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Bid Guarantee


Rodolfo

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QUESTION: Can an offeror, in spite of what the RFP prescribes, submit as bid guarantee a cashier?s check, not a personal check, drawn to the order of the Contracting Agency for the same amount set forth in the RFP? :)

BACKGROUND: A Contracting agency operating in Italy has issued a RFP for the demolition of some bunkers (construction). The FAR provision 52 228 1 Bid Guarantee Sep 1996 DEVIATION incorporated under Section 00800 of the RFP provides that ?THE OFFEROR SHALL FURNISH A PROPOSAL GUARANTEE IN THE FORM OF A FIRM COMMITMENT SUPPORTED BY A REGISTERED BANK USING THE FORMAT PROVIDED AS ENCLOSURE #8? Enclosure #8 is letter in English that a bank should sign as guarantee. The agency is refusing to accept any other format of firm commitment (i.e., a cashier?s check) than the one required by the RFP stating that the request for the commitment by a registered bank (enclosure #8) is determined to be in the best interest of the Government and that the requirement for a guarantee from a bank adds assurances concerning the financial capacity of the company which are not present in a cashier?s check, or other potential type of bid guarantee allowed in the U.S. market under the standard FAR clause. I have done some researches (GAO File B 257056 File B 272179 File B, FAR Part 28-204.2) and it appears to me that the offeror has the option to submit the cashier?s check. What is your opinion? Thanks for your attention to this matter.

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Your answer is in the language you set forth. "IN THE FORM OF A FIRM COMMITMENT SUPPORTED BY A REGISTERED BANK USING THE FORMAT PROVIDED AS ENCLOSURE #8? If this is not what the offeror intended to do, a request to have that language modified should have been submitted during the solicitation period. Agencies do not like cashier's checks for a number of reasons (ever lost one?) - but may accept it if allowed by the language of the solicitation - here, it would not be allowed because of the limitation in the above sentence.

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Guest Vern Edwards
QUESTION: Can an offeror, in spite of what the RFP prescribes, submit as bid guarantee a cashier?s check, not a personal check, drawn to the order of the Contracting Agency for the same amount set forth in the RFP? :unsure:

BACKGROUND: A Contracting agency operating in Italy has issued a RFP for the demolition of some bunkers (construction). The FAR provision 52 228 1 Bid Guarantee Sep 1996 DEVIATION incorporated under Section 00800 of the RFP provides that ?THE OFFEROR SHALL FURNISH A PROPOSAL GUARANTEE IN THE FORM OF A FIRM COMMITMENT SUPPORTED BY A REGISTERED BANK USING THE FORMAT PROVIDED AS ENCLOSURE #8? Enclosure #8 is letter in English that a bank should sign as guarantee. The agency is refusing to accept any other format of firm commitment (i.e., a cashier?s check) than the one required by the RFP stating that the request for the commitment by a registered bank (enclosure #8) is determined to be in the best interest of the Government and that the requirement for a guarantee from a bank adds assurances concerning the financial capacity of the company which are not present in a cashier?s check, or other potential type of bid guarantee allowed in the U.S. market under the standard FAR clause. I have done some researches (GAO File B 257056 File B 272179 File B, FAR Part 28-204.2) and it appears to me that the offeror has the option to submit the cashier?s check. What is your opinion? Thanks for your attention to this matter.

File a protest with the GAO at once. A cashier's check is a perfectly acceptable bid guarantee. The purpose of a bid guarantee is to guarantee a bid, not to validate an offeror's financial capacity. Don't wait. Protest now. Today. You have nothing to lose.

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I don't think a protest would win - the language in the document in very clear as to the form of the bid guarantee. You are correct that a cashier's check provides the same guarantee, but they have precluded a cashier's check by their language. The protest would have to be on the language in the solicitation - not that they won't accept the check at this point - and I believe a protest at this date would be considered not timely.

Always worth a try though.

