B-145213, MAR. 31, 1961

B-145213, MAR. 31, 1961

TO FRANCIS J. LARKIN:

FURTHER REFERENCE IS MADE TO A TELEGRAM DATED MARCH 2, 1961, FROM THE SABIN METAL CORPORATION, AND TO YOUR LETTER OF MARCH 13, 1961, CONCERNING THE CORPORATION'S PROTEST AGAINST THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS NO. DMS-MET-4R COVERING THE SALE OF CADMIUM-MAGNESIUM SCRAP BY THE GENERAL SERVICES ADMINISTRATION.

THE PROTEST IS DIRECTED TO THE REFUSAL OF THAT AGENCY TO NEGOTIATE A HIGHER PRICE WITH SABIN AFTER BIDS WERE OPENED AND IT WAS ASCERTAINED THAT ALUMINUM AND MAGNESIUM, INC., SUBMITTED THE HIGHEST BID AND SABIN SUBMITTED THE SECOND HIGHEST BID.

THE GENERAL SERVICES ADMINISTRATION, DEFENSE MATERIALS SERVICE, OFFERED FOR SALE APPROXIMATELY 8,826,000 POUNDS OF CADMIUM-MAGNESIUM BOMB SCRAP UNDER INVITATION FOR BIDS NO. DMS-MET-4 DATED APRIL 4, 1960, WHICH REQUESTED SEALED BIDS TO BE OPENED ON SEPTEMBER 9, 1960. NINE SEALED BIDS WERE RECEIVED AND OPENED ON THAT DATE INCLUDING A HIGH BID OF 11.35 CENTS PER POUND SUBMITTED BY ALUMINUM AND MAGNESIUM, INC., AND A THIRD HIGH BID OF 9.08 CENTS PER POUND SUBMITTED BY SABIN. HOWEVER, PURSUANT TO PARAGRAPH 3 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION ALL BIDS WERE REJECTED BECAUSE THE PRICES OFFERED REPRESENTED AN INADEQUATE RETURN TO THE GOVERNMENT.

ON OCTOBER 7, 1960, THE PROPERTY WAS READVERTISED UNDER INVITATION NO. DMS-MET-4R WHICH ALSO REQUESTED SEALED BIDS AND RESERVED TO THE GOVERNMENT THE RIGHT TO ACCEPT THE BID OR BIDS WHICH WILL PRODUCE THE GREATEST RETURN. FOUR SEALED BIDS SUBMITTED IN RESPONSE TO THE INVITATION WERE OPENED ON FEBRUARY 24, 1961, AND RANGED IN PRICE FROM 12.101 CENTS PER POUND TO 16.26 CENTS PER POUND. SABIN'S BID WAS SECOND HIGH AT 13.13 CENTS PER POUND OR $275,000 LESS THAN THE HIGH BID OF ALUMINUM AND MAGNESIUM, INC., AT 16.26 CENTS PER POUND. SINCE THE HIGH BID REPRESENTED A FAIR VALUE FOR THE MATERIAL OFFERED FOR SALE, AWARD WAS MADE TO ALUMINUM AND MAGNESIUM, INC., ON FEBRUARY 27, 1961.

40 U.S.C. 484 (E) PROVIDES, IN PART, THAT:

"/1) ALL DISPOSALS OR CONTRACTS FOR DISPOSAL OF SURPLUS PROPERTY (OTHER THAN BY ABANDONMENT, DESTRUCTION, DONATION, OR THROUGH CONTRACT BROKERS) MADE OR AUTHORIZED BY THE ADMINISTRATOR SHALL BE MADE AFTER PUBLICLY ADVERTISING FOR BIDS, * * *.

"/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.'

IT IS A FUNDAMENTAL RULE, ESTABLISHED BY THE DECISIONS OF THIS OFFICE AND OF THE COURTS, THAT BIDDERS MAY NOT VARY THEIR PROPOSALS AFTER BIDS ARE OPENED, SINCE THIS WOULD NULLIFY THE ENTIRE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. THE REASON FOR THIS RULE, OF COURSE, IS TO PUT ALL BIDDERS ON AN EQUAL BASIS, AND TO PREVENT ANY BIDDER FROM OBTAINING THE ADVANTAGE IT WOULD HAVE BY BEING PERMITTED TO BID AFTER THE OTHER BIDS ARE KNOWN. 17 COMP. GEN. 554; 35 ID. 167; 36 ID. 94. SEE, ALSO, 13 OP.ATTY.GEN. 510; UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; UNITED STATES V. BROOKRIDGE FARMS, INC., 111 F.2D 461; MOHR V. CHICAGO, 74 N.E. 1056.

TO HAVE PERMITTED SABIN TO NEGOTIATE UPWARD ITS SEALED BID PRICE AFTER ALL BIDS WERE PUBLICLY OPENED AND DISCLOSED WOULD HAVE BEEN PATENTLY IMPROPER AND IN VIOLATION OF THE STATUTORY COMPETITIVE ADVERTISING PROCEDURES USED IN DISPOSING OF THE MATERIAL.