B-120403, SEP 20, 1954

B-120403: Sep 20, 1954

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ESQUIRES: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 12. YOUR PROTEST WAS BASED PRIMARILY UPON THE GROUND THAT THE AMERICAN BRASS COMPANY WAS PERMITTED. YOU STATE THAT THE ALRECO METAL CORPORATION WAS ADVISED BY TELEPHONE ON MARCH 30. THAT IT WAS A SUCCESSFUL BIDDER AND THAT AN ACCEPTANCE OF ITS BID IN WRITING WOULD BE SENT TO IT. IT IS STATED FURTHER. THAT ON THE FOLLOWING DAY THE CORPORATION WAS ADVISED THAT A DECISION HAD BEEN REACHED TO AWARD A CONTRACT TO THE AMERICAN BRASS COMPANY FOR 1. IT IS YOUR POSITION THAT THE ALRECO METAL CORPORATION IS ENTITLED TO DAMAGES DUE TO THE FACT THAT IT HAD A COMMITMENT FOR THE SALE OF THE MATERIAL WHICH WAS OBTAINED ON THE BASIS OF THE ORIGINAL STATEMENT OF THE CONTRACTING OFFICER THAT THE CORPORATION WAS A SUCCESSFUL BIDDER.

B-120403, SEP 20, 1954

PRECIS-UNAVAILABLE

DIMOND AND THORMAN, ESQUIRES:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 12, 1954, PROTESTING ON BEHALF OF THE ALRECO METAL CORPORATION, 50 BROAD STREET, NEW YORK 4, NEW YORK, THE AWARD OF A CONTRACT BY THE DEPARTMENT OF THE ARMY TO THE AMERICAN BRASS COMPANY, PURSUANT TO INVITATION FOR BIDS NO. 30-121-S-54- 19, ISSUED AT THE SENECA ORDNANCE DEPOT, ROMULUS, NEW YORK.

AS ORIGINALLY SUBMITTED, YOUR PROTEST WAS BASED PRIMARILY UPON THE GROUND THAT THE AMERICAN BRASS COMPANY WAS PERMITTED, SUBSEQUENT TO THE OPENING OF BIDS, TO SUBMIT A BID DEPOSIT WHICH IT DID NOT FURNISH WITH ITS BID AS REQUIRED BY THE INVITATION. YOU STATE THAT THE ALRECO METAL CORPORATION WAS ADVISED BY TELEPHONE ON MARCH 30, 1954, THAT IT WAS A SUCCESSFUL BIDDER AND THAT AN ACCEPTANCE OF ITS BID IN WRITING WOULD BE SENT TO IT. IT IS STATED FURTHER, HOWEVER, THAT ON THE FOLLOWING DAY THE CORPORATION WAS ADVISED THAT A DECISION HAD BEEN REACHED TO AWARD A CONTRACT TO THE AMERICAN BRASS COMPANY FOR 1,000,000 POUNDS OF THE SCRAP AT A PRICE OF 20 CENTS PER POUND, THE EXPLANATION BEING THAT, ALTHOUGH THE BID OF THAT COMPANY HAD AT FIRST BEEN CONSIDERED NON CONFORMING, THE COMPANY HAD LATER BEEN GIVEN AN OPPORTUNITY TO CONFORM WITH THE REQUIREMENTS OF THE INVITATION. FINALLY, YOU STATE THAT, SINCE YOU REALIZE THAT THE MATERIAL NOW HAS PROBABLY BEEN DELIVERED, IT IS YOUR POSITION THAT THE ALRECO METAL CORPORATION IS ENTITLED TO DAMAGES DUE TO THE FACT THAT IT HAD A COMMITMENT FOR THE SALE OF THE MATERIAL WHICH WAS OBTAINED ON THE BASIS OF THE ORIGINAL STATEMENT OF THE CONTRACTING OFFICER THAT THE CORPORATION WAS A SUCCESSFUL BIDDER.

