B-158894, MAY 3, 1966, 45 COMP. GEN. 671

B-158894: May 3, 1966

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WAS PROPERLY REJECTED. 1966: FURTHER REFERENCE IS MADE TO A COPY OF YOUR TELEGRAM TO MR. - CASH BID FOR USED MACHINE ON PAGE 4 OF THE SCHEDULE APPEARED THE FOLLOWING NOTICES: IMPORTANT: THE "TRADE-IN" ALLOWANCE IS TO BE INDEPENDENT OF THE QUOTATIONS MADE ON THE NEW FRONT END LOADER. IF THE "TRADE-IN" ALLOWANCE IS ACCEPTED. THE AMOUNT QUOTED HEREFORE WILL BE DEDUCTED FROM THE PRICE QUOTED FOR THE NEW FRONT END LOADER. THE "TRADE-IN" ALLOWANCE WILL BE CONTINGENT UPON THE CONTRACTOR BEING AWARDED THE NEW MACHINE. IMPORTANT: CASH BID: BIDDERS ARE REQUESTED TO STATE THE AMOUNT OF CASH OFFERED FOR THE EQUIPMENT DESCRIBED ABOVE NOT CONTINGENT ON RECEIVING AWARD FOR NEW VEHICLE. OFFERS MADE ON CASH BID BASIS ARE INDEPENDENT OF THE TRADE-IN OFFERS.

B-158894, MAY 3, 1966, 45 COMP. GEN. 671

EQUIPMENT - REPLACEMENT - TRADE-IN-ALLOWANCES A BID THAT FAILED TO COMPLY WITH THE INVITATION REQUIREMENTS TO INCLUDE A TRADE-IN-ALLOWANCE FOR THE OLD EQUIPMENT BEING REPLACED BY THE NEW EQUIPMENT TO BE PURCHASED, OR TO SUBMIT A CASH BID, INDEPENDENT OF THE TRADE-IN-OFFER, ON THE USED EQUIPMENT, WHERE ACCEPTANCE OF A GUARANTEED PRICE MADE AFTER BID OPENING FOR THE USED EQUIPMENT IF PLACED ON SALE WOULD MAKE THE BID THE LOWEST RECEIVED, WAS PROPERLY REJECTED, NO CASH BID HAVING BEEN RECEIVED, THE USE OF THE TRADE-IN METHOD FOR THE DISPOSAL OF USED PROPERTY, PURSUANT TO REGULATIONS ISSUED UNDER SECTION 201 (C) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, OBTAINS A GREATER NET RETURN, AND ON THE BASIS OF THE GUARANTEE OF A FIXED AMOUNT UPON SALE OF THE EQUIPMENT, THE BID MAY NOT BE REEVALUATED AFTER BID OPENING, THE GUARANTEE CONSTITUTING AN OFFER TENDERED AFTER BID OPENING, ACCEPTANCE IN EFFECT WOULD PERMIT THE SUBMISSION OF A SECOND BID AFTER DISCLOSURE OF ALL BID PRICES CONTRARY TO THE WELL-ESTABLISHED PRINCIPLES GOVERNING BID PROCEDURES.

TO CONSTRUCTION MACHINERY COMPANY, DIV. OF LEONARD MOTOR CO., INC., MAY 3, 1966:

FURTHER REFERENCE IS MADE TO A COPY OF YOUR TELEGRAM TO MR. ROBERT BONE, NATIONAL PARK SERVICE, REGIONAL OFFICE, OLD SANTA FE TRAIL, SANTA FE, NEW MEXICO, PROTESTING THE PROPOSED AWARD OF A CONTRACT TO A COMPANY OTHER THAN YOURSELF UNDER DEPARTMENT OF THE INTERIOR INVITATION FOR BIDS NO. SWR 33-26, ISSUED BY THE NATIONAL PARK SERVICE, SANTA FE, NEW MEXICO.

THE INVITATION REQUESTED BIDS--- TO BE OPENED MARCH 24, 1966--- COVERING THREE ITEMS AS FOLLOWS :

ITEM NO. 1--- FRONT-END LOADER WITH BUCKET

ITEM NO. 2--- TRADE-IN ALLOWANCE FOR USED MACHINE

ITEM NO. 3--- CASH BID FOR USED MACHINE

ON PAGE 4 OF THE SCHEDULE APPEARED THE FOLLOWING NOTICES:

IMPORTANT:

THE "TRADE-IN" ALLOWANCE IS TO BE INDEPENDENT OF THE QUOTATIONS MADE ON THE NEW FRONT END LOADER, AND IF THE "TRADE-IN" ALLOWANCE IS ACCEPTED, THE AMOUNT QUOTED HEREFORE WILL BE DEDUCTED FROM THE PRICE QUOTED FOR THE NEW FRONT END LOADER. THE "TRADE-IN" ALLOWANCE WILL BE CONTINGENT UPON THE CONTRACTOR BEING AWARDED THE NEW MACHINE.

