B-126445, APR. 9, 1956

B-126445, APR. 9, 1956

TO THE HONORABLE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 27, 1955, REQUESTING DECISION WHETHER WE WOULD BE REQUIRED TO OBJECT TO CONSUMMATION OF TWO AGREEMENTS BY DELIVERY OF THE DEEDS INVOLVING NEGOTIATED SALES OF SURPLUS PROPERTY AS AUTHORIZED BY SECTION 203 (E) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED BY PUBLIC LAW 492, 83D CONGRESS, APPROVED JULY 14, 1954, 40 U.S.C. 484 (E).

THE SURPLUS PROPERTY INVOLVED CONSISTS OF 0.3 MILE OF BUREAU OF RECLAMATION POWER TRANSMISSION LINE, AND 300 ACRES OF LAND AT THE KEYHOLD UNIT, MISSOURI RIVER BASIN PROJECT, SITUATED IN CROOK COUNTY, WYOMING. AUTHORITY TO NEGOTIATE A SALE OF THE POWER TRANSMISSION LINE WAS CONTAINED IN LETTER TO YOUR OF FEBRUARY 9, 1955, FROM THE GENERAL SERVICES ADMINISTRATION IN WHICH THE NEGOTIATED SALE WAS AUTHORIZED SUBJECT TO THE REQUIREMENT THAT YOU SUBMIT TO THE APPROPRIATE COMMITTEES OF CONGRESS EXPLANATORY STATEMENTS OF THE TYPE REQUIRED BY SECTION 203 (E) OF THE ABOVE ACT. THE AUTHORIZATION SPECIFICALLY STIPULATED THAT:

"BEFORE CONSUMMATION IS EFFECTED OF THE DISPOSAL CONTEMPLATED PURSUANT TO THIS AUTHORITY, A WAITING PERIOD OF THIRTY DAYS FROM THE DATE OF NOTIFICATION TO THE COMMITTEES SHALL HAVE ELAPSED DURING WHICH TIME NO ADVERSE COMMENT HAS BEEN MADE BY SAID COMMITTEES.'

AUTHORITY TO NEGOTIATE THE SALE OF THE 300 ACRES OF LAND WAS CONTAINED IN DELEGATION OF AUTHORITY NO. 227, DATED MARCH 11, 1955, WHICH ALSO REQUIRED EXPLANATORY STATEMENTS TO BE SUBMITTED TO THE APPROPRIATE CONGRESSIONAL COMMITTEES 30 DAYS PRIOR TO ANY NEGOTIATED DISPOSAL AND COPIES OF SUCH STATEMENTS TO BE FURNISHED TO THE GENERAL SERVICES ADMINISTRATION.

YOUR LETTER STATES THAT, IN ONE OF THE CASES, INTERNAL CONSIDERATIONS WITHIN THE BUREAU OF RECLAMATION RESULTED IN DELAY IN SUBMITTING THE EXPLANATORY STATEMENT UNTIL LESS THAN 30 DAYS PRIOR TO JUNE 30. IT HAS BEEN INFORMALLY REPORTED THAT THIS UNTIMELY NOTICE CONCERNED THE PROPOSED DISPOSITION OF THE 300 ACRES OF LAND, AND THAT EXPLANATORY STATEMENTS WERE NOT FURNISHED TO THE APPROPRIATE COMMITTEES UNTIL JUNE 22, 1955.

