B-132788, APRIL 21, 1958, 37 COMP. GEN. 696

B-132788, APRIL 21, 1958, 37 COMP. GEN. 696

SALES - BIDS - ALL OR NONE - AMBIGUITY ALLEGATION A CONDITION IN AN INVITATION FOR THE SALE OF SIX LOTS OF SURPLUS PROPERTY THAT THE ITEMS WERE TO BE SOLD ON AN ALL OR NONE BASIS AND THAT AWARD WILL NOT BE MADE ON ANY ONE ITEM WITHOUT AN ACCEPTABLE BID ALSO BEING MADE ON ALL REMAINING ITEMS REQUIRES CONCURRENCE WITH THE ADMINISTRATIVE EXPLANATION THAT AWARD ON AN AGGREGATE BASIS WAS INTENDED, NOTWITHSTANDING THAT THE INVITATION DID NOT REQUIRE AN OVERALL PRICE, AND, ALTHOUGH THE INVITATION COULD HAVE BEEN CLEARER, IT IS NOT SO AMBIGUOUS AS TO REQUIRE CANCELLATION OF AN AWARD TO THE HIGHEST AGGREGATE BIDDER MADE IN GOOD FAITH SOME 2 MONTHS PRIOR TO THE PROTEST.

TO MYLES H. KNOWLES, APRIL 21, 1958:

BY LETTERS OF AUGUST 1 AND AUGUST 7, 1957, THE LATTER WITH AN ENCLOSURE AND LATER SUPPLEMENT THERETO, YOU PROTESTED, ON BEHALF OF ERIN METALS CORPORATION, THE AWARD OF A CONTRACT FOR THE SALE OF SURPLUS AIRCRAFT CARCASSES TO ANOTHER BIDDER PURSUANT TO INVITATION FOR BIDS NO. 104-607-S- 57-20, ISSUED BY THE CONTRACTING OFFICER AT NORTON AIR FORCE BASE, SAN BERNARDINO, CALIFORNIA, ON FEBRUARY 21, 1957.

THE INVITATION, AS AMENDED BY ADDENDUM NO. 2, ISSUED MARCH 14, 1957, PROVIDED FOR THE SALE OF SIX LOTS OF THE RESIDUE OF RECLAIMED AIRCRAFT. " SPECIAL NOTE TO BIDDERS" APPEARING AT THE BOTTOM OF PAGE 14 OF THE INVITATION, AS AMENDED BY PARAGRAPH C OF ADDENDUM NO. 2, STATED:

ITEMS NUMBERED 1 THROUGH 6 ARE TO BE SOLD ON AN ALL OR NONE BASIS. AWARD WILL NOT BE MADE ON ANY ONE ITEM WITHOUT AN ACCEPTABLE BID ALSO BEING MADE ON ALL REMAINING ITEMS.

BIDS SUBMITTED IN RESPONSE TO THE INVITATION WERE OPENED ON APRIL 9, 1957, AND CONTRACT NO. AF 104/607/S-1121 WAS AWARDED TO THE HIGHEST AGGREGATE BIDDER, AIRCRAFT ASSOCIATES AND MANUFACTURING COMPANY, ON JULY 17, 1957. YOUR PROTEST IS BASED ON THE CONTENTION THAT, PURSUANT TO THE INVITATION FOR BIDS, AWARD SHOULD HAVE BEEN MADE TO THE HIGHEST BIDDER ON EACH ITEM RATHER THAN TO THE HIGHEST SINGLE BIDDER IN THE AGGREGATE. YOU POINT OUT THAT MULTIPLE AWARDS WOULD HAVE RESULTED IN AN INCREASED PRICE TO THE GOVERNMENT IN EXCESS OF $40,000.

