B-178339, JUN 11, 1974, 53 COMP GEN 949

B-178339: Jun 11, 1974

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

INTERIOR DEPARTMENT - BUREAU OF SPORT FISHERIES AND WILDLIFE - PERMIT ISSUANCES - OPERATION OF CITRUS GROVES THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 AND FEDERAL PROCUREMENT REGULATIONS ARE INAPPLICABLE TO BUREAU OF SPORT FISHERIES AND WILDLIFE'S AWARD OF USE PERMITS FOR OPERATION OF CITRUS GROVES LOCATED ON WILDLIFE REFUGE. BECAUSE BOTH 16 U.S.C. 715SF) AND 668DDD)(2) AUTHORIZE THE SECRETARY OF THE INTERIOR TO PERMIT USE OF REFUGES OR DISPOSAL OF PRODUCTS THEREOF UPON CONDITIONS HE DETERMINES ARE IN BEST INTERESTS OF UNITED STATES. INDEPENDENT GROWERS - PROPRIETY AGENCY DID NOT ACT UNREASONABLY IN PERMITTING "GROWER/PACKERS" TO COMPETE WITH INDEPENDENT GROWERS FOR AWARD OF USE PERMITS FOR OPERATION OF CITRUS GROVES SINCE MATTER WAS ONE FOR AGENCY'S DISCRETION AND AGENCY BELIEVES IT HAD ADEQUATE SAFEGUARDS AGAINST POSSIBILITY OF RECEIVING ARTIFICALLY LOW RETURNS FROM "GROWER/PACKERS.".

B-178339, JUN 11, 1974, 53 COMP GEN 949

INTERIOR DEPARTMENT - BUREAU OF SPORT FISHERIES AND WILDLIFE - PERMIT ISSUANCES - OPERATION OF CITRUS GROVES THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 AND FEDERAL PROCUREMENT REGULATIONS ARE INAPPLICABLE TO BUREAU OF SPORT FISHERIES AND WILDLIFE'S AWARD OF USE PERMITS FOR OPERATION OF CITRUS GROVES LOCATED ON WILDLIFE REFUGE, BECAUSE BOTH 16 U.S.C. 715SF) AND 668DDD)(2) AUTHORIZE THE SECRETARY OF THE INTERIOR TO PERMIT USE OF REFUGES OR DISPOSAL OF PRODUCTS THEREOF UPON CONDITIONS HE DETERMINES ARE IN BEST INTERESTS OF UNITED STATES. CONTRACTS - NEGOTIATION - COMPETITION - "GROWER/PACKERS" V. INDEPENDENT GROWERS - PROPRIETY AGENCY DID NOT ACT UNREASONABLY IN PERMITTING "GROWER/PACKERS" TO COMPETE WITH INDEPENDENT GROWERS FOR AWARD OF USE PERMITS FOR OPERATION OF CITRUS GROVES SINCE MATTER WAS ONE FOR AGENCY'S DISCRETION AND AGENCY BELIEVES IT HAD ADEQUATE SAFEGUARDS AGAINST POSSIBILITY OF RECEIVING ARTIFICALLY LOW RETURNS FROM "GROWER/PACKERS." CONTRACTS - NEGOTIATION - AWARDS - PROPRIETY - EVALUATION OF PROPOSALS AWARD OF USE PERMITS WAS NOT SHOWN TO HAVE BEEN ARBITRARY, CAPRICIOUS OR WITHOUT A REASONABLE BASIS, BECAUSE OFFERS WERE IMPARTIALLY EVALUATED AGAINST FACTORS SET FORTH IN PUBLIC NOTICE SOLICITING PROPOSALS. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - DEFICIENT - MINIMUM STANDARDS STATEMENT OF EVALUATION CRITERIA, CONTAINED IN PUBLIC NOTICE SOLICITING PROPOSALS FOR USE PERMITS TO OPERATE CITRUS GROVES, WAS DEFICIENT IN THAT IT DID NOT SET FORTH MINIMUM STANDARDS OR PROVIDE REASONABLY DEFINITE INFORMATION AS TO DEGREE OF IMPORTANCE TO BE ACCORDED PARTICULAR EVALUATION FACTORS IN RELATION TO EACH OTHER.

IN THE MATTER OF NATHANIEL AND BERNICE PILATE; CAROLINE J. STARKEY, JUNE 11, 1974:

NATHANIEL AND BERNICE PILATE AND CAROLINE STARKEY INDEPENDENTLY PROTESTED AGAINST THE FAILURE OF THE GOVERNMENT TO AWARD THEM SPECIAL USE PERMITS FOR THE OPERATION OF CITRUS GROVES ON A WILDLIFE REFUGE. THIS DECISION RESPONDS TO BOTH PROTESTS, WHICH AROSE FROM THE SAME SOLICITATION AND WHICH PRESENT SOME COMMON ISSUES.

