B-141543, JAN. 5, 1960

B-141543: Jan 5, 1960

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MARITIME ADMINISTRATION: AS YOUR ADMINISTRATION IS AWARE. WHETHER THE ACTIONS TAKEN IN THE COURSE OF NEGOTIATIONS WITH THE FIRST AMERICAN CORPORATION HAVE RESULTED IN A LEGALLY ENFORCEABLE CONTRACT WITH THAT CORPORATION. IT IS OUR FURTHER UNDERSTANDING THAT THE MARITIME ADMINISTRATION HAS POSTPONED UNDER ACTION IN THE MATTER PENDING RECEIPT OF OUR ADVICE ON THESE QUESTIONS. THE CIRCUMSTANCES GIVING RISE TO THESE QUESTIONS ARE AS FOLLOWS: ON MAY 18. PROPOSALS WERE NOT TO BE CONSIDERED BINDING BUT WERE TO BE THE BASIS FOR EVALUATION OF THE OFFERS AND SUBJECT TO FINAL NEGOTIATION. NEGOTIATION IN LIEU OF FORMAL ADVERTISING FOR BIDS WAS APPROVED ON THE GROUNDS THAT (1) FORMAL ADVERTISING WOULD HAVE REQUIRED INFLEXIBLE TERMS WHICH WOULD NOT HAVE PRODUCED REASONABLE BIDS.

B-141543, JAN. 5, 1960

TO HONORABLE CLARENCE G. MORSE, ADMINISTRATOR, MARITIME ADMINISTRATION:

AS YOUR ADMINISTRATION IS AWARE, THE GENERAL ACCOUNTING OFFICE RECENTLY CONDUCTED AN INVESTIGATION INTO NEGOTIATIONS FOR THE PROPOSED SALE OF THE VANCOUVER RESERVE SHIPYARD. DURING THE COURSE OF THIS INVESTIGATION, WE UNDERSTAND THAT QUESTIONS AROSE CONCERNING THE AUTHORITY OF THE MARITIME ADMINISTRATION TO SELL THE SHIPYARD AND, IF SUCH AUTHORITY EXISTED, WHETHER THE ACTIONS TAKEN IN THE COURSE OF NEGOTIATIONS WITH THE FIRST AMERICAN CORPORATION HAVE RESULTED IN A LEGALLY ENFORCEABLE CONTRACT WITH THAT CORPORATION. IT IS OUR FURTHER UNDERSTANDING THAT THE MARITIME ADMINISTRATION HAS POSTPONED UNDER ACTION IN THE MATTER PENDING RECEIPT OF OUR ADVICE ON THESE QUESTIONS.

STATED BRIEFLY, THE CIRCUMSTANCES GIVING RISE TO THESE QUESTIONS ARE AS FOLLOWS:

ON MAY 18, 1959, AND APPARENTLY IN IMPLEMENTATION OF A RECOMMENDATION BY THE PRESIDENT OF THE UNITED STATES THAT SOME OF THE RESERVE SHIPYARDS SHOULD BE SOLD, THE MARITIME ADMINISTRATION REQUESTED WRITTEN PROPOSALS, TO BE SUBMITTED NO LATER THAN JUNE 15, 1959, TO PURCHASE THE VANCOUVER SHIPYARD. UNDER THE TERMS OF THE REQUEST, PROPOSALS WERE NOT TO BE CONSIDERED BINDING BUT WERE TO BE THE BASIS FOR EVALUATION OF THE OFFERS AND SUBJECT TO FINAL NEGOTIATION. NEGOTIATION IN LIEU OF FORMAL ADVERTISING FOR BIDS WAS APPROVED ON THE GROUNDS THAT (1) FORMAL ADVERTISING WOULD HAVE REQUIRED INFLEXIBLE TERMS WHICH WOULD NOT HAVE PRODUCED REASONABLE BIDS, (2) TIME WAS AN IMPORTANT FACTOR IN VIEW OF LIMITED FUNDS AVAILABLE FOR MAINTENANCE OF THE SHIPYARD, AND (3) NEGOTIATION WAS REQUIRED TO DETERMINE THE DETAILED REQUIREMENTS UNDER WHICH THE PURCHASER WOULD BE OBLIGATED TO PRESERVE AND USE KEY FACILITIES OF THE SHIPYARD FOR SEVERAL YEARS.

