B-159756, OCT. 27, 1966

B-159756: Oct 27, 1966

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THE SOLICITATION WAS ISSUED BECAUSE THE BUREAU OF RECLAMATION DETERMINED THAT THE SPACE PRESENTLY OCCUPIED DID NOT SATISFACTORILY MEET THE MINIMUM NEEDS OF THE GOVERNMENT. THE FIRST NATIONAL BANK OF PUEBLO SUBMITTED THE NEXT LOWEST OFFER OF $3.69 PER SQUARE FOOT WHICH WAS SUBSEQUENTLY REDUCED TO $3.65 PER SQUARE FOOT. GS-08B- 3863 RESULTED FROM THIS IFB AND WAS. A SUB-LEASE WITH HUNTER BROTHERS WHO WERE LESSEES OF THE CLEVENGER BUILDING IN PUEBLO. THE LEASE WAS FOR THE ENTIRE SECOND FLOOR OF THE BUILDING AND. SEVERAL DEFICIENCIES WERE NOTED IN THE LEASED PREMISES WHICH RESULTED IN THE TERMINATION OF THE AFOREMENTIONED LEASE AS OF AUGUST 31. STATED THE REASONS FOR THE TERMINATION AS FOLLOWS: "AS YOU ARE AWARE.

B-159756, OCT. 27, 1966

TO BELLINGER, FARICY AND TURSI, ATTORNEYS AT LAW:

WE REFER AGAIN TO YOUR LETTER DATED JULY 20, 1966, WITH ENCLOSURES, PROTESTING ON BEHALF OF YOUR CLIENT, HUNTER BROTHERS, AGAINST THE TERMINATION OF THEIR LEASE AND THE SUBSEQUENT AWARD OF A LEASE TO THE FIRST NATIONAL BANK OF PUEBLO BY THE GENERAL SERVICES ADMINISTRATION.

SOLICITATION FOR OFFERS NO. 66-36, DATED APRIL 26, 1966, REQUESTED OFFERS FOR THE LEASING TO THE GOVERNMENT OF 9,260 NET USABLE SQUARE FEET OF OFFICE, STORAGE, AND RELATED SPACE, FOR USE BY THE BUREAU OF RECLAMATION. THE SOLICITATION WAS ISSUED BECAUSE THE BUREAU OF RECLAMATION DETERMINED THAT THE SPACE PRESENTLY OCCUPIED DID NOT SATISFACTORILY MEET THE MINIMUM NEEDS OF THE GOVERNMENT. THREE FIRMS SUBMITTED OFFERS IN RESPONSE TO THE SOLICITATION, WITH HUNTER BROTHERS SUBMITTING THE LOWEST OFFER OF $3.50 PER SQUARE FOOT; THE FIRST NATIONAL BANK OF PUEBLO SUBMITTED THE NEXT LOWEST OFFER OF $3.69 PER SQUARE FOOT WHICH WAS SUBSEQUENTLY REDUCED TO $3.65 PER SQUARE FOOT.

IN DECEMBER 1962, THE GSA HAD ISSUED IFB NO. 53-3-48, REQUESTING BIDS ON APPROXIMATELY 10,000 NET USABLE SQUARE FEET OF OFFICE SPACE IN PUEBLO, COLORADO, FOR OCCUPANCY BY THE BUREAU OF RECLAMATION. LEASE NO. GS-08B- 3863 RESULTED FROM THIS IFB AND WAS, ACTUALLY, A SUB-LEASE WITH HUNTER BROTHERS WHO WERE LESSEES OF THE CLEVENGER BUILDING IN PUEBLO. THE LEASE WAS FOR THE ENTIRE SECOND FLOOR OF THE BUILDING AND,AS SUPPLEMENTED, EXTENDED OVER A FIRM TWO-YEAR PERIOD BEGINNING ON MAY 1, 1963, AND ENDING ON APRIL 30, 1965, WITH AN OPTION FOR YEARLY RENEWALS NOT TO EXTEND BEYOND APRIL 30, 1970. DURING THE TERM OF THE LEASE, ACCORDING TO THE BUREAU OF RECLAMATION, SEVERAL DEFICIENCIES WERE NOTED IN THE LEASED PREMISES WHICH RESULTED IN THE TERMINATION OF THE AFOREMENTIONED LEASE AS OF AUGUST 31, 1966. THE NOTICE OF TERMINATION, DATED JULY 1, 1966, STATED THE REASONS FOR THE TERMINATION AS FOLLOWS:

"AS YOU ARE AWARE, THE BUREAU OF RECLAMATION HAS NOT BEEN SATISFIED WITH THE OFFICE SPACE PROVIDED IN THE CLEVENGER BUILDING UNDER THE TERMS OF OUR LEASE NO. GS-08B-3863 AND REPEATEDLY HAS REQUESTED THAT EITHER THE SPACE THEY OCCUPY BE BROUGHT UP TO THE CURRENT GENERAL SERVICES ADMINISTRATION STANDARDS FOR OFFICE SPACE OR THAT THEY BE RELOCATED TO MORE SUITABLE SPACE * * *.'

IT IS HUNTER BROTHERS' CONTENTION THAT THE ACTION OF THE GSA IN TERMINATING THEIR LEASE AND AWARDING THE NEW LEASE TO THE FIRST NATIONAL BANK OF PUEBLO WAS ARBITRARY AND CAPRICIOUS IN THAT HUNTER BROTHERS SUBMITTED THE LOWEST OFFER IN RESPONSE TO THE SOLICITATION AND AGREED TO UPGRADE THEIR FACILITIES TO COMPLY WITH THE NEW GSA STANDARDS. HUNTER BROTHERS FURTHER ALLEGE THAT THEY WERE "NEVER" INFORMED BY THE GSA, PRIOR TO THE NOTICE OF TERMINATION, THAT IT WOULD BE NECESSARY TO BRING THE LEASED PREMISES UP TO CURRENT STANDARDS AND THE FAILURE BY THE GSA TO SO NOTIFY THEM OR ATTEMPT TO NEGOTIATE WITH THEM FOR THE UPGRADING OF THE FACILITIES WAS ARBITRARY, CAPRICIOUS, AND NOT IN THE BEST INTERESTS OF THE GOVERNMENT. FINALLY, HUNTER BROTHERS ARGUE THAT THEY WILL LOSE APPROXIMATELY $70,000 IF THEY ARE NOT AWARDED THE NEW LEASE AS A RESULT OF FUTURE COMMITMENTS MADE IN RELIANCE ON STATEMENTS MADE BY GSA PERSONNEL AND ALSO BECAUSE OF A LACK OF ABILITY TO LEASE THE SPACE BECAUSE OF THE "* * * SINGLE PURPOSE NATURE OF THE REMODELING AS WELL AS THE LARGE NUMBER OF VACANT BUILDINGS IN DOWNTOWN PUEBLO.'

IN REGARD TO HUNTER BROTHERS' FIRST CONTENTION THAT THEY SHOULD HAVE BEEN AWARDED THE LEASE BECAUSE THEY SUBMITTED THE LOWEST OFFER, WE CALL YOUR ATTENTION TO THE SOLICITATION FOR OFFERS AND SPECIFICALLY TO THE UNNUMBERED PAGE IMMEDIATELY FOLLOWING PAGE 8, ENTITLED "AWARD FACTORS," WHERE ARE LISTED THE FACTORS OTHER THAN THE PROPOSED RENTAL THAT WERE CONSIDERED IN DETERMINING WHICH OFFER WAS THE MOST ADVANTAGEOUS TO THE GOVERNMENT. EACH OFFEROR WAS, THEREFORE, ON NOTICE THAT THE PROPOSED RENTAL WAS NOT THE SOLE FACTOR IN EVALUATION OF THE BIDS.

ON JUNE 17, 1966, THE PROJECT MANAGER OF THE FRYINGPAN-ARKANSAS PROJECT WROTE TO THE GSA DETAILING THE DEFICIENCIES NOTED IN THE LEASED PREMISES; AMONG THE MOST SERIOUS WERE THAT THE HEATING AND COOLING WERE NEITHER ADEQUATE NOR UNIFORM THROUGHOUT THE PREMISES; THE LOUVERED OPENINGS IN THE BUILDING CAUSED UNCOMFORTABLE DRAFTS; THE PARKING AREA WAS NOT MAINTAINED; THE WATER PRESSURE WAS NOT ALWAYS ADEQUATE; AND THERE WAS CARBON MONOXIDE FUMES DUE TO THE PRESENCE OF AN AUTO SHOWROOM AND REPAIR SHOP ON THE FLOOR BELOW. IN REGARD TO THIS LAST COMPLAINT, WE HAVE IN OUR FILES A COPY OF THE CARBON MONOXIDE TEST RESULTS MADE ON FEBRUARY 24, 25, 26 AND MARCH 3, 1964, BY THE PROJECT SAFETY ENGINEER. THE RESULTS OF THOSE TESTS SHOW THAT THE PERCENTAGE CONCENTRATION WAS GREAT ENOUGH ON SOME DAYS TO CAUSE MILD GAS POISONING FROM EIGHT HOURS EXPOSURE. IN THE CONCLUSION TO THE REPORT, THE PROJECT SAFETY ENGINEER STATED:

"THE PRESENT LEVEL OF CARBON MONOXIDE AFTER 4 HOURS EXPOSURE, WILL PRODUCE EVIDENCES OF SLOWNESS IN AN INDIVIDUAL'S THOUGHT PROCESSES.'

GSA HAS STATED THAT HUNTER BROTHERS MADE SOME IMPROVEMENTS IN THE VENTILATION SYSTEM WHICH LESSENED THE ACCUMULATION OF CARBON MONOXIDE FUMES IN THE LEASED SPACE BUT DID NOT ENTIRELY CORRECT THE SITUATION, NOR DOES IT APPEAR THAT THE OTHER CONDITIONS WERE SATISFACTORILY CORRECTED. IN THIS CASE THE REALTY SPECIALIST AND THE FRYINGPAN ARKANSAS PROJECT MANAGER HAVE DETERMINED THAT THE FACILITIES AT THE FIRST NATIONAL BANK ARE SUPERIOR TO THOSE IN THE CLEVENGER BUILDING. THIS OFFICE WILL NOT SUBSTITUTE ITS JUDGMENT FOR THAT OF THE ADMINISTRATIVE OFFICERS CHARGED WITH THE RESPONSIBILITY FOR MAKING SUCH DETERMINATIONS IN THE ABSENCE OF AN ABUSE OF ADMINISTRATIVE DISCRETION. SEE 43 COMP. GEN. 663, 666; 37 COMP. GEN. 430. SECTION 2 (A) OF EXECUTIVE ORDER NO. 11035, DATED JULY 9, 1962, PROVIDES THAT THE ADMINISTRATOR OF GENERAL SERVICES SHALL BE GUIDED BY CERTAIN POLICIES FOR THE ASSIGNMENT, REASSIGNMENT, AND UTILIZATION OF OFFICE BUILDINGS AND SPACE IN THE UNITED STATES; SUBSECTION (5) IN PARTICULAR STATES:

"THE QUALITY OF OFFICE SPACE FOR GOVERNMENT OPERATIONS SHALL BE APPROPRIATE FOR THE EFFICIENT AND ECONOMICAL PERFORMANCE OF GOVERNMENTAL ACTIVITIES, WHILE AFFORDING EMPLOYEES SAFE, HEALTHFUL, AND CONVENIENT CONDITIONS OF EMPLOYMENT.'

IN VIEW OF THE FACTS NOTED ABOVE, WE DO NOT FEEL WE COULD QUESTION AN ADMINISTRATIVE DETERMINATION THAT THE LEASED SPACE WAS NOT APPROPRIATE FOR EFFICIENT AND ECONOMICAL PERFORMANCE OF GOVERNMENTAL ACTIVITIES NOR SAFE AND HEALTHFUL.

