Alamo Aircraft Supply, Inc.; Merchants World Surplus E, B-

B-278215.4 Mar 11, 1998 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Where the nature and scope of the changes were not so substantial as to warrant the cancellation and reissuance of the solicitation. Assert that the changes made by the amendment are so substantial that the agency must cancel the solicitation and issue a new one to afford all potential bidders an opportunity to compete for the contract. The solicitation represents a pilot initiative under which DRMS will award a term sale contract. Under which firms were required to submit technical proposals by September 30. Those bidders whose technical proposals are found by the agency to be technically acceptable. Will be invited to submit sealed bids in response to an invitation for bids. DRMS estimates that the surplus property that will be made available to the contractor during each year of the contract will have a market value of $30 million. View Decision Matter of: Alamo Aircraft Supply, Inc.; Merchants World Surplus Enterprises, Inc.; Associated Aircraft Manufacturing & Sales, Inc.; Blazer Surplus; Dixie Air Parts Supply, Inc. File: B-278215.4 Date: March 11, 1998 DIGEST Attorneys DECISION Alamo Aircraft Supply, Inc., Merchants World Surplus Enterprises, Inc., Associated Aircraft Manufacturing & Sales, Inc., Blazer Surplus, and Dixie Air Parts Supply, Inc. protest the decision of the Defense Reutilization and Marketing Service (DRMS), Defense Logistics Agency, to amend, rather than cancel, a solicitation for the sale of surplus property. The protesters, none of whom had submitted proposals in response to the solicitation, assert that the changes made by the amendment are so substantial that the agency must cancel the solicitation and issue a new one to afford all potential bidders an opportunity to compete for the contract. We deny the protest. The solicitation represents a pilot initiative under which DRMS will award a term sale contract, with a 5-year performance period, to the high bidder for five categories of surplus Department of Defense industrial property. The solicitation provides for a two-step approach, under which firms were required to submit technical proposals by September 30, 1997, in response to request for technical proposals (RFTP) No. 99-7005. Those bidders whose technical proposals are found by the agency to be technically acceptable, based upon the RFTP's evaluation criteria, will be invited to submit sealed bids in response to an invitation for bids, with award being made to the high bidder. DRMS estimates that the surplus property that will be made available to the contractor during each year of the contract will have a market value of $30 million. The successful bidder, or "purchaser," will have the right and obligation (with certain limited exceptions) to remove, upon payment of its bid price, certain surplus property generated by the agency within the designated federal supply classifications set forth in the solicitation. The proposed contract provides that title to and risk of loss of the property will transfer from the government to the purchaser upon payment by the purchaser of its entire bid price for the property and the removal of the property from the agency installation. The proposed contract requires, among other things, that 80 percent of the "net proceeds" the purchaser obtains by any means from the surplus property, including the purchaser's sale or lease of the property, be paid to the United States Treasury. /1/ Because of this feature--which entitles the government to 80 percent of the net proceeds, if any, realized by the purchaser from the property (in addition to the amount paid for the purchase of the property from DRMS)--the proposed contract has been referred to by the agency as a "proceeds sharing sale." Alamo Aircraft and Merchants World filed protests with our Office on September 29 and 30, 1997, respectively, contending that this "proceeds sharing sale" solicitation is actually a solicitation for property disposal services, and that the solicitation is therefore flawed because it does not contain provisions of the Federal Acquisition Regulation (FAR) associated with service contracts. These protesters argued that because of the proposed contract's proceeds sharing feature and certain other provisions, DRMS will retain an ownership interest in the surplus property after its sale to the purchaser, and that the disposal of surplus property provisions of the Federal Property and Administrative Services Act of 1949, 40 U.S.C. Sec. 484 (1994 and Supp. I 1995), and the Federal Property Management Regulations, 41 C.F.R. Part 101-45 (1997), will therefore be applicable to any resale of the surplus property by the purchaser. Additionally, the protesters asserted that any contract awarded under the solicitation would result in the unauthorized sale of the surplus property on credit. During the course of this protest, amendment No.