B-150159, DEC. 6, 1963

B-150159, DEC. 6, 1963

TO CUMMINGS AND SELLERS:

BY LETTER DATED JULY 19, 1963, WITH ENCLOSURES, CLAIM WAS MADE IN THE AMOUNT OF $23,028.73, REPRESENTING COSTS INCURRED BY ROBERT F SIMMONS AND ASSOCIATES IN RESPONDING TO INVITATION FOR BIDS NO. GS-5PR 1380, ISSUED ON AUGUST 28, 1962, BY THE PUBLIC BUILDINGS SERVICE, GENERAL SERVICES ADMINISTRATION (GSA), CINCINNATI, OHIO, FOR THE FURNISHING OF ABOUT 180,000 NET USABLE SQUARE FEET OF SPACE IN A NEW BUILDING TO BE CONSTRUCTED AT COVINGTON, KENTUCKY, FOR USE OF THE INTERNAL REVENUE SERVICE.

FOURTEEN BIDS WERE RECEIVED AND OPENED ON OCTOBER 15, 1962, AND IT APPEARED THAT THOMAS D. MCCLOSKEY SUBMITTED THE LOWEST BID. THE BID OF SIMMONS APPEARED TO BE FIFTH LOW BASED ON A TABULATION AND ANALYSIS OF THE BIDS RECEIVED. THE INVITATION PROVIDED FOR A 60-DAY BID ACCEPTANCE PERIOD IN ORDER TO PERMIT A THOROUGH ANALYSIS OF THE BIDS RECEIVED BECAUSE OF THE COMPLEXITIES OF THE ADVERTISED REQUIREMENTS, AND ALSO RESERVED TO THE GOVERNMENT THE RIGHT TO REJECT ANY OR ALL BIDS RECEIVED. HOWEVER, ON DECEMBER 13, 1962, SIMMONS WAS ADVISED, IN PART, AS FOLLOWS BY GSA:

"YOUR BID IS HEREBY REJECTED. IT HAS BEEN DETERMINED TO BE IN THE PUBLIC INTEREST TO REJECT ALL BIDS SUBMITTED IN RESPONSE TO THE REFERENCED INVITATION, AND ALL BIDDERS ARE BEING SO ADVISED IN WRITING.

"THE GENERAL PROVISIONS OF THE INDEPENDENT OFFICES APPROPRIATION ACT FOR 1963 CONTAIN RESTRICTIONS WITH RESPECT TO LEASE CONSTRUCTION APPLICABLE TO THE INVITATION REFERRED TO HEREIN. THE RESTRICTIVE LANGUAGE OF THE ACT WITH RESPECT TO LEASE CONSTRUCTION WAS EFFECTIVE ON OCTOBER 3, 1962, WHICH DATE WAS SUBSEQUENT TO THE ISSUANCE OF THE INVITATION, BUT PRIOR TO THE DATE OF BID OPENING.

"FURTHER ACTION BY GENERAL SERVICES ADMINISTRATION TO SATISFY THE SPACE REQUIREMENT AS EVIDENCED BY THE INVITATION MUST BE HELD IN ABEYANCE UNTIL THIS PROJECT HAS BEEN APPROVED BY THE APPROPRIATE CONGRESSIONAL COMMITTEES. SHOULD WE BE AUTHORIZED TO PROCEED WITH THE ISSUANCE OF A NEW INVITATION AT A LATER DATE, YOU WILL BE GIVEN AN OPPORTUNITY TO RESPOND TO THE READVERTISEMENT OF THIS REQUIREMENT.'

