Tuesday, November 9, 2010

Determining the Sufficiency of a Bid Bond

When a public works construction project requires the submission of a bid bond with the bid, under what circumstances should the bid be rejected as non-responsive for failure of the bidder to provide a sufficient bid bond?

Is the Bid Bond Enforceable?  Generally, the key question to ask about any irregularity in a bid bond is whether the bid bond would be enforceable with the surety (bonding company).  If the bid bond could not be enforced, the bid would typically be considered non-responsive.

No Surety Signature:  For example, if the bid bond was not signed by the surety or the surety's representative, the surety would argue that there was no agreement on their part to provide the bid bond.  In such a case, the bid would probably be rejected as non-responsive.

Different Names:  But what happens if the name of the bidder on the bid form and the name of the bidder in the bid bond (principal) are different?  In a recent case before the U.S. Government Accountability Office, based on specific facts, GAO ruled that a discrepancy in the names of the bidder and the bid bond principal still rendered the bid bond enforceable because the record showed that the bidder and the bid bond principal were, in fact, the same entity, and the bid was responsive.  In different situations, however, a discrepancy between the name of the bidder and the name of the bid bond principal could render a bid non-responsive.   Click here to read the 4 page GAO decision.

Consult Your Attorney:  Bid responsiveness questions are best handled on a case-by-case basis and with the advice of your attorney.

Mike Purdy's Public Contracting Blog (© 2010 by Michael E. Purdy Associates) 

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