B-154749, SEP. 24, 1964

B-154749, SEP. 24, 1964

TO MR. OWEN M. FLICKINGER:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 11, 1964, WITH ENCLOSURES, TO CONGRESSMAN ALPHONSO BELL, PROTESTING THE REJECTION OF A BID SUBMITTED BY YOU AND MR. ROBERT M. FINDLAY UNDER INVITATION FOR BIDS NO. GS-09-U/R/64-30, CAMP ELLIOTT, SAN DIEGO, CALIFORNIA.

THIS SALES OFFERING COVERED APPROXIMATELY 2,642 ACRES, COMPRISING A PORTION OF THE FORMER UNITED STATES NAVAL RETRAINING COMMAND AT CAMP ELLIOTT. AS SHOWN ON THE SCHEDULE ATTACHED TO THE INVITATION, THE PROPERTY WAS OFFERED FOR SALE IN 116 TRACTS, 97 OF WHICH WERE IN AREA "B" AND 19 OF WHICH WERE IN AREA "D.' BIDDERS WERE INFORMED THAT BIDS COULD BE MADE ON TWO ALTERNATIVE BASES, NAMELY, EITHER INDIVIDUALLY FOR ANY NUMBER OF THE LISTED ITEMS OR ON A LUMP-SUM BASIS FOR GROUPINGS OF ITEMS AT THE ELECTION OF THE BIDDER. YOU AND MR. FINDLAY SUBMITTED A LUMP-SUM BID OF $500,000 FOR PARCELS D-27 TO D-37 INCLUSIVE. GENERAL SERVICES ADMINISTRATION HAS REPORTED THAT SINCE YOUR BID REPRESENTED LESS THAN ONE- HALF OF THE APPRAISED FAIR MARKET VALUE OF THE 11 PARCELS, IT WAS CONSIDERED INADEQUATE TO MERIT SERIOUS CONSIDERATION. BY LETTER OF JUNE 29, 1964, GSA ADVISED YOU THAT IT WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT TO ACCEPT YOUR BID.

ON THE OTHER HAND, GSA HAS REPORTED THAT SEVERAL INDIVIDUAL BIDS WERE RECEIVED ON EACH OF THE INVOLVED 11 PARCELS AND THAT IT CONSIDERED THE HIGH BIDS FOR FOUR OF THE PARCELS TO BE SUFFICIENTLY CLOSE TO ITS OPINION OF THEIR VALUE AS TO WARRANT SERIOUS CONSIDERATION FOR ACCEPTANCE. THE FOUR BIDS REFERRED TO WERE REPORTED TO BE AS FOLLOWS:

CHART

D-29 $60,001.50

D-32 47,106.00

D-34 47,576.00

D-37 22,100.00

GSA HAS FURTHER REPORTED THAT EACH OF THE ABOVE FOUR BIDS EQUALLED 75 PERCENT OR MORE OF ITS ESTIMATE OF THE FAIR VALUE BASED UPON AN INDEPENDENT APPRAISAL AND THAT SINCE THE HIGH BIDS ON THE INDIVIDUAL PARCELS, ALTHOUGH WITHIN A REASONABLE APPROXIMATION OF GSA'S VALUE ESTIMATES, DID NOT EQUAL SUCH ESTIMATED VALUES, THE HIGH INDIVIDUAL PARCEL BIDDERS WERE AFFORDED AN OPPORTUNITY TO INCREASE THEIR BIDS IN ACCORDANCE WITH ESTABLISHED PROCEDURES. 44, CFR 110.32 (A) (1). SUCH ACTION RESULTED IN THE RECEIPT OF INCREASED BIDS FOR PARCELS D-33 AND D-36 FROM $30,011.77 TO $96,011.77 AND $33,207.77 TO $92,011.77, RESPECTIVELY, AND GSA HAS REPORTED THAT IT NOW HAS ACCEPTED THE INDIVIDUAL BIDS WITH RESPECT TO PARCELS NOS. D-33, D-34, D-36, AND D 37.

YOU HAVE PROTESTED GSA'S FAILURE TO EXTEND TO YOU AND MR. FINDLAY AN OPPORTUNITY TO IMPROVE YOUR BID AND YOU CONTEND THAT SINCE IT EXCEEDED THE AGGREGATE OF THE INDIVIDUAL BIDS FOR PARCELS D-27 TO D-37, YOU SHOULD HAVE BEEN ACCORDED SUCH AN OPPORTUNITY. IN SUPPORT OF YOUR CONTENTION YOU REFER TO OUR DECISION OF APRIL 6, 1964, B-152989, IN THE KINGSBURY ORDNANCE PLANT SALE AND TO OUR LETTER OF THE SAME DATE TO THE ADMINISTRATOR OF GENERAL SERVICES.

