B-163009, FEB. 1, 1968

B-163009: Feb 1, 1968

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WOULD HAVE MADE $50. MUST HAVE PROTEST DENIED IN VIEW OF SALES CONTRACTING OFFICER'S STATEMENT THAT NO REASONABLE MARKET EXISTED FOR DRIFTMETERS AND THAT FAILURE TO LIST ITEM WAS NOT RESULT OF BAD FAITH. INSOFAR AS GREATER FINANCIAL RETURN IS CONCERNED. TO WACHTEL AND WIENER: REFERENCE IS MADE TO YOUR LETTERS OF NOVEMBER 29. THE PROPERTY WAS OFFERED FOR SCRAP PURPOSES ONLY AND BIDS WERE TO BE ON AN AGGREGATE BASIS FOR ALL ITEMS. WE ARE ADVISED THAT THE AIRCRAFT CARCASSES CONSISTED OF FORTY-THREE B-47. 000 WAS SUBMITTED BY NATIONAL AIRCRAFT. THAT AWARD WAS MADE TO THAT BIDDER ON NOVEMBER 15. THAT THE DESCRIPTION THEREOF CONTAINED IN THE INVITATION "WAS IN FACT A GROSS MISDESCRIPTION. A NONDESCRIPTION AND A MISREPRESENTATION OF WHAT WAS ACTUALLY FOR SALE.'.

B-163009, FEB. 1, 1968

BIDS - SALES - DESCRIPTION DECISION ON PROTEST OF NORMANDIE IRON AND METAL CO., INC., SECOND HIGH BIDDER, FOR SURPLUS AIRCRAFT CARCASSES SOLD BY DEFENSE SURPLUS SALES OFFICE, DAVIS-MONTHAN AIR FORCE BASE, TUCSON, ARIZONA. A SECOND HIGH BIDDER WHO CONTENDS THAT IF IN SALE OF SURPLUS AIRCRAFT CARCASSES BIDDERS HAD BEEN ADVISED OF OPPORTUNITY TO PURCHASE B-6A DRIFTMETERS THE GOVT. WOULD HAVE MADE $50,000 TO $100,000 MORE, MUST HAVE PROTEST DENIED IN VIEW OF SALES CONTRACTING OFFICER'S STATEMENT THAT NO REASONABLE MARKET EXISTED FOR DRIFTMETERS AND THAT FAILURE TO LIST ITEM WAS NOT RESULT OF BAD FAITH. THEREFORE READVERTISEMENT WOULD NOT BE IN INTEREST OF GOVT. INSOFAR AS GREATER FINANCIAL RETURN IS CONCERNED.

TO WACHTEL AND WIENER:

REFERENCE IS MADE TO YOUR LETTERS OF NOVEMBER 29, 1967, JANUARY 23 AND JANUARY 30, 1968, PROTESTING, ON BEHALF OF NORMANDIE IRON AND METAL COMPANY, INC. (NORMANDIE), AGAINST THE AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER SURPLUS SALES INVITATION FOR BIDS NO. 49-8015, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, DAVIS-MONTHAN AIR FORCE BASE, TUCSON, ARIZONA. THE INVITATION REQUESTED BIDS ON 13 ITEMS CONSISTING OF A TOTAL OF 116 AIRCRAFT CARCASSES. THE PROPERTY WAS OFFERED FOR SCRAP PURPOSES ONLY AND BIDS WERE TO BE ON AN AGGREGATE BASIS FOR ALL ITEMS. THE ,GENERAL SALE TERMS AND CONDITIONS" INVITED, URGED, AND CAUTIONED BIDDERS TO INSPECT THE PROPERTY BEING SOLD PRIOR TO SUBMITTING A BID. WE ARE ADVISED THAT THE AIRCRAFT CARCASSES CONSISTED OF FORTY-THREE B-47, TWENTY- SIX B-50, AND FORTY-SEVEN KC-97 AIRCRAFTS. ITEM 9 OF THE SALES INVITATION CONTAINED THE FOLLOWING DESCRIPTION: "AIRCRAFT CARCASSES: AIR FORCE KC-97 TANKERS. EXTENSIVE RECLAMATION PERFORMED TO SATISFY DOD REQUIREMENTS. PARTS OR SYSTEMS INCOMPLETE, INCLUDING: LANDING GEAR, COMMUNICATION AND NAVIGATIONAL EQUIPMENT. PARTS MISSING, INCLUDING: ENGINES AND PROPELLERS. OUTSIDE - USED EST. TOTAL WT. 313,180 LBS. 7 EACH * * *"

THE RECORD INDICATES THAT THE HIGH AGGREGATE BID OF $500,000 WAS SUBMITTED BY NATIONAL AIRCRAFT, AND THAT AWARD WAS MADE TO THAT BIDDER ON NOVEMBER 15, 1967. NORMANDIE SUBMITTED THE NEXT HIGHEST AGGREGATE BID OF $489,600.