IN THE OTHER CASE INVOLVING THE POWER LINE, IT HAS BEEN INFORMALLY REPORTED THAT THE APPROPRIATE COMMITTEES WERE FURNISHED WITH EXPLANATORY STATEMENTS ON MARCH 9, 1955. YOUR LETTER STATES, HOWEVER, THAT REQUESTS FOR ADDITIONAL INFORMATION BY ONE OF THE COMMITTEES COULD NOT BE COMPLIED WITH UNTIL A PERIOD OF LESS THAN 30 DAYS PRIOR TO JUNE 30 REMAINED. MOREOVER, IT IS STATED THAT IN EACH CASE THE DEPARTMENT SPECIFICALLY WAS REQUESTED, SHORTLY BEFORE JUNE 30, BY A STAFF MEMBER OF THE HOUSE COMMITTEE ON GOVERNMENT OPERATIONS, TO DELAY FINAL ACTION IN ORDER TO ENABLE FURTHER COMMITTEE CONSIDERATION. IN THE CIRCUMSTANCES, IT IS STATED THAT THE PROBLEM THUS BECAME ONE OF EFFECTING THE DISPOSALS BY JUNE 30, 1955, WHILE HOLDING A MODICUM OF CONTROL IN ORDER THAT EXPRESSIONS FROM THE CONGRESSIONAL COMMITTEES RELATIVE TO THE PROPOSED TRANSACTIONS MIGHT NOT BE WITHOUT SOME PRACTICAL SIGNIFICANCE. IT APPEARS THAT WITH THE FOREGOING OBJECTIVE IN MIND THE BUREAU OF RECLAMATION ON JUNE 29, 1955, ENTERED INTO CONTRACTS FOR DISPOSAL OF THE LAND AND THE POWER LINE TO JOHN SCHURICHT AND THE GUERNSEY STONE COMPANY, RESPECTIVELY. EACH CONTRACT IS STATED TO HAVE CONTAINED LANGUAGE AS FOLLOWS:

"THIS AGREEMENT SHALL BECOME FINAL AND BINDING AS OF THE DATE HEREOF UPON THE EXPIRATION OF 60 DAYS AFTER SUCH DATE UNLESS TERMINATED PRIOR TO SUCH TIME BY THE GOVERNMENT.'

IT IS STATED THAT THEREAFTER NEITHER CONGRESSIONAL COMMITTEE EXPRESSED ANY VIEWS CONCERNING THE TWO DISPOSALS AND THAT THE DEPARTMENT DID NOT EXERCISE ITS TERMINATION RIGHTS.

SECTION 203 (E) OF THE ABOVE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT, AS AMENDED, PROVIDES THAT SURPLUS PROPERTY DISPOSALS MAY BE MADE BY THE ADMINISTRATOR OF GENERAL SERVICES, WITHOUT ADVERTISING, UNTIL 12 O- CLOCK NOON EASTERN STANDARD TIME, JUNE 30, 1955,"PROVIDED, THAT AN EXPLANATORY STATEMENT SHALL BE PREPARED AND SUBMITTED TO THE APPROPRIATE COMMITTEES OF CONGRESS AND A COPY PRESERVED IN THE FILE OF ALL CASES WHERE NEGOTIATED DISPOSAL OCCURS.'

IN OUR LETTER OF JULY 21, 1955, B-116344, TO THE CHAIRMAN, SPECIAL GOVERNMENT ACTIVITIES SUBCOMMITTEE OF THE HOUSE COMMITTEE ON GOVERNMENT OPERATIONS, REFERRED TO BY YOU, IT WAS STATED THAT IN ORDER TO COMPLY WITH THE EXPRESS PROVISIONS OF THE ABOVE STATUTE, IT IS NECESSARY TO SHOW THAT A VALID AND SUBSISTING ENFORCEABLE CONTRACT FOR THE SALE OF THE PROPERTY CAME INTO BEING ON OR PRIOR TO THE HOUR AND DATE SPECIFIED IN THE ACT, NAMELY, 12-O-CLOCK NOON EASTERN STANDARD TIME, JUNE 30, 1955. ELABORATING ON THE ABOVE STATEMENT IT WAS STATED THAT IF SUCH A CONTRACT HAS BEEN EXECUTED IN ANY PARTICULAR CASE THE FACT THAT COMPLETION OF THE TRANSACTION, SUCH AS PAYMENT OF THE PURCHASE PRICE OR THE EXECUTION OF A DEED OR OTHER TITLE INSTRUMENT, IS NOT REQUIRED TO BE MADE UNTIL AFTER THE CUT-OFF DATE WOULD NOT APPEAR TO BE CONTRARY TO THE REQUIREMENT OF THE STATUTE. ON THE OTHER HAND, IT WAS STATED THAT IF SUCH CONTRACT CONTAINS IN ITSELF EXPRESS CONDITIONS, WHICH WOULD PREVENT ITS TAKING EFFECT AS A BINDING OBLIGATION UNTIL AFTER THE CUT-OFF DATE, SUCH PROPOSED DISPOSITION PROPERLY COULD NOT BE REGARDED AS HAVING BEEN MADE WITHIN THE TIME FIXED BY THE STATUTE. IN SUCH EVENT, IT WAS STATED THAT IN THE ABSENCE OF LEGISLATION, EITHER EXTENDING THE TIME FOR NEGOTIATED SALES BEYOND JUNE 30, 1955, OR AUTHORIZING NEGOTIATED SALES GENERALLY, SUCH DISPOSALS COULD ONLY BE MADE AFTER ADVERTISING.

