BNUMBER: B-272074
DATE: August 26, 1996
TITLE: Camden Iron & Metal, Inc.
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Matter of:Camden Iron & Metal, Inc.
File: B-272074
Date:August 26, 1996
Frederick J. Rohloff, Esq., Archer & Greiner, for the protester.
Gregory J. Gusching, Esq., and Paul L. Rook, Defense Logistics Agency,
for the agency.
Jeanne W. Isrin, Esq., and John M. Melody, Esq., Office of the General
Counsel, GAO, participated in the preparation of the decision.
DIGEST
Withdrawal of item from surplus property sale, and rejection of high
bid submitted for it, was proper where agency reasonably determined
that award under the terms of the solicitation would put the
government in breach of another contract; contracting officials
reasonably determined that the solicitation did not accurately state
the government's requirements.
DECISION
Camden Iron and Metal, Inc. protests the rejection of its bid for, and
the withdrawal of, item No. 128 from an invitation for bids (IFB)
covering sale No. 31-6485, for the sale of bearings, hardware and
miscellaneous surplus property, conducted by the Defense Reutilization
& Marketing Service (DRMS), Defense Logistics Agency (DLA).[1] Item
No. 128 consists of 145 containership cargo stowage adaptors (CCSA),
399 seasheds, and related hardware located at Military Ocean Terminal
Bayonne (MOTB), Bayonne, New Jersey.[2]
We deny the protest.
Camden submitted the high bid for item 128. Prior to award, DRMS
received a letter from the Military Traffic Management Command (MTMC),
which operates MOTB and holds title to the property under the sale.
The letter advised that eight issues had been identified which had to
be addressed through an IFB modification before item 128 could be
awarded.
The only issue relevant here concerned the labor to be employed to
dismantle and cut into scrap the CCSAs and seasheds and to move and
load the scrap onto trucks. With respect to item 128, the IFB
provided that the purchaser would "furnish all labor, material, and
equipment necessary to dismantle and remove property at no cost to the
Government." However, MTMC determined that this requirement
conflicted with an existing requirements contract (No.
DAHC24-96-D-0001) under which International Terminal Operating Co.,
Inc. (ITOC) is to move, load, and unload various types of cargo onto
and from trucks, ships, and railcars. MTMC interpreted ITOC's
contract as obligating the government to utilize ITOC services for the
handling of all Department of Defense (DOD) property located at MOTB,
including the item 128 property. It therefore concluded that the
terms of the current IFB did not reflect the government's needs.
On May 17, Camden protested the agency's failure to make award of item
128 under the IFB's original terms, arguing (as relevant here) that
the IFB is not inconsistent with the ITOC contract. Thereafter, on
June 18, the agency rejected all bids and withdrew item 128 from the
sale on the grounds that the IFB did not accurately state the
government's needs, and that the changes needed could not be
incorporated in a contract with Camden because they were material (the
estimated cost of using ITOC labor and equipment ranged from
$1,209,296 to $2,597,096.46), and could have affected the bidding. In
response, Camden reiterates its argument that it should receive the
award based on the original IFB terms.
An agency must have a compelling reason to cancel a solicitation for
the sale of property after bid opening. Federal Acquisition
Regulation (FAR) sec. 14.404-1(a)(1); Tucson Iron & Metal, B-259689, Apr.
25, 1995, 95-1 CPD para. 212.[3] Contracting officials have broad
discretion to determine whether a compelling reason to cancel exists,
and our review is limited to considering the reasonableness of their
decision. Berendse & Sons Paint Co., Inc., B-262244, Nov. 21, 1995,
95-2 CPD para. 235. Generally, where an IFB does not contain
specifications that reflect the agency's actual needs, the agency has
a compelling reason to cancel. FAR sec. 14.404-1(c)(1); Victory Salvage
Co., Inc., B-253006, Aug. 11, 1993, 93-2 CPD para. 92.
Camden argues that the property in issue here is not subject to the
ITOC contract because that contract covers only DOD property, and the
property here will belong to Camden at the time it is loaded and
removed. In this regard, Camden cites DRMS's "Sale by Reference,"
part 1, paragraph 4, the provisions of which were incorporated into
the IFB by reference:
"Property will be released to the Purchaser or its authorized
representative when the official notice of award or a written
authorization from the Purchaser is presented to the Property
Disposal Officer, or designee, at the property location.
Purchasers are responsible for making all necessary
arrangements for the removal of their property."
Camden also cites the same document, part 2, paragraph 7, entitled
"Title":
"Unless otherwise provided in the Invitation, title to the
property sold hereunder shall vest in the Purchaser as and
when removal is effected."
Camden maintains that the first paragraph contemplates title passing
to the purchaser upon its release by the Property Disposal Officer, as
evidenced by the reference to "their property," and that, in any case,
the "as and when" language in the second paragraph makes it clear that
title passes no later than when the removal process is commenced.
Since title vests in the purchaser as soon as removal begins, Camden
concludes, the property no longer belongs to the government and is not
subject to the ITOC contract. Conversely, the agency takes the view
that, under the "as and when" language, title passes to the purchaser
only "when" removal is completed.
We find that the meaning of the title provision in the context of the
circumstances here is unclear, and that there thus is no basis for
finding the agency's interpretation unreasonable. There is no
conclusive evidence that title was intended to pass to the purchaser
under the IFB at the time removal of the property commenced, rather
than when removal was completed. The paragraph 4 language cited by
the protester ("their property"), while open to the interpretation
urged by Camden, does not by its terms purport to address the issue of
title passage, and thus is not dispositive. The title provision
clearly was intended to set forth the operative terms for purposes of
determining when title is to pass, but the "as and when" language of
the provision lacks the specificity necessary to resolve the
particular dispute in this case. Specifically, while we agree with
Camden that the word "as" suggests that title is to pass at some point
"as" removal proceeds, i.e., as removal is effected, the word "when"
just as clearly suggests that title passes when removal is completed.
We find no other language in the IFB--and Camden cites none--which
sheds light on the meaning of the provision in the context of this
case.
The decision in Hurlen Constr. Co., ASBCA No. 29,102, Apr. 18, 1984,
84-2 BCA para. 17,338, tends to support the agency's view. There, surplus
marine equipment, including winches, were being sold as surplus. The
solicitation included the same "Sale By Reference" title
provision--which included the same "as and when" language--in issue
here. Although the Board dismissed the case for lack of jurisdiction
(and there is no indication in the decision that the "as and when"
language was in issue), before doing so it observed that the purchaser
had paid for and removed the winches, and concluded that, based on the
title provision language, title vested in the purchaser upon removal
of the property. The parties cite no other legal decisions
inconsistent with the conclusion in this case, and we have found none.
Camden argues that it is unreasonable to think that the government
would allow the purchaser, or that the purchaser would expend
resources, to cut the seasheds and CCSAs into scrap while the
government holds title. This argument is without merit, since there
are circumstances--including those in Hurlen, under which the
government will retain title after a sale. For example, see Resource
Recovery Int'l Group, Inc., B-265880, Dec. 19, 1995, 95-2 CPD para. 277
(purchaser was required to scrap, dismantle, and mutilate vessel prior
to removal of the scrap and components, title to which did not vest in
purchaser until they were physically removed from vessel); Fort
Vancouver Plywood Co. v. U.S., 747 F.2d 547 (9th Cir. 1984) and
Summit Contractors, Inc. v. U.S., 22 Cl. Ct. 54 (1990) (timber was
required to be cut and scaled, or otherwise prepared, and then
removed; however, title did not pass until the timber was removed).
