B-169372, APRIL 8, 1970, 49 COMP. GEN. 683

B-169372: Apr 8, 1970

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AFTER-DISCOVERED NEED FOR PROPERTY THE FACT THAT THE GOVERNMENT DETERMINED THE INVENTORY ON HAND UPON TERMINATION OF A CONTRACT WAS SURPLUS TO ITS NEEDS AND AUTHORIZED THE CONTRACTOR TO DISPOSE OF THE INVENTORY. THE RULE THAT A CONTRACTING OFFICER NOT ONLY HAS THE RIGHT TO REJECT ALL BIDS WHEN A PROCUREMENT IS NO LONGER NEEDED OR WANTED BUT WOULD BE DERELICT IN HIS DUTY IF HE FAILED TO DO SO. THE PROPERTY COVERED BY THE SALE IS REPORTEDLY OWNED BY THE UNITED STATES. THIS CONTRACTOR-CONDUCTED SALE IS A TRIPARTITE MATTER. AS THE GOVERNMENT IS THE REAL PARTY IN INTEREST. WE WILL CONSIDER THE SALE AS IF IT WERE CONDUCTED DIRECTLY BY THE GOVERNMENT. IT APPEARS THAT AN AIR FORCE CONTRACT WITH BMC WAS TERMINATED IN MID 1969.

B-169372, APRIL 8, 1970, 49 COMP. GEN. 683

SALES -- BIDS -- DISCARDING ALL BIDS -- AFTER-DISCOVERED NEED FOR PROPERTY THE FACT THAT THE GOVERNMENT DETERMINED THE INVENTORY ON HAND UPON TERMINATION OF A CONTRACT WAS SURPLUS TO ITS NEEDS AND AUTHORIZED THE CONTRACTOR TO DISPOSE OF THE INVENTORY, DOES NOT PRECLUDE THE GOVERNMENT, THE REAL PARTY IN INTEREST, FROM ASSERTING AN AFTER DISCOVERED NEED FOR THE PROPERTY AND WITHDRAWING IT FROM SALE FOR USE UNDER ANOTHER CONTRACT. THE RULE THAT A CONTRACTING OFFICER NOT ONLY HAS THE RIGHT TO REJECT ALL BIDS WHEN A PROCUREMENT IS NO LONGER NEEDED OR WANTED BUT WOULD BE DERELICT IN HIS DUTY IF HE FAILED TO DO SO, SHOULD BE FOLLOWED WHEN A NEED ARISES FOR SURPLUS PROPERTY ADVERTISED FOR SALE, AS A DETERMINATION TO DISPOSE OF SURPLUS PROPERTY DOES NOT CONSTITUTE A REPRESENTATION THAT NO NEED EXISTS OR MAY NOT SUBSEQUENTLY ARISE FOR THE PROPERTY.

TO FIRESTONE EQUIPMENT, INC., APRIL 8, 1970:

PURSUANT TO THE REQUEST MADE IN YOUR LETTER DATED FEBRUARY 20, 1970, TO BATESVILLE MANUFACTURING COMPANY (BMC), YOUR PROTEST AGAINST THE WITHDRAWAL OF ITEMS 25, 26, 29, AND 33 FROM BMC SALE NO. BMC 69-002 HAS BEEN FORWARDED TO OUR OFFICE FOR REVIEW AND DECISION. THE PROPERTY COVERED BY THE SALE IS REPORTEDLY OWNED BY THE UNITED STATES, HAVING BEEN GENERATED UNDER A COST-PLUS-FIXED-FEE PRODUCTION CONTRACT WITH THE GOVERNMENT. ACCORDINGLY, THIS CONTRACTOR-CONDUCTED SALE IS A TRIPARTITE MATTER. HOWEVER, AS THE GOVERNMENT IS THE REAL PARTY IN INTEREST, WE WILL CONSIDER THE SALE AS IF IT WERE CONDUCTED DIRECTLY BY THE GOVERNMENT.

