BNUMBER:  B-272074
DATE:  August 26, 1996
TITLE:  Camden Iron & Metal, Inc.

**********************************************************************

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.