IN THE UNITED STATES COURT OF FEDERAL CLAIMS

____________________________________ ) LEEWARD CONSTRUCTION, INC., ) ) Plaintiff, )

) v. ) No. 22

- 374 C ) THE UNITED STATES, ) Filed: June 17 , 2022 ) Defendant, ) Reissued: July 5 , 2022 1

) and ) ) MOHAWK VALLEY MATERIALS, INC., ) ) Defendant

- Intervenor. )

____________________________________ )
OPINION AND ORDER Plaintiff Leeward Construction, Inc. (“Leeward”) filed this bid protest challenging the Army Corps of Engineers’ (“Army”) rejection of Leeward’s bid as non
- responsive . Leeward contends the Army err ed as a matter of law in determining that a liability limitation in its bid bond significantly departed from the solicitation’s requirements

. E ven if its bid bond were noncompliant, it claims in the alternative that the Army acted arbitrarily and capriciously because
the alleged irregularity was immaterial and should have been waived, especially where the Army
waive d an irregularity in the awardee’s bid

. The Government and Defendant

- Intervenor Mohawk Valley Materials, Inc. ( “ Mohawk ” ) argue that the ambiguities of the bid bond language presen ted a defense to enforcement and the Army reasonably re lied on decisions by the Government Accountability Office (“GAO”) finding the same bid bond defective

.

1 The Court issued this opinion under seal on June 17, 2022, and directed the parties to file any proposed redactions by June 28, 2022. As the parties did not propose any redactions, the Court reissue s the opinion publicly in full.2

Before the Court are the parties’ Cross

- Motions for Judgment on the Administrative
Record. For th e reasons discussed below, the Court finds that Leeward is not entitled to judgment
in its favor because : (1) its bid bond did not comply with the solicitation as a matter of law ; (2) the defect in its bid bond was material and not subject to waiver; (3) Leeward has not stated a valid disparate evaluation challenge; (4) the defect in its bid bond created a defense to enforcement ; and (5) the Army acted rationally in rel ying on two prior GAO decisions addressing the same bid bond language

. Accordingly, the Government and Mohawk’s Motion s are GRANTED , and Leeward’s
Motion is DENIED

. I. BACKGROUND
A. Findings of Fact On October 27, 2021, the Army issued Invitation for Bids No. W912BU22B0003 ( “IFB”)
for maintenance and modification of the General Edgar Jadwin Dam in Honesdale, Pennsylvania.
Admin. R. 263

– 95 , ECF No. 17 (hereafter “AR”)

. 2 The Army sought a contractor to replace the “riprap” ( i.e. , stone facing) on the upstream face of the dam and install a new geosynthetic liner to protect the d am from erosion. AR 309. The project was scheduled to last 455 days. AR 263

. Six bidders submitted bids in response to the IFB. AR 1362

– 63. Of the six bidders,
Leeward submi tted the lowest bid at a cost of $3,887,454. Id. This was $1,112,401 less than the
next lowest proposal submitted by Mohawk

. Id. Leeward is a heavy and highway commercial construction contractor located in Honesdale, Pennsylvania. AR 1367

– 70. Leeward has been in
the construction business for over 28 years and holds pre

- qualifications with state agencies to perform earthwork, exc avation, grading, and geotextile placement. AR 2015

– 16. The company

2 For ease of reference, citations to the Administrative Record refer to the bates

- stamped page numbers rather than the ECF page numbers.3

had over $44 million in sales in 2019 and 2020, and it has surety bonding up to $60 million. AR 1368, 1411. The IFB incorporated Federal Acquisition Regulation (“FAR”) 52.228

- 1 (e) , which requires bidders to include a bid guarantee ( i.e. , bid bond) with their submission

. AR 290

– 91. Bid
bonds are designed to protect a contracting agency from a n awardee’s default by compensating the
agency for costs in curred in reprocuring the contract or re issuing the award to a more expensive

runner
- up
. See Matter of: G2G, LLC , B

- 416502, 2018 WL 46791 48 , at *2 ( Comp. Gen. Sept. 27,
2018 ) ; see also FAR 28.001 (defining “bid guarantee) ; FAR 28.101

- 2(b). The FAR’s bid guarantee provision reads in relevant part : (a) Failure to furnish a bid guarantee in the proper form and amount, by the time set for opening of bids, may be cause for rejection of the bid. (b) The bidder shall furnish a bid guarantee in the form of a firm commitment, e.g., bid bond supported by good and sufficient surety or sureties acceptable to the Government

. . . . (c) The amount of the bid guarantee shall be

_____ percent of the bid price or

____ _ , whichever is less. (d) If the successful bidder, upon acceptance of its bid by the Government within the period specified for acceptance, fails to execute all contractual documents or furnish executed bond(s) within 10 days after receipt of the forms by t he bidder, the Contracting Officer may terminate the contract for default. (e) In the event the contract is terminated for default, the bidder is liable for any cost of acquiring the work that exceeds the amount of its bid, and the bid guarantee is available to offset the difference.
FAR 52.228

- 1

. The IFB set the bond amount at the lesser of 20 percent of the bid price or $3 million. AR 291. Before submitting its bid , Leeward sought clarification from the Army regarding the form
of its bid bond

. AR 2535

. On November 29, 2021, Leeward emailed the contracting specialist
who was listed in the IFB as the point of contact for requests for information to “ confirm there is4

not a special bid bond form ” that the Army requires. Id. ; see AR 269. The contracting specialist
followed up with a phone call to confirm that Leeward had all of the relevant IFB document s . AR
2569. Leeward sought additional clarification whether the Army would accept a bid bond on the
American Institute of Architects Document A310 , 2010 edition (“AIA Form A310”)

. Id. The contracting specialist responded that there was no special form for bidders to use , and they n eed ed only to include a bid bond of the requisite amount

. Id. Leeward went on to submit a bid bond with a penal sum of $777,490.94 (20 percent of its bid price) using the AIA Form A310 . AR 1318.
E very other bidder us ed Standard Form 24 (“SF 24”), the bid bond form p rovided in FAR
28.106

- 1

. 3 AR 1289, 1298, 1306, 1334, 1348.
The AIA Form A310 used by Leeward includes a provision that limit s the liability of the
bidder in the case of default to “the difference, not to exceed the amount of this Bond, between the amount specified in said bid and such larger amount for which the [ contracting agency ] may in good faith contract with another party[.]” AR 1318. In contrast, SF 24 states that “in the event of failure to excuse such further contractual documents and give such bonds, [t he P rincipal] pays the
Government for any cost of procuring the work which exceeds the amount of the bid.” AR 1334 (emphasis added). The AIA Form A310 also includes a savings clause , which states in full : When this bond has been furnished to comply with a statutory or other legal requirement in the location of the Project, any provision in this Bond conflicting with said statutory or legal requirement shall be deemed deleted herefrom and provisions conforming to such statutory or other legal requirem ent shall be deemed incorporated herein. When so furnished, the intent is that this Bond shall be construed as a statutory bond and not as a common law bond.
AR 1318.

