B-166766, OCTOBER 15, 1969, 49 COMP. GEN. 244

B-166766: Oct 15, 1969

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WAS PROPER ON THE BASIS THAT TO RESTRICT A BIDDER FROM COMPUTING HIS BID PRICE ON USING HIS OWN FACILITIES TO REDUCE THE CARCASSES TO SCRAP WHEN THE PROCEDURE WAS NOT NECESSARY IN THE GOVERNMENT'S INTEREST WOULD BE INIMICAL TO THE FULL AND FREE COMPETITION CONTEMPLATED BY 40 U.S.C. 484. THAT THE RESTRICTION WAS A COGENT AND COMPELLING REASON TO JUSTIFY THE REJECTION OF ALL BIDS. OR ADMINISTRATIVELY PREFERRED PROCESS UNDER WHICH PROSPECTIVE CONTRACTORS ARE REQUIRED TO PERFORM WORK. THE CRITERIA FOR INCLUSION OF RESTRICTIONS IS WHETHER A VALID JUSTIFICATION HAS BEEN ESTABLISHED FOR PROHIBITING BIDDERS FROM BASING THEIR BIDS ON USE OF ANY CUSTOMARY METHODS OF OPERATION WHICH IN THEIR CONSIDERED JUDGMENT PROVIDE THE MOST ECONOMICAL MEANS AVAILABLE TO THEM.

B-166766, OCTOBER 15, 1969, 49 COMP. GEN. 244

SALES -- BIDS -- DISCARDING ALL BIDS -- FULL AND FREE COMPETITION RESTRICTED PROCUREMENT PRINCIPLES APPLYING EQUALLY TO SURPLUS SALES, A CONTRACTING OFFICER HAS BROAD AUTHORITY TO REJECT ALL BIDS AND READVERTISE A SALE AND, THEREFORE, THE CANCELLATION OF A SALES INVITATION FOR THE DISPOSAL OF SURPLUS AIRCRAFT CARCASSES TO BE REDUCED TO SCRAP ALUMINUM, THE DEMILITARIZATION AND SWEATING OF THE AIRCRAFT TO BE ACCOMPLISHED BEFORE REMOVAL FROM THE AIR FORCE BASE, AND THE READVERTISEMENT OF THE AIRCRAFT TO GIVE THE PURCHASER THE OPTION OF EITHER ON-BASE SWEATING OR ON-BASE DEMILITARIZATION WITH OFF-BASE PROCESSING TO ALLEVIATE A CRITICAL POLLUTION PROBLEM--HELD A SECONDARY ISSUE--WAS PROPER ON THE BASIS THAT TO RESTRICT A BIDDER FROM COMPUTING HIS BID PRICE ON USING HIS OWN FACILITIES TO REDUCE THE CARCASSES TO SCRAP WHEN THE PROCEDURE WAS NOT NECESSARY IN THE GOVERNMENT'S INTEREST WOULD BE INIMICAL TO THE FULL AND FREE COMPETITION CONTEMPLATED BY 40 U.S.C. 484, AND THAT THE RESTRICTION WAS A COGENT AND COMPELLING REASON TO JUSTIFY THE REJECTION OF ALL BIDS. CONTRACTS -- SPECIFICATIONS -- RESTRICTIVE -- TECHNIQUES, METHODS, OR OPERATIONS RESTRICTED IN DRAFTING SPECIFICATIONS OR INVITATIONS FOR BIDS THAT RESTRICT THE APPLICATION OF TECHNIQUES, METHODS, OR OPERATIONS TO A SINGLE, OR ADMINISTRATIVELY PREFERRED PROCESS UNDER WHICH PROSPECTIVE CONTRACTORS ARE REQUIRED TO PERFORM WORK, THE CRITERIA FOR INCLUSION OF RESTRICTIONS IS WHETHER A VALID JUSTIFICATION HAS BEEN ESTABLISHED FOR PROHIBITING BIDDERS FROM BASING THEIR BIDS ON USE OF ANY CUSTOMARY METHODS OF OPERATION WHICH IN THEIR CONSIDERED JUDGMENT PROVIDE THE MOST ECONOMICAL MEANS AVAILABLE TO THEM, THUS RESULTING IN THE HIGHEST RETURN TO THE GOVERNMENT. THEREFORE, TO RESTRICT BIDDERS IN THE DISPOSAL OF SURPLUS AIRCRAFT TO ON- BASE SWEATING IN THE REDUCTION OF THE AIRCRAFT TO SCRAP WHEN THIS PROCEDURE WAS NOT NECESSARY TO THE GOVERNMENT'S INTEREST, DEPRIVED THE BIDDERS OF THE FULL AND FREE COMPETITION INTENDED BY 40 U.S.C. 484, AND THE CANCELLATION AND READVERTISING OF THE SALE WAS JUSTIFIED.

