B-134031, NOVEMBER 26, 1957, 37 COMP. GEN. 368

B-134031: Nov 26, 1957

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THIS PROCEDURE IS NOT REQUIRED BY STATUTE. 1957: REFERENCE IS MADE TO A LETTER DATED OCTOBER 28. IT IS THE PROTESTING BIDDER'S POSITION THAT IF THE BILLINGS AREA OFFICE HAD ADVERTISED THE COAL REQUIREMENTS OF THE CROW AND NORTHERN CHEYENNE AGENCIES UPON THE LATTER BASIS. WOULD HAVE BEEN LOWER THAN THAT QUOTED BY THE SUCCESSFUL BIDDER. THE ULTIMATE PROCUREMENT COST TO THE GOVERNMENT OF ITS HEATING REQUIREMENTS WOULD HAVE BEEN LESS. THE BIG HORNE COAL COMPANY FEELS THAT IT IS ENTITLED TO THE AWARD OF ITEM NO. COAL FROM OUTCROP AT STRIP MINES WHICH IS UNDULY WEATHERED WILL NOT BE ACCEPTABLE. SCOTT WAS AWARDED ITEMS NOS. THE PRINCIPAL ITEM OF THE AWARD WAS ITEM A. WHO WAS AWARDED THIS ITEM.

B-134031, NOVEMBER 26, 1957, 37 COMP. GEN. 368

CONTRACTS - SPECIFICATIONS - EVALUATION ON OTHER THAN USUAL BASIS - MINIMUM NEEDS - INDIAN COAL MINE LEASE ALTHOUGH GOVERNMENT AGENCIES ORDINARILY PURCHASE COAL ON A HEAT-UNIT BASIS RATHER THAN ON THE BASIS OF WEIGHT ONLY, THIS PROCEDURE IS NOT REQUIRED BY STATUTE, AND AN ADMINISTRATIVE DETERMINATION TO PURCHASE COAL MEETING THE MINIMUM STANDARDS SPECIFIED IN THE INVITATION FOR BIDS ON A PRICE PER TON BASIS DOES NOT AFFORD BASIS FOR OBJECTION. A COAL MINE OWNED BY AN INDIAN TRIBE AND OPERATED ON A ROYALTY BASIS BY A CONTRACTOR OR LESSEE EMPLOYING INDIAN LABOR MAY PROPERLY BE CONSIDERED AS AN " INDIAN INDUSTRY" WITHIN THE MEANING OF 25 U.S.C. 47, WHICH GRANTS THE SECRETARY OF THE INTERIOR DISCRETIONARY AUTHORITY TO MAKE PURCHASES OF PRODUCTS OF INDIAN INDUSTRY ON THE OPEN MARKET.

TO THE SECRETARY OF THE INTERIOR, NOVEMBER 26, 1957:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 28, 1957, WITH ENCLOSURES, FROM THE ADMINISTRATIVE ASSISTANT SECRETARY OF THE INTERIOR, REQUESTING A DECISION (1) AS TO THE PROPRIETY OF HAVING AWARDED COAL CONTRACT NO. 13-20 -250-1072, DATED JULY 22, 1957, TO MR. L. C. SCOTT, LESSEE AND OPERATOR OF THE LAME DEER, MONTANA, TRIBAL RESOURCE MINE, ON A PRICE PER TON, IN LIEU OF A GUARANTEED-ANALYSIS, BASIS; AND ALSO, (2) AS TO WHETHER THE BUREAU OF INDIAN AFFAIRS PROPERLY MAY INVOKE SECTION 23 OF THE ACT OF JUNE 25, 1910, 36 STAT. 861, 25 U.S.C. 47, AS AUTHORITY FOR UTILIZING THIS SAME SOURCE OF SUPPLY ( LAME DEER MINE) IN MEETING THE FUTURE COAL REQUIREMENTS OF THE NORTHERN CHEYENNE AND CROW AGENCIES.

YOUR FIRST INQUIRY STEMS FROM A PROTEST FILED BY THE BIG HORN COAL COMPANY, SHERIDAN, WYOMING, AGAINST THE AWARD TO MR. L. C. SCOTT OF ITEM NO. A OF THE CITED CONTRACT--- COVERING AN ESTIMATED QUANTITY OF 3,000 TONS OF SUB-BITUMINOUS OIL TREATED STOKER COAL SCHEDULED FOR DELIVERY TO THE CROW AGENCY DURING THE 1958 FISCAL YEAR--- ON A PRICE PER TON BASIS, AS SPECIFIED IN INVITATION NO. 250-57-219, RATHER THAN A "GUARANTEED- ANALYSIS" BASIS, WHICH USUALLY APPLIES TO SIZEABLE PROCUREMENTS OF THIS CHARACTER. BASICALLY, IT IS THE PROTESTING BIDDER'S POSITION THAT IF THE BILLINGS AREA OFFICE HAD ADVERTISED THE COAL REQUIREMENTS OF THE CROW AND NORTHERN CHEYENNE AGENCIES UPON THE LATTER BASIS, AND HAD THE BIDS BEEN EVALUATED AND THE RESULTING CONTRACTS LET UPON THE BASIS OF SUCH GUARANTEED-ANALYSIS, B.T.U. CONTENT AND OTHER FACTORS CONSIDERED, ITS BID PRICE ON THE 3,000 TONS OF COAL, AS COVERED BY ITEM NO. A, WOULD HAVE BEEN LOWER THAN THAT QUOTED BY THE SUCCESSFUL BIDDER, AND THE ULTIMATE PROCUREMENT COST TO THE GOVERNMENT OF ITS HEATING REQUIREMENTS WOULD HAVE BEEN LESS. HENCE, THE BIG HORNE COAL COMPANY FEELS THAT IT IS ENTITLED TO THE AWARD OF ITEM NO. A, ALONG WITH ITEM NO. B, FOR $2,856, ALSO AWARDED IT.

