B-153036, SEP. 2, 1964

B-153036, SEP. 2, 1964

TO SOL C. BENNETT AND ASSOCIATES:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 1, 1964, AND SUBSEQUENT LETTERS, PROTESTING THE ACTION ALLEGED TO HAVE BEEN TAKEN BY GENERAL SERVICES ADMINISTRATION (GSA) IN LEASING CERTAIN PROPERTY FROM THE WASHINGTON SCIENCE CENTER CONDUIT, INC., SUBSEQUENT TO OUR DECISION OF APRIL 21, 1964, B-153036.

THE FACTS INVOLVED IN OUR DECISION OF APRIL 21, 1964, NEED NOT BE RESTATED HERE IN DETAIL. SUFFICE IT TO SAY THAT YOUR PROTEST AT THAT TIME WAS DIRECTED ESSENTIALLY TO THE REJECTION OF A BID SUBMITTED BY J. K. SILLS, ROBERT A. SILLS AND BEVERLY B. SILLS IN RESPONSE TO AN INVITATION FOR BIDS NO. GS-PBS-03-593 ISSUED BY THE GENERAL SERVICES ADMINISTRATION FOR LEASING SPACE IN THE DISTRICT OF COLUMBIA, VIRGINIA OR MARYLAND. THE DESIRED SPACE WAS REQUESTED BY THE COAST AND GEODETIC SURVEY TO HOUSE SOME OF ITS ACTIVITIES IN THIS AREA, WHICH INCLUDED APPROXIMATELY 91,000 SQUARE FEET OF OFFICE SPACE. GSA DID NOT CONSIDER THE BUILDING OFFERED BY SILLS AS BEING OF THE TYPE GENERALLY RECOGNIZED AS ADAPTABLE TO GENERAL OFFICE SPACE. OTHER OBJECTIONS AGAINST LEASING THE PROPERTY OFFERED BY SILLS WERE RAISED BY GSA. WE DID NOT FIND THAT THE DETERMINATION MADE BY GSA OFFICIALS WAS WITHOUT ANY FOUNDATION AND THEREFORE WE CONCLUDED THAT THE ACTION TAKEN BY GSA IN REJECTING THE SILLS BID WAS NOT ERRONEOUS. CONNECTION WITH THIS MATTER WE INFORMED GSA THAT THE AWARD OF A LEASE ON JANUARY 15, 1964, TO THE WASHINGTON SCIENCE CENTER CONDUIT, INC., WAS IN VIOLATION OF THE LIMITATION CONTAINED IN THE INDEPENDENT OFFICES APPROPRIATIONS ACT, 1964, 77 STAT. 436-437, SINCE NO PROSPECTUS APPROVAL OF THE CONTEMPLATED LEASE HAD BEEN OBTAINED FROM THE APPROPRIATE COMMITTEES OF THE CONGRESS. SUCH AN APPROVAL WAS REQUIRED WHERE A LEASE AGREEMENT WAS FOR THE ACCOMMODATION "OF FEDERAL AGENCIES IN BUILDINGS AND IMPROVEMENTS WHICH ARE TO BE ERECTED BY THE LESSOR FOR SUCH AGENCIES AT AN ESTIMATED COST OF CONSTRUCTION IN EXCESS OF $200,000.'

YOUR PRESENT PROTEST DOES NOT QUESTION THE CORRECTNESS OF OUR DECISION OF APRIL 21, 1964, NOR IS IT CONTENDED THAT THE ACTION TAKEN BY GSA IN NEGOTIATING A LEASE THEREAFTER WITH THE WASHINGTON SCIENCE CENTER CONDUIT, INC., WAS PREJUDICIAL TO THE RIGHTS OF YOUR CLIENT OR ANY OTHER PARTY WHO WAS IN A POSITION TO OFFER ACCEPTABLE PROPERTY FOR LEASE. BEFORE YOU ADDRESSED YOUR LETTER OF JUNE 22, 1964, TO OUR OFFICE YOU HAD REQUESTED CERTAIN INFORMATION FROM THE GENERAL SERVICES ADMINISTRATION IN YOUR LETTER OF MAY 20, 1964. YOU WERE ADVISED BY GSA ON JUNE 5, 1964, THAT THE LEASE AWARDED ON JANUARY 15, 1964, HAD BEEN CANCELED ON APRIL 22, 1964. IN VIEW OF THE URGENT NEED FOR SPACE AND THE FACT THAT ADVERTISING AND A THOROUGH MARKET SURVEY HAD ESTABLISHED THAT THE SPACE OFFERED BY THE WASHINGTON SCIENCE CENTER CONDUIT, INC., WAS THE ONLY SPACE AVAILABLE FOR PROMPT OCCUPANCY, IT WAS DETERMINED THAT AN AWARD SHOULD BE MADE WITHOUT FURTHER DELAY. CONSEQUENTLY, NEGOTIATION FOR THE LEASING OF THE PROPERTY IN QUESTION WAS BEGUN AT ONCE WITH THE WASHINGTON SCIENCE CENTER CONDUIT, INC., AND CONCLUDED ON APRIL 23, 1964. A LEASE WAS ENTERED INTO ON THAT DATE AT A RENTAL RATE LESS THAN THAT PROVIDED FOR IN THE PRIOR LEASE OF JANUARY 15, 1964.