Camden also argues that the ITOC contract does not apply to the item
128 property because it is not "cargo" which, it maintains, is freight
in transit but, rather, is government personal property. While the
ITOC contract does appear to have contemplated that ITOC generally
would move cargo in transit in the traditional sense (i.e., loading it
onto and unloading it from ships, trucks and trains), the contract
does not define the term so narrowly. "Cargo" is broadly defined in
the dictionary as "goods or merchandise conveyed in a ship, airplane,
or vehicle; freight."[4] Here, when the reduction of the property is
complete, the scrap products will be loaded and conveyed off the base
in some type of vehicle. This meets the general definition of cargo
above, and since the contract does not define the term differently, or
otherwise purport to limit the types of property covered, there is no
basis for concluding that the item 128 property is not covered by the
ITOC contract.
Further, in a series of pre-proposal questions and answers under the
original solicitation for the ITOC contract, a prospective offeror
asked the following: "We understand that there are approximately 500
seasheds stored at the base. If and when these seasheds have to be
moved, will the contractor be compensated under Item 401 or on an
extra labor basis?" Contracting officials replied: "The movement of
the stored seasheds was not contemplated in the estimated quantities
for this item. Therefore, the cargo would be handled on an extra
labor basis." This dialogue (ultimately incorporated in the contract)
suggests that, while the item 128 property was not included in the
solicitation estimates, handling the property arguably was understood
by the agency and ITOC to fall within the general scope of the
contract.[5]
We conclude that, while it may not be clear that the item 128 property
would have to be moved under the terms of the ITOC contract, neither
is it clear that it falls outside the ITOC contract. We thus are
unable to conclude that the agency's determination that the IFB (item
128) does not reflect its needs, or its decision to withdraw the item
from the sale, were unreasonable; the agency is not required to risk
liability under such circumstances. See generally J.A. Walker Co.,
Inc.; James A. Walker, d/b/a J.A. Walker Co., B-236518, Nov. 17, 1989,
89-2 CPD para. 474 (where bid bond surety's liability is unclear, the
government properly may reject the bid rather than assume the risk of
litigation to enforce its rights).
Camden cites four contracts under which it claims purchasers have
dismantled and removed property from MOTB without regard to the ITOC
contract. However, our review indicates that all four took place
prior to the December 10, 1995, commencement of the ITOC contract. In
any case, each sale is a separate transaction, and what happens under
one does not determine the propriety of what occurs under another.
Komatsu Dresser Co., B-251944, May 5, 1993, 93-1 CPD para. 369.
Camden claims that the agency is insisting that the removal of item
128 property be performed by ITOC to avoid conflict with the
International Longshoremen's Association, whose labor is presumably
used by ITOC. Camden has presented no evidence besides its own
speculative assertions as to the agency's motivation. This simply
does not provide a basis to find bad faith or improper conduct on the
part of the agency. Dismantlement and Envtl. Management Co.,
B-257632, Oct. 24, 1994, 94-2 CPD para. 151.
The protest is denied.
Comptroller General
of the United States
1. We consider this protest under 4 C.F.R. sec. 21.13(a) (1996), as DLA,
by letter dated January 13, 1987, has agreed to our considering bid
protests involving its surplus property sales. See Mansfield Assocs.,
Inc., B-242270, Mar. 13, 1991, 91-1 CPD para. 284.
2. Seasheds and CCSAs are steel structures which increase the
cargo-carrying flexibility and capability aboard container-ships.
3. Pursuant to 41 C.F.R. sec. 109-45.304-50 (1995), the procedures in FAR
subpart 14.4 are applicable to the evaluation of bids and award of
contracts for the sale of personal property.
4. Webster's Ninth New Collegiate Dictionary, 1983.
5. Camden points out that the "extra labor" provisions under section
C.12 of the ITOC contract obligate ITOC to provide extra labor for
"miscellaneous services" only "when ordered by the Contracting
Officer"; it concludes that this provision reserves to the government
a discretionary right to deal with the stored seasheds in whatever
manner it chooses. However, since all services under the ITOC
contract are to be ordered by the contracting officer based on actual
needs as they arise, the fact that "extra labor" to move the seasheds
has to be ordered as well does not mean that the government is not
obligated to fill any need to move the seasheds through the ITOC
contract.