B-147043, FEB. 5, 1962

B-147043: Feb 5, 1962

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GENERAL SERVICES ADMINISTRATION: REFERENCE IS MADE TO THE PROTEST OF JAMES R. WHICH WAS THE SUBJECT OF REPORT DATED DECEMBER 5. WAS ISSUED ON JANUARY 26. NINE BIDS WERE RECEIVED. THE TEN- YEAR BIDS WERE DETERMINED NOT TO BE ADVANTAGEOUS TO THE GOVERNMENT. WERE NOT RESPONSIVE TO THE TERMS OF THE INVITATION IN THAT THE LOCATIONS OFFERED WERE NOT IN THE DOWNTOWN AREA AS REQUIRED. THE LOWEST WAS THAT OF ANDREWS AND WALKER. ALL THE BIDDERS WERE NOTIFIED THAT NO AWARD WOULD BE MADE UNDER THE INVITATION AND THAT NEGOTIATIONS WOULD BE CONDUCTED ON PROPOSALS FOR LEASES OF THE REQUIRED SPACE. WHICH AUTHORIZES NEGOTIATION FOR PROCUREMENT OF PROPERTY OR SERVICES "AS TO WHICH THE AGENCY HEAD DETERMINES THAT BID PRICES AFTER ADVERTISING THEREFOR ARE NOT REASONABLE * * *.'.

B-147043, FEB. 5, 1962

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO THE PROTEST OF JAMES R. ANDREWS AND HENRY B. WALKER, JR., AGAINST ACTIONS OF YOUR AGENCY IN CONNECTION WITH THE PROPOSED LEASING OF OFFICE SPACE FOR GOVERNMENT AGENCIES IN EVANSVILLE, INDIANA, WHICH WAS THE SUBJECT OF REPORT DATED DECEMBER 5, 1961, FROM THE COMMISSIONER, PUBLIC BUILDINGS SERVICE.

THE RECORDS FURNISHED SHOW THAT AN INVITATION, NO. 5 PRLO-347, WAS ISSUED ON JANUARY 26, 1961, REQUESTING BIDS BY FEBRUARY 16, 1961, FOR LEAVE OF APPROXIMATELY 12,305 SQUARE FEET OF AIR-CONDITIONED OFFICE SPACE FOR A TERM OF FIVE YEARS (WITH OPTION OF FIVE ONE-YEAR RENEWALS), OR AN ALTERNATE TERM OF TEN YEARS, FROM JULY 1, 1961. NINE BIDS WERE RECEIVED, FOUR FOR A TEN-YEAR TERM AND FIVE FOR BOTH FIVE AND TEN YEARS. THE TEN- YEAR BIDS WERE DETERMINED NOT TO BE ADVANTAGEOUS TO THE GOVERNMENT. THE FIVE-YEAR BIDS OFFERED RENTALS RANGING FROM $36,915 TO $64,500 PER ANNUM. THE LOW BID, AND ONE OTHER, WERE NOT RESPONSIVE TO THE TERMS OF THE INVITATION IN THAT THE LOCATIONS OFFERED WERE NOT IN THE DOWNTOWN AREA AS REQUIRED. OF THE REMAINING THREE, THE LOWEST WAS THAT OF ANDREWS AND WALKER, WHO OFFERED FOR $46,200 PER ANNUM TO FURNISH THE REQUIRED AREA IN AN EXISTING STRUCTURE TO BE REMODELED. ALL OTHER BIDDERS PROPOSED TO FURNISH THE SPACE IN NEW BUILDINGS TO BE CONSTRUCTED ON DESIGNATED SITES.

ON MAY 3, 1961, ALL THE BIDDERS WERE NOTIFIED THAT NO AWARD WOULD BE MADE UNDER THE INVITATION AND THAT NEGOTIATIONS WOULD BE CONDUCTED ON PROPOSALS FOR LEASES OF THE REQUIRED SPACE. THE NOTICES FURNISHED DID NOT STATE THE BASIS FOR THIS ACTION, BUT THE REPORT OF THE CHIEF, SPACE MANAGEMENT FIELD OFFICE, LOUISVILLE, KENTUCKY, CITES SECTION 302 (C) (14) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT,AS AMENDED (41 U.S.C. 252 (C) (14) (, WHICH AUTHORIZES NEGOTIATION FOR PROCUREMENT OF PROPERTY OR SERVICES "AS TO WHICH THE AGENCY HEAD DETERMINES THAT BID PRICES AFTER ADVERTISING THEREFOR ARE NOT REASONABLE * * *.'

