A-84821, APRIL 16, 1937, 16 COMP. GEN. 931

A-84821: Apr 16, 1937

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CERTIFICATES THAT NO FEDERAL SPACE IS AVAILABLE. THAT ALL KNOWN SOURCES HAVE BEEN CANVASSED. STATE THAT THE CONTINUED OCCUPANCY IS IN THE INTERESTS OF THE GOVERNMENT. THE OBTAINING OF RENEWAL OPTIONS UPON THE RENEWAL OF A LEASE FOR PERIODS SUBSEQUENT TO THOSE STATED IN THE ORIGINAL LEASE OR RENEWALS THEREOF IS OBJECTIONABLE ON THE GROUND THAT THE ORIGINAL LEASE WOULD BE RENDERED. 1937: THERE WAS RECEIVED FROM THE ACTING CHIEF. THIS WILL ACKNOWLEDGE RECEIPT OF YOUR LETTER DATED FEBRUARY 5. IT IS REALIZED THAT PROVISIONS OF SECTION 3709. THE INTEREST OF THE GOVERNMENT IN PROCUREMENTS UNDER CONTRACTS IS BEST SERVED BY THE SOLICITATION OF COMPETITIVE BIDS FOR EACH ENSUING FISCAL YEAR. IT IS FELT THAT CERTAIN FACTORS SINGULAR TO THIS TYPE OF CONTRACTS SHOULD BE CONSIDERED IN APPLYING SECTION 3709.

A-84821, APRIL 16, 1937, 16 COMP. GEN. 931

LEASES - RENEWALS - INFORMAL SOLICITATIONS AS TO OTHER AVAILABLE SPACE INSTEAD OF ADVERTISING - PROVISIONS FOR RENEWALS BEYOND ORIGINAL PERIOD OF RENEWAL THE GENERAL RULE THAT THERE MUST BE ADVERTISING IN CONNECTION WITH THE LEASING OF PREMISES FOR USE BY GOVERNMENT ACTIVITIES DOES NOT REQUIRE THAT OBJECTION BE MADE TO RENEWALS BY THE FIELD SERVICE WITH THE APPROVAL OF THE WASHINGTON, D.C., OFFICE OF EXISTING LEASES WHICH DO NOT CONTAIN FURTHER RENEWAL PRIVILEGES BASED UPON INFORMAL SOLICITATIONS FROM ALL KNOWN SOURCES, A SHOWING OF THE QUOTATIONS RECEIVED, CERTIFICATES THAT NO FEDERAL SPACE IS AVAILABLE, AND THAT ALL KNOWN SOURCES HAVE BEEN CANVASSED, ETC., PROVIDED THE FORM CONTAINING THIS INFORMATION AND THE CERTIFICATES BE SIGNED BY THE CONTRACTING OFFICER, AND STATE THAT THE CONTINUED OCCUPANCY IS IN THE INTERESTS OF THE GOVERNMENT. THE OBTAINING OF RENEWAL OPTIONS UPON THE RENEWAL OF A LEASE FOR PERIODS SUBSEQUENT TO THOSE STATED IN THE ORIGINAL LEASE OR RENEWALS THEREOF IS OBJECTIONABLE ON THE GROUND THAT THE ORIGINAL LEASE WOULD BE RENDERED, IN EFFECT, SELF PERPETUATING.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, RESETTLEMENT ADMINISTRATION, APRIL 16, 1937:

THERE WAS RECEIVED FROM THE ACTING CHIEF, CONTRACT SECTION, BUSINESS MANAGEMENT DIVISION, A LETTER DATED FEBRUARY 27, 1937, AS FOLLOWS:

SUBJECT: CONTRACT ER-RA 2686, RENEWAL AGREEMENT, MET. LIFE INS. CO., BIRMINGHAM, ALABAMA. REFER TO: A-WCM-CE. 2/5/37.

THIS WILL ACKNOWLEDGE RECEIPT OF YOUR LETTER DATED FEBRUARY 5, 1937, IN CONNECTION WITH THE ABOVE SUBJECT AND WITH PARTICULAR REFERENCE TO AN EXPLANATION FOR THE INCORPORATION IN THIS RENEWAL AGREEMENT OF AN OPTION TO RENEW UNTIL JUNE 30, 1938, WHEN THE ORIGINAL LEASE PROVIDED FOR NO RENEWAL BEYOND JUNE 30, 1937.