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY, OCTOBER 15, 1969:

REFERENCE IS MADE TO A LETTER DATED MAY 15, 1969, DSAH-G, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, DEFENSE SUPPLY AGENCY, SUBMITTING A REPORT ON THE PROTEST OF NATIONAL METAL & STEEL CORPORATION (NATIONAL METAL) AGAINST THE REJECTION OF ITS BID; AND, THE PROTEST OF AERO-TECH, INCORPORATED (AERO-TECH) AGAINST THE CANCELLATION OF ALL BIDS, BOTH PROTESTS RELATING TO SALES INVITATION FOR BIDS NO. 46 9105, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, SAN DIEGO, CALIFORNIA.

THE SALES INVITATION OFFERED 30 ITEMS CONSISTING OF A TOTAL OF 281 UNITS, AIRCRAFT CARCASSES, TO BE SOLD AS SCRAP ALUMINUM, BY UNIT PRICE BID, WITH THE ADDED REQUIREMENT THAT DEMILITARIZATION AND SWEATING WOULD BE ACCOMPLISHED PRIOR TO REMOVAL FROM THE DAVIS-MONTHAN AIR FORCE BASE. BIDS WERE OPENED AS SCHEDULED ON APRIL 17, 1969. NATIONAL METAL SUBMITTED A BID ON A "PER POUND" BASIS RATHER THAN ON A "UNIT" BASIS. IN ADDITION, NATIONAL METAL INCLUDED THE FOLLOWING MODIFICATION AS A PART OF ITS BID:

MODIFICATION OF BID SALE #46-9105

THIS IS IN REGARD TO ITEM 2 UNDER ARTICLE FA TERMED DEMILITARIZATION PAGE 16 OF IFB 46-9105.

PRECEDENT OR PROCEDURE FOR MODIFICATIONS. ARTICLE AC PAGE 12

*** HOWEVER, A MODIFICATION WHICH MAKES THE TERMS OF THE OTHERWISE SUCCESSFUL BID MORE FAVORABLE TO THE GOVERNMENT WILL BE CONSIDERED AT ANY TIME IT IS RECEIVED PRIOR TO AWARD AND MAY BE ACCEPTED *** ARTICLE AE PAGE 12

THE CONTRACT WILL BE AWARDED TO THAT RESPONSIBLE BIDDER WHOSE BID CONFORMING TO THE INVITATION WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED. *** ARTICLE EE PAGE 15

THE SALES CONTRACTING OFFICER MAY, AT ANY TIME, BY WRITTEN ORDER AND WITH NOTICE ONLY TO THE PERSON OR FIRM TO WHOM THE CONTRACT WAS AWARDED, MAKE CHANGES IN THE METHOD BY OR THE EXTENT TO WHICH THE PROPERTY IS TO BE SCRAPPED, MUTILATED, OR DEMILITARIZED; THE METHOD BY OR THE EXTENT TO WHICH GOVERNMENT PROPERTY IS TO BE STRIPPED FROM THE SUBJECT MATTER OF THE CONTRACT (TO INCLUDE THE ADDITION OR DELETION OF PROPERTY TO BE STRIPPED); OR THE DISPOSITION TO BE MADE OF THE STRIPPED PROPERTY. ***

HAVING QUOTED THE ABOVE AND BEING FULLY COGNIZANT OF THE AIR POLLUTION PROBLEMS CREATED BY AND INHERENT TO THE UTILIZATION OF SWEATING FURNACES WE BELIEVE WITH REASONABLE CERTAINTY THAT WE CAN ACCOMPLISH THE PROCESSING OF THE AIRCRAFT CARCASSES CONTINGENT WITH THE REQUIREMENT THAT THEY BE MUTILATED AND DESTROYED BY SYSTEMS NOW AVAILABLE AND OWNED BY US THAT WILL TOTALLY PRECLUDE THE NECESSITY FOR SWEATING.

