B-141023, NOV. 6, 1959

B-141023: Nov 6, 1959

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TO VALLEY INDUSTRIAL PARK COMPANY: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16. THE PROPERTY HERE INVOLVED WAS REPORTED TO GSA AS EXCESS PROPERTY ON JUNE 27. THE PROPERTY IS DESCRIBED AS CONSISTING OF 534 ACRES OF IMPROVED LAND. THE PROPOSED SALE BY THE SEATTLE REGIONAL OFFICE OF GSA WAS ATTEMPTED EARLY IN 1959 AFTER WIDE ADVERTISING COVERAGE IN VARIOUS PUBLICATIONS AND NEWSPAPERS AS WELL AS ADVERTISING BY BROCHURES MAILED TO POTENTIAL PURCHASERS. THE CREDIT TERMS OFFERED WERE 20 PERCENT DOWN AND THE BALANCE PAYABLE IN QUARTER-ANNUAL INSTALLMENTS OVER A PERIOD OF 10 YEARS WITH 5 PERCENT INTEREST ON THE UNPAID DECREASING BALANCE. THREE RESPONSIVE BIDS WERE RECEIVED. THE HIGHEST OF WHICH WAS IN THE AMOUNT OF $1.

B-141023, NOV. 6, 1959

TO VALLEY INDUSTRIAL PARK COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1959, PROTESTING THE METHODS USED BY THE GENERAL SERVICES ADMINISTRATION (GSA) IN CONNECTION WITH THE PROPOSED SALE OF A PORTION OF THE NAVAL SUPPLY DEPOT, SPOKANE, WASHINGTON, TO THE D-J COMPANY, SEATTLE, WASHINGTON, FOR $2,557,000.

THE PROPERTY HERE INVOLVED WAS REPORTED TO GSA AS EXCESS PROPERTY ON JUNE 27, 1958, AND DECLARED TO BE SURPLUS PROPERTY ON AUGUST 22, 1958. THE PROPERTY IS DESCRIBED AS CONSISTING OF 534 ACRES OF IMPROVED LAND, ACQUIRED AT A COST OF $13,216,200.86. THE PROPOSED SALE BY THE SEATTLE REGIONAL OFFICE OF GSA WAS ATTEMPTED EARLY IN 1959 AFTER WIDE ADVERTISING COVERAGE IN VARIOUS PUBLICATIONS AND NEWSPAPERS AS WELL AS ADVERTISING BY BROCHURES MAILED TO POTENTIAL PURCHASERS. THE FIRST BID OPENING TOOK PLACE ON MARCH 17, 1959. THE CREDIT TERMS OFFERED WERE 20 PERCENT DOWN AND THE BALANCE PAYABLE IN QUARTER-ANNUAL INSTALLMENTS OVER A PERIOD OF 10 YEARS WITH 5 PERCENT INTEREST ON THE UNPAID DECREASING BALANCE. THREE RESPONSIVE BIDS WERE RECEIVED, THE HIGHEST OF WHICH WAS IN THE AMOUNT OF $1,190,200. A NONRESPONSIVE BID OF $2,100,000 BASED ON A DOWN PAYMENT OF ONLY 5 PERCENT WAS SUBMITTED BY THE D-J COMPANY. THE THREE RESPONSIVE BIDDERS WERE GIVEN AN OPPORTUNITY TO SUBMIT REVISED BIDS AND THE HIGHEST OFFER RECEIVED AS A RESULT WAS $1,516,618.88. ON APRIL 24, 1959, THE REGIONAL COMMISSIONER, GSA, AT SEATTLE WAS AUTHORIZED TO REJECT ALL BIDS AS INADEQUATE AND READVERTISE THE PROPERTY, OFFERING ALTERNATE CREDIT TERMS OF 10 PERCENT DOWN, BALANCE PAYABLE QUARTER-ANNUALLY IN 15 YEARS WITH INTEREST AT 5 PERCENT ON THE UNPAID DECREASING BALANCE.

THE SECOND ADVERTISED SEALED BID OPENING TOOK PLACE IN SEATTLE ON JULY 1, 1959, BASED UPON THE ALTERNATE CREDIT TERMS, WITH NOTICES BEING SENT TO ALL KNOWN INTERESTED PARTIES, IN ADDITION TO NEWSPAPER ADVERTISING. THE ONLY BID RECEIVED AT THAT TIME WAS IN THE AMOUNT OF $1,256,316.10, WHICH WAS CONSIDERED AS INADEQUATE IN COMPARISON WITH THE FAIR MARKET VALUE OF THE PROPERTY AND WAS THEREFORE REJECTED.

