B-157244, NOV. 18, 1965, 45 COMP. GEN. 265

B-157244: Nov 18, 1965

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THAT TERM IS DEFINED IN SECTION 3 (G) OF THE ACT AS INCLUDING EXCESS PROPERTY THAT IS NOT REQUIRED FOR THE NEEDS AND THE DISCHARGE OF THE RESPONSIBILITIES OF ALL FEDERAL AGENCIES. 1965: REFERENCE IS MADE TO LETTER DATED OCTOBER 29. IS APPLICABLE TO THE PROPOSED NEGOTIATED SALE OF THE TWENTY-NINE PALMS PROPERTY. THE PROPOSED SALE INVOLVES PROPERTY WHICH WAS FORMERLY A PORTION OF SUNBURNT HOMES. 40 U.S.C. 484 (E) (6) STATED THAT THE INVOLVED PROPERTY CONSISTING OF ONE PARCEL OF UNIMPROVED LAND CONTAINING 0.844 OF AN ACRE WAS ACQUIRED IN 1955 FOR $1. THE APPRAISED FAIR MARKET VALUE OF THE LAND WAS ESTIMATED AT $3. WAS STATED FURTHER THAT PURSUANT TO A REQUEST MADE BY THE POST OFFICE DEPARTMENT ON MARCH 20.

B-157244, NOV. 18, 1965, 45 COMP. GEN. 265

LEASE-PURCHASE PROGRAM - PROPERTY TRANSFERS FROM GENERAL SERVICES ADMINISTRATION PROPERTY DECLARED EXCESS BY THE DEPARTMENT OF THE NAVY WITHOUT QUALIFICATION OR RESTRICTION AND NEEDED BY THE POST OFFICE DEPARTMENT FOR A LEASE-PURCHASE CONSTRUCTION PROJECT AUTHORIZED UNDER 39 U.S.C. 2103 MAY BE CONVEYED AT CURRENT FAIR MARKET VALUE BY THE GENERAL SERVICES ADMINISTRATION TO THE SUCCESSFUL BIDDER ON THE PROJECT, THE VALUE TO BE APPROVED BY THE BUREAU OF THE BUDGET, AND ALTHOUGH THE AUTHORITY IN SECTION 203 (E) (3) (G) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, TO NEGOTIATE DISPOSALS OF PROPERTY APPLIES TO "SURPLUS PROPERTY, THAT TERM IS DEFINED IN SECTION 3 (G) OF THE ACT AS INCLUDING EXCESS PROPERTY THAT IS NOT REQUIRED FOR THE NEEDS AND THE DISCHARGE OF THE RESPONSIBILITIES OF ALL FEDERAL AGENCIES, AND THE POST OFFICE DEPARTMENT HAVING AUTHORITY TO ACQUIRE OPTIONS ON PROPERTY FROM PRIVATE PARTIES TO EFFECTUATE THE LEASE-PURCHASE PROGRAM, EVEN THOUGH NOT APPROVED TO RECEIVE DIRECT TRANSFERS OF SURPLUS PROPERTY, THE GENERAL SERVICES ADMINISTRATION MAY CONVEY THE NEEDED PROPERTY TO THE SUCCESSFUL BIDDER AS THOUGH THE POST OFFICE HAD ACQUIRED AN OPTION FROM A PRIVATE OWNER.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, NOVEMBER 18, 1965:

REFERENCE IS MADE TO LETTER DATED OCTOBER 29, 1965, FROM YOUR GENERAL COUNSEL FURNISHING ADDITIONAL INFORMATION IN SUPPORT OF HIS REQUEST OF JULY 13, 1965, FOR ADVICE AS TO WHETHER THE CONCLUSION ANNOUNCED IN OUR REPORT OF NOVEMBER 6, 1963, TO THE CHAIRMAN OF THE HOUSE SUBCOMMITTEE ON GOVERNMENT ACTIVITIES, COMMITTEE ON GOVERNMENT OPERATIONS, IS APPLICABLE TO THE PROPOSED NEGOTIATED SALE OF THE TWENTY-NINE PALMS PROPERTY. THE PROPOSED SALE INVOLVES PROPERTY WHICH WAS FORMERLY A PORTION OF SUNBURNT HOMES, MARINE CORPS BASE, TWENTY NINE PALMS, CALIFORNIA. IT HAS BEEN PROPOSED TO SELL THE PROPERTY TO THE SUCCESSFUL BIDDER AWARDED THE CONTRACT FOR THE CONSTRUCTION OF A BUILDING TO BE LEASED TO THE POST OFFICE DEPARTMENT.

