B-152989, APR. 6, 1964

B-152989, APR. 6, 1964

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO LETTER OF MARCH 5, 1964, FROM THE COMMISSIONER, UTILIZATION AND DISPOSAL SERVICE, REPLYING TO OFFICE LETTER OF DECEMBER 6, 1963, CONCERNING THE PROTEST FROM THE UNIVERSAL BRICK AND SUPPLY COMPANY AGAINST THE SALE OF A PORTION OF THE KINGSBURY ORDNANCE PLANT, LA PORTE, INDIANA, TO THE EXCHANGE NATIONAL BANK OF CHICAGO, AS TRUSTEE.

THERE IS ENCLOSED FOR YOUR INFORMATION A COPY OF OUR LETTER OF TODAY TO THE PROTESTOR WHEREIN IT IS BEING ADVISED THAT UNDER THE CIRCUMSTANCES SET FORTH THEREIN OUR OFFICE IS NOT REQUIRED TO OBJECT TO THE SALE IN THIS INSTANCE. ATTENTION IS INVITED, HOWEVER, TO THE STATEMENTS IN THE LAST PARAGRAPH OF OUR LETTER TO THE PROTESTOR TO THE EFFECT THAT THE PERTINENT REGULATIONS, 44 CFR 110.32 (A) (1) AUTHORIZE NEGOTIATION IN SITUATIONS SUCH AS HERE INVOLVED (WHEN ADVERTISING DOES NOT RESULT IN RECEIPT OF A BID PRICE COMMENSURATE WITH THE FAIR MARKET VALUE OF THE PROPERTY) ONLY WITH THE HIGHEST BIDDER FOR THE PURPOSE OF AFFORDING HIM AN OPPORTUNITY TO INCREASE HIS OFFERED PRICE. THE LEGAL AUTHORITY FOR THIS PORTION OF THE REGULATIONS IS, PRESUMABLY, THE CASE OF LEITMAN V. UNITED STATES, 104 CT.CL. 324. WHILE WE HAVE SOME DOUBT WHETHER THE RATIONALE OF THE LEITMAN CASE WAS EVER INTENDED TO APPLY TO THE TYPE OF SITUATION COVERED BY THE REGULATIONS, WE ARE NOT DISPOSED TO QUESTION THE VALIDITY OF THE REGULATIONS ON THIS ACCOUNT. HOWEVER, WE DO NOT BELIEVE THE LEITMAN CASE CAN BE CONSIDERED TO JUSTIFY THE SOLICITATION OF IMPROVED BIDS FROM COMPETING BIDDERS. IN THE INSTANT CASE THERE WAS COMPETITION NOT ONLY BETWEEN BIDDERS ON EACH INDIVIDUAL PARCEL, BUT THERE WAS ALSO COMPETITION BETWEEN THE HIGHEST BIDDERS ON INDIVIDUAL PARCELS AND THE HIGHEST BIDDER FOR THE PROPERTY AS A UNIT. THIS COMPETITION WAS CONTINUED BY THE NEGOTIATION WHICH WAS CONDUCTED AFTER BID OPENING, AND IT SEEMS QUITE POSSIBLE THAT AFTER THE DISCLOSURE OF THE HIGH INDIVIDUAL PARCEL BIDS A GREATER ADVANTAGE WAS GAINED BY THE HIGH UNIT BIDDER THAN BY THE INDIVIDUAL PARCEL BIDDERS WHEN IMPROVED BIDS WERE SOLICITED. IT IS THEREFORE OUR VIEW THAT SINCE THE AGGREGATE AMOUNT OF THE BIDS SUBMITTED BY THE BIDDERS ON THE INDIVIDUAL PARCELS EXCEEDED THE BID SUBMITTED BY THE HIGHEST UNIT BIDDER ONLY THE BIDDERS ON THE INDIVIDUAL PARCELS SHOULD HAVE BEEN AFFORDED AN OPPORTUNITY TO INCREASE THEIR BIDS. THE CONTRACTING OFFICER'S ACTION IN ACCORDING THE HIGHEST BIDDER ON A UNIT BASIS AN OPPORTUNITY TO INCREASE ITS BID WAS IN ERROR AND UNAUTHORIZED UNDER 44 CFR 110.32 (A) (1). SUCH NEGOTIATIONS, IF UNDERTAKEN, SHOULD HAVE BEEN CONDUCTED IN ACCORDANCE WITH SECTION 110.34 OF THE CITED REGULATIONS. SUBPARAGRAPH (B) OF THIS LATTER SECTION REQUIRES THAT NO NEGOTIATED DISPOSAL MAY BE MADE THEREUNDER UNLESS "NOTIFICATION OF THE INTENTION TO NEGOTIATE AND REASONABLE OPPORTUNITY TO NEGOTIATE SHALL HAVE BEEN GIVEN BY THE AGENCY HEAD OR HIS DESIGNEE TO EACH RESPONSIBLE BIDDER WHO SUBMITTED A BID PURSUANT TO THE ADVERTISING.' ALSO, IN THIS REGARD THERE SHOULD BE COMPLIANCE WITH THE REQUIREMENTS OF SECTION 203 (3) (6) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 484 (E) (6), UNDER WHICH IN THE CASE OF NEGOTIATED DISPOSALS A STATEMENT IS REQUIRED TO BE FURNISHED TO THE APPROPRIATE CONGRESSIONAL COMMITTEES IN ADVANCE EXPLAINING THE CIRCUMSTANCES OF ANY SUCH SALES.

APPROPRIATE ACTION SHOULD BE TAKEN TO AVOID RECURRENCES OF SIMILAR UNAUTHORIZED DISPOSALS.