SIX PROPOSALS WERE SUBMITTED ON OR BEFORE JUNE 15 IN RESPONSE TO THE REQUEST, BUT NEGOTIATIONS WERE CONTINUED ONLY ON THE PROPOSALS SUBMITTED BY SCHNITZER PRODUCTS COMPANY; ROSENFELD INVESTMENT COMPANY; AND BY A JOINT VENTURE EMBRACING ZIDELL EXPLORATIONS, INC., AND HUGO NEU.

ON JUNE 16, 1959, APPARENTLY BECAUSE REQUEST FOR FUNDS TO MAINTAIN THE SHIPYARD HAD BEEN WITHDRAWN FROM THE ADMINISTRATION'S 1961 FLASH BUDGET SUBMISSION, AND IN VIEW OF THE REQUIREMENT IN GSA REGULATION 2 VI-201.02 (A) THAT DECLARING AGENCIES ARE TO BE RESPONSIBLE FOR CARE AND MAINTENANCE OF PROPERTY DECLARED AS EXCESS FOR A PERIOD OF TWELVE MONTHS FOLLOWING THE DECLARATION, THE ADMINISTRATION DECLARED THE SHIPYARD TO THE GENERAL SERVICES ADMINISTRATION AS EXCESS TO ITS NEEDS.

FOLLOWING THE DECLARATION TO THE GENERAL SERVICES ADMINISTRATION, NEGOTIATIONS WERE CONTINUED WITH THE ABOVE NAMED OFFERERS. THE JOINT VENTURE OF ZIDELL AND NEU SUBMITTED AN OFFER ON JULY 17 IN THE AMOUNT OF $3,500,000, BUT REDUCED THIS AMOUNT TO $3,050,000 ON OCTOBER 1. THE LATTER OFFER APPARENTLY WAS WITHDRAWN ON ORAL ADVICE FROM ZIDELL AND NEU ON OCTOBER 19 AND OCTOBER 21 THAT THE JOINT VENTURE HAD COLLAPSED. DURING THESE NEGOTIATIONS IT APPEARS THAT ONE BOYD CUTMAN HAD FULL AUTHORITY TO ACT FOR ZIDELL.

ON OCTOBER 21 SCHNITZER, ALSO REPRESENTED BY BOYD CUTMAN, SUBMITTED A REVISED OFFER IN THE AMOUNT OF $3,400,000, WHICH WAS WITHDRAWN ON NOVEMBER 4 ON THE BASIS OF LEGAL COMPLICATIONS INVOLVING THE USE OF TIDEWATERS AND ACCESS TO THE COLUMBIA RIVER.

ON NOVEMBER 9, THE FIRST AMERICAN CORPORATION, WHICH APPEARS TO HAVE BEEN ORGANIZED BY NEU AND INCORPORATED SEVERAL DAYS PREVIOUSLY WITH HUGO NEU AS ITS PRESIDENT, SUBMITTED A FIRM AND DETAILED OFFER IN THE AMOUNT OF $2,700,000 PLUS AN OPTION TO PURCHASE A PORTION OF THE PROPERTY NOW OCCUPIED BY BONNEVILLE POWER ADMINISTRATION FOR $350,000 AT THE EXPIRATION OF ITS TENANCY, TOGETHER WITH A $100,000 CHECK AS EARNEST MONEY. THIS OFFER REQUIRED ACCEPTANCE BY 5:00 P.M. ON THE DATE IT WAS SUBMITTED AND APPEARS TO HAVE BEEN PRESENTED BY BOYD CUTMAN FOR FIRST AMERICAN CORPORATION. THE OFFER REQUESTED "IMMEDIATE ACCEPTANCE BY YOU IN PRINCIPLE (SUBJECT ONLY TO THE NECESSARY LEGAL CLEARANCES AND SUCH OTHER APPROVALS AS MAY BE REQUIRED BY LAW)," AND CORRESPONDENCE SUBMITTED WITH THE OFFER SUGGESTED THAT THE OFFER MIGHT BE ACCEPTED IN THE FOLLOWING TERMS:

"THE UNDERSIGNED HEREBY ACCEPTS IN PRINCIPLE, SUBJECT TO THE NECESSARY LEGAL CLEARANCES AND SUCH OTHER APPROVALS AS MAY BE REQUIRED BY LAW, YOUR OFFER DATED NOVEMBER 9, 1959, TO PURCHASE THE VANCOUVER RESERVE SHIPYARD.'

ABOUT NOON ON THE DAY THIS OFFER WAS RECEIVED THE MARITIME ADMINISTRATION NOTIFIED THE THREE OTHER OFFERORS UNDER THE ORIGINAL REQUEST FOR PROPOSALS THAT A FIRM OFFER HAD BEEN RECEIVED, AND REQUESTED FIRM OFFERS FROM THEM, ACCOMPANIED BY $100,000 IN EARNEST MONEY, BEFORE 5:00 P.M. OF THAT SAME DAY. NO SUCH OFFERS APPEAR TO HAVE BEEN RECEIVED. THE FOLLOWING DAY, NOVEMBER 10, AND AFTER AN EXTENSION OF TIME FOR ACCEPTANCE OF THE OFFER BY FIRST AMERICAN CORPORATION, YOU ADVISED THE CORPORATION AS FOLLOWS:

"THE MARITIME ADMINISTRATION HEREBY ACCEPTS IN PRINCIPLE YOUR OFFER DATED NOVEMBER 9, 1959, TO PURCHASE THE MARITIME VANCOUVER RESERVE SHIPYARD SUBJECT TO NECESSARY LEGAL CLEARANCES, SUCH OTHER APPROVALS AS MAY BE REQUIRED BY LAW, THE DRAFTING OF A MUTUALLY SATISFACTORY MORTGAGE AND CONTRACT OF SALE WHICH WILL INVOLVE SOME MODIFICATIONS OF YOUR OFFER, AND DETERMINATION THAT THE FIRST AMERICAN CORPORATION IS FINANCIALLY AND OTHERWISE QUALIFIED TO UNDERTAKE THE PURCHASE OF THE YARD.

"WE WILL PROCEED IMMEDIATELY TO OBTAIN THE NECESSARY CLEARANCES FOR THE SALE SINCE IT IS ESSENTIAL THAT THE FINAL RESOLUTION OF THIS MATTER BE EFFECTED BEFORE THE END OF THE CURRENT TH.'

ON NOVEMBER 18 YOU ADVISED THE GENERAL SERVICES ADMINISTRATION YOU WERE CONSIDERING ACCEPTANCE OF AN OFFER AND REQUESTED ASSURANCE THAT, IN THE EVENT YOU REQUESTED A WITHDRAWAL OF YOUR EXCESS PROPERTY DECLARATION ON THE SHIPYARD, IT WOULD BE GRANTED. BY LETTER DATED NOVEMBER 27 THE GENERAL SERVICES ADMINISTRATION ADVISED YOU IT WOULD, UPON RECEIPT OF A FORMAL REQUEST THEREFOR, APPROVE WITHDRAWAL OF THE SHIPYARD FROM EXCESS REAL PROPERTY FOR THE PURPOSE OF EFFECTING ITS DISPOSAL BY YOUR ADMINISTRATION PURSUANT TO THE MERCHANT MARINE ACT, 1936, AND PROVIDED THE DISPOSAL WAS COMPLETED SUBJECT TO CERTAIN TERMS AND CONDITIONS DESCRIBED IN YOUR LETTER OF NOVEMBER 18.

ON DECEMBER 8, 1959, ZIDELL MADE AN OFFER OF $3,150,000 UNDER "PREVIOUS TERMS" AND WAS ADVISED, IN EFFECT, THAT ACCEPTANCE OF FIRST AMERICAN CORPORATION'S OFFER ON NOVEMBER 10 PRECLUDED CONSIDERATION OF FURTHER OFFERS.