THE EXPLANATORY STATEMENT IN JUSTIFICATION OF THE PROPOSED SALE FILED WITH THE APPROPRIATE CONGRESSIONAL COMMITTEES AS REQUIRED BY SECTION 203 (E) (6) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 484 (E) (6) STATED THAT THE INVOLVED PROPERTY CONSISTING OF ONE PARCEL OF UNIMPROVED LAND CONTAINING 0.844 OF AN ACRE WAS ACQUIRED IN 1955 FOR $1,415 (PRORATED); THAT ON FEBRUARY 10, 1965, THE APPRAISED FAIR MARKET VALUE OF THE LAND WAS ESTIMATED AT $3,500, AND THAT THE PROPOSED SALE WOULD BE MADE TO THE SUCCESSFUL BIDDER FOR CONSTRUCTION ON THE SITE OF A BUILDING TO BE LEASED TO THE POST OFFICE DEPARTMENT. WAS STATED FURTHER THAT PURSUANT TO A REQUEST MADE BY THE POST OFFICE DEPARTMENT ON MARCH 20, 1963, THE INVOLVED PROPERTY WAS WITHHELD FROM THE SALE IN APRIL 1964 OF THE BALANCE OF THE ORIGINAL SITE; THAT THE POST OFFICE DEPARTMENT IS READY TO ADVERTISE FOR BIDS FOR THE CONSTRUCTION OF A BUILDING; AND THAT THE INVITATION FOR BIDS WILL CONTAIN A PROVISION THAT THE SUCCESSFUL BIDDER MUST PURCHASE THE 0.844 ACRE TRACT AT THE APPRAISED VALUE OF $3,500. FACTORS IN SUPPORT OF THE CONCLUSION THAT THE PROPOSED SALE WOULD BE CONSISTENT WITH THE OBJECTIVES AND REQUIREMENTS OF NEGOTIATED SALES OF SURPLUS PROPERTY AS SET FORTH IN SECTION 203 (E) (3) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 484 (E) (3), WERE STATED AS OLLOWS:

1. THE POST OFFICE DEPARTMENT HAS DETERMINED THAT THERE IS A DEFINITE NEED FOR A NEW POST OFFICE IN THE TWENTY-NINE PALMS AREA AND THAT THIS LOCATION IS THE BEST AVAILABLE IN THE VICINITY.

2. THE POSTMASTER GENERAL HAS SPECIFIC STATUTORY AUTHORITY TO ENTER LEASE AGREEMENTS IN ORDER TO OBTAIN SPACE FOR POSTAL PURPOSES (39 U.S.C. 2103).

3. THE PROPOSED SALE PRICE OF $3,500 IS EQUAL TO THE ESTIMATED FAIR MARKET VALUE OF THE PROPERTY AND THE OTHER TERMS OF THE PROPOSED DISPOSAL ARE SATISFACTORY.

BY LETTER DATED APRIL 29, 1965, TO YOU, THE CHAIRMAN OF THE HOUSE GOVERNMENT ACTIVITIES SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, AFTER REFERRING TO THE PROPOSED NEGOTIATED SALE AND TO THE CONCLUSION IN OUR REPORT TO HIM OF NOVEMBER 6, 1963, B-152223, CONCERNING THE PORTERVILLE CASE, QUESTIONED THE CLASSIFICATION OF THE TWENTY-NINE PALMS AS "SURPLUS" PROPERTY SINCE IT WAS INTENDED TO BE USED FOR THE CONSTRUCTION OF A POST OFFICE BUILDING. ALSO, THE CHAIRMAN QUESTIONED THE APPLICABILITY OF THE BROAD CONSTRUCTION, LEASING AND DISPOSAL AUTHORITY GRANTED THE POSTMASTER GENERAL BY 39 U.S.C. 2103 TO TRANSFERS OF LAND BY GENERAL SERVICES ADMINISTRATION.

IN YOUR REPLY OF JUNE 24, 1965, TO THE CHAIRMAN IT WAS STATED THAT PRIOR TO REPORTING THE PROPOSED SALE TO THE COMMITTEE, GSA DETERMINED THAT THE FACTUAL DIFFERENCES IN THE PRESENT CASE AND THE PORTERVILLE CASE WERE SUFFICIENT TO RENDER THE CONCLUSION REACHED IN THE LATTER CASE INAPPLICABLE TO THE TWENTY-NINE PALMS CASE FOR REASONS AS FOLLOWS:

1. PORTERVILLE WAS REPORTED AS EXCESS WITH THE STIPULATION THAT IT BE DISPOSED OF ONLY TO THE SUCCESSFUL BIDDER WHO WOULD CONSTRUCT A BUILDING ON THE SITE TO BE LEASED TO THE SAME AGENCY WHICH HAD REPORTED THE PROPERTY EXCESS, WHEREAS TWENTY-NINE PALMS WAS REPORTED EXCESS BY NAVY WITHOUT ANY QUALIFICATION OR RESTRICTIONS ON THE DISPOSAL.