3 The Government takes the position that using the SF 24 was not mandatory even though FAR 28.106

- 1 states that the form “shall be used . . . when a bid bond . . . is required.” FAR 28.106

- 1.5

After identif

ying Leeward as the low est bidder , the Army requested information to perform

a technical review. AR 1362. On December 14, 2021, Leeward completed the Army’s pre
- award survey. AR 1364. On December 16, 2021, Leeward submitted supplemental information it inadvertently omitted from its pre
- award survey . AR 1 994. O n December 27, 2021, Leeward responded to the Army’s request for supplemental responses to the technical analysis . AR 1999. Shortly after providing these responses, the Army sent an email to Leeward on January 4, 2022, stating that it determined L eeward “appear [s] to be technically qualified” and “is a responsive and responsible contactor for the project.” AR 2074. The Army also sough t responses to additional questions that would need to be addressed “during the contract period ; ” however, n one of the questions related to Leeward’s bid bond. Id. Leeward’s work never got off the ground. On January 26, 2021, it received a letter from the Army rejecting its bid as nonresponsive. AR 2080

. The Army ’s Contracting Officer (“CO”)
determined the AIA Form A310 include s “limitations which differ significantly from the requirements of FAR provision 52.228

- 1 .” Id. According to the CO , the form impermissibly limits liability to “the differenc e . . . between the amount specified in said bid and the larger amount
for which the [Army] may in good faith contract with another party.” Id. The CO interpreted this
limitation as prohibiting recover y of all excess reprocurement costs

— e.g. , administrative costs or the costs of in

- house government performance

. Id. In support of his conclusion , the CO cited two
GAO decisions “ specific on this issue. ” Id. (citing G2G and Matter of: Pac

. Dredge & Constr.,
LLC , B

- 418900, 2020 WL 5702107 (Comp. Gen. Sept. 18, 2020 ) )

. For th ese reason s, the Army rejected Leeward’s bid and instead awarded the contract to Mohawk as the next lowest bidder . AR 2080, 2878

. The Army attempted to notif y unsuccessful bidders of the award to Mohawk on April 46

and 6, 2022. AR 2879

– 86. However, t he notification email attached a letter dated January 14, 2022, that erroneously indicat ed Leeward was the awardee. Id. After filing the Administrative Record in this matter, the Army learned that it had attached the wrong letter to the award notification, and it promptly corrected the mistake by issuing a new letter on April 20, 2022

. See Govt.’s Unopposed M o t. to Complete the Admin. R. at 2, ECF No. 16 ; A R 2887

– 94.
B. Procedural History
On February 3, 2022 , Leeward filed a GAO protest challenging the Army’s decision to reject its bid as nonresponsive . AR 2545. The Army subsequently moved to dismiss Leeward’s protest . AR 2597. On March 3, 2022, the GAO summarily dismissed the case

. AR 2731

. The
GAO based the dismissal on the same two prior GAO decisions cited in the CO’s decision letter

— G2G and Pacific Dredge and Constr uction

— which held that the AIA Form A310 did not comply
with FAR 52

. 228

- 1 (e)

. Id. The GAO explained that the form limit s liability to only replacement
contract costs and the savings clause did not clear ly or unambiguous ly evince the bidder’s intent

to incorporate FAR 52

. 228

- 1 (e)

. AR 2734

– 35

. On April 1, 2022, Leeward filed its Complaint in this Court

. See Pl.’s Compl., ECF No. 1. On April 25, 2022, Leeward filed a Motion for Judgment on the Administrative Record. See Pl.’s
M o t. for J. on Admin. R. , ECF No. 18. First, Leeward contends the Army erred in interpreting the
AIA Form A310 as noncompliant with F AR 52.228

- 1(e). Id. at 20

. Second, Leeward contends the Army misinterpreted FAR 52.228

- 1(e) because the regulation provides that the bidder is personally liable for any reprocurement costs regardless of any liability limitation in its bid bond

. Id. at 20

– 21. Lastly, Leeward argues that even if the AIA Form A310 does not compl y with FAR
52.228

- 1(e), the Army acted arbitrarily and capriciously in rejecting Leeward’s bid for two

reasons: ( 1 ) any irregularity was immaterial ; and ( 2 ) the Army failed to treat Leeward and Mohawk7

equally by wai ving an error in Mohawk’s bid while refusing to waive Leeward’s bid bond irregularity

. Id. at 21.
On May 5, 2022 , the Government filed a Cross

- Motion for Judgment on the Administrative
Record. See Govt.’s Cross

- Mot. for J. on Admin. R., ECF No. 22

. On the same day, Mohawk
filed its Cross

- Motion for Judgment on the Administrative Record. See Def.

- Intervenor’s Cross

Mot. for J. on Admin. R., ECF No. 21

. The Government and Mohawk contend that the Army
pro perly re

jected Leeward’s bid because the AIA Form A310 fail s to guarantee payment of all reprocurement costs in the case of default , and the Army reasonably relied on prior GAO decisions
that held the same with respect to the identical bid bond form

. ECF No. 22 a t 25; ECF No. 21 at
15

– 16 . They further contend that the Army did not arbitrarily and capriciously reject Leeward’s
bid because the liability limitation was a material irregularity and not subject to waiver , while the
error in Mohawk’s bid was an obvious clerical error that the Army had authority to correct

. ECF
No. 22 at 20 ; ECF No. 21 at 25 . Lastly, Mohawk argue s that even if the Army acted irrationally with respect to Leeward’s bid bond , such a mistake is harmless error because Leeward ’s bid would
have been rejected anyway after further analysis by the Army

. ECF No. 21 at 31

. The motions are now fully briefed. See Pl.’s Reply to Govt. ’s Cross

- Mot. , ECF No. 24; Pl.’s Reply to Def.