THE REPORT RECEIVED FROM THE DEPARTMENT OF THE AIR FORCE ON THE MATTER STATES THAT IT WAS THE INTENTION OF THE AIR FORCE TO AWARD A SINGLE CONTRACT TO THE OVERALL HIGHEST RESPONSIBLE BIDDER--- AND THE PROVISION OF THE " SPECIAL NOTE TO BIDDERS" WAS CONSIDERED TO SO ADVISE PROSPECTIVE BIDDERS--- FOR THE FOLLOWING REASONS:

UNDER THE " PROVISIONS OF SALE" THE CONTRACTOR WAS REQUIRED TO ERECT OR LOCATE A PRIVATELY OWNED OR CONTROLLED ALUMINUM SWEATING FURNACE ON THE PREMISES OF DAVIS-MONTHAN AIR FORCE BASE WITHIN THE DESIGNATED AREA FOR THE PURPOSE OF SWEATING PROPERTY SO PURCHASED INTO PIG OR INGOT FORM. THE COST OF A SUITABLE SWEATING FURNACE FOR THIS PURPOSE IS CONSERVATIVELY ESTIMATED TO BE $25,000. HAD BIDS BEEN SOLICITED ON OTHER THAN AN "ALL OR NONE" BASIS, PROSPECTIVE CONTRACTORS WOULD HAVE HAD TO CONSIDER SUCH COST IN CONNECTION WITH EACH AIRCRAFT LOT, THEREBY IN ALL PROBABILITY REDUCING BID PRICES CONSIDERABLY. IN THIS CONNECTION WE FEEL IT WOULD BE HIGHLY UNLIKELY AND UNREASONABLE TO SUPPOSE THAT BIDDERS NUMBERS 5 AND 6 WOULD HAVE ACCEPTED OR ANTICIPATED AN AWARD ON ONLY THE SINGLE ITEMS ON WHICH THEY WERE THE HIGH BIDDERS.

THE SMELTING SITE AVAILABLE AT DAVIS-MONTHAN AIR FORCE BASE FOR USE BY CONTRACTORS IN SWEATING SURPLUS AIRCRAFT INTO PIG AND INGOT FORM WILL ACCOMMODATE ONLY TWO CONTRACTORS SIMULTANEOUSLY. SINCE ONE CONTRACTOR IS PRESENTLY OPERATING ON THAT SITE UNDER A FORMER CONTRACT AND WILL NOT COMPLETE HIS OPERATIONS FOR A SUBSTANTIAL PERIOD OF TIME, THE PRESENT SITE WOULD ACCOMMODATE ONLY ONE CONTRACTOR WITH RESPECT TO THE PROPERTY AWARDED UNDER THE SUBJECT INVITATION FOR BIDS. TO HAVE PERMITTED AWARDS TO MORE THAN ONE CONTRACTOR WOULD HAVE, THEREFORE, NECESSITATED EITHER THE ROTATION OF CONTRACTORS ON THE ONE PRESENTLY AVAILABLE FACILITY OR THE ESTABLISHMENT OF ADDITIONAL SMELTING SITES. THIS SITUATION MADE THE MAKING OF MULTIPLE AWARDS EVEN MORE UNDESIRABLE. SINCE THE ESTABLISHMENT AND REMOVAL OF EACH CONTRACTOR'S FACILITY WOULD TAKE A SUBSTANTIAL AMOUNT OF TIME, THE DELAY CAUSED BY ROTATING CONTRACTORS ON THE SMELTING SITE WOULD HAVE INCREASED THE TIME REQUIRED FOR THE DISPOSAL OF THE SURPLUS AIRCRAFT. BECAUSE THE STORAGE SPACE FOR THESE AIRCRAFT IS AT PRESENT INSUFFICIENT, THE AIR FORCE CONSIDERED IT ESSENTIAL TO EFFECT THE DISPOSITION OF THE SUBJECT AIRCRAFT AS EXPEDITIOUSLY AS POSSIBLE.

