Sahara Prince | Shutterstock

Protest challenging the rejection of the protester’s bid as nonresponsive is denied. The invitation for bids required bidders to submit a bid bond. The protester submitted a commercial bid bond in lieu of the government’s standard form. The agency, citing GAO precedent, opined that commercial bid bonds are defective and thus rejected the protester’s bid as nonresponsive. The protester argued that the agency unreasonably rejected the bid because the parties had a prior course of dealing where the agency had accepted commercial bid bonds. GAO opined that responsiveness to a bid is determined solely from the face of the bid. Thus, the parties’ course of dealing cannot fill in the gaps to make a nonresponsive bid—e.g., a bid with a defective bid bond—responsive.

The Army Corps of Engineers issued an invitation for bids (IFB) for dredging of a shipping canal in California. The IFB provided that award would be based only on the price related factors specified in the solicitation. The IFB required bidders to submit a bid guarantee.

Pacific Dredge and Construction submitted a bid in response to the IFB. For its bid guarantee, Pacific did not submit the FAR standard form 24 bid bond. Instead, the company submitted a commercial bid bond form used by the American Instituted of Architects. That form provided that that in the event of Pacific’s default, the surety would pay the Corps the difference between the amount of Pacific’s bid and any larger amount the Corps had to pay another contractor to perform the work covered by Pacific’s bid.

The contracting officer rejected Pacific’s bid, concluding that the default clause in Pacific’s bid did not provide the full range of protections required to cover excess procurement costs. Indeed, the contracting officer noted that GAO had previously held that bid bonds submitted on the commercial form used by Pacific were ambiguous and thus defective. Pacific protested, challenging the rejection of its bid.

A bid bond ensures that a bidder will not withdraw its bid during the acceptance period and will furnish the required performance. The bond is ensure that a surety will provide funds to cover the government’s excess costs in awarding a contract to the next available bidder. When a bidder submits a defective bid bond, the bid itself is rendered nonresponsive.

GAO noted that it has consistently found that default language in commercial bid bonds—i.e., the language limiting the surety’s liability to the difference between the bid amount and a replacement contract—is defective because it does not unequivocally bind the contractor.

In its protest, Pacific acknowledged GAO precedent finding the commercial bid bonds defective. But, Pacific argued, those cases were distinguishable because they addressed the bonds “in isolation from the parties’ mutual understanding.” Here, Pacific argued, there was an established course of dealing between the parties—that is, the Corps had previously accepted bid guarantees from Pacific on the same commercial bid bond form.

GAO rejected the argument. The responsiveness of a bid is determined solely from the face of the bid and the materials submitted with the bid. The past course of dealing between a contractor and the government cannot affect the responsiveness to a bid. The fact that the Corps may have previously selected a defective bid bond from Pacific does not prohibit the government from invoking the proper legal requirements of competitive bidding. An improper award under one IFB does not justify an improper award under a subsequent IFB.

Pacific is represented by Clinton D. Hubbard of The Law Offices of Clinton D. Hubbard. The agency is represented by Alison J. Carmody of the Army. GAO attorneys Heather Self and Peter Tran participated in the preparation of the decision.