- Intervenor ’s Cross

- Mot. , ECF No. 25 ; Govt.’s Reply, ECF No. 29 . The Court heard oral argument on June 1, 2022

. II. LEGAL STANDARDS
A. Motion for Judgment on the Administrative Record
Rule 52.1(c) of the Rules of United States Court of Federal Claims (“RCFC”) governs motions for judgment on the administrative record. Such motions are “properly understood as
. .

. an expedited trial on the record.” Bannum, Inc. v. United States , 404 F. 3d 1346, 1356 (Fed. Cir.8

2005). In contrast to the standard for summary judgment, “the standard for judgment on the
administrative record is narrower” and involves determining, “given all the disputed and undisputed facts in the administrative record, whe ther the plaintiff has met the burden of proof to
show that the [challenged action or] decision was not in accordance with the law.” Martinez v. United States , 77 Fed. Cl. 318, 324 (2007) (citing Bannum , 404 F.3d at 1357). Therefore, a genuine issue of d isputed fact does not prevent the Court from granting a motion for judgment on the administrative record. See Bannum , 404 F.3d at 1357.
B. Bid Protest Standard of Review
The Tucker Act, as amended by the Administrative Dispute Resolution Act of 1996 (“ADRA ”), provides the Court of Federal Claims with “jurisdiction to render judgment on an action by an interested party objecting to

. . . the award of a contract or any alleged violation of

statute or regulation in connection with a procurement

. . . .” 28 U.S.C. § 1491(b)(1). In such actions, the Court “review[s] the agency’s decision pursuant to the standards set forth in section
706” of the Administrative Procedure Act (“APA”). 28 U.S.C. § 1491(b)(4); see Banknote Corp. of Am., Inc. v. United States , 365 F.3d 1345, 1350 (Fed. Cir. 2004). Accordingly, the Court
examines whether an agency’s action was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A); see Impresa Construzioni Geom.
Domenico Garufi v. United States , 238 F.3d 1324, 1332 n.5 (Fed. Cir. 2001). Under such review,

an “award may be set aside if either: (1) the procurement official’s decision lacked a rational basis;

or (2) the procurement procedure involved a violation of regulatio n or procedure.” Impresa , 238
F.3d at 1332 n.5. To prevail in a bid protest, “a protestor must show a significant, prejudicial error in the procurement process.” WellPoint Mil. Care Corp. v. United States , 953 F.3d 1373, 1377 (Fed. Cir. 2020) (quoting A lfa Laval Separation, Inc. v. United States , 175 F.3d 1365, 1367 (Fed.9

Cir. 1999)). A protestor establishes prejudice by showing “ t hat there was a substantial chance it
would have received the contract award but for that error.” Alfa Laval , 175 F.3d at 1 367 (quoting Statistica, Inc. v. Christopher , 102 F.3d 1577, 1582 (Fed. Cir. 1996)).
In reviewing an agency’s procurement decisions, the Court does not substitute its judgment
for that of the agency. See Redland Genstar, Inc. v. United States , 39 Fed. Cl. 220, 231 (1997);
Cincom Sys., Inc. v. United States , 37 Fed. Cl. 663, 672 (1997); see also M.W. Kellogg Co. v. United States , 10 Cl. Ct. 17, 23 (1986) (holding that “deference must be afforded to an agency’s

. . . procurement decisions if they have a rati onal basis and do not violate applicable law or regulations.”). The disappointed bidder “bears a heavy burden,” and the CO is “entitled to exercise
discretion upon a broad range of issues.” Impresa , 238 F.3d at 1332 (citations and quotes omitted).
This burden “is not met by reliance on [the] pleadings alone, or by conclusory allegations and generalities.” Bromley Contracting Co. v. United States , 15 Cl. Ct. 100, 105 (1988); see Campbell

v. United States , 2 Cl. Ct. 247, 249 (1983). A procurement decisi on is rational if “the contracting
agency provided a coherent and reasonable explanation of its exercise of discretion.” Impresa , 238 F.3d at 1333. “[T]hat explanation need not be extensive.” Bannum, Inc. v. United States , 91
Fed. Cl. 160, 172 (2009) (c iting Camp v. Pitts , 411 U.S. 138, 142

– 43 (1973)).
In a protest , the Court applies de novo review to any q uestion s of law

. NVT Techs

. , Inc. v.
United States , 370 F.3d 1153, 1159 (Fed. Cir. 2004). The i nterpretation of either a bid bond ( analogous to a contract ), a solicitation, or procurement regulations present such question s
. See
id. ; Balboa Ins. Co. v. United States , 775 F.2d 1 1 58, 1160 (Fed. Cir. 1985) (characterizing a surety
as a three

- party agreement whereby the principal becomes liable for the debt of an obligor to an obligee); United States v. Boeing Co. , 802 F.2d 1390, 1393 (Fed. Cir. 1986) (“The interpretation of regulations which are incorporated into government contracts is a question of law whic h this10

court is free to resolve.”). Regardless of whether the decision on review is that of the contracting
officer or of the GAO , t he Court of Federal Claims do es not afford deference on question s of law. See VS2, LLC v. United States , 155 Fed. Cl. 738, 767 (2021) ; CBY Design Builders v. United
States , 105 Fed. Cl. 303, 340 (2012) (holding that the degree of deference applied under the arbitrary

- and

- capricious standard does not change depending on whether the court is reviewing
the agency
- level decision or the GAO ’s decision in a subsequent protest, and “ [ n]o ‘special’ amount of deference, covering questions of law as well as the ultimate decision being reviewed, can be gleaned from the

. . . Federal Circuit precedents ”)) ; see also E .W. Bliss Co. v. United States , 33 Fed. Cl. 123, 135 (1995), aff’d , 77 F.3d 445 (Fed. Cir. 1996)

. Nor is the Court bound by GAO
decisions , although such decisions are noneth el ess considered “instructive” in the context of bid protests. Centech Grp., Inc. v. United States , 554 F.3d 1029, 1038 n.4 (Fed. Cir. 2009)

. III. DISCUSSION Although this protest presents a matter of first impression, well

- established principles of

contract and statutory interpretation guide the Court’s decision

. First, as a matter of law, the Court
finds the AIA Form A310 does not compl y with FAR 52.228

