B-141285, JAN. 25, 1960

B-141285, JAN. 25, 1960

TO SHIPS AND POWER, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 17, 1959, PROTESTING THE ACTION OF THE MARITIME ADMINISTRATION IN AWARDING CERTAIN VESSELS TO THE BETHLEHEM STEEL COMPANY AND THE WALSH CONSTRUCTION COMPANY.

AN EXAMINATION OF THE RECORD INDICATES THAT THE MARITIME ADMINISTRATION FOR THE PAST TWO YEARS HAS BEEN ENGAGED IN A CONTINUOUS PROGRAM OF SELLING ITS OLDER LIBERTY TYPE VESSELS FOR SCRAP. THESE VESSELS ARE IN LONG SUPPLY, AND THE MARITIME ADMINISTRATION ADVISES THAT IT HAS BEEN ABLE TO EFFECT SALES OF ONLY A PORTION OF THE VESSELS ADVERTISED. THEY FURTHER ADVISE THAT ANY INTERESTED PARTIES CAN PURCHASE THESE VESSELS FOR SCRAPPING, PROVIDED THEY COMPLY WITH THE TERMS OF THE INVITATION FOR BIDS. ALSO, THEY HAVE CONSIDERED IT TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO SELL THESE VESSELS AS SOON AS POSSIBLE, PROVIDED AN ADEQUATE RETURN CAN BE OBTAINED.

IN THE INSTANT CASE, ONLY THREE BIDS WERE RECEIVED FOR THE TEN VESSELS IN QUESTION. IT ALSO IS REPORTED THAT NO BID OR OFFER OF ANY KIND WAS SUBMITTED BY YOUR COMPANY. THE HIGH BIDS FOR THE VESSELS WERE SUBMITTED BY THE WALSH CONSTRUCTION COMPANY AND THE BETHLEHEM STEEL COMPANY, WHICH BIDS WERE DEEMED FULLY RESPONSIVE BY THE ADMINISTRATION. THE BETHLEHEM STEEL COMPANY BID WAS SUBMITTED IN THE AMOUNT OF $718,250 FOR THE TEN VESSELS "ALL ONLY; " AND ON THE BASIS OF A STRAIGHT LINE DISTRIBUTION THIS RESULTED IN AN AVERAGE PRICE OF $71,825 PER VESSEL. THE WALSH CONSTRUCTION COMPANY'S BID WAS FOR ONLY FOUR OF THE TEN VESSELS AND WAS IN THE AMOUNT OF $73,000.50 PER VESSEL. THE ONLY OTHER BID WAS FOR THE TEN VESSELS IN THE AMOUNT OF $701,000 "ALL ONLY.'

SINCE THE BID OF THE WALSH CONSTRUCTION COMPANY ON A UNIT AMOUNT BASIS WAS CONSIDERABLY ABOVE THE BID OF BETHLEHEM STEEL COMPANY, IT WAS DETERMINED BY THE MARITIME ADMINISTRATION THAT THE INTEREST OF THE GOVERNMENT MIGHT BEST BE SERVED BY ACCEPTING THE WALSH BID FOR FOUR VESSELS IN THE AMOUNT OF $73,000.50 PER VESSEL. THE BETHLEHEM STEEL COMPANY, AT THE REQUEST OF THE GOVERNMENT, ADVISED THAT IT WOULD BE WILLING TO REMOVE ITS CONDITION OF "ALL ONLY" AND ACCEPT THE REMAINING SIX VESSELS AT A UNIT PRICE OF $71,825 PER VESSEL. ACCORDINGLY, SIX VESSELS WERE SOLD TO BETHLEHEM FOR A TOTAL PRICE OF $430,950.

AS INDICATED IN OUR LETTER TO YOU, B-141171, OF NOVEMBER 23, 1959, IT IS WELL SETTLED, AS A GENERAL RULE, THAT BIDDERS MAY NOT VARY THEIR PROPOSALS AFTER BIDS ARE OPENED, SINCE THIS WOULD NULLIFY THE ENTIRE PROCEDURE OF LETTING PUBLIC CONTRACTS ON AN OPEN COMPETITIVE BASIS. 17 COMP. GEN. 554. THE REASON FOR THE RULE, OF COURSE, IS TO PUT ALL BIDDERS ON AN EQUAL BASIS, AND TO PREVENT ANY BIDDER FROM OBTAINING THE ADVANTAGE IT WOULD HAVE BY BEING PERMITTED TO BID AFTER THE OTHER BIDS WERE KNOWN. THE OTHER HAND, WE HAVE HELD THAT THERE WOULD BE NO OBJECTION TO A LOW BIDDER DECREASING THE AMOUNT OF HIS BID. SEE ALECK LEITMAN V. UNITED STATES, 104 C.CLS. 324, 341.

IN THE PRESENT CASE THE BETHLEHEM STEEL COMPANY WAS IN A POSITION ANALOGOUS TO THAT OF THE LOWEST BIDDER UNDER A PROCUREMENT TRANSACTION AND WAS THE ONLY BIDDER WHO THEN COULD BE HEARD TO COMPLAIN OF THE ACTION TAKEN. IT IS OUR OPINION THAT THE CONSENT OF THE BETHLEHEM STEEL COMPANY TO PURCHASE A LESSER NUMBER OF VESSELS THAN IT ORIGINALLY PROPOSED TO BUY WOULD NOT DO VIOLENCE TO THE RULE AGAINST MODIFICATION OF BIDS STATED ABOVE. ACCORDINGLY, WE PERCEIVE NO BASIS FOR DISTURBING THE AWARD AS MADE TO THE TWO FIRMS. FURTHERMORE, IN OUR REVIEW OF THE MATTER, WE DETECTED NO "DEVIOUS METHOD OR ARRANGEMENT" TO PREVENT AN EQUAL CHANCE FOR ALL CONCERNED TO PURCHASE THE VESSELS, AS SUGGESTED IN YOUR COMMUNICATIONS.