FOUR PROPOSALS WERE RECEIVED IN RESPONSE TO THIS NOTICE, THREE OF THEM OFFERED SPACE IN BUILDINGS TO BE CONSTRUCTED, AT ANNUAL RENTALS RANGING FROM $43,822.56 TO $49,200. ANDREWS AND WALKER RESUBMITTED THEIR OFFER OF $46,200 PER ANNUM FOR THE BUILDING TO BE REMODELED. BY TELEGRAM OF JUNE 6, 1961, ANDREWS AND WALKER OFFERED A REDUCTION OF THE PRICE QUOTED BY THE LETTER PROPOSAL OF MAY 12, BUT THIS OFFER WAS NOT CONSIDERED, ON THE GROUND THAT PROPOSALS HAD BEEN REQUESTED TO BE SUBMITTED BY MAY 15 AND THE TELEGRAM WAS "20 DAYS AFTER THE CLOSING OF NEGOTIATION WITH ALL THE BIDDERS AND COULD NOT BE CONSIDERED AS RESPONSIVE TO THE NEGOTIATED BIDDING.'

ACCEPTANCE OF ONE OF THE OFFERS RECEIVED IN THE MAY NEGOTIATIONS WAS RECOMMENDED BY THE FIELD OFFICE, BUT THIS RECOMMENDATION WAS NOT APPROVED BY THE CENTRAL OFFICE, AND "IT WAS ADMINISTRATIVELY DETERMINED THAT IT WOULD BE ADVANTAGEOUS TO THE GOVERNMENT PRICE-WISE TO RENEGOTIATE THIS ACQUISITION.'

THEREAFTER BY TELEGRAMS DATED AUGUST 7, 1961, THE PROPOSERS WERE NOTIFIED THAT NO AWARD WOULD BE MADE ON THE MAY PROPOSALS AND THAT THE TELEGRAM WOULD SERVE AS NOTICE OF THE GOVERNMENT'S INTENTION TO RENEGOTIATE FOR THE ACQUISITION BY LEASE OF 12,305 SQUARE FEET OF OFFICE SPACE IN EVANSVILLE FOR A FIRM TERM OF FIVE YEARS, IN NEW CONSTRUCTION ONLY. UNDER DATE OF AUGUST 8, 1961, A FORMAL INVITATION FOR BIDS, PREPARED ON THE STANDARD FORM DESIGNED FOR USE IN FORMALLY ADVERTISED PROCUREMENTS, AND CALLING FOR BIDS TO BE PUBLICLY OPENED ON AUGUST 17, 1961, WAS ISSUED. THE SPECIFICATION SCHEDULE OF THIS INVITATION VARIED FROM THAT OF THE ORIGINAL INVITATION OF JANUARY 26 IN THAT IT CALLED FOR SPACE IN NEW CONSTRUCTION ONLY AND PROVIDED THAT ENTRANCE SHOULD BE AT SIDEWALK LEVEL, WITHOUT STEPS UP OR DOWN. FIVE BIDS WERE RECEIVED, RANGING FROM $39,960 TO $43,822.56 PER ANNUM, BUT BIDS WERE NOT PUBLICLY OPENED OR DISCLOSED DESPITE THE PROTEST OF ANDREWS AND WALKER. IT IS THE POSITION OF THE PUBLIC BUILDINGS SERVICE THAT THE INVITATION WAS CONTROLLED BY THE TELEGRAPHIC NOTICE OF AUGUST 7 THAT PROPOSALS FOR NEGOTIATION WOULD BE REQUESTED; HOWEVER, THERE BEING NO REFERENCE IN THE INVITATION TO THE PRIOR COMMUNICATION, WE SEE NO BASIS FOR INTERPRETING THE INVITATION AS ANYTHING OTHER THAN WHAT IT PLAINLY WAS ON ITS FACE.