- 1( e ) , and thus did not meet the requirements of the IFB

. Not only is the language of the bid bond ’s savings clause ineffective as an incorporation by reference, it also is ambiguous , at best, whether the form intends to operate as

a statutory bond in response to the requirements of a solicitation in a federal government procurement

. Second , the bid bond irregularity w as material and not subject to waiver . Moreover, Leeward cannot succeed on a disparate evaluation challenge because its bid did not contain a substantially similar error as Mohawk’s. Lastly, the Army acted rationally in rejecting Leeward’s
bid because th e irregularity presented a defense to enforcement. The Army also reasonably relied

on two GAO decisions addressing this exact issue that correctly conclud ed the bid bond11

irregularity w as a material defect

. Because Leeward fail s to carry its burden of proving that the AIA Form A310 complie d with the IFB’s requirements , or that the Army acted arbitrarily and capriciously in determining its bid was nonresponsive , Leeward is not entitled to judgment on the
record.
A. The AIA Form A310 Does Not Comply With FAR 52.228
- 1 (e) as a Matter of Law
. The crux of this dispute is whether the AIA Form A310 limit s the Army ’s ability to recover all reprocurement costs in the event it terminated Leeward ’s award for default , as required by the
IFB ( pursuant to FAR 52.228

- 1 )

. The parties do not dispute that the bid bond’s language limits the surety’s liability , such that the bond does not cover excess costs (like administrative costs or
the cost of in

- house government performance )

. ECF No. 18 at 25

. Th e question at issue thus turns on the legal effect of the bid bond’s savings clause , which Leeward contends unambiguous ly incorpo rat es FAR 52.228

- 1 (e) by reference. ECF No. 18 at 25. Taking a slightly different tack, Leeward argues in its Reply that th e savings clause effective ly incorporat es FAR 52.228

- 1(e)
because the bid bond operate d as a statutory bond. ECF No. 24 at 13

. Based on this construction,
Leeward argues that the AIA Form A310 g uarantee d the A rmy recovery of all reprocurement costs stemming from default , even if the face of the bid bond seemingly excludes excess costs. Id. The
Government and Mohawk respond that the savings clause is ineffective as an incorporation by
reference because it does not affirmatively cite FAR 52.228

- 1(e) , and it is ambiguous whether the form is meant to operate as a statutory bond under this set of facts . ECF No. 22 at 25; ECF No.
21 at 29.
1. The AIA Form A310 Does Not Incorporate FAR 52.228

- 1(e) By Reference. Incorporation by reference “provides a method for integrating material from various documents into a host document . . . by citing such mat erial in a manner that makes clear that the12

material is effectively part of the host document as if it were explicitly contained therein.” Zenon
Env ’ t, Inc. v. U.S. Filter Corp. , 506 F.3d 1370, 1378 (Fed. Cir. 2007) (quoting Cook Biotech Inc. v. Acell, In c. , 460 F.3d 1365, 1376 (Fed. Cir. 2006) ) . To incorporate material by reference, “the incorporating contract must use language that is express and clear , so as to leave no ambiguity about the identity of the document being referenced, nor any reasonable d oubt about the fact that the referenced document is being incorporated into the contract.” Northrop Grumman Info. Tech.,
Inc. v. United States , 535 F.3d 1339, 1344 (Fed. Cir. 2008). A lthough there are no “magic words , ” the language “ must explicitly, or at least precisely, identify the written material being incorporated and must clearly communicate that the purpose of the reference is to incorporate the referenced
material into the contract.” Id. at 1345

– 46 (citation omitted) ; see Callaw ay Golf Co. v. Acushnet
Co. , 576 F.3d 1331, 1346 (Fed. Cir. 2009) (“ [M] ere reference to another [document] is not an incorporation of anything therein

. ”). Including information such as the “ t itle, date, parties to, or section headings of any document to b e incorporated ” serve as compelling evidence that the parties intend to incorporate the extraneous document or regulation

. Northrop Grumman , 535 F.3d at
1346.
The Federal Circuit disfavors wholesale incorporation by reference of a body of regulation s
. In Smithson v. United States , the Federal Circuit considered whether a loan and security agreement incorporated all regulations of the Farmers Home Administration by stating the agreement “ is subject to the present regulations of the [agency] and to its fu ture regulation not inconsistent with the express provisions hereof.” 847 F.2d 791, 794 ( Fed. Cir. 1988). The p laintiff

sue d for breach of contract under a theory founded on an agency regulation not stated in the agreement

. Id. at 793. T he Federal Circ uit affirmed the court’s dismissal of the claim because it was “highly doubtful” the agency intended to expose itself to such expansive liability by13

incorporating all agency regulations into the agreement

. Id. at 794. W holesale incorporatio n by
reference would have made the agency subject to over 1,200 pages of regulations , many of which

were irrelevant to the subject matter of the deal

. Id. The Federal Circuit concluded that i f this were the parties’ purpose “ they would have explicitly so p rovided

. ” Id. In the absence of such express term, the Court declined to recognize “ ‘ [a] wholly new ground of obligation . . . by mere implication ’ from a general and ambiguous contract provision. ” Id. (internal citation omitted) ; see
Peterson Indus

. Depot, Inc. v. United States , 140 Fed. Cl. 485, 491 (2018) (holding that a contract provision recognizing the parties’ obligation to comply with certain federal statutes was insufficient to incorporate by r eference certain railroad maintenance standards and safety reports). To effectively incorporate a regulation by reference, a contract must specifically refer to the regulation so as to give notice to the agency. This can be accomplished , for example, by

a ttaching the text of the incorporated regulation as an exhibit to the agreement

. See Northrop
Grumman , 535 F.3d at 1344 (citing So

. Cal

. Edison Co. v. United States, 226 F.3d 1349, 1357 (Fed. Cir. 2000) )

. Requiring overt reference to the incorporated material comports with case law
from other circuits around the country that similarly seek s to protect a contracting party from u ndue surprise

. See id. at 1345 (citing Standard Bent Glass Corp. v. Glassrobots Oy , 333 F.3d 440, 447 (3d Cir. 2003) (“Incorporation by reference is proper where the underlying contract makes clear
reference to a separate document, the identity of the separate document may be ascertained, and incorporation of the document will not res ult in surprise or hardship.” ) ; PaineWebber, Inc. v. Bybyk , 81 F.3d 1193, 1201 (2d Cir. 1996) ( noting that under common law “the paper to be incorporated into a written instrument by reference must be so referred to and described in the instrument that the paper may be identified beyond all reasonable doubt”)).
In this case , the language of the AIA Form A310 is too broad and indefinite to constitute a14

valid incorporation by reference of any particular statutory or other legal requirement, specifically
FAR 52.228

