B-128094, JUN. 22, 1956

B-128094, JUN. 22, 1956

TO MR. CHARLES A. CONNAUGHTON, REGIONAL FORESTER, FOREST SERVICE, DEPARTMENT OF AGRICULTURE:

BY LETTER OF MAY 29, 1956, YOUR REFERENCE S-SALES-MENDOCINO (MARKHAM RIDGE), YOU REQUEST OUR DECISION AS TO THE PROPER ACTION TO BE TAKEN IN REGARD TO THE SALE, BY ORAL AUCTION BEGUN MAY 15, 1956, OF TIMBER LOCATED IN THE MENDOCINO NATIONAL FOREST, CALIFORNIA.

TO QUALIFY FOR PARTICIPATION IN THE AUCTION, PROSPECTIVE PURCHASERS WERE REQUIRED TO SUBMIT ACCEPTABLE SEALED BIDS TOGETHER WITH $30,000. ADVERTISEMENT ANNOUNCING THE SALE APPEARED IN A LOCAL NEWSPAPER. STIPULATED THAT THE $30,000 WAS TO BE IN THE FORM OF A CERTIFIED OR CASHIER'S CHECK. THE PROSPECTUS AND BID FORM FURNISHED THE PROSPECTIVE BIDDERS DID NOT, HOWEVER, SO RESTRICT THE FORM OF THE $30,000. TWO OF THE OTHERWISE QUALIFIED BIDDERS SUBMITTED COMPANY CHECKS. REPRESENTATIVES OF GLENCO FOREST PRODUCTS, WHICH WAS QUALIFIED AS A BIDDER, PROTESTED THAT THE TWO COMPANIES WHO FAILED TO SUBMIT CERTIFIED OR CASHIER'S CHECKS SHOULD NOT HAVE BEEN QUALIFIED. IT WAS RULED THAT THE TWO COMPANIES WOULD BE QUALIFIED FOR THE AUCTION IF THEY SUBMITTED CERTIFIED OR CASHIER'S CHECKS IN THE PROPER AMOUNT PRIOR TO THE TIME SET FOR THE START OF THE AUCTION. THE COMPANIES DID SO AND WERE PERMITTED TO PARTICIPATE IN THE AUCTION ON THE BASIS THAT THE REQUIREMENT IN THE ADVERTISEMENT WAS AN INFORMALITY DESIGNED FOR THE BENEFIT OF THE FOREST SERVICE AND COULD BE WAIVED BY THE CONTRACTING OFFICER.

THE FAILURE OF THE TWO COMPANIES TO FURNISH CASHIER'S OR CERTIFIED CHECKS WITH THEIR SEALED BIDS WOULD NOT AFFECT THE SALES PRICE; NOR DOES IT APPEAR THAT THE FAILURE TO PRESENT THE CHECKS IN THE PRESCRIBED FORM OPERATED TO, OR WAS INTENDED TO, OBTAIN ANY UNDUE ADVANTAGE FOR THE TWO COMPANIES. UNDER SUCH CIRCUMSTANCES, AND PARTICULARLY SINCE CERTIFIED CHECKS WERE PRESENTED PRIOR TO THE START OF THE ORAL AUCTION, THE DEFICIENCY MAY PROPERLY BE DEEMED AN INFORMALITY AND MAY BE WAIVED BY THE CONTRACTING OFFICER AS BEING IN THE PUBLIC INTEREST, IT BEING APPARENT THAT A LARGER NUMBER OF BIDDERS WOULD TEND TO INCREASE THE PRICE RECEIVED FOR THE TIMBER. 31 COMP. GEN. 20 AND 26 COMP. GEN. 49.