IN REGARD TO HUNTER BROTHERS' CLAIM THAT NO ATTEMPT WAS MADE TO NEGOTIATE WITH THEM FOR THE UPGRADING OF THEIR FACILITIES, WE HAVE COPIES OF A NEGOTIATOR'S REPORT DATED JUNE 6, 1966, AND OF A SUPPLEMENTAL NEGOTIATOR'S REPORT DATED JUNE 29, 1966, BOTH SUBMITTED BY A GSA REALTY SPECIALIST. THE REPORT STATES THAT THE NEGOTIATOR MET WITH REPRESENTATIVES OF HUNTER BROTHERS ON MAY 17, 1966 AND AGAIN ON MAY 26, 1966. AT THE EARLIER MEETING THERE WERE INDICATIONS THAT THE NET USABLE SQUARE FEET REQUIREMENT COULD NOT READILY BE PROVIDED WITHIN THE SPACE OFFERED AND THAT THERE WOULD BE A SHORTAGE OF FROM 450 TO 500 SQUARE FEET. IN ADDITION, HUNTER BROTHERS WERE REQUESTED TO FURNISH OUTLINE PLANS AND SPECIFICATIONS FOR THE PROPOSED VENTILATION AND AIR CONDITIONING SYSTEM AS A RESULT OF PAST EXPERIENCES WITH THE CARBON MONOXIDE FUMES. AT THE LATER MEETING, THE REVISED FLOOR PLANS WERE DISCUSSED AND A REPRESENTATIVE FROM THE BUREAU OF RECLAMATION OBJECTED TO THEM BECAUSE THE ADDITIONAL SPACE OFFERED WAS ABOVE THE GARAGE AREA. THERE WAS ALSO CONCERN AS TO THE PROPOSED MODIFICATION TO THE AIR CONDITIONING SYSTEM TO RETAIN THE THREE UNITS WITHIN THE OFFICE SPACE. THE REALTY SPECIALIST STATED THAT BECAUSE OF THE NOISE CREATED BY THE UNITS, THEY WOULD HAVE TO BE RELOCATED IN THE LOFT AREA OR OUT OF THE OFFICE SPACE ITSELF. ACCORDINGLY TO THE REPORT, HUNTER BROTHERS STATED THIS WAS AN EXPENSE THEY DID NOT DESIRE TO ASSUME. THESE AND OTHER MATTERS OF DEFICIENCY NOTED IN THE PROJECT MANAGER'S LETTER OF JUNE 17, 1966, WERE BROUGHT TO THE ATTENTION OF THE LESSOR BOTH BEFORE AND AFTER APRIL 1965, BY THE BUREAU OF RECLAMATION AND THE GSA. THESE FACTS INDICATE THAT HUNTER BROTHERS CLAIM THAT NO ATTEMPT WAS MADE TO NEGOTIATE WITH THEM IS UNSUPPORTABLE.

FINALLY, HUNTER BROTHERS' THIRD CONTENTION IS THAT THE AWARD SHOULD BE MADE TO THEM BECAUSE THEY WILL OTHERWISE LOSE APPROXIMATELY $70,000 AS A RESULT OF STATEMENTS MADE BY GSA PERSONNEL TO THE EFFECT THAT HUNTER BROTHERS COULD REASONABLY EXPECT GSA TO OCCUPY THE SPACE FOR A MINIMUM OF 10 YEARS. PROTESTOR SEEMS TO BE IMPLYING THAT HAD SUCH STATEMENTS NOT BEEN MADE THEY WOULD NOT HAVE EXPENDED SO MUCH MONEY FOR REMODELING AND OTHER FUTURE COMMITMENTS. THE GSA DENIES THAT ANY SUCH STATEMENTS OF ASSURANCE WERE MADE. HOWEVER, EVEN ASSUMING SUCH REPRESENTATIONS WERE MADE, IT IS A WELL-ESTABLISHED RULE OF CONTRACT LAW THAT WHERE THERE IS A WRITTEN AGREEMENT THAT SPEAKS TO THE POINT IN ISSUE AND A PAROL STATEMENT CONTROVERTING THE WRITING, THE WRITING WILL ALWAYS TAKE PRECEDENCE. SEE IX WIGMORE ON EVIDENCE, SEC. 2425 WHEREIN THE RULE IS STATED AS FOLLOWS:

"WHEN A JURAL ACT IS EMBODIED IN A SINGLE MEMORIAL, ALL OTHER UTTERANCES OF THE PARTIES ON THAT TOPIC ARE LEGALLY IMMATERIAL FOR THE PURPOSES OF DETERMINING WHAT ARE THE TERMS OF THEIR ACT.'

PARAGRAPH 18 OF THE LEASE PROVIDES THAT THE GOVERNMENT HAS THE RIGHT TO CANCEL THE LEASE UPON 60 DAYS WRITTEN NOTICE TO THE LESSOR DURING ANY RENEWAL PERIOD. THIS WAS THE WRITTEN AGREEMENT OF THE PARTIES AND, THEREFORE, EVEN IF GSA PERSONNEL HAD ASSURED HUNTER BROTHERS THAT THE LEASE POSITIVELY WOULD BE RENEWED EACH YEAR, THEY WOULD NOT HAVE BEEN JUSTIFIED, IN VIEW OF THE PROVISIONS OF THE CONTRACT, IN RELYING ON THAT STATEMENT.

WHILE WE REGRET ANY LOSS WHICH THE PROTESTORS MAY SUFFER IN THIS CASE, WE MUST DENY THEIR PROTEST.