YOUR LETTER OF NOVEMBER 29 STATED AS FOLLOWS:

"WE HEREBY PROTEST ANY AWARD TO NATIONAL METALS COMPANY AND REQUEST YOUR INTERVENTION AND CANCELLATION OF BID AND AWARD OF CONTRACT TO AVOID A LOSS OF A SUBSTANTIAL SUM OF MONEY TO THE GOVERNMENT.

"THE CONTENTS OF THE SALES INVITATION NO. DSSO 49-8015 DID NOT FULLY DESCRIBE THE GOODS AND ADEQUATE INSPECTION, EVEN IF POSSIBLE, COULD NOT FULLY REVEAL OR DISCLOSE TO A BIDDER ALL THE VALUABLE INSTRUMENTATION AND EQUIPMENT BEING OFFERED AS PART OF AIRPLANE. EVERYONE INTERESTED COULD NOT BID ON THE SAME BASIS OR WITH EQUAL KNOWLEDGE OF THE GOODS THUS DENYING TO THE GOVERNMENT THE OPPORTUNITY TO OBTAIN THE BEST AND FULLEST PRICE FOR THE GOODS BEING SOLD.'

YOUR LETTER DATED JANUARY 23 ALLEGED, WITH REFERENCE TO THE SALE OF THE KC-97 CARCASSES, THAT THE DESCRIPTION THEREOF CONTAINED IN THE INVITATION "WAS IN FACT A GROSS MISDESCRIPTION, A NONDESCRIPTION AND A MISREPRESENTATION OF WHAT WAS ACTUALLY FOR SALE.' SPECIFICALLY, YOU ALLEGE THAT 2 OF THE FORTY-SEVEN KC-97 CARCASSES CONTAINED B-3 DRIFTMETERS AND FORTY-THREE OF THESE CARCASSES CONTAINED B-6A DRIFTMETERS, THE LATTER BEING MORE VALUABLE AND EXPENSIVE THAN THE STANDARD B-3 DRIFTMETERS ORDINARILY FOUND ON KC-97 AIRCRAFT, AND THAT THE GOVERNMENT'S FAILURE TO ADVISE PROSPECTIVE BIDDERS OF THE OPPORTUNITY TO PURCHASE THE B-6A DRIFTMETERS CAUSED THE KC-97 CARCASSES TO BE SOLD AT A TOTAL LOSS TO THE GOVERNMENT OF APPROXIMATELY $50,000 TO $100,000. IN VIEW THEREOF, YOU HAVE REQUESTED THAT THE AWARD BE CANCELED AND THE PROPERTY READVERTISED FOR SALE UNDER A MORE ACCURATE DESCRIPTION.

THE ADMINISTRATIVE REPORT DATED JANUARY 8, 1968, STATED THAT THERE WAS NO AVAILABLE SALES HISTORY FOR B-6A DRIFTMETERS, BUT THAT THE SALES HISTORIES OF VARIOUS COMPARABLE DRIFTMETERS, SOLD AS SEPARATE ITEMS AT GOVERNMENT SURPLUS SALES, REVEALED THAT THEY ARE LOW RETURN ITEMS. ON SOME SALES OF DRIFTMETERS, NO BIDS HAD BEEN RECEIVED; AND THE PERCENTAGE OF RETURN ON DRIFTMETERS THAT WERE SOLD, RANGED FROM A LOW OF 0.48 PERCENT TO A HIGH OF 1.37 PERCENT OF ACQUISITION COST. WE ARE ADVISED FURTHER THAT THE B-3 AND B-6A DRIFTMETERS ARE NOW BOTH OBSOLETE, BUT ORIGINALLY WERE INTERCHANGEABLE FOR USE ON KC-97 AIRCRAFT, AND BOTH ARE CURRENTLY LISTED AT $1,599 ON THE AIR FORCE STOCK LISTS. THE SALES CONTRACTING OFFICER STATED THAT "THROUGH RESEARCH AND PERSONAL CONTACTS WITH FIRMS THAT WERE EXPERIENCED WITH DRIFTMETERS, I FOUND NOTHING TO LEAD ME TO BELIEVE THE B- 6 DRIFTMETERS WERE REALLY A -HOT- ITEM ON THE CURRENT MARKET NOR THAT THEY WERE AN ITEM THAT COMMANDED AN EXCEPTIONALLY HIGH SALES PRICE.'

