Aeroplate Corp. v. United States

67 Fed. Cl. 1, 2005 U.S. Claims LEXIS 232, 2005 WL 1840044
CourtUnited States Court of Federal Claims
DecidedJuly 15, 2005
DocketNo. 05-736C
StatusPublished
Cited by2 cases

This text of 67 Fed. Cl. 1 (Aeroplate Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aeroplate Corp. v. United States, 67 Fed. Cl. 1, 2005 U.S. Claims LEXIS 232, 2005 WL 1840044 (uscfc 2005).

Opinion

MEMORANDUM OPINION AND ORDER FOR TEMPORARY AND PRELIMINARY INJUNCTIVE RELIEF

CHRISTINE O. C. MILLER, Judge.

Before the court after argument on July 14, 2005, is plaintiffs application for a temporary restraining order and preliminary injunction in this post-award bid protest. At issue is whether the Departments of the Army and Air Force, National Guard Bureau, U.S. Property and Fiscal Officer for California, Fresno, California (the “FANG”), acted arbitrarily or capriciously by rejecting plaintiffs apparent low bid as nonresponsive because a corporate seal was not affixed to an otherwise facially valid bid bond and because the surety communicated to the contract administrator after the bid opening that the surety would not guarantee the bid amount.

According to the complaint filed on July 8, 2005, Aeroplate Corporation (“plaintiff’) timely submitted on June 2, 2005, a sealed bid in the amount of $7.3 million for Solicitation No. W912LA-05-B-0001 to complete repair and construction work on a maintenance hanger for the Fresno Air National Guard Station in Fresno, California. Plaintiff submitted one of five bids, and it was the apparent lowest bidder.

By letter dated June 29,2005, Lt. Col. Eric H. McDonald, Chief Purchasing and Contracting Division, informed plaintiff that the California Army National Guard was rejecting plaintiffs bid because it submitted an “invalid” bid bond. Lt. Col. McDonald explained that the bond was “executed improperly” because the bond submitted lacked a corporate seal affixed on the front of the document as required by Instruction number 5, Standard Form 2-4 (Rev.1-90). Lt. Col. McDonald also explained that, on June 23, 2005, the Government was notified by the surety, Arch Insurance Company (“Arch”), that it would not, and did not, authorize a bond for the amount of the bid; it only authorized, according to Lt. Col. McDonald, [2]*2an amount of $5.0 million, not to exceed $5.5 million. As a consequence, Lt. Col. McDonald’s letter states that “it is not clear to the government that the surety feels liable for the penal amount of the bond.”

Plaintiff contends that the FANG’s decision to reject plaintiffs bid as nonresponsive is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. Plaintiff seeks a temporary restraining order and preliminary injunction to enjoin defendant from proceeding with the contract until this court may have opportunity to render decision on its complaint for declaratory and permanent injunctive relief. For the following reasons, this court grants interim injunctive relief.

DISCUSSION

On request for preliminary injunctive relief, the court must weight the following four factors: “(1) immediate and irreparable injury to the movant; (2) the movant’s likelihood of success on the merits; (3) the public interest; and (4) the balance of hardship on all the parties.” U.S. Ass’n of Importers of Textiles & Apparel v. United States, 413 F.3d 1344, 1347-48 (Fed.Cir.2005). No single factor is determinative, and “the weakness of the showing regarding one factor may be overborne by the strength of the others.” FMC Corp. v. United States, 3 F.3d 424, 427 (Fed.Cir.1993).

In the context of a bid protest, success on the merits would require plaintiff to prove that the contracting agency’s decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. 5 U.S.C. § 706(2)(A) (2000); 28 U.S.C. § 1491(b)(4). 48 C.F.R. (FAR) § 52.228-1(a)-(b) (2000), “Bid Guarantees,” provides, in pertinent part:

(a) Failure to furnish a bid guarantee in the proper form and amount, by the time set for opening of bids, may be cause for rejection of the bid.
(b) The bidder shall furnish a bid guarantee in the form of a firm commitment, e.g., bid bond supported by good and sufficient surety or sureties acceptable to the Government, postal money order, certified check, cashier’s check, irrevocable letter of credit, or, under Treasury Department regulations, certain bonds or notes of the United States. The Contracting Officer will return bid guarantees, other than bid bonds, (1) to unsuccessful bidders as soon as practicable after the opening of bids, and (2) to the successful bidder upon execution of contractual documents and bonds (including any necessary coinsurance or reinsurance agreements), as required by the bid as accepted.

Defendant’s contention that the failure to affix the corporate seal to the bid bond renders the bid nonresponsive falls within this court’s discussion of the law of bid bonds in Hawaiian Dredging Construction Co. v. United States, 59 Fed.Cl. 305, 316 (2004) (ruling that contracting officer’s rejection of bid because bid bond’s authenticating documents lacked original signatures was contrary to law where surety bound itself to obligations of bond). Hawaiian Dredging stands for the proposition that certain technical deficiencies do not affect the validity of the bid bond. See also Skytech Aero, Inc. v. United States, 26 Cl.Ct. 251, 254 (1992) (“Moreover, the responsiveness of a bid is not affected by the bidder’s failure to affix its corporate seal to the bid.”); Noslot Pest Control, Inc., 68 Comp. Gen. 396, B-229555, 88-1 CPD § 259, at 398 (“The absence of corporate seals from the bid or bid bond does not make the bids nonresponsive since evidence of a signer’s authority to bind the bidding company may be furnished after bid opening.”). Defense counsel concedes that the failure to affix a corporate seal does not invalidate the bid bond.

Defendant urges that the FANG’s determination of nonresponsiveness was reasonable because the agency received a communication from the surety that rendered the bid bond invalid. In defending the agency’s statement that it was not clear that the surety “feels liable” for the bond, defendant proffers a June 23, 2005 email from Susan D. Neff, counsel for Arch, which begins: “I have made some revisions to your summary....” The body of the transmission (“the summary”) states, in part, that Arch authorized its agent, Willis Risk & Insurance (‘Willis”), [3]*3to approve a bond in the amount of $5.0 million, not to exceed $5.5 million. The summary then describes circumstances of “ineorrect[] communications,]” a “false sense of approval,]” and an unauthorized last-minute approval of a much higher bid bond by an agent of Willis.

After submitting the bid bond, according to this summary, “Arch instructed Willis for [plaintiff] to withdraw its bid. Instead, at [plaintiffs] insistence, a re-evaluation of [plaintiffs] financial situation was conducted by Arch[.]” The summary concludes that Arch continues to urge withdrawal of the bid and that it “does not intend to issue Performance & Payment Bonds[.]”1

The parties were afforded several days after plaintiffs application was heard on July 11, 2005, to submit a partial administrative record and additional documents. Although defendant indicates that other documents will be forthcoming, the request for interim injunctive relief is ripe for a ruling.

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Related

Aeroplate Corp. v. United States
71 Fed. Cl. 568 (Federal Claims, 2006)

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Bluebook (online)
67 Fed. Cl. 1, 2005 U.S. Claims LEXIS 232, 2005 WL 1840044, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aeroplate-corp-v-united-states-uscfc-2005.