THE INCORPORATION OF A RENEWAL OPTION IN THIS INSTANCE REPRESENTS A CONCESSION ON THE PART OF THE LESSOR, WHEREAS THE GOVERNMENT, WITHOUT INCURRING ANY ADDITIONAL OBLIGATION, HAS OBTAINED THE DISTINCT ADVANTAGE OF BEING PROTECTED AGAINST A RENTAL INCREASE FOR THE FISCAL YEAR 1938 WITHOUT BEING DEPRIVED OF THE RIGHT TO ISSUE INVITATIONS AND RECEIVE BIDS IN THE EVENT A PRE-RENEWAL CANVASS INDICATES THAT SUBSTANTIALLY LOWER- PRICED AND SUITABLE SPACE BE AVAILABLE.

IT IS REALIZED THAT PROVISIONS OF SECTION 3709, REVISED STATUTES, REQUIRE THE SOLICITATION OF BIDS AND, ALSO, THAT, IN GENERAL, THE INTEREST OF THE GOVERNMENT IN PROCUREMENTS UNDER CONTRACTS IS BEST SERVED BY THE SOLICITATION OF COMPETITIVE BIDS FOR EACH ENSUING FISCAL YEAR. HOWEVER, IN THE RENEWALS OF EXISTING LEASES ON OFFICE SPACE, IT IS FELT THAT CERTAIN FACTORS SINGULAR TO THIS TYPE OF CONTRACTS SHOULD BE CONSIDERED IN APPLYING SECTION 3709, REVISED STATUTES.

THE RENTALS BEING PAID BY THE GOVERNMENT OUTSIDE OF WASHINGTON, D.C., ARE A MATTER OF PUBLIC KNOWLEDGE SINCE BIDS ARE ALWAYS OPENED PUBLICLY PRIOR TO ENTERING INTO THE INITIAL LEASES. SHOULD BIDS AGAIN BE RECEIVED NEAR THE EXPIRATION DATES OF THE ORIGINAL LEASES, SOME OF THE BIDDERS WILL SUBMIT OFFERS JUST ENOUGH BELOW THE EXISTING RATES TO BE TECHNICALLY THE LOW BIDDERS. HOWEVER, WERE THESE SLIGHTLY LOWER BIDS TO BE ACCEPTED, NECESSITATING MOVES, THE INTEREST OF THE GOVERNMENT WOULD BE AFFECTED ADVERSELY UNLESS THE LOWER RENTALS BE SUFFICIENTLY REDUCED TO COMPENSATE THE GOVERNMENT FOR THE COST OF MOVING FURNITURE, EQUIPMENT, AND SUPPLIES; OF INSTALLING NEW PHONES, OTHER SERVICES, AND EQUIPMENT; THE LOSS OF GOVERNMENT EMPLOYEES' TIME; THE TEMPORARY SUSPENSION OF THE PROGRAM OF EACH OFFICE INVOLVED; THE DAMAGE TO AND LOSS OF FURNITURE, EQUIPMENT, AND UPPLIES; AND THE GENERAL DECREASE IN EFFICIENCY DURING THE READJUSTMENT PERIOD FOLLOWING SUCH MOVES.

SHOULD COGNIZANCE OF THESE FACTS BE TAKEN IN THE PREPARATION OF INVITATIONS TO BID, SUCH INVITATIONS, SETTING FORTH A BASIS OF AWARD TO OTHER THAN THE LOW BIDDER, UNQUESTIONABLY WOULD BE RESTRICTIVE AND WOULD ENCOURAGE THE PRESENT LESSORS TO INCREASE THEIR RENTAL RATES. ON THE OTHER HAND, IF NO NOTICE OF THIS BASIS OF AWARD BE INCLUDED IN THE SPECIFICATIONS, FLOODS OF JUSTIFIABLE PROTESTS WOULD BE FORTHCOMING FROM UNSUCCESSFUL LOW BIDDERS.

