B-167794, OCT. 30, 1969

B-167794, OCT. 30, 1969

BIDS--EVALUATION--TAX BENEFITS--NOT FOR CONSIDERATION NEGOTIATION OF WATER AND SEWER SERVICES CONTRACT FOR VO-TECH INDIAN SCHOOL BY BUREAU OF INDIAN AFFAIRS WITH CITY OF ALBUQUERQUE, N. MEX; RATHER THAN WITH INVESTOR - OWNED TAX - PAYING PUBLIC UTILITY WHICH OFFERED CHEAPER RATES, WAS PROPER AND PROTEST TO AWARD IS DENIED, PARTICULARLY IN VIEW OF BUREAU'S PLAN TO EVENTUALLY TURN OVER OPERATION OF SCHOOL TO CITY AND IN CONFORMANCE WITH CITY PLANNED SEWER FACILITIES PROGRAM FOR AREA INVOLVED, PROMULGATED PURSUANT TO FEDERAL WATER POLLUTION CONTROL ACT, 33 U.S.C. 466, AND IN COMPLIANCE WITH EXECUTIVE ORDER 11288. TAX BENEFITS ACCRUING TO GOVT. IF AWARD MADE TO TAX - PAYING UTILITY COMPANY ARE NOT FOR CONSIDERATION IN EVALUATION OF NEGOTIATED PROCUREMENT.

TO MR. FREEMAN LUSK:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 21, 1969, PROTESTING THE AWARD OF A CONTRACT BY THE BUREAU OF INDIAN AFFAIRS, DEPARTMENT OF THE INTERIOR, TO THE CITY OF ALBUQUERQUE, NEW MEXICO, FOR WATER AND SEWAGE SERVICES TO THE NEW VO-TECH INDIAN SCHOOL, OFFICIALLY CALLED THE ALBUQUERQUE VOCATIONAL-TECHNICAL SCHOOL.

YOU STATE THAT AWARD OF THE CONTRACT TO THE CITY IS ADVERSE TO THE BEST INTERESTS OF THE UNITED STATES ECONOMICALLY AND IN PRINCIPLE. YOU STATE THAT YOUR COMPANY NOT ONLY OFFERS THE SERVICES AT LOWER COST TO THE GOVERNMENT, BUT THAT IT IS AN INVESTOR-OWNED PUBLIC UTILITY PAYING TAXES TO THE GOVERNMENT WHEREAS THE CITY DOES NOT PAY TAXES.

THE BUREAU OF INDIAN AFFAIRS HAS ACKNOWLEDGED THAT THE PARADISE SERVICES CORPORATION HAS OFFERED THE CHEAPER RATES. HOWEVER, SINCE THE BUREAU PLANS TO TURN THE OPERATION OF THE SCHOOL OVER TO THE CITY OF ALBUQUERQUE EVENTUALLY AND SINCE THE FURNISHING OF SUCH SERVICES BY THE CITY WILL COMPORT WITH THE SEWER FACILITIES PROGRAM PLANNED BY THE CITY FOR THE AREA INVOLVED, IT PROPOSES TO NEGOTIATE THE CONTRACT FOR THE WATER AND SEWAGE SERVICES WITH THE CITY. IN THAT REGARD, THE BUREAU POINTS OUT THAT SECTION 4 (I) OF EXECUTIVE ORDER NO. 11288,"PREVENTION, CONTROL AND ABATEMENT OF WATER POLLUTION BY FEDERAL ACTIVITIES," PROMULGATED PURSUANT TO THE FEDERAL WATER POLLUTION CONTROL ACT, AS AMENDED, 33 U.S.C. 466, PROVIDES:

"ANY WASTE TREATMENT FACILITIES INSTALLED BY ANY DEPARTMENT, AGENCY, OR ESTABLISHEMENT SHALL AS FAR AS PRACTICABLE BE CONSTRUCTED SO AS TO CONFORM WITH ANY AREAWIDE PROGRAM, MEETING CRITERIA ESTABLISHED BY THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT FOR A UNIFIED OR OFFICIALLY COORDINATED AREAWIDE SEWER FACILITIES SYSTEM AS PART OF THE COMPREHENSIVELY PLANNED DEVELOPMENT OF THE AREA PURSUANT TO SECTION 702 (C) OF THE HOUSING AND URBAN DEVELOPMENT ACT OF 1965, THAT MAY HAVE BEEN ADOPTED WITH RESPECT TO THE AREA CONCERNED.' IN THAT CONNECTION, THE FEDERAL WATER POLLUTION CONTROL ADMINISTRATION, DEPARTMENT OF THE INTERIOR, HAS ADVISED THE BUREAU OF INDIAN AFFAIRS, WITH RESPECT TO THE ALBUQUERQUE VOCATIONAL-TECHNICAL SCHOOL, AS FOLLOWS: "THE MIDDLE RIO GRANDE COUNCIL OF GOVERNMENTS HAS DEVELOPED AN AREAWIDE PLAN FOR SEWAGE DISPOSAL AND THE PLAN HAS BEEN APPROVED BY THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.'COMPLIANCE WITH EXECUTIVE ORDER 11288 SECTION 4 (I) WOULD BE ACCOMPLISHED BY THE SCHOOLS CONNECTING TO THE SEWAGE SYSTEM PROVIDED BY THE CITY OF ALBUQUERQUE.'

IN VIEW OF THE POLICY EXPRESSED IN THE EXECUTIVE ORDER, THE DETERMINATION TO NEGOTIATE THE CONTRACT WITH THE CITY OF ALBUQUERQUE DOES NOT APPEAR TO BE IMPROPER. IN THAT CONNECTION, IN B-161990, AUGUST 29, 1967, OUR OFFICE STATED:

"IN NEGOTIATED PROCUREMENTS, THE RULES OF FORMALLY ADVERTISED COMPETITIVE BIDDING, SUCH AS THE REQUIREMENT FOR AWARD TO THE LOWEST RESPONSIVE BIDDER, ARE NOT APPLICABLE AND THE NEGOTIATION AUTHORITY MAY LEGALLY TAKE INTO CONSIDERATION ALL FACTORS DEEMED ESSENTIAL TO THE ACCOMPLISHMENT OF A PROCUREMENT. 40 COMP. GEN. 508.'

WITH REFERENCE TO YOUR STATEMENT REGARDING THE TAXPAYING STATUS OF YOUR ORGANIZATION, WE HELD IN 43 COMP. GEN. 60 (1963) THAT TAX BENEFITS WHICH WOULD ACCRUE TO THE GOVERNMENT IF AN AWARD WERE MADE TO AN INVESTOR-OWNED PRIVATE UTILITY COMPANY RATHER THAN TO A TAX-EXEMPT UTILITY SHOULD NOT BE CONSIDERED IN EVALUATING PROPOSALS FOR AWARD OF GOVERNMENT CONTRACTS.

IN VIEW OF THE FOREGOING, YOUR PROTEST AGAINST THE PROPOSED AWARD OF A CONTRACT TO THE CITY OF ALBUQUERQUE IS DENIED.