Merriam v. Kunzig, Civ. A. No. 71-2262.

CourtUnited States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
Citation347 F. Supp. 713
Docket NumberCiv. A. No. 71-2262.
PartiesJohn MERRIAM v. Robert L. KUNZIG, Administrator, General Services Administration, et al.
Decision Date26 June 1972


C. Clark Hodgson, Jr., Philadelphia, Pa. (Stradley, Ronon, Stevens & Young, Philadelphia, Pa., of counsel), for plaintiff.

Robert A. Prince, Asst. Gen. Counsel, Claims and Litigation Div., Gen. Services Administration, Washington, D. C., Louis C. Bechtle, U. S. Atty. E. D. Pa. by Warren D. Mulloy, Asst. U. S. Atty., Philadelphia, Pa., for defendants.


HANNUM, District Judge.

On September 30, 1970, the defendant General Services 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 lease 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 solicitation. 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 underlying this controversy is required.


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 service to the general public. The City of Philadelphia was designated one of several regional headquarters for each of these agencies. GSA, charged with the responsibility of providing space for government agencies, implemented the Presidential mandate by adopting a policy requiring the realigned agencies to be headquartered in the same building where feasible. As a consequence of this policy and due to the lack of adequate government-owned office space, a need was created in Philadelphia for approximately 314,000 net useable square feet of office, storage, and related space.1

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 Government's interest in acquiring the desired amount of space was advertised in an area newspaper, the Philadelphia Inquirer. Thereafter, thirty-six persons or firms expressed an interest in supplying the Government's needs.2

On September 30, 1970, at the direction of A. F. Sampson, Commissioner of GSA's Public Buildings Service, Solicitation for Offers No. NEG (70)-63 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 nonresponsive. Consequently, only three bids remained for GSA's consideration, the plaintiff's, Gateway Center Corporation's, and a third, not relevant to the present controversy. On February 18, 1971, Robert L. Kunzig, Administrator of GSA, upon the recommendation of Commissioner Sampson, authorized the latter to make the presently disputed award to Gateway Center Corporation.3 On February 19, 1971, plaintiff protested the award to the General Accounting Office (hereafter, GAO) which, on September 16, 1971, advised his counsel that it did not feel that it could rule authoritatively on the protest at that time.4 The plaintiff filed this law suit on the same date.

On November 17, 1971, plaintiff moved for a preliminary injunction requesting that GSA be restrained from executing the Gateway lease and moved under Rule 57, Fed.R.Civ.P., 28 U.S.C., for a prompt hearing. On November 19, the defendants filed a motion for summary judgment which, in addition to seeking judgment as a matter of law, challenged the jurisdiction of this Court and the plaintiff's standing to sue. On November 23, the defendants 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 on December 9, plaintiff withdrew his motion for a preliminary injunction upon the representation of the Government that no lease would be executed with Gateway until the construction of its building had been completed. Thereafter, on February 7, 1972, this Court stayed its hand for thirty days in order to allow the Comptroller General of GAO to rule on the merits of the plaintiff's protest and thereby provide the Court with the benefit of the GAO's expertise in the area of bid protests. See, M. Steinthal & Co. v. Seamans, 455 F.2d 1289 (D.C.Cir. 1971). On March 17, 1972, the Comptroller General issued his ruling.5 Having the benefit of GAO's views, the Court must still resolve the questions of jurisdiction and standing raised by the defendants.


The administrator of GSA is empowered to enter into lease agreements necessary for the accommodation of 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)(1) (1970):

"The Administrator is authorized to enter into lease agreements with any person, copartnership, corporation, or other public or private entity, which do not bind the Government for periods in excess of twenty years 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 operations have contained the following restriction with regard to payments to be made by GSA for the lease of buildings yet to be constructed by the lessor. The restriction first appeared in the Independent Offices Appropriation Act, 1963, Act of Oct. 3, 1962, 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 lease agreements for the accommodation of Federal agencies in buildings and improvements which are to be erected by the lessor for such agencies at an estimated cost of construction in excess of $200,000 or for the payment of the salary of any person who executes such a lease agreement: Provided, That the foregoing proviso shall not be applicable to projects for which a prospectus for the lease construction of space has been submitted to and approved by the appropriate Committees of 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 and Department of Housing and Urban Development Appropriation Act, 1970, Act of Nov. 26, 1969, P.L. 91-126, tit. I, 83 Stat. 229, and the Independent Offices and Department of Housing and Urban Development Appropriation Act, 1971, Act of Dec. 17, 1970, P.L. 91-556, tit. I, 84 Stat. 1449 (hereafter, I.O.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 boundaries of the term "to be erected" 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 building "to be erected", have been interpreted by GSA to relieve it from the restrictive language of the Appropriation Acts. Should the lessor of a building to be constructed at a 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 conditions required to be met by a lessor on the date of the issuance of an invitation for bids are satisfied if:

"(i) 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;
(ii) Design was complete;
(iii) Construction financing fully committed;
(iv) A building permit for construction of the entire building, extension or addition had been issued;
(v) Actual construction is currently in progress or a firm construction contract with a fixed completion date has been entered into."6

These conditions were put into effect on May 15, 1964 by a memorandum from John W. Chapman, Assistant Commissioner for Space Management, to all Regional Administrators of GSA. As of that date they were designated for inclusion in all solicitations for bids where new construction was requested or permitted. In addition to having been included in the solicitation for bids involved in the present dispute, they...

To continue reading

Request your trial
3 cases
  • Merriam v. Kunzig
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • February 16, 1973
    ...brought to the attention of the district court by stipulation. It then took up and granted the Government's motion for summary judgment, 347 F.Supp. 713, on the ground that Merriam lacked standing, as an unsuccessful bidder, to challenge an illegal award. This appeal Merriam's Legal Content......
  • Atlee v. Laird
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • August 21, 1972
  • Northland Equities, Inc. v. Gateway Ctr. Corp., Civ. A. No. 76-1730.
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • November 29, 1977
    ...General Services Administration had failed to make a reasonable attempt to verify whether Gateway had satisfied them. In Merriam v. Kunzig, 347 F.Supp. 713 (E.D.Pa.1972), the district court found that Merriam did not have standing to bring the suit for judicial review of the award. The Thir......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT