B-170523, JAN 21, 1971

B-170523: Jan 21, 1971

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WHERE PROTESTANT HAS BEEN THE LESSEE OF THE SUBJECT LAND FOR OVER 20 YEARS AND THE DEPARTMENT OF THE ARMY POLICY WAS. THEREFORE THE PROTEST IS DENIED. HUDSON: FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 5. RECEIPT IS ALSO ACKNOWLEDGED OF YOUR LETTER OF NOVEMBER 3. USE OF THE PROPERTY WAS RESTRICTED TO CATTLE GRAZING PURPOSES. FIVE BIDS WERE RECEIVED RANGING FROM $170. THE HIGHEST BID WAS SUBMITTED BY THE LA PANZA RANCH AND THE THIRD HIGHEST BID IN THE AMOUNT OF $145. 615 PER ANNUM WAS SUBMITTED BY PACIFIC VALLEY CATTLE COMPANY. AWARD WAS THEREAFTER MADE TO THE LA PANZA RANCH PURSUANT TO PARAGRAPH "I" OF THE INVITATION. IT IS REPORTED THAT FOR OVER 20 YEARS PVC HAS BEEN THE LESSEE OF THE LAND IN QUESTION UNDER A SUCCESSION OF NEGOTIATED 5-YEAR LEASES.

B-170523, JAN 21, 1971

BID PROTEST - COMPETITIVE BIDDING DENIAL OF PROTEST BY PACIFIC VALLEY CATTLE COMPANY AGAINST INVITATION REQUESTING BIDS FOR THE LEASING OF 141,387 ACRES OF LAND RESTRICTED TO CATTLE GRAZING PURPOSES ISSUED BY THE DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, AND AWARDED TO THE LA PANZA RANCH. WHERE PROTESTANT HAS BEEN THE LESSEE OF THE SUBJECT LAND FOR OVER 20 YEARS AND THE DEPARTMENT OF THE ARMY POLICY WAS, AT ONE TIME, TO PERMIT RENEWAL OF SUCH LEASES BY NEGOTIATION WHERE THE LESSEE HAD PERFORMED SATISFACTORILY, IN 1957, THE ARMY DECIDED TO CHANGE THE POLICY TO REQUIRE COMPETITIVE BIDDING TO GIVE ALL QUALIFIED PERSONS EQUAL OPPORTUNITY TO BID FOR USE OF THE PROPERTY, TO SECURE FOR THE GOVERNMENT THE BENEFITS WHICH FLOW FROM COMPETITION AND TO PREVENT CRITICISM THAT FAVORITISM HAS BEEN SHOWN BY EMPLOYEES OF THE GOVERNMENT IN AUTHORIZING USE OF PUBLIC PROPERTY. THEREFORE THE PROTEST IS DENIED.

TO MR. THOMAS J. HUDSON:

FURTHER REFERENCE IS MADE TO YOUR TELEGRAM OF AUGUST 5, 1970, PROTESTING, ON BEHALF OF THE PACIFIC VALLEY CATTLE COMPANY, THE AWARD OF A GRAZING LEASE TO THE LA PANZA RANCH UNDER DEPARTMENT OF THE ARMY INVITATION FOR BIDS NO. DACA05-70-B-0066, ISSUED BY THE SACRAMENTO DISTRICT, CORPS OF ENGINEERS, SACRAMENTO, CALIFORNIA. RECEIPT IS ALSO ACKNOWLEDGED OF YOUR LETTER OF NOVEMBER 3, 1970.

THE INVITATION REQUESTED SEALED BIDS FOR THE LEASING FROM THE GOVERNMENT OF APPROXIMATELY 141,387 ACRES OF LAND KNOWN AS AREA "B" LOCATED WITHIN THE BOUNDARIES OF HUNTER-LIGGETT MILITARY RESERVATION, MONTEREY COUNTY, NEAR KING CITY, CALIFORNIA, FOR A PERIOD OF 5 YEARS. USE OF THE PROPERTY WAS RESTRICTED TO CATTLE GRAZING PURPOSES. IN RESPONSE, FIVE BIDS WERE RECEIVED RANGING FROM $170,000 TO $73,159.86 PER ANNUM. THE HIGHEST BID WAS SUBMITTED BY THE LA PANZA RANCH AND THE THIRD HIGHEST BID IN THE AMOUNT OF $145,615 PER ANNUM WAS SUBMITTED BY PACIFIC VALLEY CATTLE COMPANY, HEREINAFTER REFERRED TO AS PVC. AWARD WAS THEREAFTER MADE TO THE LA PANZA RANCH PURSUANT TO PARAGRAPH "I" OF THE INVITATION.