2. THE DETERMINATION IN THE PORTERVILLE CASE RESULTED IN THE LAND BEING RETAINED IN GOVERNMENT OWNERSHIP AND IN THE CUSTODY OF THE AGENCY WHICH HAD ORIGINALLY REPORTED IT AS EXCESS. SUCH DETERMINATION HAD THE EFFECT OF RETAINING THE PROPERTY FOR FURTHER FEDERAL UTILIZATION WHEREAS A SIMILAR DETERMINATION IN THIS CASE WOULD HAVE JUST THE OPPOSITE EFFECT SINCE IF THE PROPOSED NEGOTIATED SALE IS NOT MADE, THE PROPERTY WILL BE OFFERED FOR SALE TO THE PUBLIC.

3. IN GAO'S DETERMINATION IN THE PORTERVILLE CASE, IT WAS POINTED OUT THAT THE PROPERTY WAS LOCATED IN A PREDETERMINED DESIGNATED AREA FOR THE SEQUOIA NATIONAL FOREST HEADQUARTERS AND WAREHOUSE COMPLEX. CONSIDERING THAT FACT ALONG WITH THE IMPORTANCE OF HAVING THE FOREST SUPERVISOR'S OFFICE CONTIGUOUS TO ITS OPERATING YARD TOGETHER WITH THE FACT THAT THERE WERE NO PRIVATELY OWNED BUILDINGS LOCATED IN THE IMMEDIATE VICINITY OF THE INVOLVED TRACT GAO CONCLUDED THAT NO PROPER BASIS HAD BEEN STATED FOR DETERMINING THE LAND TO BE "EXCESS PROPERTY" OR "SURPLUS PROPERTY" WITHIN THE MEANING OF THOSE TERMS AS DEFINED IN SECTION 3 (E) AND 3 (G) OF THE PROPERTY ACT. ALSO, IT WAS POINTED OUTTHAT TWENTY-NINE PALMS IS NOT LOCATED WITHIN ANY PREDETERMINED DESIGNATION FOR A POST OFFICE INSTALLATION AND THAT THERE IS NO CONTIGUOUS PROPERTY UNDER THE CONTROL OF THE POST OFFICE DEPARTMENT WHICH, TOGETHER WITH THE INVOLVED SITE, MIGHT FORM AN OPERATING COMPLEX. IN ADDITION, IT WAS STATED THAT IN PROPOSING A SALE OF TWENTY-NINE PALMS TO THE SUCCESSFUL LEASE-CONSTRUCTION BIDDER GSA WAS NOT RELYING ON ANY DISPOSAL AUTHORITY GRANTED THE POSTMASTER FOR SUCH PROJECTS (39 U.S.C. 2103) BUT INSTEAD, IT WAS RELYING UPON THE EXPRESS PROVISIONS OF SECTION 203 OF THE PROPERTY ACT, 40 U.S.C. 484. IT WAS STATED, HOWEVER, THAT UPON RECONSIDERATION IT WAS RECOGNIZED THAT THE QUESTION AS TO APPLICABILITY OF THE CONCLUSION IN THE PORTERVILLE CASE TO THE PRESENT CASE IS NOT ENTIRELY FREE FROM DOUBT AND THAT THEREFORE THE MATTER WAS BEING SUBMITTED HERE FOR A DECISION.