AT THE START OF THE AUCTION IT WAS ANNOUNCED THAT EACH BIDDER COULD, IN TURN, EITHER BID OR PASS. IN ANNOUNCING THE RULES FOR THE AUCTION, THE AUTHORIZED REPRESENTATIVE OF THE CONTRACTING OFFICER WHO WAS CONDUCTING THE AUCTION STATED THAT,"AFTER THE HIGHEST BID IS RECEIVED, EACH BIDDER WILL BE GIVEN ONE CHANCE TO RAISE THE BID.' ON THE TWENTIETH ROUND OF BIDDING THREE BIDDERS REMAINED. THE FIRST, THE DIAMOND MATCH COMPANY, SUBMITTED A BID. GLENCO FOREST PRODUCTS, WHICH CAME NEXT, PASSED AS DID FORWARD BROTHERS PROPERTIES, WHICH WAS LAST. AT THAT POINT THE AUCTIONEER ANNOUNCED THE BIDS CLOSED. GLENCO AND FORWARD PROTESTED THE AUCTIONEER'S ACTION ON THE BASIS OF THEIR UNDERSTANDING THAT THEY WOULD BE GIVEN ONE MORE OPPORTUNITY AFTER A BID HAD BEEN ANNOUNCED AS THE HIGHEST BID. YOU ASK WHAT DISPOSITION SHOULD BE MADE OF THE MATTER UNDER THE CIRCUMSTANCES DESCRIBED.

YOU STATE THAT THE GENERAL PRACTICE IN THE CONDUCT OF AUCTIONS IS TO CONTINUE THE AUCTION UNTIL IT IS "CLEARLY DETERMINED" THAT THE HIGHEST BID HAS BEEN OBTAINED, I.E., THAT THE UNSUCCESSFUL BIDDERS ARE THROUGH BIDDING. THE FOREST SERVICE MANUAL, VOL. 3, TITLE 7 (SEC. B), PARA. 204.26 (AS AMENDED MARCH 1953), PROVIDES IN PART, UNDER THE HEADING "AUCTION PROCEDURE," THAT "THE AUCTION SHOULD BE HELD OPEN AS LONG AS NECESSARY TO ESTABLISH THE VALUE OF THE OFFERING AND TO GIVE EACH QUALIFIED BIDDER AN OPPORTUNITY TO SUBMIT THE HIGHEST BID HE DESIRES TO MAKE * * *.'

IT REASONABLY CAN BE ARGUED THAT THE MEANING INTENDED TO BE DRAWN FROM THE AUCTIONEER'S STATEMENTS PRECEDING THE BIDDING WAS THAT, IN ADDITION TO THE OPPORTUNITY TO BID OR PASS IN EACH ROUND, ONE ADDITIONAL OPPORTUNITY WOULD BE GIVEN EACH BIDDER TO RAISE THE HIGHEST BID. ADDITIONALLY, THE PURPOSE OF A SALE OF PROPERTY AT PUBLIC AUCTION IS TO OBTAIN THE HIGHEST POSSIBLE BID FOR THE PROPERTY. IN THE SALE OF PUBLIC PROPERTY THE PUBLIC INTEREST IS OF FIRST CONSIDERATION. THE PUBLIC INTEREST GENERALLY REQUIRES THAT THE HIGHEST POSSIBLE RETURN BE OBTAINED CONSISTENT WITH LAW. IN VIEW OF THE INTEREST SHOWN BY THE TWO UNSUCCESSFUL BIDDERS IN AN OPPORTUNITY TO BID FURTHER, IT CANNOT BE SAID THAT THE DESIRED RESULT HAS BEEN OBTAINED. ACCORDINGLY, SINCE THE PROCEDURE ANNOUNCED AT THE START OF THE AUCTION COULD HAVE BEEN INTERPRETED IN THE MANNER ALLEGED BY GLENCO AND FORWARD AND PARTICULARLY IN VIEW OF THE FOREST SERVICE MANUAL PROVISION CITED ABOVE REQUIRING THE AUCTION TO BE HELD OPEN UNTIL EACH BIDDER HAS BEEN AFFORDED AN OPPORTUNITY TO SUBMIT THE HIGHEST BID HE DESIRES TO MAKE, WE AGREE WITH YOUR APPARENT CONCLUSION THAT THE AUCTION SHOULD BE REOPENED TO GIVE EACH QUALIFIED BIDDER AN OPPORTUNITY TO CONTINUE THE BIDDING UNTIL THE HIGHEST POSSIBLE BID IS OBTAINED.