IT IS REPORTED THAT FOR OVER 20 YEARS PVC HAS BEEN THE LESSEE OF THE LAND IN QUESTION UNDER A SUCCESSION OF NEGOTIATED 5-YEAR LEASES. YOU NOW OBJECT TO THE ACTION OF THE DEPARTMENT OF THE ARMY, CORPS OF ENGINEERS, IN ADVERTISING FOR COMPETITIVE BIDS FOR THE LEASING OF SUCH LAND FROM THE GOVERNMENT INSTEAD OF NEGOTIATING A LEASE WITH PVC FOR THAT LAND.

SIGNIFICANT OBJECTIONS MADE BY YOU TO THE AWARD ARE SET FORTH BELOW, FOLLOWED BY THE PORTIONS OF THE ADMINISTRATIVE REPORT DATED SEPTEMBER 18, 1970, WHICH, IN OUR OPINION, ARE RESPONSIVE TO YOUR CONTENTIONS.

"COMPLAINT: THE GRANT SHOULD BE AN ANNUAL PERMIT RENEGOTIATED ANNUALLY WITH COMPETITION WAIVED AS SUCH WAIVER WOULD 'PROMOTE THE NATIONAL DEFENSE AND BE IN THE PUBLIC INTEREST.'

"COMMENT: ANNUAL OUTGRANT (WHETHER CALLED A LEASE OR A PERMIT) IS NOT APPROPRIATE FOR A GRAZING AREA WHICH REQUIRES SOME WORK ITEMS OF MAINTENANCE, PROTECTION, REPAIR AND RESTORATION. ALSO, ANY LESSEE WHO IS CAPABLE OF MEETING THE TERMS OF THE CONTRACT IS ACCEPTABLE SO NO WAIVER OF COMPETITION IS JUSTIFIED. COMPETITION IS USUAL EXCEPT IN RARE INSTANCES WHICH WE FEEL REQUIRES NO FURTHER DISCUSSION.

"COMPLAINT: A PROSPECTIVE BIDDER CANNOT BE EXPECTED TO BID INTELLIGENTLY ON AN UNKNOWN AMOUNT OF GRAZING OVER A FIVE YEAR PERIOD.

"COMMENT: PAST RECORDS WERE AVAILABLE AND BIDDERS WERE SO INFORMED IN THE INVITATION. WE BELIEVE THAT THE BIDS INDICATE INTELLIGENT BIDDING AND CERTAINLY THE ARMY MADE NO EFFORT TO HIDE ANY FACTOR WHICH WOULD HAVE AN INFLUENCE ON PRICE.

"COMPLAINT: BIDS ON A 'PER ACRE BASIS' IS NOT AS SATISFACTORY AS LEASING A SPECIFIED NUMBER OF ANIMAL UNIT MONTHS OF GRAZING.

"COMMENT: WE EXPERIENCED DIFFICULTY IN ENFORCING COMPLIANCE ON THE AUM BASIS. WE BELIEVE WE CAN WITH LESS EXPENSE DO A BETTER JOB OF POLICING THE GRAZING UNDER THE 'PER ACRE BASIS' AS WE NEED ONLY TO CHECK THE PASTUREAGE TO DETECT OVERGRAZING. WE ARE NOT IN FACT LEASING 'BY THE ACRE.' WE ARE LEASING AN ENTIRE AREA OF 141,000 ACRES SOME OF WHICH IS PRIME GRAZING LAND AND SOME OF WHICH IS TOTALLY DEVOID OF GRASSES.

"COMPLAINT: PVC SHOULD BE ALLOWED TO MEET THE HIGHEST BID RECEIVED AND RETAIN THE LEASE.

"COMMENT: IT IS NOT CONSIDERED FAIR TO USE OTHER LEGITIMATE BIDDERS AS A 'TRIAL HORSE.'

"COMPLAINT: THE LEASE SHOULD BE GRANTED AT AN ORAL AUCTION RATHER THAN SEALED BIDS.