IN OFFICE LETTER OF AUGUST 9, 1965, TO YOUR GENERAL COUNSEL AN EXPLANATION WAS REQUESTED AS TO WHY GSA CONCLUDED THAT IT WOULD BE REQUIRED TO OFFER TWENTY-NINE PALMS AT PUBLIC SALE IF IT SHOULD BE CONCLUDED THAT THE DISPOSITION AS NOW PROPOSED IS NOT AUTHORIZED. ALSO, ADVICE WAS REQUESTED AS TO WHY THE SITE COULD NOT BE TRANSFERRED TO THE POST OFFICE DEPARTMENT, UNDER AUTHORITY OF SECTION 202 OF THE PROPERTY ACT, 40 U.S.C. 483. IN THE REPLY OF OCTOBER 29, 1965, TO THE ABOVE REQUESTS, REFERENCE WAS MADE TO OUR DECISION OF SEPTEMBER 5, 1957, B- 132813, TO THE POSTMASTER GENERAL WHEREIN IT WAS HELD THAT WHILE UNDER SECTION 203 (A) (2) (A) OF THE POST OFFICE DEPARTMENT PROPERTY ACT OF 1954, 39 U.S.C. 2103 (A) (2) (A) THE DEPARTMENT'S APPROPRIATION AVAILABLE FOR THE PAYMENT OF RENTS IS AVAILABLE FOR THE ACQUISITION OF SITES, IT IS NOT AVAILABLE FOR SITES TRANSFERRED FROM GSA UNDER AUTHORITY OF SECTION 202 (A) OF THE PROPERTY ACT, AS AMENDED, 40 U.S.C. 483 (A). IT WAS ALSO HELD THAT OTHER APPROPRIATIONS OF THE DEPARTMENT WERE NOT AVAILABLE FOR SUCH PURPOSE. IN SUCH CIRCUMSTANCES, IT WAS STATED THAT A CERTIFICATION AS REQUIRED BY GSA REGULATIONS THAT THE PROPERTY COULD NOT BE FINANCED FROM AVAILABLE FUNDS WOULD SEEM TO BE IN ORDER. THE REPLY QUOTED FROM THE CONCLUSION OF THE CITED DECISION WHEREIN IT WAS STATED THAT IF THE REQUIRED CERTIFICATION SHOULD BE MADE AND IF THE DIRECTOR OF THE BUREAU OF THE BUDGET SHOULD DETERMINE THAT THE PROPOSED TRANSFERS THERE INVOLVED SHOULD BE MADE WITHOUT REIMBURSEMENT AS REQUIRED BY 40 U.S.C. 483 (A), SUCH TRANSFERS WITHOUT REIMBURSEMENT WOULD BE AUTHORIZED.

THE ABOVE REPLY STATED, HOWEVER, THAT SUBSEQUENTLY THE DIRECTOR OF THE BUREAU OF THE BUDGET DISAPPROVED TWO PROPOSED NONREIMBURSABLE TRANSFERS OF SITES FOR LEASE-CONSTRUCTION FACILITIES FROM GSA TO THE POST OFFICE DEPARTMENT AND NOTED THAT THE DEPARTMENT PROPOSED TO SELL SUCH SITES TO LEASE-CONSTRUCTION CONTRACTORS AT THE GOVERNMENT'S ACQUISITION COST OR FAIR MARKET VALUE, WHICHEVER WAS LOWER, AND THAT IN EACH CASE THE ACQUISITION COST WAS FAR BELOW THE FAIR MARKET VALUE. THE REPLY THEN QUOTED FROM AN EXCERPT FROM THE DIRECTOR'S LETTER OF SEPTEMBER 21, 1964, TO YOU, AS FOLLOWS:

THE EFFECT OF THE PROPOSED TRANSFER AND SALE OF THE PROPERTIES IS TO MAKE A CONTRIBUTION OF FEDERAL ASSETS TO THE OPERATION OF THE POSTAL SYSTEM IN THE AMOUNT BY WHICH THE SELLING PRICE FAILS TO RECOVER FAIR MARKET VALUE FOR DEPOSIT IN THE TREASURY. SECTIONS 2302 AND 2303 OF CHAPTER 39, U.S. CODE, SET FORTH SPECIFIC POLICY AND PROCEDURES FOR ALLOCATING POSTAL COSTS BETWEEN THOSE TO BE CHARGED TO MAIL USERS THROUGH POSTAL RATES AND THOSE TO BE CHARGED TO THE GENERAL FUND OF THE TREASURY AS PUBLIC SERVICES. THE TRANSFER AND SALE OF THE PROPERTIES IN THE MANNER PROPOSED HAS THE EFFECT OF INCREASING THE BURDEN ON THE GENERAL FUND OF THE TREASURY BEYOND THAT NOW AUTHORIZED BY LAW TO BE BORNE AS "PUBLIC SERVICES" WHICH ARE EXCLUDED FROM CONSIDERATION IN ADJUSTING POSTAL RATES.

MORE IMPORTANTLY, THE PRACTICE OF SELLING PROPERTY TO CONTRACTORS AT BELOW-MARKET PRICES WITH THE OBJECTIVE OF REDUCING POST OFFICE LEASE PAYMENTS DISTORTS THE CAPITAL COSTS OF PROVIDING POST OFFICE SERVICES. A CONSEQUENCE, THIS PRACTICE CAN LEAD TO UNECONOMIC CHOICES WITH RESPECT TO CONSTRUCTION PRIORITIES, SITE LOCATION, DESIGN, AND UTILIZATION OF POST OFFICE FACILITIES.

FOR THE REASONS STATED ABOVE, AND IN ACCORDANCE WITH SECTION 202 (A) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, AS AMENDED, THE TRANSFER OF THESE PROPERTIES IS NOT APPROVED.