IT APPEARS THAT AN AIR FORCE CONTRACT WITH BMC WAS TERMINATED IN MID 1969. PART OF THE TERMINATION INVENTORY WAS SUBMITTED TO THE DALLAS REGIONAL OFFICE OF THE DEFENSE CONTRACT ADMINISTRATION SERVICES (DCAS); THIS PORTION OF THE INVENTORY WAS SPECIAL TOOLING. ON AUGUST 1, 1969, DCAS INITIATED 30-DAY FIRST PHASE UTILIZATION SCREENING. THERE WAS NO INDICATION OF A REQUIREMENT FOR THIS PROPERTY. THEREFORE, DCAS COMMENCED 60-DAY SECOND PHASE SCREENING ON SEPTEMBER 2, 1969. THIS PHASE OF UTILIZATION SCREENING WAS ALSO COMPLETED WITHOUT DISCOVERY OF A GOVERNMENTAL REQUIREMENT FOR ANY OF THE SUBJECT PROPERTY.

IN VIEW OF THESE NEGATIVE RESPONSES, THE DCAS PROPERTY DISPOSAL OFFICER (PDO) ON NOVEMBER 21, 1969, AUTHORIZED BMC TO DISPOSE OF THE PROPERTY IN A CONTRACTOR-CONDUCTED SALE. PURSUANT TO THIS AUTHORIZATION, BMC ISSUED INVITATION FOR BIDS NO. BMC 69-002 ON DECEMBER 8, 1969, WITH OPENING OF BIDS SCHEDULED FOR 10 A.M., JANUARY 8, 1970. WHEN BIDS WERE OPENED AT THE APPOINTED TIME, FIRESTONE'S WAS REVEALED TO BE THE HIGHEST RECEIVED WITH RESPECT TO ITEMS 25, 26, 29, AND 33, AS WELL AS A NUMBER OF OTHER ITEMS. THE PRICES BID ON ITEMS 25 AND 26 (EACH DESCRIBED AS A "BLOW MOLD SYSTEM & DETAILS") WERE $8,368 FOR EACH SYSTEM. FIRESTONE BID $18 ON ITEM 29, "SPARE PARTS & TOOLING FOR BLOW MOLD SYSTEM, 2TEMS 25 & 26." ON ITEM 33, A WATER SOFTENER, YOUR BID PRICE WAS $138.

THE ABSTRACT OF BIDS WAS FORWARDED TO THE PDO, AND IT WAS RECEIVED IN HIS OFFICE LATE IN THE AFTERNOON OF JANUARY 12, 1970. THE PDO HAS REPORTED THAT ON JANUARY 13 AND 14, 1970, HE AND OTHER DCAS PLANT CLEARANCE PERSONNEL WERE AWAY FROM THE OFFICE ATTENDING A PLANT CLEARANCE SEMINAR. IT IS FURTHER REPORTED THAT DURING THESE 2 DAYS, OFFICIALS OF PICATINNY ARSENAL ATTEMPTED TO CONTACT THE PDO. THE STATEMENT BY THE PDO DISCLOSES THESE ADDITIONAL FACTS:

MR. D. G. ELLINGTON, PICATINNY ARSENAL, DOVER, NEW JERSEY CONTACTED THE PROPERTY DISPOSAL OFFICER BY TELEPHONE 15 JANUARY 1970 TO ADVISE THAT THE ARSENAL HAD A REQUIREMENT FOR SOME OF THE AUTOMATED ASSEMBLY MACHINES AT BATESVILLE MFG. CO. IF THEY WERE STILL AVAILABLE. HE ALSO ASKED IF APSA (AMMUNITION PROCUREMENT AND SUPPLY AGENCY), JOLIET HAD SCREENED THE ITEMS AS HE KNEW THAT THEY ALSO HAD REQUIREMENTS FOR THIS TYPE EQUIPMENT. MR. ELLINGTON WAS ADVISED THAT THE PROPERTY HAD ALREADY BEEN THROUGH SCREENING, INCLUDING APSA, WHO HAD NOTIFIED THIS OFFICE THEY HAD NO REQUIREMENTS FOR THE EQUIPMENT. MR. ELLINGTON WAS FURTHER ADVISED THAT THE PROPERTY WAS IN A SALE ON WHICH THE PROPERTY DISPOSAL OFFICER'S APPROVAL OF AWARDS TO SUCCESSFUL BIDDERS WAS PENDING AT THE TIME. REQUESTED TIME TO REVIEW THEIR REQUIREMENTS AGAINST THE ITEMS PENDING AWARD. HE WAS THEN ADVISED THAT THIS INVOLVED TERMINATION INVENTORY THAT MUST BE REMOVED AS SOON AS POSSIBLE TO PRECLUDE ACCRUAL OF STORAGE CHARGES. THE PROPERTY DISPOSAL OFFICER SUGGESTED TO MR. ELLINGTON, HOWEVER, THAT APPROVAL OF AWARDS WOULD BE DELAYED UNTIL 21 JANUARY 1970, IF HE WOULD SEND A PICATINNY ARSENAL TOOLING ENGINEER TO PHYSICALLY SIGHT THE EQUIPMENT NOT LATER THAN 19 JANUARY 1970 IN ORDER TO BE ABLE TO FURNISH US THEIR FIRM REQUIREMENTS BY 21 JANUARY 1970. MR. ELLINGTON COORDINATED THIS SUGGESTION WITH MANAGEMENT AND CALLED BACK LATER IN THE DAY TO ADVISE THAT THEIR REPRESENTATIVE WOULD ARRIVE AT THE CONTRACTOR'S PLANT MONDAY, 19 JANUARY 1970 TO SIGHT THE EQUIPMENT.

