AGO 94-F-033.

• Case Date: November 23, 1994
• Court: North Dakota

North Dakota Attorney General Opinions 1994. AGO 94-F-033. STATE OF NORTH DAKOTA ATTORNEY GENERAL'S OPINION 94-F-33Date Issued: November 23, 1994Requested by: Henry Wessman, Department of Human Services- QUESTION PRESENTED - Whether a bidder's failure to execute the required bid security is a substantive omission requiring automatic rejection of the bid or a minor irregularity that can be waived or cured by post-bid corrective action.- ATTORNEY GENERAL'S OPINION - It is my opinion that a bidder's failure to execute the required bid bond is a non-waivable substantive omission requiring automatic rejection of the bid. - ANALYSIS - Although your question refers specifically to the Dakota Project,1 bids on many public contracts in this state must be accompanied by "a bidder's bond . . . executed by the bidder as principal and by a surety company authorized to do business in this state . . . ." N.D.C.C. § 48-02-04 (public buildings) (emphasis added). See also N.D.C.C. §§ 11-11-28 (counties); 24-02-20 (state highways); 40-22-22 (municipal improvements by special assessment). The Dakota Project request for proposals (RFP) adopts this requirement and states that the "bid bond shall be duly executed by the Bidder as Principal and shall have as Surety a surety company acceptable to the States." Dakota Project RFP § 4.25. When requesting bids, a public body will often reserve both the right to waive minor irregularities in a bid and the right to reject any or all bids. Although these rights are not absolute, a public body that has the authority to insert requirements in its RFP also "has the right to require literal and exact compliance with them and to decline all bids as informal which do not so comply." 10 E. McQuillin, The Law of Municipal Corporations § 29.65 (3d ed. 1990) [hereinafter McQuillin]. Because a public body may properly reject a bid for failure to comply with a requirement in its RFP or a statute that the bid bond be executed by the bidder, this opinion only addresses whether a bid must be rejected for that failure. In deciding whether a bidder's failure to execute the bid bond is a substantive omission, one must first determine the effect of that failure on the enforceability of the bond. "Suretyship is a contractual relationship, which results from two persons becoming obligated to the same creditor with one of them bearing the ultimate liability. In other words, if the debt is enforced against the surety, he then is entitled to be indemnified by the one who should have paid the debt before the surety was compelled to do so." First Interstate Bank v. Rebarchek, 511 N.W.2d 235, 239 (N.D. 1994), quoting State of Wis. Inv. Bd. v. Hurst, 410 N.W.2d 560, 562-63 (S.D. 1987). The "liability of the surety is ordinarily measured by the liability of the principal, and . . . the surety is not liable if the principal is not." 74 Am. Jur.2d Suretyship § 25 (1974). "[I]t is of the essence of the surety's contract that there be a valid obligation of the principal." 74 Am. Jur.2d Suretyship § 1 (1974). In other words, a suretyship cannot be created without...