Petition for Writ of Certiorari — Gateway Center Corp. v. Merriam
Supreme Court brief1973
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TABLE OF CONTENTS
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Jurisdictional Statement ...........0.0...0...0.2005. 2
Statement of the Issues .. 2... ee eee 3
Constitutional and Statutory Provisions ............ 3
Siatement of the Case... ceca ied vwulds cays a eees 5
Reasons for Granting the Writ)... ...00.0200.0.00.... 7
COTE . 5 ose ce cee cea wa ened lameer tee ere 22
TABLE OF CITATIONS
Cases:
Allen M. Campbell Co., General Contractor, Inc. v.
Lloyd Wood Construction Co., 446 F.2d 261
(BUTE?) vc eecn shes ccghanissne eee ce ee 9
American Smelting & Refining Co. v. United States,
Soe US. Fe (See) 6 bs canes hae yae eee a 1]
Association of Data Processing Service Organizations,
Inc. v. Camp, 397 U.S. 150 (1970) ............. 9,10
Ballerina Pen Co. v. Kunzig, 433 F.2d 1204(1970).... 9
Barlow v. Collins, 397 U.S. 159(1970) .............. 10
Blackhawk Heating & Plumbing Co. v. Driver, 433 F.2d
BAGS (QO0O) 6006 ise s saxeteee be keae 9, 14,17
City Railway Co. v. Citizens’ Street Railroad Co., 16€
Ue Be) (ER 6i6ssiei ae eee 21
Constructores Civiles de Centroamerica S.A.._ v.
Hannah, 459 F.2d 1183 (1972) ................ 9, 14
Edelman v. Federal Housing Administration, 382 F.2d
We CT is how OS eee ee eee 9,12
Priend v. Lee. 231 F 20G6 (1088)... .... cee cacan, 14
j
HERONS 1° IT PRISE
3
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a
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4 4
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3
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TABLE OF CITATIONS~ Continued )
Cases: Page
Gary Aircraft Corporation v. United States, 342 F. Supp.
ee CR ty er rn oe eee uae 12
Keco Industries v. United States, 428 F.2d 1233, 199
CE Se Fe CUD coc ev kt erences ce dens )
M. Steinthal & Co. v. Seamans, 455 F.2d 1289 (1971) . .9. 17
Perkins v. Lukens Steel Co., 310 U.S. 113 (1940) ..... 9 16
Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859
CE go a ee eo es eae ee 9, 13, 14,16
Sicrra Club v. Morton, 405 U.S. 727, 92 S. Ct. 1361, 31
Le SMUT RD oc ba eva vo occweeecrvesun. 10
Twenty Percent Cases, 20 Wall 179 (1874)... 20.2... 21
United States v. St. Louis, San Francisco & Texas Rail-
way Co., 270 U.S. 1 (1925)
Whceelabrator Corporation v. Chafee, 455 F.2d 1306
fee eee eT eee res ee ees 9, 14, 18
Constitutional Provisions:
United States Constitution, Amendment V.......... 21
Statutes:
OPE hoa cs sock etae we eenee eee 4.9.10
Se IERS cg os oa cer cae ene ee es 2
We NES os oy oe oe ee ee reece een 4
gl | ee rer ree.
ee Ps ena a eae es eae Pe 4,7
I IE 2 6 kira Poe eae eae ste oe eae 4,19
ff PEST OEE ee iy re Tyre Sere rer ey 4,19
Federal Procurement Regulations:
Oe <I cea a 04s a ea ae aes 8
Executive Orders:
. i. 8 | Perreau yet A
il
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1973
No.
GATEWAY CENTER CORPORATION, Petitioner
and
ROBERT L. KUNZIG. Administrator.
General Services Administration
A. J. SAMPSON, Commissioner,
Public Building Service of the
General Services Administration.
L. M. SHIPP, JR., Assistant Commissioner,
Space Management of the General Services
Administration and the GENERAL SERVICES
ADMINISTRATION of the United States of America
U.
JOHN W. MERRIAM. Respondent
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Petitioner, Gateway Center Corporation, a Defendant
herein, prays that a writ of certiorari issue to the United
States Court of Appeals for the Third Circuit to review the
judgment of that Court in reversing the Order of the United
States District Court for the Eastern District of Pennsyl-
vanla.
]
2
The General Accounting Office decision not to rule
on the Plaintiff's protest of the award of the contract to
Gateway Center Corporation is set forth in Decision
B-171958 of the Deputy Comptroller General, dated Sep-
tember 16, 1971, and the reasons for this decision are set
forth in Decision B-171958, dated March 17, 1972, and set
forth fully at (appendix p. 19%).
OPINIONS BELOW
The Opinion of the United States District Court for
the Eastern District of Pennsylvania, entered on June 26,
1972 and set forth fully at (Appendix, p. 36a), is reported
at 347 F. Supp. 713. The Opinion of the United States Court
of Appeals for the Third Circuit, entered on February 16,
1973 and set forth fully at (Appendix, p. 66a), is reported
at 476 F.2d 1233. The Order of the United States Court of
Appeals for the Third Circuit denying defendants’ petition
for rehearing, which includes the dissenting Opinion of
Circuit Judge Adams, was entered on April 27, 1973, and
it too is reported at 476 F.2d 1233. This Order is set forth
fully at (Appendix, p. 87a).
JURISDICTIONAL STATEMENT
The Order of the United States Court of Appeals for
the Third Circuit was entered on February 16, 1973. The
Defendants’ Petition for Rehearing was denied on April
27, 1973. The jurisdiction of this Court is invoked pursuant
to 28 U.S.C. §1254(1).
STATEMENT OF THE ISSUES
1. Whether the Plaintiff, an unsuccessful offeror of
space to house various federal agencies, has standing to
maintain an action to protest the General Services Adminis-
tration’s decision to accept another offer in a transaction
in which the government, pursuant to the procedures
provided under 41 U.S.C. §252, negotiated the contract
instead of employing the formal process of advertising for
sealed bids pursuant to the provisions of 41 U.S.C. §253?
2. Whether this contract is prohibited by the Indepen-
dent Offices Appropriations Act for 1971, when no money
for this project was expended under that Act, or by the
Public Buildings Act Amendments of 1972, which the Court
of Appeals applied retroactively to this 1971 contract?
CONSTITUTIONAL AND STATUTORY PROVISIONS
The Fifth Amendment to the Constitution of the
United States provides:
“No person shall be held to answer for a capital
or otherwise infamous crime, unless on a presentment
or indictment of a Grand Jury, except in cases arising
in the land or naval forces, or in the Militia, when in
actual service in time of War or public danger; nor
shall any person be subject for the same offense to be
twice put in jeopardy of life or limb; nor shall be com-
pelled, in any criminal case to be a witness against
himself, nor be deprived of life, liberty, or property.
without due process of law: nor shall private property
be taken for public use without just compensation.
Section 302 of the Federal Property and Administrative
Services Act, June 30, 1949, 63 Stat. 393, as amended, 41
4
U.S.C. $252. is set forth in full at (appendix p. 2a).
Section 303 of the Federal Property and Administrative
Services Act, June 30, 1949, 63 Stat. 395, as amended, 4]
U.S.C. §253, is set forth in full at (appendix, p. 1a).
The Public Buildings Act Amendments, June 16, 1972,
Pub. L. No. 92-313, 86 Stat. 217, 40 U.S.C. §$606(a), are set
forth in full at (appendix p. 16a).
Section 10 of the Administrative Procedure Act, Sep-
tember 6, 1966, Pub. L. No. 89-554, 80 Stat. 392, 5 U.S.C.
$702, is set forth in full at (appendix, p. 4a).
The Independent Offices Appropriations Act for 197],
Dec. 17, 1970, Pub. L. No. 91-556, 84 Stat. 1448, is set forth
at (appendix, p. 10a).
The Independent Offices Appropriations Act for 1972,
July —, 1971, Pub. L. No. 92-49, 85 Stat. 115, is set forth in
pertinent part at (appendix, p. 13a).
Federal Procurement Regulation 1-3.805-1, 41 C.F.R.
$1-3.805-1, is set forth in full at (appendix, p. 7a).
% ‘Rages LD ert
—-
Oo
STATEMENT OF THE CASE
On September 16, 1971, the Plaintiff, John W. Mer-
rian, commenced this action, in the United States District
Court for the Eastern District of Pennsylvania, seeking an
Order to vacate a contract which the General Services
Administration (GSA) had negotiated with Gateway Center
Corporation in an effort to provide office space for various
Federal Agencies in Philadelphia. GSA has issued solicita-
tion for offers No. (70)}-63 on September 30, 1970, and it
received several offers, including those of the Plaintiff and
Gateway Center Corporation. The contract was negotiated
in order to obtain the most favorable terms, as it did not
lend itself to the formal procedure of advertising for sealed
bids because space was offered in diverse buildings and
sites. Thus the nature of the solicitation made it imprac-
ticable to compare the offers on the basis of final price and
the other criteria normally associated with the sealed bid
procedure. GSA elected to solicit offers under 41 U.S.C.
§252. which empowers the GSA to negotiate a contract,
and it did not elect to proceed under 41 U.S.C. §253, the
Statute providing for the formal procedure of advertising
for bids.
After extended negotiations and substantial changes,
GSA awarded the contract to Gateway Center Corporation,
and the Plaintiff filed a protest of award with the General
Accounting Office (GAO). The lawsuit was commenced
against the Federal Defendants after the Deputy Comp-
troller General decided that the GAO should not act on
this protest, and, on November 1, 1971. the Defendants
moved for summary judgment, alleging that the Court
lacked jurisdiction over the action, that the Plaintiff lacked
standing to prosecute the action, and that the issue was
moot.
On June 26, 1972. the District Court dismissed the
Complaint on the sole grounds that the Plaintiff lacked
standing to sue and it did not reach the issue of mootness.
= yy ~~
6
On February 16, 1973, the Court of Appeals reversed the
Order of the District Court and remanded the cause for
further proceedings. On April 27, 1973, the Court of Appeals
denied Defendants’ Petition for Rehearing. Circuit Judge
Adams filed an Opinion dissenting from this Order, and his
opinion was addressed to the issue of the Plaintiff's
standing to sue.
Thereafter, on June 29, 1973, Gateway Center Corpora-
tion, which had relied upon its contract with the Govern-
ment to the extent of not seeking other tenants for the
building, was permitted, upon consent of all of the parties,
to intervene as a Defendant in this action, and it files this
Petition for Certiorari.
i
7 :
REASONS FOR GRANTING THE WRIT f
;
The Court of Appeals based its Opinion upon an ‘
analysis of the standing of a disappointed bidder to main- :
tain an action to protest violations of the statute providing ;
for Government procurement pursuant to the formal, two-
step process of advertising for bids, 41 U.S.C. §253, 66 ;
Stat. 594, 476 F.2d at 1242. The basis for the Court of Ap- :
peals’ decision is, however, inapposite since this case 4
involves a transaction in which the government proceeded is
under the alternative method of negotiating the contract 1
instead of advertising for sealed bids. Solicitation for offers,
No. NEG(70)-63, which was sent to Plaintiff and to Gate-
way Center Corporation among others, specifically states @
that “Offers are solicited under Section 302:c (10) of the 4
Federal Property and Administrative Services Act of 1949
(63 Stat. 377), as amended, . . .” (Appendix, p. 2a). This
Statute provides that:
“(c) All purchases and contracts for property s
and services shall be made by advertising, as provided
in section 253 of this title, except that such purchases
and contracts may be negotiated by the agency head
without advertising if —
(10) for property or services for which it is im-
practicable to secure competition: . . . [Emphasis
added. J
41 U.S.C. §252, 63 Stat. 377.
This initial error led the Court of Appeals to further
mistake the true nature of the controversy raised by the
Plaintiffs Complaint. In the case of advertised bids, the
contract must, by statute, be awarded to the lowest re-
sponsible bidder. 41 U.S.C. §253(b), 63 Stat. 395.
8
A negotiated contract, on the other hand, involves
agency consideration of many factors in addition to price.
In the instant case, GSA was secking office space, and the
interested parties therefore offered facilities having differ-
ent layouts and different locations. Some of these facilities
were housed in new buildings, and some were in older
buildings. Moreover GSA was enjoined by the President to
consider the socio-economic impact of cach proposed
location for the new Federal offices, and, whenever pos-
sible, to place them where they could most contribute to
the redevelopment of a deteriorating area. Executive Order
No. 11512 (Appendix, p. 4a). This extensive exercise of
GSA’s discretion is, furthermore, entirely compatible with
the flexibility in contracting which is provided by Procure-
ment Regulation 1-3.805-1. This Regulation, which deals
with selection of offerors for negotiation and award, states
that “. . . award of a contract may be influenced by the
proposal which promises the greatest value to the Govern-
ment in terms of possible performance, ultimate produci-
bility, growth potential, and other factors.” 41 C.F.R.
§1-3.805-1.
Since the Statute governing negotiated contracts such
as that involved in the instant case clearly imposes duties
different and more extensive than those imposed by the
Statute relied upon by the Court of Appeals in its Opinion,
that Court’s error in applying the wrong statute naturally
led it to render an opinion which conflicts with the
doctrines of standing, established by this Court, and
followed in other Circuits. It should be noted, moreover,
that the Court of Appeals remanded this cause for further
proceedings in the District Court, and its action therefore
constitutes a final decision on the issue of standing.
A. The Court of Appeals decision directly conflicts with
the decisions of this Court.
The Order of the Court of Appeals for the Third Cir-
cuit, which held that the Plaintiff had standing to proceed
9
in the District Court, is the first instance of any court's
finding that an unsuccessful offeror who failed to nego-
tiate a contract with GSA, nevertheless has standing to
protest the award of that contract; ordinarily the Govern-
ment is conceded the right to choose those with whom it
will do business. Indeed, every case in which the Court
has granted standing involves a disappointed bidder who
is protesting alleged violations of the Statute governing
formal advertisements for bids.!
This decision is. moreover, one which directly con-
flicts with the applicable decisions of this Court, decisions
which constitute binding precedent for the Court of Appeals
for the Third Circuit. In Perkins v. Lukens Steel Co.. 310
U.S. 113, 60 S. Ct. 869, 84 L. Ed. 1108 (1940). this Court
specifically held that the statutes governing the award of
public contracts confer standing to protest such awards
only upon the Government, 310 U.S. at 125, and this case
has never been overruled.
Furthermore, it is clear that the reasoning in the
Perkins case is as valid today as it was when that case
was decided in 1940. The Plaintiff commenced the instant
action under section 10 of the Administrative Procedure
Act. 5 U.S.C. §702, 80 Stat. 392, the same statute which
this Court recently construed both in the 1970 cases of
Association of Data Processing Service Organizations, Inc.
1. See e.g.. Constructores Civiles de Centroamerica, S.A. cv.
Hannah, 459 F. 2d 1183 (D.C. Cir. 1972): M. Steinthal & Co., Inc.
i. Seamans, 455 F. 2d 1289 (D.C. Cir. 1971); Wheelabrator Corp.
v. Chafee. 455 F. 2d 1306 (D.C. Cir. 1971); Allen M. Campbell Co.,
General Contractor. Inc. v. Lloyd Wood Construction Co.. 446 F. 2d
261 (Sth Cir. 1971). Blackhawk Heating & Plumbing Co. v. Driver.
433 F. 2d 1137 (D.C. Cir. 1970): Ballerina Pen Co. v. Kunzig. 433
F. 2d 1204 (D.C. Cir. 1970). cert. den. 401 U.S. 950 (1971): Keco
Industries v. United States, 428 F. 2d 1233, 192 Ct. Claims 773
(Court of Claims 1970). Scanwell Laboratories. Inc. v. Shaffer. 424
F. 2d 859 (D.C. Cir. 1970). Edelman v. Federal Housing Adminis-
tration, 382 F. 2d 594 (2d Cir. 1967).
2
3
e
:
z
:
§
ater
10
v. Camp?; Barlow v. Collins®, and in the 1972 case of
Sierra Club v. Morton. This Act accords standing to
any person “aggrieved by agency action within the mean-
ing of the relevant statute” (5 U.S.C. Section 702, 80 Stai.
392), and it thus allows him to obtain judicial review of
that action. A person is “aggrieved” within the meaning
of the relevant statute if, due to a violation of that statute,
he (a) suffers “injury in fact” and (b) suffers this injury
to an interest “arguably within the zone of interests to be
protected or regulated by the statute or constitutional
guarantee in question”. Data Processing, supra at 152, 153:
Barlow, supra at 164. Moreover, this analysis of the prin-
ciples of standing was affirmed two years later in Sierra
Club v. Morton decision, 405 U.S. 727, 92 S. Ct. at 1365,
31 L. Ed. 2d 636.
Under these principles, the Court's reasoning in
Perkins, supra, is still valid: that decision was based upon
a finding that the public contract laws were enacted
solely for the protection of the government, and _ that
other persons therefore did not even arguably come within
the zone of interests protected by these statutes:
“Section 3709 of the Revised Statutes requires
for the Government's benefit that its contracts be
made after public advertising. It was not enacted
for the protection of the Sellers and confers no en-
forceable rights upon prospective bidders. The United
States needs the protection of publicity, form, regu-
larity or returns and affidavit . . . in order to prevent
possible frauds upon it by officers. A private person
needs no such protection against a written under-
taking signed by himsclf. The duty is imposed upon
officers of the Government, not upon him. The duty
is owning to the Government and to no one else.”
2. 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970).
3. 397 U.S. 159, 90 S. Ct. 832, 25 L. Ed. 2d 192 (1970).
4. 405 U.S. 727, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972).
1]
310 U.S. at 125, 60 S. Ct. 869, 84 L. Ed. 1108 (1940); see also
American Smelting & Refining Co. v. United States, 259
U.S. 75, 42 S. Ct. 420, 66 L. Ed. 833 (1922).
{he holding of the Court of Appeals that the interests
of the offeror, disappointed after failing to negotiate a
contract with the Government, arguably come within the
zone of interests protected by the Federal Property and
Administrative Services Act (the negotiation Statute) thus
directly contravenes this Court’s holding in Perkins that
public contracts statutes protect only the interests of the
Government. Therefore, the Court of Appeals’ decision
cannot stand unless this Court decides to overrule the
Perkins line of cases.
Moreover, this holding was based on nothing more
than an assumption by the Court of Appeals that the
Plaintiff came within the zone of interests arguably pro-
tected by that Statute; the Court did not investigate the
legislative history or attempt to ascertain the intent of
Congress, as commanded by this Court in the Sierra Club
case:
“... [W]here, however, Congress has authorized
public officials to perform certain functions according
to law, and has provided by statute for judicial review
of those actions under certain circumstances, the
inquiry as to standing must begin with a determina-
tion of whether the statute in question authorizes
review at the behest of the Plaintiff.”
Sierra Club, supra, 92 S. Ct. at 1364. The command that
the intent of Congress be determined through a review of
the legislative history of the statute in question, is hardly
fulfilled by the single, unsupported statement by the Court
of Appeals that:
“Patently the statute protects not only the Govern-
ment’s interest in securing advantageous contracts,
but also the interests of those responding to the
Government's invitation to do business with it.”
Se MRP ECE eee
ok Re
12
476 F.2d at 1242.
Furthermore, it must be remembered that here the
Court of Appeals was mistakenly interpreting a Statute
having no relevance to the offers to negotiate submitted by
both the Plaintiff and Gateway Center Corporation. Indeed,
in a case involving a negotiated procurement, the Court
of Appeals for the District of Columbia Circuit stated that:
“. . [t}he legislative history . . . indicates that
Congress intended to prevent review of determina-
tions to negotiate .. . by either the Comptroller Gen-
eral or the Courts.”
Wheelabrator Corporation, supra at 1311. See also Edel-
man v. Federal Housing Administration, supra at 597:
Allen M. Campbell Co., General Contractor, Inc., supra
at 265. Cf. Keco Industries. supra at 1236.
After having reviewed the relevant legislative history
in another government negotiation case, the Court stated
that:
“ . . [t}here is still no evidence of a Congres-
sional desire to depart from this long-standing view
that the fundamental Government procurement
statutes .. . were designed not to protect bidders but
rather to protect the Government.”
Gary Aircraft Corporation, 342 F. Supp. 473, 477 (W.D.
Tex. 1972).
In light of such statements by courts which have
examined the legislative history of the applicable nego-
tiation statutes, the words of Circuit Judge Adams, who
dissented from the denial of Defendants’ Petition for a
Rehearing, assume special import:
“... [t}he panel states, and indeed holds that
Congress did intend for a private party, allegedly
aggrieved by the action of GSA, to be heard by a
federal district court. What concerns me about such
7 ‘ Peer A ke ee ak
SRE wet 4
13
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conclusion is that it is little more than just that—a
conclusion not shown to be based, at least so far as é
the opinion reveals, upon the underlying purposes
or legislative history of the statute. In order to draw :
the inference that Congress intended for this kind of :
case to be heard by a federal court, I believe some-
thing more must be developed than the mere fact that
the statute prohibits what the agency has allegedly :
done. What the pancl has said still does not ade-
quately answer the question whether Congress in-
tended to protect those, who like the plaintiff, are
disappointed in not receiving a government contract,
and to provide them with a private right of action in
the district court.”
476 F.2d at 1249.
It is clear that the Court of Appeals for the Third
Circuit has not only granted standing where prohibited
by this Court’s decision in Perkins, but it has done so with-
out the inquiry, demanded by the Sierra Club opinion,
into the intent of Congress and the legislative history of
the Statute in question. The Petitioner therefore prays
this Court to grant the writ of certiorari and to review the
decision of the Court of Appeals for the Third Circuit.
B. Unsuccessful offerors, who fail to negotiate a contract
with the Government, are accorded standing to sue
in the Third Circuit, but not in the District of Colum-
bia Circuit.
In 1970, the Court of Appeals for the District of
Columbia Circuit rendered its precedent-setting opinion
in Scanwell Laboratories, Inc. v. Shaffer, where it granted
an unsuccessful bidder standing to contest the award of
in advertised contract. 424 F.2d 859. It should be noted
that the Court of Appeals went out of its way, in Scanwell,
14
to distinguish its carlicr holding in Friend v. Lee, 22]
F.2d 96 (D.C. Cir. 1955), a case in which the unsuccessful
offeror was denied standing to contest the award of a
negotiated contract. In footnote 10 in Scanwell, the Court
specifically stated that:
“{t}his somewhat lengthy recital of the Friend
opinion is necessary to demonstrate the marked dif-
ference between that case and the present one.”
424 F.2d at 868.
And, indeed, the two cases were different. The Friend
case, which set forth the rule of standing for cases in-
volving negotiated contracts, has never been overruled
and still constitutes binding precedent in that Circuit. It
is, of course, true that in later cases, the Court of Appeals
for the District of Columbia has cited the Scanwell decision
in support of a grant of standing in all cases where an un-
successful businessman wishes to sue to contest the award
of a contract, so long as he alleges sufficient facts to make
out a prima facie case of either an illegal award, or one
which was arbitrary or capricious. See Wheelabrator,
supra at 1309. However, this reasoning fails, since the
Plaintiff in Friend asserted the illegality of that negotiated
contract throughout those proceedings. 221 F.2d at 100.
The fact remains, however, that the District of
Columbia Circuit has refused to overrule Friend, both in
Scanwell and in its later decisions. See e.g., Constructores
Civiles de Centroamerica, supra; M. Steinthal & Co. v.
Seamans, supra; Wheelabrator, supra; Blackhawk Heat-
ing & Plumbing Co., supra; Ballerina Pen Co., supra.
The sole distinction between the Friend case and Scanwell
is that the former sets forth the rule of standing applicable
to negotiated contracts, and the latter sets forth the rule
for advertised contracts.
Under these precedents, the Plaintiff would therefore
have been denied standing had he sued in the District of
SR wh! he ust . ee ee ee ie
sr aie istaiet ee
F vee .
AMeressnere:
15
bash 2
Columbia. This action was, however, brought in Philadel-
phia, and the Plaintiff was accorded standing under the
rule of the Third Circuit. In order to reconcile the reign-
ing confusion in this area, and thus to obtain one rule of
standing in the Federal Courts, the Petitioner prays this
Court to grant the writ of certiorari and to review this
case,
SAUER aH
C. Since the Court of Appeals’ decision has “opened the
door” to lawsuits by unsuccessful offerors, lawsuits
which often pose complex legal issues and which
demand equitable relief, lawsuits which increase the
burden on the courts and disrupt government pro-
curement, its opinion raises an important federal
issue which should be decided by this Court.
The holding of the Court of Appeals for the first time
permits a disappointed offeror to have standing to chal-
lenge a contract negotiated pursuant to the provisions of
41 U.S.C. §252, a Statute specifically providing for the
alternate route of negotiation as contrasted with the formal
procedure of advertising for bids. Clearly this decision of
the Court of Appeals for the Third Circuit opens the door
to a whole new range of cases and presents them for con-
sideration at a time when the Courts’ resources are
stretched so thin that delays render it difficult to do sub-
stantial justice to the claims of the litigants. Lawsuits of
this type must necessarily have the effect of disrupting the
government procurement process, and in fact they ignore
the specific congressional intent of permitting agency
negotiation in circumstances which the agency deems ap-
propriate; this decision in effect renders 41 U.S.C., §252
meaningless and is tantamount to judicial negation of an
act of Congress. These factors have led other courts, con-
sidering similar cases, to note the importance of the issue
of standing:
is PASI lan SE CACM AR DE INOS ALT hi
16
“Whether a frustrated bidder for a government
contract has standing to suc, alleging illegality in
the manner in which the contract was let, is a ques-
tion of major importance and can be dealt with only
on the basis of a thorough review of the laws of
standing.”
Scanwell Laboratories, Inc. v. Shaffer. supra at 862.
The courts which have considered lawsuits by both
disappointed bidders and offerors have alike remarked on
the disruptive effect of such lawsuits on the Government's
procurement operations:
“Like private individuals in businesses, the
Government enjoys the unrestricted power to produce
its own supplies, to determine those with whom it will
deal, and to fix the terms and conditions upon which
it will make needed purchases. Acting through its
agents, as it must of necessity, the Government may,
for the purpose of keeping its own house in order, Jay
down guideposts by which its agents are to proceed
in the procurement of supplies, and which create
duties to the Government alone. It has done so in the
Public Contracts Act. That Act does not depart from
but instead embodies the traditional principle of
leaving purchases necessary to the operation of our
Government to administration by the executive
branch of Government, with adequate range of dis-
cretion free from vexations and dilatory restraints at
the suits of prospective or potential sellers. It was not
intended to be a bestowal of litigable rights upon those
desirous of selling to the Government; it is a self-
imposed restraint for violation of which the Govern-
ment—but not private litigants—can complain.”
Perkins, supra, 310 U.S. at 127. See also Perkins, supra
310 U.S. at 130, where Mr. Justice Black stated for this
Court that “a like restraint applied to purchasing by pri-
Seat 6S PITRE 5
17
vate business would be widely condemned as an intoler-
able business handicap.”
IHlustrative of the havoc wrought upon the federal
system by such a cavalicr approach is the deluge of cases
swamping the District of Columbia docket following its
decision in Scanwell. The District of Columbia Circuit
took notice of the disastrous effect of its Scanwell decision
when it stated that “the mere fact that a party has standing
to sue does not entitle him to render uncertain for a pro-
longed period of time government contracts which are vital
to the functions performed by the sovereign.” Blackhawk
Heating & Plumbing Co., supra at 1141; see also M. Stein-
thall & Co., supra at 1303.
Furthermore, the complexity of these cases is such
that the burdens on the district courts, as well as the
disruption of Government procurement, are exaggerated
by the amount of time necessary to litigate such cases.
See M. Steinthal & Co., supra. One district judge con-
fronted with the difficulties involved in this type of action,
denied standing and stated that:
“The present case amply demonstrates why in-
junctive suits of this nature have not been counte-
nanced traditionally, and should not be permitted
here. The Perkins rule is neither obsolete nor legalis-
tic, but is firmly rooted in meritorious practical con-
siderations. Whether or not these considerations are
still subsumed under the traditional standing doc-
trine, they should and, unless the Supreme Court
overrules Perkins, must be respected.
“The fallacy of the Scanwell line of decisions
which initially opened the District of Columbia’s
courtroom doors to all disgruntled bidders trying to
upset awards became evident to that circuit in less
than two vears of this tvne of litigation when it denied
plaintiff relief in Wheelabrator.”
z
DE a a 3 es
18
Gary Aircraft) Corporation, supra at 477-478: see also
Wheelabrator Corporation v. Chafee, supra at 1311-1312.
The severe burden imposed on the courts by this
type of action, and the consequent disruption of the pro-
curement process, were likewise noted by Circuit Judge
Adams, who therefore considered this case significant:
“During the last few years the federal courts have
experienced an extraordinary increase in volume far
more than what ought to have been expected from
population growth alone. As Chief Judge Friendly
has recently indicated .. . it may be that, if federal
courts are to handle best the tasks most appropriately
given them a solution must be sought not by creating
more judgeships, but by slowing up judicial intake
and certainly not by staking out additional areas of
jurisdiction without very careful consideration.”
476 F.2d at 1250.
The fact that the decision of the Court of Appeals for
the Third Circuit threatens to so severely burden. the
Courts, and furthermore to subject the government's pro-
curement of facilities to similar delays and disruption,
demonstrates that this case presents a federal issue of
major importance. The fact that the Court of Appcals
undertook to render an unprecedented extension of the
Federal Law of Standing renders this case deserving of
consideration by the Supreme Court, and the Petitioner
therefore prays this Court to issue the writ of certiorari to
the Court of Appeals for the Third Circuit.
ee
ee br > RRNA Tae by. Se SERA REE
nied Pantie
Bsr
19
D. The Plaintiff’s contentions that Defendant violated
both the 1971 Appropriations Act and the Public
Buildings Act of 1972 are rendered moot by the fact
that no money was expended for this project in
1971, and that the Public Buildings Act does not
apply retroactively.
The Plaintiff complains that this contract is pro-
hibited by the Independent Offices Appropriations Act for
19715, which requires congressional approval for the
payment of rent in transactions where the Lessor is to
construct a building at an estimated cost exceeding
$200,000 and then leases space in that building to the
Government. Although congressional approval was
neither sought nor obtained, this contention is rendered
moot by the fact that no money was expended by the
government for the Gateway project until the commence-
ment of rental payments following the execution of the
Lease in November, 1972. Since the Independent Offices
Appropriations Act for 19726 does not contain the pro-
hibition found in the earlier acts, the government's pay-
ment of rent to Gateway Center Corporation cannot be
said to violate any appropriations Act.
However, the Plaintiff complains further that this
contract violates the Public Buildings Act Amendments
of 1972, Pub. L. No. 92-313, 80 Stat. 217, 40 U.S.C.
§606(a), and the Court of Appeals sustained this conten-
tion. 476 F.2d at 1243-1244. These amendments, which
contain a prohibition similar to that in the Independent
Offices Appropriations Act, went into effect on June 16,
1972, and they are said to prohibit the lease from Gateway
Center Corporation to GSA, which was executed on Novem-
ber 1, 1972.
5. Independent Offices Appropriations Act, 1970: Pub. L. No.
91-556, 84 Stat. 1448.
6. Independent Offices Appropriations Act, 1971, Pub. L. No.
92-49, 85 Stat. 115.
R
i
:
.
f
4
t
¥
%
Le
steers +
pga,
20
This argument, however, ignores the fact that the
Government's contract with Gateway Center Corporation
entails more than the execution of the lease: the Govern.
ment solicited offers to negotiate under 41 U.S.C. §252\¢)-
(10), 63 Stat. 393, precisely because the facilities it desired
could not readily be obtained, and because it therefore
wished to negotiate with various offerors in order that
more suitable facilities might become available. The nego-
tiations resulted in significant amendments to Gatewavy’'s
offer after its submission on October 13, 1970, and before
the GSA acceptance on February 18, 1971, and_ these
changes were made at GSA’s behest. When GSA accepted
Gateways offer, it is clear that the rights and obligations
of the parties then became fixed, and these rights and
obligations included the execution of a lease and the pay-
ment of rent under it: in the letter accepting Gateway’s
offer, Arthur Sampson, Commissioner of the GSA Public
Building Service stated that:
“In accordance with the provisions of the Fed-
eral Property and Administrative Services Act of
1949, as amended, and Executive Order 11512, |
hereby accept your offer of October 12, 1970, as
amended by Amendment to offer of Gateway Centre
[sic] Corporation dated January 12, 1971, and
Second Amendment to offer of Gateway Centre
[sic] Corporation, dated January 18, 1971, to lease
to the United States ... Rental will be paid at the rate
of $2,316,000 per annum for a term of twenty years
commencing 60 days after occupancy by the Govern-
ment.” [Emphasis added. ]
Mr. Sampson’s language indicates that the execution
of the Lease was nothing more than a ministerial Act.
This letter furthermore demonstrates that the contract
between GSA and the Gateway Center Corporation was
entered into on February 18, 1971, more than. sixteen
months before the Public Buildings Act Amendments
et ae ea DG iy TARR AUTRES tt hae ON me A eel
21
became effective. The holding of the Court of Appeals, that
this 1972 statute applies to the Government's 1971 contract
with Gateway Center Corporation, clearly impairs Gate-
way’s rights under that contract and therefore constitutes
an uncompensated taking of Gateway’s property rights
in violation of the Fifth Amendment to the United States
Constitution. Twenty Percent Cases, 20 Wall 179, 22 L. Ed.
339 (1874); United States v. St. Louis, San Francisco &
Texas Railway Co., 270 U.S. 1, 46S. Ct. 182, 70 L. Ed. 435
(1925).
Moreover, the decision of the Court of Appeals to
apply these amendments retroactively also violates the
established principle of statutory construction that a
statute should not be applied retroactively unless the
language is so clear as not to admit of any other construc-
tion. City Railway Co. v. Citizens’ Street Railroad Co., 166
U.S. 557, 17 S. Ct. 653, 41 L. Ed. 1114 (1897). It should be
noted that the decision of the Court of Appeals contradicts
a General Accounting Office (GAO) ruling that these
Amendments should only be applied prospectively. Deci-
sion of the Comptroller General B-171958, January 19,
1973. Since the GAO is an agency of Congress (Wheelabra-
tor Corporation, supra at 1313-1314; M. Steinthal & Co.,
supra at 1304-1305), its rulings on Congressional intent
are entitled to great weight. The Petitioner therefore prays
this Court to grant the writ of certiorari and to review the
decision of the Court of Appeals.
| NTA LHD
22
CONCLUSION
The issues posed by this case are of a nature requiring
decision by the Supreme Court. The principles of standing
announced in this Court's recent decisions require further
amplification, and this can be supplied only upon Supreme
Court review: the District of Columbia Circuit and the
Third Circuit are already applving different rules to
unsuccessful offerors, who fail to obtain negotiated con-
tracts with the government. Moreover, this Court is asked
to review a Court of Appeals decision, which directly
contravenes an earlier Supreme Court decision, and the
importance of the issue is not lessened by the major bur-
dens imposed on the courts, and the disruption of govern-
ment procurement engendered by the ruling of the Court
of Appeals. This disruption is furthered by the Court's
decision to apply the Public Buildings Act Amendments
retroactively in defiance of the intent of Congress and
in violation of the Fifth Amendment to the Constitution.
These issues assume major importance due to burdens
imposed upon both courts and the executive branch of the
government by this decision, and the Petitioner therefore
requests this Court to grant this writ of certiorari to the
United States Court of Appeals for the Third Circuit and
to consider the issues raised herein.
Respectfully submitted,
1 JS
/ { bictant ff hkhfa fe 4 U(
DAVID F. MAXWELL
Attorney for Petitioner,
Gateway Center
Corporation
—
Of Counsel
OBERMAYER, REBMANN, MAXWELL & HIPPEL
14th Floor Packard Building
Philadelphia, Pennsyivania 19102
INDEX TO APPENDIX
APPENDIX I
United States Constitution, Amendment Vio... ..
Federal Property and Administrative Services Act
Or ce Oe Re vce d es oenswa seas nes
Federal Property and Administrative Services Act
res ae Or ee es sn ee ees eae ee
Section 10, Administrative Procedure Act... 2.0... .
Seecutive Order No. 11512 .............00cc eee
Federal Procurement Regulation 1-3.805-] 2.2... ...
Independent Offices Appropriations Act for 1971... .
Independent Offices Appropriations Act for 1972... .
Public Buildings Act Amendments of 1972 .... .
APPENDIX II
Letter of the Comptroller, General, September 16,
SEs, BORNE GPE TRUE cc kc cw aeaebechavdps
Letter of the Comptroller General, March 17, 1972.
ERC OMD fo ee a oa Or ee
Opinion of the United States District Court for the
Eastern District of Pennsylvania, June 26,
1972
Opinion of the United States Court of Appeals for the
Third Circuit, February 16, 1973
Order Amending Opinion, United States Court of
Appeals for the Third Circuit, April 13, 1973. .
Opinion on Petition for Rehearing, United States
Court of Appeals for the Third Circuit, April 27,
1973
iP esi ON x,
PAP SM BOLE TE
ete
. A en aren Re
INDEX TO APPENDIX— Continued)
APPENDIX Il— Continued)
Order of United States District Court for the Eastern
District of Pennsylvania Permitting Inter-
vention of Gateway Center Corporation as
DeGeentiaet. Jemme DO, BOTS . 2... cece.
APPENDIX III
Solicitation for Offers No. NEG(70)-63, September
aie ae es em Ae PE Rk aD aa
8 CGMP IE Tae
BNulase >
la
APPENDIX I
CONSTITUTIONAL PROVISIONS, STATUTES AND EX-
ECUTIVE ORDERS
UNITED STATES CONSTITUTION, AMENDMENT V.
No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment or
indictment of a Grand Jury, except in cases arising in the
land or naval forces, or in the Militia, when in actual
service in time of War or public danger; nor shal] any
person be subject for the same offence to be twice put in
jeopardy of life or limb; nor shall be compelled in any
criminal case to be a witness against himself, nor be de-
prived of life, liberty, or property, without due process of
law; nor shall private property be taken for public use, with-
out just compensation.
FEDERAL PROPERTY AND ADMINISTRATIVE SER-
VICES ACT OF 1949, as amended, June 30, 1949,
c. 288, Title III, §303, 63 Stat. 395; July 12, 1952,
c. 703, §1(m), 66 Stat. 594: as amended Mar. 16.
1968, Pub. L. No. 90-268, §2, 82 Stat. 49, 41 U.S.C.
§253.
§253. Advertising requirements
Whenever advertising is required—
(a) The advertisement for bids shall be made a suf-
ficient time previous to the purchase or contract, and
specifications and invitations for bids shall permit such
full and free competition as is consistent with the pro-
curement of types of property and services necessary to
meet the requirements of the agency concerned. No adver-
tisement or invitation to bid for the carriage of Govern-
ment property in other than Government-owned cargo
L
STRELA RRR ety — |
containers shall specify carriage of such property in cargo
containers of any stated length, height, or width.
(b) All bids shall be publicly opened at the time and
place stated in the advertisement. Award shall be made
with reasonable promptness by written notice to that re-
sponsible bidder whose bid, conforming to the invitation
for bids, will be most advantageous to the Government.
price and other factors considered: Provided. That all
bids may be rejected when the agency head determines
that it is in the public interest so to do.
FEDERAL PROPERTY AND ADMINISTRATIVE SER-
VICES ACT OF 1949, as amended, June 30, 1949.
c. 288, Title II, §302, 63 Stat. 393; as amended
Nov. 8, 1965, Pub. L. No. 89-343, §§1, 2, 79 Stat.
1303; Nov. 8, 1965, Pub. L. No. 89-348, §1(2), 79
Stat. 1310; Mar. 16, 1968, Pub. L. No. 90-268. $4.
82 Stat. 50, 41 U.S.C. §252.
§252. Purchases and contracts for property—applica-
bility of chapter; delegation of authority
Negotiated purchases and contracts for property; con-
ditions
(c) All purchases and contracts for property and
services shall be made by advertising, as provided in
section 253 of this title, except that such purchases and
contracts may be negotiated by the agency head without
advertising if—
(1) determined to be necessary in the public interest
during the period of a national emergency declared by the
President or by the Congress;
(2) the public exigency will not admit of the delay
incident to advertising:
(3) the aggregate amount involved does not exceed
$2,500;
(4) for personal or professional services;
< ?
oa
(5) for any service to be rendered by any university,
college, or other educational institution.
(6) the property or services are to be procured and
ysed outside the limits of the United States and_ its
possessions ;
(7) for medicines or medical property;
(8) for property purchased for authorized resale;
(9) for perishable or nonperishable — subsistence
supplies:
(10) for property or services for which it is impracti-
cable to secure Competition ;
(11) the agency head determines that the purchase
or contract is for experimental, developmental, or rescarch
work, or for the manufacture or furnishing of property for
experimentation, development, research, or test:
(12) for property or services as to which the agency
head determines that the character, ingredients, or com-
ponents thereof are such that the purchase or contract
should not be publicly disclosed;
(13) for equipment which the agency head determines
to be technical equipment, and as to which he determines
that the procurement thereof without advertising is neces-
sary in special situations or in particular localities in order
to assure standardization of equipment and interchange-
ability of parts and that such standardization and inter-
changeability is necessary in the public interest;
(14) for property or services as to which the agency
head determines that bid prices after advertising therefor
are not reasonable (cither as to all or as to some part of the
requirements) or have not been independently arrived at
in open competition: Provided, That no negotiated pur-
chase or contract mav be entered into under this paragraph
after the rejection of all or some of the bids received unless
A) notification of the intention to negotiate and reasonable
opportunity to negotiate shall have been given by the
dency head to each responsible bidder and (B) the nego-
tiated price is the lowest negotiated price offered by any
responsible supplicr; or
we ee
—
a ee
4a
(15) otherwise authorized by law, except that section
254 of this title shall apply to purchases and contracts
made without advertising under this paragraph.
ADMINISTRATIVE PROCEDURE ACT $10. Pub. L. No.
89-554, Sept. 6, 1966, 80 Stat. 392, 5 U.S.C. §702.
$702. Right of review
A person suffering legal wrong because of agency
action, or adversely affected or aggrieved by agency action
within the meaning of a relevant statute, is entitled to
judicial review thereof.
EXECUTIVE ORDER No. 11512, 35 Fed. Reg. 3979
PLANNING, ACQUISITION, AND MANAGEMENT OF
FEDERAL SPACE
By virtue of the authority vested in me by the Federal
Property and Administrative Services Act of 1949, as
amended [F.C.A. 40 §§471 and notes—475, 481, 483,
484, 485-492, 511-514, 521-524, 531 and note—535, 751-759;
41 §§5, 251-254, 255, 257-260; 44 §2901 et seq.], and as
President of the United States, it is hereby ordered as
follows:
Section 1. The Administrator of General Services
(hereinafter termed “the Administrator”) shall initiate and
maintain plans and programs for the effective and efficient
acquisition and utilization of federally owned and leased
space located in the States of the United States or in the
District of Columbia or in Puerto Rico (hereinafter termed
“in the United States”), and for which the Administrator
is responsible. The Administrator shall prepare and issue
standards and criteria for the use of such space and shall
periodically undertake surveys of space requirements and
space utilization in the executive agencies and _ initiate
actions and formulate programs to meet the essential
space requirements of executive agencies. In carrying oul
5a
these functions, the Administrator shall (a) coordinate
proposed programs and plans for buildings and space with
the Bureau of the Budget, (b) obtain from the Civil Service
Commission, the Office of Emergency Preparedness, and
the Department of Defense any information in the posses-
sion of those agencies which may bear upon such programs
and plans, (c) coordinate proposed programs and plans
for buildings and space in a manner designed to exert a
positive economic and social influence on the development
or redevelopment of the areas in which such facilities will
be located, (d) seek the cooperation of the heads of the
executive agencies concerned with any of the foregoing.
and (ec) annually submit long-range plans and programs
for the acquisition, modernization, and use of space for
approval by the President.
Sec. 2. (a) The Administrator, and the heads of execu-
tive agencies, shall be guided by the following policies for
the acquisition, assignment, reassignment, and utilization
of office buildings in the United States:
(1) Material consideration shall be given to the effi-
cient performance of the missions and programs of the
executive agencies and the nature and function of the
facilities involved, with due regard for the convenience
of the public served and the maintenance and improve-
ment of safe and healthful working conditions for em-
plovees;
(2) Consideration shall be given in the selection of
sites for Federal facilities to the need for development
and redevelopment of areas and the development of new
communities, and the impact a selection will have on im-
proving social and economic conditions in the area. In de-
termining these conditions the Administrator shall consult
with and receive advice from the Secretary of Housing and
Urban Development, the Secretary of Health, Education,
and Welfare, the Secretary of Commerce, and others, as
appropriate;
(3) Maximum use shall be made of existing Govern-
ment-owned permanent buildings which are adequate or
6a
economically adaptable to the space needs of executive
agencies;
(4) Suitable privately owned space shall be acquired
only when satisfactory Government-owned space is not
available, and only at rental charges which are consistent
with prevailing rates in the community for Comparable
facilities;
(5) Space planning and assignments shall take into
account the objective of consolidating agencies and con-
stituent parts thereof in common or adjacent space for the
purpose of improving management and administration:
EXECUTIVE ORDER
(6) The availability of adequate low and moderate
income housing, adequate access from other areas of the
urban center, and adequacy of parking will be considered:
and
(7) Proposed developments shall be, to the greatest
extent practicable, consistent with State, regional, and
local plans and programs; and Governors, local elected
officials, and regional comprehensive planning agencies
shall be consulted in the planning of such develop-
ments.
(b) The Administrator shall plan, acquire, and
manage space in the United States upon his determina-
tion that such actions will serve to improve the manage-
ment and administration of governmental activities and
services, and will foster the programs and policies of the
Federal Government. Prior to making such determinations,
the Administrator shall consult with the heads of the execu-
tive agencies concerned and take into account their require-
ments, consistent with the criteria stated here and his
other responsibilities. The Administrator shall advise the
agency head in writing of his intended course of action and
notify him that in the event of disagreement the affected
agency head mav within thirty davs make a written request
for review of the matter, through the Director of the Bureau
of the Budget, to the President.
7a
Sec. 3. The heads of executive agencies shall (a) coop-
erate With and assist the Administrator in carrying out his
responsibilities respecting buildings and space. (b) take
measures to give the Administrator early notice of new or
changing space requirements, (Cc) seck to economize in
their requirements for space, and (d) review continuously
their needs for space in and near the District of Columbia,
taking into account the feasibility of decentralizing services
or activities Which can be carried on elsewhere without ex-
cessive costs or significant loss of efficiency.
Sec. 4. The provisions of this order shall be sub-
ject to applicable provisions of law (including applicable
provisions of any reorganization plan).
Sec. 5. Executive Order No. 11035 of July 9, 1962
(1962 Public Laws and Administrative Material, p.
B116], is hereby superseded.
Richard Nixon
February 27, 1970.
[F. R. Doc. 70-2649; Filed, Feb, 27, 1970: 4:45 p.m.]
FEDERAL PROCUREMENT REGULATION | 1-3.805-1,
41 C.F.R. §1-3.805-1.
§1-3.805 Selection of offerors for negotiation and award
§1-3.805-1 General
The procedures set forth in this §1-3.805-1 are gen-
crally applicable to negotiated procurement. However,
they are not applicable where their use would be inap-
propriate, as may be the case, for example, when procuring
research and development or special services (such as
architect-engineer services) or when cost-reimbursement
type contracting is anticipated (see §1-3.805-2). While
the lowest price or lowest cost to the Government is prop-
erly the deciding factor in source selection in many in-
PE PETE _
8a
stances, award of a contract properly may be influenced
by the proposal which promises the greatest value to the
Government in terms of possible performance, ultimate
producibility, growth potential, and other factors.
(a) After receipt: of initial proposals. written
or oral discussions shall be conducted with all re-
sponsible offerors who submitted proposals within 4
competitive range, price and other factors considered,
except that this requirement need not necessarily be
applied to:
(1) Procurements not in excess of $2,500,
(2) Procurements in which rates or prices
are fixed by law or regulations;
(3) Procurements in which time of delivery
will not permit such discussions;
(4) Procurements of the set-aside portion of
partial set-asides or by small business restricted
advertising; or
(5) Procurements in which it can be clearly
demonstrated from the existence of adequate com-
petition or accurate prior cost experience with
the product or service that acceptance of the most
favorable initial proposal without discussion
would result in a fair and reasonable price:
Provided, That the request for proposals con-
tains a notice to all offerors of the possibility
that award may be made without discussion of
proposals received and, hence, that proposals
should be submitted initially on the most favor:
able terms, from a price and technical standpoint,
Which the offeror can submit to the Government.
In any case where there is uncertainty as to the
pricing or technical aspects of any proposals, the
contracting officer shall not make award without
further exploration and discussion prior to award.
Also, when the proposal most advantageous to
the Government involves a material departure
from the stated requirements, consideration shall
9a
be given to offering the other firms which sub-
mitted proposals an opportunity to submit new
proposals on a technical basis which is com-
parable to that of the most advantageous pro-
posal: Provided, That this can be done with-
out revealing to the other firms any informa-
tion which the offeror does not want disclosed
to the public (sce §1-3.103(b) ).
(b) Whenever negotiations are conducted with
more than one offeror, no indication shall be given
to any offeror of a price which must be met to obtain
further consideration since such practice constitutes
an auction technique which must be avoided. Like-
wise, no offeror shall be advised of his relative stand-
ing with other offerors as to price or be furnished
information as to the prices offered by other offerors.
After receipt of proposals, no information regarding
the number of identity of the offerors participating
in the negotiations shall be made available to the
public or to any one whose official duties do not re-
quire such knowledge. Whenever negotiations are
conducted with several offerors, while such negotia-
tions may be conducted successively, all offerors
selected to participate in such negotiations (see
§1-3.805-1(a) ) shall be offered an equitable oppor-
tunity to submit such price, technical, or other revi-
sions in their proposals as may result from the nego-
tiations. All such offerors shall be informed of the
specified date (and time if desired) of the closing of
negotiations and that any revisions to their proposals
should be submitted by that date. In addition, all
such offerors shall be informed that after the specified
date for the closing of negotiations, no information
(other than pre-award notice of unacceptable pro-
posals or offers) will be furnished to any offeror until
award has been made. For the requirements and
limitations concerning the furnishing of information
after awards have been made, sce §1-3.103.
10a
(c) Except where cost-reimbursement type con.
tracts are to be used (see $1-4 805-2). a request for
proposals may provide that after receipt of initial
technical proposals, such prope als will be evaluated
to determine those which are acceptable to thy
Government or which, after discussion, can be made
acceptable, and upon submission of prices thereafter
award shall be made to that offeror of an acceptable
proposal who is the low responsible offeror.
(d) When, during negotiations, a substantial
change occurs in the Government's requirements or
a decision is reached to relax, increase, or otherwise
modify the scope of the work or statement of require.
ments, such change or modification shall be made in
writing as an amendment to the request for proposals,
and a copy shall be furnished to each prospective
contractor. Oral advice of change or modification may
be given if (1) the changes involved are not complex
in nature, (2) all prospective contractors are notified
simultaneously ( preferably by a meeting with the con-
tracting officer), and (3) a record is made of the oral
advice given. In such instances, however, the oral ad-
vice should be promptly followed by a written amend-
ment verifying such oral advice previously given. The
dissemination of oral advice of changes or modifica-
tions separately to cach prospective contractor during
individual negotiation sessions should be avoided un-
less preceded, accompanied, or immediately followed
by a written amendment to the request for proposals
embodying such changes or modifications.
INDEPENDENT OFFICES APPROPRIATIONS ACT, Dec.
17, 1970. Pub. L. 91-556, 84 Stat. 1448.
GENERAL PROVISIONS
The appropriate appropriation or fund available
to the General Services Administration shall be credited
with (1) cost of operation, protection, maintenance,
upkeep. repair, and improvement, included as part of
entals received from Government corporations pursuant
w law (40 U.S.C. 129), (2) reimbursements for services
performed in respect to bonds and other obligations
under the jurisdiction of the General Services Adminis-
tration. issued by public authorities, States, or other
public bodies, and such services in respect to such bonds
or obligations as the Administrator deems necessary and
in the public interest may, upon the request and at the
expense of the issuing agencies, be provided from the appro-
priate foregoing appropriation; and (3) appropriations or
funds available to other agencies, and transferred to the
General Services Administration, in connection with prop-
erty transferred to the General Services Administration
pursuant to the Act of July 2, 1948 (50 U.S.C. 151ff), and
such appropriations or funds may be so transferred, with
the approval of the Bureau of the Budget.
Appropriations to the General Services Administra-
tion under the heading “Construction, Public Building
Projects” shall be available, subject to the provisions
of the Public Buildings Act of 1959 for (1) acquisition of
buildings and sites thereof by purchase, condemnation, or
otherwise, including prepayment of purchase contracts,
2) extension or conversion of Government-ownced buildings,
and (3) construction of new buildings, in addition to those
set forth under that appropriation: Provided, That noth-
ing herein shall authorize an expenditure of funds for ac-
quisition, extension or conversion, or construction with-
out the approval of the Committees on Appropriations
of the Senate and House of Representatives.
Funds available to the General Services Adminis-
tration shall be available for the hire of passenger
motor vehicles.
No part of any money appropriated by this or any
other Act for any agency of the executive branch of the
Government shall be used during the current fiscal year
lor the purchase within the continental limits of the
—
Fat aa
RTT SRI
2a
United States of any typewriting machines except in
accordance with regulations issued pursuant to the pro-
visions of the Federal Property and Administrative Ser.
vices Act of 1949, as amended.
Not to exceed 2 per centum of any appropriation
made available to the General Services Administration
for the current fiscal year by this Act may be. trans-
ferred to any other such appropriation, but no such
appropriation shall be increased thereby more than 2 per
centum: Provided, That) such transfers shall apply
only to operating expenses, and shall not exceed in the
aggregate the amount of $2,000,000.
Appropriations available to any department or agency
during the current fiscal year for necessary expenses,
including maintenance or operating expenses, shall also be
available for (a) reimbursement to the General Services
Administration for those expenses of renovation and
alteration of buildings and facilities which constitute
public improvements, performed in accordance with the
Public Buildings Act of 1959 (73 Stat. 479) or other appli-
cable law, and (b) transfer or reimbursement to applicable
appropriations to said Administration for rents and related
expenses, not otherwise provided for, of providing subject to
Executive Order 11035, dated July 9, 1962, directly or indi-
rectly, suitable general purpose space for any such depatt-
ment or agency, in the District of Columbia or elsewhere.
No part of any appropriation contained in this Act
shall be used for the payment of rental o tes” agree
ments for the accommodation of Federal agencies in build:
ings 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 the Congress and approval
made in the same manner as for the public buildings con-
struction projects pursuant to the Public Buildings Act
of 1959.
INDEPENDENT OFFICES APPROPRIATIONS ACT,
July 9, 1971, Pub. L. 92-49, 85 Stat. 115.
GENERAL SERVICES ADMINISTRATION
PuBLIC BUILDINGS SERVICE
Operating Expenses
For necessary expenses, not otherwise provided for,
of real property management and related activities as pro-
vided by law; rental of buildings in the District of Colum-
bia; restoration of Iecased premises; moving Government
agencies (including space adjustments) in connection with
the assignment, allocation, and transfer of building space;
acquisition by purchase or otherwise of real estate and
interests thérein; and contractual services incident to
cleaning or servicing buildings and moving; $406,000,000:
Provided, That this appropriation shall be available to
provide such fencing, lighting, guard booths, and other
facilities on private or other property not in Government
ownership or control as may be appropriate to enable the
United States Secret Service to perform its protective func-
tions pursuant to title 18, U.S.C. 3056: Provided further,
That this appropriation and the “Buildings Management
Fund” (40 U.S.C. 490(f)), shall be available for employment
of guards for all buildings and areas owned or occupied by
the United States and under the charge and control of the
General Services Administration or the Post Office Depart-
ment (or the Postal Service), and such guards shall have.
with respect to such property, the powers of special police-
men provided by the first section of the Act of June 1,
1948 (62 Stat. 281; 40 U.S.C. 318), but shall not be restricted
to certain Federal property as otherwise required by the
proviso contained in said section.
Repair and Improvement of Public Buildings
For expenses, not otherwise provided for, necessary
to alter public buildings and to acquire additions to sites
Ia
pursuant to the Public Buildings Act of 1959, as amended
(40 U.S.C. 601-615). and to alter other federally owned
buildings and to acquire additions to sites thereof, includ-
ing grounds, approaches and appurtenances, wharves
and piers. together with the necessary dredging adjacent
thereto; and care and safeguarding of sites; preliminary
planning of projects by contract or otherwise; mainte-
nance, preservation, demolition, and equipment; $92.000-
000, to remain available until expended: Provided, That
for the purposes of this appropriation, buildings con-
structed pursuant to the Public Buildings Purchase Con-
tract Act of 1954 (40 U.S.C. 356) and buildings under the
control of another department or agency where alteration
of such buildings is required in connection with the moving
of such other department or agency from buildings then,
or thereafter to be, under the control of General Services
Administration shall be considered to be public buildings.
Construction, Public Building Projects
For an additional amount for expenses, not otherwise
provided for, necessary to construct and acquire public
buildings projects and alter public buildings by extension
or conversion where the estimated cost for a project is in
excess of $200,000, pursuant to the Public Buildings Act
of 1959, as amended (40 U.S.C. 601-615), including fallout
shelters and equipment for such buildings, $200,440,000.
und not to exceed $500,000 of this amount shall be avail-
able to the Administrator for construction or alteration of
small public buildings outside the District of Columbia as
the Administrator approves and deems necessary, all to
remain available until expended: Provided, That the fore-
going amount shall be available for public buildings
projects at locations and at maximum construction im-
provement costs (excluding funds for sites and expenses).
as follows:
Federal office building. Mobile, Alabama, $8,339,
000:
15a
Courthouse and Federal office building, Fayette-
ville, Arkansas, $2,067,000;
Border station, Calexico, California, $5,122,000;
Federal correctional center and parking facility,
Chicago, Illinois, $4,281,000;
Post office, courthouse and Federal office build-
ing, Aberdeen, Mississippi, $2,249,000;
Post office, courthouse and Federal office build-
ing, Oxford, Mississippi. $3,248,000:
Border station, Champlain, New York, $6,116,-
000;
Foley Square Courthouse annex, New York, New
York, $10,700,000;
Post office and Federal office building, Mans-
field, Ohio, $6,117,000;
Border patrol sector headquarters, McAllen,
Texas, $1,193,000;
Post office, courthouse and Federal office build-
ing, Midland, Texas, $4,925,000;
Post office. courthouse, and Federal office build-
ing, Elkins, West Virginia, $2,454,000:
Federal office building (superstructure), Seattle,
Washington, $35,004,000;
Department of Labor building (superstructure),
District of Columbia, $67,167,000; and
Federal office building (superstructure), South
Portal, District of Columbia, $40,958,000: Provided
further, That the foregoing limits of costs may be
exceeded to the extent that savings are effected in
other projects, but by not to exceed 10 per centum.
Sites and Expenses, Public Buildings Projects
For an additional amount for expenses necessary in
connection with the construction of public buildings
projects not otherwise provided for, including preliminary
planning by contract or otherwise, $17,749,500, to remain
wailable until expended: Provided, That the $4,209,000
16a
appropriated under the heading “Sites and Expenses, Pub-
lic Buildings Projects”, in the Second Supplemental Ap-
propriation Act, 1971, Public Law 92-18, shall also remain
available until expended.
Payments, Public Buildings Purchase Contracts
For payments of principal, interest, taxes, and any
other obligations under contracts entered into pursuant to
the Public Buildings Purchase Contract Act of 1954 | 40
U.S.C. 356), $2,400,000.
Expenses, United States Court Facilities
For necessary expenses, not otherwise provided for,
to provide directly or indirectly, additional space for the
United States Courts incident to expansion of facilities
(including rental of buildings in the District of Columbia
and elsewhere and moving and space adjustments). and
furniture and furnishings, $2,780,000.
PUBLIC BUILDINGS ACT AMENDMENTS OF 1972.
Pub. L. 92-313, §2(4), June 16, 1972, 86 Stat. 217, 40
U.S.C. §606.
$606. Approval of proposed projects by Congress—Limita-
tion of funds; transmission to Congress of prospectus of
proposed project.
(a) In order to insure the equitable distribution of
public buildings throughout the United States with due
regard for the comparative urgency of need for such build-
ings, except as provided in section 605 of this title, no
appropriation shall be made to construct, alter, purchase.
or to acquire any building to be used as a public building
which involves a total expenditure in excess of $500,900
if such construction, alteration, purchase, or acquisition
has not been approved. by resolutions adopted by the Com-
Wa
mittee on Public Works of the Senate and House of Repre-
ventatives, respectively, No appropriation shall be made to
lease any space at an avcrage annual rental in excess of
500.000 for use for public purposes if such lease has not
heen approved by resolutions adopted by the Committee
on Public Works of the Senate and House of Representa-
tives, respectively. For the purpose of securing considera-
tion for such approval, the Administrator shall transmit to
the Congress a prospectus of the proposed facility, includ-
ing (but not limited to }—
(1) a brief description of the building to be con-
structed, altered, purchased, acquired, or the space to
be leased under this chapter;
(2) the location of the building or space to be
leased and an estimate of the maximum cost to the
United States of the facility to be constructed, altered,
purchased, acquired, or the space to be leased;
(3) a comprehensive plan for providing space for
all Government officers and employees in the locality
of the proposed facility or the space to be leased,
having due regard for suitable space which may con-
tinue to be available in existing Government-owned
or occupied buildings;
(4) with respect to any project for the construc-
tion, alteration, purchase, or acquisition of any build-
ing, a statement by the Administrator that suitable
space owned by the Government is not available and
that suitable rental space is not available at a price
commensurate with that to be afforded through the
proposed action; and
(5) a statement of rents and other housing costs
currently being paid by the Government for Federal
agencies to be housed in the building to be con-
structed, altered, purchased, acquired, or the space to
be leased.
ws
18a
Increase of estimated maximum cost
(b) The estimated maximum cost of any project lp-
proved under this section as sect forth in any prospectus
may be increased by an amount equal to the percentage
increase, if anv, as determined by the Administrator, in
construction or alteration costs, as the case may be, from
the date of transmittal of such prospectus to Congress,
but in no event shall the increase authorized by this sub-
section exceed 10 per centum of such estimated maximum
cost.
Rescission of approval for failure to make
appropriations for project
(c) In the case of any project approved for construc:
tion, alteration, or acquisition by the Committees on Pubiic
Works of the Senate and of the House of Representatives,
respectively, in accordance with subsection (a) of this sec-
tion, for which an appropriation has not been made within
one year after the date of such approval, either the Com-
mittee on Public Works of the Senate or the Committee on
Public Works of the House of Representatives, may
rescind, by resolution, its approval of such project at any
time thereafter before such an appropriation has been
made.
Emergency leases by the Administrator
(d) Nothing in this section shall be construed to pre-
vent the Administrator from entering into emergenc\
leases during any period declared by the President to re-
quire such emergency leasing authority, except that no
such emergency lease shall be for a period of more than 189
days without approval of a prospectus for such Tease in
accordance with subsection (a) of this section.
19a
APPENDIX II
COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON, D.C. 20643
B-171958 September 16, 197]
Dear Mr. Kunczig:
We refer to letters, with enclosures, dated April 12
and July 9, 1971, from the General Counsel, furnishing
our Office a report on the protest of Richard B. Herman
and Company against the negotiation of a Icase by the
General Services Administration with Gateway Center
Corporation under solicitation for offers No. NEG(70)-63
Enclosed is a copy of our letter of today ‘o counsel
for the protestant, declining to rule on the matter at this
time.
Sincerely yours,
Acting Comptroller General
of the United States
Enclosure
The Honorable Robert L. Kunzig
Administrator, General Services
Administration
20a
COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON, D.C. 20343
September 16, 197]
Lankler and Parker
Waterhouse
3526 Street, N.W. (Water Street)
Washington, D.C. 20007
Attention: Douglas H. Parker, Esq.
Gentlemen:
We refer to your submission received here on August
27, 1971, and prior correspondence, on behalf of Richard
B. Herman and Company, agent for Mr. John W. Mer-
riam, questioning the negotiation of a lease by the General
Services Administration (GSA) with Gateway Center
Corporation under solicitation for offers No. (70)-63.
Question is raised primarily on the ground that Gateway
did not meet the criteria established by GSA for the pur-
pose of assuring compliance with the limitation in the
Independent Offices Appropriation Act of 1970 (Public
Law 91-556), which, in effect, precludes the lease of new
construction unless such construction has already been
committed as a private venture.
We have reviewed the arguments in support of your
position that the award to Gateway should be canceled.
Though there may be merit in your argument that Gate-
way did not fully meet one or more of the five criteria
adopted by GSA to establish compliance with the ap-
propriation limitation, we feel that we cannot rule au-
thoritatively on the protest at this time.
We are concluding a review of GSA’s lease construc:
tion practices, with particular emphasis on its implementa
tion of the appropriation limitation, including the efficacy
of the criteria prescribed by GSA for assuring complianc:
21a
[his case is being considered in the review. From. the
sandpoint of the appropriation limitation, the basic and
underlying question is whether an offeror actually intends
to construct a building irrespective of a lease with GSA.
[his question cannot be resolved without considering the
impact of GSA’s practices on the response of a particular
offeror. In this connection, we cannot ignore the fact that
in reliance on GSA’s determination that there was com-
pliance with the appropriation limitation as implemented
by the five criteria, Gateway has made progress in con-
struction of the building involved.
Upon completion of our review we will report our
findings and conclusions to the Congress.
Very truly vours,
R. E. KELLER
Comptroller General
of the United States
22
COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON, D.C. 20548
B-171958 March 17, 1979
Dear Mr. Kreger:
By letter dated February 11, 1972, the Assistant At
torney General, Land and Natural Resources Division, De-
partment of Justice, forwarded a copy of the court's order
of February 7, 1972, staving action in the case of John W.
Merriam v. Kunzig. et al., United States District Court,
Eastern District of Pennsylvania, Civil Action No. 71-2262.
pending receipt of our decision on a protest covering the
same subject matter initially filed with our Office by the
plaintiff.
The matter presently before the court was initially
brought to our attention by telegram of February 19, 1971,
from Richard B. Herman and Company, agent for John W,
Merriam (Merriam), which questioned generally the pro-
pricty of the negotiation of a lease by the General Services
Administration (GSA), acting on behalf of the United
States, with Gateway Center Corporation (Gateway ) under
solicitation for offers No. NEG(70)-63. By letter dated
April 12. 1971, with enclosures, your Gencral Counsel fur
nished our Office an administrative report outlining the cir
cumstances involved. By letter with enclosures dated May,
28, 1971, Lankler and Parker, counsel for Merriam for pur-
poses of its protest before our Office, responded to the ad-
ministrative report. As a result of counsel's reply, we
requested a further report from GSA. By letter, with en
closures, dated July 9, 1971, we received a reply from your
General Counsel and this supplemental report was mad
available to Merriam’s counsel for comment. By letter
received in our Office on July 22, 1971, counsel responded.
Further submissions were also received from Merriam’
counsel by letters dated August 25, 27 and September 10.
1971.
y2
23a
By letter dated September 16, 1971, we advised Mer-
ram's counsel that we could not authoritatively rule at the
time on the basic question presented by the protest, namely,
whether Gateway met the criteria established by GSA for
the purpose of assuring compliance with the limitation in
the Independent Offices Appropriation Act of 1970 (Public
Law 91-556), which, in effect, precludes the lease of new
constuction unless such construction has already been
committed as a private venture. This action was taken in
view of the fact that we were still in the process of review-
ing GSA’s lease construction practices, with particular
emphasis on its implementation of the appropriation
limitation. Merriam was advised, however, that we would
consider the protest in the context of our report to the
Congress. We were also cognizant of the fact that Merriam
would institute court proceedings in the event of our
declination to rule.
Our review is now complete and our report to the
Congress will be released in the next few weeks. In view of
the court's request for a specific ruling by our Office on the
merits of Merriam’s contention that the award to Gateway
violates the Appropriation Act limitation and in conso-
nance with the principles recently articulated in) The
Wheelabrator Corporation v. Chafee, et al. — F. 2d —
D.C. Cir. Nos. 24.705 and 24,729, October 14, 1971), and
M. Steinthal & Co.. Inc. v. Seamans,. et al... — F.2d —
D.C. Cir. No. 24,595, October 14, 1971), we have consid-
ered the facts surrounding the Merriam protest indepen-
dent of the report. In our view, two separate inquiries are
involved. First, there is question as to the meaning and
application of the Appropriation Act limitation and, second,
there is question as to the impact of the five criteria on
competitive aspects of the procurement, that is, the rights
of contending offerors during the negotiation of a lease
contract.
With respect to the first question, the statutory limita-
tion on the use of appropriations for lease construction pro-
grams Was first included in the Independent Offices Appro-
Q4a
priations Act of 1963, Public Law 67-741. 76 Stat. 723. [y
explaining the proposed statutory limitation. the [lous
Committee on Appropriations stated:
“The General Services Administration wants to
build several new buildings in the District of Columbia
under a lease construction program to provide 1 mil-
lion square feet of additional space. The entire spac
in cach building is to be rented by the Government
With this procedure the Committee disagrees sinc
they are completely financed new buildings unde:
lease construction contracts. The Committee belicves
that the Government should own the buildings instead
of giving somebody a ten to fifteen vear payout.
“The concern of the Committee is that lease con-
struction is clearly the most expensive method of pro-
viding Government space. Under this method the
Government never obtains title to the property
A limitation on use of funds for lease construction
projects costing over $200,000 has therefore been in-
cluded in the bill ° “ H. Rept. No. 2050. 87th
Cong.. 2d sess., at page 13.
In presenting its views to Subcommittee on Indepen-
dent Offices of the Hlouse Committee on Appropriations in
connection with the 1964 appropriations, GSA requested
deletion of the restrictive provision. GSA suggested that the
limitation was inconsistent with the program it Considered
necessary to meet the office space requirements of the
Government. In rejecting GSA’s request. the chairman of
the subcommittee stated:
“Tam afraid the GSA misinterpreted the language
The language was intended absolutely to forbid the
leasing of that space under vour jurisdiction, and re-
quiring of you to come to the proper committees for
authorization. Your language is quite weak. The rea
son vou want this deleted is that vou do not want to
come back to Congress every year for vour funds and
Da
suthorization. In that regard, you are no different from
any other agency that wants back-door authority.”
We believe the statutory limitation and its legislative
history evidence a strong congressional policy against
lease Construction programs. Although this policy is di-
weted primarily against GSA, as opposed to a particular
class of prospective lessors, the basic thrust of any imple-
mentation of the Appropriation Act limitation in the case
of new Construction must be to assure that only construc-
tion already Committed as a private venture is offered to the
Government for rental. In our view, the underlying question
which any administrative implementation of the limitation
must seck to resolve is whether there is a bona fide inten-
tion on the part of the offeror to construct the building of-
fered for lease irrespective of its securing a lease with GSA.
If this is the basic question, as we believe it is, then the fact
that an offered building is not actually in existence is not
decisive.
The five criteria are designed to provide objective
assurance that a particular offeror intends to go forward
with his building irrespective of executing a lease with the
Government—and this is their only purpose. The practical
fleet of meeting the criteria is to create a presumption
werrlding the appropriation restriction against Icasing
space to be created for the Government. Compliance must
be judged on the basis of the circumstances existing at the
time of issuance of the solicitation for offers.
As noted by GSA in its submissions to the court, dis-
cussions were held between representatives of our Office
and GSA prior to GSA’s determination to rely upon the five
criteria. We did not object to use of the criteria because we
could not say that their adoption and proper enforcement
would not adequately insure compliance with the Appropri-
ation Act limitation. We remain of that view.
A basic question, then, is whether there has been bona
lide compliance with cach of the five criteria in this case,
ind we turn to a consideration of the specific circum-
stances involved.
26a
Solicitation NEG(70)-63 was issued on September 30.
1970, for the leasing of 314,000 net usable square feet of
office, storage and related space to be ready for possession
by July 1, 1972. The lease is to be for a period of 20 vears
beginning on the date the space is accepted for Government
occupancy with the right reserved to the Government to
renew the lease for two additional 5-year periods.
The subject solicitation contained the following provi-
SIONS:
“12. SPECIAL CONDITIONS RELATING TO> BUILD-
ING TO BE ERECTED BY BIDDER.
“a. Requirement. Each year since 1963. the follow.
ing provision has been included in the Independent Offices
Appropriations Act:
‘No part of any appropriation contained in this Act
shall be used for the payment of rental on lease agree-
ments for the accommodation of Federal agencies in
buildings and improvements which are to be created
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 least
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
the Congress and approval made in the same manner
as for the public buildings construction projects pur-
suant to the Public Buildings Act of 1959.
“b. Buildings and Improvements to be Erected or Al
tered. In the event a bidder offers (1) a new building to be
erected, or (2) an existing building to be extended or added
to (see C(2\¢), below) such bid shall remain open for ac-
ceptance by the Government for 120 days beyond the date
for bid acceptance elsewhere specificd in this solicitation.
in order to afford the Government adequate time to prepa
and submit to the appropriate Committees of Congress for
Qa
ipproval, the prospectus required by the Act quoted in a.
above.
“c. Definition of Existing Buildings, Extension. and
Additions.
“(1) For the purpose of this solicitation, buildings,
extensions or additions ‘which are to be erected by the
lessor’ do not include:
“(a) Buildings. extensions, or additions, con-
struction of which is substantially completed
prior to date of the solicitation.
“(b) New buildings, or extensions of and
additions to existing buildings the construction
status of which, on the date of issuance of the
solicitation, met all of the following conditions:
“j. Title to the site was vested in the offeror
or he possessed such other interest in and dominion
and control over the site to enable starting construc-
tion.
“ii. Design was complete.
“ii. Construction financing fully committed.
“iv. A building permit for construction of the
entire building, extension or addition had been issued.
“vy. Actual construction is currently in prog-
ress or a firm construction contract with a fixed com-
pletion date has been entered into.” (Emphasis added. )
Gateway submitted the following documentation to
the contracting officer to establish that its offered building
Was within the exception of paragraph c(1 \b):
1. A lease dated September 23, 1970, between
University City Science Center, landlord, and Gate-
Way, as tenant, for a term of 50 years, with an option
to purchase, Opinions of counsel as to the validity of
the lease.
2. A letter from the Provident National Bank,
Philadelphia, Pennsylvania, dated September 15, 1970,
approving a construction loan to the extent of
512,000,000.
28a
3. Building permits issued by the City of Philade.
phia.
4. A construction contract dated September 30.
1970, between Gateway and Rosemont Construction
Corporation.
5. Drawings to demonstrate the design of th
building had been completed.
Since this documentation satisfied the contracting
officer that Gateway met the five criteria set out in the
solicitation, Gateway was included in the negotiations con-
ducted with Merriam and two other sources. Ultimately,
Gatewav’s offer was accepted on February 18, 1971. .
It is Merriam’s position that the award to Gateway
contravenes the Independent Offices Appropriation Act of
1970 (Public Law 91-556) because the documentation
submitted by Gateway does not demonstrate that it ful-
filled the five criteria on September 30. 1970, the date of
issuance of the request for offers.
With respect to the question whether Gateway pos-
sessed “such ~ ~ © interest in and dominion and control
over the site to enable starting construction,” as required
by the first criterion, Merriam points out that paragraph
25 of the lease between University City Science Center
and Gateway expressly provided that it was made pursuant
to a certain redevelopment contract dated November 26.
1965, between the Science Center and the Redevelopment
Authority, the terms of which are to be binding on the ten-
ant. In the referenced agreement between the Redevelop-
ment Authority of the City of Philadelphia (Authority) and
the Science Center, the Authority agrees to transfer title to
the subject property to the Center subject to certain condi-
tions binding on the Center and any transferce thereol.
Paragraph 14 of this agreement provides:
“The REDEVELOPER or its) nominee shall
not sell, lease or otherwise transfer the Project area.
or Project, or any part thereof, without the prior
written consent of the AUTHORITY until the At-
29a
THORITY shall have certified in writing that the
Redevelopment Project has been completed.”
Paragraph 18 of the agreement provides:
“The “-REDEVELOPER or its) nominee shall
submit to the AUTHORITY for its review and ap-
proval all necessary final plans, designs, and speci-
fications for the development of the Project: area,
including architectural and landscaping drawings.
The REDEVELOPER or its nominee shall not com-
mence any work pursuant to such plans, designs or
specifications until approval by the AUTHORITY
is made in writing: however, if no written Communi-
cation is made by the AUTHORITY within thirty
(30) days after such submission, AUTHORITY ap-
proval is inferred, unless the AUTHORITY requests
an additional thirty (30) days for approval. Such
approval shall not be unreasonably withheld.”
In support of its position that the requisite approval has
not been given as of the date of solicitation issuance, Mer-
ram submitted a letter dated March 19, 1971, to a city
councilman from the Executive Director of the Authority.
The letter states in pertinent part:
“In response to your March 13 inquiry, please be
advised that the Redevelopment Authority has ap-
proved no lease between the Science Center and
Gateway Center Corporation for the above site.
“Preliminary plans for the proposed building on
the site were approved in August, 1970. Final working
drawings of the building have not vet been submitted
for our approval. These plans must be submitted
before construction can commence.”
A letter dated April 20. 1971, between the same two
persons states that while the Science Center has requested
the Authority's approval of Gateway, the required documen-
tation had not as of that date been furnished. Another
30a
letter dated September 25, 1970, from the Authority to the
Center states that Gateway is accepted as the Center's
nominee subject, however, to several conditions such as
formal approval by the Authority and the Department of
Housing and Urban Development. The record before our
Office fails to show that the required approvals were
granted as of the date the solicitation was issued,
Your General Counsel's petition in reply is that th
approvals have no bearing on the efficacy of the lease and
notes that Gateway had taken steps to secure the needed
approvals, citing as an example the approval of the pre-
liminary building plans in August of 1970. The point. how-
ever, is that in the absence of the Authority's approval of
the “final plans, designs, and specifications” pursuant to
paragraph 18 of the redevelopment contract between the
Authority and University Citv Science Center, it is difficult
to understand how it can be said under any reasonabk
interpretation of the circumstances and the linguage of the
first criterion that Gateway’s interest on September 30.
1970, was such as would “enable starting construction.”
While failure to meet the first criterion is, in itself,
a sufficient basis to support Merriam’s position, we not
that documentation submitted by Gateway to show com-
pliance with the fifth criterion is also subject to question
We may agree that the construction contract: between
Gateway and Rosemont Construction Corporation literall
complies with the requirement that there be a “firm con-
struction contract with a fixed completion date.” However
Merriam’s contention that Rosemont Construction Cor-
poration is controlled by the same individual who controls
Gateway and that, subsequent to award, Rosemont entered
into a joint venture with a firm with the capacity to perform
the work—a capacity which Rosemont allegedly did not
have—certainly raises question as to whether Gateway
complied with the spirit of the criterion. This question Is
not, in our opinion, adequately answered by your General
Counsel's advice in his Ictter of Julv 9 that Gateway com-
plied with the criterion since actual construction is cur
Sla
rently in progress. The issue is whether Gateway complicd
with the criterion at the time of issuance of the solicitation
for offers.
We might add that if the case turned solely on the
propricty of GSA’s determination that Gateway complied
with the third and fourth criteria, we would be inclined to
deny Merriam’s protest. Insofar as the requirement of the
third criterion that financing be fully committed is con-
cerned, the letter dated September 15, 1970, from. the
Provident National Bank recites that:
“This letter represents our agreement to provide
a construction loan up to a maximum of $12,000,000
subject to the execution of our usual Construc-
tion loan documentation prior to closing. The interest
rate shall be set at market level at the time of closing.”
We cannot say that GSA’s position that this letter satisfies
the requirement that construction financing be fully com-
mitted is unreasonable, for there is no indication that the
commitment is subject to a material condition, such as
Gateway obtaining a lease with GSA.
With respect to the fourth criterion, the question
whether Gateway possessed a building permit for construc-
tion of the “entire” building involves an interpretative issue
and GSA notes in this regard that three permits were issued
to Gateway prior to September 30 by the City of Philadel-
phia Department of Licenses & Inspections for over $12,000
in permit fees. While Merriam urges that Gateway lacked
permits for air conditioning, plumbing and electrical work,
there is, as GSA points out. no indication that the basic
permit is for less than an entire building. More important.
in our view, is the following observation in vour General
Counsel's letter of July 9, 1971, with which we agree:
Whether the word ‘entire: means ‘com-
pleted’ in the sense of total, final construction is a
matter of semantics. GSA does not require the latter
Which is not only impractical but virtually impossible
since in order to meet the SFO [solicitation for offers
aaa
requirements} changes, even in building design, might
be required.
“AL that is required is that a permit has been
issued for the building offered. .
The clear implication of Merriam’s position with re-
spect to GSA’s determination that Gateway complied with
the five criteria, particularly insofar as the first and fifth
criteria are concerned, is that a reasonable attempt to
verify or assure the adequacy of the documentation sub-
mitted was not made. From the record before us, we must
agree. The attitude of GSA is also reflected in its treatment
of the requirement of the second criterion that the design
be “complete.” From the record, it appears to us that
GSA considered that this requirement was complied with
by virtue of the approval of the preliminary plans by the
Authority in August of 1970, the bank commitment and the
issuance of building permits by the City of Philadelphia.
This conclusion appears to be bolstered by your General
Counsel’s advice that the drawings were submitted by
Gateway only for the purpose of aiding the contracting
officer in evaluating the space in terms of potential use.
layout, etc. This interpretation fails, in effect, to accord
any independent meaning to the second criterion.
We should add at this point that by letter dated Febru-
ary 17, 1972, Merriam’s counsel submitted for our con-
sideration certain depositions and affidavits (which we
understand are part of the record before the court). We
also received a further letter dated February 28, 1972, from
counsel, forwarding a copy of University City Science
Center's deed to the property. While we believe that reli-
ance on this additional documentation is unnecessary to
support our conclusion, we have examined the documen-
tation and find nothing therein which would detract from
Merriam’s position.
We recognize that since GSA is charged with the
primary responsibility for insuring compliance with the
Appropriation Act limitation, its interpretations concer
ing application of the criteria in any given case must bi
S32
accorded great weight. Its determination if reasonable
should stand notwithstanding that an alternative ap-
proach might appear to be more reasonable. We have
expressed our opinion in light of this standard. To sus-
tain GSA’s determination here, we would have to say that
it was under no duty to conduct a reasonable and inde-
pendent examination of a particular offerors compliance
with the criteria, including When necessary a request for
additional information to resolve reasonable doubts about
compliance. Such a conclusion would sanction a complete
evasion of the Appropriation Act limitation.
We come now to the corrective aspects of the pro-
curement. Although it is our opinion that the agreement to
lease is improper by reason of Gateway’s noncompliance
with some of the criteria as of the date specified, it does not
follow that Gateway must be excluded from any resolici-
tation of the requirement, as Merriam urges. While non-
compliance with the criteria implementing the Appropria-
tion Act limitation at the date of issuance of a particular
solicitation for offers may be decisive as to the eligibility of
a particular prospective lessor to participate in’ these
negotiations, we do not believe this alone would preclude
that proposer from participating in future negotiations.
Elimination of Gateway from future participation would
release to the competitive aspects of GSA’s lease procure-
ments—namely, the right of interested sources to compete
equally for lease awards. As we indicated, this question is
separate from an inquiry relating to the appropriation
restriction. Insofar as the latter question is concerned. we
find nothing in the limitation itself which would bar an
diferor such as Gateway from future participation. See
B-193036, September 2, 1964, wherein we expressed no
objection to the subsequent execution of a new lease with
an offeror who did not comply with the limitation at the
time the original lease was executed.
From the competitive standpoint, it has long been our
position that the Government has the duty to secure mani-
mum competition in its procurements. The rights of pro-
34a
spective offerors to exclude other sources from any com-
petition are clearly subordinate to) the Governments
obligation to secure maximum competition. Morcover, in
this context, as Merriam’s counsel recognizes in his letter
of March 7, 1972, the elimination of Gateway from further
participation would require a determination that Gateway
Was not a responsible prospective contractor because of .
lack of integrity.