THE KINGSBURY CASE INVOLVED A SALE OF 24 PARCELS OF SURPLUS PROPERTY OFFERED FOR SALE ON AN ALTERNATIVE BID BASIS, NAMELY, ON THE BASIS OF 24 INDIVIDUAL PARCELS OR AS A SINGLE UNIT OR ANY COMBINATION OF PARCELS. THE PROTESTING BIDDER SUBMITTED THE HIGHEST BID ON PARCEL NO. 1 IN THE AMOUNT OF $5,850. THE HIGHEST BIDS FOR THE PROPERTY AS INDIVIDUAL PARCELS TOTALED $1,524,898 AND THE HIGHEST BIDDER FOR THE PROPERTY AS A SINGLE UNIT SUBMITTED A BID IN THE AMOUNT OF $1,411,010. SINCE THE BIDS RECEIVED WERE NOT CONSIDERED COMMENSURATE WITH THE APPRAISED FAIR MARKET VALUE ESTIMATES GSA AFFORDED OPPORTUNITIES FOR INCREASED BIDS TO THE HIGHEST INDIVIDUAL BIDDERS AND THE HIGHEST UNIT BIDDER AFTER REJECTING ALL OTHER BIDS RECEIVED. AS A RESULT OF SUCH ACTION THE HIGHEST BIDDERS FOR THE INDIVIDUAL PARCELS INCREASED THEIR BIDS TO A TOTAL AMOUNT OF $1,594,644 AND THE HIGHEST BIDDER ON A UNIT BASIS INCREASED ITS BID TO $1,612,010. AN AWARD WAS MADE TO THE LATTER BIDDER AND THE HIGH BIDDER FOR ONE OF THE INDIVIDUAL PARCELS PROTESTED SUCH ACTION ON THE GROUND THAT PERMITTING SUBSEQUENT NEGOTIATIONS WITH THE HIGH BIDDER ON A UNIT BASIS UNDER THE CIRCUMSTANCES CONSTITUTED PREFERENTIAL TREATMENT, SINCE THE BIDS UPON OPENING BECAME PUBLIC INFORMATION WHICH WAS MORE BENEFICIAL TO THE HIGH BIDDER ON A UNIT BASIS THAN TO THE BIDDERS ON INDIVIDUAL PARCELS.

AS INDICATED IN YOUR LETTER, WE CONCLUDED 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 AND WE STATED THAT:

"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.'"

AS POINTED OUT IN OUR LETTER OF APRIL 6, 1964, TO THE ADMINISTRATOR OF GENERAL SERVICES THERE WAS COMPETITION IN THE KINGSBURY CASE 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 THE BID OPENING AND WE STATED THAT IT SEEMED 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.

IN THE PRESENT CASE GSA HAS REPORTED THAT SINCE YOUR BID EQUALLED LESS THAN ONE-HALF OF THE APPRAISED FAIR MARKET VALUE OF THE 11 PARCELS, PRIOR TO AFFORDING THE INDIVIDUAL BIDDERS AN OPPORTUNITY TO IMPROVE THEIR BIDS, IT WAS DETERMINED NOT TO FURTHER CONSIDER THE DISPOSAL OF PARCELS D-27 TO D-37 ON OTHER THAN AN INDIVIDUAL PARCEL BASIS. THIS ACTION TERMINATED THE COMPETITION BETWEEN THE INDIVIDUAL BIDDERS AND YOU AND MR. FINDLAY. THEREFORE, THE PRINCIPLE APPLIED IN THE KINGSBURY CASE IS NOT FOR APPLICATION IN THIS INSTANCE.

ACCORDINGLY, OUR OFFICE IS NOT REQUIRED TO OBJECT TO GSA'S REFUSAL TO ACCORD YOU AN OPPORTUNITY TO IMPROVE YOUR BID ON AN AGGREGATE BASIS FOR PARCELS NOS. D-27 TO D-37 AND SINCE YOU FAILED TO SUBMIT BIDS FOR ANY OF THE INDIVIDUAL PARCELS IN THAT GROUP PRIOR TO BID OPENING, THERE WAS NO REQUIREMENT UNDER THE APPLICABLE REGULATIONS TO AFFORD YOU AN OPPORTUNITY TO PARTICIPATE ON AN INDIVIDUAL BASIS. THEREFORE, YOUR PROTEST MUST BE DENIED.