B-143137, AUG. 4, 1960

B-143137, AUG. 4, 1960

TO HERBERT A. FIERST, ATTORNEY AT LAW:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 9, 1960, WITH ENCLOSURE, RELATIVE TO THE PROTEST OF THE WRECKING CORPORATION OF AMERICA AGAINST THE PROCEDURES OF SALE UTILIZED IN THE DISPOSAL OF CERTAIN INSTALLED PROPERTY AT SUSQUEHANNA SUB-DEPOT OF LETTERKENNY ORDNANCE DEPOT, WILLIAMSPORT, PENNSYLVANIA, UNDER DISPOSAL NO. 2PRD 313.

BY NEWSPAPER ADVERTISEMENTS, SEALED BIDS WERE REQUESTED, TO BE OPENED ON MAY 23, 1960, FOR THE SALE OF PIPING AND WATER SUPPLY EQUIPMENT (LOT A), ELECTRICAL EQUIPMENT (LOT B), AND RAILROAD TRACKAGE (LOT C), LOCATED AT THE SUB-DEPOT. ELEVEN BIDS FOR LOT A WERE RECEIVED AND RANGED FROM $241,000 (THE WRECKING CORPORATION OF AMERICA) TO $5,222.20; THE THREE BIDS ON LOT B RANGED FROM $10,111 TO $3,160.20; AND THE THIRTEEN BIDS ON LOT C RANGED FROM $68,018.56 TO $2,762. THE HIGH BID OF $68,018.56 FOR LOT C MADE BY STAIMAN BROTHERS, BEING MORE THAN THE APPRAISED FAIR MARKET VALUE OF THE RAILROAD TRACKAGE, WAS ACCEPTED AND AWARD WAS MADE TO THAT BIDDER. SINCE THE HIGHEST BIDS RECEIVED ON LOTS A AND B WERE NOT COMMENSURATE WITH THE GSA APPRAISED FAIR MARKET VALUE FOR THOSE LOTS, IDENTICAL LETTERS WERE SENT ON JUNE 2, 1960, TO EACH OF THE BIDDERS ON THOSE LOTS INQUIRING WHETHER THE BIDDER WISHED TO INCREASE HIS ORIGINAL OFFER. A CUTOFF DATE OF JUNE 10, 1960, WAS ESTABLISHED FOR THE RECEIPT OF REVISED OFFERS. AS OF THE CLOSE OF BUSINESS JUNE 10, THREE INCREASED OFFERS FOR LOT A WERE RECEIVED IN THE AMOUNTS OF $267,118.31 (STAIMAN BROTHERS), $265,101.01, AND $255,500; AND TWO INCREASED OFFERS OF $12,118,68 (STAIMAN BROTHERS), AND $10,711 WERE RECEIVED FOR LOT B. THE WRECKING CORPORATION OF AMERICA DID NOT SUBMIT A REVISED OFFER BUT ELECTED TO STAND ON ITS ORIGINAL BID OF $241,000 ON LOT A.

UPON REVIEW OF THE OFFERS RECEIVED ON MAY 23 AND JUNE 10, 1960, IT WAS ADMINISTRATIVELY DETERMINED TO REJECT ALL BIDS FOR LOTS A AND B ON THE BASIS THAT THE BID PRICES WERE INADEQUATE IN COMPARISON TO THE APPRAISED MARKET VALUE FOR THESE LOTS. A NEW ADVERTISEMENT WAS MADE FOR THE SALE OF LOTS A AND B IN THE SAME NEWSPAPERS WHICH CARRIED THE PREVIOUS ADVERTISEMENT FOR SEALED BIDS WITH A BID OPENING SCHEDULED FOR JUNE 30, 1960. ALL THOSE PARTICIPATING IN THE FIRST BID OPENING, IN ADDITION TO ALL OTHER PARTIES PRESUMED TO BE INTERESTED, WERE SENT SPECIFIC NOTICE OF THE NEW ADVERTISEMENT. FIVE BIDS WERE RECEIVED FOR LOT A RANGING FROM $301,018.66 TO $204,010.88, AND THREE BIDS WERE RECEIVED FOR LOT B RANGING FROM $15,111.11 TO $12,621.66. WE ARE ADVISED THAT AWARDS HAVE BEEN MADE TO STAIMAN BROTHERS AND SIMON WRECKING COMPANY, JOINTLY, AS HIGH BIDDERS FOR LOT A, AND TO GUSTAVE KATZ AS HIGH BIDDER FOR LOT B.