WE BELIEVE THAT COINCIDENTAL WITH THE GOVERNMENT'S ESTABLISHED POLICY FOR BEAUTIFICATION AND THE ELIMINATION OF HAZARDS EMANATING FROM THE INCIDENTS OF AIR POLLUTION THAT SUCH PROCESSING AS WE INTEND TO USE WILL FURTHER THE PRINCIPLES OF GOVERNMENT POLICY.

OUR BID IS THEREFORE CONTINGENT UPON AN AMENDMENT OF SAID CLAUSE THAT WILL PERMIT US TO DEMILITARIZE, STRIP, CLEAN THESE AIRCRAFT AT THEIR LOCATION BY MANUAL OR MECHANICAL DEVICES AND THEN REMOVING FUSELAGES, WINGS, ETC. IN THEIR THEN EXISTING FORM HAVING BEEN ONLY COMPRESSED, FLATTENED OR OTHERWISE TREATED TO ENABLE US TO ESTABLISH PAY LOADS FOR TRUCKS DESIGNATED TO REMOVE THE MATERIAL.

AT THE SAME TIME THOUGH WITH REASONABLE CERTAINTY AS TO THE FEASIBILITY OF OUR PROJECT WE REQUIRE FLEXIBILITY THAT WILL ENABLE US TO REVERT TO THE USE OF PORTABLE SWEATERS ON THE BASE AS HAS CONSISTENTLY REPRESENTED PAST PROCEDURE SHOULD OUR SUGGESTED PROCESS NOT BE FEASIBLE FOR REASONS PRESENTLY UNFORESEEABLE. WE MUST THEN HAVE THE RIGHT TO REVERT TO SWEATING.

"NATIONAL METAL'S "PER POUND" BID, EVALUATED ON THE BASIS OF THE GOVERNMENT'S ESTIMATED WEIGHTS, WAS THE HIGHEST IN THE AMOUNT OF $1,172,765.97. HOWEVER, THE CONTRACTING OFFICER ANNOUNCED AFTER BID OPENING THAT NATIONAL METAL'S BID WAS NONRESPONSIVE IN THAT THE BID WAS ON A "PER POUND" BASIS RATHER THAN ON A "UNIT" BASIS AS CLEARLY REQUIRED BY THE INVITATION. IN VIEW THEREOF, IT WAS ANNOUNCED THAT AWARD WOULD BE PROCESSED ON THE BASIS OF THE HIGH RESPONSIVE BID SUBMITTED BY AERO-TECH, IN THE AMOUNT OF $1,105,000.

THE CHRONOLOGICAL FACTS AS SET FORTH IN THE ADMINISTRATIVE REPORT SHOW THAT ON APRIL 15, 1969, TWO DAYS PRIOR TO BID OPENING, A REPRESENTATIVE OF DAVIS-MONTHAN AIR FORCE BASE ADVISED THE SALES OFFICE THAT A REPRESENTATIVE OF NATIONAL METAL WAS AT THE BASE TO INSPECT THE AIRCRAFT CARCASSES. AT THAT TIME, THE REPRESENTATIVE OF NATIONAL METAL INDICATED THAT THE FIRM DESIRED TO SUBMIT A BID IN SUCH A MANNER AS TO ELIMINATE THE NECESSITY FOR ON-BASE SWEATING. ON APRIL 16, 1969, THE SALES CONTRACTING OFFICER ADVISED NATIONAL METAL BY TELEPHONE THAT SUCH A QUALIFIED BID WOULD BE CONSIDERED TO BE NONRESPONSIVE. NOTWITHSTANDING THIS ADVICE, THE FIRM SUBMITTED THE QUALIFIED BID REFERRED TO ABOVE. BY CONFIRMING LETTER DATED APRIL 17, 1969, NATIONAL METAL WAS ADVISED THAT ITS BID WAS NONRESPONSIVE ON TWO GROUNDS--(1) THAT THE FIRM HAD TAKEN EXCEPTION TO THE ON-BASE SWEATING REQUIREMENTS, AND (2) THAT IT HAD BID ON A "POUND" BASIS WHEN THE AIRCRAFT WERE OFFERED ON AN "EACH" BASIS.