IMPORTANT:

CASH BID: BIDDERS ARE REQUESTED TO STATE THE AMOUNT OF CASH OFFERED FOR THE EQUIPMENT DESCRIBED ABOVE NOT CONTINGENT ON RECEIVING AWARD FOR NEW VEHICLE. OFFERS MADE ON CASH BID BASIS ARE INDEPENDENT OF THE TRADE-IN OFFERS.

THE FOLLOWING SIX BIDS WERE RECEIVED IN RESPONSE TO THE INVITATION:

CHART

TRADE-IN

FRONT-END ALLOWANCE

BIDDERS LOADER FOR OLD UNIT NET BID

------- --------- ------------ ------- CONTRACTORS' EQUIP. $14,999.00 $1,000.00 $13,999.00 WESTERN STATES MACH. (**) 16,000.00 2,500.00

13,500.00 CLARK EQUIP. CO. 17,787.60 NONE 17,787.60 PACIFIC TRENCHER (*) 14,860.68 2,500.00 12,360.68 CONSTR. MACH. CO. 13,955.05 NONE 13,955.05 N.C. RIBBLE CO. 21,360.00 2,061.00

19,299.00

(*) UNACCEPTABLE--- BID NOT RESPONSIVE TO INVITATION.

(**) LOWEST NET BID.

IT IS REPORTED THAT SEVERAL DAYS BEFORE THE DATE SET FOR OPENING OF BIDS A REPRESENTATIVE OF YOUR COMPANY CALLED THE PURCHASING OFFICE AND INQUIRED WHETHER OR NOT A TRADE-IN ADJUSTMENT OR A CASH BID FOR THE OLD EQUIPMENT BEING REPLACED WAS MANDATORY AND THAT YOUR REPRESENTATIVE WAS INFORMED THAT IT WAS NOT MANDATORY.

IN A TELEGRAM DATED MARCH 25, 1966, MR. HAMPTON OF YOUR FIRM ADVISED THE PURCHASING OFFICE THAT AFTER A TELEPHONE CONVERSATION WITH MR. BONE OF THAT OFFICE IT WAS HIS UNDERSTANDING THAT YOUR COMPANY COULD SUBMIT A BID ON THIS PROCUREMENT WITHOUT OFFERING A TRADE-IN ALLOWANCE FOR THE USED EQUIPMENT. MR. HAMPTON ALSO ADVISED THE PURCHASING OFFICE THAT IF THE NATIONAL PARK SERVICE WOULD PLACE THE USED EQUIPMENT UP FOR SALE YOUR COMPANY WOULD GUARANTEE THAT THE SERVICE WOULD RECEIVE A PRICE OF AT LEAST $1,500 FOR THE MACHINE. ACCEPTANCE BY THE NATIONAL PARK SERVICE OF YOUR GUARANTEE OFFER WOULD HAVE THE EFFECT OF MAKING YOUR BID THE LOWEST NET BID RECEIVED ON THE EQUIPMENT. IT IS REPORTED THAT THE PRESIDENT OF YOUR COMPANY HAS ALLEGED THAT HE HAD INTERPRETED THE SPECIFICATIONS TO MEAN THAT ANY OFFER FOR TRADE-IN WOULD HAVE NO EFFECT UPON AN AWARD.

IT APPEARS THAT YOUR MR. HAMPTON WAS MISINFORMED OR MISUNDERSTOOD BY THE PROCUREMENT OFFICIALS OF THE NATIONAL PARK SERVICE. WE BELIEVE THAT IT WAS THE LATTER. ON PAGE 5 OF THE INVITATION FOR BIDS APPEARS THE FOLLOWING NOTE:

THE PROPERTY IS BEING OFFERED IN ACCORDANCE WITH THE EXCHANGE/SALE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE ACT OF 1949 AS AMENDED.

SECTION 201 (C) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 1949, AS AMENDED, 40 U.S.C. 481 (C), PROVIDES THAT ANY EXECUTIVE AGENCY IN ACQUIRING PERSONAL PROPERTY MAY UNDER REGULATIONS PRESCRIBED BY THE ADMINISTRATOR OF GENERAL SERVICES EXCHANGE OR SELL SIMILAR ITEMS AND APPLY THE EXCHANGE ALLOWANCE OR PROCEEDS IN PAYMENT FOR THE NEW ITEM. PURSUANT TO THIS AUTHORITY THE ADMINISTRATOR HAS PROMULGATED REGULATIONS GOVERNING THE EXCHANGE OR SALE OF PERSONAL PROPERTY FOR REPLACEMENT PURPOSES. GENERAL SERVICES ADMINISTRATION FEDERAL PROPERTY MANAGEMENT REGULATIONS, AMENDMENT NO. H-3, FEBRUARY 1965, SUBPART 101 45.3 SALE OF PERSONAL PROPERTY, PROVIDES AS FOLLOWS:

SEC. 101-45.305 EXCHANGE OR SALE OF NONEXCESS PERSONAL PROPERTY FOR REPLACEMENT PURPOSES.

