B-152989, B-154749, FEB. 24, 1965

B-152989,B-154749: Feb 24, 1965

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YOU HAVE REQUESTED OUR COMMENTS ON WHETHER THE SOLICITATION OF IMPROVED BIDS FROM THE HIGHEST BIDDERS FOR INDIVIDUAL PARCELS AND VARIOUS COMBINATIONS THEREOF IN SITUATIONS WHERE THE INVITATION PROVIDES THAT THE PROPERTY IS TO BE SOLD AS SEPARATE PARCELS. IS PERMISSIBLE. 40 U.S.C. 484 (E) (6) PROVIDES THAT IN CASES OF NEGOTIATED DISPOSALS A STATEMENT IS REQUIRED TO BE FURNISHED TO THE APPROPRIATE CONGRESSIONAL COMMITTEES IN ADVANCE EXPLAINING THE CIRCUMSTANCES OF SUCH SALE. THERE IS NO REQUIREMENT UNDER 44 CFR 110.32 THAT SUCH A STATEMENT BE GIVEN TO THE APPROPRIATE CONGRESSIONAL COMMITTEES. IT IS THE INTENTION OF YOUR DEPARTMENT THAT ANY SOLICITATION UNDER 44 CFR 110.32 SHOULD BE CONSIDERED AS A CONTINUATION OF THE ADVERTISEMENT RATHER THAN NEGOTIATION.

B-152989, B-154749, FEB. 24, 1965

TO THE HONORABLE LAWSON B. KNOTT, JR., ACTING ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

WE REFER TO A LETTER DATED AUGUST 19, 1964, FROM YOUR GENERAL COUNSEL REQUESTING CLARIFICATION OF OUR DECISION B-152989, APRIL 6, 1964, INVOLVING THE SALE OF A PORTION OF THE KINGSBURY ORDNANCE PLANT. SPECIFICALLY, YOU HAVE REQUESTED OUR COMMENTS ON WHETHER THE SOLICITATION OF IMPROVED BIDS FROM THE HIGHEST BIDDERS FOR INDIVIDUAL PARCELS AND VARIOUS COMBINATIONS THEREOF IN SITUATIONS WHERE THE INVITATION PROVIDES THAT THE PROPERTY IS TO BE SOLD AS SEPARATE PARCELS, ANY COMBINATION OF PARCELS, OR IN ITS ENTIRETY, IS PERMISSIBLE.

SECTION 203 (3) (6) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 72 STAT. 288, 40 U.S.C. 484 (E) (6) PROVIDES THAT IN CASES OF NEGOTIATED DISPOSALS A STATEMENT IS REQUIRED TO BE FURNISHED TO THE APPROPRIATE CONGRESSIONAL COMMITTEES IN ADVANCE EXPLAINING THE CIRCUMSTANCES OF SUCH SALE. THERE IS NO REQUIREMENT UNDER 44 CFR 110.32 THAT SUCH A STATEMENT BE GIVEN TO THE APPROPRIATE CONGRESSIONAL COMMITTEES. APPARENTLY, IT IS THE INTENTION OF YOUR DEPARTMENT THAT ANY SOLICITATION UNDER 44 CFR 110.32 SHOULD BE CONSIDERED AS A CONTINUATION OF THE ADVERTISEMENT RATHER THAN NEGOTIATION.

LEITMAN V. UNITED STATES, 104 CT.CL. 325 (1945) CONSIDERED A SITUATION WHERE THE LOW BID WAS REDUCED BY A TELEGRAPHIC MODIFICATION DISPATCHED AFTER THE TIME SET FOR BID OPENING. THERE WAS NO QUESTION IN THE LEITMAN CASE THAT THE PRICE IN THE LOW BID WAS ACCEPTABLE AS SUBMITTED. ALSO, IT WAS FOUND THAT THE LATE MODIFICATION WAS NOT WITHDRAWN PRIOR TO AWARD. THOSE CIRCUMSTANCES, THE COURT FOUND THAT THE TELEGRAPHIC MODIFICATION WHICH FURTHER REDUCED THE LOW BID AFTER BID OPENING COULD BE CONSIDERED.

