Matter of: Camden Iron & Metal, Inc. File: B-272074 Date: August 26, 1996

B-272074: Aug 26, 1996

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Was proper where agency reasonably determined that award under the terms of the solicitation would put the government in breach of another contract. (ITOC) is to move. Arguing (as relevant here) that the IFB is not inconsistent with the ITOC contract. That the changes needed could not be incorporated in a contract with Camden because they were material (the estimated cost of using ITOC labor and equipment ranged from $1. Could have affected the bidding. An agency must have a compelling reason to cancel a solicitation for the sale of property after bid opening. 95-1 CPD para. 212. [3] Contracting officials have broad discretion to determine whether a compelling reason to cancel exists. Our review is limited to considering the reasonableness of their decision.

Matter of: Camden Iron & Metal, Inc. File: B-272074 Date: August 26, 1996

Withdrawal of item from surplus property sale, and rejection of high bid submitted for it, was proper where agency reasonably determined that award under the terms of the solicitation would put the government in breach of another contract; contracting officials reasonably determined that the solicitation did not accurately state the government's requirements.

Attorneys

DECISION

Camden Iron and Metal, Inc. protests the rejection of its bid for, and the withdrawal of, item No. 128 from an invitation for bids (IFB) covering sale No. 31-6485, for the sale of bearings, hardware and miscellaneous surplus property, conducted by the Defense Reutilization & Marketing Service (DRMS), Defense Logistics Agency (DLA). [1] Item No. 128 consists of 145 containership cargo stowage adaptors (CCSA), 399 seasheds, and related hardware located at Military Ocean Terminal Bayonne (MOTB), Bayonne, New Jersey. [2]

We deny the protest.

Camden submitted the high bid for item 128. Prior to award, DRMS received a letter from the Military Traffic Management Command (MTMC), which operates MOTB and holds title to the property under the sale. The letter advised that eight issues had been identified which had to be addressed through an IFB modification before item 128 could be awarded.

The only issue relevant here concerned the labor to be employed to dismantle and cut into scrap the CCSAs and seasheds and to move and load the scrap onto trucks. With respect to item 128, the IFB provided that the purchaser would "furnish all labor, material, and equipment necessary to dismantle and remove property at no cost to the Government." However, MTMC determined that this requirement conflicted with an existing requirements contract (No. DAHC24-96-D-0001) under which International Terminal Operating Co., Inc. (ITOC) is to move, load, and unload various types of cargo onto and from trucks, ships, and railcars. MTMC interpreted ITOC's contract as obligating the government to utilize ITOC services for the handling of all Department of Defense (DOD) property located at MOTB, including the item 128 property. It therefore concluded that the terms of the current IFB did not reflect the government's needs.

On May 17, Camden protested the agency's failure to make award of item 128 under the IFB's original terms, arguing (as relevant here) that the IFB is not inconsistent with the ITOC contract. Thereafter, on June 18, the agency rejected all bids and withdrew item 128 from the sale on the grounds that the IFB did not accurately state the government's needs, and that the changes needed could not be incorporated in a contract with Camden because they were material (the estimated cost of using ITOC labor and equipment ranged from $1,209,296 to $2,597,096.46), and could have affected the bidding. In response, Camden reiterates its argument that it should receive the award based on the original IFB terms.

An agency must have a compelling reason to cancel a solicitation for the sale of property after bid opening. Federal Acquisition Regulation (FAR) sec. 14.404-1(a)(1); Tucson Iron & Metal, B-259689, Apr. 25, 1995, 95-1 CPD para. 212. [3] Contracting officials have broad discretion to determine whether a compelling reason to cancel exists, and our review is limited to considering the reasonableness of their decision. Berendse & Sons Paint Co., Inc., B-262244, Nov. 21, 1995, 95-2 CPD para. 235. Generally, where an IFB does not contain specifications that reflect the agency's actual needs, the agency has a compelling reason to cancel. FAR sec. 14.404-1(c)(1); Victory Salvage Co., Inc., B-253006, Aug. 11, 1993, 93-2 CPD para. 92.

