[Federal Register: August 23, 2004 (Volume 69, Number 162)]
[Proposed Rules]
[Page 51935-51937]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23au04-14]
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Part IV
Department of Defense
General Services Administration
National Aeronautics and Space Administration
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48 CFR Part 28
Federal Acquisition Regulation; Powers of Attorney for Bid Bonds;
Proposed Rule
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 28
FAR Case 2003-029
RIN 9000-AK01
Federal Acquisition Regulation; Powers of Attorney for Bid Bonds
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule with request for comments.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to establish that a copy of an
original power of attorney, including a photocopy or facsimile copy,
when submitted in support of a bid bond, is sufficient evidence of the
authority to bind the surety. The authenticity and enforceability of
the power of attorney at the time of the bid opening will be treated as
a matter of responsibility.
DATES: Interested parties should submit comments in writing on or
before October 22, 2004, to be considered in the formulation of a final
rule.
ADDRESSES: Submit comments identified by FAR case 2003-029 by any of
the following methods:
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.
Follow the instructions for submitting comments.
Agency Web Site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov/far/ProposedRules/proposed.htm.
Click on the FAR case number to submit comments. E-mail: farcase.2003-029@gsa.gov. Include FAR case 2003-
029 in the subject line of the message.
Fax: 202-501-4067.
Mail: General Services Administration, Regulatory
Secretariat (V), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte,
Washington, DC 20405.
Instructions: Please submit comments only and cite FAR case 2003-
029 in all correspondence related to this case. All comments received
will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.acqnet.gov/far/ProposedRules/proposed.htm
, including any personal information
provided.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat at (202) 501-4755
for information pertaining to status or publication schedules. For
clarification of content, contact Ms. Cecelia Davis, Procurement
Analyst, at (202) 219-0202. Please cite FAR case 2003-029.
SUPPLEMENTARY INFORMATION:
A. Background
This FAR rule proposes to revise the policy relating to acceptance
of copies of powers of attorneys accompanying bid bonds. There has been
a significant level of controversy surrounding contracting officers'
decisions regarding the evaluation of bid bonds and accompanying powers
of attorney.
Since 1999, a series of GAO decisions has rejected telefaxed as
well as photocopied powers of attorney. Then in All Seasons
Construction, Inc., B-291166.2, Dec. 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.
Furthermore, most recently, on January 9, 2004, the U.S. Court of
Federal Claims (COFC), in Hawaiian Dredging Constr., Co. v. U.S., No.
03-2763C, issued a ruling opposing 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. Moreover, the COFC held that the
contracting officer was unreasonable in relying on 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.
Another problem is that it has become even more difficult for the
contracting officer to determine at bid opening the authenticity and
enforceability of the power of attorney. Commercial practice would
permit a quick check to determine if the power of attorney was in fact
authentic and enforceable. However, in our current procurement process,
if the contracting officer is unable to determine with unequivocal
certainty that the surety would be bound by the bid bond and associated
documents, then the bid must be rejected as nonresponsive. This may not
be in the best interest of the Government, if the power of attorney was
actually authentic and enforceable. Only after the rejected bidder
challenges the contracting officer decision in a bid protest are the
facts established through testimony and representations of the surety
company as to whether the document was indeed authentic. If doubt about
the power of attorney becomes a matter of responsibility rather than
responsiveness, then the surety can confirm whether the attorney-in-
fact is actually authorized to represent the company before the
contracting officer rejects the bid.
The objective of the proposed rule is to 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 both industry and Government. Accordingly, the Councils
propose a rule that will 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. Providing the bid bond with evidence of power of
attorney is still a matter of responsiveness, but if there is any
reason to doubt the authenticity and enforceability of a power of
attorney at the time of the bid opening, the rule provides that the
contracting officer will handle this after the bid opening as a matter
of responsibility. The proposed rule is consistent with commercial
practices, decreases the burden on industry, and will allow the
contracting officer to make more informed decisions that are in the
best interest of the Government.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies to
this rule, because the proposed change to FAR Part 28 may have a
significant beneficial economic impact on a substantial number of small
entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C.
601, et seq. This rule establishes very simple and uniform standards
for providing evidence of
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powers of attorney, which remove a costly and unworkable requirement
from all sureties and attorneys-in-fact. An Initial Regulatory
Flexibility Analysis (IRFA) has been prepared and is summarized as
follows:
The objective of this proposed rule is to establish clear and
uniform standards for powers of attorney accompanying bid bonds and
to allow the contracting officer to make more informed decisions
that are in the best interest of the Government. The proposed rule
applies to all offerors in Federal acquisitions that require bid
bonds, and the associated sureties and attorneys-in-fact. The
proposed rule will reduce the information collection requirement by
simplifying the standards for an acceptable evidence of power of
attorney in support of a bid bond. There are no significant
alternatives to the proposed rule that accomplish the stated
objectives. This rule will have a beneficial impact on small
entities, which are offerors in Federal acquisitions that require
bid bonds, as well as the associated sureties and attorneys-in-fact.
A copy of the IRFA has been submitted to the Chief Counsel for
Advocacy of the Small Business Administration. Interested parties may
obtain a copy of the IRFA from the FAR Secretariat. We invite comments
from small businesses and other interested parties. The Councils will
consider comments from small entities concerning the affected FAR Part
in accordance with 5 U.S.C. 610. Interested parties must submit such
comments separately and should cite 5 U.S.C. 601, et seq. FAR case
2003-029, in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does apply; however, these changes to
the FAR do not impose additional information collection requirements to
the paperwork burden previously approved under OMB Control Number 9000-
0045. The Councils estimate that this revision will decrease the actual
burden because it will reduce the number of hours that industry must
expend in providing original powers of attorney.
List of Subjects in 48 CFR Part 28
Government procurement.
Dated: August 17, 2004.
Laura Auletta,
Director, Contract Policy Division.
Therefore, DoD, GSA, and NASA propose amending 48 CFR part 28 as
set forth below:
PART 28--BONDS AND INSURANCE
1. The authority citation for 48 CFR part 28 is revised to read as
follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
2. Add section 28.101-3 to read as follows:
28.101-3 Authority of an Attorney-in-Fact for a Bid Bond.
(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.
[FR Doc. 04-19234 Filed 8-20-04; 8:45 am]