WE UNDERSTAND THAT THE REFUSAL TO CONSIDER THE DECEMBER 8 OFFER BY ZIDELL WAS BASED UPON THE BELIEF THAT THE OFFER BY FIRST AMERICAN CORPORATION ON NOVEMBER 9, AND THE ACCEPTANCE OF NOVEMBER 10, CONSTITUTED A LEGALLY ENFORCEABLE CONTRACT TO CONVEY THE SHIPYARD TO FIRST AMERICAN CORPORATION AT THE PRICE STATED. WHILE THE PRIMARY PURPOSE IN WITHHOLDING FURTHER ACTION IN THE MATTER IS TO OBTAIN OUR OPINION WITH RESPECT TO THE CORRECTNESS OF SUCH BELIEF, IT IS OUR FURTHER UNDERSTANDING THAT YOU DESIRE AN EXPRESSION OF OUR OPINION ON THE AUTHORITY OF YOUR ADMINISTRATION TO DISPOSE OF THE SHIPYARD ON EITHER THE BASIS OF THE PRESENT OFFER FROM FIRST AMERICAN CORPORATION OR ON THE BASIS OF FURTHER NEGOTIATIONS.

THE AUTHORITY OF THE MARITIME ADMINISTRATION TO SELL SURPLUS PROPERTY ACQUIRED AND HELD IN CARRYING OUT THE ACTIVITIES PRESCRIBED BY THE MERCHANT MARINE ACT, 1936, AS IMPLIED IN SECTIONS 206 AND 207 OF THAT ACT, IS SPECIFICALLY RECOGNIZED IN SECTION 602 (D) (16) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, WHICH READS IN PERTINENT PART AS FOLLOWS:

"/D) NOTHING IN THIS ACT SHALL IMPAIR OR AFFECT ANY AUTHORITY OF--

"/16) THE UNITED STATES MARITIME COMMISSION WITH RESPECT TO THE CONSTRUCTION, RECONSTRUCTION, AND RECONDITIONING (INCLUDING OUTFITTING AND EQUIPPING INCIDENT TO THE FOREGOING), THE ACQUISITION, PROCUREMENT, OPERATION, MAINTENANCE, PRESERVATION, SALE, LEASE, OR CHARTER OF ANY MERCHANT VESSEL OR OF ANY SHIPYARD, SHIP SITE, TERMINAL, PIER, DOCK, WAREHOUSE, OR OTHER INSTALLATION NECESSARY OR APPRECIATE FOR THE CARRYING OUT OF ANY PROGRAM OF SUCH COMMISSION AUTHORIZED BY LAW, OR NON- ADMINISTRATIVE ACTIVITIES INCIDENTAL THERETO: PROVIDED, THAT THE UNITED STATES MARITIME COMMISSION SHALL TO THE MAXIMUM EXTENT THAT IT MAY DEEM PRACTICABLE, CONSISTENT WITH THE FULFILLMENT OF THE PURPOSES OF SUCH PROGRAMS AND THE EFFECTIVE AND EFFICIENT CONDUCT OF SUCH ACTIVITIES, COORDINATE ITS OPERATIONS WITH THE REQUIREMENTS OF THIS ACT, AND THE POLICIES AND REGULATIONS PRESCRIBED PURSUANT THERETO; "

IN VIEW OF SUCH AUTHORITY WE WOULD NOT BE JUSTIFIED IN THE INSTANT CASE IN SAYING THAT YOUR ACTION IN ATTEMPTING TO DISPOSE OF THE VANCOUVER SHIPYARD, BY NEGOTIATED SALE AND WITHOUT FIRST REPORTING THE PROPERTY TO THE GENERAL SERVICES ADMINISTRATION AS EXCESS TO YOUR NEEDS UNDER THE PROVISIONS OF SECTION 202 (B) (2) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, WAS IMPROPER.

