dislocation does not by itself justify a negotiated sale at other than the estimated fair market value. The genesis of exceptions to the requirement for competitive advertising is that in some instances the best interests of the Government require a wider latitude in the choice of purposes to be served than that permitted by advertised bidding. As we have already noted, the Surplus Property Act of 1944 provided for unrestricted sales by negotiation in order to permit the wider latitude of terms associated with negotiation and considered necessary to avoid wholesale dumping of surplus war goods which would disrupt elements of the economy. Agencies were only directed to sell at a fair price, “fair” being interpreted in the light of the economic impacts of the sale. The fact that the language of the Department of Defense agreement also referred to "fair" prices, while the 1958 amendments to the Federal Property and Administrative Services Act of 1949 refer to "estimated fair market value," indicates that the 1954 agreement was based upon the unrestricted negotiation authority contained in the said act prior to the 1958 amendments. We believe that a requirement in a negotiated Government contract to scrap surplus property, for the purpose of avoiding an adverse economic impact, if this requirement will depreciate the property being sold and consequently depress the price obtained, cannot be reconciled with those parts of the 1958 amendment which require such property to be sold only for the estimated fair market value. We believe the selective inclusion of this mandate in particular subsections of the 1958 amendment indicates a considered judgment by the Congress, and attenuates any suggestion that the requirement could properly be circumvented by deliberately devaluating the property before selling it for its reduced market value. By the time the Federal Property and Administrative Services Act of 1949 was passed, the fear of huge war disposals had been substantially abated. See, e.g., Hearings before the Surplus Property Subcommittee of the Committee on Expenditures in the Executive Departments on H. Res. 90 and H. Res. 100, 80th Cong., 2d Sess. 235051. Also, see H. Doc. No. 558, 80th Cong., 2d Sess., Message from the President of the United States Transmitting Recommendation that the Congress Now Provide for the Liquidation of the Temporary Arrangements for Disposing of Surplus War Property and for the Completion of the Remaining Disposal Activities within the Permanent Federal Establishment, dated March 5, 1948; and H. Rept. 670, 81st Cong., 1st Sess. 5. Nonetheless, in 1958, Congress authorized the sale of surplus personal property by negotiation for its estimated rather than its actual fair market value. See subsections (e) (3) (D) and (e) (6), 40 U.S.C. 484 (e) (6). This special authority was necessary, since fair and reasonable prices are normally assured by the forces of full and free competition, but may not always be obtained when based upon estimated value. See statement of the Comptroller General of the United States before the Subcommittee on Defense Procurement of the Joint Economic Committee, Hearings on Impact of Defense Procurement, 86th Cong., 2d Sess. 3. While Congress provided certain conditions under which sales could be negotiated in order to prevent certain economic impacts, it is clear that it chose not to permit sales, negotiated or advertised, at a substantial loss to the Government in order to protect an adversely affected industry. It would require a strained interpretation of the statute to conclude that while Congress intended to prohibit the negotiated sale of property of this nature at other than the estimated fair market value, it had no objection to requiring the devaluation of such personal property as a condition of advertised bidding. From the foregoing, we must conclude that Congress intended to permit GSA and authorized executive agencies to contract by negotiation for the sale of surplus goods which, if contracted for by advertised bidding, might have an adverse economic impact on the national economy, but did not grant any agency the discretion to avoid possible economic dislocations by selling surplus below the actual fair market value, if sold by advertised bidding, or below the estimated fair market value if sold by negotiation. As a result of the sale of 11 large anchors on March 21, 1963, there appears to be little doubt that the monetary return to the Government is reduced below the fair market value by the condition requiring the anchors to be scrapped. Therefore, we must hold that the condition was included in the subject contract and invitation for bids without legal authority. You have advised us that invitation for bids 25-S-63-54 has been canceled in order to first determine the results of the "test sales" of whole anchors, and to reevaluate the policy of conducting surplus anchor sales with the scrapping condition. We believe this action was proper since the invitation contained an unauthorized provision which would tend to reduce the monetary return to the Government. In regard to the contract already made with Peck Iron and Metal Company, Inc., you advise that you are attempting to negotiate a no-cost cancellation. In view of the fact that your agency had no authority to enter into this contract on the terms included therein, cancellation of the contract and replevy of the anchors would not be improper if considered to be in the best interests of the Government. However, under the circumstances, we would have no objection to your negotiating a deletion from the contract of the scrapping condition, provided you received a price increase which in your judgment of all the factors involved is compatible with the return received on the March 21, 1963, sale of 11 anchors. [B-151745] Contracts Specifications-Ambiguous-Effect Not Prejudicial to Bidders An interpretation by a low bidder that an invitation for the fabrication and erection of several launch towers not to exceed a maximum specified weight required the insertion of a larger estimated weight in one of the blanks which interpretation was one that any reasonably informed prudent bidder might make on the basis of the invitation and specifications, even though not in conformity with the expectations of the contracting agency, does not require rejection of the bid as nonresponsive, the contracting agency having the burden to set out the requirements with sufficient clarity to prevent varied interpretations. A low bidder who, in response to an invitation for the fabrication and erection of several launch towers not to exceed a maximum specified weight, inserted in one of the blanks provided for an estimated weight a larger weight than the maximum based on a reasonable interpretation of the invitation is not