"COMMENT: WE HAVE CONSISTENTLY USED THE SEALED BID METHOD OF GRANTING AGRICULTURAL AND GRAZING LEASES COMPETITIVELY, AND SAW NO JUSTIFICATION FOR CHANGING OUR METHOD FOR THIS CASE.

"COMPLAINT: IN CONDITION NO. 5 IN THE PRINTED LEASE FORM THE WORDS 'OR MATERIALLY AFFECTS ITS USE BY THE LESSEE' HAVE BEEN DELETED. HIS ARGUMENT HERE IS THAT, IF CATTLE ARE REQUIRED TO BE MOVED FROM A RANGE SO THAT IT MAY BE USED FOR MILITARY PURPOSES THERE SHOULD BE AN 'EQUITABLE ADJUSTMENT' IN THE RENT.

"COMMENT: IN CONDITION 6 OF THE LAND USE REGULATIONS WHICH ARE A PART OF THE LEASE, SPECIFIC MENTION IS MADE OF THE FACT THAT CATTLE WILL BE MOVED UPON NOTICE. ALSO, THERE IS A SPECIAL FULL PAGE NOTICE TO BIDDERS (GREEN SHEET) WHICH IS A PART OF THE INVITATION TO BID. GREAT DETAIL IS GIVEN REGARDING THE MILITARY USE OF THE LAND. THIS IS A CONDITION THAT PVC HAD BEEN WILLING TO LIVE WITH IN PRIOR LEASES AND APPARENTLY WOULD HAVE BEEN HAPPY TO OBTAIN RENEWAL OF THE LEASE.

"COMPLAINT: SUGGESTED THAT INVITATION TO BID CONTAIN A REQUIREMENT THAT ANY PROSPECTIVE BIDDER MUST CONTACT PVC (PRESENT LESSEE) IN ORDER THAT PVC COULD ENLIGHTEN THE BIDDER AS TO THE RAMIFICATIONS OF WORKING UNDER THE LEASE.

"COMMENT: WE DID NOT SEE ANY MERIT IN THIS SUGGESTION."

A COPY OF THE ADMINISTRATIVE REPORT OF SEPTEMBER 18, 1970, WAS MADE AVAILABLE TO YOU BY OUR OFFICE FOR YOUR COMMENTS. SINCE, IN YOUR LETTER DATED NOVEMBER 3, 1970, YOU HAVE REBUTTED PORTIONS OF THE ADMINISTRATIVE REPORT, A COPY OF YOUR LETTER WAS FORWARDED TO THE DEPARTMENT OF THE ARMY FOR THEIR COMMENTS.

THE DEPARTMENT OF THE ARMY MADE THE FOLLOWING COMMENTS ON YOUR NOVEMBER 3 LETTER AS FOLLOWS:

"STATEMENT BY MR. HUDSON, INSERT NO. 1 - 'NOTE THAT THE PRECEDING 5 YEAR LEASE INVOLVED 31 AMENDMENTS AND VERY SUBSTANTIAL CAPITAL IMPROVEMENTS TO THE HUNTER-LIGGETT MILITARY RESERVATION. THIS WAS A RUSE USED BY THE SECRETARY OF THE ARMY TO CIRCUMVENT THE NEED FOR CONGRESSIONAL APPROVAL.'

COMMENT: THE STATUTE AUTHORIZING LEASING OF MILITARY LANDS (10 U.S.C. 2667) PROVIDES THAT ALL OR PART OF THE RENT CONSIDERATION MAY BE ACCEPTED IN THE FORM OF MAINTENANCE, PROTECTION, REPAIR OR RESTORATION. FOR ADMINISTRATIVE PURPOSES, PERFORMANCE OF ITEMS OF MAINTENANCE, PROTECTION, REPAIR OR RESTORATION BY THE LESSEE AND ABATEMENT OF RENTAL THEREFOR WERE RECORDED BY AMENDMENT TO THE LEASE. WE ARE CONTINUALLY REVIEWING OUR LEASES IN AN EFFORT TO PREVENT ABUSE OF THIS STATUTORY AUTHORITY. THOUGHT THERE WERE SOME BORDERLINE ITEMS OF MAINTENANCE, PROTECTION, REPAIR OR RESTORATION IN THE PRECEDING 5-YEAR LEASE AND, THEREFORE, REDUCED THE ITEMS IN THE CURRENT LEASE.