THE DEPARTMENT OF THE INTERIOR, BUREAU OF SPORT FISHERIES AND WILDLIFE (BSFW), ADMINISTERS THE MERRITT ISLAND NATIONAL WILDLIFE REFUGE, TITUSVILLE, FLORIDA. ORANGE AND GRAPEFRUIT GROVES WERE LOCATED ON THIS LAND WHEN IT WAS ACQUIRED BY THE GOVERNMENT. IN ORDER TO PRESERVE THIS VALUABLE ASSET, PRIVATE FIRMS, UNDER PERMIT, HAVE MAINTAINED THE GROVES AND HARVESTED AND MARKETED THE FRUIT. IN EXCHANGE, THE PERMITTEES PAY THE GOVERNMENT RENTAL.

IN NOVEMBER 1972, A PUBLIC NOTICE WAS RELEASED BY BSFW, REQUESTING PROPOSALS FOR PERMITS TO OPERATE NINE GROUPS OF GROVES LOCATED ON THE REFUGE. THE PUBLIC NOTICE PROVIDED THAT PROPOSALS SHOULD CONTAIN "INFORMATION ON THE FOLLOWING:"

A. THE FIRM NAME AND NAMES OF THE PRINCIPALS INTERESTED.

B. AN EXPLANATION OF THE PROPOSED METHOD OF CITRUS CARETAKING WITH PARTICULAR REFERENCE TO PLANNED PROCEDURES OVER AND ABOVE THOSE REQUIRED

C. EXPERIENCE AND ABILITY IN MANAGEMENT OF CITRUS GROVES.

D. FINANCIAL RESPONSIBILITY AND RESOURCES, WITH REFERENCES, ADEQUATE FOR OPERATION OF THIS SIZE.

E. PERCENTAGE OF GROSS RECEIPTS (ON TREE VALUE) PROPOSED TO BE PAID TO THE GOVERNMENT AS RENTAL.

OTHER THAN AN EXPRESSED DESIRE TO MAKE THE GROVES AVAILABLE TO "EXPERIENCED AND PROFESSIONAL CITRUS PRODUCERS," THE PUBLIC NOTICE DID NOT RESTRICT PERMIT APPLICANTS TO ANY TYPE OF BUSINESS ENTITY. THE PUBLIC NOTICE ALSO DID NOT SPECIFICALLY STATE THE RELATIVE IMPORTANCE OF ITEMS B., C., D., AND E., QUOTED ABOVE, TO THE DETERMINATION OF WHICH APPLICANTS WOULD BE AWARDED PERMITS. IT IS CLEAR THAT CARETAKING OF THE GROVES WAS A SIGNIFICANT FACTOR, FOR THE PUBLIC NOTICE CONTAINED DETAILED MAINTENANCE REQUIREMENTS FOR EACH GROUP OF GROVES AND ADVISED APPLICANTS:

THE PERMITTEE SHALL, WITHOUT COST TO THE GOVERNMENT, FURNISH ALL LABOR, EQUIPMENT, AND MATERIALS NECESSARY TO CULTIVATE, FERTILIZE, SPRAY, DRAIN, IRRIGATE, HEDGE, TOP, PRUNE ROOTSTOCK SPROUTS, REMOVE ROOTSTOCK TREES, REPLACE DEAD OR MISSING TREES, DO NORMAL CLEAN-UP AND MINOR IMPROVEMENTS IN ACCORDANCE WITH GOOD STANDARD PRACTICES, AND SHALL ATTEMPT TO MAINTAIN THE GROVES IN A HEALTHY, VIGOROUS CONDITION AT ALL TIMES. THE GROVES SHALL BE OPERATED IN A MANNER TO INSURE THEIR CONTINUED HEALTHY, VIGOROUS CONDITION AND PRODUCTION OF A SATISFACTORY QUANTITY OF HIGH QUALITY FRUIT. EXCELLENT CARETAKING IS MANDATORY IN MAINTENANCE OF THESE GROVES.

IN RESPONSE TO THE PUBLIC NOTICE, TWO PROPOSALS FOR A PERMIT TO OPERATE THE GROVES IN GROUP NO. 5 WERE RECEIVED BY BSFW ON THE DECEMBER 15, 1972, CLOSING DATE. THE PERMIT FOR GROUP NO. 5 WAS AWARDED TO MR. FRANK E. SULLIVAN, JR., BECAUSE, IN THE AGENCY'S OPINION, MR. SULLIVAN'S OFFER TO PAY THE GOVERNMENT A RENTAL FEE OF 30.5 PERCENT OF THE GROSS RECEIPTS, AS OPPOSED TO MRS. STARKEY'S OFFER OF 7.5 PERCENT, MORE THAN OVERCAME ANY POSSIBLE ADVANTAGE MRS. STARKEY MAY HAVE HAD IN THE CARETAKING AREA. MRS. STARKEY SUBSEQUENTLY FILED WITH THIS OFFICE A PROTEST AGAINST THE AWARD.

MR. AND MRS. PILATE, WHO SUBMITTED ONE OF THE THREE PROPOSALS FOR THE OPERATION OF GROUP NO. 1, OFFERED A RENTAL RETURN OF 11 PERCENT OF GROSS RECEIPTS. THE SUCCESSFUL OFFEROR, EGAN, FICKETT & CO., PROPOSED A 10 PERCENT RETURN AND THE THIRD OFFEROR PROPOSED A RETURN OF 8 PERCENT. OUR EXAMINATION OF THE RECORD SHOWS THAT THE MANAGER OF THE WILDLIFE REFUGE CONCLUDED THAT "THE BEST INTEREST OF THE GOVERNMENT AND PUBLIC AT LARGE" WOULD BE SERVED BY AN AWARD TO EGAN BECAUSE EGAN PROPOSED TO PERFORM CARETAKING, OVER AND ABOVE THE MINIMUM REQUIRED, OF A MORE VALUABLE NATURE THAN THAT PLANNED BY THE OTHER TWO FIRMS AND BECAUSE EGAN'S MANAGEMENT TEAM, FINANCIAL RESOURCES, AND MAINTENANCE AND PRODUCTION CAPABILITY WERE SUPERIOR.

IT IS FURTHER REPORTED THAT AFTER THE PROPOSALS FOR GROUP NO. 1 WERE ANALYZED AND IT WAS DETERMINED THAT EGAN'S PROPOSAL RATED HIGHEST, ALL FACTORS BEING CONSIDERED, AN ADDITIONAL EXAMINATION WAS MADE OF THE EGAN AND PILATE PROPOSALS BECAUSE THE OFFERED RENTAL PERCENTAGES WERE SO CLOSE. IT WAS THEN NOTED FOR THE FIRST TIME THAT MR. PILATE WAS AN EMPLOYEE OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, A CIRCUMSTANCE WHICH IN THE BSFW'S VIEW PRECLUDED FURTHER CONSIDERATION OF MR. PILATE'S PROPOSAL. SEE B-159472, AUGUST 10, 1966. UPON BEING ADVISED OF THE REJECTION OF THEIR PROPOSAL, THE PILATES ALSO PROTESTED TO OUR OFFICE. IN THIS CONNECTION BSFW REPORTS THAT THE PILATES WOULD NOT HAVE RECEIVED THE AWARD FOR GROUP NO. 1 EVEN IF MR. PILATE HAD NOT BEEN A FEDERAL EMPLOYEE, IN VIEW OF THE RELATIVE MERITS OF THE PROPOSALS.

THE PROVISIONS OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, 41 U.S.C. 201 NOTE (1964 ED.)) AND THE FPR ISSUED IN IMPLEMENTATION OF THE ACT ARE NOT APPLICABLE TO THE GRANT OF THESE USE PERMITS SINCE THE TRANSACTIONS CONCERN NEITHER THE PROCUREMENT OF SUPPLIES OR SERVICES, NOR THE DISPOSAL OF SURPLUS PROPERTY. WE NOTE THAT 16 U.S.C. 715SF) AUTHORIZES THE SECRETARY OF THE INTERIOR TO PERMIT THE USE OF LANDS OR THE DISPOSAL OF PRODUCTS OF THOSE LANDS WITHIN THE REFUGE SYSTEM "UPON SUCH TERMS, CONDITIONS, OR REGULATIONS, INCLUDING SALE IN THE OPEN MARKETS, AS THE SECRETARY SHALL DETERMINE TO BE IN THE BEST INTEREST OF THE UNITED STATES." FURTHERMORE, SECTION 4(D)(2) OF THE NATIONAL WILDLIFE REFUGE SYSTEM ADMINISTRATION ACT OF 1966, 16 U.S.C. 668DDD)(2), AUTHORIZES THE SECRETARY OF THE INTERIOR TO:

*** PERMIT THE USE OF, OR GRANT EASEMENTS IN, OVER, ACROSS, UPON, THROUGH, OR UNDER ANY AREAS WITHIN THE SYSTEM FOR PURPOSES SUCH AS BUT NOT NECESSARILY LIMITED TO, POWERLINES, TELEPHONE LINES, CANALS, DITCHES, PIPELINES, AND ROADS, INCLUDING THE CONSTRUCTION, OPERATION, AND MAINTENANCE THEREOF, WHENEVER HE DETERMINES THAT USES ARE COMPATIBLE WITH THE PURPOSES FOR WHICH THESE AREAS ARE ESTABLISHED.

REGULATIONS PUBLISHED AT 50 CFR, PARTS 25-35, DEAL WITH THE NATIONAL WILDLIFE REFUGE SYSTEM. SECTION 29.1 PROVIDES THAT "PERMITS FOR ECONOMIC USE WILL CONTAIN SUCH TERMS AND CONDITIONS AS ARE DETERMINED TO BE NECESSARY FOR THE PROPER ADMINISTRATION OF THE RESOURCES." THE REGULATIONS PROVIDE NO MORE SPECIFIC GUIDANCE AS TO WHAT TERMS AND CONDITIONS MIGHT BE APPROPRIATE, NOR DO THE REGULATIONS SET FORTH A UNIFORM METHOD FOR SELECTING PERMITTEES. UNDER THESE CIRCUMSTANCES, WE BELIEVE THAT THE ESTABLISHMENT OF THE TERMS AND CONDITIONS UNDER WHICH AN ECONOMIC USE PERMIT WILL BE GRANTED, THE STATEMENT OF THE NEEDS WHICH WILL BE SERVED BY AN AWARD OF THE PERMIT, AND THE DETERMINATION OF WHICH PROSPECTIVE PERMITTEE WILL BEST MEET THOSE NEEDS, ALL ARE MATTERS OF JUDGMENT TO BE EXERCISED BY THE ADMINISTRATIVE AGENCY, WHICH WE SHALL NOT QUESTION UNLESS IT IS CLEARLY SHOWN THAT THE ACTION TAKEN WAS ARBITRARY, CAPRICIOUS OR WITHOUT A REASONABLE BASIS. SEE B-172177, AUGUST 17, 1971.

ONE OF THE EVALUATION CRITERIA FOR DETERMINING TO WHOM TO AWARD THESE PERMITS WAS THE AMOUNT THE PROSPECTIVE PERMITTEE OFFERED TO PAY THE GOVERNMENT AS RENTAL, EXPRESSED AS A "PERCENTAGE OF GROSS RECEIPTS." THE PROTESTERS' FIRST CONTENTION BASICALLY IS THAT THE SUCCESSFUL OFFERORS' TYPE OF BUSINESS ORGANIZATION PERMITS THEM TO OFFER AN ILLUSORY HIGH "PERCENTAGE OF GROSS RECEIPTS" AS RENTAL.

EGAN AND SULLIVAN, THE SUCCESSFUL OFFERORS FOR GROUPS 1 AND 5 RESPECTIVELY, OPERATE PACKING PLANTS IN ADDITION TO BEING CITRUS GROWERS. THE PROTESTERS, WHO ARE INDEPENDENT GROWERS, CONTEND THAT IT IS UNFAIR TO COMPEL THEM TO COMPETE WITH "GROWER/PACKERS" FOR USE PERMITS WHERE THE RETURN TO THE GOVERNMENT IS BASED ON A PERCENTAGE OF RECEIPTS FROM THE SALE OF THE CROP. THE PROTESTERS NOTE THAT SINCE AN INDEPENDENT GROWER MUST DERIVE ALL OF HIS RETURN ON THE SALE OF THE CROP DIRECTLY FROM THE GROVES, THE PERCENTAGE OFFERED THE GOVERNMENT MUST ALLOW FOR A REASONABLE PROFIT. IT IS ARGUED THAT IN CONTRAST, A "GROWER/PACKER" CAN OFFER AN ARTIFICIALLY HIGH RENTAL PERCENTAGE, BECAUSE IT IS ABLE TO KEEP THE RETURN ON THE INITIAL SALE OF THE CROP FROM THE GROVES TO A MINIMUM BY "SELLING" OR CONSIGNING THE CROP TO ITS OWN PACKING ORGANIZATION AT AN UNREALISTICALLY LOW PRICE. THE GROWER/PACKER IS THEN ALLEGEDLY ABLE TO MARKET THE CROP THROUGH ITS PACKING ORGANIZATION AT A HIGHER PRICE WHICH IS EXEMPT FROM THE GOVERNMENT'S RENTAL SHARE. IT IS ASSERTED THAT A COMPARISON OF RENTAL FEES PAID THE GOVERNMENT OVER THE YEARS BY INDEPENDENT GROWERS WITH FEES RECEIVED FROM "GROWER/PACKERS" WOULD REVEAL THAT PAYMENTS FROM INDEPENDENT GROWERS HAVE BEEN MUCH LARGER. ADDITION, IT IS CONTENDED THAT A "GROWER/PACKER" IS IN A POSITION TO EASILY DEFRAUD THE GOVERNMENT DURING THE OPERATION OF THE GROVES BY ALTERING SHIPPING MANIFESTS.

THE AGENCY POINTS OUT THAT THERE IS NO PROVISION IN THE PUBLIC NOTICE RESTRICTING COMPETITION TO INDEPENDENT GROWERS NOR DOES IT BELIEVE THAT SUCH A RESTRICTION IS NECESSARY. OUR ATTENTION IS DIRECTED TO THE FOLLOWING PROVISIONS IN THE USE PERMIT WHICH IN THE AGENCY'S VIEW PROTECT ITS INTEREST FROM FRAUD BY A "GROWER/PACKER," OR FOR THAT MATTER, BY ANY PERMITTEE:

A. SECTION 29 OF THE GENERAL PROVISIONS OF THE SPECIAL USE PERMIT REQUIRES THE PERMITTEE TO "MAINTAIN RECORDS AND BOOKS OF ACCOUNT" WHICH SHALL BE OPEN TO THE GOVERNMENT "AT ALL REASONABLE TIMES" FOR INSPECTION AND AUDIT. DURING AUGUST OF EACH YEAR SECTION 29 REQUIRES THAT THE RECORDS SHALL BE CERTIFIED TO BE TRUE AND CORRECT BY A CERTIFIED PUBLIC ACCOUNTANT.

B. SECTION 32 OF THE GENERAL PROVISIONS AUTHORIZES USE OF ONLY TWO ROUTES FOR HAULING FRUIT FROM THE GROVES. FURTHER, THE GOVERNMENT RESERVES THE RIGHT TO STOP ANY OR ALL TRUCKS FOR INSPECTION TO DETERMINE ACCURACY OF TRIP TICKETS, WHICH ARE REQUIRED BY FLORIDA LAW. IN ACCORDANCE WITH SECTION 30 OF THE GENERAL PROVISIONS, TRIP TICKETS MUST BE MAILED TO THE MERRITT ISLAND NATIONAL WILDLIFE REFUGE OFFICE WITHIN SEVENTY-TWO HOURS AFTER HAULING OF EACH TRUCKLOAD OF CITRUS FROM THE GROVES.

C. SECTION 34 REQUIRES THAT ALL FRUIT PICKED FOR DELIVERY TO A PACKING HOUSE FOR PROCESSING ON CONSIGNMENT BE ENTERED IN A RECEIPT BOOK AT THE PACKING HOUSE. DURING THE PROCESS OF GRADING AND PACKING THE FRUIT, QUANTITIES ARE RECORDED ON A "RUN SHEET." FROM RUN SHEETS MANIFESTS ARE PREPARED INDICATING TO WHOM AND TO WHAT MARKETS THE PACKED FRUIT WAS SHIPPED. WITHIN 30 DAYS OF THE SALE, THE PROCEEDS ARE NORMALLY RECEIVED BY THE PACKING HOUSE, AND THE NET PROCEEDS ARE REMITTED TO THE GROWER INVOLVED. THE PERMIT ISSUING OFFICER, THE CITRUS GROVE MANAGER, OR OTHER INSPECTOR DESIGNATED BY THE PERMIT ISSUING OFFICER CAN INSPECT THE FRUIT AND RECORDS FOR COMPLIANCE WITH SECTION 34.

D. THE PERMIT ISSUING OFFICER HAS A CITRUS GROVE MANAGER ON HIS STAFF WHO DEVOTES ALL OF HIS TIME TO INSPECTING THE GROVES, FRUIT, AND RECORDS TO DETERMINE THAT EACH PERMITTEE IS PERFORMING HONESTLY IN ACCORDANCE WITH TERMS OF HIS PERMIT.

E. GOVERNMENT FILES CONTAIN RECORDS SHOWING TOTAL GROSS SALES FOR THE GROVES IN GROUP NO. 5 FOR THE LAST FIVE YEARS. ANALYSIS AND COMPARISON OF PREVIOUS AND CURRENT RECORDS AND REPORTS WOULD QUICKLY CALL ATTENTION TO ANY QUESTIONABLE ACTIVITIES.

F. THE SUCCESSFUL PERMITTEES ARE REQUIRED TO FURNISH PERFORMANCE BONDS TO INSURE FAITHFUL PERFORMANCE.

FURTHER, THE AGENCY INFORMS US THAT THERE ARE THREE MAIN METHODS BY WHICH GROWERS MAY MARKET THE CROP, NONE OF WHICH GIVES "GROWER/PACKERS" AN UNFAIR ADVANTAGE OVER INDEPENDENT GROWERS. FIRST, WE ARE INFORMED, THE GROWER, WHETHER AN INDEPENDENT OR ALSO A PACKER, MAY SELL HIS FRUIT ON THE TREE. IN SUCH CASES THE CONTRACT PRICE IS THE "GROSS RECEIPTS (ON TREE VALUE)" ON WHICH THE RENTAL FEE IS BASED. THE BUYER IS RESPONSIBLE FOR ALL COSTS OF HARVESTING, PACKING, SHIPPING, ETC. THIS METHOD, WE ARE ASSURED, IS AVAILABLE TO BOTH INDEPENDENTS AND "GROWER/PACKERS."

SECOND, THE AGENCY INFORMS US, EITHER TYPE OF GROWER MAY CONSIGN THE FRUIT TO A PROCESSOR WHO CHARGES THE CONSIGNOR A FEE TO GRADE, PROCESS AND PACK THE FRUIT AND SHIP IT TO WHOLESALE MARKETS WHERE IT IS SOLD AT AUCTION. THE PROCEEDS, LESS PACKING AND SHIPPING FEES, ARE REMITTED THROUGH THE PACKER TO THE GROWER. THIS AMOUNT (PROCEEDS LESS HARVESTING, PACKING AND SHIPPING CHARGES) COMPRISES THE "GROSS RECEIPTS (ON TREE VALUE)." THIS METHOD, WE ARE INFORMED, IS EQUALLY AVAILABLE TO INDEPENDENT GROWERS AND "GROWER/PACKERS."