- 1(e) . The savings clause provides that : When this bond has been furnished to comply with a statutory or other legal requirement in the location of the Project, any provision in this Bond conflicting with said statutory or legal re quirement shall be deemed deleted herefrom and provisions conforming to such statutory or other legal requirement shall be deemed incorporated herein.
AR 1318 . The apparent intent of this clause is to bring the bid bond into compliance with any
statute or legal requirement in the location of the p roject that may conflict with its terms . B ut in doing so, it fails to refer to any relevant statute or legal requirement with the “detailed part icularity” required by the Federal Circuit. Northrop Grumman , 535 F.3d at 1344. The form does not cite to
the FAR at all (let alone any particular provision of the FAR relevant to bid bonds) , nor does it not state which provision (s) of the bid bond should be deleted in the event of a conflict

. Like the

contr a ct provision at issue in Smithson , the form attempts an open
- ended “wholesale incorporation of a mass of regulations , ” such that any statute or legal requirement from a near ly indefinable body
of code could apply. 847 F.2d at 794. And u nlike the contract provision at issue in Southern California Edison , Leeward ’s bond did not use the judicially

- approved language of incorporation

or attach a copy of the FAR regulation intended to be i ncorporate d

. See 226 F.3d at 1357. This
absence of notice is exactly the type of issue the Federal Circuit ’s incorporation

- by

- reference precedent has sought to protect against. As such, the AIA Form A310’s savings clause is not a valid incorporation by reference of
FAR 52.228

- 1(e)

. 2. The AIA Form A310 Does Not Unambiguously Operate as a Statutory Bond When Furnished in Response to an IFB

. Perhaps recognizing the weakness in its incorporation by reference argument , Leeward focuses its Reply on the statutory nature of the bid bond. It contends the AIA Form A310 complies15

with FAR 52.228

- 1(e) because the savings clause states , “ [w]hen [this Bond has been furnished to comply with a statutory or other legal requirement in the location of the P roject] the intent is that this Bond shall be construed as a statutory bond and not as a common law bond

. ” ECF No. 24 at
10 (quoting AR 1318 )

. According to Leeward , if a bid bond is a statutory bond, courts either “ read omitted statutory/regulatory provisions into the bon d” or “h old that a particular statutory/regulatory provision overrides a conflicting bond provision.” Id. at 11. T he Gove rnment replies that the bid bond should not operate as a statutory bond because it is ambiguous whether it
was f urnished to comply with a “ statutory or other legal requirement in the loca tion of the P roject. ”
ECF No. 29 at 9 (quoting AR 1318)

. As with any contract, c ourts “begin with the plain language” when interpreting a bid bond

. McAbee Constr., Inc. v. United States , 97 F.3d 1431, 1435 (Fed. Cir. 1996) ; Am. Cas. Co. of Reading, Pa. v. Irvin , 426 F.2d 647, 650 (5th Cir. 1 970) (“[T]he liability of a surety on a bond which is plain and unambiguous is governed, like any other contract, by the intention of the parties as expressed in the instrument.”)

. A contract term is ambiguous only “when it is susceptible to
two reasonabl e interpretations.” A

– Trans p. N w. Co., Inc. v. United States , 36 F.3d 1576, 1584 (Fed. Cir. 1994). Its content s must be read as a whole and in “a manner that harmonizes and gives reasonable meaning to all of its provisions.” Banknote , 365 F.3d at 1353; NVT Techs. , 370 F.3d
at 1159. The plain language of the contract “must be given that meaning that would be deriv ed from the contract by a reasonably intelligent person acquainted with the contemporaneous
circumstances.” TEG

– Paradigm Envtl., Inc. v. United Sta tes , 465 F.3d 1329, 1338 (Fed. Cir. 2006) (quoting Metric Constructors, Inc. v. Nat’l Aeronautics & Space Ad min. , 169 F.3d 747, 752 (Fed. Cir. 1999)).
Leeward does not cite a case in this circuit on the proper application of a statutory bond.16

It instead cites several federal and state court cases

. ECF No. 24 at 11. For example, it relies on Trustees for Michigan Laborers’ Health Care Fund v. Warranty Builders, Inc. , where a court in
the Easter n District of Michigan considered whether the notice requirement in a payment bond should be enforced in accordance with the bond language

. 921 F. Supp. 471 , 47 5 ( E .D. Mich. 1996). Even though the terms of the payment bond provided a party 90 days after completion of
the work to make a claim against the payment bond , the defendant sought to apply under Michigan
law an additional 30

- day period after commencement of t he work

. Id. The payment bond included a savings clause identical to the AIA Form A310. Id. The court ultimately applied the 90

- day
notice language of the payment bond , but grounded its decision on the absence of directly conflicting terms between the bond and statute

. Id. The court determined that the savings clause

“ only acts to delete any contractual provisions which are in conflict with the law , ” not incorporate
omitted statutory provision s
. Id. at 477. In this sense, the court endo rsed application of the savings clause, but limited it to situations where provisions are directly in conflict with a law to prevent
the surety from profit ing “ by its own ill

- drafted bond notice requirements.” Id. The problem with applying the AIA Form A3 10 as a statutory bond here , as in Trustees for Michigan , is the distinguishable set of facts underlying a federal government procurement

. Under
the interpretation advocated by Leeward , if the AIA Form A310 is a statutory bond, it automatically reads in

— and therefore complies with

— FAR 52.228

- 1(e) , even if it is not expressly
stated in the form’s terms or incorporated by reference

. ECF No. 24 at 23. But unlike in Trustees for Michigan , where the question at issue was whether a Michigan sta tutory provision should be
read in to a bond posted for a public school construction contract , the bid bond at issue in this case is not clearly furnished in response to a “ statutory or other legal requi rement in the location of the project

. ” 921 F. Supp. at 475. Indeed , Leeward’s claim that its bid bond constituted a statutory17

bond is belied by ambiguity in two ways

. First, t he FAR is a federal regulation, not a statute . Although there seems no reason to
draw a distinct ion between a federal regulation and a statute in the context of the bond’s language , FAR 52.228