HOWEVER, IT IS OUR FURTHER OPINION THAT ONCE THE VANCOUVER SHIPYARD WAS REPORTED TO THE GENERAL SERVICES ADMINISTRATION AS EXCESS TO YOUR NEEDS, ITS DISPOSITION BECAME FULLY SUBJECT TO THE REMAINING PROVISIONS OF THE ACT AND TO THE AUTHORITY OF THAT AGENCY. NO INDEPENDENT AUTHORITY TO DISPOSE OF THE SHIPYARD WAS RETAINED BY YOUR ADMINISTRATION. SEE, IN THIS CONNECTION, SECTION 202 (B) (4) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, REQUIRING EXECUTIVE AGENCIES TO TRANSFER OR DISPOSE OF EXCESS PROPERTY IN ACCORDANCE WITH THE AUTHORITY DELEGATED, AND THE REGULATIONS PRESCRIBED, BY THE ADMINISTRATOR OF GENERAL SERVICES. SEE ALSO GSA REGULATION 2-IV 202.07 (C), PROVIDING THAT THE ADMINISTRATOR WILL EXECUTE, AUTHORIZE, OR DIRECT ALL TRANSFERS OF EXCESS REAL PROPERTY, AND 2 -V-201.03, DESIGNATING THE GENERAL SERVICES ADMINISTRATION AS THE DISPOSAL AGENCY IN THE ABSENCE OF A DELEGATION OF DISPOSAL AUTHORITY TO THE HOLDING AGENCY. IN VIEW THEREOF, IT WOULD APPEAR THAT YOUR ADMINISTRATION WAS WITHOUT AUTHORITY TO DISPOSE OF THE SHIPYARD AFTER IT WAS REPORTED AS EXCESS TO THE GENERAL SERVICES ADMINISTRATION, AND THE CONTINUED NEGOTIATIONS BY YOUR ADMINISTRATION THEREAFTER COULD NOT GIVE RISE TO A BINDING OBLIGATION ON THE PART OF THE GOVERNMENT TO CONVEY THE SHIPYARD UNLESS AND UNTIL YOUR ADMINISTRATION WAS DESIGNATED AS THE DISPOSAL AGENCY BY THE ADMINISTRATOR OF GENERAL SERVICES OR UNTIL YOUR REQUEST TO WITHDRAW THE EXCESS PROPERTY REPORT WAS APPROVED BY THE ADMINISTRATOR IN ACCORDANCE WITH GSA REGULATION 2-IV-202.09. SEE FEDERAL COOP INS. CORP. V. MERRILL, 332 U.S. 380; UNITED STATES V. STEWART, 311 U.S. 60; SHIP CONSTRUCTION CO. V. UNITED STATES, 91 C.CLS. 419.

SEPARATE AND DISTINCT FROM THIS QUESTION, HOWEVER, IS THE QUESTION WHETHER THE PURPORTED ACCEPTANCE ON NOVEMBER 10, 1959, OF THE OFFER BY FIRST AMERICAN CORPORATION, TOGETHER WITH THE ASSURANCE BY THE GENERAL SERVICES ADMINISTRATION ON NOVEMBER 27, 1959, THAT A REQUEST FOR WITHDRAWAL OF THE DECLARATION OF EXCESS PROPERTY WOULD BE APPROVED WHEN MADE, WOULD OPERATE TO MAKE YOUR ACCEPTANCE OF NOVEMBER 10 A BINDING OBLIGATION ON THE GOVERNMENT EITHER AT THE PRESENT TIME OR AT THE TIME YOUR WITHDRAWAL REQUEST IS APPROVED.

WHILE IT MAY WELL BE THAT A LACK OF AUTHORITY IN YOUR ADMINISTRATION TO BIND THE UNITED STATES BY AN UNQUALIFIED ACCEPTANCE OF AN OFFER TO PURCHASE THE VANCOUVER SHIPYARD COULD BE CORRECTED, SUBSEQUENT TO SUCH ACCEPTANCE, BY EITHER APPROVAL OF YOUR REQUEST FOR WITHDRAWAL OF THE SHIPYARD FROM ITS CLASSIFICATION AS EXCESS PROPERTY OR BY A DESIGNATION OF YOUR ADMINISTRATION AS DISPOSAL AGENCY ONCE THE PROPERTY IS DECLARED SURPLUS TO THE NEEDS OF THE GOVERNMENT, WE FIND IT UNNECESSARY TO PASS UPON THAT POINT. AN ACCEPTANCE OF THE OFFER FROM FIRST AMERICAN CORPORATION WAS REQUIRED TO BE UNEQUIVOCAL AND IN FULL COMPLIANCE WITH THE TERMS OF THE OFFER BEFORE IT WAS EFFECTIVE TO BIND THE OFFEROR. WILLISTON ON CONTRACTS, SECTION 72 AND 73.