We cannot ignore the fact that Gateway has made sub-
stantial construction progress in reliance on GSA’s assur:
ance that it complied with the Appropriation Act limita-
tion. Merriam would have us disregard the equities in favor
of Gateway stemming from reliance upon determinations
made by GSA. Merriam urges that if Gateway had truly in-
tended to construct a building irrespective of executing a
Government loan, there is no real harm done to Gateway
in concluding that its lease with GSA is invalid for having
failed to comply with solicitation requirements.
But such approach begs the question. If in fact it was
certain that Gateway fully intended to construct the build-
ing in question apart from GSA interest, there would be
little question concerning validity of the lease in terms of
the operative appropriation restriction. And it would be
difficult to construe as a fatal defect any failure to meet
solicitation criteria design solely to establish such intent.
In the instant case an issue arises only by reason of the fact
that it is not clear as to Gatewav's intent apart from GSA
interest. In the circumstances we find it difficult to reach
a conclusion that would penalize Gateway for having relied
upon the Government's own determination in this matter.
Moreover, we belive that the issues posed by this cas
are broader than the isolated circumstance of a single leas
transaction. GSA’s implementation of the appropriation
restriction compliance criteria in the instant case is not
unique, as our report to the Congress will demonstrate.
and there is substantial likelihood that numerous other
lessors are similarly situated. Thus. the magnitude and
seriousness of the problems created by GS.A’s administt:
eval
tion of the Criteria leads us to conclude that the appro-
priate course of action for our Office is to draw the entire
matter to the attention to the Congress for its consider-
ation and possible corrective legislative action.
In light of the above conclusions we do not propose to
initiate anv question (in the context of the issues discussed
herein) with respect to payments under existing leases.
However, We must advise that we have no alternative to
raising objection to payments under any Tease executed
after the date of this decision without proper regard for
the restriction against Icasing buildings to be erected for
the Government, where the restriction is operative both
atthe ume of the lease execution and at the time of pav-
ment.
Sincerely vours,
R. F. KELLER
Deputy Comptroller General
of the United States
the Honorable Frederick F. Kreger
Acting Administrator
General Services Administration
36a
IN THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re:
JOHN W. MERRIAM
v. Date: June 26, 1979
ROBERT L. KUNZIG,
Administrator, No: Civil Action 71-2262
General Services
Administration, et al.
This is to advise you that Judge John B. Hannum filed
Opinion and Order DISMISSING Plaintiff's Com-
plaint.
THE CLERK'S FEE IS $20.50
for said Opinion, Memorandum and/or Order
JOHN J. HARDING, ESQ.
CLERK
By J. M. YAWORSKI (Miss
Deputy Clerk
Notice to:
C. Clark Hodgson, Jr... Esq.
Goodis. Greenfield, Henry,
Shaiman & Levin, Esqs.
Simons. Kashkashian, Nissenbaum
& Kellis. Esqs.
Obermayer, Rebmann, Maxwell
& Hippel. Esqs.
Copies To:
Carl J. Melone, U.S. Attorney
37a
IN THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
OPINION AND ORDER
HANNUM, J. June 26th, 1972
On September 30, 1970, the defendant General Ser-
vices Administration (hereafter, GSA) solicited bids for
the lease of office space for several federal agencies located
in the City of Philadelphia. On February 18, 1971 GSA
awarded a 20 year Iease to Gateway Center Corporation
‘hereafter, Gateway), the builder of a new office building
yet to be constructed. The plaintiff, John W. Merriam
hereafter, plaintiff), is the owner of the Curtis Building,
a twelve story office building located at Independence
Square in Philadelphia. He, as an unsuccessful offeror of
office space, has filed the present action seeking, inter alia,
a declaratory judgment that the award to Gateway was
illegal, an injunction prohibiting the defendants from
executing the lease contemplated by the award, and an
order compelling GSA to reconsider those offers, other
than Gateway’s, that were responsive to the original solici-
tation. Presently before the Court is the defendant's motion
for summary judgment pursuant to Rule 56, Fed. R. Civ. P.
28 U.S.C. To deal with the legal questions raised a detailed
statement of the facts underlving this controversy is
required.
HISTORY OF THE CONTROVERSY
By Presidential directive dated March 27. 1969, the
regional boundaries of the Department of Labor, Housing,
and Urban Development, Health, Education and Welfare,
and the Office of Economic Opportunity were realigned in
order to promote their efficiency and to improve their
38a
service to the general public. The City of Philadelphia was
designated one of several regional headquarters for cach of
these agencies. The GSA. charged with the responsibility
of providing space for government agencies. implemented
the Presidential mandate by adopting a policy requiring thy
realigned agencies to be headquartered in the same build
ing where feasible. As a consequence of this policy and duc
to the lack of adequate government-owned office space. 4
need was created in Philadelphia for approximately 314.000
net useable square feet of office, storage. and related
space!
Following an effort to develop competition in the real
estate market to supply the required space, GSA conducted
a market survey between January 21 and January 28.
1970. During this interval, on January 25 and again on
January 28, the Governments interest in acquiring the
desired amount of space was advertised in an area news
paper, the Philadelphia Inquirer. Thereafter. thirty-six
persons or firms expressed an interest in supplying the
Government's needs.?
On September 50, 1970. at the direction of A. F.
Sampson, Commissioner of GSA’s Public Buildings Service
Solicitation for Offers No. NEG (70-65 was issued to the
plaintiff and twenty-five other prospective offerors in the
metropolitan area. In response to the solicitation a total
of five offers. including the plaintiff's, were received. One
bid was withdrawn and another determined to be non-
responsive. Consequently. only three bids remained for
GSA's consideration, the plaintiff's, Gateway Center Cor-
poration’s, and a third, not relevant to the present con-
troversy. On February 18. 1971. Robert L. Kunzig. \d-
ministrator of GSA, upon the recommendation of Commis-
sioncr Sampson, authorized the Latter to make the presents
disputed award to Gateway Center Corporation.* On
1. Complaint. paras. 2.6. 7. Parker Affidavit. Exhibit A
2 Motion for Summary Judgment. Sampson Affidavit
3. Complaint, paras. 4. 5. 8. Motion for Summary Judgment.
Sampson Affidavit.
19.4
bewuars 19) F971 phantlf protested the award to the
Gemral Accounting Otfice hereafter, GAO. which, on
Sptember 16, 19TE. advised his counsel that it did not
fed that it Could rule authoritatively, on the protest: at
thet me? The phanetf filed this law suit on the same
date
On November 17. 1971. plaintiff moved for a prelimi-
nary injunction requesting that GSA be restrained from
exccuting the Gateway lease and moved under Rule 37,
Fed. R. Civ, PL. 28 USC. for a prompt bearing. On No-
vember 19. the defendants filed a motion for summary
judgment which. in addition to secking judgment as a
matter of law. Challenged the jurisdiction of this Court and
the plainuff’s standing to sue. On November 23, the de-
hndants filed answers to both of the plaintiff's motions
and. in light of the jurisdictional issues raised by their
motion for summary judgment. requested the Court to
defer any hearing on the plaintiff's motions until the
motion for summary judgment had been resolved. At a
pre-trial Conference om December 9. plainuff withdrew
his motion for a preliminary injunction upon the repre-
vntation of the Government that no lease would be exe-
cuted with Gateway until the construction of its building
had been completed. Thereafter, on February 7, 1972.
this Court staved its hand for thirty davs in order to allow
the Comptroller General of GAO to rule on the merits of
the plaintiffs protest and thereby provide the Court with
the benefit of the GAO's expertise in the arca of bid protests.
See, M. Steinthal & Co. ©. Seamans. 455 F.2d 1289 (D.C.
Cir, 1971). On March 17. 1972. the Comptroller General
issued his ruling.* Having the benefit of GAO's views. the
Court must still resolve the questions of jurisdiction and
standing raised by the defendants
NATURE OF THE CONTROVERSY
The administrator of GSA is empowered to center
into Jease agreements necessary for the accommodation of
1 Douglas Mo Parker Affidavit. Exhibit E.
> Appendix A to this Opinion. [See page —— supra. |
oo
So APB E
4a
federal agencies by virtue of Section 210 of the Federal
Property and) Administrative Services Act of 1949, as
amended, 40 U.S.C. §490¢h i) (1970):
“The Administrator is authorized to enter into Jease
agreements with any person, copartnership, corpo:
ration, or other public or private entity, which do
not bind the Government for periods in cxcess of
twenty vears for each such lease agreement, on such
terms as he deems to be in the interest of the United
States and necessary for the accommodation of
Federal agencies in buildings and = improvements
which are in existence or to be erected by the lessor
for such purposes and to assign and reassign space
therein to Federal agencies.” (Emphasis added)
Since 1963, annual appropriations for GSA’s opera-
tions have contained the following restriction with regard
to payments to be made by GSA for the lease of buildings
vet to be constructed by the lessor. The restriction first
appeared in the Independent Offices Appropriation Act.
1963, Act of Oct. 3, 1972, P.L. 87-741, tit. I, 76 Stat. 728:
“No part of any appropriation contained in this
Act shall be used for the payment of rental or Tease
agreements for the accommodation of Federal agen-
cies 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 exccutes such
a lease agreement: Provided, That the foregoing pro-
viso 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 Com-
mittees of Congress in the same manner as for public
building construction projects pursuant to the Public
Buildings Act of 1959. (Emphasis added)
During the period presently in controversy, essentially the
same restriction appeared in both the Independent Offices
a ee,
Matin at
4a
and Department of Housing and Urban Development
\ppropriation Act, 1970, Act of Nov. 26, P.L. 91-126, tit.
|, 83 Stat. 229, and the Independent Offices and Depart-
ment of Housing and Urban Development Appropriation
Act. 1971, Act of Dec. 17, 1970, P.L. 91-556, tit. IT, 84 Stat.
1449 ‘hereafter, 1.0.A.A.).
In April and May of 1964 informal discussions were
held between representatives of the General Services
Administration and the General Accounting Office in an
effort to determine the impact of the foregoing restrictions
upon the basic authority of the Administrator to enter into
lease agreements for the accommodation of Federal
agencies. GSA’s purpose was to interpret the boundarics
of the term “to be crected™ and thereby create workable
criteria by which the restriction could be observed. These
discussions gave birth to what have come to be known as
the “5 conditions” which, when met by a lessor of a build-
ing “to be erected.” have been interpreted by GSA_ to
relieve it from the restrictive language of the Appropria-
tion Acts. Should the lessor of a building to be constructed
ata cost in excess of $200,000 certify its compliance with
the five conditions, GSA would deem the building to be
in existence already and thereby eliminate the need for
Congressional approval of a prospectus. The five condi-
tions required to be met by a lessor on the date of the
issuance of an invitation for bids are satisfied if:
“G) ~~ Title to the site was vested in the bidder or the
bidder possessed such other interest in and
dominion and control over the site to enable
starting construction;
(i) Design was complete:
(iii) Construction financing fully committed:
(iv) A building permit for construction of the entire
building. extension or addition had been
issucd:
Wat
() 0 Acti Construction is currently in’ progress
or « firm comstruction Contract: with a fixed
completion date has been entered into.”6
These conditions were put into effect on Mav 15, 1964 by 4
memorandum from John W. Chapman, Assistant Commis.
sioner for Space Management, to all Regional Administra-
tors of GSA. As of that date they were designated for
inclusion in all solicitations for bids where new construc.
tion was requested or permitted. Ino addition to having
been included in the solicitation for bids involved in the
present dispute, they have been included in thirty other
solicitations issued by GSA since 1964.7
In response to the solicitation issucd in the case at
bar, the plaintiff submitted a responsive offer of office
space in a building that has been in existence for many
years. The building offered by Gateway. however, was,
and is. vet to be constructed. As planned, it will stand in
the University Citv Science Center at 36th and Market
Streets in Philadelphia and will be a modern fifteen stor
building providing fourteen consecutive floors of uniform
office space. The cost of construction will be in excess of
510.600 ,000.
To certify its compliance with the “5 conditions” for
being considered a building in existence, Gateway sub-
mitted with its offer the following documentation:
1 =A lease from University. City Science Center
dated September 23, 1970, accompanied by
letters from counsel for both Gateway Center
Corporation and University City Science Center
of the same date, stating that in their opinion the
lease was a valid and binding instrument.*
2. Building plans and specifications.®
6. Motion for Summary Judgment. Shipp Affidavit.
7. Id
8 Motion for Summary Judgment. Sampson Affidavit. At
tachment 2
9. Id.. Attachment 3
43a
3. A letter from Allan C. Kirkman, Assistant Vice
President of Provident) National Bank, Phila-
delphia, Pa., dated September 15, 1970, commit-
ting the bank to provide a construction loan up
to $12,000,000. !°
4. A building permit issued by the City of Philadel-
phia Department of Licenses and Inspections
dated September 30, 1970."!
5. <A construction contract between Gateway Cen-
ter Corporation and Rosemont Construction
Corporation, dated September 30, 1970, for the
construction of University Citv Gateway Building
No. 1 at the Northeast corner of 36th and Market
Streets, Philadelphia, Pa., per plans and _ speci-
fications of Norwicki and Polillo. Architects,
dated September 14, 1970.'”
In Count 1 of plaintiffs Complaint it is contended
that GSA’s acceptance of Gateway's offer was illegal
because it violated the requirements of the 1.0.A.A. of
1970. and that the defendants Kunzig. Sampson, and
Shipp acted arbitrarily, capriciously, and unlawfully
because they were instrumental in its acceptance. Spe-
cifically, it is averred that the acceptance of an offer to
construct a fifteen story building costing in excess of ten
million dollars and in which federal agencies will be the
sole tenants, required the submission. of a lease pros-
pectus to Congress and its prior approval.
In Count Il of the Complaint the defendants are
charged with arbitrarily and unlawfully interpreting the
which are to be erected by the lessor” language of the
10.A.A. by prescribing the “5 conditions” and substituting
these conditions for the statute they purport to interpret.
lt is averred that the defendants were not authorized to
interpret the 1.O.A.A.. and that it constitutes a firm con-
10. Id.. Attachment 4.
11. Id., Attachment 5.
12. Id., Attachment 6.
Ada
gressional mandate restricting GSA’s authority to enter
into lease agreements for the accommodation of federal
agencies. The plaintiff contends that under the 1.O.A\.\.
it was GSA’s duty to determine whether or not Gateway
intended to build a building independent of the prospect
of a government lease, and that GSA failed to perform this
duty.
Count I, which is stated in the alternative, accepts
arguendo the proposition that the defendants were
authorized to use the “S conditions” as a valid statutory
interpretation of the L.O.A.A. Nonetheless, it is alleged
that the defendants were derelict in their duty by accept-
ing. without investigating, Gateway’s representations. It
is averred that Gateway made representations in the offer,
including the documentation submitted in support thereof,
purportedly certifying that the offer complied with the five
conditions of the solicitation, whereas, in truth, such rep-
resentations were false and intentionally misleading.
SUBJECT MATTER JURISDICTION
The first question to be dealt with in this controversy
is whether federal jurisdiction exists. In his complaint. the
plaintiff has alleged that the matter in’ controversy
exceeds $10,000, exclusive of interest and costs. He has
invoked federal jurisdiction on the basis of tithe 28 U.S.C
$1331 (federal question), $1361 (mandamus), §§2201-02
(declaratory judgment), title 41 U.S.C. $11 (limitation on
public contracts), and tithe 5 U.S.C. $702 ($10 of the
Administrative Procedure Act). Because 28 U.S.C. §153
definitely provides federal jurisdiction in the present case.
there is no need to resolve the open question in this
Circuit as to whether §10 of the APA provides an inde-
pendent source of jurisdiction in federal courts for review
of agency action.
Title 28 U.S.C. $133.16 a) provides:
“The district’ courts shall) have original jurisdic-
tion of all civil actions wherein the matter in conto:
45a
versy exceeds the sum or value of $10,000, exclusive
of interest and costs, and arises under the Constitu-
tion. laws, or treaties of the United States.”
Crucial to the determination of whether federal jurisdic-
tion exists under §1331 in the present case are the ques-
tions of Whether the matter in controversy exceeds $10,000.
exclusive of interest and costs, and whether the contro-
versy “arises under” a law of the United States.
There can be no doubt that the plaintiff has satisfied
the jurisdictional amount requirement. He claims that
GSA’s action has caused him to suffer the loss of a pros-
pective beneficial business relationship with the Govern-
ment. Further, he claims a right to protect that prospec-
tive relationship by having GSA’s allegedly illegal award
to Gateway set aside. Should such a right exist. it would
renew the plaintiff's prospect of a business relationship
with the Government which would involve an annual
amount in excess of $2,000,000. Although the value of the
prospective business relationship sought to be protected
by the plaintiff would not equal the amount of the lease at
stake. it certainly has a value in excess of $10,000 for
jurisdictional purposes.
