B-139179, MAR. 15, 1960

B-139179, MAR. 15, 1960

TO STOCKTON BOX COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 1, 1960, REQUESTING RECONSIDERATION OF OUR DECISION OF MAY 25, 1959, TO YOU, IN WHICH WE AFFIRMED OUR PRIOR DECISION OF APRIL 16, 1959, TO MR. CHARLES A. CONNAUGHTON, CONTRACTING OFFICER, DEPARTMENT OF AGRICULTURE, FOREST SERVICE, CONCERNING THE ACTION TO BE TAKEN WITH RESPECT TO BIDS RECEIVED FOR THE SALE OF TIMBER IN THE CUCKOO RIDGE UNIT, TAHOE NATIONAL FOREST AND WHICH WERE OPENED ON MARCH 2, 1959.

THE FACTS WERE RELATED IN OUR PRIOR DECISIONS AND WILL NOT BE RESTATED IN FULL DETAIL HEREIN. AS STATED IN OUR DECISION OF MAY 25, 1959, THE CRUX OF THE WHOLE MATTER IS WHETHER AFTER THE OPENING OF WRITTEN BIDS THE TWO BIDDERS, INCLUDING YOUR FIRM, WERE BIDDING ON EQUAL TERMS.

THE WORK OF CONDUCTING THE AUCTION IN THIS CASE WAS CARRIED ON BY MR. HAL TURNER, ASSISTANT TO THE SUPERVISOR OF TAHOE NATIONAL FOREST LOCATED AT NEVADA CITY, CALIFORNIA, WHILE THE CONTRACTING OFFICER APPEARS TO BE LOCATED AT SAN FRANCISCO, CALIFORNIA. THE INFORMATION FOR PROSPECTIVE BIDDERS WAS DATED JANUARY 29, 1959, AND APPEARS TO HAVE BEEN PREPARED UNDER THE SUPERVISION OF THE SUPERVISOR OF TAHOE NATIONAL FOREST, CALIFORNIA. PARAGRAPH 13 OF THE PROSPECTUS INVITED PROSPECTIVE BIDDERS WHO REQUIRED ADDITIONAL INFORMATION TO CONTACT EITHER THE DISTRICT RANGER, FORESTHILL, CALIFORNIA, OR THE FOREST SUPERVISOR, NEVADA CITY, CALIFORNIA. IN LINE WITH THESE INSTRUCTIONS AND SINCE THE PROSPECTUS WAS NOT CLEAR IN REGARD TO THE MATTER OF THE MAINTENANCE OF FOREST HIGHWAY 96, THE CONTRACTOR CALLED ON MR. TURNER ON FEBRUARY 24, 1959, FOR CLARIFICATION OF SOME MATTERS. PRIOR THERETO, OR ON FEBRUARY 18, 1959, MR. GLEN E. SINDEL, DISTRICT RANGER, FORESTHILL, CALIFORNIA, HAD ADDRESSED A MEMORANDUM TO MR. TURNER, AS FOLLOWS:

"I BELIEVE THE ITEM IN THE WRITTEN PORTION OF THE PROSPECTI ON BOTH THESE SALES DEALING WITH THE MAINTENANCE OF HIGHWAY NO. 96 MAY BE MISLEADING TO BIDDERS.

"ACTUALLY THE COST OF MAINTENANCE OF THIS PAVED ROAD SECTION IS CONSIDERED IN THE BASIC APPRAISAL AND IS INCLUDED IN THE TOTAL STUMPAGE PRICE.

"THE REFERENCE TO THE BIDDER HAVING TO ENTER INTO A SEPARATE COOP. AGREEMENT AND MAKING PAYMENTS INTO A COOPERATIVE DEPOSIT CERTAIN AMOUNTS PER M FOR THIS ROAD MAINT. IS NOT ENTIRELY CORRECT ANY MORE. ALSO THE BIDDERS WILL LIKELY ASSUME THAT THESE AMOUNTS PAYABLE ARE OVER AND ABOVE TOTAL BID PRICES. THIS IS NOT THE CASE AS I UNDERSTAND IT AND THE TRUE SITUATION SHOULD BE EXPLAINED AT LEAST PRIOR TO THE ORAL BIDDING.--- I WOULD THINK"

