Pacific Dredge and Construction, LLC (W912P720B0005)

B-418900 Sep 18, 2020 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights Pacific Dredge and Construction, LLC, a small business of San Diego, California, protests the rejection of its bid as nonresponsive under invitation for bids (IFB) No. W912P720B0005, issued by the Department of the Army, United States Army Corps of Engineers (Corps) for dredging. The protester challenges the agency's rejection of its bid for failing to submit a valid bid bond. We deny the protest. View Decision DOCUMENT FOR PUBLIC RELEASE The decision issued on the date below was subject to a GAO Protective Order. This version has been approved for public release. Decision Matter of:  Pacific Dredge and Construction, LLC File:  B-418900 Date:  September 18, 2020 Clinton D. Hubbard, Esq., Law Offices of Clinton D. Hubbard, for the protester. Allison J. Carmody, Esq., Department of the Army, for the agency. Heather Self, Esq., and Peter Tran, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Protest challenging agency’s rejection of bid as nonresponsive is denied because, notwithstanding prior dealing between the parties, agency reasonably rejected as defective a bid bond that limited the liability of the corporate surety with respect to excess reprocurement costs in the event of contractor default. DECISION   Pacific Dredge and Construction, LLC, a small business of San Diego, California, protests the rejection of its bid as nonresponsive under invitation for bids (IFB) No. W912P720B0005, issued by the Department of the Army, United States Army Corps of Engineers (Corps) for dredging.  The protester challenges the agency’s rejection of its bid for failing to submit a valid bid bond. We deny the protest. BACKGROUND On May 14, 2020, the Corps solicited bids for annual maintenance dredging of the Stockton deep water shipping channel in San Joaquin County, California.  Req. for Dismissal, attach. 1, IFB at 4.  The solicitation provided that award would be made in accordance with Federal Acquisition Regulation (FAR) provision 52.214-19, which sets forth that the government “will award a contract to the responsible bidder whose bid, conforming to the solicitation, will be most advantageous to the Government, considering only price and the price-related factors specified elsewhere in the solicitation.”  Id. at 10; FAR provision 52.214-19.  The solicitation required bidders to submit pricing for each item in the pricing schedule in order to be considered responsive.  IFB at 10.  The solicitation also required bidders to submit a bid guarantee, and included FAR provision 52.228-1, Bid Guarantee, which informed bidders that failure to furnish a bid guarantee in the proper form and amount could result in rejection of a bid.  Id. at 4, 14, 16, 40.  The Corps conducted bid opening on June 15.  Req. for Dismissal, attach. 4, Abstract of Bids.  Pacific was the apparent low bidder.  Id.  Pacific submitted its bid guarantee on a commercial form furnished by the American Institute of Architects, in lieu of submitting a completed FAR standard form (SF) 24 bid bond.  Agency Report (AR), Tab 1, Protester’s Bid Package.  Of relevance here, the bid bond submitted by Pacific provided that in the event of the contractor’s default “[the surety] pays to the Owner [the Corps] the difference, not to exceed the amount of this Bond, between the amount specified in said bid and such larger amount for which the Owner [the Corps] may in good faith contract with another party to perform the work covered by said bid[.]”  Id. at 9 (hereinafter referred to as the bond’s “default clause”).  Pacific’s bid bond further provided that: When this Bond has been furnished to comply with a statutory or other legal requirement in the location of the Project, any provision in this Bond conflicting with said statutory or legal requirement shall be deemed deleted herefrom and provisions conforming to such statutory or other legal requirement shall be deemed incorporated herein.  When so furnished, the intent is that this bond shall be construed as a statutory bond and not as a common law bond. Id. (hereinafter referred to as the bond’s “savings clause”). In reviewing Pacific’s bid, the contracting officer concluded that the default clause of Pacific’s bid bond did not “provide the full range of protections” specified in FAR provision 52.228-1, which requires the surety to cover all excess reprocurement costs in the event of a default.  AR, Tab 4, Bid Rejection Letter.  The contracting officer informed Pacific that its bid was rejected as nonresponsive, noting that a prior decision of our Office “required” the government to reject Pacific’s bid because in that decision our Office concluded that a bid bond submitted using the same commercial bid bond form submitted by Pacific here was ambiguous, and, therefore, defective.  Id., citing G2G, LLC, B-416502, Sept.