IN ADDITION, AN EXCERPT WAS QUOTED FROM A PRIOR LETTER FROM THE DIRECTOR QUESTIONING SUCH TRANSFERS WHEREIN IT WAS STATED THAT THERE APPEARED TO BE TWO APPROPRIATE METHODS FOR MAKING THE TWO PROPERTIES AVAILABLE TO LEASE- CONSTRUCTION CONTRACTORS, AS FOLLOWS:

ONE IS FOR THE DEPARTMENT TO REIMBURSE THE GENERAL SERVICES ADMINISTRATION FOR THE FAIR MARKET VALUE OF THE PROPERTIES, SELL THE PROPERTIES TO THE LEASE-CONSTRUCTION CONTRACTORS FOR THE FAIR MARKET VALUE, AND DEPOSIT THE PROCEEDS OF THE SALE IN THE POSTAL FUND. UNDERSTAND THAT LEGISLATION WOULD BE NEEDED TO AUTHORIZE REIMBURSEMENT TO GENERAL SERVICES ADMINISTRATION AND DEPOSIT OF THE SALES PROCEEDS IN THE POSTAL FUND, AND IF SO, I WILL COOPERATE IN EXPEDITING A LEGISLATIVE PROPOSAL TO THE CONGRESS, IF YOU SO DESIRE. THE SECOND METHOD IS TO ARRANGE TO HAVE THE GENERAL SERVICES ADMINISTRATION NEGOTIATE A SALE OF THE PROPERTIES TO SUCH PARTIES AS YOU DESIGNATE. THE PRICE OF THE SITE (EQUAL TO FAIR MARKET VALUE) AND THE INFORMATION THAT THE SITE IS TO BE PURCHASED FROM GENERAL SERVICES ADMINISTRATION CAN BE INCLUDED IN THE REQUEST FOR BIDS FOR LEASE-CONSTRUCTION.

IT WAS STATED THAT THE MATTER WAS NOT PURSUED FURTHER APPARENTLY BECAUSE BOTH GSA AND THE DEPARTMENT CONSIDERED THAT IT WOULD BE POSSIBLE FOR FEDERALLY OWNED SITES NOT NEEDED FOR THE CONSTRUCTION OF BUILDINGS BY THE FEDERAL GOVERNMENT TO BE MADE AVAILABLE TO THE DEPARTMENT'S LEASE- CONSTRUCTION CONTRACTORS IN THE MANNER PROPOSED WITH RESPECT TO TWENTY- NINE PALMS.

SUMMARIZING, THE REPLY OF OCTOBER 29, 1965 STATED THAT:

1. GSA CONSIDERS THAT THE ACTION OF THE DIRECTOR OF THE BUREAU OF THE BUDGET, IN HIS LETTER OF SEPTEMBER 21, 1964, ESTABLISHED THE POLICY THAT EXCESS GOVERNMENT-OWNED SITES SHOULD NOT BE TRANSFERRED TO THE POST OFFICE, WITHOUT REIMBURSEMENT, FOR SALE BY THE POST OFFICE TO LEASE- CONSTRUCTION CONTRACTORS. GSA AGREES WITH AND FOLLOWS THIS POLICY. THE ESTABLISHMENT OF SUCH POLICY IS AUTHORIZED UNDER SECTION 202 OF THE PROPERTY ACT.

2. THE POST OFFICE HAS NO FUNDS WHICH ARE AVAILABLE FOR THE PURPOSE OF REIMBURSING GSA FOR THE TRANSFER OF THE TWENTY-NINE PALMS SITE.

3. THE TWENTY-NINE PALMS SITE WAS REPORTED EXCESS BY THE DEPARTMENT OF THE NAVY, WITH NO QUALIFICATIONS OR RESTRICTIONS ON DISPOSAL. IF IT CANNOT BE SOLD BY GSA TO THE SUCCESSFUL BIDDER ON THE POST OFFICE INVITATION FOR BIDS FOR LEASE-CONSTRUCTION, GSA WOULD, SINCE NO FEDERAL AGENCY HAS REQUESTED THE SITE, OFFER THE PROPERTY FOR SALE TO THE PUBLIC.