ON APRIL 22, 1969, NATIONAL METAL REQUESTED THAT THE AWARD BE DELAYED PENDING A DECISION FROM HIGHER HEADQUARTERS. THE SALES OFFICE REPLIED ON APRIL 23, 1969, THAT THE AWARD OF CONTRACT WOULD NOT BE DELAYED. ITS REASON WAS THAT IT HAD TO OBTAIN ANTITRUST ADVICE FROM THE ATTORNEY GENERAL PRIOR TO AWARD IN ACCORDANCE WITH SECTION 207 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 488, AND HAD REASON TO BELIEVE THAT THE PROTEST WOULD BE RESOLVED PRIOR TO OBTAINING SUCH ADVICE WHICH WAS REQUESTED BY LETTER DATED APRIL 21, 1969. NATIONAL METAL PROTESTED TO OUR OFFICE BY LETTER DATED APRIL 23, 1969, THAT ITS BID SHOULD HAVE BEEN CONSIDERED RESPONSIVE ON THE BASIS OF LANGUAGE IN THE INVITATION, AS SET OUT IN ITS MODIFICATION ABOVE. APRIL 29, 1969, AS A RESULT OF INFORMATION DEVELOPED IN THE PREPARATION OF THE ADMINISTRATIVE REPORT, THE SALES OFFICE DETERMINED TO REJECT ALL BIDS AND READVERTISE. BASED ON THIS DECISION, NATIONAL METAL WITHDREW ITS PROTEST ON APRIL 30, 1969. AERO-TECH, BY LETTER DATED MAY 1, 1969, FROM ITS COUNSEL, PROTESTED THE CANCELLATION OF THE INVITATION.

NATIONAL METAL'S PROTEST AGAINST THE REJECTION OF ITS BID RELIES ON PROVISIONS IN THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION APPLYING TO BIDS WHICH CONFORM TO THE INVITATION REQUIREMENTS. ARTICLE AE, ALLOWS THE ACCEPTANCE OF MODIFICATIONS WHICH MAKE THE TERMS OF THE "OTHERWISE SUCCESSFUL BID" MORE FAVORABLE. ARTICLE AC AND ARTICLE EE APPLY TO CHANGES MADE OR DIRECTED BY THE CONTRACTING OFFICER SUBSEQUENT TO THE AWARD OF THE CONTRACT. THE STATUTORY AUTHORITY PURSUANT TO WHICH THE SALE WAS ADVERTISED IS 40 U.S.C. 484, AND UNDER THIS STATUTE, A LEGAL AWARD OF A CONTRACT FOR SURPLUS PROPERTY OFFERED FOR SALE BY FORMAL SALES INVITATION CAN BE MADE ONLY TO A RESPONSIVE BIDDER, THAT IS, ONE WHO HAS SUBMITTED A BID IN CONFORMANCE WITH THE ADVERTISED TERMS AND CONDITIONS. A BID WHICH DEVIATES IN ANY MATERIAL RESPECT FROM THOSE TERMS AND CONDITIONS MAY NOT PROPERLY BE CONSIDERED FOR AWARD SINCE, IN LEGAL EFFORT, SUCH A BID IS A COUNTEROFFER WHICH THE GOVERNMENT MAY NOT ACCEPT.

WE HAVE HELD THAT A NONRESPONSIVE BID, SUCH AS WAS SUBMITTED HERE, MAY NOT BE ACCEPTED BUT MUST BE REGARDED AS CONTRARY TO THE CONDITIONS OF THE SALES INVITATION WHICH REQUIRED--WITHOUT EXCEPTION--"UNITY BIDS" ONLY. FOR COMPARISON SEE B-140335, AUGUST 17, 1959 AND B-161894, SEPTEMBER 1, 1967. WE THEREFORE CONCUR WITH THE CONTRACTING OFFICER THAT NO "LEGAL AWARD" COULD HAVE BEEN MADE TO NATIONAL METAL UNDER ITS ORIGINAL BID ON A "PER POUND" BASIS.

IT IS ADMINISTRATIVELY REPORTED THAT CERTAIN BACKGROUND INFORMATION IS NECESSARY TO UNDERSTAND THE BASIS FOR THE DECISION TO REJECT ALL BIDS UNDER THE INVITATION. THE OVERALL POLICY WITH RESPECT TO THE DISPOSAL OF MILITARY AIRCRAFT WAS REVIEWED IN DETAIL BY THE DEPARTMENT OF DEFENSE IN 1963. IN RESPONSE TO DEVELOPING POLICY CONCERNING THE LOCATION AT WHICH SUCH AIRCRAFT HAD TO BE SWEATED, THE DEPARTMENT OF THE AIR FORCE TOOK A VERY FIRM STAND THAT AIR FORCE MILITARY AIRCRAFT HAD TO BE SWEATED ON-BASE IN LIEU OF ON-BASE DEMILITARIZATION WITH OFF BASE PROCESSING.