MR. TURNER, IN A SIGNED STATEMENT DATED MARCH 17, 1959, STATED THAT AT THE AUCTION ON MARCH 2, THE SEALED BIDS OF SPECKERT LUMBER COMPANY AND YOUR COMPANY WERE OPENED AND THAT BOTH COMPANIES QUALIFIED AS TO BIDDING THE MINIMUM OF $292,570. AT THIS POINT IT WAS IMPOSSIBLE TO TELL WHETHER OR NOT EACH BIDDER HAD TAKEN INTO ACCOUNT THE AMOUNT OF $40,400 HE WAS TO PAY TO THE FOREST SERVICE FOR REIMBURSING THE GOVERNMENT FOR USE OF FOREST HIGHWAY 96. MR. TURNER ALSO STATES THAT THE ANNOUNCEMENT WAS THEN MADE THAT RANGER SINDEL HAD BROUGHT TO HIS ATTENTION THE NEED FOR CLARIFYING THE PROSPECTUS AND "THAT THE PRICES LISTED IN THE PROSPECTUS WERE THE TOTAL PRICE PER SPECIE AND INCLUDED THE AVERAGE $2.00 PER THOUSAND FEE (T) FOR MAINTAINING HIGHWAY 96.' MR. TURNER, IN A SUPPLEMENTAL STATEMENT OF MARCH 23, 1959, STATED THAT THERE WERE NO QUESTIONS ASKED AND HE CONFIRMED THIS BY CHECKING WITH RANGER SINDEL AND THE RESOURCE CLERK, BOTH IN ATTENDANCE AT THE AUCTION. SPECKERT LUMBER COMPANY MADE THE HIGHEST BID OF $406,250 FOR THE ESTIMATED VOLUME AND YOUR BID WAS $404,500. SPECKERT WAS TENTATIVELY DECLARED THE SUCCESSFUL BIDDER AND BY LETTER OF MARCH 6, 1959, FROM THE SAN FRANCISCO OFFICE, SPECKERT'S BID WAS CONDITIONALLY ACCEPTED, SUBJECT TO EXECUTION OF FORMAL DOCUMENTS. IT WAS THEN LEARNED THAT MR. TURNER, THE AUTHORIZED REPRESENTATIVE FOR THE CONDUCT OF THE BIDDING, HAD STATED TO THE BIDDERS, PRIOR TO THE ORAL AUCTION, THAT THE STATED AMOUNT OF THE DEPOSIT FOR MAINTENANCE OF FOREST HIGHWAY 96 WAS INCLUDED IN THE MINIMUM ACCEPTABLE BID OF $292,750. IN VIEW OF THE AMOUNT OF THE OVERBID ($406,250), THE GOVERNMENT DOES NOT STAND TO LOSE $40,400, AS YOU INFER, IF BOTH BIDDERS WERE RAISING THEIR WRITTEN BIDS ON THE BASIS OUTLINED BY MR. TURNER AND THE ONLY DIFFERENCE RESULTING FROM THIS CHANGE IN BIDDING PROCEDURE IS THAT THE AMOUNT OF $40,400 WILL STAND AS RECEIPTS FROM SALES OF TIMBER INSTEAD OF BEING MADE AVAILABLE AS A TRANSFER FOR LOCAL MAINTENANCE.

WHEN OUR DECISION OF APRIL 16, 1959, WHICH WAS ADDRESSED TO THE CONTRACTING OFFICER, WAS RENDERED, THE EVIDENCE BEFORE OUR OFFICE WAS TO THE EFFECT THAT YOUR REPRESENTATIVES AT THE AUCTION DID APPREHEND THE MEANING OF MR. SINDEL'S MEMORANDUM. EVEN IN YOUR LETTER OF APRIL 29, 1959, YOU DID NOT CONTEND THAT YOUR REPRESENTATIVES FAILED TO UNDERSTAND THE ANNOUNCEMENTS AT THE AUCTION. IN FACT, WHILE THE AUCTION WAS HELD ON MARCH 2, 1959, THE CONTRACTING OFFICER REPORTED ON MAY 5, 1959, THAT MR. FAIRBROTHER OF YOUR FIRM HAD CALLED HIS OFFICE A WEEK OR SO AFTER THE AUCTION WAS HELD AND ASKED WHAT HAD BEEN DONE ABOUTSPECKERT'S BID AND HE WAS ADVISED THAT THE CASE WAS BEING CONSIDERED AND NO FINAL AWARD HAD BEEN MADE. ALSO, IT WAS STATED FURTHER IN THE LETTER THAT:

"THE STOCKTON BOX COMPANY MADE NO PROTEST TO THE FOREST SERVICE OF AWARD TO SPECKERT LUMBER COMPANY UNTIL AFTER ACTION HAD BEEN TAKEN ON YOUR DECISION AND FINAL AWARD MADE TO SPECKERT LUMBER COMPANY NOR, HAVE THEY TOLD US AT ANY TIME THAT ITS BID WAS SUBMITTED ON THE BASIS THAT THE ROAD MAINTENANCE CHARGE WOULD BE IN ADDITION TO THE AMOUNT BID.'