THE ESTABLISHMENT OF ADDITIONAL SMELTING SITES WOULD HAVE ALSO BEEN UNDESIRABLE. THE " PROVISIONS OF SALE" PROVIDED THAT ELECTRICITY, GAS, WATER AND SEWER FACILITIES WERE NOT AVAILABLE ON THE DESIGNATED SITE AND THAT ALL EXPENSES INCIDENT TO THE INSTALLATION OF UTILITY CONNECTING LINES, INSTALLATION OF METERS, AND OTHER RELATED COSTS, AS WELL AS UTILITY COSTS, INCLUDING WATER, WOULD BE BORNE BY THE CONTRACTOR. ADDITIONAL SMELTING SITES WOULD, OF NECESSITY, HAVE HAD TO BE LOCATED A GREATER DISTANCE FROM THE EXISTING FACILITIES OF DAVIS MONTHAN AIR FORCE BASE, THEREBY INCREASING FURTHER THE EXPENSE TO PROSPECTIVE CONTRACTORS WITH A CORRESPONDING FURTHER REDUCTION IN EXPECTED BID PRICES ON THE AIRCRAFT CARCASSES. FURTHER, IT WAS CONSIDERED BY THE AIR FORCE THAT THE USE OF ADDITIONAL SWEATING FACILITIES WOULD COMPOUND THE FIRE AND SMOKE HAZARDS AT DAVIS-MONTHAN AIR FORCE BASE.

YOU CONTEND THAT THE PROPER INTERPRETATION OF THE PROVISIONS OF THE " SPECIAL NOTE TO BIDDERS" QUOTED ABOVE, IS THAT THE MATERIALS INCLUDED IN ANY ONE ITEM WERE TO BE SOLD ON AN ALL OR NONE BASIS AND THAT THE SECOND SENTENCE IN THE PROVISION WARNING THAT NO AWARD WOULD BE MADE ON ANY ONE ITEM UNLESS ACCEPTABLE BIDS WERE ALSO RECEIVED ON ALL REMAINING ITEMS APPLIED TO THE BIDS IN TOTO RATHER THAN TO ANY INDIVIDUAL BID. IN SUPPORT OF THIS CONTENTION YOU CITE PARAGRAPH 3 OF THE " GENERAL SALES TERMS AND CONDITIONS" OF THE INVITATION STATING THAT "THE GOVERNMENT RESERVES THE RIGHT * * * TO ACCEPT ANY ONE ITEM OR GROUP OF ITEMS IN THE BID, AS MAY BE IN THE BEST INTEREST OF THE GOVERNMENT.' YOU ALSO POINT OUT THAT PARAGRAPH 17 OF THE " ADDITIONAL SPECIAL SALES TERMS AND CONDITIONS" PROVIDES "* * * IF A BID DEPOSIT EXCEEDS THE TOTAL SUM BID ON THE ITEMS ACCEPTED BY THE GOVERNMENT, SUCH BID DEPOSIT OR EXCESS THEREOF WILL BE PROMPTLY RETURNED TO THE BIDDER OR CHASER.' YOU CONTEND THIS CLEARLY INDICATES THAT AWARD WAS CONTEMPLATED TO AN INDIVIDUAL BIDDER FOR LESS THAN THE TOTAL OF THE ITEMS IN THE INVITATION. YOU ALSO NOTE THAT PARAGRAPH TWO OF THE " ADDITIONAL INSTRUCTIONS TO BIDDERS," APPEARING AT PAGE 8 OF THE INVITATION PROVIDES THAT "ANY AWARDS AS A RESULT OF THIS INVITATION FOR BIDS WILL BE IN THE FORM OF AN AUTHENTICATED COPY OF THE CONTRACT.' IT IS YOUR POSITION THAT THE USE OF THE WORD "AWARDS" RATHER THAN THE SINGULAR FORM ALSO INDICATES AN INTENTION TO ACCEPT MORE THAN ONE BID UNDER THE INVITATION.

A PROVISION IN AN INVITATION TO THE EFFECT THAT AWARD WILL BE MADE ON AN "ALL OR NONE BASIS" HAS BEEN HELD TO REQUIRE AN INTERPRETATION THAT THE ENTIRE PROCUREMENT OR SALE WILL BE AWARDED TO A SINGLE BIDDER. SEE B- 103590, JUNE 18, 1951. WE RECOGNIZE, AS YOU POINT OUT, THAT CERTAIN OF THE OTHER PROVISIONS OF THE INVITATION, WHICH YOU CITED, APPEAR TO BE INCONSISTENT WITH THE USUAL DEFINITION. FURTHER, WE AGREE THAT THE MATTER COULD HAVE BEEN EASILY CLARIFIED BY REVISING THE SECOND SENTENCE OF PARAGRAPH ONE OF THE " SPECIAL NOTE TO BIDDERS" TO READ "AWARD WILL NOT BE MADE ON ANY ONE ITEM WITHOUT AN ACCEPTABLE OFFER ALSO BEING MADE BY THE SAME BIDDER ON ALL REMAINING ITEMS.'

