B-158060, MAY 19, 1966

B-158060: May 19, 1966

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ABSE: FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 17. THE REAL ESTATE OFFERED FOR LEASE BY THE SUBJECT INVITATION IS A PORTION OF O-HARE INTERNATIONAL AIRPORT IN CHICAGO. BIDS WERE OPENED AS SCHEDULED ON OCTOBER 1. 644 PER ANNUM WAS HIGH. WRECKERS AND THE OTHER BIDDERS WERE ADVISED THAT SINCE NONE OF THE BIDS RECEIVED WERE ACCEPTABLE. ALL BIDS WERE REJECTED AND THE DEPOSITS SUBMITTED WITH THE BIDS WOULD BE RETURNED UNDER SEPARATE COVER. WERE ALSO REJECTED FOR THE REASON THAT THEY WERE NOT CONSIDERED COMMENSURATE WITH THE FAIR MARKET VALUE OF THE PROPERTY. THE APPARENT HIGH BID UNDER THIS SOLICITATION WAS $3. ALTHOUGH WRECKERS CLAIMED THAT ITS BID OF $387.50 PER ANNUM WAS IN ERROR AS IT INTENDED TO BID $387.50 PER MONTH.

B-158060, MAY 19, 1966

TO DAVID I. ABSE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 17, 1965, WITH ENCLOSURES, PROTESTING ON BEHALF OF WRECKERS, INC., AGAINST THE REJECTION OF WRECKERS' BID FOR LEASE OF CERTAIN GOVERNMENT PROPERTY UNDER INVITATION FOR BIDS NO. D-I11-496A, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA), UTILIZATION AND DISPOSAL SERVICE, REAL PROPERTY DIVISION, CHICAGO, ILLINOIS.

THE REAL ESTATE OFFERED FOR LEASE BY THE SUBJECT INVITATION IS A PORTION OF O-HARE INTERNATIONAL AIRPORT IN CHICAGO, AND CONSISTS OF APPROXIMATELY 20 ACRES OF LAND IMPROVED WITH TWO FRAME BUILDINGS. THE INVITATION CALLED FOR LEASING THE PROPERTY FOR THREE YEARS BEGINNING NOVEMBER 1, 1965, AND ENDING OCTOBER 31, 1968, WITH A PROVISION FOR TERMINATION BY EITHER PARTY ON OR AFTER OCTOBER 31, 1966, UPON GIVING 60 DAYS WRITTEN NOTICE. BIDS WERE OPENED AS SCHEDULED ON OCTOBER 1, 1965, AND WRECKERS' BID OF $7,644 PER ANNUM WAS HIGH. BY LETTER DATED OCTOBER 29, 1965, WRECKERS AND THE OTHER BIDDERS WERE ADVISED THAT SINCE NONE OF THE BIDS RECEIVED WERE ACCEPTABLE, ALL BIDS WERE REJECTED AND THE DEPOSITS SUBMITTED WITH THE BIDS WOULD BE RETURNED UNDER SEPARATE COVER.

BIDS SUBMITTED UNDER AN EARLIER OFFERING, JULY 30, 1965, WERE ALSO REJECTED FOR THE REASON THAT THEY WERE NOT CONSIDERED COMMENSURATE WITH THE FAIR MARKET VALUE OF THE PROPERTY. THE APPARENT HIGH BID UNDER THIS SOLICITATION WAS $3,000 PER ANNUM, ALTHOUGH WRECKERS CLAIMED THAT ITS BID OF $387.50 PER ANNUM WAS IN ERROR AS IT INTENDED TO BID $387.50 PER MONTH. SINCE IT WAS DECIDED TO REJECT ALL BIDS, IT WAS NOT NECESSARY TO RESOLVE THE ALLEGED MISTAKE IN BID QUESTION.