"STATEMENT BY MR. HUDSON: INSERT NOS. 4 AND 5 - 'MORE "BALONEY". I WOULD APPRECIATE IT IF YOU WOULD REQUIRE THE SECRETARY OF THE ARMY TO SUBMIT PROOF OF THIS COMMENT.'

"THIS STATEMENT IS RELATED TO OUR COMMENT IN OUR PREVIOUS REPLY TO YOU (GAO) THAT WE HAD CONSISTENTLY USED THE SEALED BID METHOD OF GRANTING AGRICULTURAL AND GRAZING LEASES COMPETITIVELY AND SAW NO JUSTIFICATION FOR CHANGING OUR METHOD FOR THIS CASE.

"COMMENT: AT ONE TIME WE HAD A POLICY OF PERMITTING RENEWAL OF AGRICULTURAL AND GRAZING LEASES WITH FORMER OWNERS AND THEIR TENANTS. ALSO, AT ONE TIME, WHERE A LESSEE HAD PERFORMED SATISFACTORILY OUR POLICY PERMITTED RENEWAL OF THE LEASE BY NEGOTIATION. THIS WAS CHANGED IN 1957 TO REQUIRE COMPETITIVE BIDDING. OUR POLICY IS REFLECTED IN CORPS OF ENGINEERS REGULATIONS, PAGES 3 AND 4 OF ER 405-1-800 AND PAGES 14 AND 15 OF ER 405-1-830, ***

"IN RESPECT TO INSERTS NOS. 2 AND 6, WE BELIEVE THAT THE INVITATION TO BID PROVIDED AN OPPORTUNITY FOR PROSPECTIVE BIDDERS TO OBTAIN INFORMATION NECESSARY TO MAKE AN INTELLIGENT BID. WE THINK THAT THIS IS REFLECTED BY THE NUMBER OF BIDS RECEIVED. TO OUR KNOWLEDGE, THE PRESENT LESSEE IS NOT COMPLAINING ABOUT LEASE PROVISIONS."

THE LEASE FOR THE GRAZING LAND AT THE HUNTER-LIGGETT MILITARY RESERVATION WAS EXECUTED PURSUANT TO THE PROVISIONS OF 10 U.S.C. 2667(A) WHICH AUTHORIZES THE SECRETARY OF A MILITARY DEPARTMENT TO LEASE REAL PROPERTY THAT IS NOT NEEDED FOR PUBLIC USE AND IS NOT EXCESS PROPERTY UPON SUCH TERMS AS HE CONSIDERS WILL PROMOTE THE NATIONAL DEFENSE OR BE IN THE PUBLIC INTEREST. SUBSECTION (B)(5) OF THE ABOVE STATUTE AUTHORIZES A LEASE THEREUNDER TO PROVIDE FOR THE MAINTENANCE, PROTECTION, REPAIR, OR RESTORATION BY THE LESSEE OF THE PROPERTY LEASED.

IT IS REPORTED THAT AT ONE TIME, WHERE A LESSEE HAD PERFORMED SATISFACTORILY, THE POLICY OF THE DEPARTMENT OF THE ARMY WAS TO PERMIT RENEWAL OF THE LEASE BY NEGOTIATION. HOWEVER, IN 1957, THE DEPARTMENT DECIDED TO CHANGE THE POLICY SO AS TO REQUIRE COMPETITIVE BIDDING. THE PURPOSE OF ADVERTISING TO OBTAIN COMPETITION WAS TO GIVE ALL QUALIFIED PERSONS EQUAL OPPORTUNITY TO BID FOR THE USE OF THE PROPERTY; TO SECURE FOR THE GOVERNMENT THE BENEFITS WHICH FLOW FROM COMPETITION; AND TO PREVENT CRITICISM THAT FAVORITISM HAS BEEN SHOWN BY EMPLOYEES OF THE GOVERNMENT IN AUTHORIZING USE OF PUBLIC PROPERTY.

IN VIEW OF THE BROAD LEASING AUTHORITY VESTED IN THE SECRETARY OF THE ARMY BY 10 U.S.C. 2667, WE PERCEIVE OF NO PROPER BASIS FOR QUESTIONING THE DEPARTMENT OF THE ARMY LEASING POLICIES AT THE HUNTER-LIGGETT MILITARY RESERVATION.

FOR THE REASONS STATED, YOUR PROTEST IS DENIED.