SUBSEQUENT NEGOTIATIONS WITH INTERESTED PARTIES RESULTED IN A FIRM OFFER DATED AUGUST 6, 1959, FROM THE D-J COMPANY TO PURCHASE THE PROPERTY FOR $2,100,000 ON THE TERMS AS OFFERED BY GSA IN THE JULY 1 BID OPENING. IS REPORTED THAT THIS BID WAS FORMALLY ACCEPTED ON SEPTEMBER 4, 1959, SUBJECT TO AVOIDANCE BY GSA UNDER CERTAIN CONDITIONS, INCLUDING RECEIPT OF A RECOMMENDATION FROM A CONGRESSIONAL COMMITTEE NOT TO CONSUMMATE THE SALE. IN THIS REGARD SECTION 203 (E) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 484, REQUIRES THAT AN EXPLANATORY STATEMENT SHALL BE PREPARED AND SUBMITTED TO THE APPROPRIATE COMMITTEES OF CONGRESS AND A COPY PRESERVED IN THE FILE OF ALL CASES WHERE NEGOTIATED DISPOSAL OCCURS. IN VIEW OF YOUR CONTEMPLATED OFFER OF $2,550,000 FOR THE PROPERTY IT WAS RECOMMENDED BY THE CHAIRMAN, GOVERNMENT ACTIVITIES SUBCOMMITTEE OF THE HOUSE COMMITTEE ON GOVERNMENT OPERATIONS, IN HIS LETTER OF SEPTEMBER 21, 1959, TO GSA, THAT THE PROPOSED SALE TO THE D J COMPANY BE REJECTED AND THAT YOUR NEW AND HIGHER OFFER BE TENTATIVELY ACCEPTED, AND ALSO, THAT THE D-J COMPANY BE ADVISED THAT THEY COULD INCREASE THEIR OFFER TO BETTER THE NEW BID.

IT APPEARS THAT GSA OFFICIALS CONCLUDED THAT BEFORE REJECTING THE PENDING D-J COMPANY FIRM BID OF $2,100,000 AND DECIDING ON FURTHER DISPOSAL METHODS, THEY WOULD ASK YOUR COMPANY TO MAKE YOUR OFFER OF $2,550,000 FIRM FOR A PERIOD OF 60 DAYS AND YOU EFFECTED THIS BY A SUPPLEMENTAL LETTER OF SEPTEMBER 28, 1959. IT IS REPORTED THAT THE D J COMPANY AND YOUR COMPANY WERE TOLD THAT YOU WOULD BE INFORMED AS SOON AS POSSIBLE OF THE PROCEDURE ADOPTED BY GSA TO DETERMINE THE PURCHASER OF THE FACILITY. ALSO, IT IS REPORTED THAT BECAUSE ANOTHER GROUP IN SPOKANE, WASHINGTON, HAD STATED, AFTER ANNOUNCEMENT OF THE CONDITIONAL AWARD TO THE D-J COMPANY, THAT IT WOULD HAVE OFFERED HIGHER PRICE HAD AN OPPORTUNITY BEEN PROVIDED, IT WAS THOUGHT ADVISABLE TO AFFORD THIS GROUP AND ANY OTHER PARTY INTERESTED IN ACQUIRING THE PROPERTY AN OPPORTUNITY TO BID FOR THE SAME. BY ITS PRESS RELEASE NO. 1124 ISSUED OCTOBER 2, 1959, GSA MADE PUBLIC ANNOUNCEMENT OF THE TERMS WHICH WOULD GOVERN FINAL BIDDING TO BE CONDUCTED AT THE PLANT SITE AT SPOKANE ON OCTOBER 8, 1959. WRITTEN NOTICE THEREOF WAS FURNISHED ON OCTOBER 2, 1959, TO THE D-J COMPANY, YOUR COMPANY AND ALL OTHER PARTIES DISCLOSED BY THE GSA FILES TO HAVE SHOWN ANY INTEREST AS A PROSPECTIVE PURCHASER. IN ADDITION, NEWSPAPER ADVERTISING WAS CONDUCTED IN SEATTLE AND SPOKANE NEWSPAPERS ON OCTOBER 3 AND 4, 1959. THE D-J COMPANY WAS THE SOLE BIDDER AT THE OCTOBER 8,1959, PROCEEDING AND RECEIVED A CONDITIONAL AWARD IN ACCORDANCE WITH THE PUBLICLY ANNOUNCED TERMS FOLLOWING RECEIPT OF ITS BID OF $2,557,000. YOUR COMPANY WAS NOTIFIED BY LETTER DATED OCTOBER 8, 1959, OF THE REJECTION OF YOUR OFFER OF $2,550,000 ON SEPTEMBER 21, 1959, AS SUPPLEMENTED SEPTEMBER 28, 1959. THE PROPOSED SALE HAS BEEN REPORTED TO APPROPRIATE CONGRESSIONAL COMMITTEES FOR THEIR CONSIDERATION.