THE THIRD METHOD IS SIMILAR TO THE ABOVE METHOD MINUS THE FINAL STEP. INSTEAD OF SHIPPING THE FRUIT TO WHOLESALE MARKETS, PROCESSED AND PACKED FRUIT IS SOLD F.O.B. PACKING PLANT TO LARGE GROCERY CHAINS. AFTER DEDUCTION OF THE HARVESTING AND PACKING CHARGE FROM THE AMOUNT RECEIVED, THE REMAINDER IS REMITTED TO THE GROWER AS THE "GROSS RECEIPTS (ON TREE VALUE)." THIS METHOD, THE AGENCY ALSO CONTENDS, CAN BE USED BY BOTH CATEGORIES OF GROWERS. THE AGENCY POINTS OUT THAT "IF A GROWER IS ALSO THE OWNER OF A PACKING PLANT AND THAT PLANT IS USED TO PROCESS AND PACK THE FRUIT, THERE IS IN FACT NO SALE FROM ONE ENTITY TO ANOTHER AT THIS POINT. THERE WOULD BE NO NEED OR PRACTICAL PURPOSE IN DOING THIS. LEGAL EFFECT WHAT IS DONE IS CONSIGNMENT OR BAILMENT." ALTHOUGH WE THINK THAT THE AGENCY POSITION MAY WELL HAVE MERIT AS FAR AS THE SECOND METHOD OF MARKETING IS CONCERNED WE ARE UNABLE TO FIND ANY PROVISION IN THE USE PERMIT OR PUBLIC NOTICE WHICH WOULD PROHIBIT THE OUTRIGHT SALE OF FRUIT, AS ILLUSTRATED IN THE FIRST MARKETING METHOD, TO A PACKING ORGANIZATION CONTROLLED BY THE GROWER/PERMITTEE. HOWEVER, WE FEEL THAT THE QUESTION OF "GROWER/PACKER" ELIGIBILITY TO COMPETE FOR USE PERMITS IS A MATTER OF JUDGMENT WITHIN THE COGNIZANCE OF THE AGENCY. SINCE THE AGENCY WHICH HAS EXPERIENCE IN THE AREA OF LAND MANAGEMENT DOES NOT BELIEVE THAT IT IS ASSUMING AN UNDUE RISK OF RECEIVING ARTIFICIALLY LOW RETURNS BECAUSE OF AWARDS OF PERMITS TO "GROWER/PACKERS," AND CONSIDERING THE FACT THAT A PROHIBITION AGAINST "GROWER/PACKER" PARTICIPATION WOULD HAVE RESULTED IN ONLY ONE OFFER UNDER GROUP NO. 5 AND TWO OFFERS UNDER GROUP NO. 1, WE DO NOT FIND THE AGENCY ACTED UNREASONABLY IN SOLICITING BOTH CATEGORIES OF GROWERS.

CONCERNING THE CONTENTION THAT HISTORICALLY, INDEPENDENT GROWERS HAVE GIVEN THE GOVERNMENT HIGHER RATES OF RETURN THAN "GROWER/PACKERS," THE AGENCY INFORMS US THAT THE THREE "GROWER/PACKERS" WHO HAVE RECEIVED PERMITS HAVE PRODUCED A HIGHER AVERAGE RETURN THAN THAT RECEIVED FROM INDEPENDENT GROWERS.

MRS. STARKEY FURTHER CONTENDS THAT A BSFW REPRESENTATIVE INFORMED HER PRIOR TO THE SUBMISSION OF OFFERS THAT THE AGENCY'S PRIMARY INTEREST WAS IN MAINTENANCE OF THE GROVES AND THAT RETURN TO THE GOVERNMENT WAS MERELY A SECONDARY CONSIDERATION. SHE ALSO MAINTAINS THAT SHE WAS INFORMED THAT ANY RETURN RATE OF OVER 15 PERCENT WOULD BE SUSPECT AND THAT AN OFFER OF BETWEEN 5 AND 10 PERCENT WOULD BE CONSIDERED A REASONABLE OFFER. THE PROTESTER CONTENDS THAT, RELYING UPON THESE REPRESENTATIONS, SHE PREPARED AN OFFER STRESSING A COMPREHENSIVE MAINTENANCE PLAN WITH A 7.5 PERCENT RETURN TO THE GOVERNMENT. AS STATED ABOVE, THE AWARD FOR GROUP NO. 5 WAS MADE TO SULLIVAN AT A RENTAL RATE OF 30.5 PERCENT IN WHAT MRS. STARKEY CONSIDERS AS TOTAL DISREGARD FOR THE ABOVE-MENTIONED REPRESENTATIONS. MRS. STARKEY HAS SUBMITTED A PERSONAL AFFIDAVIT AND THOSE OF TWO OTHERS SUPPORTING HER CONTENTION.