THE AIR FORCE POLICY WAS ADOPTED BY DSSO IN JUNE 1963 BY WRITING CONTRACT PROVISIONS REQUIRING ON-BASE SWEATING. SINCE JULY 1964 A SINGLE MANAGER OPERATING AGENCY HAS HAD CHARGE OF AIRCRAFT STORAGE, RECLAMATION, AND DISPOSAL OPERATIONS. THIS AGENCY OPERATES UNDER THE JURISDICTION OF THE DEPARTMENT OF THE AIR FORCE AND WAS ASSIGNED THE RESPONSIBILITY TO PROVIDE COMPLETE TECHNICAL GUIDANCE TO THE DEFENSE SURPLUS SALES OFFICE WITH SPECIAL EMPHASIS ON MILITARIZATION REQUIREMENTS AND PROVIDING THE SALES OFFICE WITH ANY SPECIAL CONDITIONS OR PROVISIONS OF SALE CONSIDERED TO BE NECESSARY. THE DEPARTMENT OF THE AIR FORCE THROUGH ITS REGIONAL ENVIRONMENTAL HEALTH LABORATORY CONDUCTED A COMPREHENSIVE EVALUATION OF THE AIR POLLUTION POTENTIAL OF THE AIRCRAFT RECLAMATION. AS A RESULT OF THIS REPORT, THE AIR FORCE BY LETTER DATED JANUARY 21, 1965, ADVISED ITS SINGLE MANAGER OPERATING AGENCY OF THE VERY CRITICAL PROBLEM CONCERNING AIR POLLUTION IN THE TUCSON AREA AND INSTRUCTED THAT AGENCY TO OFFER AIRCRAFT CARCASSES UNDER AN ALTERNATE PROVISION WHICH WOULD ALLOW THE CONTRACTOR TO DEMILITARIZE THE AIRCRAFT CARCASSES ON-BASE AND THEN REMOVE THE CARCASSES FOR OFF-BASE PROCESSING. IT WAS BELIEVED THAT SUCH AN ALTERNATIVE MIGHT MINIMIZE THE AIR POLLUTION PROBLEM. AS THE RESULT, APPARENTLY, OF A MISUNDERSTANDING BY THE SINGLE MANAGER OPERATING AGENCY AT DAVIS-MONTHAN, THE DEFENSE SURPLUS SALES OFFICE WAS TOLD TO PERMIT OFF- BASE PROCESSING ON THE NEXT SALE, IN MAY 1965, BUT WAS TOLD TO REQUIRE ON- BASE SWEATING IN SUBSEQUENT SALES.

IT IS FURTHER REPORTED THAT THE DEFENSE LOGISTICS SERVICES CENTER, THE DSA ACTIVITY WHICH ADMINISTERS THE SURPLUS PROPERTY PROGRAM OF THE DEPARTMENT OF DEFENSE, FIRST BECAME AWARE ON APRIL 29, 1969, OF THE AIR FORCE POLICY PERMITTING ON-BASE DEMILITARIZATION OF AIRCRAFT WITH OFF BASE PROCESSING. AFTER CONSULTATION WITH THE AIR FORCE, THE SALES CONTRACTING OFFICER AND DLSC CONCLUDED THAT ALL BIDS SHOULD BE REJECTED AND THE AIRCRAFT CARCASSES READVERTISED GIVING THE PURCHASER THE OPTION OF EITHER ON-BASE SWEATING OR ON-BASE DEMILITARIZATION WITH OFF-BASE PROCESSING. THE DECISION TO REJECT ALL BIDS WAS BASED ON TWO FACTORS, (1) ON-BASE DEMILITARIZATION WITH OFF-BASE PROCESSING WOULD HELP TO ALLEVIATE A CRITICAL AIR POLLUTION PROBLEM, AND (2) FROM A LEGAL STANDPOINT, SINCE THE AIRCRAFT HAD BEEN OFFERED FOR SALE UNDER MORE RESTRICTIVE PROVISIONS THAN THOSE NECESSARY TO ASSURE THE PROTECTION OF THE GOVERNMENT'S INTEREST, THE FULL AND FREE COMPETITION CONTEMPLATED BY THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, WHICH GOVERN THE DISPOSITION OF SUCH PROPERTY, WAS NOT OBTAINED.