THIS SECTION PRESCRIBES POLICIES AND METHODS GOVERNING THE SALE OF PROPERTY REFERRED TO IN SECTION 201 (C) OF THE ACT. SALE OF PERSONAL PROPERTY IN CONNECTION WITH THE APPLICATION OF THE PROCEEDS OF SALE IN THE ACQUISITION OF SIMILAR PERSONAL PROPERTY FOR REPLACEMENT PURPOSES SHALL BE MADE ONLY AFTER COMPLIANCE WITH THE PROVISIONS OF SUBPART 101 43.2 COVERING THE UTILIZATION REQUIREMENTS TO BE MET PRIOR TO OUTRIGHT SALE.

SEC. 101-45.305-1SOLICITATION OF BIDS.

THE OBJECTIVE SHALL BE TO OBTAIN THE MAXIMUM RETURN TO THE GOVERNMENT FROM PROPERTY SOLD. THEREFORE, BIDS SHALL BE SOLICITED EXCEPT WHEN THE ITEMS SOUGHT TO BE SOLD MAY BE DISPOSED OF WITHOUT SOLICITATION OF BIDS UNDER APPLICABLE LAWS AND REGULATIONS.

SEC. 101-45.305-2 TERMS AND CONDITIONS OF SALE.

THE TERMS AND CONDITIONS OF SALE AUTHORIZED IN SEC. 101-45.304, AS WELL AS METHODS OF SALE AND FORMS PRESCRIBED, SHALL ALSO BE USED IN THE SALE OF PROPERTY BEING REPLACED. SUCH PROPERTY WILL BE REPORTED TO THE APPROPRIATE GSA REGIONAL OFFICE FOR SALE UNLESS EXPERIENCE INDICATES A GREATER NET RETURN CAN BE OBTAINED THROUGH TRADE-IN.

IT IS CLEAR FROM THE FOREGOING THAT THE OBJECTIVE IS TO OBTAIN THE MAXIMUM RETURN TO THE GOVERNMENT FROM THE PROPERTY SOLD AND THAT WHERE EXPERIENCE INDICATES A GREATER NET RETURN CAN BE OBTAINED THROUGH TRADE-IN SUCH METHOD OF DISPOSAL OF THE PROPERTY SHALL BE USED. IN THAT CONNECTION, IT APPEARS FROM THE ABSTRACT OF BIDS THAT THE INCLUSION OF A PROVISION FOR A TRADE-IN ALLOWANCE IN THE SUBJECT INVITATION HELPED THE GOVERNMENT TO ATTAIN A GREATER NET RETURN FOR THE PROPERTY SOLD SINCE NO CASH BIDS FOR THE OLD EQUIPMENT WERE RECEIVED FROM ANY OF THE BIDDERS UNDER THIS INVITATION. IT HAS BEEN OUR CONSISTENT POSITION, ESTABLISHED WELL BEFORE THE ENACTMENT OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, THAT IN ORDER TO PROTECT THE BEST INTERESTS OF THE GOVERNMENT AN AGENCY, WHEN DISPOSING OF OLD EQUIPMENT AT THE SAME TIME NEW EQUIPMENT IS PURCHASED UNDER COMPETITIVE BIDDING, MUST SOLICIT BOTH EXCHANGE AND CASH BIDS, AND MUST MAKE AWARD ON THE BASIS OF THE LOWEST NET COST TO THE GOVERNMENT REGARDLESS OF THE EFFECT ON A PARTICULAR APPROPRIATION OR FUND. 21 COMP. GEN. 316; ID. 294; 18 ID. 227.

YOU REQUEST THAT THE GOVERNMENT REEVALUATE YOUR BID AND TAKE INTO CONSIDERATION YOUR WILLINGNESS TO GUARANTEE THAT THE GOVERNMENT WILL RECEIVE AT LEAST $1,500 FOR THE USED EQUIPMENT UPON THE SALE THEREOF. THIS, OF COURSE, CONSTITUTES AN OFFER, OTHER THAN AS SET FORTH IN YOUR BID, TENDERED AFTER BID OPENING. TO PERMIT A BIDDER TO LOWER HIS BID PRICE AFTER BID OPENING WOULD, IN EFFECT, PERMIT THE SUBMISSION OF A SECOND BID AFTER DISCLOSURE OF ALL BID PRICES CONTRARY TO WELL ESTABLISHED PRINCIPLES GOVERNING BID PROCEDURES. 34 COMP. GEN. 82; 35 ID. 33; 41 ID. 203; B-149165, DATED SEPTEMBER 4, 1962. THEREFORE, SINCE YOUR OFFER OF A GUARANTEE IS TANTAMOUNT TO THE SUBMISSION OF A NEW BID AFTER BID OPENING, IT IS NOT PROPER FOR ACCEPTANCE.