MR. PAUL PACKARD, DCASR, DALLAS DEPUTY DIRECTOR, WAS CONTACTED VIA TELEPHONE 21 JANUARY 1970, BY MR. F. C. JUNE, JR., DEPUTY CHIEF, CONTROL DIVISION, APSA, JOLIET, ILLINOIS WHO REQUESTED THAT APSA BE GIVEN AN OPPORTUNITY TO RESCREEN THE EQUIPMENT AGAINST THEIR REQUIREMENTS BEFORE AWARDS WERE APPROVED TO THE SUCCESSFUL BIDDERS. MR. PACKARD THEN DISCUSSED THE SUBJECT WITH THE DCASR DALLAS, DEPUTY DIRECTOR OF CONTRACTS, CHIEF OF THE INDUSTRIAL MATERIAL SUPPORT DIVISION, AND THE ASSIGNED PROPERTY DISPOSAL OFFICER. FOLLOWING A BRIEFING BY THE PROPERTY DISPOSAL OFFICER ON THE CURRENT STATUS OF THE SALE, AND THE IMPORTANCE OF REMOVING THE PROPERTY FROM THE CONTRACTOR'S PREMISES AS SOON AS POSSIBLE, MR. PACKARD STATED THAT EVEN THOUGH APSA HAD ALREADY SCREENED THE EQUIPMENT WITH NEGATIVE RESULTS, THEY SHOULD BE GIVEN ANOTHER OPPORTUNITY IF THEY NOW HAD REQUIREMENTS. ACCORDINGLY, HE DIRECTED THAT APPROVAL OF AWARDS BE DELAYED PENDING RESCREENING BY APSA AND THAT WE (PERSONNEL INDICATED ABOVE) CONTACT MR. JUNE BY TELEPHONE CONFERENCE TO ARRANGE A REALISTIC TIME CYCLE FOR ACCOMPLISHMENT OF THIS ACTION. THE DESIGNATED PERSONNEL (MESSRS. G. E. CARLSON, C. E. HAMILTON AND M. D. LEWIS RESPECTIVELY) PLUS MR. JOHN LYGA, TERMINATION OFFICER, CONTACTED MR. JUNE BY TELEPHONE CONFERENCE 21 JANUARY 1970 AND AGREED TO A 31 JANUARY 1970 DATE FOR APSA TO RESCREEN THE PROPERTY AND FURNISH THEIR REQUIREMENTS TO THIS OFFICE. ADDITIONAL COPIES OF ALL APPLICABLE INVENTORY SCHEDULES WERE AIR MAILED TO MR. JUNE, AT HIS REQUEST, IMMEDIATELY FOLLOWING OUR TELEPHONE CONFERENCE. THE PROPERTY DISPOSAL OFFICER RECEIVED A TELEPHONE CALL FROM MR. JUNE 29 JANUARY 1970 REQUESTING AN EXTENSION UNTIL NOON 4 FEBRUARY 1970 TO COMPLETE SCREENING OF THE PROPERTY FOR REQUIREMENTS. HE STATED THAT THE ADDITIONAL TIME WAS NEEDED TO PERMIT A VISIT TO THE CONTRACTOR'S PLANT FOR PHYSICAL INSPECTION OF THE EQUIPMENT BY GOVERNMENT ARSENAL AND DEFENSE CONTRACTOR PERSONNEL. HE WAS ADVISED BY THE PDO THAT DUE TO THE EXTREME URGENCY OF REMOVING THE PROPERTY FROM THE CONTRACTOR'S PLANT, NO EXTENSION COULD BE GRANTED UNLESS AGREED TO BY THE TERMINATION CONTRACTING OFFICER. MR. LYGA WAS ASKED TO JOIN THE CONVERSATION AND IT WAS AGREED THE EXTENSION WOULD BE APPROVED BASED ON THE CONDITION THAT APSA WOULD FURNISH THE PDO ADVANCE TELEPHONE INFORMATION OF THEIR FIRM REQUIREMENTS NOT LATER THAN NOON 4 FEBRUARY 1970. MR. CLYDE MILLER, APSA REPRESENTATIVE, AND TEAM CAPTAIN OF THE DOD AND DEFENSE CONTRACTOR PERSONNEL VISITING THE CONTRACTOR'S PLANT TO INSPECT THE PROPERTY, CALLED ME FROM BATESVILLE MFG. CO. PLANT 4 FEBRUARY 1970 AND FURNISHED THE FIRM REQUIREMENTS, INCLUDING THE VARIOUS DESTINATIONS FOR THE SHIPMENTS.

THE PROPERTY DISPOSAL OFFICER FURNISHED BATESVILLE MFG. CO. VERBAL APPROVAL OF AWARDS VIA TELEPHONE THE AFTERNOON OF 4 FEBRUARY 1970 FOR SALE BMC 69-002, ITEM NOS. 3, 4, 21, 22 AND 32. CONTRACTOR WAS ALSO NOTIFIED THAT THE HIGH BIDS ON ALL OTHER SALE ITEM NOS. WERE REJECTED SINCE THE PROPERTY HAD BEEN SELECTED FOR TRANSFER TO OTHER DEPARTMENT OF DEFENSE PROGRAMS. THIS VERBAL NOTIFICATION WAS CONFIRMED BY LETTER 5 FEBRUARY 1970. ***

THE ESSENCE OF YOUR PROTESTS, AS DETAILED IN YOUR LETTER OF FEBRUARY 20, SEEMS TO BE THAT UPON COMPLETION OF THE SCREENING PROCESS CONDUCTED BY DCAS, WHICH UNCOVERED NO GOVERNMENTAL NEEDS FOR ITEMS 25, 26, 29, AND 33, AND AFTER THE RECEIPT OF BIDS FROM PRIVATE CONCERNS ON THE PROPERTY, THE GOVERNMENT IN THIS CONTRACTOR-CONDUCTED SALE WAS PRECLUDED FROM THEREAFTER ASSERTING A NEED FOR THE PROPERTY, WITHDRAWING IT FROM THE SALE, AND DEVOTING IT TO USE UNDER ANOTHER GOVERNMENT CONTRACT.

