GAO Rejects Contractor's Use of AIA Bid Bond for Federal Project

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As all construction contractors know, the American Institute of Architects (AIA) provides a series of nearly 200 industry standard consensus forms that define the relationships and terms involved in design and construction projects.  While these forms are appropriate for commercial projects, contractors that perform a mix of commercial and government projects should use caution when using them in a government contract context.

In a decision published on September 24, 2020, the Government Accountability Office (GAO) considered a federal contractor’s use of an AIA Bid Bond enclosed with the offer instead of a Standard Form SF24 bid bond that directly tracks the requirements of Federal Acquisition Regulation (FAR) provision 52.228-1.  A bid bond is often required by an owner to provide assurance that if the bidder is offered a contract based on its proposal but fails to then enter into the contract, the owner will be compensated for the difference in cost to award the contract to the next qualified bidder. 

In Matter of Pacific Dredge and Construction, LLC, B-418900, the GAO denied the protest of an offeror whose bid was rejected by the U.S. Army Corps of Engineers (USACE) as nonresponsive due to the commercial bid bond form submitted failing to provide the full range of protections specified in FAR provision 52.228-1.  The GAO noted that use of a commercial bid bond form is not per se objectionable, but the analysis must consider whether the form is sufficient or whether it represents a significant departure from the rights and obligations required by the FAR and set forth in the SF24.  The GAO concluded that the AIA A310 bid bond submitted failed that analysis and so denied the protest.  In making that determination, the GAO rejected the Protester’s argument that the USACE’s acceptance of the same commercial bid bond for other projects had established a course of dealing between itself and the USACE and that the offer therefore should not have been deemed nonresponsive.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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