IN ADVERTISING THE ESTIMATED COAL REQUIREMENTS FOR THE CROW AND NORTHERN CHEYENNE AGENCIES FOR THE FISCAL YEAR 1958, THE BILLINGS AREA OFFICE, IN ITS INVITATION NO. 250-57-219, SPECIFIED CERTAIN STANDARDS OF QUALITY, SUCH AS:

COAL SHALL BE OF BEST QUALITY BITUMINOUS OR SUB-BITUMINOUS FOR USE IN HEATING OR STEAM GENERATING PLANTS MEETING THE FOLLOWING ANALYTICAL LIMITS:

B.T.U. (DRY) 12,3000 MINIMUM.

ASH (DRY) 7 PERCENT MAXIMUM.

MOISTURE (AS RECEIVED) 28 PERCENT MAXIMUM.

COAL FROM OUTCROP AT STRIP MINES WHICH IS UNDULY WEATHERED WILL NOT BE ACCEPTABLE.

THE RECORD SHOWS THAT MR. L. C. SCOTT WAS AWARDED ITEMS NOS. A, 2A AND 2C OF CONTRACT NO. 14-20-250-1072, FOR $26,212.50, UPON THE BASIS OF HIS LOW BID PRICES THEREON OF $6.00, $7.25 AND $7.50 PER TON, RESPECTIVELY. THE PRINCIPAL ITEM OF THE AWARD WAS ITEM A, FOR AN ESTIMATED 3,000 TONS, SCHEDULED TO BE DELIVERED TO THE BINS OF THE CROW AGENCY, MONTANA, FOR THE TOTAL BID PRICE OF $18,000. MR. SCOTT, WHO WAS AWARDED THIS ITEM, OFFERED TO SUPPLY THIS COAL FROM THE LAME DEER MINE, MONTANA, WHICH HAD BEEN LEASED TO HIM, AN EXPERIENCED OPERATOR, BY THE BUREAU OF INDIAN AFFAIRS. IT IS ADMINISTRATIVELY REPORTED THAT FOR MANY YEARS THE NORTHERN CHEYENNE AGENCY, UNDER AGREEMENT WITH THE NORTHERN CHEYENNE TRIBE, CARRIED ON THE OPERATION OF THE LAME DEER TRIBAL MINE AND, UNDER THE AUTHORITY OF SECTION 23 OF THE ACT OF JUNE 25, 1910, UTILIZED THIS SOURCE TO SUPPLY THE COAL REQUIREMENTS OF THE NORTHERN CHEYENNE AGENCY. THE LAME DEER MINE REPORTEDLY WAS LEASED TO MR. SCOTT AS A MEANS TO PROVIDE GREATER INCOME TO THE TRIBE, THROUGH THE PAYMENT OF A ROYALTY ON THE COAL PRODUCED, AND THROUGH THE EMPLOYMENT OF NEEDY INDIANS IN THAT AREA.

AS TO THE QUALITY OF THE COAL PRODUCED AT THE LAME DEER MINE, THE RECORD SHOWS THAT THE BUREAU OF INDIAN AFFAIRS HAS UTILIZED THIS COAL OVER A PERIOD OF MANY YEARS KNOWING THAT IT POSSESSED CERTAIN PHYSICAL AND CHEMICAL CHARACTERISTICS WHICH MADE IT ENTIRELY SATISFACTORY FOR BUREAU PURPOSES. FROM THE LATEST ANALYSIS REPORT BY THE BUREAU OF MINES ON A "RUN-OF-MINE" SAMPLE TAKEN FROM THIS MINE, IT WAS FOUND THAT NOT ONLY WILL IT OPERATE SATISFACTORILY AS STOKER COAL--- ITS INTENDED USAGE--- BUT ALSO, THAT ITS B.T.U. CONTENT TESTED AT 12,400 (DRY), OR 100 B.T.U.'S IN EXCESS OF THE MINIMUM REQUIREMENTS SET FORTH IN THE INVITATION. THE COAL OFFERED BY MR. SCOTT OTHERWISE APPEARS TO COMPLY WITH THE REQUIREMENTS OF THE GOVERNMENT'S INVITATION.