Camden argues that the property in issue here is not subject to the ITOC contract because that contract covers only DOD property, and the property here will belong to Camden at the time it is loaded and removed. In this regard, Camden cites DRMS's "Sale by Reference," part 1, paragraph 4, the provisions of which were incorporated into the IFB by reference:

"Property will be released to the Purchaser or its authorized representative when the official notice of award or a written authorization from the Purchaser is presented to the Property Disposal Officer, or designee, at the property location. Purchasers are responsible for making all necessary arrangements for the removal of their property."

Camden also cites the same document, part 2, paragraph 7, entitled "Title":

"Unless otherwise provided in the Invitation, title to the property sold hereunder shall vest in the Purchaser as and when removal is effected."

Camden maintains that the first paragraph contemplates title passing to the purchaser upon its release by the Property Disposal Officer, as evidenced by the reference to "their property," and that, in any case, the "as and when" language in the second paragraph makes it clear that title passes no later than when the removal process is commenced. Since title vests in the purchaser as soon as removal begins, Camden concludes, the property no longer belongs to the government and is not subject to the ITOC contract. Conversely, the agency takes the view that, under the "as and when" language, title passes to the purchaser only "when" removal is completed.

We find that the meaning of the title provision in the context of the circumstances here is unclear, and that there thus is no basis for finding the agency's interpretation unreasonable. There is no conclusive evidence that title was intended to pass to the purchaser under the IFB at the time removal of the property commenced, rather than when removal was completed. The paragraph 4 language cited by the protester ("their property"), while open to the interpretation urged by Camden, does not by its terms purport to address the issue of title passage, and thus is not dispositive. The title provision clearly was intended to set forth the operative terms for purposes of determining when title is to pass, but the "as and when" language of the provision lacks the specificity necessary to resolve the particular dispute in this case. Specifically, while we agree with Camden that the word "as" suggests that title is to pass at some point "as" removal proceeds, i.e., as removal is effected, the word "when" just as clearly suggests that title passes when removal is completed. We find no other language in the IFB--and Camden cites none--which sheds light on the meaning of the provision in the context of this case.

The decision in Hurlen Constr. Co., ASBCA No. 29,102, Apr. 18, 1984, 84-2 BCA para. 17,338, tends to support the agency's view. There, surplus marine equipment, including winches, were being sold as surplus. The solicitation included the same "Sale By Reference" title provision--which included the same "as and when" language--in issue here. Although the Board dismissed the case for lack of jurisdiction (and there is no indication in the decision that the "as and when" language was in issue), before doing so it observed that the purchaser had paid for and removed the winches, and concluded that, based on the title provision language, title vested in the purchaser upon removal of the property. The parties cite no other legal decisions inconsistent with the conclusion in this case, and we have found none.

Camden argues that it is unreasonable to think that the government would allow the purchaser, or that the purchaser would expend resources, to cut the seasheds and CCSAs into scrap while the government holds title. This argument is without merit, since there are circumstances--including those in Hurlen, under which the government will retain title after a sale. For example, see Resource Recovery Int'l Group, Inc., B-265880, Dec. 19, 1995, 95-2 CPD para. 277 (purchaser was required to scrap, dismantle, and mutilate vessel prior to removal of the scrap and components, title to which did not vest in purchaser until they were physically removed from vessel); Fort Vancouver Plywood Co. v. U.S., 747 F.2d 547 (9th Cir. 1984) and Summit Contractors, Inc. v. U.S., 22 Cl. Ct. 54 (1990) (timber was required to be cut and scaled, or otherwise prepared, and then removed; however, title did not pass until the timber was removed).