THERE WAS NOTHING IN THE RECORD TO INDICATE THAT THE AWARD OF JANUARY 15, 1964, HAD NOT BEEN MADE IN GOOD FAITH AND GSA ADVISES OUR OFFICE THAT THEY HAD BELIEVED THE AWARD WAS VALID AND NOT IN CONTRAVENTION OF THE APPROPRIATION LIMITATION. AT THE TIME OF NEGOTIATION OF THE LEASE ON APRIL 23, 1964, THE OFFICE BUILDING FILLING TWO-THIRDS OF THE GOVERNMENT'S NEEDS HAD BEEN CONSTRUCTED--- AND THIS SAME SITUATION PREVAILED EVEN WHEN THE LEASE OF JANUARY 15, 1964, WAS ENTERED INTO--- AND THE BUILDING ADJACENT THERETO WHICH WAS TO FILL THE SPECIAL EQUIPMENT AND STORAGE NEEDS WAS THEN IN THE COURSE OF CONSTRUCTION. CONSEQUENTLY, AT THE TIME THIS LATTER LEASE WAS NEGOTIATED IT WAS NOT IN CONTRAVENTION OF THE APPROPRIATION LIMITATION SINCE IT DID NOT COVER BUILDINGS WHICH WERE TO BE ERECTED BY THE LESSOR. IT IS NOT UNDERSTOOD THAT THE PROHIBITION AGAINST LEASING, WITHOUT PROSPECTUS APPROVAL, WAS INTENDED TO APPLY TO BUILDINGS IN THE COURSE OF CONSTRUCTION PRIOR TO THE CONSUMMATION OF THE LEASE.

YOU QUESTION THE URGENCY OF SECURING ADDITIONAL SPACE FOR THE GOVERNMENT AND YOU EXPRESS A DOUBT AS TO WHETHER GSA HAD THE AUTHORITY TO NEGOTIATE A LEASE ON APRIL 23, 1964, INSTEAD OF SOLICITING BIDS ON A COMPETITIVE BASIS. AS TO THE URGENCY IN THE MATTER, GSA, IN A LETTER OF JULY 27, 1964, TO OUR OFFICE, STATED THE FOLLOWING:

"* * * FOLLOWING RECEIPT OF THE COMPTROLLER GENERAL'S DECISION B 153036, DATED APRIL 21, 1964, WE CANCELLED THE THEN EXISTING LEASE WITH THE WASHINGTON SCIENCE CENTER CONDUIT, INC. THE DEPARTMENT OF COMMERCE STILL HAD AN UNFULFILLED URGENT NEED FOR APPROXIMATELY 139,000 SQUARE FEET OF OFFICE, SPECIAL PURPOSE AND STORAGE SPACE IN ORDER TO IMPLEMENT ITS MASTER PLAN OF SPACE UTILIZATION. DUE TO THE GROWTH OF THE VARIOUS BUREAUS OF THE DEPARTMENT OF COMMERCE, EXPANSION SPACE WAS REQUIRED AND THE MASTER PLAN INVOLVED THE ACQUISITION OF THE NECESSARY SPACE REARRANGEMENT OF A NUMBER OF BUREAUS OF THE DEPARTMENT. THE VARIOUS COMPONENTS OR BUREAUS TO BE AFFECTED BY THIS SERIES OF INTERCONNECTED MOVES, IN ACCORDANCE WITH THE MASTER PLAN FOR A CONSOLIDATION AND REARRANGEMENT OF THE VARIOUS BUREAUS, HAD BEEN PREPARING FOR THE MOVES ON THE BASIS OF THE AWARD MADE ON JANUARY 15, 1964. AS OF APRIL 23, 1964, SOME OF THE PACKING HAD BEEN ACCOMPLISHED AND PERSONNEL ACTIONS HAD BEEN TAKEN, ANTICIPATING THAT THE MOVES WOULD HAVE BEEN ACCOMPLISHED ON JUNE 1, 1964. TO BACK-TRACT, DELAYING THE MOVE, AT THIS LATE DATE WOULD HAVE COST CONSIDERABLE MONEY. IN ADDITION, THE DEPARTMENT REQUIRED THE REMOVAL OF VARIOUS BUREAUS OR PARTS THEREOF FROM THE MAIN COMMERCE BUILDING TO PROVIDE APPROXIMATELY 60,000 SQUARE FEET OF SPACE FOR THE OFFICE OF THE SECRETARY, PATENT OFFICE, AND OTHER ORGANIZATION ELEMENTS, IN CONTIGUOUS SPACE. THIS WAS TO BE DONE BY PROVIDING HOUSING FOR COAST AND GEODETIC SURVEY IN NEWLY ACQUIRED LEASED SPACE AND THE RELOCATION OF OTHER ACTIVITIES, SUCH AS THE WEATHER BUREAU IN LEASED SPACE THEN BEING OCCUPIED BY THE COAST AND GEODETIC SURVEY. ADDITION, THE SPACE BEING USED BY COMMERCE AT PROVIDENCE HOSPITAL WAS MARKEDLY SUBSTANDARD, AND AS A RESULT WAS EXPENSIVE TO MAINTAIN AND OPERATE AND WAS INCAPABLE OF BEING USED IN AN EFFICIENT MANNER. TOO, THE SPACE IN T-30, T-31 AND CURRIE HALL, ALL IN WEST POTOMAC PARK, WAS SCHEDULED FOR DEMOLITION. IT WOULD HAVE BEEN EXPENSIVE TO REARRANGE THE SCHEDULE. SINCE THE SCHEDULE CONTEMPLATED THE REMOVAL OF ALL ACTIVITIES FROM THE THREE TEMPORARY STRUCTURES, THE COST NECESSARY TO MAINTAIN THE ENTIRE STRUCTURES FOR THE USE OF THE DEPARTMENT OF COMMERCE ELEMENTS HOUSED THEREIN, IF THEY WERE TO REMAIN AFTER THEIR SCHEDULED DEPARTURE, WOULD HAVE BEEN EXTREMELY UNECONOMICAL. THE COAST AND GEODETIC SURVEY HAD REACHED THE SATURATION POINT IN ITS THEN EXISTING SPACE AND THE EMPLOYMENT OF ADDITIONAL PERSONNEL WAS BEING DELAYED UNTIL SUCH TIME AS THE ADDITIONAL SPACE WAS ACQUIRED. THE COAST AND GEODETIC SURVEY HAD REQUESTED ADDITIONAL SPACE FROM GSA EARLY IN SEPTEMBER 1963, AND THIS CONDITION HAD EXISTED SINCE THAT TIME. THE RESEARCH AND DEVELOPMENT PROGRAMS OF COAST AND GEODETIC SURVEY WERE FUNCTIONING AT LESS THAN THE DESIRED MINIMUM LEVEL OF EFFICIENCY AND THE CONTINUATION OF THIS CONDITION WOULD HAVE MEANT A SERIOUS DISRUPTION OF THE PROGRAMS INVOLVED. THE ALASKAN EARTHQUAKE OF MARCH 1964 INTENSIFIED THE URGENT NEED FOR MORE SPACE BECAUSE A GREAT AMOUNT OF SCIENTIFIC INFORMATION WAS AND IS BEING COLLECTED AS A RESULT OF THAT DISASTER AND IS BEING SENT TO THE COAST AND GEODETIC SURVEY.'

