the exact dollar difference between all of the bids on each facility it cannot tell whether to attempt to drive the lump-sum bidder up with reference to a particular facility or whether to try to drive up other bidders on that facility. In other words, it is conceivable that a lumpsum package bidder whose proposal is higher than any combination of individual bids might be negotiated upward even more if he were low on one or two facilities. Or if such a bidder were for some reason disqualified from obtaining all the plants he sought, the Commission by having his bid broken down as required by the act might be able to negotiate on a higher basis with individual plant bidders.

Now, there is one more point that I wish to direct attention of this committee to, on the question as to whether section 7 (b) (4) is mandatory. This is on page 8 of the old statement.

We call attention to the fact that with exception of Shell every successful bidder who proposed to purchase more than one facility specified an amount for each facility separately. To illustrate this very significant fact we call attention specifically to two instances.

The Standard Oil Company of California submitted a proposal of four different plants and stated:

Purchaser offers to pay the sum of $16,600,000 for all facilities defined in the proposal. The price proposed to be paid for each of the facilities except Plancor 611 on an individual basis is set forth in purchaser's alternative proposal. The price otherwise to be paid for Plancor 611 on an individual basis is $3,500,000.

And in addition thereto, an examination of Standard's proposal will show that the total aggregate amount which it proposed to pay for each facility separately totaled $16 million. In addition, Standard submitted a lump-sum package bid for all 4 of the facilities and offered to pay $16,600,000 under its combination bid, which amount was $600,000 in excess of the total of the separate amounts. This bid is in compliance with the law as well as the instructions.

Another illustration can be found in the Phillips Petroleum Co. proposal. Phillips bid upon two facilities. It specified the amount proposed to be paid for each facility separately. It stated its preference between the two facilities and, in addition, Phillips proposed to pay upon a lump-sum package basis for the two facilities an amount which was $1,001,000 greater than the aggregate amount proposed to be paid for the two facilities separately. This proposal is in accordance with the letter and the spirit of the law and followed the instructions.

We submit that it is significant that Shell is the only successful bidder who declined to follow the law and the instructions. It appears that the successful bidders in every instance, with the exception of Shell, understood and placed the same interpretation upon the law and the instructions as we set forth in this statement. I am attaching to my statement a brief analysis of all successful proposals in substantiation of this fact.

And if you will turn to this very short analysis attached to this statement, you will find that every successful bidder who bid upon more than one facility broke his bid down as to each facility. For instance, Copolymer submitted a separate amount for each facility. Firestone submitted a separate amount for each facility. Food Machinery submitted a separate amount for each facility. GoodrichGulf submitted a separate amount for each facility. Goodyear sub

mitted a separate amount for each facility. Humble submitted a separate amount for each facility. Phillips submitted a separate amount for each facility. Standard of California very carefully broke their bid down to clearly indicate a separate and specific amount for each facility. United States Rubber submitted a separate amount for each facility. Shell Chemical Corp. declined to assign an amount for each facility.

(The material referred to by Mr. Blalock is as follows:)

Remarks

The American Synthetic Rubber Corp. submitted 1 proposal to purchase 1 facility.
American Synthetic made no excepting conditions or contingencies.
Copolymer Corp. submitted 1 proposal to purchase 2 facilities, Plancor 876, copoly-
mer, and 152 butadiene. Copolymer submitted a separate amount for each facil-
ity. Stated "Copolymer Corp. desires to acquire both plants for an integrated,
efficient operation. Our proposal to acquire the butadiene plant, Plancor 152, is
contingent upon our acquiring the GR-S plant, Plancor 876." (Copolymer sub-
mitted a separate amount for each facility.)

Esso Standard submitted 1 proposal for this facility. Esso made no excepting con-
ditions or contingencies.

Firestone submitted 2 separate and distinct proposals for these 2, Plancors 1056 and

Firestone stated: "This plant (Plancor 1056) is considered first in order of preference
by the prospective purchaser." Also, "The bid on this plant (Plancor 127) is
considered to be separate and distinct from the bid proposal on Plancor 1056.1
(Firestone submitted a separate amount for each facility.)
Food Machinery submitted 1 bid proposal. Proposed to purchase 2 facilities.
Preference was Houston, Tex., butadiene facility Plancor 1063. Alternate
facility, Baytown, Tex., butadiene, Plancor 485. (Food Machinery submitted
a separate amount for each facility.)

