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two points. For the most part it simply restates the requirements of the contract documents which I would like to address now. The bid bond which was submitted by Willie Electric was submitted by the same surety in this bidding process as was submitted in the first bid process. And we alerted Willie Electric Company to the fact that that bid surety was not admitted or licensed in Califomia. Now may be the Willie Electric Company people do not understand the strictness that is required with respect to the public bidding process. But, the bid bond, surety requirements for public bids require that the surety be admitted or licensed in California. That doesn't mean just authorized to do business, because an outside, out of state company can do business in California, but that doesn't mean their licensed to do business in California as a surety. And the reason that public bids require licensed Sureties is because of the financial back-up that is required under the Califomia Surety Laws that protect the beneficiaries of Sureties against default of the principal, or the surety itself. In other words, there is back-up fmancing. That's why licensed Sureties are required. Now, the surety that was named is the Cal-Nor/Cal-Marine Industries. That's the name of the surety. The Office of the Insurance Commissioner indicates that that company is not licensed in California. Behind that and submitted with that document is an authorization of special power of attorney, not issued to that company, but issued to the Zenith Insurance Company, Ltd..... described as an alien insurer of the state of Kingston, St. Vincent and Grenadines, West Indies. That company likewise is not licensed to do business in California, or to act as a surety in California. Aside from that, our office did receive today, what purports to be a set aside letter of credit, or a standby letter of credit from the law offices of James Alexander representing the Willie Electric Company. This is identified as a standby letter of credit issued by the Zenith Insurance Ltd. which is the same company I just referred to, which is not licensed in California. It also indicates, as the issuing bank, of CalNor Zenith Insurance Ltd. which is the same company as I mentioned was named on the surety bond, so it is simply instead of a surety bond now, the company is proposing to issue a standby letter of credit. I only mention that to describe what is the same company, the same surety, under a different process. And in point of fact, a standby letter of credit is not acceptable as a bid surety. That is not one of the alternatives that is listed in the bid documents which all bidders have to adhere to. The only altematives allowed are certified checks or cashier checks or surety bond of a licensed surety. On all counts, the Willie Electric surety, simply does not conform to the bid requirements. Those are substantial requirements. The requirements the bidders have to follow are not only for the protection of the public, and the City, but also to provide a level playing field for all of the bidders. It is competitive bidding. People who do not perform public contracts frequently do not understand how strictly those laws are construed and followed by the courts. It may be that this company simply is not familiar with that. I'm giving them the benefit of the doubt. But we have spent a considerable amount of time explaining these requirements to the Willie Electric people and to their attorneys. I have seen nothing nor heard nothing tonight which would indicate anything different, a recommendation different than what has been made to you by the staff. Christopher Albert asked to respond to the City Attorney's comments. REGULAR COUNCIL MEETING MINUTE BOOK NO. 55 OCTOBER 27,1997 MINUTES Page No. 634 PAGE 18