IN SUPPORT OF YOUR CONTENTION THAT GSA DID NOT HAVE THE AUTHORITY TO NEGOTIATE A LEASE BECAUSE OF URGENCY YOU POINT OUT THAT SECTION 302 (C) (2) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 393, 41 U.S.C. 252, PROVIDES THAT PURCHASES AND CONTRACTS FOR PROPERTY AND SERVICES NEED NOT BE MADE BY ADVERTISING WHERE "THE PUBLIC EXIGENCY WILL NOT ADMIT OF THE DELAY INCIDENT TO ADVERTISING," AND THAT PURSUANT TO THIS STATUTE, THERE HAVE BEEN PROMULGATED CERTAIN REGULATIONS. YOU CITE THE CODE OF FEDERAL REGULATIONS (41 CFR 1-3.202) AS INDICATING WHEN THIS AUTHORITY SHOULD BE USED. IN PARTICULAR YOU QUOTE THE PART OF THE REGULATION WHICH REFERS TO AN EXAMPLE, SUCH AS "WHEN PROPERTY OR SERVICES ARE NEEDED AT ONCE BECAUSE OF A FIRE, FLOOD, EXPLOSION, OR OTHER DISASTER.' IN REGARD TO THIS MATTER, GSA IN ITS LETTER OF JULY 27, 1964, STATES THAT --

"* * * OUR OWN INTERNAL REGULATIONS, GSA HANDBOOK, ENTITLED "ACQUISITION OF LEASEHOLD INTERESTS IN REAL PROPERTY," PBS P 1600.1, CHAPTER 6, PARAGRAPH 9, CONTAINS A SIMILAR REGULATION FOR USE OF THE AUTHORITY OF SECTION 302 (C) (2) OF THE FEDERAL PROPERTY ACT IN LEASING PROPERTY AS FOLLOWS:

"PUBLIC EXIGENCY. PURSUANT TO SECTION 302 (C) (2) OF THE ACT, CONTRACTS MAY BE NEGOTIATED WITHOUT FORMAL ADVERTISING IF "THE PUBLIC EXIGENCY WILL NOT ADMIT OF THE DELAY INCIDENT TO ADVERTISING.'

"A. FOR THIS AUTHORITY TO BE USED, THE NEED MUST BE COMPELLING AND OF UNUSUAL URGENCY, AS WHEN THE GOVERNMENT WOULD BE SERIOUSLY INJURED, FINANCIALLY OR OTHERWISE, IF THE REAL PROPERTY TO BE LEASED WAS NOT FURNISHED BY A CERTAIN DATE, AND WHEN IT COULD NOT BE ACQUIRED BY THAT DATE BY MEANS OF FORMAL ADVERTISING. THIS APPLIES WHETHER THAT URGENCY COULD OR SHOULD HAVE BEEN FORESEEN. THE FOLLOWING ARE ILLUSTRATIVE OF CIRCUMSTANCES IN WHICH THIS AUTHORITY MAY BE USED.

"/1) REAL PROPERTY IS NEEDED AT ONCE BECAUSE OF A FIRE, FLOOD, EXPLOSION OR OTHER DISASTER.

"/2) DEVELOPMENTS IN CONNECTION WITH ANY ESSENTIAL GOVERNMENT ACTIVITY REQUIRE IMMEDIATE LEASING OF REAL PROPERTY TO PERMIT ACCOMPLISHMENT OF SUCH ACTIVITIES WITHIN THE TIME REQUIRED.'

ALSO, THE RECORD SHOWS THAT THE DETERMINATION TO ENTER INTO THE LEASE OF APRIL 23, 1964, WAS MADE PURSUANT TO SECTION 302 (C) (10) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 WHICH PERMITS NEGOTIATION WITHOUT ADVERTISING WHERE IT IS IMPRACTICABLE TO SECURE COMPETITION. YOU QUESTION THE DETERMINATION SO MADE ALTHOUGH YOU HAVE NOT FURNISHED ANYTHING TO SHOW THAT OTHER SUITABLE SPACE WAS PROMPTLY AVAILABLE. THE REPORT OF GSA IN REGARD TO THIS MATTER IS AS FOLLOWS:

"* * * AS A RESULT OF CONTINUOUS EFFORTS BY GSA TO ACQUIRE OTHER LARGE BLOCKS OF SPACE IN THE WASHINGTON METROPOLITAN AREA, EXTENSIVE PERSONAL CANVASSES AND SOLICITATIONS OF LISTINGS FOR SPACE, IT WAS APPARENT THAT THE ONLY SPACE AVAILABLE MEETING THE REQUIREMENTS OF THE DEPARTMENT OF COMMERCE WHICH COULD BE DELIVERED PARTLY BY JUNE 1, AND COMPLETELY BY JULY 31, 1964, WERE BUILDINGS NO. 1 AND NO. 2, OF THE WASHINGTON SCIENCE CENTER CONDUIT, INC., 11800 OLD GEORGETOWN ROAD, ROCKVILLE, MARYLAND. ALTHOUGH IT WAS DESIRED THAT ALL THE SPACE BE AVAILABLE BY JUNE 1, 1964, IT WAS NOT POSSIBLE TO OBTAIN THE FULL AMOUNT ANYWHERE IN THE METROPOLITAN AREA, NOT EVEN AT THE WASHINGTON SCIENCE CENTER CONDUIT, INC., PROPERTY. HOWEVER, A LARGE BLOCK OF SPACE WAS ALMOST IMMEDIATELY AVAILABLE AT THE WASHINGTON SCIENCE CENTER CONDUIT, INC., PROPERTY AS EVIDENCED BY THE FACT THAT OCCUPANCY COMMENCED ON MAY 16, 1964, THEREBY PERMITTING ORDERLY MOVES OF ALL THE BUREAUS OF THE DEPARTMENT OF COMMERCE THAT WERE AFFECTED BY THIS REARRANGEMENT, CONSOLIDATION AND ACQUISITION OF SPACE. APPROXIMATELY 50,000 SQUARE FEET OF SPACE WAS OCCUPIED BY JUNE 1, 1964, AND PROGRESSIVE OCCUPANCY IS TAKING PLACE ALL THE TIME. THE ENTIRE LEASED SPACE WILL BE OCCUPIED BY JULY 31, 1964.

"BUILDING NO. 1 OF THE WASHINGTON SCIENCE CENTER CONDUIT, INC., PROPERTY WAS A COMPLETE BUILDING ON APRIL 22, 1964, CONTAINING APPROXIMATELY 90,000 SQUARE FEET OF SPACE. THIS BUILDING REQUIRED ONLY SOME OF THE PARTITION, ELECTRICAL, AND OTHER INTERIOR ALTERATION WORK REQUIRED FOR THIS PARTICULAR OCCUPANCY. THE CONNECTING BUILDING, BUILDING NO. 2, ON APRIL 23, 1964, WAS SO FAR ADVANCED IN CONSTRUCTION THAT IT COULD NO LONGER BE CONSIDERED A BUILDING OR IMPROVEMENT TO BE ERECTED BY THE LESSOR. ABOVE STATED, THESE BUILDINGS WERE FOUND TO BE THE ONLY BUILDINGS SUITABLE FOR THE NEEDS OF THE DEPARTMENT OF COMMERCE FOR APPROXIMATELY 140,000 SQUARE FEET OF OFFICE, SPECIAL PURPOSE AND STORAGE SPACE AND AVAILABLE IN THE SHORTEST POSSIBLE TIME.

"WE HAVE SHOWN THAT OUR ONLY CONCERN WAS TO OBTAIN THE EXPANSION SPACE REQUIRED BY THE DEPARTMENT OF COMMERCE IN THE SHORTEST POSSIBLE TIME AND, THEREFORE, THE ANSWER TO QUESTION (G) IS THAT THERE WAS NO THOUGHT OF SAVING THE WASHINGTON SCIENCE CENTER CONDUIT, INC., FROM FINANCIAL PLIGHT NOR WAS SYMPATHY FOR THE WASHINGTON SCIENCE CENTER CONDUIT, INC., A CONSIDERATION OF THE AWARD.'

IN REGARD TO YOUR REFERENCE TO OUR DECISION OF DECEMBER 11, 1962, B 149610, THE FACTS IN THAT CASE DO NOT HAVE ANY APPLICATION HERE SINCE THAT DECISION INVOLVED ONLY CERTAIN PROBLEMS INCIDENT TO COMPETITIVE BIDDING WHEREAS THE INSTANT CASE INVOLVES A NEGOTIATED LEASE. IN VIEW OF THE FOREGOING, WE DO NOT HAVE ANY BASIS FOR QUESTIONING THE ACTION TAKEN BY GSA IN THIS CASE.