B-153036, APR. 21, 1964

B-153036, APR. 21, 1964

TO ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

REFERENCE IS MADE TO A LETTER DATED JANUARY 30, 1964, FROM THE COMMISSIONER, PUBLIC BUILDINGS SERVICE, FURNISHING A REPORT ON THE PROTEST BY SOL C. BENNETT AND ASSOCIATES AGAINST THE REJECTION OF A BID SUBMITTED BY J. K. SILLS, ROBERT A. SILLS AND BEVERLY B. SILLS, IN RESPONSE TO INVITATION FOR BIDS NO. GS-PBS-03-593 FOR LEASING SPACE IN THE DISTRICT OF COLUMBIA, VIRGINIA OR MARYLAND.

ENCLOSED IS A COPY OF OUR LETTER OF TODAY TO THE PROTESTANT DENYING THE PROTEST.

WITH RESPECT TO THE AWARD MADE TO THE WASHINGTON SCIENCE CENTER CONDUIT, INC., THE PROTESTING BIDDER HAS CONTENDED THAT THE AWARD IS IN CONTRAVENTION OF THE RESTRICTION IN THE INDEPENDENT OFFICES APPROPRIATION ACT, 1964 (PUBLIC LAW 88-215), 77 STAT. 436-437, AS FOLLOWS:

"NO PART OF ANY APPROPRIATION CONTAINED IN THIS ACT SHALL BE USED FOR THE PAYMENT OF RENTAL ON LEASE AGREEMENTS FOR THE ACCOMMODATION OF FEDERAL AGENCIES IN BUILDINGS AND IMPROVEMENTS WHICH ARE TO BE ERECTED BY THE LESSOR FOR SUCH AGENCIES AT AN ESTIMATED COST OF CONSTRUCTION IN EXCESS OF $200,000 OR FOR PAYMENT OF THE SALARY OF ANY PERSON WHO EXECUTES SUCH A LEASE AGREEMENT: PROVIDED, THAT THE FOREGOING PROVISO SHALL NOT BE APPLICABLE TO PROJECTS FOR WHICH A PROSPECTUS FOR THE LEASE CONSTRUCTION OF SPACE HAS BEEN SUBMITTED TO AND APPROVED BY THE APPROPRIATE COMMITTEES OF THE CONGRESS IN THE SAME MANNER AS FOR PUBLIC BUILDINGS CONSTRUCTION PROJECTS PURSUANT TO THE PUBLIC BUILDINGS ACT OF 1959.'

THE FOREGOING LIMITATION FIRST APPEARED IN GENERAL SERVICES ADMINISTRATION'S 1963 APPROPRIATION (PUBLIC LAW 87-741), 76 STAT. 728, AND IT IS UNDERSTOOD THAT THE SAME LIMITATION IS INCLUDED IN THE PENDING APPROPRIATION BILL FOR 1965.

IT IS UNDERSTOOD FROM INFORMAL DISCUSSIONS WITH YOUR REPRESENTATIVES THAT YOUR AGENCY IS OF THE VIEW THAT THE RESTRICTIVE PROVISION WAS NOT INTENDED TO APPLY TO BUILDINGS SUCH AS ARE OFFERED BY WASHINGTON SCIENCE CENTER CONDUIT, INC., WHOSE BID WAS ACCEPTED BY GENERAL SERVICES ADMINISTRATION ON JANUARY 15, 1964. WE CANNOT CONCUR WITH SUCH CONCLUSION FOR REASONS HEREINAFTER STATED.

THE ACCEPTED BID OFFERED SPACE IN TWO BUILDINGS, THE OFFICE SPACE CONSISTING OF 95,971 SQUARE FEET TO BE HOUSED IN BUILDING NO. 1 AND THE STORAGE AND SPECIAL SERVICE SPACE CONSISTING OF 43,117 SQUARE FEET IN AN ADJACENT BUILDING NO. 2. IT HAS BEEN INFORMALLY REPORTED THAT CONSTRUCTION WORK ON BUILDING NO. 1 WAS BEGUN ON OR ABOUT MARCH 25, 1963; THAT CONSTRUCTION (CONSISTING OF DRIVING PILES FOR THE FOUNDATION) ON BUILDING NO. 2 DID NOT START UNTIL ON OR ABOUT FEBRUARY 18, 1964, OR OVER A MONTH AFTER THE AWARD; THAT BUILDING NO. 2 WILL CONTAIN AN ESTIMATED 53,642 GROSS SQUARE FEET; AND THAT THE CONSTRUCTION COST OF THIS LATTER BUILDING HAS BEEN ESTIMATED AT $965,000.

