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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: August 23, 2004

SUBJECT: Federal Acquisition Regulation (FAR); Powers of Attorney for Bid Bonds

SOURCE: Federal Register, August 23, 2004, Vol. 69, No. 162, page 51935

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR 28.101-3, Authority of an Attorney-in-Fact for a Bid Bond, be added to establish that a copy of an original power of attorney, when submitted in support of a bid bond, is sufficient evidence of the authority to bind the surety.

DATES: Comments should be submitted on or before October 22, 2004.

ADDRESSES: Submit comments, identified by "FAR Case 2003-029," to: (1) http://www.regulations.gov; (2) http://www.acqnet.gov/far/ProposedRules/proposed.htm; (3) e-mail: farcase.2003-029@gsa.gov; (4) fax: 202-501-4067; or (5) mail: General Services Administration, Regulatory Secretariat (MVA), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405.

FOR FURTHER INFORMATION CONTACT: Cecelia Davis, 202-219-0202.

SUPPLEMENTAL INFORMATION: Since 1999, a series of Government Accountability Office (GAO) decisions has rejected faxed and photocopied powers of attorney. Then, in All Seasons Construction, Inc., B-291166.2, December 6, 2002, GAO sustained the government's decision to reject a low bidder's power of attorney because the signatures were generated by computer as part of the document. This decision has been interpreted by industry and procuring agencies to require a contracting officer to inspect the power of attorney at bid opening to ascertain that the signatures are original. The requirement for an original power of attorney, combined with the requirement for an original "wet" signature after the generation of the document, has become costly and unworkable for the surety industry.

However, on January 9, 2004, the U.S. Court of Federal Claims (COFC), in Hawaiian Dredging Construction Co. v. U.S., No. 03-2763C, ruled against the government's decision to reject a low bidder's power of attorney because the signatures were not original. In this decision, the COFC indicated that the FAR does not require an original signature on the document that serves as evidence of authority to bind the surety. In addition, the COFC held that the contracting officer was unreasonable in relying on GAO's All Seasons to require original signatures and was critical of certain aspects of GAO's reasoning in the decision. The Hawaiian Dredging case has created a division of opinion in the bid protest forums in regards to the standards for acceptability of powers of attorney.

This proposed rule would establish clear and uniform standards for powers of attorney accompanying bid bonds that safeguard the integrity of the procurement process but are not unduly onerous to either industry or government. It would allow a copy of an original power of attorney, including a photocopy or facsimile copy, as sufficient evidence of authority for a person signing a bid bond to bind the surety as an attorney-in-fact. While providing the bid bond with evidence of power of attorney would remain a matter of responsiveness, any doubt regarding the authenticity and enforceability of a power of attorney would be handled by the contracting officer after the bid opening as a matter of responsibility. The proposed rule is consistent with commercial practice, decreases the burden on industry, and would give the contracting officer sufficient time to make informed decisions.

The proposed FAR 28.101-3 would be:

      "(a) Any person signing a bid bond as an attorney-in-fact shall include with the bid bond evidence of authority to bind the surety.

      "(b) An original or photocopy, or facsimile of an original power of attorney is sufficient evidence of such authority.

      "(c) The contracting officer shall --
      "(1) Treat the failure to provide a signed and dated power of attorney at the time of bid opening as a matter of responsiveness; and

      "(2) Treat questions regarding the authenticity and enforceability of the power of attorney at the time of bid opening as a matter of responsibility. These questions are handled after bid opening."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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