B-157211, B-157266, OCT. 25, 1965

B-157211, B-157266, OCT. 25, 1965

TO SHERMAN, COWARD AND MACDONALD:

YOUR LETTER OF SEPTEMBER 23, 1965, ON BEHALF OF PETROF TRADING COMPANY, INCORPORATED, REQUESTS RECONSIDERATION OF OUR DECISION B 157211, B-157266, DATED SEPTEMBER 3, 1965, DENYING PETROF'S PROTEST AGAINST THE PROCEDURES EMPLOYED BY THE DEFENSE SUPPLY AGENCY (DSA), DEFENSE SURPLUS SALES OFFICE (DSSO), COLUMBUS, OHIO, IN THE SALE OF SURPLUS EXPLOSIVES AND CHEMICALS UNDER INVITATION FOR BIDS NO. 27-S-65 75.

THE INVITATION OFFERED FOR SALE FIVE ITEMS OF SMOKELESS POWDER AND TWO ITEMS OF BARIUM CHLORATE. THE PROPERTY WAS LOCATED AT THE UNITED STATES AMMUNITION DEPOT, CRANE, INDIANA, AND WAS MADE AVAILABLE FOR INSPECTION BY PROSPECTIVE BIDDERS.

ALTHOUGH PETROF DID NOT INSPECT THE PROPERTY, IT COMMUNICATED BY TELEPHONE WITH THE HOLDING ACTIVITY AT CRANE ON MAY 26, 1965, ONE WEEK AFTER THE INVITATION WAS ISSUED AND TWO WEEK BEFORE JUNE 9, THE DATE SCHEDULES FOR BID OPENING. IT IS APPARENT, THEREFORE, THAT PETROF HAD READ THE ITEM DESCRIPTIONS AS EARLY AS MAY 26, BUT RAISED NO QUESTION AS TO MISDESCRIPTION UNTIL JUNE 8, ONLY ONE DAY BEFORE BID OPENING.

AS WAS STATED IN OUR DECISION OF SEPTEMBER 3, IT IS THE POLICY OF THE DEFENSE LOGISTICS SERVICES CENTER (DLSC), WHEN TIME PERMITS, TO WITHDRAW FROM SALE AN ITEM ON WHICH A MISDESCRIPTION IS OF SOME CONSEQUENCE. THIS CASE, EVEN THOUGH BID OPENING WAS SCHEDULED THE DAY AFTER PETROF'S ALLEGATION OF MISDESCRIPTION WAS MADE, DLSC PROMPTLY INVESTIGATED THE MATTER. ON THE BASIS OF THE INFORMATION WHICH COULD BE OBTAINED IN SUCH A SHORT TIME AND IN THE ABSENCE OF SPECIFIC ALLEGATIONS BY PETROF AS TO THE NATURE OF THE ERRORS, DLSC CONCLUDED THAT THE BIDS SHOULD BE OPENED ON TIME BUT THAT THE AWARDS SHOULD BE WITHHELD PENDING A MORE THOROUGH INVESTIGATION. THE SUBSEQUENT AWARDS OF SIX OF THE SEVEN SALE ITEMS WERE MADE ONLY AFTER DLSC WAS SATISFIED THAT THREE OF THE ITEMS HAD BEEN PROPERLY DESCRIBED IN THE INVITATION AND AFTER THE HIGH BIDDERS ON THE OTHER THREE ITEMS, WHICH HAD BEEN MISDESCRIBED, AGREED UPON NOTICE OF THE DISCREPANCIES TO WAIVE LIABILITY ON THE PART OF THE GOVERNMENT THEREFOR. SUCH ACTION WAS IN ACCORD WITH OUR EARLIER DECISION B-156813, JUNE 30, 1965, ON ANOTHER SURPLUS GOVERNMENT PROPERTY SALE, IN WHICH WE HELD THAT A HIGH BIDDER'S OFFER COULD BE ACCEPTED IN SUCH CIRCUMSTANCES IF DETERMINED TO BE IN THE INTERESTS OF THE GOVERNMENT.

AS TO THE SEVENTH ITEM, WHICH WAS MISDESCRIBED, TO THE EXTENT THAT THE WEIGHT OF THE CONTAINERS HOLDING BARIUM CHLORATE WAS OVERSTATED BY FOUR POUNDS EACH, AND ON WHICH IT APPEARED THAT THE HIGH BID WAS PROBABLY HIGHER THAN THE RETURN THE GOVERNMENT COULD EXPECT WERE THE PROPERTY READVERTISED UNDER A CORRECTED DESCRIPTION, WE HELD THAT SHOULD AWARD AT THE HIGH BID PRICE BE DETERMINED TO BE IN THE BEST INTEREST OF THE GOVERNMENT WE WOULD NOT OBJECT TO SUCH AWARD CONDITIONED ON A WAIVER BY THE HIGH BIDDER OF ANY CLAIM OF MISDESCRIPTION AGAINST THE GOVERNMENT.