THE CLAIM FOR RECOVERY OF SIMMONS' BID PREPARATION COSTS IS PREDICATED ON GSA'S FAILURE TO EVALUATE THE BID ON ITS MERITS. IN THAT CONNECTION, IT IS ARGUED THAT FOR AT LEAST SIX WEEKS IMMEDIATELY PRECEDING THE BID OPENING DATE--- OCTOBER 15, 1962--- GSA DID NOT INTEND TO EVALUATE SIMMONS' BID ON ITS MERITS, THEREBY RENDERING SIMMONS' BID PREPARATION A USELESS ACT WITHOUT THE POSSIBILITY OF RESULTING IN ANY CONTRACT. IT IS THEREFORE CONTENDED THAT GSA BREACHED ITS IMPLIED CONTRACT WHEREBY IT OBLIGATED ITSELF TO HONESTLY CONSIDER THE BID ON ITS MERITS, AND THAT UNDER THE PRINCIPLES ENUNCIATED IN HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, 135 CT.CL. 63, SIMMONS' DAMAGES SHOULD BE MEASURED BY THE COSTS OF PREPARING ITS BID.

THAT GSA DID NOT HAVE THE INTENTION TO CONSIDER SIMMONS' BID IS STATED TO BE EVIDENCED BY THE FACT THAT GSA AT NO TIME TOOK THE NECESSARY STEPS TO OBTAIN APPROVAL OF THE PROJECT FROM THE APPROPRIATE COMMITTEES OF THE HOUSE OF REPRESENTATIVES AND THE SENATE AS REQUIRED BY THE INDEPENDENT OFFICES APPROPRIATION ACT, 1963, PUBLIC LAW 87-741, APPROVED OCTOBER 3, 1962, 76 STAT. 728. THE PERTINENT PROVISION OF THAT ACT READS 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 THE 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.'

IT IS POINTED OUT THAT ON AUGUST 1, 1962, THE HOUSE OF REPRESENTATIVES PASSED THE INDEPENDENT OFFICES APPROPRIATION BILL, 1963, WHICH INCLUDED AN AMENDMENT SUBSTANTIALLY AS QUOTED ABOVE, AND THAT SUCH AMENDMENT WAS CONSIDERED IN CONFERENCE REPORTS ON THE BILL AS LATE AS SEPTEMBER 25, 1962. THUS, PRIOR TO DATE OF ISSUANCE OF THE INVITATION, IT IS CONTENDED THAT GSA WAS AWARE OF THE POSSIBILITY THAT A PROJECT OF THE SIZE ADVERTISED MIGHT REQUIRE COMMITTEE APPROVAL, AND THAT SUCH APPROVAL WAS REQUIRED AS A MATTER OF LAW ABOUT TWO WEEKS BEFORE BIDS WERE OPENED ON OCTOBER 15, 1962. HOWEVER, THE DECISION TO REJECT ALL BIDS WAS NOT MADE UNTIL DECEMBER 13, 1962. YOU POINT OUT THAT SUCH DETERMINATION TO REJECT ALL BIDS COULD HAVE BEEN, AND SHOULD HAVE BEEN, PRIOR TO OCTOBER 15, 1962. THESE FACTS, YOU CONTEND, AMPLY DEMONSTRATE THAT GSA DID NOT INTEND TO CONSIDER THE BID ON ITS MERITS AND, THEREFORE, THE INSTANT MATTER WITHIN THE RATIONALE OF THE HEYER PRODUCTS CASE. THE GENERAL RULE LAID DOWN IN THAT CASE WAS SUCCINCTLY STATED BY THE COURT OF CLAIMS IN THE SECOND DECISION IN HEYER PRODUCTS (147 CT.CL. 256), AS FOLLOWS:

"* * * BY THE SOLICITATION FOR BIDS, THE GOVERNMENT IMPLIEDLY PROMISED THAT IT WOULD GIVE HONEST AND FAIR CONSIDERATION TO ALL BIDS RECEIVED AND WOULD NOT REJECT ANY ONE OF THEM ARBITRARILY OR CAPRICIOUSLY, BUT WOULD AWARD THE CONTRACT TO THAT BIDDER WHOSE BID IN ITS HONEST JUDGMENT WAS MOST ADVANTAGEOUS TO THE GOVERNMENT. IF IN THE INSTANT CASE THE OTAC, IN REJECTING PLAINTIFF'S BID, DID NOT ACT IN GOOD FAITH, BUT ARBITRARILY AND CAPRICIOUSLY, IT BREACHED ITS IMPLIED PROMISE WHEN IT SOLICITED BIDS, FOR THE BREACH OF WHICH PLAINTIFF MAY RECOVER THE EXPENSES IT HAD INCURRED IN SUBMITTING ITS BID.'