Similarly, there can be no doubt that the present
controversy “arises under” a law of the United States. The
basis for the plaintiff’s suit. for which the plaintiff claims
dright of redress under the APA, is GSA’s asserted viola-
tion of the 1.0.A.A. of 1970. Central to the plaintiff's claim
isa judicial construction of the LO.A.A. Whether or not the
plaintiff is the proper party to redress GSA’s possible vio-
lition of a federal law requires a determination of his
suunding to sue. Whether or not the plaintiff has stated
cause of action upon which relief can be granted
requires a judgment on the merits. However, for a federal
court to have jurisdiction, and therefore the power to
mter a judgment upon the merits, it is sufficient that
the plaintiff plead a right to recovery or redress directly
volving a Controversy respecting the construction
or effect. of a law of the United States. Gully oc. First
46a
Nat. Bank in Meridian, 299 U.S. 109, 114 (1936). Inasmuch
as a direct violation of a federal law has been pleaded in
the present case, and since the claim does not appear
immaterial to the law pleaded or “wholly insubstantial
and frivolous,” this Court has jurisdiction over the subject
matter of the present litigation. Bell v. Hood. 327 U.S. 678.
682-83 (1946); State of Delaware v. Pa. N.Y. Cent. Trans.
Co.. 323 F. Supp. 487, 493-95 (D.Del. 1971): Pennsylvania
Environmental Council, Inc. v. Bartlett, 315 F. Supp. 238.
240 n.1 (M.D. Pa. 1970); A. G. Schoonmaker Co. ¢. Resor.
319 F. Supp. 933, 940 (D.D.C. 1970).
STANDING
As this case has developed, the most difficult question
facing this Court has been the determination of the plain-
tiff “s standing to sue.
In general, the question of whether a party has stand-
ing to sue is the question of whether he has a sufficient
stake in an otherwise justiciable controversy to obtain
judicial resolution of that controversy. Sierra Club ¢.
Morton, 92 S.Ct. 1361, 1364 (1972). “The fundamental
aspect of standing is that it focuses on the party seeking to
get his complaint before a federal court and not on the
issucs he wishes to have adjudicated.” Flast v. Cohen, 392
U.S. 83. 99 (1968). Like the justiciabilitvy of the issues
sought to be adjudicated, questions of standing must be
determined within the framework of Article HI which
restricts federal judicial power to “cases” and “contro-
versics’. Flastv. Cohen, supra; Association of Data Process-
ing Service Organizations, Inc. v. Camp, 397 U.S. 150, 151
(1970). As was stated in Sierra Club v. Morton. supra,
1364-65:
“Where the party docs not rely on any specific
statute authorizing invocation of the judicial process,
the question of standing depends upon whether the
party has alleged such a ‘personal stake in the outcome
478
of the controversy’, Baker v. Carr. 369 U.S. 186, 204.
as to ensure that ‘the dispute sought to be adjudicated
will be presented in an adversary context and in a form
historically viewed as capable of judicial resolution’.
Flust v. Cohen, 392 U.S. 83, 101. Where, however,
Congress has authorized public officials to perform
certain functions according to law, and has provided
by statute for judicial review of those actions under
certain circumstances, the inquiry as to standing
must begin with a determination of whether the
statute in question authorizes review at the behest of
the plaintiff.”
In Sierra Club, a membership corporation Composed
of conservationists sought a declaratory judgment and
injunction to restrain the United States Forest Service and
the Department of the Interior from granting approval or
issuing permits for the building of a recreational develop-
ment, aspects of which allegedly violated federal laws
governing the preservation of national parks, forests. and
game refuges. The Sierra Club sought judicial review relv-
ing upon §10 of the Administrative Procedure Act (APA),
3 U.S.C. §702. The plaintiff in the present case proceeds
on the same basis.
To determine a plaintiffs standing to initiate revicw
under $10 of the APA, the Supreme Court referred to its
analysis of the same question in the companion cases of
Association of Data Processing Service Organizations.
Inc. v. Camp, 397 U.S. 150. and Barlow v. Collins. 397
US. 157 (1970). There, two important criteria were set
forth when the Court held:
that persons had standing to obtain judicial
review of federal agency action under $10 of the APA
where they had alleged that the challenged action
had caused them ‘injury in fact’, and where the alleged
injury Was to an interest ‘arguably within the zone of
interests to be protected or regulated’ by the statutes
that the agencies were claimed to have violated.” 92
S.Ct. at 1365.
48a
Under the facts of the present case, the plaintiff has
little difficulty in meeting the first criteria set forth in
Data Processing and reiterated in Sierra Club. The plain-
tiff has alleged that the loss of a prospective beneficial
business relationship has caused him irreparable damage.
In cach count of the complaint he alleges that he is “ag.
grieved and palpably injured” by the defendants’ alleged)
egal action. From the facts in this case, there can be
little doubt that the plaintiff has suffered the “injury in fact’
necessary to provide standing to initiate review unde
$10 of the APA.
The plaintiff, however, encounters greater difficulty
in demonstrating that he comes within the second criteria,
that the interest he seeks to protect is “arguably within the
zone of interests to be protected or regulated” by the statute
claimed to have been violated by the defendants.
To determine the zone of interests to be protected by
the 1.0.A.A. requires analysis of its legislative history. The
language requiring GSA to submit a prospectus to Congress
prior to entering into a lease construction contract for a
building costing more than $200,000 first appeared in the
1.0.A.A. of 1963. The purpose for the restriction is set
forth in the report from the Committee on Appropriations.
H.R. Rep. No. 2050, 87th Cong.. 2d Sess. 13 (1962). The
relevant language reads:
“The General Services Administration wants to
build several new buildings in the District of Columbia
under a lease construction program to. provide |
million square feet of additional space. The entire
space in cach building is to be rented by the Govern-
ment. With this procedure the Committee disagrees
since they are completely financed new buildings
under lease construction contracts. The Committee
believes that the Government should own the build-
ings instead of giving somebody a ten to fifteen vear
pavout. The concern of the Committee is that lease
construction is clearly the most expensive method of
providing Government space. Under this method ti
49a
Government pays rent at $4 to $4.25 per square foot
per year and never obtains title to the property. A
limitation on use of funds for lease construction
projects. costing over $200,000 has therefore been
included in the bill, but it provides that a project
may proceed after obtaining legislative approval in
advance of a commitment in the same manner as for
public building construction projects financed by
direct appropriations pursuant to the Public Buildings
Act of 1959.”
From the foregoing, it is apparent that, by enacting
the restrictive provisions of the Act. Congress was solely
concerned with achieving economy in Federal spending.
The very fact that this restriction has repeatedly appeared
in annual appropriation legislation, rather than in an
amendment to the basic Jeasing authority of the Adminis-
trator serves to reentorce this view. That which is to be both
protected and regulated is the Federal budget. The interests
to be protected are those of the Government and of the
gneral public in minimizing governmental expenditures.
The question then, is whether the specific interest sought
to be protected by the plaintiff falls “arguably” within this
zone.
The specific interest of the plaintiff as it appears in the
complaint is stated to be:
that the offers which were responsive on the
date the bid period closed be considered for the award
and that it be made in accordance with applicable
federal statutues. .. . [T]he interest) [asserted] is
the same as any bidder possesses in public contract
cases; an interest in having the government, in its
business dealings with the public, proceed according
to law."
the plaintiff concedes that his specific interest is not
mong the interests sought to be protected by the
13>. Plamuff s Supplemental Brief. 21-22
es
Oa
LOANS! But he argues that he has standing to protect
the public interest.as a private attorney general’, and that.
as such, the “zone of interests” requirement. of Duty
Processing should be liberally construed “to enable any
plaintiff to ‘argue’ that he has an interest: protected oy
regulated within a given statute." In support of. this
proposition the plainuff advances a recent line of Cases
from the District of Columbia commencing with Scanuel!
Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970,
Scanwell involved a bid protest similar to the present.
The Federal Aviation Administration had issued an invita-
tion for bids on instrument landing systems to be installed
at airports. Scanwell Laboratories was an unsuccessful
bidder who had submitted the second lowest bid. Becaus
the lowest bidder had allegedly failed to comply in all
respects with the invitation for bids, Scanwell filed-suits to
have its acceptance set aside claiming that the FAAS
award of the contract to an allegedly non-responsive bidder
Was arbitrary, capricious, and a violation of the statutor
provisions controlling government contracts. Judicial
review was sought on the basis of §10 of the APA. Although
the district court had dismissed the suit for lack of stand-
ing, the District of Columbia Circuit reversed, holding that
Scanwell had standing to sue as a “private attornes
general”:
“Thus the essential thrust of the appellant's claim
on the merits is to satisfy the public interest in having
agencies follow the regulations which control govern:
ment contracting. The public interest in preventing
the granting of contracts through arbitrary or capri
cious action can properly be vindicated through a suit
brought by one who suffers injurv as a result of the
egal activity, but the suit itself is brought in the
14. In his brief he states, “Can this Court find the plainutt s
interest specifically identified in the statute or legislative histor
certainly not.” Plaintiffs Supplemental Briet. 23.
15. Id.. at 17.
Pee;
Sha
public interest by one acting essentially as a precate
attorney general,” AA F.2d 859, bob emphasis added
The “private attornes general doctrine developed
during a period in which standing was held to be licking
unless the interest sought to be protected constituted © a
legal right. —one of property, one arising out of Contract.
one protected against tortious invasion, or onc founded on
a statute Which conters a privilege”. Tennessee Electric
ower Co. v. TVA, 306 U.S. 118, 137-38 (1939); Perkins co.
Lukens Steel Co.. 310 U.S. 313, 325 (1940). The concept
was designated to permit those with less than recognized
legal rights to establish an otherwise lacking “case” or
controversy” by acting as private attorneys general to
vindicate the interest of the public in preventing unlawful
agency action. It was first emploved in Associated Indus-
tries v. Ickes, 134 F.2d 694 (2 Cir. 1943), vacated as moot,
20 U.S. 707 (1943), where an association of coal con-
sumers sought to challenge an order of the National
Bituminous Coal Commission increasing the minimum
prices of coal. Judge Frank advanced the theory to recon-
cile two previous decisions of the Supreme Court, FCC v.
Sunders Bros. Radio Station. 309 U.S. 470 (1940), and
Seripps-Howard Radio v. FCC, 316 U.S. 4 (1942), with the
legal right” doctrine. In Sanders and Scripps-Howard.
radio stations suffering increased competition as a result
of FCC action were granted standing on the basis of
402(b\ 2) of the Communications Act!® which provided
ieview for persons “aggrieved” or “adversely affected” by
decisions of the Commission. In Associated Industries.
Judge Frank granted standing on the basis that the peti-
lioners were persons “aggrieved” within the meaning of
the review provision in the Bituminous Coal Act of 1937;!7
“. . Congress can constitutionally cnact a statute
conferring on any non-official person, or on a desig-
16. Act of June 19, 1934. c. 652. tit. IV. $402(b\ 2), 48 Stat.
1093
Iv. Act of April 26, 1937, ¢. 127. $6(b), 50 Stat. 85.
a2a
nated group of non-official persons, authority tp
bring a suit to prevent action by an officer in viola.
tion of his statutory powers; for then . ~~ there is ap
actual controversy, and there is nothing constitu.
tionally prohibiting Congress from empowering any
person, official or not, to institute a proceeding jp.
volving such a controversy, even if the sole purpose
is to vindicate the public interest. Such persons, so
authorized, are, so to speak, private Attorney Generals.
“. . TL then. one is a ‘person aggrieved’, he has
authority by review proceedings under §6(b), to vin-
dicate the public interest involved in a violation of
the Act. . . . even if he can show no part or threat-
ened invasion of any private legally protected substan-
tive interest of his own.” 134 F.2d 69-4, 704-05.
Scanwell was decided when the weight of advers
commentary and decisional law was) pressing for th
abandonment of the legal right doctrine in) government
contract cases. After analysis of its legislative history. it
was held that Congress had intended to incorporate th
private attorney general concept into the Administrative
Procedure Act. As a result. it was held that the APA pro-
vides standing to any person “in tact agurieved™ by agency
action. In so holding, the court reper ted the legal right doc
trine and reduced the requirements for standing to the
minimum necessary to provide a constitutional “case” oF
“controversy. In Data Processing, however, decided less
than one month later, the Supreme Court did not go as far
In requiring Complainants to demonstrate “injurv in fact
it. too, rejected the legal right doctrine, but it added the
non-constitutional requirement that the interest sought to
be protected by the complainant be arguably within the
zone of interests to be protected or regulated by the statut
Claimed to have been violated. [tis clear that the Scanwell
decision did not include, and therefore did not consider.
this requirement.
The District of Columbia Circuit may have been
correct in its analysis of the APA's legislative history. Bui
ysuming that it was. it is impossible to assume further
that the Supreme Court intended the private attorney gen-
eral concept “arguably” to supply the interest necessary to
meet the “zone of interests” requirement. That requirement
is inherently restrictive. It is antithetical to the private
attorney general concept which would apply to any plaintiff
who challenged an agency's violation of any statute. If, in
Data Processing, the Supreme Court intended to permit any
person injured in fact to have standing as a private attor-
ney general under the APA, then the zone of interests re-
quirement would have been surplusage and never imposed.
Consequently, there is litthe basis for accepting the plain-
tiffs contention that the Scanwell decision placed him
arguably” within the zone of interests necessarv to confer
standing."* Because the specific interest of the plaintiff
18. The cases decided after Scanwell and Data Processing do
not alter this conclusion. In Ballerina Pen Company v. Kunzig.
433 F.2d 1204 (D.C. Cir. 1970), Data Processing was followed
and the interest sought to be protected by the plaintiff was held
wo be arguably within the zone of interests sought to be protected
by the Wagner-O Davy Act. In Blackhawk Heating & Plumbing Co
© Dreer, 433 F.2d 1137 (DC. Cir. 1970), however, the court only
restated the requirements of Data Processing. applying in fact the
requirements of Scanwell. In A. G. Schoonmaker Co.. Inc. wv.
Rewr. 319 F.Supp. 933 (D. D.C. 1970), Data Processing was not
considered and Scanwell was followed without analysis. In Shan-
non i. U.S. Dept. of Housing and Urban Dev.. 436 F.2d 809 (3
Cw. 1970). the interest sought to be protected by the plaintiff was
held to be arguably within the zone of interests to be protected by
the Housing Act of 1949. In American Standard. Inc. v. Laird.
326 F.Supp. 492 (D. D.C. 1971), Data Processing was not con-
sidered and Scanuwell was followed without analysis. In Citizess
to Preserve Overton Park. Inc. v. Volpe. 401 U.S. 402 (1971). no
question of standing was raised. And in National Helium Corp
Morton. 326 F.Supp. 151 (D. Kan. 1971), M. Steinthal & Co. ce.
Seamans, 455 F.2d 1289 (D.C. Cir, 1971). and Wheelabrator Corp
i. Chafee. 455 F.2d 1306 (D.C. Cir, 1971). Data Processing was
not considered and Scanu ell was followed without further analysis
Not all courts have overlooked the conflict between Scan ell
and Data Processing. See. ¢.g.. Gary Aircraft Corp) vu. Seamans
WUS.LAW. WD. Tex. May 8. 1972) which. to the extent that it
applies the Duta Processing zone ot interest requirement. is adopted
by this Court.
54a
cannot reasonably be considered to be included in the zone
of interests to be protected or regulated by either. the
1.0.A.A. of 1970 or 1971, this Court is forced to conclude
that the plaintiff lacks standing to sue and that his com-
plaint must be dismissed.
My decision is compelled by the present state of the
law, vet considering the nature of the remedy available to
the plaintiff had he standing and were he to prove his
case, his present status may simply be an advancement of
the inevitable. He concedes that this Court is not em-
powered to make a contract for him. His remedy, at best,
would be to have the award to Gateway set aside. Such
action suggests one of two results: that the Government be
compelled to award a lease to cither the plaintiff or the
other remaining responsive offeror, or, that the Govern:
ment be compelled to resolicit bids altogether. If the latter
course of action were adopted, the additional question
would be raised as to whether Gateway should be excluded
from further competition.
The wholesale exclusion of Gateway in either case
would have to be weighed against the public interest in
having the federal socio-economic agencies housed in a
location which would provide optimal impact for the
services to be provided and in a structure that would
facilitate the highest interdepartmental efficiency.
The present record reflects major differences between
the location and building offered by Gateway and those
offered by the two other responsive bidders.!* Of con-
siderable significance ‘is the high preference accorded the
Gateway location by all Federal, State, and local agencies
consulted.2° It is clear that were Gateway to be excluded
to vindicate one public interest, it would be done so only
at the expense of another.
In its decision not to object to GSA’s action, GAQ
suggests that nothing beneficial would be accomplished by
upsetting the present award in order to satisfy the plain-
19. See Appendix B. Commissioner Sampson's recommenda
tion of February 18, 1971, p. 3-4.
20. Id., 5-8
55a
tiffs asserted right) to. reconsideration.2!- The positive
aspects of the Gateway project are manifest. If there has
been harm in GSA’s action, it has been harm in the method.
not in the result.
