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Maryland State Board of Contract Appeals Rules That the Failure to Supply an Original Power of Attorney With Bid Bond Is Not Fatal to the Bid

In Appeal of Southern Improvement Company, Inc., MSBCA 2904, the Maryland State Board of Contract Appeals considered whether the failure to supply an original Power of Attorney with a bid bond constituted a “minor irregularity,” which may be waived, or in the alternative, rose to a level of deficiency to render a bid non-responsive thereby disqualifying it from the solicitation.

In this appeal, Southern Improvement Company challenged the sufficiency of the bid bond documents supplied by another interested party. This other party had used a bid bond on the form provided by the procuring agency and had correctly identified the bidder, oblige, surety, amount of the bond and the applicable contract. It was also appropriately executed by the President of the interested party and contained the raised seal of the surety.

However, the Power of Attorney provided by the bonding agent as evidence of the valid execution of the bid bond by a duly authorized agent of the surety was a copy and not the original. The POA also contained a watermark stamps of the word “void,” as well as the statement “this document is not valid unless printed on gray shaded background with a red serial number in the upper right hand corner. If you have any questions concerning the authenticity of this document, call 800-475-4450.” The POA supplied with the bid was black and white copy.

Upon discovering that the POA was a copy, the procurement officer contacted the interested party to ask for the original. Southern Improvement Company filed a bid protest objecting to the eligibility of the interested party on the basis that it had failed to provide a valid bid bond. The procurement agency denied the protest stating that the provision of a copy of a POA was a “minor irregularity.”

In considering this appeal, the MSBCA highlighted those instances in which a defect in the bid bond documentation would disqualify a bidder: (1) a bid bond’s failure to reflect the State of Maryland as an oblige; (2) a bid bond that references an incorrect contract number; (3) a bid bond that does not provide the measure of protection required in the solicitation; (4) a bid bond that fails to include the penal sum of the bond; and (5) a bid bond that fails to include a provision for automatic extension of the surety’s obligation for a period of time without the consent of the surety where the State has required an extension as a condition of the bond assuring the validity of a bid.

However, where an alleged defect “has no impact on the validity of the bond, it may be presumed to be a minor irregularity.” In this instance, the bond itself had contained the surety’s raised seal and complied in all other material respects. Moreover, there was no contention that the surety agent did not have actual authority to supply the bond. The MSBCA stated that “even without the power of attorney at all, the Bid Bond alone documents the enforceable obligation of the surety to the State. Because the Bid Bond appears to be enforceable with or without the original of the Power of Attorney, the bid is responsive.” However, the MSBCA qualified this statement by indicating that it is a better practice to include the POA with the bid bond.

For further information on procurement, bid protests or bonding issues, contact Matt Hjortsberg at (410) 583-2400 or Hjortsberg@bowie-jensen.com.

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