B-139252, MAY 7, 1959, 38 COMP. GEN. 747

B-139252: May 7, 1959

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LEASES - BIDS - AMBIGUITIES - EVALUATION FACTORS - MAINTENANCE COSTS - LONG TERMS ALTHOUGH A DIFFERENCE BETWEEN THE RENEWAL TERMS IN AN INVITATION FOR THE CONSTRUCTION AND LEASE OF A BUILDING AND THE LEASE AGREEMENT MAY HAVE CAUSED CONFUSION AMONG THE BIDDERS. SINCE EVALUATION OF THE BIDS IS PROPOSED TO BE MADE ON THE BASIS OF THE BASIC LEASE TERM. WHICH WAS THE SAME IN BOTH THE INVITATION AND THE LEASE AGREEMENT. NO OBJECTION WILL BE MADE. IN THE FUTURE ACTION SHOULD BE TAKEN TO HAVE THE LEASE FORM AGREE WITH THE INVITATION IN ALL RESPECTS. UNDER AN INVITATION FOR THE CONSTRUCTION AND LONG-TERM LEASE OF A BUILDING WHICH REQUIRES THE SUBMISSION OF BIDS ON A LESSOR-MAINTENANCE BASIS OR IN THE ALTERNATE ON A GOVERNMENT MAINTENANCE BASIS BUT PROVIDES THAT AWARD WILL BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID IS MOST ADVANTAGEOUS TO THE GOVERNMENT.

B-139252, MAY 7, 1959, 38 COMP. GEN. 747

LEASES - BIDS - AMBIGUITIES - EVALUATION FACTORS - MAINTENANCE COSTS - LONG TERMS ALTHOUGH A DIFFERENCE BETWEEN THE RENEWAL TERMS IN AN INVITATION FOR THE CONSTRUCTION AND LEASE OF A BUILDING AND THE LEASE AGREEMENT MAY HAVE CAUSED CONFUSION AMONG THE BIDDERS, SINCE EVALUATION OF THE BIDS IS PROPOSED TO BE MADE ON THE BASIS OF THE BASIC LEASE TERM, WHICH WAS THE SAME IN BOTH THE INVITATION AND THE LEASE AGREEMENT, NO OBJECTION WILL BE MADE; HOWEVER, IN THE FUTURE ACTION SHOULD BE TAKEN TO HAVE THE LEASE FORM AGREE WITH THE INVITATION IN ALL RESPECTS. UNDER AN INVITATION FOR THE CONSTRUCTION AND LONG-TERM LEASE OF A BUILDING WHICH REQUIRES THE SUBMISSION OF BIDS ON A LESSOR-MAINTENANCE BASIS OR IN THE ALTERNATE ON A GOVERNMENT MAINTENANCE BASIS BUT PROVIDES THAT AWARD WILL BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED, THE USE IN EVALUATION OF AN ESTIMATED FIGURE FOR MAINTENANCE COSTS IS NOT IMPROPER AND, EVEN THOUGH THERE WAS A WIDE VARIATION IN THE MAINTENANCE COSTS SUBMITTED, ALL BIDDERS WERE PLACED IN THE SAME POSITION IN BEING REQUIRED TO ESTIMATE SUCH COSTS; HOWEVER, IN FUTURE ADVERTISEMENTS THE USE OF A GOVERNMENT ESTIMATE FOR LONG PERIODS, WHICH MAY PROVE INACCURATE AND THE REQUIREMENT FOR CONJECTURE ON THE PART OF BIDDERS AS TO FUTURE COSTS, SHOULD BE ELIMINATED.

TO THE POSTMASTER GENERAL, MAY 7, 1959:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 23, 1959, FURNISHING A REPORT ON THE PROTEST OF POST OFFICE TERMINAL ANNEX BUILDING CORPORATION IN REGARD TO THE ADVERTISEMENT FOR BIDS DATED JANUARY 9, 1959, AS SUPPLEMENTED BY ADDENDUM NO. 1 DATED FEBRUARY 18, 1959, AND ADDENDUM NO. 2 DATED MARCH 25, 1959, FOR CONSTRUCTION AND LEASE OF A POSTAL GARAGE FACILITY AT PHILADELPHIA, PENNSYLVANIA.

THE PROTESTANT NOTIFIED OUR OFFICE ON APRIL 21, 1959, THAT IT WAS WITHDRAWING ITS PROTEST AND NOTIFIED YOUR DEPARTMENT TO THE SAME EFFECT BY LETTER DATED APRIL 22, 1959. YOU INDICATE, HOWEVER, THAT OUR VIEWS ARE DESIRED ON THE MATTER PRESENTED BY THE PROTESTANT BECAUSE THE PROTEST MAY BE RENEWED IN FUTURE BID CASES UNDER THE PROVISIONS OF 39 U.S.C. 903.