IN CONCLUSION, AND WITH A VIEW TO DISTINGUISHING THE PRESENT CASE FROM THE PORTERVILLE CASE, IT WAS STATED THAT GSA BELIEVES THAT, AS A MATTER OF POLICY, EXCESS PROPERTY SHOULD NOT ORDINARILY BE TRANSFERRED TO ANOTHER AGENCY FOR SALE; THAT SUCH A TRANSFER SUGGESTS THE CONCLUSION, SUCH AS IN THE INSTANT CASE, THAT THE PROPERTY IS SURPLUS; THAT UNDER THE PROPERTY ACT GSA HAS COMPLETE RESPONSIBILITY FOR THE DISPOSITION OF SURPLUS PROPERTY; AND THAT GSA IS OF THE VIEW THAT IT SHOULD MAKE SALES OF SURPLUS PROPERTY PURSUANT TO THE REQUIREMENTS OF SECTION 203 OF THE PROPERTY ACT (40 U.S.C. 484), INCLUDING THE REQUIREMENT FOR SUBMISSION OF EXPLANATORY STATEMENTS TO THE APPROPRIATE COMMITTEES OF CONGRESS (SENATE AND HOUSE COMMITTEES ON GOVERNMENT OPERATIONS) IN INSTANCES INVOLVING NEGOTIATED SALES, SUCH AS HERE INVOLVED. THE TERM "SURPLUS PROPERTY" IS DEFINED IN SECTION 3 (G) OF THE PROPERTY ACT (40 U.S.C. 472 (G) ( AS MEANING ANY EXCESS PROPERTY NOT REQUIRED FOR THE NEEDS AND DISCHARGE OF THE RESPONSIBILITIES OF ALL FEDERAL AGENCIES, AS DETERMINED BY THE ADMINISTRATOR. 41 CFR 101-47. 204-1 PROVIDES THAT ANY REAL PROPERTY AND RELATED PERSONAL PROPERTY REPORTED EXCESS UNDER SUBPART 101-47.2 WHICH HAS BEEN SCREENED FOR NEEDS OF FEDERAL AGENCIES OR WAIVED FROM SCREENING BY GSA AND NOT DESIGNATED BY GSA FOR UTILIZATION BY A FEDERAL AGENCY, SHALL BE SUBJECT TO DETERMINATION AS SURPLUS PROPERTY BY GSA. THE TERM "EXCESS PROPERTY" IS DEFINED IN SECTION 3 (E) (40 U.S.C. 472 (E) (, AS ANY PROPERTY UNDER THE CONTROL OF ANY FEDERAL AGENCY WHICH IS NOT REQUIRED FOR ITS NEEDS AND DISCHARGE OF ITS RESPONSIBILITIES, "AS DETERMINED BY THE HEAD THEREOF," IN THIS INSTANCE THE SECRETARY OF THE NAVY.

THE PRIMARY DISTINCTION BETWEEN THE PORTERVILLE CASE AND THE PRESENT ONE IS THAT IN THE PORTERVILLE CASE THERE WAS A DEMONSTRATED NEED FOR THE TRACT BY FOREST SERVICE, THE HOLDING AGENCY, WHEREAS IN THE INSTANT CASE THE LAND PROPERLY WAS SUBJECT TO AN EXCESS DECLARATION SINCE IT WAS NO LONGER NEEDED FOR THE DISCHARGE OF THE RESPONSIBILITIES OF THE NAVY. BECAUSE OF THE FOREGOING DISTINCTION AND THE REASONS STATED IN YOUR LETTER OF JUNE 24, 1965, TO THE CHAIRMAN OF THE HOUSE GOVERNMENT ACTIVITIES SUBCOMMITTEE, WE DO NOT FEEL THAT THE RULE ANNOUNCED IN THE PORTERVILLE CASE IS FOR APPLICATION IN THE PRESENT PROPOSED DISPOSAL.

AS INDICATED IN THE EXCERPT FROM THE LETTER FROM THE DIRECTOR, BUREAU OF THE BUDGET, QUOTED ON PAGE THREE OF YOUR LETTER OF OCTOBER 29, 1965, THERE ARE TWO POSSIBLE METHODS FOR MAKING THE INVOLVED PROPERTY AND SIMILAR PROPERTIES AVAILABLE TO LEASE-CONSTRUCTION CONTRACTORS NAMELY, (1) REIMBURSEMENT TO GSA BY THE POST OFFICE DEPARTMENT OF THE FAIR MARKET VALUE OF THE PROPERTIES FOLLOWED BY SALE OF SAME TO THE SUCCESSFUL LEASE- CONSTRUCTION CONTRACTOR AT THE FAIR MARKET VALUE AND THE DEPOSIT OF THE SALE PROCEEDS IN THE POSTAL FUND, AND (2) ARRANGEMENT WITH GSA FOR A NEGOTIATED SALE TO THE SUCCESSFUL LEASE-CONSTRUCTION CONTRACTOR AS PRESENTLY PROPOSED.