SPECIFICALLY, CONCERNING THE PROTEST OF THE BIG HORN COAL COMPANY, IT MUST BE RECOGNIZED THAT THE FUNCTION OF DETERMINING WHAT IS NEEDED OR REQUIRED IN THE CONDUCT OF A PARTICULAR GOVERNMENTAL ACTIVITY ESSENTIALLY IS AN ADMINISTRATIVE ONE AND, AS SUCH, PROPERLY SHOULD BE EXERCISED BY THE LOCAL ADMINISTRATIVE OFFICERS OR EMPLOYEES OF THE GOVERNMENT, WHO ARE ACQUAINTED WITH THE PARTICULAR NEED TO BE SERVED, AND THUS BEST QUALIFIED TO WRITE THE SPECIFICATIONS DESIGNED TO SATISFY SUCH NEED. IN THE PRESENT CASE, THERE CAN BE NO DOUBT BUT THAT THE LOCAL OFFICIALS IN BILLINGS AREA OFFICE WERE THOROUGHLY FAMILIAR WITH THE ACTUAL COAL REQUIREMENTS OF THE CROW AND NORTHERN CHEYENNE INDIAN AGENCIES FOR THE YEAR ENDING JUNE 30, 1958, AND WERE BEST QUALIFIED TO STIPULATE AS TO THE QUALITY OF COAL NEEDED TO SERVE THE HEATING AND STEAM GENERATING PLANTS INSTALLED AND IN USE AT THOSE AGENCIES. WHILE IT IS OUR UNDERSTANDING THAT IT IS THE MORE PREVALENT PRACTICE OF GOVERNMENT AGENCIES TO PURCHASE COAL ON A HEAT-UNIT BASIS RATHER THAN ON THE BASIS OF WEIGHT ONLY, WE ARE AWARE OF NO STATUTORY REQUIREMENT TO THAT EFFECT, AND ON THE RECORD FURNISHED WE FIND NO ADEQUATE GROUND TO QUESTION THE PROPRIETY OF THE ADMINISTRATIVE DETERMINATION TO PURCHASE COAL MEETING THE MINIMUM STANDARDS SPECIFIED ON A PRICE PER TON BASIS.

THE PROTESTING BIDDER ALLEGES THAT HE WAS UNABLE TO GET A SATISFACTORY ANSWER FROM THE AREA OFFICIALS TO HIS SPECIFIC QUESTIONS CONCERNING THE METHOD OF EVALUATION TO BE USED, BUT THIS IS DENIED BY THE ADMINISTRATIVE REPORT. ON THE FACE OF THE INVITATION IT SEEMS CLEAR THAT PRICE PER TON WAS THE ONLY EVALUATING FACTOR CONTEMPLATED, AND THE FACT THAT THIS WAS AN UNUSUAL METHOD OF EVALUATION IN THIS TYPE OF PROCUREMENT IS NOT ENOUGH TO MAKE THE INVESTIGATION AMBIGUOUS.

FOR THE REASONS STATED, WE CONCLUDE THAT THE PROTEST SHOULD BE REJECTED.

YOU ALSO REQUEST A DECISION AS TO WHETHER THE PROVISIONS OF SECTION 23, ACT OF JUNE 25, 1910, 36 STAT. 861, MAY BE INTERPRETED TO PERMIT THE UTILIZATION OF THE LAME DEER TRIBAL RESOURCE MINE TO SUPPLY THE FUTURE COAL REQUIREMENTS OF THE NORTHERN CHEYENNE AND CROW AGENCIES, AND THUS PROVIDING GREATER INCOME TO THE SAID TRIBES ALONG WITH EMPLOYMENT TO NEEDY INDIANS IN THAT AREA. THE ACT (25 U.S.C. 47), PROVIDES:

SO FAR AS MAY BE PRACTICABLE INDIAN LABOR SHALL BE EMPLOYED, AND PURCHASES OF THE PRODUCTS OF INDIAN INDUSTRY MAY BE MADE IN OPEN MARKET IN THE DISCRETION OF THE SECRETARY OF THE INTERIOR. ( ITALICS SUPPLIED.)

SUBJECT TO THE CONDITION THAT THE OPERATING LESSEE OF THE MINE BE SPECIFICALLY REQUIRED TO EMPLOY INDIAN LABOR, WE ARE OF THE OPINION THAT A MINE OWNED BY AN INDIAN TRIBE AND OPERATED ON A ROYALTY BASIS BY A CONTRACTOR OR LESSEE EMPLOYING INDIAN LABOR MAY PROPERLY BE CONSIDERED AS AN " INDIAN INDUSTRY" WITHIN THE MEANING OF THE STATUTE.

THEREFORE, SHOULD YOU OR YOUR DULY AUTHORIZED REPRESENTATIVE, IN THE EXERCISE OF YOUR DISCRETIONARY POWERS CONFERRED BY THE ABOVE STATUTE, AUTHORIZE THE OPEN MARKET PROCUREMENT OF COAL FROM SUCH A MINE, THERE IS PERCEIVED NO LEGAL OBJECTION TO ADOPTION OF THE PROCEDURE SUGGESTED IN THE PENULTIMATE PARAGRAPH OF YOUR LETTER. SEE 15 COMP. GEN. 1144, 1145.