Who Are You? Ambiguity as to Identity of Bond Principal Costs Joint Venture a Contract

“Who Are You?” asks Pete Townshend, the songwriter behind the tune a later generation would come to know as “The CSI Song.”  It’s a good question when it comes to self-reflection (or catching criminals), but it’s not so great when the government is asking the same thing in reference to a bid bond.

An ambiguous bid bond can cost an otherwise successful offeror to lose a contract.  And as the GAO’s decision in GAO Protest of BW JV1, LLC, B-401841 (Dec. 4, 2009) demonstrates, it is especially important for offerors submitting as joint venturers or in other teaming arrangements to carefully consider their bid bond arrangements to eliminate any potential ambiguities.

The BW JV1 bid protest arose from an Invitation for Bids issued by the Department of Veterans Affairs for renovations at the Clement J. Zablocki VA Medical Center in Milwaukee.  The IFB called for offerors to submit bid guarantees, or bid bonds, in an amount not less than twenty percent of the bid price.

BW JV 1, a joint venture comprised of BW Contracting Services and KPH Construction Corporation, submitted the apparent low bid.  The accompanying bid bond identified the bond principal as “BW JVI” and noted that it was a “joint venture.”   However,  a notarized “Acknowledgment of Principal” form attached to the bond identified the principal as KPH Construction, and was signed by KPH’s President.

The VA determined that the conflicting information created an ambiguity as to whether the bid and the bid bond were submitted by the same entity, and refused to award the contract to BW JV 1.

The GAO denied the joint venture’s bid protest, holding that “the identification [KPH Construction] as the entity that executed the bid bond calls into question the liability of the surety with respect to the joint venture, thus rendering the bid nonresponsive.”  In response to the joint venture’s contention that KPH Construction, as a joint venture partner, had authority to bind BW JV1, the GAO reviewed BW JV1’s joint venture agreement and determined that it required both partners to execute the bid bond.

Finally, the GAO rejected the joint venture’s contention that the agency should have clarified the ambiguity, writing “Where a protester submits a bid bond that creates an ambiguity in the identity of the principal and the nominal bidder, the contracting offcer is not obligated to reconcile the ambiguity by deductions and inferences in order to make the bid responsive.”

The BW JV1 bid protest offers a good lesson for government contractors: before submitting a bid, carefully review any required bid bond with an eye for any potential ambiguities. It sounds like a simple matter, but especially as here, where the offeror is a joint venture, it can be easy to lose sight of the fact that the joint venture—not one of its constituent members—must be identified as the bond principal.  Otherwise, you could leave the government scratching its head and asking “Who Are You?”

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>