YOU RAISE THE FOLLOWING QUESTION WITH RESPECT TO THE CONDUCT OF THE SALE:

"IN A PROPOSED SALE OF GOVERNMENT SURPLUS PROPERTY BY ADVERTISEMENT FOR SEALED BIDS WHEN THE INVITATION FOR BIDS PROVIDED THAT NO BID OR MODIFICATION RECEIVED AFTER THE TIME SET FOR OPENING WOULD BE CONSIDERED, DOES THE GENERAL SERVICES ADMINISTRATION HAVE LEGAL AUTHORITY, AFTER PUBLIC OPENING OF THE BIDS, TO SOLICIT HIGHER BIDS FROM THE ORIGINAL BIDDERS, WITHOUT FIRST REJECTING ALL BIDS?

THE SALE AS ADVERTISED AND AS FINALLY CONSUMMATED WAS AUTHORIZED UNDER 40 U.S.C. 484 (E) (2) WHICH PROVIDES AS FOLLOWS:

"/2) WHENEVER PUBLIC ADVERTISING FOR BIDS IS REQUIRED UNDER PARAGRAPH (1) OF THIS SUBSECTION---

"/A) THE ADVERTISEMENT FOR BIDS SHALL BE MADE AT SUCH TIME PREVIOUS TO THE DISPOSAL OR CONTRACT, THROUGH SUCH METHODS, AND ON SUCH TERMS AND CONDITIONS AS SHALL PERMIT THAT FULL AND FREE COMPETITION WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY INVOLVED;

"/B) ALL BIDS SHALL BE PUBLICLY DISCLOSED AT THE TIME AND PLACE STATED IN THE ADVERTISEMENT;

"/C) AWARD SHALL BE MADE WITH REASONABLE PROMPTNESS BY NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN IT IS IN THE PUBLIC INTEREST TO DO SO.'

SUBSECTION "C," QUOTED ABOVE, PROVIDES ONLY TWO ALTERNATIVES TO THE DISPOSAL AGENCY AFTER SEALED, COMPETITIVE BIDS ARE OPENED, THAT IS, EITHER TO MAKE AN AWARD TO THE HIGHEST RESPONSIVE, RESPONSIBLE BIDDER, OR TO REJECT ALL BIDS IF SUCH ACTION IS ADMINISTRATIVELY DETERMINED TO BE IN THE PUBLIC INTEREST. 17 COMP. GEN. 554, 559-560.

HENCE, WE REGARD THE REJECTION OF ALL OFFERS RECEIVED ON MAY 23 AND JUNE 10, 1960, AS CONSTITUTING A PROPER EXERCISE OF THE AUTHORITY RESERVED TO THE GOVERNMENT BY THE TERMS OF THE ADVERTISEMENT AND 40 U.S.C. 484 (E) (2) (C). WE FEEL THAT THIS IS SO EVEN THOUGH THE JUNE 2 LETTER REPRESENTED AN ADMINISTRATIVE REQUEST FOR AMENDED OFFERS WHICH WAS NOT IN ACCORDANCE WITH ACCEPTED ADVERTISING PROCEDURES. IN THAT CONNECTION, WE HAVE BEEN INFORMALLY ADVISED BY GSA THAT PROPER STEPS HAVE BEEN TAKEN TO PREVENT A RECURRENCE OF SUCH PROCEDURE. SINCE THE REJECTION OF ALL OFFERS PLACED ALL BIDDERS IN STATUS QUO AND RENDERED THE ADMINISTRATIVE REQUEST FOR REVISED BIDS A NULLITY FOR ALL INTENTS AND PURPOSES, WE DO NOT OBJECT TO THE AWARD AS MADE UNDER THE NEW ADVERTISEMENT TO THE HIGHEST RESPONSIBLE, RESPONSIVE BIDDER.