YOU HAVE FURNISHED NO ADDITIONAL INFORMATION FOR OUR CONSIDERATION. HOWEVER, YOU REQUEST THAT WE REVERSE OUR DECISION ON THE BASIS THAT THE MISDESCRIPTIONS INVOLVED WERE MAJOR, RATHER THAN MINOR, THUS WARRANTING WITHDRAWAL OF THE SALE AND READVERTISEMENT; THAT MISDESCRIPTIONS LEAD SOME BIDDERS TO REFRAIN FROM BIDDING OR TO BID LOWER THAN NORMALLY; AND THAT THE GOVERNMENT SHOULD BE HELD, WHEN SELLING, TO SOME REASONABLE STANDARD OF ACCURACY.

THE REGULATIONS WHICH GOVERN THE SALE OF SURPLUS GOVERNMENT PROPERTY BY DSA ARE PUBLISHED IN THE DEFENSE DISPOSAL MANUAL, DSA MANUAL 4160.1. CHAPTER XV, PART 3, GOVERNING DISPOSAL OF PROPERTY REQUIRING SPECIAL HANDLING, READS, IN PART, AS FOLLOWS:

"12. DANGEROUS PROPERTY.

"A. EXTREME CARE WILL BE EXERCISED IN THE DISPOSAL OF PROPERTY THAT IS DANGEROUS TO PUBLIC HEALTH AND SAFETY. ALL SUCH PROPERTY THAT IS STRICTLY MILITARY IN CHARACTER AND THAT WHICH LACKS COMMERCIAL VALUE WILL BE RENDERED INNOCUOUS BEFORE BEING TURNED OVER TO THE DISPOSAL OFFICER. PROPER PRECAUTIONARY MEASURES WILL BE TAKEN BY THE GENERATING ACTIVITY TO INSURE THAT SUCH PROPERTY IS PROPERLY INSPECTED AND NOT COMMINGLED WITH OTHER PROPERTY AUTHORIZED FOR DISPOSAL. THE PERSON CONDUCTING THIS INSPECTION WILL SUBMIT A CERTIFICATE AS PART OF THE TURN-IN DOCUMENT, AS FOLLOWS:

" "I CERTIFY THAT THE ITEM OR ITEMS LISTED HEREON HAVE BEEN INSPECTED BY ME AND, TO THE BEST OF MY KNOWLEDGE AND BELIEF, CONTAIN NO ITEMS OF A DANGEROUS NATURE.'

"C. THE FOLLOWING PROCEDURES WILL APPLY TO THE DISPOSAL OF HIGH EXPLOSIVES (INCLUDING BUT NOT LIMITED TO DYNAMITE, TNT, AND DEMOLITION BLOCKS), SUPPLIES USED FOR BLASTING PURPOSES (BLASTING CAPS, FUSE LIGHTERS, DETONATORS, DETONATING CORD, PRIMACORD, PRIMERS, FUSES) AND CHEMICALS USED IN THE MANUFACTURE OF AMMUNITION PRIMERS:

(1) ALL MATERIALS WILL BE IDENTIFIED PROPERLY IN THE OFFERING WITH RESPECT TO THEIR HAZARDOUS CHARACTERISTICS.

(2) ALL MATERIALS WILL BE LABELED BY THE GENERATING INSTALLATION SO THAT THEIR HAZARDOUS CHARACTER WILL BE EVIDENT IMMEDIATELY UPON INSPECTION.

(3) THE SELLING ORGANIZATION WILL REQUIRE THE PURCHASER TO EXECUTE THE APPROPRIATE CERTIFICATE CONTAINED IN CHAPTER VII, PARAGRAPH K 3, THIS PART.

(4) WHEN PROPERTY OFFERED FOR SALE MAY CONTAIN AN EXPLOSIVE OR TOXIC ELEMENT, THE APPROPRIATE NOTIFICATIONS CONTAINED IN CHAPTER VII, PARAGRAPH K 3, THIS PART, TOGETHER WITH ANY APPLICABLE WARNING CONDITION, WILL BE MADE A PART OF THE PROVISIONS OF THE IFB.'

