B-158924, OCT. 5, 1966

B-158924: Oct 5, 1966

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ESQUIRE: REFERENCE IS MADE TO YOUR LETTERS OF APRIL 4 AND MAY 27. IT IS ADMINISTRATIVELY REPORTED THAT THE KAYSINGER BLUFF DAM IS A MULTIPURPOSE PROJECT BEING BUILT BY THE KANSAS CITY DISTRICT. AN OVERLOOK AND PICNIC AREA IS BEING CONSTRUCTED AT THE NORTHEAST END OF THE DAM. THE ADMINISTRATIVE FACILITIES AND PROJECT OPERATIONS ARE BEING CONSTRUCTED AT THE SOUTHWEST END OF THE DAM. ELECTRICAL SERVICE IS NEEDED ON BOTH SIDES OF THE RIVER. IS AUTHORIZED BY THE STATE PUBLIC SERVICE COMMISSION TO SELL ELECTRICAL SERVICE TO AREA ON BOTH SIDES OF THE OSAGE RIVER IN THAT PART OF MISSOURI. IT IS FURTHER REPORTED THAT THE MISSOURI PUBLIC SERVICE COMPANY. THIS AND OTHER TELEPHONE CONTACTS THROUGH NOVEMBER 1965 WERE CONFIRMED BY LETTERS FROM THE ELECTRIC COMPANY.

B-158924, OCT. 5, 1966

TO GREGORY C. STOCKARD, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTERS OF APRIL 4 AND MAY 27, 1966, IN BEHALF OF THE SOUTHWEST ELECTRIC COOPERATIVE, BOLIVER, MISSOURI, PROTESTING THE AWARD OF CONTRACT NO. DA-23-028-CIVENG-66-862 TO THE MISSOURI PUBLIC SERVICE COMPANY FOR FURNISHING ELECTRIC SERVICE AT THE SITE FOR KAYSINGER BLUFF DAM AND RESERVOIR, OSAGE RIVER, MISSOURI.

IT IS ADMINISTRATIVELY REPORTED THAT THE KAYSINGER BLUFF DAM IS A MULTIPURPOSE PROJECT BEING BUILT BY THE KANSAS CITY DISTRICT, CORPS OF ENGINEERS, ON THE OSAGE RIVER NEAR WARSAW, MISSOURI. AN OVERLOOK AND PICNIC AREA IS BEING CONSTRUCTED AT THE NORTHEAST END OF THE DAM, AND THE ADMINISTRATIVE FACILITIES AND PROJECT OPERATIONS ARE BEING CONSTRUCTED AT THE SOUTHWEST END OF THE DAM. ELECTRICAL SERVICE IS NEEDED ON BOTH SIDES OF THE RIVER--- AT THE OVERLOOK-PICNIC AREA AS WELL AS THE ADMINISTRATION- OPERATIONS AREA. THREE FIRMS SELL ELECTRIC POWER IN THE VICINITY OF THE DAM: (1) THE MISSOURI PUBLIC SERVICE COMPANY, WITH AN OFFICE IN NEARBY WARSAW, IS AUTHORIZED BY THE STATE PUBLIC SERVICE COMMISSION TO SELL ELECTRICAL SERVICE TO AREA ON BOTH SIDES OF THE OSAGE RIVER IN THAT PART OF MISSOURI; (2) THE CENTRAL MISSOURI ELECTRIC COOPERATIVE SERVES RURAL AREAS WHICH INCLUDE THE OVERLOOK-PICNIC AREAS; AND (3) THE SOUTHWEST ELECTRIC COOPERATIVE SERVES RURAL AREAS WHICH INCLUDE THE SITE OF THE ADMINISTRATIVE FACILITIES AND PROJECT OPERATIONS AREA. THE STATE PUBLIC SERVICE COMMISSION HAS NO JURISDICTION OVER EITHER OF THE ELECTRIC COOPERATIVES, AND THE COOPERATIVES DO NOT COMPETE WITH EACH OTHER.

IT IS FURTHER REPORTED THAT THE MISSOURI PUBLIC SERVICE COMPANY, SEEKING ADDITIONAL BUSINESS, FIRST CONTACTED THE ENGINEERING DIVISION OF THE DISTRICT ENGINEER'S OFFICE ON JULY 23, 1965, REGARDING THE POSSIBLE USE BY THE GOVERNMENT OF ELECTRICAL SERVICE AT THE KAYSINGER PROJECT. THIS AND OTHER TELEPHONE CONTACTS THROUGH NOVEMBER 1965 WERE CONFIRMED BY LETTERS FROM THE ELECTRIC COMPANY. IN DECEMBER 1965 NEGOTIATIONS WERE CARRIED ON WITH THE MISSOURI PUBLIC SERVICE COMPANY ON THE ASSUMPTION THAT THAT COMPANY WAS THE ONLY AVAILABLE SOURCE IN THE AREA OF THREE-PHASE POWER, WHICH WAS THE TYPE OF POWER REQUIRED FOR THE FACILITIES TO BE SERVED. WAS BELIEVED BY THE CONTRACTING OFFICER THAT THE ELECTRIC COOPERATIVES COULD NOT FURNISH THREE-PHASE POWER.