WHILE, AS POINTED OUT IN OUR LETTER, THE LEGISLATIVE HISTORY OF THE PROVISO CONTAINED IN SECTION 203 (E) INDICATES THAT IT WAS CONTEMPLATED THAT THE EXPLANATORY STATEMENT SHOULD BE SUBMITTED TO THE APPROPRIATE COMMITTEE PRIOR TO DISPOSAL, THE LANGUAGE OF THE PROVISION CANNOT BE CONSTRUED AS REQUIRING SUCH SUBMISSION AS A CONDITION PRECEDENT TO DISPOSAL. THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, HAS REPORTED THAT THE ADDITIONAL REQUIREMENT THAT EXPLANATORY STATEMENTS SHOULD BE SUBMITTED 30 DAYS IN ADVANCE OF THE CONSUMMATION OF EACH SALE WAS IMPOSED BY HIM IN HIS DELEGATIONS OF AUTHORITY PURSUANT TO SECTION 203 (C) OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, AS AMENDED, 40 U.S.C. 484 (C), WHICH PERMITS THE ADMINISTRATOR TO AUTHORIZE OTHER AGENCIES TO DISPOSE OF SURPLUS PROPERTY UPON SUCH TERMS AND CONDITIONS AS HE DEEMS PROPER.

PRIMARILY, YOUR ARGUMENTS AND THE AUTHORITIES CITED IN YOUR LETTER ARE INTENDED TO ESTABLISH THAT THE UNILATERAL CANCELLATION PROVISION IN EACH CONTRACT IN FAVOR OF THE UNITED STATES DID NOT INVALIDATE THE CONTRACT. YOU STATE THAT SINCE SUCH PROVISION DOES NOT SPECIFY THAT THE TERMINATION OPTION MAY BE INVOKED AT THE WILL OR WHIM OF PERSONS ACTING FOR THE GOVERNMENT IT IS DEPENDENT FOR ITS INVOCATION ON THE OCCURRENCE OR RECOGNITION OF CIRCUMSTANCES WHICH ARE INDEPENDENT OF ARBITRARY WILL OR WHIM, THUS JUSTIFYING THE INTRODUCTION OF EXTRINSIC FACTS TO ESTABLISH THE MEANING OF SUCH PROVISION. YOU STATE THAT THERE UNDOUBTEDLY WAS A MUTUAL UNDERSTANDING THAT THE TERMINATION PROVISION WAS USED SOLELY TO PERMIT THE BUREAU OF RECLAMATION TO HAVE THE BENEFIT OF THE COMMITTEES VIEWS IN DETERMINING FINALLY WHETHER A DISPOSAL BY ADVERTISING WOULD BETTER PROTECT THE PUBLIC INTEREST. FOR THE PURPOSE OF SHOWING WHAT COULD HAVE BEEN DONE TO SPELL OUT WITH SOME DEGREE OF ACCURACY WHAT THE TERMINATION PROVISION ACTUALLY IMPORTED, THERE IS QUOTED IN YOUR LETTER AN ALTERNATIVE PROVISION CONSISTENT WITH SUCH MUTUAL UNDERSTANDING WHICH YOU STATE COULD HAVE BEEN USED TO SHOW THE REAL PURPOSE OF THE 60-DAY WAITING PERIOD AND THUS RESULT IN AN ENFORCEABLE CONTRACT.