SECTION 202 OF THE PROPERTY ACT, AS AMENDED, 40 U.S.C. 483 (A) PROVIDES THAT:

(A) IN ORDER TO MINIMIZE EXPENDITURES FOR PROPERTY, THE ADMINISTRATOR SHALL PRESCRIBE POLICIES AND METHODS TO PROMOTE THE MAXIMUM UTILIZATION OF EXCESS PROPERTY BY EXECUTIVE AGENCIES, AND HE SHALL PROVIDE FOR THE TRANSFER OF EXCESS PROPERTY AMONG FEDERAL AGENCIES AND TO THE ORGANIZATIONS SPECIFIED IN SECTION 630G (F) OF TITLE 5. THE ADMINISTRATOR, WITH THE APPROVAL OF THE DIRECTOR OF THE BUREAU OF THE BUDGET, SHALL PRESCRIBE THE EXTENT OF REIMBURSEMENT FOR SUCH TRANSFERS OF EXCESS PROPERTY: PROVIDED, THAT REIMBURSEMENT SHALL BE REQUIRED OF THE FAIR VALUE, AS DETERMINED BY THE ADMINISTRATOR, OF ANY EXCESS PROPERTY TRANSFERRED WHENEVER NET PROCEEDS ARE REQUIRED PURSUANT TO 485 (C) OF THIS TITLE OR WHENEVER EITHER THE TRANSFEROR OR THE TRANSFEREE AGENCY (OR THE ORGANIZATIONAL UNIT AFFECTED) IS SUBJECT TO THE GOVERNMENT CORPORATION CONTROL ACT OR IS AN ORGANIZATION SPECIFIED IN SECTION 630G (F) OF TITLE 5; AND THAT EXCESS PROPERTY DETERMINED BY THE ADMINISTRATOR TO BE SUITABLE FOR DISTRIBUTION THROUGH THE SUPPLY CENTERS OF GENERAL SERVICES ADMINISTRATION SHALL BE RETRANSFERRED AS (AT) PRICES FIXED BY THE ADMINISTRATOR WITH DUE REGARD TO PRICES ESTABLISHED IN ACCORDANCE WITH SECTION 630G (B) OF TITLE 5.

41 CFR 47.203-7 OUTLINES THE PROCEDURE FOR AGENCIES REQUESTING TRANSFERS OF EXCESS REAL AND RELATED PERSONAL PROPERTY REPORTED TO GSA.

SUBPARAGRAPHS (B) AND (C) OF THE FOREGOING SECTION PROVIDE:

(B) UPON DETERMINATION BY GSA, WITH THE CONCURRENCE OF THE BUREAU OF THE BUDGET WHEN REQUIRED (SEE SEC. 101-47.203-7 (C) (, THAT A TRANSFER OF THE PROPERTY REQUESTED IS IN THE BEST INTEREST OF THE GOVERNMENT AND THAT THE REQUESTED AGENCY IS THE APPROPRIATE AGENCY TO HOLD THE PROPERTY, SUCH TRANSFER MAY BE MADE AMONG FEDERAL AGENCIES AND TO MIXED-OWNERSHIP GOVERNMENT CORPORATIONS, AND THE MUNICIPAL GOVERNMENT OF THE DISTRICT OF COLUMBIA.

(C) IN THE CASE OF TRANSFERS INVOLVING EXCESS LAND, WHICH TOGETHER WITH ANY IMPROVEMENTS THEREON HAS A TOTAL APPRAISED FAIR MARKET VALUE OF $100,000 OR MORE, GSA SHALL SECURE THE CONCURRENCE OF THE BUREAU OF THE BUDGET TO THE TRANSFER.

SUBPARAGRAPH (F) (2) (II) (A) OF THE SAME SECTION PROVIDES:

(2) REIMBURSEMENT IN ALL OTHER TRANSFERS OF EXCESS REAL PROPERTY SHALL BE:

(II) WITHOUT REIMBURSEMENT WHEN THE TRANSFER IS TO BE MADE UNDER ANY ONE OF THE FOLLOWING CONDITIONS:

(A) THE TRANSFEREE AGENCY CLEARLY DEMONSTRATES THAT IT CANNOT FURNISH THE REQUIRED REIMBURSEMENT WITHOUT OBTAINING AN ADDITIONAL APPROPRIATION FOR THAT SPECIFIC PURPOSE.