HOWEVER, IF YOUR INTERPRETATION OF THE ALL OR NONE PROVISION (THAT IT APPLIED ONLY TO EACH LOT) IS ACCEPTED, THEN A BIDDER COULD HAVE BEEN AWARDED ITEM ONE ONLY. SUCH BIDDER, PURSUANT TO PARAGRAPH F OF THE "1PROVISIONS OF SALE" WOULD HAVE BEEN REQUIRED TO ERECT A SWEATING FURNACE AT THE DESIGNATED SITE. THE HIGH BID ON ITEM ONE WAS $620. THAT BID, COMPARED WITH THE CONSERVATIVE ESTIMATE IN THE ADMINISTRATIVE REPORT OF $25,000 FOR THE SWEATING PLANT, DEMONSTRATES THAT AWARD TO A BIDDER OF ITEM ONE ONLY WOULD OBVIOUSLY BE FINANCIALLY DISASTROUS TO THAT BIDDER. THIS POSSIBILITY SHOULD HAVE PUT ERIN METALS ON NOTICE THAT YOUR INTERPRETATION OF THE ALL OR NONE PROVISION COULD NOT HAVE BEEN INTENDED.

YOU ALSO ALLEGE IN SUPPORT OF YOUR CONTENTION THAT THE FACT THAT A BID IS REQUIRED FOR EACH ITEM AND THAT THERE IS NO PROVISION IN THE BID FORM FOR AN OVERALL BID ALSO INDICATES THAT AWARD COULD BE MADE TO MORE THAN ONE BIDDER. THE ADMINISTRATIVE REPORT STATES, AS A REASON FOR REQUIRING INDIVIDUAL UNIT PRICES, THE ESTABLISHMENT OF UNIT SELLING PRICES IN THE EVENT THAT ADDITIONAL QUANTITIES WERE ADDED AFTER THE CONTRACT HAD BEEN AWARDED PURSUANT TO PARAGRAPH 18 OF THE " ADDITIONAL SALES TERMS AND CONDITIONS" RESERVING TO THE GOVERNMENT THE RIGHT TO INCREASE QUANTITIES OF ITEMS SOLD UNDER THE CONTRACT. IN VIEW OF THE RELATIVELY SMALL NUMBER OF ITEMS INCLUDED IN THE INVITATION AND IN VIEW OF THE ADMINISTRATIVE EXPLANATION, WE CANNOT REGARD THE FAILURE TO REQUIRE AN OVERALL PRICE AS INDICATIVE OF AN INTENTION TO AWARD ON A UNIT RATHER THAN AN OVERALL BASIS.

IT SHOULD BE NOTED THAT PARAGRAPH ONE OF THE " ADDITIONAL INSTRUCTIONS TO BIDDERS" REQUIRES THAT EACH BIDDER SUBMIT A BID ON ALL ITEMS. THIS REQUIREMENT APPEARS TO BE INCONSISTENT WITH YOUR INTERPRETATION OF THE PROVISIONS DISCUSSED ABOVE SINCE IF AWARD WERE TO BE MADE ON AN ITEM BASIS THERE WOULD BE LITTLE POINT IN REQUIRING A BID ON EACH ITEM FROM A BIDDER WHO WOULD NOT OTHERWISE HAVE BID ON ALL ITEMS, IT BEING LOGICAL TO CONCLUDE THAT SUCH ITEM BID FORCED FROM A RELUCTANT BIDDER BY THE TERMS OF THE INVITATION WOULD BE CONSIDERABLY LOWER THAN A BID FROM A BIDDER WHO WAS INTERESTED IN ACQUIRING THE PROPERTY AND WHO WOULD HAVE BID ON SUCH ITEM REGARDLESS OF ANY REQUIREMENT TO DO SO.