ALSO, AS STATED IN OUR LETTER OF MAY 25, 1959, TO YOU, MR. LEO SPECKERT HAD STATED IN A LETTER OF MARCH 17, 1959, TO THE FOREST SERVICE THAT:

"STOCKTON BOX AND OURSELVES (SPECKERT LUMBER COMPANY) BID AGAINST EACH OTHER WITH THE ABOVE UNDERSTANDING AND WE WERE FINALLY DECLARED THE HIGHEST BIDDER. I WAS NOT INFORMED ABOUT THE HEREIN REFERRED TO SITUATION UNTIL THE FOLLOWING WEEK AT WHICH TIME A SIMILAR QUESTION WAS ASKED CONCERNING AN ADJACENT FOREST SERVICE TIMBER SALE. STOCKTON BOX PERSONNEL ADMITTED AT THIS GATHERING THAT THEY WERE WELL AWARE OF THE ABOVE FACTS BEFORE BIDDING COMMENCED ON MARCH 2ND (CUCKOO RIDGE SALE).'

IN VIEW OF ALL THIS EVIDENCE AND THE FACT THAT SPECKERT HAD MOVED EQUIPMENT INTO THE TIMBER AREA AND HAD PROBABLY STARTED ROAD CONSTRUCTION, THERE WAS NO CONVINCING REASON AS TO WHY THE CONTRACT SHOULD BE CANCELED AND THE CONTRACT AWARDED TO YOU. IF, AT THAT TIME, YOU HAD PRESENTED SUBSTANTIAL EVIDENCE THAT YOUR REPRESENTATIVES AT THE AUCTION FAILED TO UNDERSTAND THE CHANGE IN BIDDING PROCEDURE AND HAD ADVANCED YOUR WRITTEN BID FROM $292,750 TO $404,500 ON THE PROMISE THAT YOU HAD TO PAY AN ADDITIONAL $40,400 TO THE GOVERNMENT FOR ROAD MAINTENANCE, THERE WOULD HAVE BEEN A BASIS FOR DIRECTING THE CANCELLATION OF THE CONTRACT AND A READVERTISEMENT OF THE SALE OF TIMBER.

YOU STATE THAT YOU FAIL TO UNDERSTAND WHY YOUR REPRESENTATIVES AT THE AUCTION SHOULD HAVE QUESTIONED THE CHANGE IN BIDDING PROCEDURE. BUT, IT IS OBVIOUS THAT THE AMOUNT OF THE BID AS SUCH UNDER THE CHANGED PROCEDURE WILL BE HIGHER THAN IN A CASE WHERE THE BIDDER WILL HAVE TO PAY TO THE GOVERNMENT, IN A SEPARATE TRANSACTION, AN ADDITIONAL AMOUNT OF $40,400. IT IS, OF COURSE, A FUNDAMENTAL RULE OF COMPETITIVE BIDDING THAT A VALID AWARD OF A CONTRACT CANNOT BE MADE ON TERMS DIFFERENT FROM THOSE SET OUT IN THE GOVERNMENT'S INVITATION. BUT THAT RULE APPLIES WHERE THE BIDDERS ARE NOT APPRISED OF THE CHANGED TERMS AND, HENCE, ARE NOT BIDDING ON AN EQUAL BASIS. THE PRESENT MATTER RESOLVES ITSELF INTO WHETHER THERE WAS ANY QUESTION THAT YOUR REPRESENTATIVES MISUNDERSTOOD THE ANNOUNCEMENT BY MR. TURNER AT THE AUCTION AND THEREFORE WERE NOT BIDDING ON AN EQUAL BASIS WITH THE OTHER BIDDER. IF IT IS TO BE CONCLUDED THAT YOUR REPRESENTATIVES UNDERSTOOD THE ANNOUNCEMENT--- AND ALL THE EVIDENCE PRESENTED IS TO THE EFFECT THAT THEY DID--- THE OTHER MATTERS NEED NOT BE CONSIDERED. WHILE WO DO NOT CONDONE THE MANNER IN WHICH THE SALE WAS ACCOMPLISHED, WE DO NOT THINK IT CAN BE HELD TO BE ILLEGAL, AND WE THEREFORE WOULD NOT BE JUSTIFIED IN COMPLYING WITH YOUR REQUEST THAT THE SPECKERT CONTRACT BE CANCELLED.