B-173038, SEP 7, 1971

B-173038: Sep 7, 1971

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SINCE THERE IS NO INDICATION THAT THE REPORT WAS BASED ON A BIASED JUDGMENT. TO MCINTIRE AND NORTHERN: FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE REJECTION OF YOUR BID UNDER IFB NO. WHEN BIDS WERE OPENED ON APRIL 19. ONLY THE BID FROM YOUR FIRM WAS RECEIVED IN THE SUM OF $990 A MONTH. IN ORDER TO DETERMINE THE REASONABLENESS OF YOUR PROPOSED RENTAL A DETAILED APPRAISAL REPORT WAS PREPARED BY THE REAL ESTATE DIVISION OF THE CORPS OF ENGINEERS. WHICH WAS COMPLETED ON MAY 4. YOU WERE ADVISED BY LETTER OF MAY 5. THAT YOUR BID WAS REJECTED AND THAT READVERTISEMENT FOR THE FACILITIES WOULD BE ISSUED SHORTLY. THE NEW IFB WAS ISSUED. THE BID OPENING DATE WAS POSTPONED PENDING RESOLUTION OF THIS PROTEST.

B-173038, SEP 7, 1971

BID PROTEST - UNREASONABLE BID - APPRAISAL REPORT AS PRIVILEGED DECISION DENYING PROTEST BY MCINTIRE AND NORTHERN AGAINST THE REJECTION OF THEIR BID AS BEING UNREASONABLE UNDER AN IFB ISSUED BY THE U.S. ARMY DISTRICT ENGINEER, KANSAS CITY, MISSOURI, WHICH CALLED FOR BIDS ON THE LEASING OF SPACE FOR A NEW ARMY RESERVE TRAINING CENTER AT OSAWATOMIE, KANSAS. SINCE THE APPRAISAL REPORT CLEARLY INDICATES THAT THE OFFERED RATE EXCEEDED THAT ALLOWED BY THE ECONOMY ACT OF 1932, AND SINCE THERE IS NO INDICATION THAT THE REPORT WAS BASED ON A BIASED JUDGMENT, THE PROTEST MUST BE DENIED. IF PROTESTANT WISHES TO EXAMINE THE APPRAISAL REPORT, THEY MUST PURSUE THE MATTER WITH THE ARMY. 4 CFR 81.4(E).

TO MCINTIRE AND NORTHERN:

FURTHER REFERENCE IS MADE TO YOUR PROTEST AGAINST THE REJECTION OF YOUR BID UNDER IFB NO. DACA41-71-B-0019, ISSUED BY THE U.S. ARMY DISTRICT ENGINEER, KANSAS CITY, MISSOURI.

THE INSTANT SOLICITATION, ISSUED ON APRIL 1, 1971, CALLED FOR BIDS ON THE LEASING OF APPROXIMATELY 5,000 SQUARE FEET OF SPACE AND 7,500 SQUARE FEET OF PARKING AREA TO THE DEPARTMENT OF THE ARMY FOR A NEW TRAINING CENTER FOR THE U.S. ARMY RESERVE AT OSAWATOMIE, KANSAS.

WHEN BIDS WERE OPENED ON APRIL 19, 1971, ONLY THE BID FROM YOUR FIRM WAS RECEIVED IN THE SUM OF $990 A MONTH, BASED ON A COMPLETELY NEW FACILITY TO BE CONSTRUCTED ON THE PRESENT SITE OF THE CURRENT TRAINING CENTER OWNED BY YOUR PARTNERSHIP. IN ORDER TO DETERMINE THE REASONABLENESS OF YOUR PROPOSED RENTAL A DETAILED APPRAISAL REPORT WAS PREPARED BY THE REAL ESTATE DIVISION OF THE CORPS OF ENGINEERS, KANSAS CITY DISTRICT, WHICH WAS COMPLETED ON MAY 4, 1971.

SINCE THE GOVERNMENT APPRAISAL FOUND THAT A LESSER SUM THAN THAT OFFERED BY YOU TO BE THE FAIR RENTAL VALUE, AND THAT THE OFFERED RENTAL RATE EXCEEDED THAT ALLOWED BY THE ECONOMY ACT OF 1932 (40 U.S.C. 278A), YOU WERE ADVISED BY LETTER OF MAY 5, 1971, THAT YOUR BID WAS REJECTED AND THAT READVERTISEMENT FOR THE FACILITIES WOULD BE ISSUED SHORTLY. ON MAY 13, 1971, THE NEW IFB WAS ISSUED, AND BY AMENDMENT OF JUNE 8, 1971, THE BID OPENING DATE WAS POSTPONED PENDING RESOLUTION OF THIS PROTEST.

ON THE SAME DATE OF THE REISSUANCE OF THE IFB A REPRESENTATIVE OF YOUR OFFICE MET WITH OFFICIALS OF THE OFFICE OF THE DISTRICT ENGINEER AND A DISCUSSION WAS HELD CONCERNING THE DETAILS OF MCINTIRE AND NORTHERN'S BID AND THE MANNER IN WHICH THE REAL ESTATE APPRAISAL WAS ACCOMPLISHED. HOWEVER, SINCE THE OFFICIALS VIEWED REAL ESTATE APPRAISALS AS BEING CONFIDENTIAL, YOUR REPRESENTATIVE WAS NOT FURNISHED A COPY OF THE APPRAISAL OR INFORMED OF ITS EXACT CONTENTS. HE WAS INFORMED THAT IF HE WOULD PRESENT A WRITTEN REQUEST FOR SUCH DISCLOSURE, THE DISTRICT ENGINEER'S OFFICE WOULD RESPOND IN WRITING AND ADVISE HIM OF A RIGHT OF APPEAL TO THE SECRETARY OF THE ARMY. WHILE YOU HAVE REQUESTED OUR OFFICE TO REQUIRE THE CORPS OF ENGINEERS TO MAKE THE REPORT AVAILABLE TO YOU, THE RECORD DOES NOT REFLECT THAT YOU HAVE SUBMITTED A WRITTEN REQUEST TO THE DEPARTMENT OF THE ARMY FOR DISCLOSURE OF THE REPORT.