AS INDICATED ABOVE THE APPLICABLE GSA REGULATIONS AUTHORIZE TRANSFERS OF EXCESS REAL PROPERTY TO REQUESTING AGENCIES WITHOUT REIMBURSEMENT WHERE THE TRANSFEREE AGENCY CLEARLY DEMONSTRATES THAT IT CANNOT FURNISH REIMBURSEMENT WITHOUT OBTAINING AN ADDITIONAL APPROPRIATION. IN THE PRESENT CASE, HOWEVER, A TRANSFER TO THE POST OFFICE DEPARTMENT IS PRECLUDED BECAUSE OF THE REPORTED ESTABLISHED POLICY OF THE BUREAU OF THE BUDGET (AUTHORIZED BY SECTION 202 (A) OF THE PROPERTY ACT, AS AMENDED) OF WITHHOLDING APPROVAL FOR TRANSFERS OF EXCESS GOVERNMENT-OWNED SITES TO THE POST OFFICE DEPARTMENT WITHOUT REIMBURSEMENT. THE SUGGESTED REMAINING ALTERNATIVE IS A NEGOTIATED SALE TO THE SUCCESSFUL LEASE-CONSTRUCTION CONTRACTOR.

AUTHORITY FOR NEGOTIATED DISPOSALS IS PROVIDED FOR BY SECTION 203 (E) (3) OF THE PROPERTY ACT, AS AMENDED. SUBSECTION (G) OF THE CITED SECTION AUTHORIZES SUCH DISPOSALS IF "WITH RESPECT TO REAL PROPERTY ONLY, THE CHARACTER OR CONDITION OF THE PROPERTY OR UNUSUAL CIRCUMSTANCES MAKE IT IMPRACTICABLE TO ADVERTISE PUBLICLY FOR COMPETITIVE BIDS AND THE FAIR MARKET VALUE OF THE PROPERTY OR OTHER SATISFACTORY TERMS OF DISPOSAL CAN BE OBTAINED BY NEGOTIATION; * * *.' THE REGULATIONS FOLLOW THE STATUTE. 41 CFR 101-47.304-9 (A) (3).

THE TECHNICAL DIFFICULTY HERE IS THAT SECTION 203 (E) (3) IS APPLICABLE ONLY TO SURPLUS PROPERTY, THAT IS,"ANY EXCESS PROPERTY NOT REQUIRED FOR THE NEEDS AND THE DISCHARGE OF THE RESPONSIBILITIES OF ALL FEDERAL AGENCIES (INCLUDING THE POST OFFICE DEPARTMENT), AS DETERMINED BY THE ADMINISTRATOR.' HOWEVER, UNDER THE PROPERTY ACT AND PERTINENT REGULATIONS ANY FEDERAL AGENCY, INCLUDING THE POST OFFICE DEPARTMENT, HAVING A NEED FOR PROPERTY DECLARED EXCESS BY ANY OTHER AGENCY HAS A RIGHT TO HAVE SUCH PROPERTY TRANSFERRED TO IT UPON THE TERMS PROVIDED FOR UNDER 47 CFR 101.203-7.

IN THE PRESENT CASE, THE POST OFFICE DEPARTMENT HAS A NEED WHICH IT PROPOSES TO FULFILL BY UTILIZATION OF THE PROPERTY BY LEASE-PURCHASE CONSTRUCTION AUTHORIZED BY 39 U.S.C. 2103. BECAUSE OF OUR DECISION OF SEPTEMBER 5, 1957, B-132813, TO THE POSTMASTER GENERAL AND THE BUDGET BUREAU POLICY THE POST OFFICE DEPARTMENT IS NOT IN A POSITION TO OBTAIN A DIRECT TRANSFER OF TWENTY-NINE PALMS. AS INDICATED IN 36 COMP. GEN. 48, HOWEVER, THE DEPARTMENT DOES HAVE AUTHORITY TO ACQUIRE OPTIONS ON PROPERTY NEEDED FOR CARRYING OUT ITS LEASE-CONSTRUCTION PROGRAM AUTHORIZED BY 39 U.S.C. 2103. CONSIDERING THE PROVISIONS OF THE PROPERTY ACT, IT APPEARS TO US FOR ALL PRACTICABLE PURPOSES THAT THE DEPARTMENT IS IN THE SAME POSITION WITH RESPECT TO TWENTY-NINE PALMS AS IF IT HAD ACTUALLY ACQUIRED AN OPTION THEREON FROM A PRIVATE OWNER. WHILE THE PROPERTY ACT CONTAINS NO PROVISION SPECIFICALLY PROVIDING FOR ASSIGNMENT OF THE POST OFFICE DEPARTMENT'S RIGHT TO TRANSFER, WE SEE NO SOUND REASON WHY YOU COULD NOT PROPERLY AGREE TO THE DEPARTMENT'S REQUEST TO CONVEY TWENTY-NINE PALMS TO THE SUCCESSFUL BIDDER FOR LEASE-CONSTRUCTION PURPOSES UPON PAYMENT OF THE AMOUNT DETERMINED BY YOU AS THE CURRENT FAIR MARKET VALUE.