ACTION ON THE LAST-MENTIONED BIDS OR PROPOSALS HAS BEEN WITHHELD PENDING CONSIDERATION BY OUR OFFICE OF THE PROTEST BY ANDREWS AND WALKER, WHO ALLEGE THAT THEY WERE ENTITLED TO AWARD OF A LEASE CONTRACT AS THE LOWEST RESPONSIVE BIDDERS UNDER THE ORIGINAL INVITATION AS WELL AS THE LOWEST RESPONSIVE PROPOSER UNDER THE MAY NEGOTIATION, AND THAT THE ACTIONS OF THE GOVERNMENT REPRESENTATIVES IN THE MATTER WERE ARBITRARY, UNREASONABLE AND DISCRIMINATORY.

IN SUPPORT OF THE PROTEST THERE ARE CITED CERTAIN PROVISIONS OF THE FEDERAL PROCUREMENT REGULATIONS. IN HIS REPORT THE COMMISSIONER, PUBLIC BUILDINGS SERVICE, POINTS OUT THAT THOSE REGULATIONS APPLY ONLY TO THE PROCUREMENT OF PERSONAL PROPERTY AND NONPERSONAL SERVICES, BUT THAT THEY ARE USED "TO THE EXTENT FEASIBLE, AS A GUIDE IN OUR ACQUISITION OF SPACE BY LEASING.' NO CONTROLLING REGULATIONS ARE CITED BY THE COMMISSIONER, AND WE ARE UNABLE TO FIND ANY SUCH REGULATIONS PUBLISHED IN THE FEDERAL REGISTER OR CODE OF FEDERAL REGULATIONS, ALTHOUGH YOU WERE AUTHORIZED BY SECTION 205 (C) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 TO ISSUE REGULATIONS TO EFFECTUATE THE POWERS AND FUNCTIONS GRANTED TO YOU THEREBY WITH RESPECT TO LEASING AND ASSIGNING GENERAL PURPOSE SPACE FOR USE OF GOVERNMENT AGENCIES GENERALLY.

WE DO NOT UNDERSTAND, HOWEVER, THAT ANY QUESTION EXISTS AS TO THE APPLICABILITY OF SECTION 302 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, AS AMENDED (41 U.S.C. 252), TO THE SPACE PROCUREMENT IN QUESTION. UNDER THAT SECTION ADVERTISING, AS SPECIFIED IN SECTION 303 (41 U.S.C. 253), IS REQUIRED UNLESS NEGOTIATION IS AUTHORIZED BY ONE OF THE 15 EXCEPTIONS NOTED IN SECTION 252 (C). THE INVITATION ORIGINALLY ISSUED IN JANUARY WAS IN ACCORDANCE WITH THE ADVERTISING REQUIREMENT OF THE STATUTE, AND WAS OF COURSE SUBJECT TO THE CONCLUDING PROVISO OF SECTION 303 (B) "THAT ALL BIDS MAY BE REJECTED WHEN THE AGENCY HEAD DETERMINES THAT IT IS IN THE PUBLIC INTEREST SO TO DO.'

THIS AUTHORITY TO REJECT BIDS IN THE PUBLIC INTEREST IS DELEGABLE TO SUBORDINATE OFFICIALS AND, ALTHOUGH IT SHOULD NOT BE EXERCISED ARBITRARILY OR IN SUCH A WAY AS TO PREJUDICE OR DISCRIMINATE AGAINST ANY LEGITIMATE BIDDER, IT CONFERS SUCH A BROAD ADMINISTRATIVE DISCRETION THAT OUR OFFICE CANNOT PROPERLY INTERFERE WITH ITS EXERCISE EXCEPT UPON A CLEAR SHOWING THAT THE ACTION TAKEN COULD NOT BE JUSTIFIED BY ANY REASONABLE EVALUATION OR INTERPRETATION OF THE PERTINENT FACTS AND CIRCUMSTANCES.

UPON THE ENTIRE RECORD IN THIS CASE WE FIND NO BASIS FOR HOLDING THAT THE REJECTION OF ALL BIDS RECEIVED UNDER THE INVITATION OF JANUARY 26, 1961, AND OF ALL PROPOSALS UNDER THE MAY NEGOTIATIONS, WERE NOT PROPER EXERCISES OF THE ADMINISTRATIVE DISCRETION VESTED IN YOU. WE MUST THEREFORE DENY THE CONTENTION OF ANDREWS AND WALKER THAT THEY ARE ENTITLED TO AWARD OF A LEASE CONTRACT ON EITHER OF THEIR BIDS OR PROPOSALS.