Goodrich-Gulf submitted 2 distinct and separate proposals for Plancors 983 (copol-
ymer) and Plancor 1063, Houston, Tex., butadiene plant. Goodrich-Gulf ex-
pressed preference as follows: "The Port Neches, Tex., butadiene plant (Plancor
933) is the first preference of Goodrich-Gulf and their proposal to purchase the
butadiene plant at Houston, Tex. (Plancor 1063) is submitted for the purpose of
enabling Goodrich-Gulf to negotiate for and purchase a whole or part interest one
of the Government-owned butadiene plants being offered for sale." (Goodrich-
Gulf submitted a separate amount for each facility.)

This combination of comparnies submitted 1 proposal. If awarded, plant will
furnish butadiene to copolymer plants Plancor 983 and 983A at Port Neches.
Goodrich-Gulf and Texas-United States both stated "participation in this pro-
plant."
posal is contingent upon being permitted to purchase a suitable copolymer
Goodyear synthetic submitted 2 proposals to purchase. Preference stated as follows
in first proposal: "The proposals made herein are the following stated in order of
preference: (a). For the purchase of Plancor 956, Houston; (b) for the purchase of
Plancor 126, Akron, Ohio.

The second proposal bid on the Houston butadiene plant Plancor 1063, only and
Goodyear Plancor 1063 was 3d preference. Goodyear did not get Plancor 1063.
(Goodyear submitted a separate amount for each facility.)

8. Goodyear Synthetic Rub- Houston, Tex., Plancor 956 (copoly-
ber Corp.
mer).

11,889,000

2

Akron, Ohio (Plancor 126) (copolymer).

2,075,000

Analysis of successful proposals-Continued

9. Humble Oil & Refining Co. Baytown, Tex. (Plancor 1082) (butyl

10. Kopper Co., Inc.

11. Petroleum Chemical, Inc.
(Cities Service and
Continental Oil).

12. Phillips Chemical Co.

13. Shell Chemical Corp.

14. Standard Oil California.

15. Texas Co. and United
States Rubber Co.

16. United States Rubber Co

Mr. BLALOCK. Of course, gentlemen of the committee, it is axiomatic that strict maintenance of the competitive bidding procedures required by law is infinitely more in the public interest than obtaining a small pecuniary advantage in individual cases by permitting practices which do violence to the spirit and purpose of the law.

In view of the foregoing the Shell bid and the ensuing negotiations on Plancor Nos. 611, 963, and 929 were not in accordance with the act, and the proposed sale of the plants to Shell is unlawful.

Thank you very much, gentlemen, for your indulgence.
The CHAIRMAN. Thank you very much, Mr. Blalock.
Now, Mr. Cunningham, any questions?

Mr. CUNNINGHAM. Yes.

Mr. BLALOCK. I am not clear on one statement you made that it was obvious that "if the total amount bid by Shell was greater than the sum of the total of the highest bids of the individual bidders"Mr. BLALOCK. Yes, sir.

Mr. CUNNINGHAM. "And it is an obvious disadvantage to the Government." Just how would that be a disadvantage to the Government? Mr. BLALOCK. I believe I didn't say if it was the total amount, but I said if the Shell proposal was not broken down plant-by-plant, that then the disadvantage to the Government was obvious because of the fact that if the Commission, in negotiating for the full fair value or the highest amount it could get-if it didn't know what Shell was offering, for instance, on the copolymer plant, how could it attempt to drive Shell up on that plant to an amount greater than the individual bidder had offered for that plant?

Mr. CUNNINGHAM. But that is not my question. Supposing at that time the Commission already had in its possession the highest bids it could get individually for the plants and the sum total of the three highest bids was below the overall total or the combined total of the Shell bid, and they accepted the Shell bid-granting that it might not technically be in compliance with the statute-how did the Government suffer a dollars-and-cents disadvantage.

Mr. BLALOCK. You will refer―

Mr. CUNNINGHAM. That, you have not explained to me.

Mr. BLALOCK. I will tell you exactly how, in my opinion. I stated: "The disadvantage to the Government is obvious. Unless the Commission knows at the outset of negotiations the exact dollar difference between all of the bids on each facility, it can't tell whether to attempt to drive the lump-sum bidder up with reference to a particular facility or whether to drive up the bidders on that facility."

In other words, it is conceivable that a lump sum package bidder whose proposal is higher than any combination of individual bids might be negotiated upward, even more, if he were low on one or two facilities.

Mr. CUNNINGHAM. My question was that if the Commission at that time, when Shell gave its bid already had the highest bid, that it was possible for it to get from individual bidders on each of the three plants, and the total of those three bids was still less than the total of the Shell bid, how did the Government suffer? You are not answering that question.

Mr. BLALOCK. Well, I will attempt to answer it. Let's say that the highest bid on the copolymer facility, for instance, was $500, the individual bid.