IT HAS BEEN FOUND THAT WHILE LANDLORDS GENERALLY ARE NOT INCLINED TO TIE UP THEIR PROPERTY UNDER RENEWAL OPTIONS FOR A PERIOD OF YEARS, THEY USUALLY ARE WILLING TO EXTEND THE OPTION AT THE TIME EACH SUCCEEDING RENEWAL IS ACCOMPLISHED FOR ANOTHER YEAR AND SOMETIMES FOR TWO YEARS. THESE CASES THE GOVERNMENT IS NOT OBLIGATED TO RENEW AND IF MORE DESIRABLE OR SUBSTANTIALLY LOWER-PRICED SPACE BE AVAILABLE, BIDS CAN BE SOLICITED IN INDIVIDUAL CASES AND MOVES EFFECTED. IT HAS BEEN SUGGESTED AS A SOLUTION THAT THE BIDDERS BE REQUIRED TO INDICATE THEIR APPROVAL OF RENEWALS FOR A LONG PERIOD OF YEARS SUBJECT TO THEIR RIGHT TO TERMINATE UPON A STATED NOTICE TO THE GOVERNMENT. HOWEVER, IT CANNOT BE SEEN HOW THIS ARRANGEMENT WOULD ACCOMPLISH ANYTHING AS RENEWALS SHOULD BE JUSTIFIED EACH YEAR IN ORDER TO PROTECT PROPERLY THE INTEREST OF THE GOVERNMENT.

IN VIEW OF THE FACT THAT THIS OFFICE IS ABOUT READY TO INITIATE PRELIMINARY ACTION TOWARD EFFECTING RENEWALS, INSOFAR AS THE ISSUANCE OF INSTRUCTIONS TO THE FIELD AND THE PREPARATION AND DISTRIBUTION OF FORMS ARE CONCERNED, IT IS REQUESTED THAT THE ENCLOSED COPIES OF THE FORM RA-BM 122, PRE-RENEWAL CANVASS STATEMENT (YELLOW STRIPS ATTACHED ARE SUGGESTED REVISIONS), BE REVIEWED; THAT ANY NECESSARY OR SUGGESTED REVISIONS BE INDICATED; AND THAT THIS OFFICE BE ADVISED AS TO WHETHER OR NOT ITS USE OR A RESTATEMENT ON STANDARD FORM 1036 OF THE DATA CONTAINED THEREON (UNDER THE CONTRACTING OFFICER'S SIGNATURE) WILL BE ADEQUATE TO JUSTIFY RENEWALS OF EXISTING LEASES WHICH DO NOT CONTAIN FURTHER RENEWAL PRIVILEGE WHEN IT CAN BE ESTABLISHED THAT SUCH RENEWALS WOULD BE TO THE ADVANTAGE OF THE GOVERNMENT.

IT IS REQUESTED ALSO THAT AN EXPRESSION BE GIVEN AS TO THE PROPRIETY OF OBTAINING, IF POSSIBLE, AT THE TIME OF EACH RENEWAL, ADDITIONAL RENEWAL OPTIONS FOR PERIODS SUBSEQUENT TO THOSE STATED IN THE ORIGINAL LEASES OR RENEWALS THEREOF.

THE FORM REFERRED TO, INCLUDING THE PROPOSED REVISIONS, IS AS FOLLOWS:

DEPARTMENT OF AGRICULTURE, RESETTLEMENT ADMINISTRATION, PRE RENEWAL

CANVASS STATEMENT

(THIS FORM TO BE FILLED IN BY THE HEAD OF THE OFFICE INVOLVED BEFORE RENEWAL OF LEASES MAY BE EFFECTED. SINCE ONE MONTH'S NOTICE IS USUALLY REQUIRED, THIS FORM SHOULD BE DIRECTED THROUGH PROPER CHANNELS TO THE BUSINESS MANAGEMENT DIVISION, RESETTLEMENT ADMINISTRATION, WASHINGTON, C., AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE. ALL KNOWN SOURCES OF SUPPLY SHOULD BE SOLICITED AND AT LEAST THREE INFORMAL QUOTATIONS SUBMITTED IN SPACES PROVIDED OR ON AN ATTACHED RIDER IF MORE THAN FIVE QUOTATIONS ARE RECEIVED. A STATEMENT FROM THE LOCAL POSTMASTER RELATIVE TO AVAILABILITY OF FEDERAL SPACE SHOULD BE ATTACHED HERETO.)

(DATE)

THE FOLLOWING IS A LIST OF INFORMAL QUOTATIONS FOR FURNISHING APPROXIMATELY --------------- SQ. FT.