WE ARE, HOWEVER, EQUALLY UNABLE TO FIND A VALID BASIS FOR AWARD OF A LEASE CONTRACT, AS RECOMMENDED, ON ONE OF THE BIDS OR PROPOSALS SUBMITTED UNDER THE AUGUST 8 INVITATION. ASSUMING THAT IT MAY BE REGARDED AS A REQUEST FOR PROPOSALS FOR NEGOTIATION, AS CONTENDED BY THE COMMISSIONER, IT IS NOT JUSTIFIED BY SECTION 302 (C) (14) OF THE ACT, WHICH IS THE AUTHORITY PROPOSED TO BE CITED, BECAUSE THE SPECIFICATION REQUIREMENTS STATED ARE NOT THE SAME AS THOSE IN THE ORIGINALLY ADVERTISED INVITATION, AND THE NEGOTIATIONS INITIATED UPON THE REJECTION OF BIDS RECEIVED THEREUNDER HAD BEEN TERMINATED BY THE TELEGRAPHIC NOTICE OF AUGUST 7. IF, ON THE OTHER HAND, THE AUGUST 8 INVITATION BE REGARDED AS THE INITIATION OF FORMALLY ADVERTISED PROCUREMENT, AS WE THINK IT SHOULD, THE PROCEDURE FOLLOWED--- PARTICULARLY THE FAILURE TO OPEN BIDS PUBLICLY OR TO DIVULGE ANY INFORMATION CONCERNING THEM--- WAS IN CLEAR VIOLATION OF THE SPECIFIC REQUIREMENTS OF SECTION 303. IN ADDITION, THE RECORD LEAVES ROOM FOR DOUBT AS TO WHETHER THE RESTRICTION OF OFFERS TO NEW CONSTRUCTION IS ADEQUATELY JUSTIFIED. IN THE ABSENCE OF A SPECIFIC FACTUAL DETERMINATION THAT THERE EXISTS IN THE DESIRED AREA NO BUILDING WHICH COULD REASONABLY BE EXPECTED TO BE RENDERED CAPABLE OF MEETING THE PROPER REQUIREMENTS OF THE GOVERNMENT, WE QUESTION THE PROPRIETY OF RESTRICTING A PROPOSED LEASE OF GENERAL PURPOSE OFFICE SPACE FOR A 5 YEAR TERM TO NEW BUILDINGS.

THE FILE SUBMITTED LEAVES MUCH TO BE DESIRED IN THE WAY OF CLEAR AND DEFINITE DETERMINATIONS. IT APPEARS THAT THE PRINCIPAL OBJECTIONS TO THE ACCEPTANCE OF THE BUILDING OFFERED BY ANDREWS AND WALKER WERE RAISED BY THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, WHICH WAS ONE OF THE AGENCIES FOR WHOSE USE THE SPACE WAS REQUIRED. THOSE OBJECTIONS WERE, IN SUBSTANCE, THAT THEIR OFFICE WOULD BE VISITED LARGELY BY AGED, AND IN MANY CASES FEEBLE OR DISABLED PERSONS, TO WHOM THE FIVE STEPS FROM STREET LEVEL WOULD BE A SERIOUS HANDICAP; THAT SUPPORTING COLUMNS IN THE FLOOR SPACE MIGHT INTERFERE WITH THE AGENCY'S DESIRED ARRANGEMENT OF OFFICE FURNITURE; AND THAT THE LOCATION OF THE BUILDING WAS UNDESIRABLE (ALTHOUGH IT WAS WITHIN THE AREA SPECIFIED IN THE INVITATION). NONE OF THOSE REQUIREMENTS HAD BEEN STATED IN THE SPECIFICATIONS, AS WOULD HAVE BEEN PROPER IF THEY HAD BEEN ACCEPTED BY YOUR AGENCY AS REASONABLE. WHILE THE PROCURING OFFICER RATHER TENTATIVELY PROPOSED TO BASE REJECTION OF THE BID ON THE THEORY THAT THE SPACE OFFERED ON A FLOOR FIVE STEPS ABOVE THE SIDEWALK WAS NONRESPONSIVE TO THE STATED REQUIREMENT THAT ELEVATOR SERVICE SHOULD BE FURNISHED IF THE SPACE OFFERED WAS NOT ON THE "GROUND FLOOR" OF THE BUILDING, WE FIND IN THE FILE NO DEFINITE AND SPECIFIC FINDING, EITHER THAT THE ANDREWS AND WALKER BID WAS NOT RESPONSIVE TO THE TERMS OF THE INVITATION, OR THAT THE INVITATION DID NOT ADEQUATELY STATE THE GOVERNMENT'S REQUIREMENTS. IT APPEARS THAT THE FIELD OFFICE REPORTED TO HIGHER AUTHORITY IN THE PUBLIC BUILDINGS SERVICE THE POSITION OF THE HEW REPRESENTATIVES, AND PRESENTED THE QUESTION WHETHER THEIR DEMANDS WERE ACCEPTABLE, BUT THE QUESTION REMAINED UNANSWERED UNTIL INSTRUCTIONS WERE ISSUED ABOUT THE END OF JULY TO RENEGOTIATE ON THE CHANGED SPECIFICATIONS.

