Bond Mistake Sinks Contractor’s Bid

Check your bid bonds, then check them again–especially if you are bidding on multiple procurements at the same time.

That’s the lesson to be learned from a recent GAO bid protest decision, in which a contractor’s bid was rejected because its bid bond referenced the wrong solicitation number and bid opening date.  Reading between the lines, it seems that a simple mistake occurred, confusing the solicitation with another procurement.  But assuming that to be the case, the simple mistake (and the contractor’s failure to catch it) cost the contractor an award.

The GAO’s decision in BCI Construction USA, Inc., B-407451 (Dec. 4, 2012) involved an Army Corps of Engineers invitation for bids for construction services at Bolivar Dam in Ohio.  The IFB required bidders to submit a bid guarantee, or bid bond, in the amount of 20 percent of the bid price or $3 million, whichever was less.

BCI Construction USA, Inc., submitted the apparent low bid.  However, BCI’s bid bond referenced a different ongoing procurement, the bid opening date was incorrect, and the bond’s description of the work did not reference the Ohio location.  Instead, the information in the bid bond corresponded to a different Corps procurement for work in Pennsylvania–a procurement BCI was also bidding on (and later won).

The Corps determined that BCI’s bond was defective and rejected BCI’s bid.  BCI then filed a GAO bid protest, arguing that the mistakes in the bid bond were minor clerical errors that BCI could have easily corrected or that the Corps could have waived.

Citing prior GAO bid protest decisions, the GAO wrote that “[t]he determinative question in judging the sufficiency of a bid guarantee is whether it could be enforced if the bidder subsequently fails to execute required contract documents and to provide performance and payment bonds.”  The GAO continued, “a bid bond is defective, and the agency may properly reject the bid, where the bond references a wrong bid opening date and identifies a different solicitation instead of the solicitation that the bond is actually intended to cover.”  The GAO explained that in such a case, “the bid bond’s reference to a different solicitation provides the surety with an opportunity to subsequently assert that it was liable only for a default for a bid on the wrongly cited procurement, not the bidder’s intended procurement.”

In BCI’s case, the GAO held that the agency properly determined that BCI’s bid bond was defective and rejected BCI’s bid because “it is uncertain whether, at the time of bid opening, BCI had provided the government a legally binding bid bond as required by the IFB.”  The GAO denied BCI’s bid protest.

The BCI Construction USA GAO bid protest decision demonstrates the critical importance of checking and double-checking bid bonds to make sure that they contain the correct information.  Especially when a contractor is competing on multiple procurements at the same time, it is easy for a mistake to be made.  However, regardless of whether a bid bond mistake is made by the surety or the contractor, is is the contractor that pays the price for a defective bid bond–as BCI learned the hard way.

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