THE INVITATION REQUESTED BIDS, TO BE OPENED MARCH 30, 1954, FOR THE SALE OF 3,000,000 POUNDS OF BRASS SCRAP, DESCRIBED AS UNSERVICEABLE, FIRED, SMALL ARMS CARTRIDGE CASES. BIDDERS WERE ADVISED THAT BIDS MIGHT BE SUBMITTED ON MINIMUM LOTS OF 250,000 POUNDS AND THAT THE GOVERNMENT RESERVED THE RIGHT TO MAKE AN AWARD FOR LESS THAN THE TOTAL QUANTITY BID UPON, UNLESS OTHERWISE SPECIFIED BY THE BIDDER. IT WAS STATED THAT A BID DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID MUST ACCOMPANY EACH BID. THE INVITATION CONTAINED THE USUAL GENERAL TERMS AND CONDITIONS INCLUDED IN CONTRACTS FOR THE SALE OF GOVERNMENT PROPERTY AND, IN ADDITION, CERTAIN ALTERNATE AND ADDITIONAL PROVISIONS WITH WHICH BIDDERS WERE REQUESTED TO COMPLY.

IT APPEARS THAT 15 BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION AND THAT THE AMERICAN BRASS COMPANY SUBMITTED THE HIGHEST BID OFFERING TO PURCHASE 1,000,000 POUNDS OF THE MATERIAL AT 20 CENTS PER POUND. HOWEVER, THAT BIDDER NOT ONLY DID NOT FURNISH WITH ITS BID A BID DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID, BUT STATED CERTAIN QUALIFICATIONS ON A SHEET ATTACHED TO ITS BID WHICH MATERIALLY DEVIATED FORM THE ADVERTISED REQUIREMENTS. SUBSEQUENTLY, BY LETTER DATED MARCH 31, 1954, PRIOR TO THE AWARD OF THE CONTRACT BUT AFTER THE BID OPENING DATE, THE AMERICAN BRASS COMPANY FORWARDED TO THE SENECA ORDNANCE DEPOT A CERTIFIED CHECK IN THE AMOUNT OF $40,000 REPRESENTING 20 PERCENT OF THE TOTAL AMOUNT BID AS ORIGINALLY REQUIRED.

AS TO THE BASIS FOR THE ELIMINATION OF YOUR BID FOR CONSIDERATION AND FOR THE AWARD OF THE CONTRACT TO THE AMERICAN BRASS COMPANY, THE DEPARTMENT OF THE ARMY NOW HAS FORWARDED TO THIS OFFICE A REPORT FROM HEADQUARTERS FIRST ARMY, GOVERNORS ISLAND, NEW YORK, STATING THAT THE PROPERTY DISPOSAL OFFICER AT THE ORDNANCE AMMUNITION CENTER, JOLIET, ILLINOIS, ADVISED THAT THE QUALIFICATIONS IN THAT COMPANY'S BID "WERE THOSE THAT NORMALLY EXISTED IN COMMERCIAL PRACTICE." THE REPORT CONTINUES AS FOLLOWS:

"F. ORDNANCE AMMUNITION CENTER HAD PROCESSED THESE CONTRACTS FOR SALE OF SCRAP BRASS PRIOR TO THIS PARTICULAR INVITATION AND THE PROPERTY DISPOSAL OFFICER STATED THAT THEY DID NOT REQUIRE BID DEPOSITS AND THAT ACCEPTANCE WAS AT MILL.

"G. UPON RECEIPT OF THE OPINION FROM ORDNANCE AMMUNITION CENTER, IT WAS DETERMINED BY SENECA ORDNANCE DEPOT TO ACCEPT THE BID OF AMERICAN BRASS CO. PROVIDED THE BID DEPOSIT WAS SUPPLIED PROMPTLY, AND IT WAS ALSO DETERMINED THAT 18 1/2 CENTS PER POUND WOULD BE THE LOWEST ACCEPTABLE BID.

"H. ON 31 MARCH 1954, A TELEPHONE CONVERSATION WAS HELD WITH MR. PENDLETON OF AMERICAN BRASS CO. BY PROPERTY DISPOSAL OFFICER, SENECA ORDNANCE DEPOT AT WHICH TIME THE NONCONFORMITY OF THEIR BID WAS DISCUSSED. AS A RESULT OF THIS CONVERSATION, AMERICAN BRASS CO. SUPPLIED A 20% BID DEPOSIT AND SUBMITTED A LETTER AMENDING THE QUALIFICATIONS ADDED TO THE ORIGINAL BID.