WE BELIEVE THE CONSIDERATIONS TO BE OBSERVED IN DRAFTING SPECIFICATIONS FOR PROCUREMENT OF PROPERTY AND SERVICES FOR GOVERNMENT USE ARE AS APPLICABLE TO ACQUISITIONS OF OFFICE SPACE AS TO THOSE OF ANY OTHER KINDS OF PROPERTY OR INTERESTS IN PROPERTY. THAT IS TO SAY, WITHOUT DEFINITE LEGISLATIVE AUTHORITY TO THE CONTRARY, APPROPRIATIONS FOR PAYMENT OF RENT FOR OFFICE SPACE FOR GOVERNMENT AGENCIES ARE AVAILABLE ONLY TO THE EXTENT NECESSARY TO OBTAIN SUCH TYPES OF SPACE AND SERVICES AS WILL REASONABLY MEET THE NEEDS OF THE AGENCIES, AND NOT FOR PAYMENT OF GREATER AMOUNTS FOR EXTRA FACILITIES OR FEATURES NOT REASONABLY NECESSARY FOR CARRYING OUT THEIR PROPER DUTIES AND FUNCTIONS. WE DO NOT MEAN TO IMPLY THAT THE REQUESTS OF HEW IN THIS INSTANCE WERE UNREASONABLE, BUT ONLY TO POINT OUT THAT EVALUATION OF SUCH REQUESTS AND DETERMINATION OF THEIR VALIDITY IS PRIMARILY THE RESPONSIBILITY OF YOUR AGENCY WHICH SHOULD BE EXERCISED AS EARLY AS POSSIBLE IN THE PROCUREMENT PROCESS, PREFERABLY BEFORE THE ADVERTISING OF SPACE REQUIREMENTS. UPON SUBSEQUENT DETERMINATION THAT THE GOVERNMENT'S REQUIREMENTS HAD NOT BEEN ADEQUATELY STATED, PROMPT READVERTISING UNDER REVISED SPECIFICATIONS WOULD NORMALLY BE THE PROPER PROCEDURE.

THE FILES ALSO EVIDENCE SOME LAXITY IN INCORPORATING IN THE RECORD DEFINITE FINDINGS OF THE FACTS NECESSARY TO SUPPORT THE INITIATION OF NEGOTIATIONS UNDER THE STATUTORY EXCEPTION RELIED UPON. IT DOES NOT APPEAR THAT ANY SPECIFIC AND DEFINITE FINDING OR DETERMINATION AS TO THE EXCESSIVENESS OF THE RENTALS BID UNDER THE FIRST INVITATION WAS EXECUTED BY A RESPONSIBLE OFFICIAL UNTIL AFTER THE MAY NEGOTIATIONS HAD ACTUALLY BEEN CONDUCTED, WHEREAS WE BELIEVE THAT TO FURNISH A PROPER BASIS FOR NEGOTIATION SUCH DETERMINATIONS SHOULD NOT 0NLY BE MADE BUT REDUCED TO WRITING AND RECORDED BEFORE THE COMMENCEMENT OF THE NEGOTIATING PROCEDURE. WHILE NOT SPECIFICALLY REQUIRED BY THE STATUTE, THE INCLUSION IN ANY REQUEST FOR PROPOSALS, OR OTHER COMMUNICATION INITIATING NEGOTIATION, OF A CITATION TO THE AUTHORITY FOR NEGOTIATING WOULD ALSO APPEAR TO BE DESIRABLE IN ORDER THAT ANY QUESTION WITH RESPECT THERETO MIGHT BE RAISED AT AN EARLY STAGE OF THE PROCUREMENT PROCESS.