UNAWARE THAT MISSOURI PUBLIC SERVICE COMPANY WAS NOT THE SOLE SOURCE OF ELECTRIC POWER, PREDICATED ON A BELIEF THAT THE PUBLIC SERVICE COMMISSION OF MISSOURI IN CERTIFYING THE AREA TO MISSOURI PUBLIC SERVICE COMPANY THEREBY EXCLUDED THE ELECTRICAL COOPERATIVES, THE CONTRACTING OFFICER ON JANUARY 7, 1966, MADE THE FOLLOWING DETERMINATION AND FINDINGS:

"DETERMINATIONS AND FINDINGS AUTHORITY TO NEGOTIATE

AN INDIVIDUAL CONTRACT

"1. I HEREBY FIND THAT:

"A. THE U.S. ARMY ENGINEER DISTRICT, KANSAS CITY, PROPOSES TO PROCURE, BY NEGOTIATION, THE FURNISHING OF ELECTRIC SERVICE TO THE KAYSINGER BLUFF RESERVOIR IN BENTON COUNTY, MISSOURI.

"B. THE ESTIMATED ANNUAL COST OF THE PROPOSED PROCUREMENT IS $7,000.00.

"C. PROCUREMENT BY NEGOTIATION OF THE ABOVE-DESCRIBED SERVICES IS JUSTIFIED BECAUSE THE PROCUREMENT IS FOR ELECTRIC SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION BY FORMAL ADVERTISING.

"D. USE OF FORMAL ADVERTISING FOR PROCUREMENT OF THE ABOVE DESCRIBED SERVICES IS IMPRACTICABLE BECAUSE THE ELECTRIC POWER CAN BE OBTAINED FROM ONLY ONE FIRM (SOLE SOURCE OF SUPPLY.)

"2. UPON THE BASIS OF THE FINDINGS SET FORTH ABOVE, I HEREBY DETERMINE THAT SUCH SERVICES MAY BE PROCURED BY NEGOTIATION PURSUANT TO 10 U.S.C. 2304 (A) (10) AND PARAGRAPH 3-210.2 (I) AND 3-210.2 (V) OF THE ARMED SERVICES PROCUREMENT REGULATIONS.'

THE CONTRACT WITH THE MISSOURI PUBLIC SERVICE COMPANY WAS APPROVED ON JANUARY 14, 1966. IN ORDER TO FURNISH THE ELECTRICAL SERVICE, THE MISSOURI PUBLIC SERVICE COMPANY UNDERTOOK TO BUILD OR EXTEND TWO SERVICE LINES.

A REPRESENTATIVE OF THE CENTRAL MISSOURI ELECTRIC COOPERATIVE, NOTING THAT MISSOURI PUBLIC SERVICE COMPANY WAS BUILDING A LINE FROM WARSAW TOWARD THE ADMINISTRATIVE AREA OF THE DAM SITE (IN THE SOUTHWEST ELECTRIC COOPERATIVE'S SERVICE AREA), INQUIRED ABOUT MISSOURI PUBLIC SERVICE COMPANY'S ACTIVITIES, AND WAS ADVISED THAT THE LINE UNDER CONSTRUCTION WAS TO SERVE THE KAYSINGER BLUFF DAM AND RESERVOIR. THEREUPON THE COOPERATIVE REPRESENTATIVE ORALLY PROTESTED THE MANNER OF THE PROCUREMENT. IN VIEW OF THE PROTEST, A FURTHER INQUIRY WAS MADE AS TO POSSIBLE SOURCES OF POWER, AND IT WAS LEARNED THAT THE MISSOURI PUBLIC SERVICE COMPANY WAS NOT THE ONLY AVAILABLE SOURCE OF REQUIRED POWER. UPON REALIZATION OF THE AVAILABILITY OF THREE-PHASE SERVICE FROM THE OTHER COMPANIES, THE DISTRICT ENGINEER DECIDED TO LEARN WHAT THE SERVICE WOULD COST FROM THE OTHER COMPANIES AND IN ADDITION, ADVISED THE MISSOURI PUBLIC SERVICE COMPANY THAT IT COULD SUBMIT NEW RATES AND SUGGESTED IT SUSPEND CONSTRUCTION WORK. SOUTHWEST ELECTRIC COOPERATIVE SUBMITTED A PROPOSAL FOR THE ADMINISTRATIVE AREA AND THE CENTRAL MISSOURI COOPERATIVE SUBMITTED ITS PROPOSAL FOR THE OVERLOOK AREA. MISSOURI PUBLIC SERVICE COMPANY DECLINED TO REVISE ITS RATES, STATING THAT ITS RATES WERE POSTED WITH THE STATE PUBLIC SERVICE COMMISSION, AND WERE SUBJECT TO COMMISSION REGULATIONS.