- 1 imposes an obligation on the agency ’s contracting officer with respect to the content
of the solicitation and contract

. See FAR 28. 101

- 2(a) (“ The contracting officer shall insert a provision or clause substantially the same as the provision at 52.228

- 1 , Bid Guarantee, in solicitations or contracts that require a bid guarantee or similar guarantee. ”). I ndividual bidders
become bound b y the requirements of FAR 52.228

- 1 only through its insertion in the terms of the
solicitation and the contract awarded by the agency

. The phrase “other legal requirement” in the
AIA Form A310 is broad (and not adequately defined by the parties ) such that it may encompass a federal regulation , b ut the problem remains that Leeward furnished it s bid bond in response to
the IFB

. This creates significant ambiguity as to whether the bid bond was intended to be construed as a statutory bond in t his case

. Leeward has cited no cases addressing application of a statutory
bond to a federal procurement; instead, it cites cases primarily concern ing state and city
construction contracts or deals between private parties involving questions about the application
of state statutes

. ECF No. 24 at 11 (citing Trustees for Michigan , 921 F. Supp. at 475 ( state public school construction contract involving Michigan Public Works Act); Williamson v . Williams , 247 N.W. 704, 705 (Mich. 1933) ( state highway construction contract involving Michigan statutory provisions requiring payment bonds of contractors on public works, Comp. Law 1929 §§ 13132,
13134 ); Mayor and City Council of Baltimore v. Fidelity & Deposit Co. of Md

. , 282 Md. 431, 441 (1978) ( city contract for construct ion of storm drain outfall involving Maryland’s Little Miller
Act ) ; Charles City v. Rasmussen , 232 N.W. 137, 139 ( Iowa 1930) ( city contract for street improvements involving Iowa statutory provision requiring contractor and bondsmen to keep18

improvements in good repair , Code 1924 § 6003, ) ; Am. Cas. Co. of Reading , 426 F.2d at 648 ( bond posted by livestock dealer in Georgia pursuant to the federal Packers And Stockyards Act of 1921 )

. The applicability of these cases to a bid bond submitted in response to a federal agency ’s
solicitation is unclear . As such, it is ambiguous whether the AI A Form A310 should operate as a statutory bond in this case.
Second , the qualifying phrase “ location of the P roject” further complicates the applicability of the savings clause to this case

. A “statute or other legal requirement in the location of the
P roject” reasonably refer s to state or loca l laws and ordinance s in the locality where the project will be performed

. The AIA Form A310 presumably includes this phrase to ensure that contractors
can use the standard

- form bid bond in any jurisdiction without the concern that state or local rules applicable in a particular jurisdiction will invalidate the bond . T here is no indication , however, that the phrase should be applied so broadly as to encompass a ny federal statute, regulation , or other legal requirement relevant to a federal procurement

— and specifically here, the FAR

. Indeed, the FAR does not apply because of the location of the proje ct but rather because of the entity

— i.e. , a federal executive agency

— that is seeking to acquire supplies and services with appropriate d
funds

. See FAR 104.1 (“ The FAR applies to all acquisitions as defined in part 2 of the FAR, except where expressly excl uded. ”); FAR 2.101 (defining “acquisition”). Although the federal government may own or possess the dam and /or the land on which it is situated , the location of the project is Honesdale, Pennsylvania. AR 263

. Even i f Leeward furnished its bond to comply
with a federal regulation (and not simply the terms of the IFB) , it did not do so to comply with a

“ legal requirement in the location of the P roject , ” AR 1318 , meaning the statutory bond language of the savings clause i s in effective in this case

. Accordingly, the AIA Form A310 does not effectively incorporate FAR 52.228

- 1(e)19

because it cannot be unambiguous ly construed to operate as a statutory bond where it was submitted with a bid in response to the IFB

. Because its bond did not comply with FAR
52.228

- 1(e) , Leeward is not entitled to judgment on this ground. 4
B. The Army Acted Rationally in Rejecting Leeward’s Bid. Regardless of whether the AIA Form A310 was noncompliant with the IFB , Leeward must
show that the Army acted arbitrarily and capriciously in rejecting its bid as nonresponsive. The parties offer competing arguments o n this point, raising three questions for the Court’s resolution : (1) whether the noncompliant language in Leeward’s bid bond was a n im material defect ; (2) whether the Army treated bidders unequally by correcting an error in Mohawk’s bid while rejecting Leeward’s bid as nonresponsive; and ( 3 ) whether the Army reasonably rejected the bond
because the noncompliant language created a defense to enforcement.
1. The Defect in Leeward’s Bid Bond Was Material.
Leeward contends the Army’s rejection of its bid lacked a rational basis because

— even assuming Leeward’s bid bond was defective

— the agency should have concluded that any irregularity was immaterial and subject to waiver

. ECF No. 18 at 30. According to Leeward, the

4 Leeward also contends the Army misinterpreted FAR 52.228

- 1(e) in determining its bid bond was noncompliant because the regulation impose s liability for all reprocurement costs on the bidder , whereas the bid bond need only be available to offset some portion of that amount

. ECF No. 18 at 28 . Th is interpretation is e asily rejected as inconsistent with a plain reading of the regulation. See Shoshone Indian Tribe of the Wind River Rsrv. v. United States , 364 F.3d 1339, 1345 (Fed. Cir. 2004) (noting that the plain language of a regulation is controlling if a regulation is clear and unambiguous). FAR 52.228

- 1(e) provides that a bidder is liable for “ any cost of acquiring the work that exceeds the amount of its bid” and that the “bid guarantee is available to offset the difference.” The Court agrees with the Government that i f a bid bond limits liability in a manner that exclude s payment of excess costs then , at least to some degree, it is not “available to offset” the difference between the amount of the bidder ’ s bid and any cost of acquiring the work. Based on the plain language, the regulation unambiguously requires a bid bond to protect the agency in the event of default to the same extent that the bidd er is liable. To accept Leeward’s interpretation would undercut the very purpose of the bid guarantee itself