WE UNDERSTAND THE POSITION OF YOUR AGENCY TO BE THAT THE INTERPRETATION AND APPLICATION OF THE APPROPRIATION LIMITATION SHOULD BE GOVERNED BY THE OBJECTIVES THAT THE HOUSE COMMITTEE ON APPROPRIATIONS INTENDED TO ACHIEVE AS DISCLOSED BY THE LEGISLATIVE BACKGROUND AND THAT THIS BACKGROUND INDICATES, WITH SUFFICIENT CLARITY, THAT THE RESTRICTIVE PROVISION WAS INTENDED TO APPLY ONLY TO THOSE SITUATIONS WHERE A LEASE TO THE GOVERNMENT IS THE MOTIVATING FACTOR IN BRINGING ABOUT CONSTRUCTION OF NEW SPACE TO BE OCCUPIED BY THE GOVERNMENT. IN SHORT, YOUR AGENCY IS OF THE VIEW THAT THE RESTRICTIVE PROVISION WAS INTENDED TO PROHIBIT, WITHOUT PROSPECTUS APPROVAL, ONLY LEASE TRANSACTIONS INVOLVING CONSTRUCTION FOR THE PURPOSE OF MEETING SPECIFIC GOVERNMENT REQUIREMENTS IN RESPONSE TO INVITATIONS DESIGNED AND INTENDED TO PRODUCE OFFERS TO CONSTRUCT AND LEASE BUILDINGS TO THE GOVERNMENT FOR TERMS (10 TO 15 YEARS) SUFFICIENT TO AMORTIZE THE OWNER'S ORIGINAL INVESTMENT. IN PRESENTING YOUR VIEWS TO THE SUBCOMMITTEE ON INDEPENDENT OFFICES OF THE HOUSE APPROPRIATIONS COMMITTEE IN CONNECTION WITH THE 1964 APPROPRIATIONS FOR YOUR AGENCY, REQUEST WAS MADE FOR DELETION OF THE RESTRICTIVE PROVISION FROM THE APPROPRIATION BILL THEN PENDING. IT WAS SUGGESTED THAT THE LIMITATION WAS INCONSISTENT WITH YOUR AGENCY'S PROGRAM CONSIDERED NECESSARY TO MEET THE NEEDS OF THE GOVERNMENT. IN REJECTING YOUR REQUEST THE CHAIRMAN OF THE SUBCOMMITTEE STATED:

"I AM AFRAID THE G.S.A. MISINTERPRETED THE LANGUAGE. THE LANGUAGE WAS INTENDED ABSOLUTELY TO FORBID THE LEASING OF THAT SPACE UNDER YOUR JURISDICTION, AND REQUIRING OF YOU TO COME TO THE PROPER COMMITTEES FOR AUTHORIZATION. YOUR LANGUAGE IS QUITE WEAK. THE REASON YOU WANT THIS DELETED IS THAT YOU DO NOT WANT TO COME BACK TO CONGRESS EVERY YEAR FOR YOUR FUNDS AND AUTHORIZATION. IN THAT REGARD, YOU ARE NO DIFFERENT FROM ANY OTHER AGENCY THAT WANTS BACK-DOOR AUTHORITY.'

WHILE THERE WAS SOME DISCUSSION IN THE 1963 APPROPRIATION HEARINGS WHEN THE APPROPRIATION LIMITATION WAS FIRST ADOPTED IN REGARD TO THE TERM OF THE LEASE SUFFICIENT TO AMORTIZE THE OWNER'S INVESTMENT INCIDENT TO CONSTRUCTION, IT IS CLEAR FROM THE UNEQUIVOCAL LANGUAGE OF THE LIMITATION ITSELF AND FROM THE FOREGOING STATEMENT BY THE CHAIRMAN THAT, ABSENT PROSPECTUS APPROVAL, THE LIMITATION WAS INTENDED TO APPLY IN ALL CASES WHERE THE ESTIMATED COST OF CONSTRUCTION OF BUILDINGS AND IMPROVEMENTS WHICH ARE TO BE ERECTED FOR LEASING TO THE GOVERNMENT EXCEEDS $200,000, REGARDLESS OF THE LEASE TERM AND OTHER FACTORS SUGGESTED BY YOUR AGENCY.

ACCORDINGLY, IN THE ABSENCE OF PROSPECTUS APPROVAL THE AWARD IN THIS INSTANCE TO THE WASHINGTON SCIENCE CENTER CONDUIT, INC., MUST BE REGARDED AS IN CONTRAVENTION OF THE APPROPRIATION LIMITATION.