Camden also argues that the ITOC contract does not apply to the item 128 property because it is not "cargo" which, it maintains, is freight in transit but, rather, is government personal property. While the ITOC contract does appear to have contemplated that ITOC generally would move cargo in transit in the traditional sense (i.e., loading it onto and unloading it from ships, trucks and trains), the contract does not define the term so narrowly. "Cargo" is broadly defined in the dictionary as "goods or merchandise conveyed in a ship, airplane, or vehicle; freight." [4] Here, when the reduction of the property is complete, the scrap products will be loaded and conveyed off the base in some type of vehicle. This meets the general definition of cargo above, and since the contract does not define the term differently, or otherwise purport to limit the types of property covered, there is no basis for concluding that the item 128 property is not covered by the ITOC contract.

Further, in a series of pre-proposal questions and answers under the original solicitation for the ITOC contract, a prospective offeror asked the following: "We understand that there are approximately 500 seasheds stored at the base. If and when these seasheds have to be moved, will the contractor be compensated under Item 401 or on an extra labor basis?" Contracting officials replied: "The movement of the stored seasheds was not contemplated in the estimated quantities for this item. Therefore, the cargo would be handled on an extra labor basis." This dialogue (ultimately incorporated in the contract) suggests that, while the item 128 property was not included in the solicitation estimates, handling the property arguably was understood by the agency and ITOC to fall within the general scope of the contract. [5]

We conclude that, while it may not be clear that the item 128 property would have to be moved under the terms of the ITOC contract, neither is it clear that it falls outside the ITOC contract. We thus are unable to conclude that the agency's determination that the IFB (item 128) does not reflect its needs, or its decision to withdraw the item from the sale, were unreasonable; the agency is not required to risk liability under such circumstances. See generally J.A. Walker Co., Inc.; James A. Walker, d/b/a J.A. Walker Co., B-236518, Nov. 17, 1989, 89-2 CPD para. 474 (where bid bond surety's liability is unclear, the government properly may reject the bid rather than assume the risk of litigation to enforce its rights).

Camden cites four contracts under which it claims purchasers have dismantled and removed property from MOTB without regard to the ITOC contract. However, our review indicates that all four took place prior to the December 10, 1995, commencement of the ITOC contract. In any case, each sale is a separate transaction, and what happens under one does not determine the propriety of what occurs under another. Komatsu Dresser Co., B-251944, May 5, 1993, 93-1 CPD para. 369.

Camden claims that the agency is insisting that the removal of item 128 property be performed by ITOC to avoid conflict with the International Longshoremen's Association, whose labor is presumably used by ITOC. Camden has presented no evidence besides its own speculative assertions as to the agency's motivation. This simply does not provide a basis to find bad faith or improper conduct on the part of the agency. Dismantlement and Envtl. Management Co., B-257632, Oct. 24, 1994, 94-2 CPD para. 151.

The protest is denied.

Comptroller General of the United States

1. We consider this protest under 4 C.F.R. Sec. 21.13(a) (1996), as DLA, by letter dated January 13, 1987, has agreed to our considering bid protests involving its surplus property sales. See Mansfield Assocs., Inc., B-242270, Mar. 13, 1991, 91-1 CPD para. 284.

2. Seasheds and CCSAs are steel structures which increase the cargo-carrying flexibility and capability aboard container-ships.

3. Pursuant to 41 C.F.R. Sec. 109-45.304-50 (1995), the procedures in FAR subpart 14.4 are applicable to the evaluation of bids and award of contracts for the sale of personal property.

4. Webster's Ninth New Collegiate Dictionary, 1983.

5. Camden points out that the "extra labor" provisions under section C.12 of the ITOC contract obligate ITOC to provide extra labor for "miscellaneous services" only "when ordered by the Contracting Officer"; it concludes that this provision reserves to the government a discretionary right to deal with the stored seasheds in whatever manner it chooses. However, since all services under the ITOC contract are to be ordered by the contracting officer based on actual needs as they arise, the fact that "extra labor" to move the seasheds has to be ordered as well does not mean that the government is not obligated to fill any need to move the seasheds through the ITOC contract.