Late last year, the Court of Federal Claims (“COFC”) contradicted long-standing Government Accountability Office (“GAO”) precedent on the acceptability of photocopied signatures on bid bonds finding that the Government’s reliance on GAO’s decisions was not rational. The COFC decision directly criticizes well-established GAO precedent dating back to 1987 and asserts that GAO has been misinterpreting its own decisions for decades. While I’ve written extensively about splits between COFC and GAO, it is exceptionally rare for COFC to explicitly contradict or criticize GAO.
Dirk Haire, Joseph Cohen, and myself filed this COFC bid protest on behalf of Togiak Management Services, LLC (“Togiak”) after the United States Army Corps of Engineers (“USACE”) rejected Togiak’s bids on two projects because the bid bonds didn’t include an original “wet-ink” signature. Togiak Mgmt. Servs., LLC v. United States, 169 Fed. Cl. 83 (2023). The fallout should change the way contractors, bond brokers, and government agencies treat bid guarantees and related protests.
In rejecting Togiak’s bids, USACE claimed that the lack of original “wet-ink” signatures on the bid bonds rendered the entire bid non-responsive. The government relied on GAO precedent in its explanation, citing TJ’s Marine Constr. LLC, B-402227 (Jan. 7, 2010). GAO has said for decades that copies of bid guarantee documents are not sufficient because they could be altered. During the COVID-19 pandemic, however, various agencies issued exceptions to the GAO principle that photocopies were unacceptable to keep government work moving. It became a widespread practice in the industry to use electronic signatures and/or photocopies for bid guarantees as a result. This was a core argument we made in this protest, among others. .
In the Togiak’s case, however, the Court’s holding was not limited to if “wet-ink” signatures are required. Instead, the Court found that GAO misinterpreted its own precedent and it was not rational for USACE to rely on GAO’s incorrect holdings. The Court dissected GAO decisions, saying that GAO had misinterpreted earlier related bid guarantee issues in Imperial Maint., Inc., B-224257 (Jan. 8, 1987). In essence, the Court showed that the earlier decisions were not focused on whether the bid bond was photocopied, but rather whether there was evidence of “material alterations” Ameron, Inc., B-218262 (Apr. 29, 1985; Baucom Janitorial Service, Inc., B-206353 (Apr. 19, 1982).
Because USACE had no reason to think Togiak’s bid bonds were altered, the Court found it irrational to reject them. In theory, if USACE had any other reason to reject the photocopied bid bonds aside from blind reliance on GAO precedent, the outcome might have been different.
The takeaway today is to make every effort to avoid the expense of protesting by providing original bid bond documents. Going forward, GAO could revise its position or the Federal Acquisition Regulation (“FAR”) council could step in. Until then, if you do have a dispute over the rejection of your photocopied or electronically signed bid bonds, you would be wise to protest at COFC rather than GAO.
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