IT IS YOUR CONTENTION THAT GSA OFFICIALS CONDUCTED THEIR AFFAIRS IN A "MOST UNORTHODOX MANNER" BY OBTAINING FROM YOUR COMPANY A SUPPLEMENT TO YOUR PROPOSAL OF SEPTEMBER 21 FIRMLY BINDING YOU FOR A 60-DAY PERIOD. YOU OBJECT PARTICULARLY TO THE FACT THAT THEY USED THE AMOUNT OF YOUR PROPOSAL AS THE MINIMUM AMOUNT OF A BID THAT WOULD BE CONSIDERED FOR AWARD OF A CONTRACT.

IT IS NOT TO BE OVERLOOKED THAT YOUR BID OF $2,550,000 WAS TENTATIVELY ACCEPTED WITH THE RESULT THAT THE PRIOR FIRM COMMITMENT OF THE D-J COMPANY, SUBJECT TO AVOIDANCE BY GSA UNDER CERTAIN CONDITIONS, HAD TO BE REJECTED. IN THESE CIRCUMSTANCES, IT WOULD APPEAR THAT IT WAS ENTIRELY PROPER THAT THE D-J COMPANY BE ALLOWED TO BETTER ITS BID, AS RECOMMENDED BY THE CHAIRMAN, GOVERNMENT ACTIVITIES SUBCOMMITTEE, OF THE HOUSE COMMITTEE ON GOVERNMENT OPERATIONS. THE DETAILS OF THE NEW PROCEDURE OF OBTAINING BIDS TO BE OPENED OCTOBER 8, 1959, WITH ENCLOSURE, FROM THE GSA REGIONAL COMMISSIONER, IN WHICH HE INFORMED YOUR COMPANY THAT THE AMOUNT OF YOUR DEPOSIT PREVIOUSLY PAID WOULD BE APPLIED TO ANY NEW OFFER YOU DESIRED TO MAKE AND UNDER THE RULES AS SET FORTH IN THE ENCLOSURE TO THE LETTER YOUR COMPANY WAS AWARE THAT IF A BIDDER SUBMITTED A BID IN THE MINIMUM ACCEPTABLE AMOUNT OF $2,550,000, HE WAS ELIGIBLE TO PARTICIPATE IN THE FINAL AUCTION BIDDING WHICH WAS SCHEDULED TO COMMENCE IMMEDIATELY FOLLOWING THE OPENING OF BIDS ON OCTOBER 8, 1959.

THE SALE AS FINALLY CONSUMMATED WAS CONDUCTED PURSUANT TO SECTION 203 (E) (3) (F) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 484 (E) (3) (F). THAT SECTION SPECIFICALLY AUTHORIZES DISPOSALS AND CONTRACTS FOR DISPOSALS TO BE NEGOTIATED WITHOUT REGARD TO THE PROVISIONS OF THE SECTION RELATING TO PUBLIC ADVERTISING IF THE BID PRICES AFTER ADVERTISING ARE NOT REASONABLE OR HAVE NOT BEEN INDEPENDENTLY ARRIVED AT IN OPEN COMPETITION. THE FACTS OF THIS SALE AS SET OUT ABOVE REASONABLY ESTABLISH THAT IT WAS CONDUCTED CONSISTENT WITH THE OBJECTIVES AND REQUIREMENTS FOR NEGOTIATED SALES OF SURPLUS REAL PROPERTY AS CONTEMPLATED BY SECTION 023 (E) (3) (F). IN THIS REGARD, OUR OFFICE HAS CONSISTENTLY HELD THAT WHERE THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING ARE NOT FOR APPLICATION IT IS THE DUTY OF CONTRACTING OFFICIALS TO CONDUCT THE NEGOTIATION TO THE BEST ADVANTAGE OF THE GOVERNMENT AND TO PLACE THE CONTRACT WITH THE COMPANY OR INDIVIDUAL MAKING THE BEST FINAL PROPOSAL. SEE, FOR EXAMPLE 37, COMP. GEN. 855, 856.

CONSEQUENTLY, SINCE THE RECORD BEFORE OUR OFFICE DOES NOT INDICATE ANY ILLEGALITY OR AN ABSENCE OF GOOD FAITH ON THE PART OF GSA IN CONSUMMATING THIS SALE AND IT APPEARS THAT ALL PROSPECTIVE OFFERS HAVE BEEN GIVEN THOROUGH CONSIDERATION WITH A VIEW TO SECURING THE MOST REMUNERATION FOR THE GOVERNMENT, WE FIND NO BASIS FOR OBJECTING TO THE CONTEMPLATED SALE.

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