.20

immateriality is demonstrated by the fact that the Army would have received the entire benefi t of
Leeward’s bid bond because the difference between Leeward’s bid and Mohawk’s bid (as the

next

- lowest bidder) far exceeded the penal sum of its bond

. ECF No. 18 at 32

. In other words, the bond’s liability limitation would have had no material effect on the Army’s recovery in the
event of default. Id. To support its argument, Leeward relies on FAR 14.405, which provides that an agency shall give offeror s the opportunity to cure or shall waive minor informalities or irregularities in bids . FAR 14.405 (defining a “ minor informality or irregularity” as “one that is merely a matter of form and not of substance”).
I t is well settled that “ a proposal that fails to conform to the material terms and conditions of the solicitation should be considered unacceptable[.]” E.W. Bliss , 77 F.3d at 448; see FAR 14.301(a) (“To be considered for award, a bid must comply in all material respects with the invitation for bids”). A term is material if it is expressly stated in the solicitation and it adds “something important to the evaluation of the offer, is binding on the offeror, or has a more than negligible impact on the price, quantity, or quality of the bid.” ManTech Advanced Sys. Int’l, Inc.
v. United States , 141 Fed. Cl. 493, 506

– 07 (2019) (collecting cases). An agency is entitled to a strong presumption of regularity and good faith in evaluating whether a bid is responsive. Am

– Pro Protective Age ncy, Inc. v. United States , 281 F.3d 1234, 1239

– 41 (Fed. Cir. 2002)

. One type of material deficiency occurs when a bidder submits a defective bid bond or uncertainty exists at the time of bid opening that the bidder has furnished a sufficient, legally
bi nding bond

. Interstate Rock Prods. , Inc. v. United States , 50 Fed. Cl. 349, 361 (2001). In such

case , the bid itself is rendered nonresponsive and generally requires rejection. FAR 28.101

– 4(a) ;

see FAR 52.288

- 1(a)

. In limited circumstances, the FAR pro vides that an agency shall waive noncompliance with a solicitation requirement for a bid guarantee unless it determines acceptance21

would be detrimental to the Government’s interest . FAR 28.101

- 4(c) (listing eight situations where noncompliance shall be waived)

. The parties do not dispute that none of these waiver circumstances appl ied to Leeward’s bid bond

. In this case, t he Court finds the Army acted rationally by not waiving the irregularity in the
AIA Form A310 and ins tead rejecting Leeward’s bid as nonresponsive. As a preliminary matter, the bid bond requirement was a material aspect of the IFB because it was binding on bidder s and had a more than negligible impact on the quality of the bid s
. See ManTech Advanced , 14 1 Fed.
Cl. at 506

– 07 ; see also Interstate Rock , 50 Fed. Cl. at 366 . The Army inserted the terms of FAR
52.228

- 1(e) into the IFB, making the bid bond requirements mandatory, and a bidder’s failure to comply would have put the agency at economic risk of not recovering all reprocurement costs. AR
290

– 91. Such irregularity was most certainly not “merely a matter of form” but rather “of
substance.” FAR 14.405

. Leeward’s attempt to construe the liability limitation in it s bid bond as
immaterial is unpersuasive because it discounts the uncertainty accompanying the amount of any future reprocurement costs. Leeward assumes the Army would have accepted Mohawk’s next
lowest bid in the event of Leeward’s default , but there was no guarantee of that. Mohawk’s bid expired on April 6, 2022

. AR 2663

. If the Army had to resolicit the contract, the difference
between Leeward’s bid and the bid of a replacement contractor may not have been so large. The Army therefore act ed rationally in not waiv ing a material defect that c ould have subjected it t o prospective economic risks. Indeed, FAR 28.101

- 4 required the Army to reject Leeward ’s bid
because its bid bond was noncomplian t with IFB’s bid bond requirements.
2. Leeward Does No t State a Valid Disparate Evaluation Challenge Against the Army for Correcting a Clerical Error in Mohawk’s Bid. Leeward also contends the Army acted arbitrarily and capriciously by failing to treat all bidders equally during the evaluation process. ECF No. 18 at 34. It argues the Army gave22

Mohawk preferential treatment by waiving a mistake in Mohawk’s pricing proposal, whereas it rejected Leeward’s bid for the irregularity in its bid bond. Id. at 35. T he Government and Mohawk respond that the Army’s t reatment of Mohawk’s bid was rational because the IFB permitted the agency to correct obvious clerical errors. ECF No. 22 at 28; ECF No. 21 at 19

– 20. The Government also argues that a claim for disparate evaluation must be founded on identical errors
in the two bids. ECF No. 22 at 28. To prevail on a claim of disparate evaluation, a protestor must show that the agency unreasonably downgraded its proposal for deficiencies that were “substantively indistinguishable”
from or “nearly identical” to those cont ained in other proposals. Office Design Grp. v. United
States , 951 F.3d 1366, 1372 (Fed. Cir. 2020) (citing Enhanced Veterans Sols

. , Inc. v. United States , 131 Fed. Cl. 565, 588 (2017)); Red River Comput. Co. v. United States , 120 Fed. Cl. 227, 238 (2015). A protestor also may prevail by showing the agency inconsistently applied objective solicitation requirements among it and the other offerors. Sci. Applications Int’l Corp. v. United
States , 108 Fed. Cl. 235, 272 (2012) (c iting BayFirst Sols

. , LLC v. United States , 102 Fed. Cl. 677 (2012)). If a protestor does not meet this threshold showing, then the court should dismiss the claim, otherwise it “would give a court free reign to second

- guess the agency’s discretionary
dete rminations underlying its technical ratings.” Office Design Grp. , 951 F.3d at 1372. The Court finds that Leeward has not stated a valid disparate evaluation argument because
the clerical error in Mohawk’s bid was substantially different from the bid bond irregularity that caused Leeward’s rejection. While the Army determined Leeward’s bid was nonresponsive for including a limitation on liability that significantly differed from FAR 52.228

- 1, the Army made a correction to the calculation of Mohawk’s pricin g proposal based on an apparent clerical error.
AR 1362

– 63. Specifically, Mohawk stated a unit price of $61.71/SY at line item 12 of its bidding23

schedule. AR 1363. Based on this unit price, the total cost of the line item at a quantity of 31,000
would have been $1,913,010, making Mohawk the fourth highest bidder instead of the runner

- up. As this unit price/ total cost was exorbitantly more expensive than other bidders, the Army reasonably concluded that Mohawk’s unit price contained a decimal point erro r. Id. The Army thus adjusted the total estimated price accordingly by adjusting the unit price to $6.17 , as was allowed by the IFP

. Id. ; AR 270 (“Obviously misplaced decimal points will be corrected[.]”)