THE INVITATION NO. 46-0010, READVERTISING THE AIRCRAFT CARCASSES WAS ISSUED WITH A PROVISION THAT AFTER DEMILITARIZATION IS PERFORMED THE MATERIAL MAY BE REMOVED OFF GOVERNMENT PREMISES FOR FURTHER PROCESSING AT THE OPTION OF THE PURCHASER. THE OPENING DATE FOR THE READVERTISED BIDS, AS AMENDED, WAS JULY 24, 1969. BY AMENDMENT NO. 2 DATED JULY 1, 1969, 444 LANDING WHEELS WERE DELETED FROM THE LIST OF ACCESSORIES TO BE SAVED FOR THE GOVERNMENT AND WILL REMAIN IN THE PURCHASER'S POSSESSION. FIVE RESPONSIVE BIDS WERE RECEIVED UNDER THE INVITATION AS FOLLOWS:

NATIONAL METAL & STEEL CORP. $1,019,852

AERO-TECH 1,463,000

ENGINEER ASSOCIATES OF PHOENIX 1,308,600

NATIONAL AIRCRAFT, DIVISION OF NATIONAL METALS

OF TUCSON 1,250,000

ALLIED AIRCRAFT 1,000,000

AERO-TECH, THROUGH ITS ATTORNEY'S LETTER DATED JUNE 4, 1969, FORCIBLY PROTESTS THE "REJECTION OF ALL BIDS" UNDER INVITATION 46-9105 ON THE GROUND THAT THE CONTRACTING OFFICER'S DETERMINATIONS WERE SO GROSSLY ERRONEOUS AS TO CONSTITUTE AN ARBITRARY REJECTION CONTRARY AND DETRIMENTAL TO THE GOVERNMENT'S INTEREST IN MAINTAINING THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM.

THE PROCURING ACTIVITY CITES 43 COMP. GEN. 15 (1963) OF THE REASONS FOR REJECTION OF ALL BIDS, WHEREIN WE STATED:

WE HAVE HELD THAT GENERALLY CONDITIONS IN GOVERNMENT PROCUREMENT CONTRACTS WHICH MAY INCREASE THE COST OF PERFORMANCE ARE IMPROPER UNLESS AUTHORIZED BY STATUTE, 20 COMP. GEN. 836, 845, AND CASES CITED THEREIN. WE BELIEVE THIS PRINCIPLE APPLIES WITH EQUAL FORCE TO CONTRACT STIPULATIONS OR CONDITIONS WHICH TEND TO REDUCE THE RETURN TO THE GOVERNMENT IN SALES OF SURPLUS PROPERTY. THE FOREGOING PRINCIPLE IS A VALID RULE, IN OUR OPINION, BUT THE PROBABLE ADVERSE MONETARY IMPACT ON PRICES DUE TO RESTRICTIONS IN SPECIFICATIONS MUST BE WEIGHED AGAINST OTHER FACTORS, IF PRESENT, SUCH AS PRESERVATION OF THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM. IN THE CASE AT 43 COMP. GEN. 15 THE QUESTION AS TO RESTRICTIVE SPECIFICATIONS WAS RAISED BY THE CONTRACTOR AFTER A CONTRACT HAD BEEN AWARDED, SO THE FACTOR OF POSSIBLE PREJUDICE TO BIDDERS BY READVERTISING AFTER BID PRICES HAD BEEN EXPOSED WAS NOT PRESENT. THE PRESENT CASE THERE IS ANOTHER PRINCIPLE FOR CONSIDERATION. AS WAS STATED BY THE COURT OF CLAIMS IN MASSMAN CONSTRUCTION COMPANY V UNITED STATES, 102 CT. CL. 699, 719: TO HAVE A SET OF BIDS DISCARDED AFTER THEY ARE OPENED AND EACH BIDDER HAS LEARNED HIS COMPETITOR'S PRICE IS A SERIOUS MATTER, AND IT SHOULD NOT BE PERMITTED EXCEPT FOR COGENT REASONS.