THE PROTEST WAS ESSENTIALLY ON THE BASIS THAT THE ADVERTISEMENT DID NOT GIVE BIDDERS A DEFINITIVE STANDARD BY WHICH DETERMINATION WAS TO BE MADE OF THE LOWEST RESPONSIVE BID. SPECIFICALLY THE PROTESTANT STATED THAT THE INVITATION DID NOT SET FORTH THE BASIS UPON WHICH THE BIDS WOULD BE EVALUATED BECAUSE IT DID NOT SPECIFY THE BASIC LEASE TERM; WHETHER IN THE EVALUATION THERE WOULD BE INCLUDED OR EXCLUDED THE OBLIGATION OF MAINTENANCE OF PREMISES BY THE BIDDER/LESSOR; OR WHETHER THERE WOULD BE INCLUDED OR EXCLUDED THE OPTION TO PURCHASE. ALSO, IT WAS POINTED OUT THAT THE INVITATION DID NOT SET FORTH THE ESTIMATED ANNUAL COST OF SUCH MAINTENANCE TO THE GOVERNMENT IF THE GOVERNMENT WAS TO ASSUME SUCH OBLIGATION. FURTHERMORE, IT WAS ALLEGED THAT THERE WAS NOT SET OUT ANY STANDARD OF ANNUAL MAINTENANCE ON WHICH BIDS WERE REQUESTED.

WITH REGARD TO THE MATTER OF WHETHER THE INVITATION DID SET OUT PROPERLY THE BASIC LEASE TERM IT IS STATED IN YOUR LETTER--- AND A COPY OF ADDENDUM NO. 2, ISSUED MARCH 25, 1959, SHOWS--- THAT THE ADVERTISEMENT ASKED FOR A 30-YEAR BASIC LEASE TERM PLUS TWO 10-YEAR AND FOUR 5-YEAR RENEWAL TERMS WHEREAS THE AGREEMENT TO LEASE FORM CALLED FOR ONE 10-YEAR AND TWO 5-YEAR RENEWALS. ALTHOUGH THIS DIFFERENCE CAUSED SOME CONFUSION AMONG THE BIDDERS, YOU PROPOSE TO EVALUATE BIDS MAINLY ON THE BASIS OF RENTALS QUOTED IN THE INITIAL 30-YEAR TERM SINCE IT IS DIFFICULT TO PROJECT PROBABLE OCCUPANCY BEYOND 30 YEARS. THE PROTESTANT HAS GIVEN RENEWAL TERMS AS CALLED FOR IN ADDENDUM NO. 2 AND IS THE LOW BIDDER. PRESUMABLY APPROPRIATE ACTION WILL BE TAKEN IN FUTURE CASES TO HAVE THE LEASE FORM AGREE WITH THE INVITATION FOR BIDS INSOFAR AS THE RENEWAL TERMS ARE CONCERNED.

INSOFAR AS YOUR DEPARTMENT'S BID EVALUATION STANDARD IS CONCERNED, WE AGREE THAT BIDDERS ARE ADEQUATELY APPRISED OF SUCH STANDARD BY THE SECOND PARAGRAPH OF PAGE 2 OF THE ADVERTISEMENT FOR BIDS WHICH STATES THAT THE AWARD WILL BE MADE TO THE RESPONSIBLE BIDDER WHOSE BID IS MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. LINE WITH THIS PROVISION IT WOULD APPEAR THAT IT WAS ENTIRELY PROPER TO REQUEST BIDS ON AN ALTERNATE BASIS, THAT IS, ON A LESSOR-MAINTENANCE BASIS OR ON A GOVERNMENT-MAINTENANCE BASIS. WHILE THE DETERMINATION BY THE GOVERNMENT OF MAINTENANCE COSTS PER YEAR ($10,000) FOR THE NEXT 30 YEARS MAY NOT PROVE TO BE ACCURATE AND WHILE THE VARIATION IN THE BIDS RECEIVED FOR LESSOR-MAINTENANCE RANGED FROM $4,173 TO $200,000 PER YEAR, IT APPEARS THAT ALL BIDDERS WERE PLACED IN THE SAME POSITION IN BEING REQUIRED TO ESTIMATE THE ANNUAL MAINTEANCE COSTS AND CONSEQUENTLY NO OBJECTION IN THIS REGARD NEED BE MADE TO THIS INVITATION. HOWEVER, THE UNCERTAINTY OF WHAT AMOUNTS WOULD BE REQUIRED TO BE EXPENDED 25 TO 30 YEARS HENCE SHOULD WARRANT FURTHER CONSIDERATION IN FUTURE ADVERTISEMENTS, ALL WITH A VIEW TO ELIMINATING THE USE OF GOVERNMENT ESTIMATES FOR EVALUATION PURPOSES AND ELIMINATING THE CONSIDERATION OF BIDS THAT REQUIRE THE CONJECTURE ON THE PART OF BIDDERS AS TO WHAT SUCH COSTS WILL BE FOR THE NEXT 30 YEARS.

THE QUESTION AS TO THE SCOPE OF THE LESSOR'S OBLIGATION TO PROVIDE MAINTENANCE HAS BEEN COVERED BY ADDENDUM NO. 1, DATED MARCH 25, 1959, TO THE AGREEMENT TO LEASE FORM AND IT IS UNDERSTOOD INFORMALLY FROM A REPRESENTATIVE OF THE PROTESTANT THAT THE ADDENDUM SETS OUT SUFFICIENTLY THE DETAILS OF THIS OBLIGATION.

IN VIEW OF THE FOREGOING, WE WOULD NOT BE REQUIRED TO OBJECT TO AN AWARD BEING MADE UNDER THE INVITATION AND BIDDING DOCUMENTS IN THIS CASE.