THE EFFECT OF THE CLAUSE USED IN THE ABOVE HYPOTHETICAL PROVISION WHICH YOU STATE MIGHT BETTER HAVE EXPRESSED THE REAL UNDERSTANDING OF THE PARTIES WOULD HAVE BEEN TO RESERVE TO THE GOVERNMENT, FOR A PERIOD OF 60 DAYS AFTER THE DATE OF THE CONTRACTS, THE RIGHT TO DETERMINE WHETHER THE PUBLIC INTEREST WOULD BE BETTER SERVED BY A NEGOTIATED OR AN ADVERTISED DISPOSAL. IN OTHER WORDS, THE NET EFFECT OF THE CLAUSE WOULD HAVE BEEN TO PROLONG THE AUTHORITY TO MAKE THAT DETERMINATION BEYOND THE TIME FIXED BY THE ACT. TO THAT EXTENT, THE HYPOTHETICAL PROVISION WOULD HAVE HAD THE SAME EFFECT AS THE CONTRACT PROVISIONS. THE DISCRETION VESTED IN THE ADMINISTRATOR OF GENERAL SERVICES TO EFFECT NEGOTIATED DISPOSALS BY SECTION 203 (E) OF THE ACT, AND DELEGATED TO YOU UNDER AUTHORITY OF SECTION 203 (C) OF THE SAME ACT, ENDED AS OF 12 O-CLOCK NOON ON JUNE 30, 1955. THEREFORE, THE DETERMINATION TO NEGOTIATE RATHER THAN TO ADVERTISE MUST HAVE BEEN MADE IRREVOCABLY BY THAT TIME TO COMPLY WITH THE STATUTORY REQUIREMENT. THE INCLUSION OF THE RESERVATION OF THE RIGHT TO MAKE THAT DETERMINATION AT A LATER DATE WAS BEYOND THE SCOPE OF THE CONTRACTING OFFICER'S AUTHORITY AND THEREFORE UNAUTHORIZED. GAY STREET CORP. OF BALTIMORE, MARYLAND V. UNITED STATES, 130 C.CLS. 341. IN THE CIRCUMSTANCES, WE MUST CONCLUDE THAT AT THE TIME OF EXPIRATION OF THE DISPOSAL AUTHORITY THERE WAS NO VALID ENFORCEABLE CONTRACT IN EITHER OF THE TWO CASES. FURTHERMORE, IN THE CASE OF THE PROPOSED DISPOSAL OF THE 300 ACRES OF LAND THE EXPLANATORY STATEMENT WAS NOT SUBMITTED UNTIL JUNE 22, 1955, OR LESS THAN 30 DAYS PRIOR TO JUNE 30, 1955. THE EXPRESS TERMS OF THE AUTHORIZATION NO. 227 REQUIRED THE SUBMISSION OF AN EXPLANATORY STATEMENT TO THE APPROPRIATE COMMITTEES AT LEAST 30 DAYS PRIOR TO THE CONSUMMATION OF ANY NEGOTIATED DISPOSAL. IN OUR VIEW, AND APPARENTLY IN THE VIEW OF THE GENERAL SERVICES ADMINISTRATION, THIS REQUIREMENT OPERATED AS A CONDITION PRECEDENT TO THE VALIDITY OF ANY CONTRACT FOR A NEGOTIATED SALE. FOR THIS ADDITIONAL REASON THE CONTRACTING OFFICER EXCEEDED HIS AUTHORITY IN EXECUTING THE LAND CONTRACT PRIOR TO THE EXPIRATION OF THE 30 -DAY WAITING PERIOD AS CONTAINED IN DELEGATION OF AUTHORITY NO. 227.

ACCORDINGLY, WE WOULD BE REQUIRED TO OBJECT TO DELIVERY OF THE DEEDS IN BOTH CASES.