WE CANNOT ASSENT TO SUCH A PROPOSITION. IT IS TO BE NOTED INITIALLY THAT INVITATION BMC 69-002 SPECIFICALLY PROVIDED THAT "THE RIGHT IS RESERVED TO REJECT ANY OR ALL BIDS." MOREOVER, IT IS WELL ESTABLISHED THAT AN INVITATION FOR BIDS DOES NOT IMPORT AN OBLIGATION TO ACCEPT ANY OF THE BIDS RECEIVED, INCLUDING THAT ONE WHICH IS MOST ADVANTAGEOUS TO THE GOVERNMENT AND WHICH THEREFORE IS APPROPRIATE FOR ACCEPTANCE UNDER THE APPLICABLE PROCUREMENT STATUTE (10 U.S.C. 2305). SEE, E.G., B 168557, JANUARY 23, 1970. SUBSECTION (C) OF THE CITED STATUTORY PROVISION EXPLICITLY STATES THAT ALL BIDS MAY BE REJECTED IF SUCH ACTION IS DETERMINED TO BE "IN THE PUBLIC INTEREST." IN OUR DECISION 17 COMP. GEN. 554 (1938), TO WHICH WE HAVE FREQUENTLY ADVERTED IN SUBSEQUENT DECISIONS OF OUR OFFICE, WE REMARKED AT PAGES 559 AND 560:

*** AND CERTAINLY IT CANNOT BE CONCEDED THAT A PUBLIC OFFICER, ACTING FOR THE GENERAL WELFARE, IS BOUNDED TO ACCEPT A BID, WHERE HE DETERMINES THAT THE PUBLIC INTEREST WOULD BE SERVED BY A REJECTION OF ALL BIDS ***

THE AUTHORITY OF GOVERNMENT CONTRACTING OFFICERS TO REJECT ALL BIDS IS CLEARLY CONDITIONED UPON A DETERMINATION THAT THE PUBLIC INTEREST WOULD BE SERVED THEREBY. HOWEVER, OUR REVIEW OF SUCH DETERMINATIONS IS RESTRICTED TO ASCERTAINING WHETHER THE ADMINISTRATIVE OFFICIALS ACTED IN AN ARBITRARY MANNER. IN B-165463, MARCH 13, 1969, WE STATED OUR POSITION AS FOLLOWS:

*** IT IS CLEAR THAT THE QUESTION OF WHETHER TO MAKE AN AWARD OR REJECT ALL BIDS IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION. IN THE ABSENCE OF CLEAR PROOF OF THE ABUSE OF SUCH DISCRETIONARY POWER, THIS OFFICE WILL NOT OBJECT TO SUCH ACTION. ***

IN B-162914, JANUARY 30, 1968, WE BASED OUR HOLDING, THAT THERE WAS NO ABUSE OF DISCRETION, ON THE WELL-ESTABLISHED PRINCIPLE THAT "THE GOVERNMENT SHOULD NOT BE COMPELLED TO MAKE AN AWARD FOR AN ITEM OR FOR QUANTITIES OF AN ITEM WHICH IT NO LONGER NEEDS OR WANTS." WE ALSO OBSERVED IN THAT DECISION THAT OUR OFFICE HAD PREVIOUSLY HELD THAT IN SUCH CIRCUMSTANCES A CONTRACTING OFFICER NOT ONLY HAS THE RIGHT TO REJECT ALL BIDS, BUT WOULD BE DERELICT IN HIS DUTY IF HE FAILED TO DO SO.