IN RESPONSE, THE BSFW REPRESENTATIVE HAS ALSO SUBMITTED AN AFFIDAVIT WHICH STATES THAT HE DISCUSSED IN A GENERAL MANNER THE WORK WHICH WOULD BE REQUIRED AND ALSO STATES THAT HE INDICATED THE GROVES WOULD ON AN AVERAGE PRODUCE A RETURN TO THE GOVERNMENT OF BETWEEN 5 TO 10 PERCENT. HOWEVER, THE REPRESENTATIVE INSISTS IN HIS AFFIDAVIT THAT HE DID NOT SUGGEST TO MRS. STARKEY THAT SHE SHOULD SUBMIT AN OFFER OF 5 TO 10 PERCENT ON GROUP NO. 5, WHICH HE SAYS HE DESCRIBED TO MRS. STARKEY AS AN EXTRAORDINARY TRACT. THEREFORE, WE DO NOT FIND THAT THE GOVERNMENT REPRESENTATIVE ADVISED MRS. STARKEY AS TO THE PERCENTAGE WHICH SHOULD BE OFFERED. SEE B- 167102(1), OCTOBER 10, 1969.

IN A DIFFERENT CONTEXT, THE PILATES ALSO HAVE QUESTIONED WHETHER GROVE MAINTENANCE OR RATE OF RETURN TO THE GOVERNMENT WAS THE PARAMOUNT CONSIDERATION IN SELECTING PERMITTEES. THE AWARD FOR GROUP NO. 1 WAS MADE TO EGAN AT A RETURN OF 10 PERCENT, EVEN THOUGH THE PILATES OFFERED 11 PERCENT. THE PILATES MAINTAIN THAT ALL OTHER PERMITTEES WERE SELECTED BECAUSE THEY OFFERED THE HIGHEST PERCENTAGE OF GROSS RECEIPTS TO BE PAID AS RENTAL, AND, THEREFORE, THE PILATES' PROPOSAL SIMILARLY SHOULD HAVE BEEN ACCEPTED AS REPRESENTING THE BEST VALUE TO THE GOVERNMENT.

IN RESPONSE TO THIS CONTENTION, THE DEPARTMENT OF THE INTERIOR STATED IN ITS REPORT TO OUR OFFICE:

THE GROVE MANAGERS' LETTER OF JANUARY 2, 1973, *** SETS FORTH THE REASONING USED IN EVALUATING PROPOSALS. A CLOSE ANALYSIS OF THAT LETTER INDICATES THAT ALL FACTORS LISTED IN THE PUBLIC NOTICE WERE CONSIDERED. IN SOME CASES, IF ALL OTHER FACTORS WERE RATED SUBSTANTIALLY EQUAL, AWARD WAS MADE ON THE BASIS OF THE HIGHEST PERCENTAGE TO THE GOVERNMENT. OTHER CASES, WHERE TWO FIRMS OFFERED THE HIGHEST AND THE SAME PERCENTAGE PAYMENT, A VALUE JUDGMENT WAS MADE AS TO WHICH FIRM WOULD PERFORM BEST. IN STILL OTHER CASES, WHERE PERCENTAGE PAYMENTS OFFERED WERE CLOSE, A JUDGMENT WAS MADE AS TO THE RELATIVE IMPORTANCE OF RATINGS RECEIVED ON OTHER FACTORS. NO ATTEMPT WAS MADE TO AWARD ONLY ON THE BASIS OF THE HIGH OFFERED PERCENTAGE PAYMENT.

THIS STATEMENT IS SUPPORTED BY THE "ANALYSIS OF BIDS FOR CITRUS GROVE CONTRACTS" PREPARED BY EMPLOYEES OF THE MERRITT ISLAND REFUGE AND UPON WHICH THE AWARDS WERE BASED. INCLUDED IN THE ANALYSIS WAS A DISCUSSION OF THE PLANNED CARETAKING OF THE GROVES IN GROUP NO. 1 OVER AND ABOVE THE MINIMUM REQUIRED. IT WAS CONCLUDED THAT THE CARETAKING PROPOSED BY EGAN WAS OF A MORE VALUABLE NATURE THAN THE OTHER TWO OFFERORS. WITH REGARD TO EXPERIENCE AND ABILITY, IT WAS NOTED THAT MR. EGAN'S FULL TIME OCCUPATION SINCE THE MID-1920'S WAS CITRUS GROWING; THAT HIS SON WAS "RAISED IN THE BUSINESS;" AND THAT THE EGANS HAD RETAINED AS A CONSULTANT A "WELL-KNOWN AND HIGHLY REGARDED" INDIVIDUAL. ALTHOUGH THE EVALUATORS CONSIDERED THE PRIOR EXPERIENCE OF MR. AND MRS. PILATE IN MANAGING GROVES, CONCERN WAS EXPRESSED AT THE FACT THAT THE PILATES' PRIMARY OCCUPATIONS WERE OTHER THAN CITRUS GROWERS. MR. EGAN'S FINANCIAL RESOURCES WERE DEEMED BY THE EVALUATORS TO "FAR EXCEED" THOSE OF THE OTHER TWO OFFERORS. CONCLUSION, THE EVALUATORS REGARDED EGAN'S SUPERIOR CARETAKING PLAN, EXPERIENCE AND ABILITY AND FINANCIAL RESOURCES MERITED AN AWARD TO HIM AT A RATE OF RETURN ONE PERCENT LESS THAN THAT OFFERED BY THE PILATES.