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Guest Vern Edwards
I don't think a protest would win - the language in the document in very clear as to the form of the bid guarantee. You are correct that a cashier's check provides the same guarantee, but they have precluded a cashier's check by their language. The protest would have to be on the language in the solicitation - not that they won't accept the check at this point - and I believe a protest at this date would be considered not timely. Always worth a try though.

Here is what was quoted to us from the RFP: "THE OFFEROR SHALL FURNISH A PROPOSAL GUARANTEE IN THE FORM OF A FIRM COMMITMENT SUPPORTED BY A REGISTERED BANK USING THE FORMAT PROVIDED AS ENCLOSURE #8"

I don't think that's so very clear. I read that sentence to say that the offeror had to provide a guarantee in the form of a firm commitment, which had to be "supported by a registered bank using a format as provided... ." In other words, the bid guarantee, in whatever form, had to be supported by something from a bank in the format of the enclosure, i.e., accompanied by another document. Did the agency mean "a proposal guarantee in the format provided as Enclosure 8, supported by a registered bank"? Why "supported"? Did they mean "a proposal guarantee in the format provided as Enclosure 8, furnished by a registered bank"? If they meant either of those things, which would have been clear, then that is what they should have written. A cashier's check is about as firm a commitment as anyone can imagine. Is a cashier's check in Italy different than it is here? All a cashier's check means is that you bought it with cash and it won't bounce. It doesn't say anything about financial capability beyond the amount of the check.

Besides, "format" is not the same as content. I think failure to provide something in the required format might not be a material failure.

The first poster said:

The agency is refusing to accept any other format of firm commitment (i.e., a cashier's check) than the one required by the RFP stating that the request for the commitment by a registered bank (enclosure #8) is determined to be in the best interest of the Government and that the requirement for a guarantee from a bank adds assurances concerning the financial capacity of the company which are not present in a cashier's check, or other potential type of bid guarantee allowed in the U.S. market under the standard FAR clause... .

Emphasis added.

The agency has complicated things for itself by saying that it needed something in the prescribed format in order to establish the offeror's financial capacity. The adequacy of a proposal guarantee is a matter of proposal acceptability. Financial capacity is a matter of offeror responsibility. In effect, it seems that the agency is rejecting the bid guarantee because the offeror has not provided proof of its responsibility. But it does not have to prove its responsibility at the time of proposal submission.

Protest!

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Don A. has a good point. I'm afraid I assumed the solicitation period was over with. If not, then the offeror should formally request the requirement be, at a minimum - clarifiied, or removed. I guess there are other factors to consider here too - is this federally funded and needs to follow the FAR? If not, you can request any of the documentation be provided in a certain format in an RFP and consider it a material defect if it's not submitted in that format. In a previous agency I worked for, if they did not use the language in the supplied sample bid bond, their bids were rejected. (federal funds, non-FAR).

Vern is correct - I don't read that sentence the way he does, but if there are two ways to read anything, an ambiguity arises and it should be clarified.

Also, I understand that some agencies have stopped accepting cashier's checks because they have received fraudulent ones. Those offerors obviously are taking no risk. Perhaps that is why the Agency in Italy will not accept them. They are good - if they are "good". But until you go to cash one, you may not know whether it's a real one or not.

This conversation may not be helpful to the originator, but it certainly has exercised MY mind!

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The FAR provision 52 228 1 Bid Guarantee Sep 1996 DEVIATION incorporated under Section 00800 of the RFP provides that ?THE OFFEROR SHALL FURNISH A PROPOSAL GUARANTEE IN THE FORM OF A FIRM COMMITMENT SUPPORTED BY A REGISTERED BANK USING THE FORMAT PROVIDED AS ENCLOSURE #8?

Rodolfo,

What agency authorized the deviation from FAR 52.228-1? How is it different from the standard provision?

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Rodolfo,

What agency authorized the deviation from FAR 52.228-1? How is it different from the standard provision?

In addition to Don's question, is there a way for you to provide a link to or a copy of the enclosure #8?

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