WHILE THE CITED CASE INVOLVED A SITUATION WHERE THE GOVERNMENT DISCOVERED THAT IT DID NOT HAVE A NEED FOR THE ITEM FOR WHICH IT HAD INVITED AND RECEIVED BIDS, WE SEE NO NECESSARY REASON WHY OUR APPROACH SHOULD BE DIFFERENT IN THE CONVERSE SETTING WHERE THE GOVERNMENT REJECTS BIDS ON ITS PROPERTY WHICH HAS BEEN ADVERTISED FOR SALE AS SURPLUS OR EXCESS ON THE BASIS OF A SUBSEQUENTLY DISCOVERED GOVERNMENTAL NEED FOR SUCH PROPERTY. IN B-144756, MARCH 28, 1961, THE GENERAL SERVICES ADMINISTRATION (GSA) RECEIVED BIDS ON AN AIR FORCE PLANT WHICH WAS INTENDED FOR SALE AS SURPLUS. NONE OF THE BIDS RECEIVED CAME UP TO THE APPRAISED FAIR MARKET VALUE OF THE PLANT. IN ADDITION, SHORTLY AFTER OPENING, THE DEPARTMENT OF DEFENSE ADVISED GSA OF A NEED FOR CERTAIN EQUIPMENT AVAILABLE AT THE PLANT. BASED ON THESE TWO CONSIDERATIONS, GSA REJECTED ALL BIDS. DENIED THE PROTEST OF THE HIGHEST BIDDER BECAUSE WE FOUND THAT THE ADMINISTRATIVE DETERMINATION HAD BEEN MADE IN GOOD FAITH. ALTHOUGH THE ABOVE DECISION IS FACTUALLY DISTINGUISHABLE FROM THE INSTANT MATTER IN THAT THERE HAS BEEN NO REPRESENTATION THAT YOUR BID PRICE IS INADEQUATE, THE DECISION DOES STAND FOR THE PROPOSITION THAT IT IS APPROPRIATE TO TAKE INTO ACCOUNT NEWLY DISCOVERED GOVERNMENTAL NEEDS IN DECIDING WHETHER TO REJECT ALL BIDS RECEIVED PURSUANT TO AN ADVERTISED SALE OF PROPERTY THERETOFORE CONSIDERED SURPLUS.

YOU RELY ON THE FACT THAT THE ADMINISTRATIVE SCREENING PROCEDURE DID NOT BRING TO LIGHT ANY EXISTING GOVERNMENTAL NEED FOR THIS PROPERTY. BELIEVE THAT SUCH RELIANCE IS MISPLACED AND THAT AN AFTER-DISCOVERED NEED MAY BE THE BASIS FOR A REJECTION OF YOUR BID. TO REACH THE RESULT YOU HAVE URGED WOULD REQUIRE US TO ELEVATE A PROCEDURE ADOPTED AS AN ADMINISTRATIVELY CONVENIENT METHOD OF ASCERTAINING SUCH NEEDS TO THE LEVEL OF A REPRESENTATION THAT, IN FACT, NO SUCH NEEDS EXIST. THERE IS NO EVIDENCE THAT SUCH A REPRESENTATION WAS INTENDED, AND WE WILL NOT PRESUME SUCH AN INTENT. FURTHERMORE, EVEN IF SUCH A REPRESENTATION WERE INTENDED, IT COULD NOT EXTEND TO ANY NEEDS ARISING SUBSEQUENT TO THE DATE OF COMPLETION OF THE SCREENING, AND YOUR JUSTIFIABLE RELIANCE THEREON WOULD BE CORRESPONDINGLY LIMITED. FINALLY, YOUR ARGUMENT IN ANY EVENT AMOUNTS TO AN ASSERTION OF AN ESTOPPEL; IT IS CLEARLY ESTABLISHED THAT ESTOPPEL DOES NOT APPLY AGAINST THE GOVERNMENT. UTAH POWER AND LIGHT CO. V UNITED STATES, 243 U.S. 389 (1917).

SINCE WE FIND NO ABUSE OF DISCRETION IN THIS RECORD, YOUR PROTEST MUST BE DENIED.