ORDER
AND NOW, this 26th day of June, 1972. it is OR-
DERED that the Plaintiff's Complaint be, and is, hereby
DISMISSED.
JOUN B. HANNUM
J.
21. Appendix A, 10-11
APPENDIX A
Comptroller Generals Decision B-171958. letter of March
17, 1972; see Appendix 2. p. 21a et seq.
56a
APPENDIX B
UNITED STATES OF AMERICA
GENERAL SERVICES ADMINISTRATION
February 1, 1971 Public Buildings Service
Washington, D.C. 20405
Reply to Attn. of: Commissioner, Public Buildings Ser-
vice — 1
Subject. Consolidation—Socio-Economic Agencies, Phila-
delphia. Pennsylvania
Mr. Robert L. Kunzig
The Administrator - A
In March 1969, President Nixon, so as to enhance
the efficiency and effectiveness of the Federal human
resources programs and to improve service to the gencral
public, directed that common regional boundaries and
headquarters for the regional offices of the various Federal
agencies be established. It was determined bv the Office
of Management and Budget that the regional activities
of the Departments of HUD, HEW, Labor and the OEO
should be collocated in the new regional headquarters
cities. Philadelphia was designated as one of the head-
quarters Cities.
A. Implementation of the Directive to Collocate the Socio:
Economic Agencies.
rn
In the absence of sufficient Government-owned space
in which to collocate the socio-economic agencies in Phila-
delphia, it is necessary to acquire by lease approximately
314,000 net usable square feet of space for this program.
a. Procedure.
(1) Market Survey. Vhe projected space require-
ment for the collocation was advertised in the Philadelphia
Inquirer on 1/23/70 and 1/25/70, and a market survey was
conducted during the period 1/21 through 1/28/70. On
March 3. L9TO, market survey questionnaire letters were
distributed to 36 entreprencurs who had manifested an
interest in supplying the required space.
(2) Solicitation for Offers. On September 30,
1970, Solicitation for Offers NEG(70)-63. was issued to 26
prospecuve offerors. The solicitation called for 314,000
square feet, with a minimum of 20,000 square feet of
office space per floor on contiguous floors, located within
the city of Philadelphia, for a firm term of 20 years, to be
delivered July 1, 1972. Award factors include those speci-
fied in Executive Order 11512. A requirement for an af-
firmative action plan to ensure equal employment oppor-
tunity Was made a special condition of the solicitation.
(3) Receipt of Offers and Negotiations. Initial
offers for 5 locations were received and ultimately nego-
tiated to the final offered price.
to
58a
INITIAL
OFFEROR LOCATION PRICE/SQ FT FINAL
Gateway Centre Corp. Gateway Build- $8.90 $7.67
ing #1, NE Cor- (52.316,00)
ner, 36th & per vear)
Market Streets
2. 401 N. Broad Street 401 N. Broad $6.17 $5.604
Corp. Street ($1.700.00
per vear)
Binswanger Corp. Bourse Build- $7.56 Withdrew
ing, 21 S. 5th
Street
Binswanger Corp. Ford-Philco $7.14 $5.10
Plant. 4700 ($1.905.95
Wissahickon per vear
Ave.
Richard B. Herman Curtis Building, $6.38 $7.09
& Co. 6th & 7th & ($2,173.5f2
Walnut & Juniper per vear
Streets
(4) Compilation of Data Award Factors. In
order to comply with criteria established in’ Executive
Order 11512, appropriate Federal, State, and local agen-
cics were consulted about the prospective impact of the
effered locations on the social and cconomic development
of the community. Visits were made to the Philadelphia
Planning Commission, Philadelphia Bicentennial Corpo-
ration, and other affected public and private agencies. The
Secretaries of Commerce, HEW, and HUD were requested
to provide representation on an ad hoc committee to
advise with respect to the factors set forth in the executive
order, and those agencies were asked to advise us as to
the comparative merits of cach of the proposed locations.
A city task force on intergovernmental Cooperation Was
also formed under the chairmanship of Philadelphia Mavor
James Hl. J. Tate to evaluate the sites offered under the
59a
wrms of the Intergovernmental Cooperation Act and OMB
Circular A-95. The information and data obtained were
related to the proposed sites by field inspection.
B. Evaluation of Offers.
a. Responsiveness to Solicitation and Economy Act.
The offers submitted for Gateway Building #1, 401 N.
Broad, and the Curtis Building are responsive to the
requirements and specifications of the solicitation. The
offer for the Bourse Building was withdrawn by the
offeror. The offer for the Philco-Ford Plant was not
responsive because the offeror will not accept the escala-
tion provisions as required, nor firmly commit to deliver
the required space by July 1, 1972.
All of the above responsive offers are within the ap-
praised fair rental values and Economy Act Limitations.
a
b. Space Utilization.
(1) Gateway Building #1. This building is located
in the University City Science Center. It is a new mod-
ern, 15-story office building, rectangular in shape, mea-
suring 200’ x 120’, serviced by a_ centrally located
core area with high speed elevators. The building will
provide 14 consecutive office floors of 20,000 square feet
each with uniform configuration. Its interior column
spacing is on uniform 24’'6” centers with exterior window
space on a 3'6" module. Its design, configuration, and
column spacing will assure an efficient lavout, effective
utilization of the space, and a continuing high degree of
flexibility for space changes over the 20-vear firm term
of the proposed lease,
(2) 401 N. Broad Street. this building was) con-
structed in 1930 for semi-industrial and storage purposes
with related office space. It is rectangular in shape, meas-
wing 225' x 525°. and contains approximately 1,000,000
square feet. Floors 6 to 11. offered to the Government. are
“U shaped, divided by a light well.
60a
The Federal agencies presently occupying the build.
ing have been dissatisfied, over an extended period of time.
with the building's elevators, air conditioning, heating
and restroom facilities. Although the owner can improv
upon some of these deficiencies in accordance with the
specifications of our lease solicitation, it will not be pos:
sible to entirely correct the functional obsolescence of the
building’s mechanical systems. In these circumstances.
it can be expected that agency dissatisfaction will continue
to some extent, with an attendant drop in morale and
agency efficiency.
Several other characteristics of the building preclude
optimum space utilization and functional space avout.
The building has large circular columns and column
spacing varies at several locations within the building.
There is noo standard module. Mechanical shafts are
located throughout the space as opposed to being confined
to a central core. The extended distance from the primar
corridors requires an extensive secondary corridor system
Finally, of the seven floors offered, only two floors are
offered in their entirety. Various sized sections of the
other five floors are offered and will result in the ineffic-
ient splitting of functional agency components to fit the
space available.
In summary, the design of the building. the built-in
functional obsolescence. and the adverse lavout charac:
teristics will not produce effective space utilization and
opumum operational efficiency mn agency activities
3) Curtis Building. This building, constructed
about LOG) was designed for a combination of heavy
industry and manufacturing use with some related offic
space. The building is) rectangular in) shape. approx-
mately 23004 379°) and contains approximately 1,000,006
square feet. Ttas divided into 4 basic areas cach served by
freight and passenger clevators. Accessibility is restricted
between areas because of a central light court: and the
scattered placement of fire stairs, elevators and mechanical
bla
areas. The column spacing is irregular (13, 18, and 20
feet) With varied Column spacings from floor to floor and
within floors. On the 10th and 11th floors, both of which
have been offered for lease, there are variations in cleva-
tions, requiring ramp or stair access. The office space will
contain a relatively high proportion of interior windowless
space. The configuration of the building would neces-
sitate an extensive corridor system to provide appropriate
access to all of the operational units of the agencies to
he accommodated and will not produce an efficient space
lavout. Thus, the effective cost of the space actually util-
ved for office purposes will be increased above that which
would prevail in a building designed for office purposes.
C. Summary of Advice Regarding Locations.
1]. Gateway Building #1. The City Task Force on
Inter-governmental Cooperation ranked this site as being
the best. The Department of Health, Education, and
Welfare, after a detailed analysis, rated this site the highest.
the Department of Commerce also preferred this site,
indicating it offers the best location for the programs
administered by the agencies and, because of its Conve-
nence to nearby neighborhoods, offers opportunities for
hiring and training of disadvantaged people.
2. 401 North Broad Street. None of the advising
wencies rated this location as their first choice. This loca-
won Is not as Conveniently located as the Gateway Build-
ing #1 with respect to educational and training facilities
needed to adequately support the agencies being housed.
\dditonally, the acquisition of this location would have
very Limited :positive impact on the local goals of the
renewal programs in the City of Philadelphia.
» Curtis Building. Those advising agencies which
provided a priority listing of the various sites did not rate
this location as the preferred site for the collocation. Over-
Il. the acquisition of spacesat this location would not have
(NY positive effect on ongoing Federal programs for the
2:
development and/or redevelopment of the City of Phila.
delphia.
D. Analysis and Findings
Executive Order 11512 requires selection of the offer
which will achieve the optimum blending and benefit in
terms of the stated criteria set forth in the Order. One of
the primary factors is attaining the maximum impact of
the Federal monies being expended in direct or assisted
programs in the community.
Each of the three locations responsive to the require-
ments and. specifications of the solicitation have been
analyzed with respect to meeting the criteria of the Execu-
tive Order and the advice received from other Federal and
citv. agencies concerned. The Gateway Building #1 is
the first choice of the city, HEW, Commerce and DHUD.
The Citw’s Task Force made a comprehensive analy-
sis of the sites under consideration and ranks the Gateway
Building as the strongly preferred location by a consider-
able margin. The Task Force has also indicated that this
building is in complete conformance with the local goals
of the renewal programs in the City of Philadelphia.
In summary, there is a definite preference on the part
of the concerned governmental organizations for the Gate-
way Building #1 location. Detailed support for the selec:
tion of this location is evidenced by the following:
a. Housing. A survey of employee domicile was con-
ducted of all Federal employees involved with the col-
location move. This survey found that approximately 72
percent of all emplovees in grades 1 to 6 live within the
Citv of Philadelphia. The Gateway Building #1 site is
readily accessible from all arcas of the city.
A large supply of low and moderate income housing
has been provided through the citv’s Housing Authority
and the quasi-public Philadelphia Housing Development
Corporation. Some 15,000 units of this housing supply are
located in the nearby Center Citv, Lower North, and West
O3a
Philadelphia areas. In addition to these city efforts. the
West Philadelphia Corporation, which is composed of the
University of Pennsylvania, Drexel Institute, Presbyterian
Hospital and other similar institutions, has sponsored the
redevelopment of low cost housing in proximity to the Uni-
versity City Science Center.
b. Transportation. Vhe Gateway Building #1 is
cated in an area with excellent transportation facilities
by several modes which provide good accessibility for
agency emplovees and clients. Subway service is available
athe nearby 34th Street Station. There are several bus
lines and street car routes operating on the streets adjacent
w or within easy walking distance of Gateway Building
+]. This location is in proximity to the 30th Street Com-
muter Rail Station and the planned through-rail connec-
tion to Penn Center Station and the Reading Terminal.
[here is good accessibility. via the Schuylkill Expressway
and the planned Schuylkill Expressway Bypass. to the
freeway system serving the general area. There are several
arterial streets serving the area and the impact of traffic
generated by this facility will be minimal. Parking facilities
we planned as a part of the development of the University
City Science Center.
¢. Community Facilities. The central location and
weellent: transportation facilities serving this site make
the Gateway Building #1 readily accessible to a wide array
of community facilities within the City of Philadelphia.
The location is particularly convenient to institutions of,
higher learning including the University of Pennsylvania.
Drexel Institute, and the Franklin Institute. These insti-
tions offer exceptional opportunities for employee train-
ing and for Government research.
d. Impact on Neighborhood. The impact of this com-
jlex on the nearby community in West Philadelphia will
% extremely beneficial. A survey of the socio-economic
problems within Philadelphia has shown the areas im-
mediately north and west of the University City Science
Ota
Center have some of the most severe problems of low
family income, unemployment. and cducational attain-
ment. The selection of this site will expand the impact
of approximately $18,600,000 in Federal funds which
have been expended to assist in the redevelopment and
revitalization of this area. The occupancy of this building
will reinforce the beneficial impact the construction of
the Food and Drug laboratory building on Market Street,
west of 38th Street, will have on the neighborhood, and
serve as a catalyst to accelerate the development of the
University City Science Center.
ve. Conformity to Existing Plans. The Gateway
Building #1 site and the University Citv Science Center
complex has been officially designated by the City of
Philadelphia as a redevelopment area. Full community
participation was obtained in the planning process prior
to the city’s approval.
f. Coordination with Local, State and Federal Of-
ficials. Mayor Tate’s Task Force expressed his city’s
strong support of the Gateway Building #1 over the other
possible sites. Many other prominent citizens of the city,
including the Executive Vice-President of the Greater
Philadelphia Chamber of Commerce and the Chairman of
the Board of the Philadelphia Bicentennial Corporation.
expressed similar support for this site. Governor Milton
J. Shapp and former Governor Raymond P. Shafer both
have indicated that the State supports the Gateway
Building #1 site. Senators Hugh Scott and Richard S.
Schweiker have strongly backed the collocation move to
this site. The socio-economic impact of this site selection
was also carefully reviewed with appropriate officials of
the Departments of Commerce. HEW and DIIUD, and
they have indicated a preference for the Gateway Building
#1 location.
65a
E. Conclusions and Recommendation.
a
&
*
z
ia
s
:
Three responsive offers have been received. The
offer by the owners of the Gateway Building #1 exceeds f
the offer of space in the Curtis Building by $..98 per square ;
foot or approximately $142,000 per year, and the offer of :
space at 401 North Broad Street by $2.07 pet square foot
or $616,000 per year. The Government, through the
local redevelopment authority, has invested 518,000,000
in the University City Science Center. Development of this
center is lagging, and the community is not realizing any
return from the Federal funds which have been committed.
The acquisition of space in the Gateway Building #1 will
expand the impact of these funds and secure for the com-
munity the benefits envisaged at the time of those expen-
ditures. Such action will also secure for the Government
modern, first-class office space which will provide for
optimum operational efficiency on the part of the agencies
to be housed. The acquisition of space through acceptance
of the third highest offer is in accordance with the objec-
tives and aims of Executive Order 11512 and the require-
ments of the Federal Property and Administrative Ser-
vices Act of 1949, as amended. Therefore, it is recom-
mended that the Gateway Building #1 be selected for the
collocation of the Federal socio-economic agencies in
Philadelphia, and that I be authorized to proceed with the
award of the lease contract.
A. F. Sampson
Commissioner
Public Buildings Service
APPROVED:
The Administrator February 18, 1971
Date
| a sore
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UNITED STATES COURT OF APPEALS
For THE THIRD CIRCUIT
No. 72-1686
JOHN W. MERRIAM, Appellant
v.
ROBERT L. KUNZIG, Administrator, General Services
Administration, A. J. SAMPSON, Commissioner,
Public Building Service of the General Services Admin-
istration, L. M. SHIPP, JR., Assistant Commissioner,
Space Management of the General Services Adminis-
tration and the GENERAL SERVICES ADMINIS-
TRATION of the United States of America
(D. C. Civil Action No. 71-2262)
APPEAL FrRomM THE UNiTED STATES District Court
For THE EASTERN DistRICT OF PENNSYLVANIA
Argued December 7, 1972
Before Van Dusen, Gippons and HUNTER,
Circuit Judges
C. Clark Hodgson, Jr., Philadelphia, Pa.. Attorney for
Appellant.
Kent Frizzell, Philadelphia, Pa., Carl J. Malone, Philadel-
phia, Pa., Warren D. Mulloy, Philadelphia, Pa., Robert
- A. Prince, Philadelphia, Pa.
67a
George R. Hyde. Washington, D.C... Rembert A. Gaddy.
Washington D.C... Anthony Borwick, Washington, D.C..
Eva R. Datz, Washington, D.C., Attorneys for Appellees.
OPINION OF THE COURT
(Filed February 16, 1973)
Gippons, Circuit Judge.
This is an appeal from an order of the district court
dismissing the complaint of appellant Merriam on defend-
ants’ motion for summary judgment for lack of standing.
Merriam is one of two unsuccessful bidders on a solicitation
for bids to furnish leasehold office space to the General
Services Administration (GSA). That agency and several of
its officials are defendants. Merriam seeks to have set aside
an award made by GSA to Gateway Center Corporation
(Gateway) for a twenty year lease of a new office building to
be constructed in Philadelphia, and to have enjoined the
execution of the proposed lease.
GSA’s Solicitation for Offers for leasehold space was
issued on September 30, 1970, to Merriam, to Gateway and
to twenty-four other prospective offerors in the Philadelphia
metropolitan area. Five bids were received. One was with-
drawn and another was determined to be nonresponsive.
On February 18, 1971, the Administrator of GSA author-
ized the making of the disputed award to Gateway. On
February 19, 1971, Merriam, pursuant to 4 C.F.R. §§20.1-
20.12 (1972), protested the award to the General Account-
ing Office, which on September 16, 1971, advised him
through cou
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