. This alleged unequal treatment involving the e rror in Mohawk’s bid was not “substantively indistinguishable” from the irregularity in Leeward’s bid. Office Design Grp. , 951 F.3d at 1372.
3. The Languag e of Leeward’s Bid Bond Created a Defense to Enforcement

. The Government and Mohawk argue that the Army acted rationally in rejecting Leeward’s bid because, when faced with ambiguity as to the bid bond’s scope of liability, it reasonably
deferred to two GAO decisions

— G2G and Pacific Dredge and Construction

— that found the very
same bid bond noncompliant . ECF No. 22 at 22; ECF No. 21 at 15

– 16. In those cases, the contracting agencies found the liability limitation in the AIA Form A310
inconsistent with the full scope of protection required by FAR 52.228

- 1(e) and reje cted the protestors’ bids as nonresponsive. See G2G , B

- 416502, 2018 WL 4679148 , at * 2 ; Pac. Dredge &
Constr. , B

- 418900, 2020 WL 5702107 , at * 2

. Like Leeward, the protestor in G2G argued that the
bid bond incorporated FAR 52.228

- 1(e) through the savings clause , and thus the conflicting liability limitation was deemed deleted. See G2G , B

- 416502, 2018 WL 4679148 , at * 3 . In reviewing both protests, the GAO defined the determinative question as “ whether the bond establishes unequivocall y at the time of bid opening that the bond is enforceable against the surety should the bidder fail to meet its obligations. ” Id. at *3 ; see Pac. Dredge & Constr. , B

- 418900,
2020 WL 5702107 , at *4 (“The test applied in determining the responsiveness of a bid is whether24

the bid as submitted is an unequivocal offer to perform the exact thing called for in the IFB . . . .”)

. It held that “ [a] bond is defective and the bid must be rejected” under FAR 28.104

- 1 “[i] f the agency cannot determine definitively from the bid bond documents that the surety would be
bound ” in the manner required by FAR 52.228

- 1(e)

. G2G , B

- 416502, 2018 WL 4679148, a t * 3

. The GAO found the savings clause of the AIA Form A310 wa s, at best, ambiguous. Id. at *4. As it explained, t he plain language of the bond “ does not provide clear or unambiguous evidence of

. . . [an] intent to incorporate by reference the solicitation requirements for a bid guarantee to include the requiremen ts of FAR § 52.228

– 1. ” Id. (noting “ it is not clear from the face of the protester ’ s bid bond what is meant by the phrase ‘ to comply with a statutory or other legal requirement in the location of the [p]roject ,’” and it cannot be inferred that “ FAR § 52.228

– 1, in whole or in part, is the ‘ legal requirement ’ that should be ‘ deemed incorporated ’ into the bid
bond. ”). Likewise, in Pacific Dredge and Construction , the GAO repeated its position that the ambiguous l anguage in the savings clause required the agency to reject the bid. Pac

. Dredge &
Constr. , B

- 418900, 2020 WL 5702107 , at *5

. T he GAO’s reasoning was sound and , as explained above, legally correct. Another judge of this c ourt upheld an agency’s determination that a bid was nonresponsive
due to a defect in the bid bond where the agency similarly relied on GAO precedent. In Interstate
Roc k , the court rejected the plaintiff’s claim that its bid bond complied with the terms of a
solicitation despite the inadvertent omission of a penal sum in the bond . 50 Fed. Cl. at 361. While the plaintiff maintained the error was immaterial , the agency attached two GAO decisions to its responsiveness determination holding that the omission of the penal sum on a bond renders the bid
bond defective

. Id. at 351

– 52. Upon review, the court concluded that while it was arguable
whether the omission of the penal sum was in fact a fatal error , the ambiguity nonetheless created25

a defense to enforcement. Id. at 361 ; see id. at 362 (“In the view of this court, the omission of the penal sum creates a potential ambiguity and therefore a defense that either the surety or the contractor could raise as a defense to enforcement of the bid bond.”)

. Accordingly, it held the
agenc y acted rationally by rejecting the bid due to the risk that its validity could be challenged in future litigation. Id. The court further held that the agency likewise acted reasonably by relying on GAO precedent, which it found “appl[ied] the standards as set forth in the FAR in a manner that is eminently rational

. ” Id. at 363

. In this case, because of the ambiguit y in the plain language of AIA Form A310 and in light
of two GAO decision s that found the exact same bond noncompliant , Leeward’s bid bond presented a defense to enforcement warranting rejection

. As t he Federal Circuit recently acknowledge d , an agency is not required to accept a bid if it creates a demonstrable risk of future litigation. See Asset Prot. & Sec. Servs., L.P. v. Unit ed States , 5 F.4th 1361, 1366 (Fed. Cir. 2021) (“[T]he government has a substantial interest in not creating opportunities for litigation . . . and [is] not obligated to accept a bid that [is] contrary to the amended terms of its solicitation.” )

. Nor

can t he Court say the Army act ed arbitrarily and capriciously by recogniz ing th e ambiguity and
rel ying on two prior GAO decision s to guide how it should proceed

. AR 2080

. Although GAO
decisions do not constitute mandatory authorit y , the arbitrary

- and

- capricious standard asks whether an agency lacked a rational basis in making a decision

. Impresa , 238 F.3d at 1333. In
the absence of contrary holdings from the Federal Circuit or Court of Federal Claims , the Army reasonably followed two administrative protest decisions that dealt with an identical bid bond. As such, the Court finds that the Army acted rationally in determining Leeward’s bid nonresponsive

. Leeward fail s to carry its heavy burden of proving the agency’s decision lacked a26

rational basis. Accordingly , Leeward is not entitled to judgment on this ground. 5
IV. CONCLUSION For the reasons set forth above, Leeward’s Motion for Judgment on the Administrative
Record (ECF No. 18) is DENIED , the Government’s Cross

- Motion (ECF No. 22 ) is GRANTED , and Mohawk’s Cross

- Motion (ECF No. 28 ) is GRANTED . The C lerk is directed to enter judgment accordingly.
SO ORDERED

.

Dated: June 17 , 202 2 /s/ Kathryn C. Davis KATHRYN C. DAVIS Judge

5 In light of the Court’s ruling, it is not necessary to address Mohawk’s argument s regarding whether the Army would likely have rejected Leeward’s bid notwithstanding the bid bond issue

.