FROM YOUR LETTER TO OUR OFFICE, IT APPEARS THAT THE ONLY REASON OF WHICH YOU ARE AWARE FOR REJECTING WRECKERS' BID WAS THE INTENDED USE OF THE PROPERTY. AS INDICATED IN YOUR LETTER, IT IS ADMINISTRATIVELY REPORTED THAT WRECKERS WOULD USE THE LAND TO STORE VARIOUS SALVAGE MATERIALS RESULTING FROM ITS DEMOLITION AND DISMANTLING OF A NEARBY VERY LARGE WOODEN STRUCTURE UNDER A CONTRACT WITH THE CORPS OF ENGINEERS. JUSTIFICATION FOR THIS INTENDED USE YOU STATE THAT THE AREA WITHIN WHICH THE PROPERTY LIES IS ZONED INDUSTRIAL AND IS "SURROUNDED BY VARIED INDUSTRIAL AND COMMERCIAL ACTIVITIES, INCLUDING SEVERAL LUMBER YARDS AND BUILDING SUPPLY WAREHOUSES.' IN ADDITION, YOU POINT OUT THE ADVANTAGE TO EVERYONE USING THE AIRFIELD IF THE SALVAGE MATERIAL IS REMOVED FROM THE PROXIMITY OF THE AIRCRAFT APRON AND RAMP, THEREBY DIMINISHING INHERENT DANGERS SUCH AS FIRE. IT IS THEREFORE APPARENTLY YOUR POSITION THAT SINCE THE ONLY REASON ADVANCED FOR REJECTING WRECKERS' BID IS WITHOUT A SUFFICIENT BASIS, AWARD SHOULD BE MADE TO WRECKERS, INC.

THE BASIS FOR REJECTING ALL BIDS UNDER THE SUBJECT INVITATION APPEARS IN A MEMORANDUM DATED OCTOBER 26, 1965, FROM THE REGIONAL ADMINISTRATOR TO THE COMMISSIONER, UTILIZATION AND DISPOSAL SERVICE, RECOMMENDING SUCH ACTION, FROM WHICH WE QUOTE THE FOLLOWING:

"THE PROPOSED USE WILL UNDOUBTEDLY PRESENT AN UNSIGHTLY SCENE ALONG MANNHEIM ROAD WHICH IS A MAJOR FOUR LANE THOROUGHFARE. THE MAYOR'S OFFICE HAS BEEN CAREFULLY WATCHING THE RESULTS OF OUR SEALED BID OPENING AND WHEN THE BIDS WERE OPENED AND THE PROPOSED USE WAS KNOWN, THE MAYOR, THROUGH HIS COMMISSIONER, DEPARTMENT OF DEVELOPMENT AND PLANNING, STRONGLY OBJECTED TO SUCH USE OF THE PROPERTY AND STATED THAT IT WOULD VIOLATE THE CITY'S ZONING OF THIS AREA.

"IN VIEW OF THE CITY'S OBJECTION AND THE ALLEGED VIOLATION OF ZONING AS WELL AS THE PRESIDENT'S BEAUTIFICATION OF HIGHWAYS PROGRAM, WE BELIEVE THAT THE PROPERTY SHOULD NOT BE PUT TO THE USE CONTEMPLATED BY THE HIGH BIDDER. WE ALSO BELIEVE THAT THIS PROPERTY COULD COMMAND A HIGHER RENTAL AND THE BIDS SHOULD BE REJECTED AS BEING INADEQUATE.'