YOUR LETTER OF NOVEMBER 10 SPECIFICALLY RESTRICTED YOUR ACCEPTANCE OF THE OFFER TO AN ACCEPTANCE "IN PRINCIPLE," AND CLEARLY CONDITIONED ANY FURTHER ACCEPTANCE UPON THE DRAFTING OF A MUTUALLY SATISFACTORY MORTGAGE AND CONTRACT OF SALE "WHICH WILL INVOLVE SOME MODIFICATIONS OF YOUR OFFER.' THIS QUALIFICATION LEFT YOUR ADMINISTRATION FREE TO PROPOSE ALMOST UNLIMITED MODIFICATIONS TO THE OFFER, AND THE LAW APPEARS TO BE SETTLED THAT A QUALIFIED OR CONDITIONAL ACCEPTANCE OF AN OFFER CONSTITUTES A COUNTER-OFFER AND REJECTS THE ORIGINAL OFFER SO THAT THEREAFTER EVEN A PURPORTEDLY UNQUALIFIED ACCEPTANCE OF THAT OFFER WILL NOT FORM A CONTRACT. WILLISTON ON CONTRACTS, SECTION 77; RESTATEMENT OF THE LAW OF CONTRACTS, SECTION 58, 59, 60; 12 AM.JUR. CONTRACT, 53; 17 C.J.S. CONTRACTS, 43; ISELIN V. UNITED STATES, 271 U.S. 136; HOFFSTAT V. DICKINSON, 166 F.2D 36; UNITED STATES V. BRAUNSTEIN, 75 F.S. 137; NEWSPAPER READERS SERVICE, INC. V. CANNONSBURG POTTERY CO., 52 F.S. 341. OUR EXAMINATION OF THE TERMS AND CONDITIONS OF THE OFFER AND OF THE TERMS SET OUT IN THE DRAFT OF THE CONTRACT DRAWN UP BY YOUR ADMINISTRATION FOR SUBMISSION TO THE FIRST AMERICAN CORPORATION FORCES US TO CONCLUDE THAT THERE WOULD BE NO LEGAL OBLIGATION UPON THE PART OF THE CORPORATION TO ACCEPT THE MODIFICATIONS OF THE TERMS OF ITS OFFER SET OUT IN THE DRAFT CONTRACT, AND THAT THE MODIFICATIONS TO THE OFFER RESERVED BY YOUR LETTER OF NOVEMBER 10 WERE THEREFORE OF SUFFICIENT SUBSTANCE TO BRING THE FACTS IN THIS CASE WITHIN THE RULE QUOTED ABOVE. IT IS THEREFORE OUR OPINION THAT THE NEGOTIATIONS BETWEEN YOUR ADMINISTRATION AND FIRST AMERICAN CORPORATION HAVE NOT RESULTED IN A CONTRACT WHICH IS LEGALLY ENFORCEABLE BY EITHER THE CORPORATION OR THE GOVERNMENT. WHETHER NEGOTIATIONS FOR SALE OF THE VANCOUVER SHIPYARD, IN CONTEMPLATION OF A WITHDRAWAL OF YOUR DECLARATION OF EXCESS PROPERTY, SHOULD BE CONTINUED BY YOUR ADMINISTRATION, WOULD APPEAR TO BE A MATTER TO BE RESOLVED BETWEEN YOUR ADMINISTRATION AND THE GENERAL SERVICES ADMINISTRATION, AND WE EXPRESS NO OPINION THEREON. HOWEVER, IN THE EVENT SUCH NEGOTIATIONS ARE TO BE CONTINUED, AND IN VIEW OF OUR OPINION THAT THERE HAS BEEN NO BINDING ACCEPTANCE OF THE OFFER SUBMITTED BY FIRST AMERICAN CORPORATION, WE ARE AWARE OF NO VALID REASON FOR NOT CONSIDERING FURTHER OFFERS FROM, OR REFUSING TO NEGOTIATE FURTHER WITH, OTHER OFFERORS.