THE REGULATION AT 44 CFR 110.32 PROVIDES:

"WHENEVER THE ADVERTISING DOES NOT RESULT IN THE RECEIPT OF A BID AT A PRICE COMMENSURATE WITH THE FAIR MARKET VALUE OF THE PROPERTY, THE HIGHEST BIDDER MAY, AT THE DISCRETION OF THE HEAD OF THE DISPOSAL AGENCY OR HIS DESIGNEE, AND UPON DETERMINATION OF RESPONSIVENESS AND BIDDER RESPONSIBILITY, BE OFFERED AN OPPORTUNITY TO INCREASE HIS OFFERED PRICE. * * *" THE CITED REGULATION IMPLIES THAT THE POST OPENING SOLICITATION OF IMPROVED PRICES WILL BE WITH ONE BIDDER--- THE HIGHEST. THE REGULATION ALSO IMPLIES THAT THE SOLICITATION OF IMPROVED PRICES MAY BE CONDUCTED EVEN IN SITUATIONS WHERE THE HIGHEST BID AS SUBMITTED WAS NOT ACCEPTABLE BECAUSE OF THE PRICE QUOTED. FOR THIS REASON, WE STATED IN THE LETTER TO YOUR AGENCY, B-152989, APRIL 6, 1964, REGARDING THE KINGSBURY ORDNANCE SALE, THAT WE HAD DOUBT WHETHER THE LEITMAN CASE, SUPRA, WHICH DID NOT CONSIDER A SITUATION WHERE THE LOW BID AS SUBMITTED WAS NOT ACCEPTABLE BECAUSE OF THE PRICE QUOTED, COULD BE CONSIDERED AS AUTHORITY FOR THE CITED REGULATION. WE ADVISED THAT WE WERE NOT DISPOSED TO QUESTION THE REGULATION AS PERMITTING THE SOLICITATION OF IMPROVED PRICES FROM ONE BIDDER--- THE HIGHEST.

IN THE KINGSBURY ORDNANCE SALE CASE, BIDS WERE RECEIVED ON EACH OF THE INDIVIDUAL PARCELS; IN ADDITION THERE WAS RECEIVED A UNIT BID FOR ALL THE PARCELS. IMPROVED PRICES WERE SOLICITED PURSUANT TO 44 CFR 110.32 FROM THE INDIVIDUAL BIDDERS AND FROM THE UNIT BIDDER FOR ALL THE PARCELS. ADVISED THAT WE DID NOT CONSIDER THE LEITMAN CASE, SUPRA, AS AUTHORITY FOR THIS ACTION BY YOUR AGENCY. THE LETTER FROM YOUR AGENCY OF AUGUST 19, 1964, TAKES THE POSITION THAT AN INVITATION WHICH SOLICITS BIDS ON INDIVIDUAL PARCELS, A COMBINATION OF PARCELS,OR A TRACT IN ITS ENTIRETY, SIMULTANEOUSLY CONDUCTS SEVERAL DIFFERENT OFFERINGS AND THAT BIDDERS ON THE DIFFERENT OFFERINGS ARE NOT COMPETING WITH EACH OTHER IN A TRUE SENSE.

IT IS OUR VIEW THAT WHERE AN INVITATION PERMITS BIDS ON A PARTICULAR PARCEL EITHER BY ITSELF OR AS PART OF A COMBINATION OF PARCELS, THERE IS COMPETITION AS TO ANY PARCEL WHICH IS INCLUDED IN TWO BIDS, WHETHER SUCH BIDS ARE ON THE INDIVIDUAL PARCEL ALONE OR AS A PART OF A LARGER COMBINATION OF PARCELS. IN SUCH CASE, IT IS OUR FURTHER VIEW THAT SOLICITATION OF AN IMPROVED BID IS NOT LEGALLY PROPER UNTIL AN ADMINISTRATIVE DETERMINATION HAS BEEN MADE TO REJECT ALL BUT ONE BID ON THAT PARCEL, REGARDLESS OF WHETHER BIDS THEREON ARE ON AN INDIVIDUAL OR COMBINATION BASIS. ONLY IN SUCH CIRCUMSTANCES DO WE BELIEVE THE RATIONALE OF THE LEITMAN CASE WOULD WARRANT SOLICITATION OF AN IMPROVED BID FROM THE SINGLE BID REMAINING FOR CONSIDERATION FOR POSSIBLE AWARD. IF IMPROVED BIDS ARE TO BE SOLICITED FROM MORE THAN ONE BIDDER ON ANY PARCEL, WHETHER HE HAS BID ON ONLY THAT PARCEL OR ON A COMBINATION INCLUDING THAT PARCEL, THIS CONSTITUTES NEGOTIATION WHICH SHOULD BE CONDUCTED PURSUANT TO 44 CFR 110.34.