"I. ON 30 MARCH 1954, MR. HAYUM OF ALRECO METAL CORP. CALLED THE PROPERTY DISPOSAL OFFICER AT SENECA ORDNANCE DEPOT REQUESTING INFORMATION REGARDING THE BIDS. HE WAS ADVISED THAT HIS COMPANY WAS ONE OF THE HIGH BIDDERS, HOWEVER, HE WAS NOT INFORMED AT THAT TIME THAT HE WAS A SUCCESSFUL BIDDER.

"J. ON 31 MARCH 1954, THE PROPERTY DISPOSAL OFFICER, SENECA ORDNANCE DEPOT CALLED MR. HAYUM OF ALRECO METAL CORP. INFORMING HIM OF THE AWARDS TO BE MADE AND THE LOWEST BID THAT WOULD BE ACCEPTABLE, NAMELY 18 1/2 CENTS PER POUND. MR. HAYUM WAS FURTHER INFORMED THAT THE DECISION TO ACCEPT 18 1/2 CENTS PER POUND AUTOMATICALLY ELIMINATED ALRECO METAL CORP. SINCE THEIR BID WAS 18 1/4 CENTS PER POUND."

THE BASIC STATUTORY AUTHORITY FOR THE SALE IS TO BE FOUND IN SECTION 203 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 385. PARAGRAPH (B) OF THAT SECTION PROVIDES THAT THE CARE AND HANDLING OF SURPLUS PROPERTY, PENDING ITS DISPOSITION, AND THE DISPOSAL OF SURPLUS PROPERTY, MAY BE PERFORMED BY THE GENERAL SERVICES ADMINISTRATION OR, WHEN SO DETERMINED BY THE ADMINISTRATOR, BY THE EXECUTIVE AGENCY IN POSSESSION OF THE PROPERTY OR BY ANY OTHER EXECUTIVE AGENCY WILLING TO TAKE SUCH ACTION. PARAGRAPH (C) PROVIDES THAT ANY EXECUTIVE AGENCY DESIGNATED OR AUTHORIZED BY THE ADMINISTRATOR TO DISPOSE OF SURPLUS PROPERTY MAY DO SO BY SALE, EXCHANGE LEASE, PERMIT, OR TRANSFER, FOR CASH, CREDIT, OR OTHER PROPERTY, WITH OR WITHOUT WARRANTY, AND UPON SUCH OTHER TERMS AND CONDITIONS AS THE ADMINISTRATOR DEEMS PROPER, AND THAT IT MAY EXECUTE SUCH DOCUMENTS FOR THE TRANSFER OF TITLE OR INTEREST IN PROPERTY AND TAKE SUCH OTHER ACTION AS IT DEEMS NECESSARY OR PROPER TO DISPOSE OF THE PROPERTY UNDER THE PROVISIONS OF THE ACT. PARAGRAPH (E) PROVIDES THAT UNLESS THE ADMINISTRATOR SHALL DETERMINE THAT DISPOSAL BY ADVERTISING WILL IN A GIVEN CASE BETTER PROTECT THE PUBLIC INTEREST, SURPLUS PROPERTY DISPOSALS MAY BE MADE WITHOUT REGARD TO ANY PROVISION OF EXISTING LAW FOR ADVERTISING UNTIL 12 O'CLOCK NOON EASTERN STANDARD TIME, DECEMBER 31, 1950. THIS DATE HAS BEEN EXTENDED TO JUNE 30, 1955. SEE THE ACTS OF JULY 12, 1952, 66 STAT. 593, AUGUST 8, 1953, 67 STAT. 521, AND PUBLIC NO. 492, 83RD CONGRESS, APPROVED JULY 14, 1954, 68 STAT. 474.