HEYER PRODUCTS' PETITION FOR MONETARY RELIEF WAS DISMISSED BY THE COURT BECAUSE IT CONCLUDED THAT THE GOVERNMENT ACTED IN GOOD FAITH IN DECIDING THAT ACCEPTANCE OF THE HIGHER BID WAS MORE ADVANTAGEOUS TO THE GOVERNMENT THAN THE BID OF HEYER PRODUCTS. THE COURT FURTHER HELD THAT THE REJECTION OF THE HEYER PRODUCTS' BID WAS NOT ARBITRARY OR CAPRICIOUS OR LACKING IN GOOD FAITH. SIGNIFICANTLY, THE COURT HELD THAT, IN ORDER TO BE ENTITLED TO RELIEF, THE UNSUCCESSFUL BIDDER MUST SHOW BY CLEAR AND CONVINCING PROOF

"* * * THAT BIDS WERE NOT INVITED IN GOOD FAITH, BUT AS A PRETENSE TO CONCEAL THE PURPOSE TO LET THE CONTRACT TO SOME FAVORED BIDDER, OR TO ONE OF A GROUP OF PREFERRED BIDDERS, AND WITH THE INTENT TO WILFULLY, CAPRICIOUSLY, AND ARBITRARILY DISREGARD THE OBLIGATION TO LET THE CONTRACT TO HIM WHOSE BID WAS MOST ADVANTAGEOUS TO THE GOVERNMENT.'

THIS IS THE SUM AND SUBSTANCE OF THE PRINCIPLE ENUNCIATED BY THE HEYER PRODUCTS CASE. IT WAS AN INTERDICTION AGAINST A SINISTER, PURPOSEFUL DESIGN OF A PROCUREMENT AGENCY TO INVITE COMPETITIVE BIDS AS A STRATAGEM TO CLOAK ITS INTENDED PURPOSE TO AWARD A CONTRACT TO A PREDETERMINED BIDDER EVEN THOUGH ANOTHER'S BID MAY BE MORE ADVANTAGEOUS TO THE GOVERNMENT WITHIN THE MEANING OF 41 U.S.C. 253 (B) AND 10 U.S.C. 2305 (C).

WE DO NOT FEE THAT UNDER THE FACTS HERE INVOLVED THE PRINCIPLE OF THE HEYER PRODUCTS CASE IS APPLICABLE.

AT THE TIME THE INVITATION WAS ISSUED, GSA CLEARLY HAD AUTHORITY TO ENTER INTO LONG TERM LEASES OF BUILDINGS TO BE CONSTRUCTED BY LESSORS WITHOUT LIMITATION AS TO COST OR REQUIREMENT FOR COMMITTEE APPROVAL. WHILE LEGISLATION WAS BEING CONSIDERED WHICH WOULD LIMIT SUCH AUTHORITY, THE INVITATION AS ISSUED WAS PROPER EXERCISE OF PROCUREMENT AUTHORITY. AFTER BIDS WERE RECEIVED AND OPENED, GSA WAS OBLIGATED, PROVIDED THE ADVERTISED REQUIREMENTS REMAINED FIRM, TO SUBMIT A PROSPECTUS FOR THE LEASE CONSTRUCTION TO THE APPROPRIATE COMMITTEES FOR APPROVAL. HOWEVER, GSA WAS NOT LEGALLY OBLIGATED UNDER ITS 1963 FISCAL YEAR APPROPRIATION ACT TO REQUEST PROSPECTUS APPROVAL WHEN IT DETERMINED THAT THE ADVERTISED LEASE CONSTRUCTION WOULD NOT BE IN THE BEST INTERESTS OF THE GOVERNMENT. THERE IS NO LEGAL REQUIREMENT THAT A CONTRACT MUST BE AWARDED AFTER FORMAL SOLICITATION OF BIDS WHEN THE RIGHT TO REJECT ANY AND ALL BIDS IS RESERVED TO THE GOVERNMENT BY LAW AND IN THE INVITATION FOR BIDS. SEE MCQUILLIN, MUNICIPAL CORPORATIONS, 3RD ED., 29.77, VOL. 10.