CHAPTER VI, PART 3, GOVERNING THE PREPARATION AND DISTRIBUTION OF INVITATIONS FOR BIDS, PROVIDES THAT THE HOLDING ACTIVITIES WILL FURNISH THE SALES OFFICE WITH THE DESCRIPTION DATA REQUIRED FOR INCLUSION IN SALES INVITATIONS; THAT THE HOLDING ACTIVITY HAS PRIME RESPONSIBILITY FOR PROPERTY DESCRIPTIONS; AND THAT SUCH DESCRIPTIONS WILL BE PREPARED FROM PHYSICAL INSPECTION OF THE PROPERTY AND RESEARCH OF RECORDS.

FROM THE FOREGOING, IT IS APPARENT THAT DSA HAS ESTABLISHED FIRM PROCEDURES TO ASSURE THAT ALL SURPLUS PROPERTY SALES DESCRIPTIONS WILL BE BASED ON THE BEST AVAILABLE INFORMATION AND THAT THE SALE OF SURPLUS CHEMICALS AND EXPLOSIVES WILL BE CONDUCTED WITH PARTICULAR CARE. FURTHERMORE, THE USE OF THE GUARANTEED DESCRIPTIONS CLAUSE IN ALL DSA SALES CONTRACTS SINCE NOVEMBER 1, 1964, PROVIDING RELIEF TO PURCHASERS IN THOSE CASES IN WHICH, DESPITE THE BEST EFFORTS OF THE GOVERNMENT, MISDESCRIPTIONS OCCUR, REPRESENTS AN ADDITIONAL STEP IN DSA'S PROGRAM TO DEAL EQUITABLY WITH PURCHASERS OF SURPLUS GOVERNMENT PROPERTY. ACCORDINGLY, IT IS OUR VIEW, CONTRARY TO YOUR ASSERTIONS, THAT THE PRESENT PROCEDURES SHOULD TEND TO ENCOURAGE BIDDING.

WITH REGARD TO YOUR CONTENTION THAT THE MISDESCRIPTIONS IN THE SALES INVITATION IN QUESTION WERE MAJOR, IT IS TO BE NOTED THAT NONE OF THE PURCHASERS OF THE FOUR ITEMS WHICH WERE FOUND TO BE MISDESCRIBED ALLEGED ANY MISDESCRIPTIONS, AND WHEN ADVISED OF THE DISCREPANCIES EACH ELECTED TO WAIVE ANY CLAIM AGAINST THE GOVERNMENT ON SUCH BASIS. IN THIS CONNECTION, WE NOTE YOUR CONTENTION THAT THE PROCEDURE, WHEREBY AN AWARD MAY BE MADE ON A MISDESCRIBED ARTICLE IF NO GREATER PRICE CAN BE EXPECTED ON READVERTISEMENT AND THE BIDDER WILL WAIVE HIS RIGHT TO A PRICE REDUCTION UNDER THE GUARANTEED DESCRIPTION CLAUSE, IGNORES THE POSSIBILITY THAT OTHER POTENTIALLY HIGHER BIDDERS MAY NOT HAVE BID BECAUSE OF THE MISDESCRIPTION. WE ARE PERSUADED, HOWEVER, BY THE APPARENTLY GREATER POSSIBILITY UNDER SUCH CIRCUMSTANCES THAT THE MISDESCRIPTION RESULTED IN HIGHER BID PRICES THAN WOULD HAVE BEEN SUBMITTED UNDER A PROPER DESCRIPTION.

WHILE WE ARE IN AGREEMENT WITH YOUR CONTENTION THAT THE BEST INTEREST OF THE GOVERNMENT WOULD BE SERVED IF ALL DESCRIPTIONS OF SURPLUS PROPERTY WERE COMPLETELY ACCURATE, IT DOES NOT NECESSARILY FOLLOW THAT EACH MISDESCRIPTION WHICH MAY AFFECT THE BID PRICES WOULD REQUIRE, OR WOULD CONSTITUTE A PROPER BASIS FOR, REFUSAL TO CONSUMMATE THE SALE. IN THIS CONNECTION, IT SHOULD BE NOTED THAT THIS OFFICE WILL DIRECT THE CANCELLATION OF A CONTRACT AWARD ONLY WHERE IT CAN BE DEMONSTRATED THAT THE AWARD ACTION WAS SO IN VIOLATION OF LAW OR REGULATIONS AS TO RENDER THE TRANSACTION VOID AB INITIO. BASED UPON THE PRESENT RECORD, WE ARE UNABLE TO CONCLUDE THAT VIOLATIONS OF THAT NATURE HAVE OCCURRED IN THE INSTANT PROCUREMENT. IN VIEW THEREOF, OUR DECISION OF SEPTEMBER 3 MUST BE AFFIRMED.