OUR OFFICE RECOGNIZES THAT THE AUTHORITY VESTED IN THE CONTRACTING OFFICER TO REJECT ANY OR ALL BIDS AND READVERTISE IS EXTREMELY BROAD, AND ORDINARILY SUCH ACTION WILL NOT BE QUESTIONED BY OUR OFFICE. HOWEVER, WE HAVE RULED, IN PROPER CASES, THAT THE INTEGRITY OF THE COMPETITIVE BIDDING SYSTEM WOULD SUFFER LESS FROM THE MAKING OF AN AWARD UNDER AN IMPERFECT INVITATION THAN FROM READVERTISING A PROCUREMENT. SEE 39 COMP. GEN. 396 (1959); ID. 563 (1960). WE REALIZE THAT THESE CASES INVOLVE PROCUREMENTS, BUT PRINCIPLE OF THE MASSMAN CASE IS, WE BELIEVE, EQUALLY APPLICABLE TO SURPLUS SALES. WE, THEREFORE, EXAMINE THE GIVEN DETERMINATIONS IN THE CONTEXT OF THE STATUTORY REQUIREMENT. AS IN THE CASE OF THE PROCUREMENT OF SUPPLIES AND SERVICES BY GOVERNMENT AGENCIES PURSUANT TO THE STATUTORY REQUIREMENTS GOVERNING FORMAL ADVERTISING, THE STATUTE GOVERNING THE DISPOSITION OF SURPLUS GOVERNMENT PROPERTY, 40 U.S.C. 484(E)(2) REQUIRES THAT THE TERMS AND CONDITIONS FOR BIDS "SHALL PERMIT THAT FULL AND FREE COMPETITION" WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY INVOLVED, AND THAT:

AWARD SHALL BE MAKE WITH REASONABLE PROMPTNESS BY NOTICE TO THE RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT, PRICE AND OTHER FACTORS CONSIDERED: PROVIDED, THAT ALL BIDS MAY BE REJECTED WHEN IT IS IN THE PUBLIC INTEREST TO DO SO.

THE BASIC ISSUE IN THE PRESENT CASE IS WHETHER THE REASONS GIVEN FOR THE DISCRETIONARY ACTION TAKEN BY THE CONTRACTING OFFICER CONSTITUTE COGENT OR COMPELLING REASONS TO JUSTIFY REJECTION OF ALL BIDS, AS BEING IN THE PUBLIC INTEREST. HERE, BECAUSE OF THE NATURE OF THE PROPERTY INVOLVED, THE GOVERNMENT'S ACTUAL NEED IS TO HAVE THE AIRCRAFT CARCASSES, AFTER DEMILITARIZATION, REDUCED TO SCRAP FORM FOR FUTURE REDUCTION OF THE MEAL CONTENT. WHILE WE DO NOT QUESTION THAT THE JOB CAN, AND SHOULD, BE PERFORMED WITHOUT CREATING SIGNIFICANT AIR POLLUTION "A CIRCUMSTANCE INIMICAL TO, AND AT VARIANCE WITH," THE NATIONAL PUBLIC HEALTH, WE DO NOT BELIEVE THAT SUCH AN ISSUE IS FOR OTHER THAN SECONDARY CONSIDERATION IN MEASURING THE GOVERNMENT'S NEEDS HEREIN; ESPECIALLY WHERE THE READVERTISED INVITATION ALLOWS ON-BASE SWEATING.

CONCERNING THE CONTENTION BY AERO-TECH, THAT ON-BASE SWEATING HAS PROVEN THE MOST ECONOMICAL PROCESS, WE ARE OF THE OPINION THAT, WHETHER OR NOT ECONOMIES MAY BE EFFECTED BY AN INDIVIDUAL PROSPECTIVE CONTRACTOR IN PERFORMING A PARTICULAR JOB, CAN BE BEST DETERMINED BY THAT CONTRACTOR RATHER THAN BY THE PROCUREMENT OFFICIALS. WHEN DRAFTING SPECIFICATIONS OR INVITATIONS FOR BIDS WHICH RESTRICT THE APPLICATION OF TECHNIQUES, METHODS OR OPERATIONS TO A SINGLE, OR ADMINISTRATIVELY PREFERRED, PROCESS UNDER WHICH PROSPECTIVE CONTRACTORS ARE REQUIRED TO PERFORM THE WORK, THE CRITERION OF INCLUSION OF SUCH RESTRICTIONS IS WHETHER A VALID JUSTIFICATION HAS BEEN ESTABLISHED FOR PROHIBITING BIDDERS FROM BASING THEIR BIDS ON THE USE OF ANY CUSTOMARY METHODS OF OPERATION WHICH, IN THEIR CONSIDERED JUDGMENT, PROVIDE THE MOST ECONOMICAL MEANS AVAILABLE TO THEM AND THUS WILL RESULT IN THE HIGHEST RETURN TO THE GOVERNMENT. THE DETERMINATION OR OPINION THAT A PARTICULAR OPERATION CANNOT BE ECONOMICALLY EMPLOYED IN THE WORK PERFORMANCE BY A BIDDER, OR BY ALL BIDDERS, PROVIDES NO VALID BASIS FOR PROHIBITING SUCH OPERATIONS, SINCE DETERMINATIONS AS TO THE OPERATIONAL AREAS IN WHICH ECONOMIES MAY BE EFFECTED BY AN INDIVIDUAL PROSPECTIVE CONTRACTOR IN PERFORMING A PARTICULAR JOB RESIDE MORE PROPERLY WITH THE INDIVIDUAL CONTRACTOR, AND CONSTITUTE AN ESSENTIAL ELEMENT TO HIS COMPETING FREELY AND FULLY FOR THE MATERIAL AS INTENDED BY 40 U.S.C. 484.

