B-139916, JUL. 29, 1959

B-139916, JUL. 29, 1959

TO WALTER FREEDMAN, ESQUIRE:

IN A LETTER DATED JUNE 15, 1959, YOU PROTESTED, ON BEHALF OF SOCIETA INDUSTRIALE DEMOLIZIONI RIPARAZIONI MARITIME (SIDEMAR), THE ACTION OF THE NAVY DEPARTMENT IN DISQUALIFYING SIDEMAR'S BID FOR LIGHT CARRIERS OFFERED FOR SALE BY THE GOVERNMENT. IN ADDITION TO A FULL REPORT FROM THE NAVY DEPARTMENT, WE RECEIVED THE VIEWS OF THE DEPARTMENT OF STATE.

ON MAY 1, 1959, UNDER INVITATION NO. B-202-59-131 THE NEW YORK NAVAL SHIPYARD, BROOKLYN, NEW YORK, ISSUED AN INVITATION FOR THE SALE OF UTILITY AIRCRAFT CARRIERS CLASSIFIED AS AUXILIARY VESSELS. PARAGRAPH 24 OF THE INVITATION PROVIDES THAT:

"THE PURCHASER MAY NOT EXPORT THE VESSEL (OR VESSELS) FROM THE CONTINENTAL UNITED STATES, IT'S TERRITORIES OR POSSESSIONS WITHOUT OBTAINING THE NECESSARY APPROVAL AND LICENSE. EXPORT APPROVAL MUST BE OBTAINED FROM THE DEPARTMENT OF STATE, OFFICE OF MUNITIONS CONTROL, WASHINGTON 25, D.C. AND THE LICENSE MUST BE OBTAINED FROM THE DEPARTMENT OF COMMERCE, LICENSE OFFICE, WASHINGTON 25, D.C. IN ADDITION, IF THE PURCHASER IS AN ALIEN, HE AGREES TO OBTAIN THE APPROVAL OF THE UNITED STATES DEPARTMENT OF COMMERCE, MARITIME ADMINISTRATION PRIOR TO REMOVAL OF THE VESSEL FROM THE UNITED STATES, IT'S TERRITORIES AND POSSESSIONS. THE DEPARTMENT OF THE NAVY DOES NOT GUARANTEE THAT EITHER THE LICENSES REFERRED TO HEREIN, OR THE APPROVAL OF THE UNITED STATES MARITIME ADMINISTRATION, WILL BE GRANTED.'

IT APPEARS THAT PARAGRAPH 24 WAS INCLUDED TO ADVISE FOREIGN BIDDERS OF THE OBSTACLES INCIDENT TO EXPORTATION AND TO DISCLAIM ANY DUTY OF THE NAVY TO GUARANTEE GRANTING OF THE NECESSARY LICENSES. SIDEMAR ENTERED A SEPARATE BID FOR EACH CARRIER, BUT INSERTED THE FOLLOWING PHRASE WITH EACH ITEM:

"SUBJECT TO RECEIVING ALL PERMITS NECESSARY FOR EXPORTING THIS VESSEL TO ITALY.'

ALTHOUGH THE SIDEMAR BID WAS HIGHEST ON THREE OF THE FOUR ITEMS, IT WAS REJECTED AS NON-RESPONSIVE (A QUALIFIED BID) AND THE BID DEPOSIT RETURNED. SIDEMAR REQUESTED, AFTER BID OPENING, THAT THE QUALIFYING PHRASES BE WITHDRAWN.

IN HIS LETTER THE ASSISTANT SECRETARY OF STATE INCLUDED THE FOLLOWING PASSAGE:

"FROM THE INFORMATION MADE AVAILABLE TO THE DEPARTMENT CONCERNING THE CASE, IT WOULD APPEAR THAT THE DIFFICULTY CONCERNING THE ITALIAN BID RESULTED FROM UNDERSTANDABLE ADMINISTRATIVE UNCERTAINTY IN INTERPRETING THE REGULATIONS IMPLEMENTING THE RECENT DECISION TO PERMIT FOREIGN AS WELL AS DOMESTIC BIDDING ON CERTAIN GOVERNMENT MATERIAL. IT SEEMS THAT THE ARRANGEMENTS RELATING TO THE BIDDING, WHILE APPARENTLY CLEAR WHEN VIEWED FROM THE STANDPOINT OF DOMESTIC BIDDERS, CONTAINED AN ELEMENT OF UNCERTAINTY IN SO FAR AS THE ITALIAN BIDDER WAS CONCERNED. THE UNCERTAINTY ARISES FROM THE FACT THAT ALTHOUGH THE OFFER REPRESENTED A POTENTIAL TRANSACTION WITH THE UNITED STATES GOVERNMENT, THROUGH ONE GOVERNMENT AGENCY, A REQUIREMENT WAS SET FORTH IN PARAGRAPH 24 OF THE CONDITIONS PROVIDING THAT THE PURCHASER COULD NOT EXPORT THE MATERIAL WITHOUT FIRST OBTAINING APPROVAL AND LICENSE FROM THE UNITED STATES GOVERNMENT, THROUGH ANOTHER AGENCY THEREOF. AS SUCH APPROVAL AND LICENSES CAN NOT BE OBTAINED IN ADVANCE, SUCH A CONDITION WOULD BE REASONABLE ONLY IF THE FOREIGN BIDDER WERE ENTITLED TO MAKE HIS BID SUBJECT TO THE SAME CONDITION ESTABLISHED BY THE GOVERNMENT. IT WOULD NOT APPEAR TO BE A REASONABLE CONDITION OF A SALE TO PLACE FOREIGN BIDDERS IN THE IMPOSSIBLE POSITION OF AGREEING TO BUY EXPENSIVE MATERIAL WITHOUT ANY CERTAINTY THAT THE SELLER WILL PERMIT THE MATERIAL TO BE TAKEN TO THE PLACE OF INTENDED USE. THE INCLUSION OF PARAGRAPH 24 OF THE CONDITIONS OF PARTICIPATION, UNDER THE CIRCUMSTANCES, THUS SEEMS TO HAVE CONSTITUTED A CONFUSING ELEMENT IN THE BIDDING ARRANGEMENT. * * *"

WE DO NOT AGREE THAT PARAGRAPH 24,"CONSTITUTED A CONFUSING ELEMENT IN THE BIDDING ARRANGEMENT.' THE LANGUAGE OF THAT PARAGRAPH IS PERFECTLY CLEAR WHEN READ IN CONTEXT, I.E., AS PART OF A DOCUMENT INVITING PROSPECTIVE PURCHASERS TO BUY GOVERNMENT PROPERTY.

SINCE IT APPEARS THAT THE DEPARTMENT OF THE NAVY DEEMED IT TO BE IN THE INTEREST OF THE GOVERNMENT TO REQUIRE THE SUCCESSFUL BIDDER TO ASSUME ABSOLUTE RESPONSIBILITY FOR OBTAINING ANY REQUIRED LICENSES TO EXPORT THE VESSELS, A BID SO QUALIFIED AS TO RELIEVE THE BIDDER FROM ITS CONTRACT IN THE EVENT THE LICENSES WERE NOT OBTAINED PROPERLY SHOULD BE DISREGARDED AS NOT RESPONSIVE TO THE INVITATION FOR BIDS. OBVIOUSLY, A CONTRACT AWARDED TO A BIDDER WHO SO LIMITS HIS OBLIGATION WOULD NOT BE THE CONTRACT OFFERED TO ALL BIDDERS, AND WOULD BE A MANIFEST INJUSTICE TO BIDDERS WILLING TO ACCEPT A CONTRACT UPON THE CONDITIONS OFFERED BY THE GOVERNMENT AND TO ASSUME THE RISK OF OBTAINING EXPORT LICENSES. MOREOVER, IT IS A WELL- ESTABLISHED RULE THAT A PUBLIC OFFICER GIVEN POWER BY STATUTE TO ENTER INTO A CONTRACT ON BEHALF OF THE PUBLIC WITH THE BEST BIDDER, HAS NO POWER TO GRANT THAT BIDDER ANY TERM MATERIALLY ADVANTAGEOUS TO HIM WHICH WAS NOT ANNOUNCED IN THE ADVERTISEMENT FOR BIDS. THE CONTRACT ENTERED INTO MUST BE THE CONTRACT OFFERED TO THE HIGHEST RESPONSIBLE BIDDER BY ADVERTISEMENT. 8 COMP. GEN. 299.

IN VIEW OF THE QUALIFICATION, WE AGREE WITH THE ADMINISTRATIVE DETERMINATION TO REJECT SIDMAR'S BID.