YOU CONTEND ALSO, NOTWITHSTANDING THE PORTION OF THE ADMINISTRATIVE REPORT QUOTED ABOVE, THAT THERE IS SUFFICIENT SPACE TO SET UP THE FACILITIES FOR MORE THAN ONE CONTRACTOR. WHETHER OR NOT SUCH SPACE EXISTS IS PRIMARILY A QUESTION OF FACT AND IT HAS LONG BEEN THE POSITION OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT THAT WHERE FACTS ARE IN DISPUTE, WE ARE REQUIRED TO ACCEPT THE VERSION OF THE ADMINISTRATIVE AGENCY INVOLVED IN THE ABSENCE OF A CLEAR SHOWING TO THE CONTRARY. 3 COMP. GEN. 51.

AS WE STATED ABOVE, THE DISPUTED CONDITION OF THE INVITATION COULD HAVE BEEN MADE CLEARER AND WE ARE REQUESTING THAT THE SECRETARY OF THE AIR FORCE TAKE STEPS TO INSURE THAT FUTURE INVITATIONS CONTEMPLATING AWARD ON AN AGGREGATE BASIS ONLY SHALL SO STATE IN LANGUAGE LEAVING NO ROOM FOR OTHER REASONABLE INTERPRETATIONS. IT IS UNFORTUNATE THAT SITUATIONS OF THIS KIND ARISE, PARTICULARLY AS HERE WHERE YOU INDICATE THAT ERIN METALS WOULD HAVE SUBMITTED A HIGHER BID HAD THEY BEEN AWARE OF THE INTENTION TO AWARD ON AN AGGREGATE BASIS. WHILE THE CONDITIONS OF THE INVITATION COULD HAVE AND SHOULD HAVE BEEN PRESENTED MORE CLEARLY, WE CANNOT STATE THAT THEY WERE SO AMBIGUOUS AS TO REQUIRE CANCELLATION OF AN AWARD MADE IN GOOD FAITH ALMOST TWO MONTHS EARLIER, PARTICULARLY WHEN ALL BIDDERS WERE NOTIFIED BY PARAGRAPH TWO OF THE " SPECIAL NOTE TO BIDDERS" THAT CLARIFICATION OF ANY TERM OR CONDITION COULD BE OBTAINED FROM THE CONTRACTING OFFICER. WHILE WE BELIEVE THAT, UNDER THE CIRCUMSTANCES, THE DEPARTMENT OF THE AIR FORCE PRIOR TO AWARD WOULD HAVE BEEN JUSTIFIED IN REJECTING ALL BIDS AND READVERTISING SO AS TO CLARIFY THE ALL OR NONE REQUIREMENT, THE FACT REMAINS THAT YOU COULD HAVE REQUESTED CLARIFICATION OF ANY TERMS OF THE CONTRACT WHICH YOU CONSIDERED AMBIGUOUS. THEREFORE, WE PERCEIVE NO LEGAL BASIS UPON WHICH WE COULD AT THIS POINT REQUIRE CANCELLATION OF THE AWARD AND READVERTISEMENT OF THE SALE.

YOU ALSO SUBMITTED A SWORN AFFIDAVIT WHEREIN IT WAS ALLEGED THAT INFORMATION HAD BEEN RECEIVED BY YOU INDICATING THAT THE AMOUNT OF YOUR BID HAD BEEN IMPROPERLY DISCLOSED TO OTHER BIDDERS PRIOR TO AWARD. CAREFUL INVESTIGATION OF THE MATTER HAS FAILED TO DEVELOP ANY INFORMATION SUBSTANTIATING THE ALLEGATION. IN THE ABSENCE OF SUCH SUBSTANTIATION, WE ARE UNABLE TO CONCLUDE THAT THERE WAS SUCH LACK OF FREE AND OPEN COMPETITION AS TO RENDER THE AWARD INVALID.