THE REMAINING QUESTION WHICH MUST BE REGARDED AS THE BASIC FACTOR FOR THE DETERMINATION TO REJECT ALL BIDS CONCERNS THE ALTERNATE OFF-BASE PROCESSING PROSCRIPTION WHICH WAS NOT IN FACT NECESSARY TO THE GOVERNMENT'S PURPOSES. THE CLEAR MANDATE OF 40 U.S.C. 484 IS THAT INVITATIONS "SHALL PERMIT" THAT FULL AND FREE COMPETITION WHICH IS CONSISTENT WITH THE VALUE AND NATURE OF THE PROPERTY INVOLVED. THE GOVERNMENT'S ACTUAL NEEDS, AS STATED HEREINBEFORE, ARE TO HAVE THE AIRCRAFT CARCASSES, AFTER DEMILITARIZATION, REDUCED TO SCRAP FORM FOR FUTURE REDUCTION OF THE METAL CONTENT. THERE IS NO NEED THAT ANY OF THE AIRCRAFT CARCASSES BE SWEATED ON-BASE AS DESIGNATED IN THE SPECIFICATIONS, NOR IS IT INCONSISTENT WITH THE SALES POLICY FOR THE MATERIAL TO BE PROCESSED OFF-BASE. WE FIND NOTHING IN 40 U.S.C. 484 TO INDICATE THAT SUCH STATUTE CONTEMPLATES THAT A BIDDER'S RIGHT, AS PROVIDED THEREIN, TO COMPETE FREELY AND FULLY MAY BE ADMINISTRATIVELY RESTRICTED OR CONTROLLED BY PROCUREMENT OFFICIALS IN THE DRAFTING OF SALES INVITATION FOR BIDS TO THE EXTENT THAT ANY BIDDER IS PRECLUDED FROM COMPUTING HIS BID PRICE ON THE MAXIMUM UTILIZATION OF HIS OWN PROPERTY, FACILITIES AND EQUIPMENT. ACCORDINGLY, WE HOLD THAT SUCH ADMINISTRATIVE RESTRICTIONS IN THE AREAS OF A BIDDER'S INTERNAL OPERATIONS IS BASICALLY INIMICAL TO FREE AND FULL COMPETITION BY THE INDIVIDUAL BIDDER, AND MAY BE CONDONED ONLY WHERE IT IS CLEARLY REQUIRED IN ORDER TO SECURE THE ACTUAL NEEDS OF THE GOVERNMENT.

ALTHOUGH IT IS REGRETTABLE THAT THE MISTAKEN POLICY OF THE SALES AGENCY IN DRAFTING SALES INVITATIONS SO AS TO NOT ALLOW RESPONSIVE BIDDING ON OFF BASE PROCESSING BY THE CONTRACTOR WAS NOT KNOWN PRIOR TO BID OPENING, THAT POLICY DOES NOT PERMIT BIDDERS TO COMPETE FREELY AND FULLY IN SITUATIONS SUCH AS THAT AT HAND FOR THE NEEDS ACTUALLY REQUIRED BY THE GOVERNMENT AND TO THE EXTENT THAT SUCH POLICY CONFLICTS WITH 40 U.S.C. 484 THE STATUTE MUST PREVAIL. WAS PROPERLY CANCELED.

FOR THE REASONS STATED WE CONCLUDE THAT THE INVITATION IN QUESTION ..END