required to have the estimate regarded as a warranty nor as binding on the Government; therefore, since the low bidder does not have an option to furnish other than the maximum weight and the contracting agency is not required to accept something other than intended under the invitation award may be made to the low bidder. To the Administrator, National Aeronautics and Space Administration, July 2, 1963: By letter of June 8, 1963, with enclosures, you have requested our advice as to the responsiveness of the low bid submitted pursuant to invitation for bids No. CC-144-3 issued March 16, 1963, by the Launch Operations Center at Cocoa Beach, Florida, for the fabrication and erection of three launch umbilical towers. On May 20, 1963, the bids were opened and publicly read. The low bid was found to have been submitted by the Ingalls Iron Works Company at $11,225,368.85; the next low bid was from the Bethlehem Steel Corporation at $11,264,353. No question has been raised as to the responsiveness of the second low bid or the responsibility of either of the two lowest bidders. A single question, set out below, arises with respect to the responsiveness of the low bid. Each of the three items called for under the terms of the invitation includes a mobile base described as a launcher on which is mounted a 380-foot tower at the top of which is a crane capable of supporting a payload of 50 tons. With respect to the crane and payload paragraph 2-04 (j) of the specifications states: Dead load on top of Tower including 25 ton hook load not to exceed 236,000 pounds. Amendment No. 1 to the invitation amended paragraph 2-10 (a) of the specifications by adding the following sentence: * Crane dimensions and weight shall be within the limits specified hereinabove under Paragraph 2-04 (j). We think it clear from the foregoing that the specifications set a maximum acceptable weight for the crane and payload of 236,000 pounds. In view thereof, and particularly since the dead weight at the top of the assembly is a critical factor in its operation, any attempt to increase such weight would render a bid unresponsive. Included in the specifications was a series of drawings depicting various parts of the tower. In general the drawings spell out the required characteristics of the tower in considerable detail. Sheet No. 50 shows the framing plan for the topmost level of the tower, identified as level 380. A note on the sheet makes it clear that unlike other levels, the size and location of members depicted for level 380 are approximate only and will ultimately depend on the characteristics of the crane. We have been advised by the attorney for Ingalls that the firm's engineers considered that level 380 would require other and additional structural members increasing the weight of the level by some 14,000 pounds in order to properly support the crane proposed to be placed at the top. Paragraph 2-28 of the specifications provides: ESTIMATED WEIGHTS: Each bidder shall state in his bid form the estimated total dead weight of the crane and all components that he proposes to put on top of the Umbilical Tower and including 25-ton payload. The only place found to include this estimate is at item No. 13 of the bid sheet which reads as follows: 13 Hammerhead Cranes: The Hammerhead cranes will be manufactured by: (Name of Manufacturer) Crane drive controls will be manufactured by: (Name of Manufacturer) Total Weight in place with 25-ton payload: Mindful of the additional weight proposed to be placed at level 380 and the language of Paragraph 2-28, Ingalls inserted the figure "250,000" in the last blank of item No. 13. The contracting officer, in a determination dated May 25, 1963, construed the inserted figure as a material qualification of the permissible weight limitation and proposed to reject the low bid as unresponsive. You have referred the matter for our decision prior to making any award. It should be noted initially that the Ingalls bid does not include any of the foregoing explanations concerning the insertion of the figure "250,000." These explanations were submited by the firm's attorney after opening. Under the general rule, of course, competitive bids are to be interpreted in accordance with the form in which they appeared at bid opening and not on the basis of explanations offered thereafter. Since our decisions at 36 Comp. Gen. 376; id. 415, we have consistently recognized that in appropriate circumstances invitations may require as a material condition of responsivenes, the submission with the bid of descriptive data in order to fix precisely the nature of the item called for. See 40 Comp. Gen. 132. However, we have also held that the nature and extent of descriptive data required should be spelled out in the invitation with sufficient clarity to put bidders on notice of what is desired. 38 Comp. Gen. 59, 63. The foregoing is consistent with the principle that the requirements of an invitation should be set forth clearly and accurately in order to permit bidders to compete on an equal footing. 17 Comp. Gen. 789, 790. We have been informally advised by NASA personnel that the information solicited for the last blank in item No. 13 was the maximum weight of the crane and payload not to exceed 236,000 pounds. The position of the low bidder is, however, that since the maximum permissible figure had already been clearly stipulated and since paragraphs 2-04 (j) and 2-10 (a) to which the maximum limitation clearly applied referred to the crane and the payload whereas paragraph 2-28 asked for an estimated weight of the crane, payload and "all components" proposed to be placed on top of the umbilical tower, the weight to be placed in the last blank of item No. 13 was intended to cover the crane, payload and additional weight represented by changes in structural members at level 380. NASA engineering personnel are of the opinion, we have been advised, that the interpretation of the language of paragraph 2-28 said to have resulted in the 250,000 pound figure, while not that intended, is not unreasonable from an engineering standpoint. In other words, a reasonably informed and prudent bidder could well have interpreted the language of the invitation and specifications in such manner as to require the inclusion of the 250,000 pound figure. Under the circumstances, we question whether the invitation expressed the Government's requirements with such clarity as to conform with 10 U.S.C. 2305, stating in part: (a) The specifications and invitations for bids shall permit such free and full competition as is consistent with the procurement of the property and services needed by the agency concerned. (b) The specifications in invitations for bids * must be sufficiently descriptive in language and attachments, to permit full and free competition. |