THE PRINCIPAL BASIS OF YOUR PROTEST IS THAT THE TRUE ACTUAL MARKET VALUE OF THE PROPOSED FACILITIES JUSTIFIED YOUR OFFERED RENTAL RATE AND THAT YOU ARE OF THE BELIEF THAT THE ONLY REASON FOR THE REJECTION OF YOUR BID WAS DUE TO THE FACT THAT YOU WERE THE ONLY BIDDER WHO SUBMITTED A PROPOSAL. YOU ARE ALSO OF THE BELIEF THAT THE PUBLIC INFORMATION ACT OF 1966, PUBLIC LAW 89-487 (5 U.S.C. 522), REQUIRES THAT YOU BE AFFORDED AN OPPORTUNITY TO REVIEW THE REAL ESTATE APPRAISAL.

PARAGRAPH 14 OF STANDARD FORM 2-A, MADE A PART OF THE INVITATION, ADVISED ALL POTENTIAL BIDDERS:

"ECONOMY ACT LIMITATION.

"IF THE RENTAL SPECIFIED IN THE LEASE EXCEEDS $2,000 PER ANNUM, THE LIMITATION OF SECTION 322 OF THE ECONOMY ACT OF 1932, AS AMENDED (40 U.S.C. 278A), SHALL APPLY."

THE REFERENCED ECONOMY ACT PROVIDES IN PERTINENT PART:

" *** NO APPROPRIATION SHALL BE OBLIGATED OR EXPENDED FOR THE RENT OF ANY BUILDING OR PART OF A BUILDING TO BE OCCUPIED FOR GOVERNMENT PURPOSES AT A RENTAL IN EXCESS OF THE PER ANNUM RATE OF 15 PER CENTUM OF THE FAIR MARKET VALUE OF THE RENTED PREMISES AT DATE OF THE LEASE UNDER WHICH THE PREMISES ARE TO BE OCCUPIED BY THE GOVERNMENT *** ."

WE HAVE CAREFULLY REVIEWED THE REAL ESTATE APPRAISAL REPORT MADE AVAILABLE TO OUR OFFICE WHICH APPEARS TO BE A THOROUGH STUDY OF COMPARABLE RENTALS AND SALES IN THE LOCALE IN QUESTION. THERE IS NO INDICATION WHATEVER THAT IT WAS BASED ON A BIASED JUDGMENT OF WHAT THE TRUE AND CORRECT RENTAL VALUE OF THE PROPERTY WAS AT THE TIME IN QUESTION. NEITHER DOES THE RECORD INDICATE, AS YOU BELIEVE, THAT A PRIOR APPRAISAL WAS MADE OF THE PROPERTY AND THAT SUCH APPRAISAL WAS OVERRULED BECAUSE OF PROTEST LETTERS RECEIVED FROM OTHER PROSPECTIVE BIDDERS. THE APPRAISAL REPORT CLEARLY REVEALS THAT YOUR OFFERED RENTAL RATE EXCEEDED THAT ALLOWED BY THE ECONOMY ACT, AND CONSEQUENTLY WE MUST CONCUR WITH THE ACTION OF THE AGENCY IN REJECTING YOUR BID FOR THAT REASON.

THE REAL ESTATE APPRAISAL REPORT IN QUESTION IS AN OPINION RENDERED BY CORPS OF ENGINEERS' APPRAISERS TO THE CONTRACTING OFFICER AND WAS INCLUDED IN THE FILE ACCOMPANYING A REPORT DATED JUNE 16, 1971, WHICH THE DEPARTMENT OF THE ARMY TRANSMITTED TO OUR OFFICE ON JULY 8, 1971. IN ITS TRANSMITTAL TO OUR OFFICE THE DEPARTMENT OF THE ARMY SPECIFICALLY REQUESTED THAT WE NOT MAKE AVAILABLE TO YOU THE REFERENCED REPORT. SINCE THE DEPARTMENT OF THE ARMY IS THE AGENCY HAVING THE PRIMARY INTEREST IN THE RECORD, WE MUST HONOR ITS REQUEST TO WITHHOLD THE REPORT FROM YOUR INSPECTION. SEE, IN THIS CONNECTION, THE REGULATION OF THIS OFFICE CODIFIED IN 4 CFR 81.4 AS SUBSECTION (E) WHICH PROVIDES:

"(E) IF A FEDERAL AGENCY OTHER THAN THE GENERAL ACCOUNTING OFFICE HAS THE PRIMARY INTEREST IN A RECORD, A REQUEST FOR THE RECORD SHALL BE TRANSFERRED TO THE AGENCY WITH THE PRIMARY INTEREST, AND THE REQUESTER NOTIFIED OF THAT ACTION."

ACCORDINGLY, IF YOU STILL WISH TO INSPECT THE APPRAISAL REPORT, AND SINCE YOU INDICATE IN YOUR LETTER OF AUGUST 2, 1971, THAT YOU DO NOT INTEND TO PURSUE THE MATTER WITH THE DEPARTMENT OF THE ARMY, IT APPEARS THAT YOU SHOULD CONSIDER UNDERTAKING SUCH OTHER ACTION AS MAY BE DEEMED APPROPRIATE.

IN VIEW OF THE FOREGOING YOUR PROTEST MUST BE DENIED.