer Westfall-McGrail, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST A bid bond is defective where no penal sum has been inserted on the bond, and the bond does not otherwise establish the intention of the surety to be bound in the required amount. DECISION Hamilton Pacific Chamberlain, LLC, of Waldorf, MD, protests the rejection of its bid under invitation for bids (IFB) No. VA246-14-B-1143, issued by the Department of Veterans Affairs (VA) for the upgrade of a heating, ventilation, and air conditioning (HVAC) system. The protester argues that the agency improperly rejected its bid as noncompliant with the bid guarantee requirements in the solicitation. We deny the protest. BACKGROUND The IFB, issued on September 5, 2014, sought bids for the replacement and upgrade of an HVAC system at the Hunter Holmes McGuire VA Medical Center in Richmond, Virginia. The IFB, which was set aside for service-disabled, veteran-owned small businesses, contemplated the award of a fixed-price contract. IFB at 10, 13. The solicitation required bidders to submit a bid guarantee with their bids, in the amount of twenty percent of the bid price or three million dollars, whichever was less. IFB at 15. The agency conducted a public bid opening on October 7, and eight bids were received. Contracting Officer’s (CO’s) Statement at 1. Hamilton Pacific Chamberlain (HPC) was the apparent low bidder, with a bid of $1,129,000. The protester had not entered an amount in the “Penal Sum of Bond” section of their bid bond (standard form (SF) 24), however, and the liability limit listed on the SF 24 ($6,457,000) exceeded the upper limit of the attorney-in-fact’s authority to bind the surety, as indicated in the attached power of attorney ($5,000,000). Id. As a result, the contracting officer rejected the protester’s bid, citing noncompliance with the bid guarantee requirements in the solicitation. Id. The protester learned that its bid had been rejected on December 16, 2014, and this protest followed. DISCUSSION The protester argues that the omission of the penal sum does not render the bid bond unenforceable because its surety is liable up to the amount authorized in the power of attorney. Comments on AR at 2. The agency argues that there is considerable uncertainty as to the agency’s ability to bind the surety for any amount because the liability limit listed on the bid bond exceeds the authority granted to the attorney-in-fact who signed the bid bond on behalf of the surety. Agency Report (AR) at 2. The general rule is that a bid is nonresponsive and must be rejected when accompanied by a bid bond that does not include the penal sum. Kennedy Electric Company, Inc., B-239687, May 24, 1990, 90-1 CPD ¶ 499 at 1; See also; M/V Constructor Co., B-232572, Sept. 20, 1988, 88-2 CPD ¶ 272 at 1; F&F Pizano, B‑219591, B-219594, July 25, 1985, 85-2 CPD ¶ 88 at 1; Allen County Builders Supply, B-216647, May 7, 1985, 85-1 CPD ¶ 507 at 1. The purpose of a bid bond is to assure that a bidder will not withdraw its bid within the time specified for acceptance; it secures the liability of a surety to the government in the event the bidder fails to fulfill its obligations. Allen County Builders Supply, supra. Thus, the sufficiency of a bid bond will depend on whether the surety is clearly bound by its terms; when the liability of the surety is not clear, the bond properly may be regarded as defective. Id. In support of its argument that the failure to list the penal amount on the bid bond does not render its bid nonresponsive, the protester relies on a decision issued by our Office, in which we held that a bid bond was enforceable against a single corporate surety, despite the omission of the penal sum, where the bond otherwise established the intent of the surety to be bound for a sufficient penal sum. Professional Restoration Services, Inc., B-232424, Jan.