THE REJECTION OF ALL BIDS WAS DETERMINED TO BE ADVISABLE IN THE "PUBLIC INTEREST.' WHETHER THE REJECTION WAS, IN FACT, IN THE "PUBLIC INTEREST" IS A QUESTION INVOLVING PROCUREMENT RESPONSIBILITY WHICH WE ORDINARILY WILL NOT QUESTION UNLESS ARBITRARY OR CAPRICIOUS. GSA DETERMINED, ON THE BASIS OF ANALYSIS OF THE CURRENT LEASE CONSTRUCTION SITUATION AT COVINGTON, KENTUCKY, THAT A VERY DEFINITE POSSIBILITY EXISTED THAT THE LEASE PREMISES CONTEMPLATED MIGHT BECOME OBSOLETE BEFORE EXPIRATION OF THE PROPOSED FIRM LEASE TERM. THUS, GSA HAD SERIOUS DOUBTS WHETHER THE ADVERTISED LEASE CONSTRUCTION MIGHT NOT RESULT IN AN IMPROVIDENT EXPENDITURE OF PUBLIC FUNDS OVER AN EXTENDED PERIOD OF TIME. ON THE RECORD BEFORE US, WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF GSA WHICH IS THE AGENCY RESPONSIBLE FOR THE HOUSING OF GOVERNMENT AGENCIES GENERALLY. WE CANNOT FIND THAT THE ENACTMENT OF THE RESTRICTION IN THE 1963 APPROPRIATION ACT AND THE SO CALLED FAILURE OF GSA TO COMPLY WITH THE RESTRICTION WAS THE PARAMOUNT OR OVERRIDING FACTOR IN THE REJECTION OF ALL BIDS. WHILE THE LANGUAGE OF THE LETTER OF BID REJECTION MIGHT LEND SOME SUPPORT TO YOUR POSITION, THE FACT REMAINS THAT GSA PROPERLY EXERCISED ITS VESTED RIGHT TO REJECT ALL BIDS AND THAT SUCH REJECTION WAS IN THE PUBLIC INTEREST.

WE FAIL TO SEE HERE ANY BREACH OF AN IMPLIED CONTRACT TO CONSIDER SIMMONS' BID ON ITS MERITS. THE FACT IS THAT ALL BIDS WERE EQUALLY CONSIDERED AND HAD GSA GONE FORWARD WITH THE PROJECT, A BIDDER OTHER THAN SIMMONS PROBABLY WOULD HAVE BEEN SUCCESSFUL. IN THAT EVENT, SIMONS CLEARLY WOULD HAVE HAD NO REMEDY AT LAW AS A DISGRUNTLED BIDDER. SEE 70 HARV L REV 564; HEYER PRODUCTS COMPANY, INC. V. UNITED STATES, 135 CT.CL. 63, 68.

FURTHER, WE FEEL THAT THE HEYER PRODUCTS PRINCIPLE IS FOR APPLICATION ONLY WHERE A CONTRACT IS AWARDED UNDER FALSE PRETENSES TO OTHER THAN THE LEGALLY ENTITLED BIDDER. THE COURT DID NOT, EXPRESSLY OR BY INFERENCE, EXTEND THAT PRINCIPLE TO SITUATIONS WHEREIN ALL BIDS ARE REJECTED PURSUANT TO THE AUTHORITY VESTED IN THE PROCUREMENT AGENCY BY LAW AND REGULATION.

WE HAVE CAREFULLY CONSIDERED THE AUTHORITIES CITED BY YOU BUT WE ARE NOT PERSUADED THAT THEY LEND ANY SUBSTANCE OF LEGALITY TO SIMMONS' CLAIM. THEREFORE, THE CLAIM MUST BE DENIED FOR THE REASONS HEREIN STATED.