YOUR ATTENTION IS ALSO INVITED TO THE PROVISIONS OF SECTION 806 (A) OF THE MERCHANT MARINE ACT, 1936, UNDER WHICH CERTAIN ACTS DEPRIVING THE UNITED STATES IN ANY WAY OF THE BENEFIT OF FULL, FREE, AND SECRET COMPETITION IN THE AWARDING OF CONTRACTS UNDER THE ACT A RECLASSIFIED AS MISDEMEANORS. WE EXPRESS NO OPINION AS TO WHETHER THE PROVISIONS OF THIS SECTION HAVE BEEN VIOLATED IN THE INSTANT CASE. HOWEVER, THE REPRESENTATION OF THREE SEPARATE BIDDERS BY THE SAME AGENT IN NEGOTIATIONS WITH YOUR ADMINISTRATION IN THIS CASE WOULD, IN ITSELF, APPEAR TO BE SUFFICIENT TO RAISE A QUESTION AS TO WHETHER THE UNITED STATES DID, IN FACT, RECEIVE THE BENEFIT OF FULL, FREE, AND SECRET COMPETITION IN SUCH NEGOTIATIONS. YOU MAY THEREFORE WISH TO CONSIDER THE ADVISABILITY OF LIMITING SUCH REPRESENTATION IN ANY FUTURE NEGOTIATIONS OF THIS TYPE IN WHICH THE ADMINISTRATION MAY ENGAGE.

OTHER THAN THE LEGAL QUESTIONS WHICH HAVE BEEN DISCUSSED ABOVE, WE CALL ATTENTION TO CERTAIN ADMINISTRATIVE ASPECTS OF THE NEGOTIATION PROCEEDINGS WHICH WE BELIEVE WERE NOT IN KEEPING WITH SOUND MANAGEMENT PRACTICES AND SHOULD BE AVOIDED IN FUTURE SIMILAR TRANSACTIONS.

THE CONDUCT OF THE NEGOTIATIONS APPEARS TO HAVE BEEN CHARACTERIZED BY AN ATMOSPHERE OF FORCED SALE, WHICH WAS NOT CONDUCIVE TO OBTAINING THE MOST FAVORABLE SALES PRIOR OR TO ESTABLISHING RELIABLE EVIDENCE OF WHAT THE FAIR MARKET VALUE OF THE SHIPYARD MAY BE.

CONSIDERING THE HISTORY OF THE NEGOTIATIONS FOR THE SALE OF THE SHIPYARD, THE WILLINGNESS OF MARITIME TO ENTERTAIN THE ULTIMATUM TYPE OFFER BY FIRST AMERICAN CORPORATION, AND THE ALLOWANCE OF ONLY FOUR HOURS FOLLOWING SUCH OFFER FOR OTHER INTERESTED PURCHASERS TO SUBMIT FIRM OFFERS ACCOMPANIED BY SUBSTANTIAL CASH BIDDERS, SEEMS TO HAVE BEEN NOT ONLY UNREALISTIC BUT INEQUITABLE TO BOTH THE GOVERNMENT AND SUCH PROSPECTIVE PURCHASERS. BELIEVE THAT THE CONSUMMATION OF NEGOTIATIONS IN ALL SUCH CASES SHOULD BE PRECEDED BY APPROPRIATE NOTICE GIVING ALL OFFERORS ADEQUATE TIME TO PRESENT FINAL OFFERS.

A COPY OF THIS LETTER IS BEING FORWARDED TO CONGRESSWOMAN EDITH GREEN, TOGETHER WITH THE ANSWERS TO CERTAIN QUESTIONS SENT TO US BY MRS. GREEN.