THESE CONCLUSIONS WERE CONCURRED IN BY THE COMMISSIONER AND THE DECISION TO REJECT ALL BIDS WAS THEREFORE APPROVED. WITH REGARD TO THE CONCLUSION THAT THE PROPERTY COULD COMMAND A HIGHER RENTAL THAN THAT OFFERED, IT IS REPORTED THAT THE APPRAISED VALUE OF THE PROPERTY IS APPROXIMATELY $600,000 AND A RENTAL OF SLIGHTLY OVER ONE PERCENT IS NOT CONSIDERED COMMENSURATE WITH THIS VALUATION. IT IS ALSO REPORTED THAT GSA REAL ESTATE OFFICERS ARE OF THE OPINION THAT NOT ENOUGH TIME HAD ELAPSED BETWEEN THE INITIAL OFFERING AND THE SUBJECT OFFERING TO GAIN THE ADVANTAGE OF POSSIBLY BETTER MARKET CONDITIONS AND MORE PUBLIC INTEREST IN RENTING THE PROPERTY. IT IS ALSO FELT THAT A BETTER RESPONSE WOULD BE OBTAINED IF THE PROPERTY IS OFFERED FOR A FIRM PERIOD OF TWO YEARS RATHER THAN THE ONE YEAR FIRM PERIOD UNDER THE SUBJECT OFFERING.

WHILE OUR OFFICE RECOGNIZES THAT THE REJECTION OF ALL BIDS AFTER OPENING, AND READVERTISING FOR BIDS ON THE SAME BASIS, IS A SERIOUS MATTER AND SHOULD BE DONE ONLY FOR COGENT REASONS, THE RESPONSIBILITY OF MAKING A DETERMINATION TO REJECT ALL BIDS AND READVERTISE IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION. 36 COMP. GEN. 364. IN THE ABSENCE OF A CLEAR SHOWING OF ABUSE OF THIS DISCRETIONARY AUTHORITY, OUR OFFICE MAY NOT PROPERLY OBJECT TO SUCH ACTION. IN THE PRESENT CASE, WE BELIEVE THAT THE ADMINISTRATIVELY REPORTED FACTS ARE ADEQUATE JUSTIFICATION FOR THE ACTION TAKEN, AND INASMUCH AS IT APPEARS THAT IF NEW BIDS FOR RENTAL OF THE PROPERTY ARE SOLICITED THE SOLICITATION WILL BE ON MATERIALLY DIFFERENT TERMS WE DO NOT FEEL THAT THE DISCLOSURE OF THE BIDS ON THE PRIOR SOLICITATION, WHICH WERE FOUND BY THE AGENCY TO BE INADEQUATE, WAS PARTICULARLY PREJUDICIAL TO ANY BIDDER.

SECTION 210 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED (40 U.S.C. 490) AUTHORIZES THE ADMINISTRATOR OF GENERAL SERVICES TO ENTER INTO LEASES OF FEDERAL BUILDING SITES UNTIL THEY ARE NEEDED FOR CONSTRUCTION PURPOSES "AT THEIR FAIR RENTAL VALUE.' SECTION 203 (E) OF THE SAME ACT (40 U.S.C. 484 (E) ( WHICH IS MADE APPLICABLE TO SUCH LEASING AUTHORITY, EXPRESSLY PROVIDES IN CONNECTION WITH PUBLIC ADVERTISING FOR BIDS "THAT ALL BIDS MAY BE REJECTED WHEN IT IS IN THE PUBLIC INTEREST TO DO SO," AND PARAGRAPH 8 OF THE INSTRUCTIONS TO BIDDERS INCLUDED IN THE SUBJECT IFB CONTAINED THIS RESERVATION. IN VIEW OF THESE PROVISIONS THERE CAN BE NO QUESTION AS TO THE RIGHT OF THE GOVERNMENT TO REJECT ANY BID WHICH IT CONSIDERS TO BE LESS THAN THE FAIR RENTAL VALUE. IN THIS CONNECTION IT SHOULD ALSO BE NOTED THAT BOTH OUR OFFICE AND THE COURTS HAVE HELD THAT A REQUEST FOR BIDS DOES NOT IMPORT ANY OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED. 17 COMP. GEN. 554; 26 ID., 49; PERKINS V. LUKENS STEEL CO., 310 U.S. 113; O-BRIEN V. CARNEY, 6 F.SUPP. 761; COLORADO PAVING CO. V. MURPHY, 78 F. 28.