PURSUANT TO THIS AUTHORITY ARMY REGULATIONS 755-5, DATED JULY 14, 1953, WERE ISSUED. THESE REGULATIONS IMPLEMENT REGULATIONS OF THE GENERAL SERVICES ADMINISTRATION. THEY PROVIDE THAT SURPLUS PROPERTY IS AUTHORIZED FOR SALE BY THREE GENERAL METHODS OF SALE, (1) BY COMPETITIVE BID SALES, WHICH METHOD INCLUDES SEALED BID SALES, SPOT BID SALES AND AUCTION SALES, (2) BY NEGOTIATED SALES AND (3) BY RETAIL SALES. SPECIAL REGULATIONS 755- 5-2, ISSUED BY THE DEPARTMENT OF THE ARMY, PROVIDE THAT AWARDS NORMALLY WILL BE MADE TO THE HIGHEST RESPONSIBLE BIDDER COMPLYING WITH THE CONDITIONS OF THE INVITATION BUT THAT IF IT IS DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT AWARD MAY BE MADE TO OTHER THAN THE HIGHEST BIDDER EITHER AT HIS BID PRICE OR AT A HIGHER PRICE ARRIVED AT BY FURTHER NEGOTIATION. ALSO, THESE REGULATIONS PROVIDE THAT NORMALLY BID DEPOSITS OF 20 PERCENT OF THE TOTAL AMOUNT BID MUST ACCOMPANY THE BID.

IT IS APPARENT FROM THE RECORD THAT THE ACTION OF THE CONTRACTING OFFICER IN DISREGARDING YOUR BID AND ALL LOWER BIDS AND IN AWARDING CONTRACTS TO HIGHER BIDDERS, INCLUDING THE AMERICAN BRASS COMPANY ON THE BASIS OF ITS OFFER TO PURCHASE 1,000,000 POUNDS OF THE SCRAP, WAS DEFINITELY IN THE INTEREST OF THE GOVERNMENT FROM THE STANDPOINT OF PRICE. MOREOVER, THIS OFFICE HAS HELD CONSISTENTLY THAT WHERE A CONTRACT IS LET UNDER AUTHORITY WHICH PERMITS NEGOTIATION, AN ADMINISTRATIVE ELECTION TO ADVERTISE DOES NOT PRECLUDE THE SUBSEQUENT NEGOTIATION OF A CONTRACT WITH A LOWER OR HIGHER BIDDER AS THE CASE MAY BE ON TERMS CONSISTENT WITH THE PRINCIPLES APPLICABLE IN THE NEGOTIATION OF GOVERNMENT CONTRACTS. SEE FOR EXAMPLE, 20 COMP.GEN. 194. HENCE, ON THE BASIS OF THE FACTS OF RECORD THIS OFFICE PROPERLY MAY NOT OBJECT TO THE AWARD TO THE AMERICAN BRASS COMPANY.

REGARDING YOUR CLAIM FOR DAMAGES, ATTENTION IS INVITED TO THE STATEMENT IN THE REPORT FURNISHED BY THE DEPARTMENT OF THE ARMY, QUOTED ABOVE, TO THE EFFECT THAT THE REPRESENTATIVE OF THE ALRECO METAL CORPORATION WAS ADVISED THAT THE CORPORATION WAS ONE OF THE HIGH BIDDERS BUT WAS NOT ADVISED THAT THE CORPORATION WAS A SUCCESSFUL BIDDER. IT IS WELL SETTLED THAT STATUTORY PROVISIONS RELATIVE TO ADVERTISING AND LETTING OF PUBLIC CONTRACTS ARE FOR THE PROTECTION OF THE GOVERNMENT AND NOT BIDDERS AND THAT NO PERSON CAN ACQUIRE ANY VESTED RIGHTS AGAINST THE GOVERNMENT UNTIL THERE HAS BEEN A VALID ACCEPTANCE OF HIS OFFER BY AN AUTHORIZED AGENT OF THE GOVERNMENT. PERKINS V. LUKENS STEEL CO., 310 U.S. 113, 126; AMERICAN SMELTING CO. V. UNITED STATES, 259 U.S. 75, 78; UNITED STATES V. NEW YORK & PUERTO RICO S.S. CO., 238 U.S. 88.

ACCORDINGLY, IT MUST BE HELD THAT THERE IS NO LEGAL BASIS UPON WHICH YOUR CLAIM FOR DAMAGES MAY BE ALLOWED.