LIST 1. A -------------------------------------------------------- -----

(NAME OF BIDDER AND ADDRESS OF PROPERTY OFFERED)

B ---------------------------------------------------------------- --

(NUMBER OF SQ. FT.) (RATE PER SQ. FT. PER ANNUM) (TOTAL ANNUAL RENTAL)

C ---------------------------------------------------------------- --

(SERVICES INCLUDED IN RENTAL RATE)

D ---------------------------------------------------------------- --

(REMARKS)

(THE FORM CONTAINS FOUR OTHER LIKE BLOCKS.)

I HEREBY CERTIFY THAT THE ABOVE IS A TRUE STATEMENT OF FACTS, AND, IN ACCORDANCE THEREWITH, I RECOMMEND THAT---

A. PRESENT LEASE BE RENEWED FOR PERIOD BEGINNING ---------------- AND

ENDING -------------------- B. PRESENT LEASE NOT BE RENEWED. C. PRESENT LEASE BE TERMINATED EFFECTIVE AS OF ---------------- D. FORMAL BIDS BE TAKEN IN ORDER TO OBTAIN SPACE OTHER THAN THAT NOW

OCCUPIED.

(INDICATE CHOICE BY CHECK OPPOSITE LETTER)

THIS RECOMMENDATION IS MADE BECAUSE -------------------------------- -- -

I FURTHER CERTIFY THAT, INSOFAR AS I HAVE BEEN ABLE TO DETERMINE AFTER A THOROUGH INVESTIGATION, ALL SOURCES HAVE BEEN CANVASSED FROM WHICH MIGHT BE OBTAINED SPACE SUITABLE TO THE NEEDS OF THE RESETTLEMENT ADMINISTRATION OFFICES PREVIOUSLY DESCRIBED IN THIS FORM IMMEDIATELY ABOVE THE SPACE PROVIDED FOR QUOTATION NUMBER 1.

(SIGNATURE)

(TITLE)

THE GENERAL RULE REGARDING THE REQUIREMENT FOR ADVERTISING FOR BIDS IN THE CASE OF THE LEASING OF PREMISES WAS STATED IN 14 COMP. GEN. 769, AS FOLLOWS (QUOTING FROM THE SYLLABUS):

THE GENERAL RULE IS THAT THERE MUST BE ADVERTISING FOR BIDS FOR THE LEASING OF PREMISES FOR USE OF THE VARIOUS GOVERNMENT ACTIVITIES, PURSUANT TO SECTION 3709, REVISED STATUTES, AND CLEARANCES OBTAINED FROM THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, DO NOT RELIEVE THE ADMINISTRATIVE OFFICE FROM SUCH STATUTORY REQUIREMENT.

(SEE, ALSO, 14 COMP. GEN. 59.)

UNDER THE CIRCUMSTANCES PRESENTED, AND IT OTHERWISE APPEARING THAT THE ACTION IN OBTAINING THE INFORMATION ON THE FORM WILL CONSTITUTE A SUBSTANTIAL COMPLIANCE WITH THE REQUIREMENTS OF SECTION 3709, REVISED STATUTES, THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO THE USE OF THE FORM IN SUPPORT OF RENEWALS OF EXISTING LEASES WHICH DO NOT CONTAIN FURTHER RENEWAL PRIVILEGES PROVIDED THE FORM BE SIGNED BY THE CONTRACTING OFFICER AND OTHERWISE CONTAINS STATEMENTS TO THE EFFECT THAT THE CONTINUED OCCUPANCY WILL NOT BE DETRIMENTAL TO THE GOVERNMENT, BUT RATHER, THAT SUCH OCCUPANCY IS OTHERWISE ADMINISTRATIVELY DEEMED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT--- DUE REGARD TO BE GIVEN, OF COURSE, TO THE PROVISIONS OF SECTION 3679, REVISED STATUTES, AS AMENDED, 34 STAT. 48. (SEE 7 COMP. GEN. 48.)

WITH RESPECT TO THE QUESTION PRESENTED IN THE CONCLUDING PARAGRAPH OF THE QUOTED LETTER, THE OBTAINING OF RENEWAL OPTIONS FOR PERIODS SUBSEQUENT TO THOSE STATED IN THE ORIGINAL LEASES OR RENEWALS THEREOF WOULD BE OBJECTIONABLE ON THE GROUND THAT THE ORIGINAL LEASE WOULD BE RENDERED, IN EFFECT, SELF-PERPETUATING (14 COMP. GEN. 59).