IT IS YOUR CONTENTION THAT THE CORPS OF ENGINEERS KNEW OF THE ELECTRIC FACILITIES OF SOUTHWEST ELECTRIC COOPERATIVE AND THAT AT THE TIME WAS TAKING SERVICE FROM THE COOPERATIVE. YOU ALSO STATE THAT THE CORPS OF ENGINEERS ASSURED SOUTHWEST ELECTRIC COOPERATIVE THAT EVEN THOUGH THE CONTRACT HAD BEEN LET TO MISSOURI PUBLIC SERVICE COMPANY THAT THE FINAL ACTION ON THE CONTRACT WOULD BE DETERMINED BY AND THE CONTRACT LET TO THE COMPANY SUBMITTING THE LOWEST PROPOSAL FOR SERVICE.

SECTIONS 2304, 2310, AND 2311 OF TITLE 10, U.S.C. PROVIDE IN PERTINENT PART AS FOLLOWS:

"SEC. 2304. PURCHASES AND CONTRACTS: FORMAL ADVERTISING; EXCEPTIONS.

"/A) PURCHASES OF AND CONTRACTS FOR PROPERTY OR SERVICES COVERED BY THIS CHAPTER SHALL BE MADE BY FORMAL ADVERTISING IN ALL CASES IN WHICH THE USE OF SUCH METHOD IS FEASIBLE AND PRACTICABLE UNDER THE EXISTING CONDITIONS AND CIRCUMSTANCES. IF USE OF SUCH METHOD IS NOT FEASIBLE AND PRACTICABLE, THE HEAD OF AN AGENCY, SUBJECT TO THE REQUIREMENTS FOR DETERMINATIONS AND FINDINGS IN SECTION 2310, MAY NEGOTIATE SUCH A PURCHASE OR CONTRACT, IF---

"/10) THE PURCHASE OR CONTRACT IS FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION; * * *.'

"SEC. 2310. DETERMINATIONS AND DECISIONS.

"/B) * * * A DECISION TO NEGOTIATE CONTRACTS UNDER CLAUSES * * * (10), * * * OF SECTION 2304 (A), SHALL BE BASED ON A WRITTEN FINDING BY THE PERSON MAKING THE DETERMINATION OR DECISION, WHICH FINDING SHALL SET OUT FACTS AND CIRCUMSTANCES THAT * * * (4) CLEARLY AND CONVINCINGLY ESTABLISH WITH RESPECT TO THE USE OF CLAUSES * * * (10), * * * THAT FORMAL ADVERTISING WOULD NOT HAVE BEEN FEASIBLE AND PRACTICABLE. SUCH A FINDING IS FINAL * *

"SEC. 2311. DELEGATION.

"THE HEAD OF AN AGENCY MAY DELEGATE, SUBJECT TO HIS DISCRETION, TO ANY OTHER OFFICER OR OFFICIAL OF THAT AGENCY, ANY POWER UNDER THIS CHAPTER EXCEPT THE POWER TO MAKE DETERMINATIONS AND DECISIONS UNDER CLAUSES (11) - (16) OF SECTION 2304 (A) OF THIS TITLE. * * *.'

PARAGRAPH 3-210, 3-303, AND 3-306 OF THE ARMED SERVICES PROCUREMENT REGULATION, WHICH HAVE THE FORCE AND EFFECT OF LAW, PROVIDE IN PERTINENT PART, AS FOLLOWS:

"3-210 SUPPLIES OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO SECURE COMPETITION BY FORMAL ADVERTISING.

"3-210.1 AUTHORITY. PURSUANT TO 10 U.S.C. 2304 (A) (10), PURCHASES AND CONTRACTS MAY BE NEGOTIATED IF---

"FOR PROPERTY OR SERVICES FOR WHICH IT IS IMPRACTICABLE TO OBTAIN COMPETITION.'

"3-210.2 APPLICATION. THE FOLLOWING ARE ILLUSTRATIVE OF CIRCUMSTANCES WITH RESPECT TO WHICH THE AUTHORITY OF THIS PARAGRAPH 3 210 MAY BE USED:

"/I) WHEN SUPPLIES OR SERVICE CAN BE OBTAINED FROM ONLY ONE PERSON OR FIRM ("SOLE SOURCE OF SUPPLY");

"/V) WHEN THE CONTEMPLATED PROCUREMENT IS FOR ELECTRIC POWER OR ENERGY, GAS (NATURAL OR MANUFACTURED), WATER, OR OTHER UTILITY SERVICES * * *.