WITH REGARD TO GROUP NO. 5, THE EVALUATORS CONCLUDED THAT BOTH MRS. STARKEY AND SULLIVAN:

*** ARE SUBSTANTIAL PROFESSIONAL CITRUS PRODUCERS, HIGHLY REGARDED IN THEIR COMMUNITY. BOTH HAVE ADEQUATE FINANCIAL RESPONSIBILITY, RESOURCES, EXPERIENCE, AND ABILITY TO QUALIFY AS PERMITTEES.

THE ANALYSIS ALSO INDICATES THAT MRS. STARKEY OFFERED MORE DESIRABLE CARETAKING ABOVE THE MINIMUM REQUIRED. HOWEVER, IN VIEW OF THE FACT THAT SULLIVAN OFFERED A 23 PERCENT GREATER RETURN ON A GROUP WHICH HAD BEEN GROSSING IN EXCESS OF $200,000 ANNUALLY, IT WAS RECOMMENDED THAT GROUP NO. 5 BE AWARDED TO HIM.

IT THEREFORE APPEARS THAT THE PROPOSALS WERE EVALUATED IN THE LIGHT OF THE INFORMATION WHICH THE PUBLIC NOTICE REQUIRED OF PROSPECTIVE PERMITTEES. FROM OUR REVIEW OF THE RECORD, WE ARE UNABLE TO CONCLUDE THAT BSFW'S DETERMINATIONS TO MAKE AWARDS TO EGAN AND SULLIVAN WERE ARBITRARY OR CAPRICIOUS OR LACKING IN SUBSTANTIAL EVIDENTIARY SUPPORT.

WE ARE OF THE VIEW, HOWEVER, THAT THE CRITERIA USED BY THE AGENCY TO EVALUATE THE PROPOSALS SHOULD HAVE BEEN SET FORTH MORE CLEARLY IN THE PUBLIC NOTICE. FIRST, WE NOTE THAT ALTHOUGH THE PUBLIC NOTICE ADVISED OFFERORS TO PROVIDE "AS A MINIMUM, INFORMATION ON" CARETAKING, MANAGEMENT EXPERIENCE, FINANCIAL RESPONSIBILITY AND PERCENTAGE OF GROSS RECEIPTS TO BE PAID TO THE GOVERNMENT AS RENTAL, OFFERORS WERE NOT SPECIFICALLY ADVISED THAT THESE FACTORS CONSTITUTED THE EVALUATION CRITERIA. MORE IMPORTANTLY, OFFERORS WERE NOT INFORMED OF THE RELATIVE IMPORTANCE OF THESE CRITERIA. WE HAVE OFTEN STATED THAT GOOD PROCUREMENT PRACTICE REQUIRES THAT NOTICE SHOULD BE GIVEN AS TO ANY MINIMUM STANDARDS WHICH WILL BE REQUIRED FOR ANY PARTICULAR ELEMENT OF THE EVALUATION, AS WELL AS REASONABLY DEFINITE INFORMATION AS TO THE DEGREE OF IMPORTANCE TO BE ACCORDED TO PARTICULAR FACTORS IN RELATION TO EACH OTHER. 50 COMP. GEN. 59 (1970); 50 ID. 117 (1970).

WE BELIEVE THAT THE GOVERNMENT'S INTERESTS WOULD HAVE BEEN SERVED IN THIS CASE IF THE COMPETITORS FOR THESE USE PERMITS HAD BEEN ADVISED OF THE MINIMUM EVALUATION STANDARDS AND THE RELATIVE IMPORTANCE OF THESE STANDARDS PRIOR TO SUBMITTING THEIR PROPOSALS. BY LETTER OF TODAY WE ARE BRINGING THIS MATTER TO THE ATTENTION OF THE SECRETARY OF THE INTERIOR FOR CONSIDERATION IN FUTURE SOLICITATIONS. HOWEVER, WE DO NOT BELIEVE THIS DEFICIENCY AFFECTS THE VALIDITY OF THE AWARDS SINCE THE RECORD INDICATES THAT PROPOSALS WERE IMPARTIALLY EVALUATED ACCORDING TO THE SAME CRITERIA.

FOR THE REASONS STATED ABOVE, AFTER REVIEW OF THE RECORD BEFORE US, WE DO NOT REGARD THE ACTIONS TAKEN BY BSFW AS ARBITRARY, CAPRICIOUS OR LACKING A REASONABLE BASIS. ACCORDINGLY, THE PROTESTS MUST BE DENIED.