YOUR LETTER OF JANUARY 23 ALLEGES THAT THE SALES CONTRACTING OFFICER'S STATEMENTS RELATIVE TO THE LACK OF A MARKET FOR DRIFTMETERS ARE OF "LITTLE OR NO PROBATIVE VALUE TO A DETERMINATION OF THIS PROTEST," AND THAT NORMANDIE WAS RECENTLY OFFERED UPWARDS OF $500 EACH FOR B-6A DRIFTMETERS. IN SUPPORT OF THIS STATEMENT, YOU SUPPLIED, FOR OUR CONSIDERATION, COPIES OF THREE LETTERS ADDRESSED TO NORMANDIE FROM PROSPECTIVE PURCHASERS OF DRIFTMETERS, EVIDENCING ONE FIRM OFFER FOR SIX B-6A DRIFTMETERS AND, AT BEST, TWO EXPRESSIONS OF A GENERAL INTEREST IN PRUCHASING A FEW UNITS, PROVIDED THEY ARE IN GOOD TO EXCELLENT CONDITION.

THERE IS GENERALLY A WELL-DEFINED DISTINCTION BETWEEN THE GOVERNMENT SALE OF SURPLUS PROPERTY AND AN ORDINARY COMMERCIAL SALE OF SOME VALUABLE COMMODITY. WHEN THE GOVERNMENT SELLS SURPLUS PROPERTY IT IS TRYING TO DISPOSE OF A VAST MISCELLANY OF USED AND UNUSED ITEMS IN AN EFFORT, SO FAR AS IS POSSIBLE, TO MINIMIZE ITS LOSS. SURPLUS SALES ARE PROCESSED IN A MASS QUANTITY BASIS BY GOVERNMENT PERSONNEL WHO SELDOM, IF EVER, HAVE ANY EXPERTISE IN THE PARTICULAR ITEMS WHICH COME TO THEIR WAREHOUSES AND DEPOTS. BUYERS OF SUCH SURPLUS PROPERTY KNOW THAT THERE IS ALWAYS THE CHANCE OF BUYING PROPERTY THAT MAY TURN OUT TO BE OF LITTLE VALUE, OR MAY DEVELOP INTO A BARGAIN WITH A WINDFALL OF PROFIT.

WE ARE OF THE OPINION IN THE PRESENT CASE THAT, IN THE ABSENCE OF EVIDENCE CAPABLE OF OVERCOMING THE ASSUMPTION OF THE VERACITY OF THE SALES CONTRACTING OFFICER'S DETERMINATION THAT NO REASONABLE MARKET EXISTED FOR THE DRIFTMETERS, THE DISPOSAL BY SALE OF THE KC-97 AIRCRAFT CARCASSES WITHOUT SPECIFIC REFERENCE TO B-6A DRIFTMETERS, WAS A PROPER ADMINISTRATION OF THE FUNCTIONS OF THE DISPOSAL AGENCY, AND IS NOT OPEN TO QUESTION BY OUR OFFICE. THERE IS NO INDICATION IN THE RECORD BEFORE US THAT THE FAILURE TO LIST THE ABOVE-REFERENCED DRIFTMETERS IN THE KC-97 ITEM DESCRIPTIONS IN THE INVITATION FOR BIDS BROCHURE WAS A RESULT OF BAD FAITH ON THE PART OF THE SALES PERSONNEL WHO DRAFTED THE INVITATION, NOR IS BAD FAITH ALLEGED.

MOREOVER, THE THREE LETTERS FURNISHED BY YOU IN SUPPORT OF YOUR PROTEST ARE INADEQUATE TO SHOW THAT THE SPECIFIC INCLUSION OF THE B-6A DRIFTMETERS IN THE KC-97 DESCRIPTION WOULD HAVE INCREASED THE AGGREGATE BID PRICE SUBMITTED IN RESPONSE TO THE INVITATION. IN THIS REGARD, WE MUST ACCORD SIGNIFICANT WEIGHT TO THE CONTRARY FINDINGS OF THE SALES CONTRACTING OFFICER AND WE CANNOT SAY THAT READVERTISEMENT WOULD BE IN THE INTEREST OF THE GOVERNMENT INSOFAR AS GREATER FINANCIAL RETURN IS CONCERNED.

WE HAVE CAREFULLY CONSIDERED THE AUTHORITIES CITED BY YOU BUT WE ARE NOT PERSUADED THAT THEY LEND SUBSTANCE TO YOUR PROTEST. ACCORDINGLY, WE FIND NO BASIS TO QUESTION THE PROPRIETY OF THE ADMINISTRATIVE ACTIONS TAKEN WITH REGARD TO THE AWARD OF THE CONTRACT TO NATIONAL AIRCRAFT UNDER INVITATION FOR BIDS NO. 49-8015.