"3-210.3 LIMITATION. * * * EVERY CONTRACT THAT IS NEGOTIATED UNDER THE AUTHORITY OF THIS PARAGRAPH 3-210 SHALL BE ACCOMPANIED WITH A DETERMINATION AND FINDINGS JUSTIFYING ITS USE, SIGNED BY THE CONTRACTING OFFICER AND PREPARED IN ACCORDANCE WITH THE REQUIREMENTS OF PART 3 OF THIS SECTION III.'

"3-303 DETERMINATIONS AND FINDINGS BELOW THE SECRETARIAL LEVEL.

"/A) DETERMINATIONS, AND FINDINGS IN SUPPORT THEREOF, NOT REQUIRED TO BE MADE BY HIGHER AUTHORITY * * *MAY BE MADE WITH RESPECT TO INDIVIDUAL PURCHASES OR CONTRACTS BY THE HEAD OF A PROCURING ACTIVITY SIGNING AS A CHIEF OFFICER RESPONSIBLE FOR PROCUREMENT. * * *.'

"3-306 PROCEDURE WITH RESPECT TO DETERMINATIONS AND FINDINGS.

"/A) DETERMINATIONS AND FINDINGS FOR AUTHORITY TO NEGOTIATE REQUIRED BY 3 -202, 3-207, 3-208, AND 3-210 THROUGH 3-216 SHALL BE SIGNED BY THE APPROPRIATE OFFICIAL PRIOR TO ISSUANCE OF A REQUEST FOR PROPOSALS OR QUOTATIONS. * * *.'

THE JUSTIFICATION ADVANCED BY THE CORPS OF ENGINEERS FOR NEGOTIATION--- THAT IT WAS IMPRACTICABLE TO OBTAIN COMPETITION--- WAS BASED UPON THE TWO FACTUAL SITUATIONS CITED IN THE DETERMINATION AND FINDINGS AS BEING SET OUT IN ASPR 3-210.2 (I) AND (V). IT IS THE PRIMARY RESPONSIBILITY OF THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT TO DETERMINE THE EXISTENCE OF FACTS UPON WHICH ADMINISTRATIVE ACTION IS BASED. UNLESS SUCH DETERMINATION IS ARBITRARY OR CAPRICIOUS, OR LACKS A REASONABLE BASIS, WE MAY NOT PROPERLY SUBSTITUTE OUR JUDGMENT FOR THAT OF THE ADMINISTRATIVE OFFICERS. IN THE CIRCUMSTANCES HERE REPORTED, NEGOTIATION WAS CONDUCTED ONLY WITH MISSOURI PUBLIC SERVICE COMPANY BECAUSE NO OTHER SOURCE OF SUPPLY OF THREE-PHASE POWER WAS KNOWN TO THE CONTRACTING OFFICER AT THE TIME OF NEGOTIATION. ALTHOUGH THE INFORMATION RELIED ON WAS NOT ENTIRELY ACCURATE, AND THE ASSUMPTIONS MADE WERE FAULTY, WE CANNOT CONCLUDE THAT THE CONTRACTING OFFICER DID NOT ACT IN GOOD FAITH. IT IS NOT ALLEGED NOR IS THERE ANY INDICATION THAT THE CONTRACTING OFFICER ACTED IN AN ARBITRARY OR CAPRICIOUS MANNER. THEREFORE, WE SEE NO LEGAL BASIS UPON WHICH WE MAY PROPERLY OBJECT TO THE ADMINISTRATIVE DETERMINATION IN THIS MATTER.

ACCORDINGLY, YOUR PROTEST MUST BE DENIED.

IN YOUR LETTER OF AUGUST 29, 1966, YOU REQUEST A COPY OF THE COMMENTS OF THE MISSOURI PUBLIC SERVICE COMPANY CONCERNING THE MATTER IN THE BELIEF THAT THAT COMPANY MAY HAVE STATED THAT THE SOUTHWEST MISSOURI COOPERATIVE DID NOT HAVE THREE-PHASE SERVICE OR THAT ITS LINES DID NOT HAVE SUFFICIENT CAPACITY. WE HAVE ENCLOSED HEREWITH A COPY OF THE MISSOURI PUBLIC SERVICE COMPANY'S LETTER OF JULY 12, 1966. AS YOU MAY OBSERVE, OUR ABOVE DECISION IS NOT PREDICATED ON ANY OF THE ALLEGATIONS MADE BY THE MISSOURI PUBLIC SERVICE COMPANY. YOU MAY ALSO BE ADVISED THAT ALTHOUGH THE STATEMENTS MADE WERE EVALUATED IN OUR CONSIDERATION OF THE MATTER, THEY WERE ADJUDGED IN THE LIGHT OF YOUR STATEMENTS, AND WERE NOT DECISIVE OF THE CONCLUSION REACHED.