Bidder May File Suit To Reopen

In an unexpected development to the two auctions of the New York Lighthouses, it appears an improper setting in the GSA’s computer system may have caused the premature end of the auction. According to one of the bidders, Michael Lynn Gabriel, he was preparing to enter a new bid when he discovered the auctions had been closed, against the rules on the site and not in accordance with the information in the Invitations For Bid. The auctions have been in a soft close state since August 15. Taking this directly from the Instructions To Bidders in the IFB for West Bank (and it’s the same in the one for Old Orchard Shoals), it reads:

12. CALL FOR FINAL BIDS (”Soft Close”): Once bidding slows down, a date will be set for the receipt of final bids. On that date, if no increased bid is received by 3:00 p.m. Eastern Daylight Time, then bidding will close at 3:00 p.m. and consideration will be given to selling the Property to the high bidder. If an increased bid is received on a timely basis, then bidding will be continued over until the next business day on the same terms. Eventually, no one will outbid the high bidder and bidding will close at 3:00 p.m. Eastern Daylight Time on that day. The Government reserves the right to increase the minimum bid increment once the soft close date has been established. There is no advantage to waiting until the last minute to bid.

The soft close was most recently extended until August 27 at 3:00 p.m. EDT. If no bids had been received on that date, the auction would close. Well, in fact, there were two bids (three if you count the one late afternoon the day before) to Old Orchard Shoals lighthouse on that date, and one to West Bank, yet the auction still shut down. See images below.

Old Orchard Shoals	West Bank

Government Claims Bids Accepted Business Hours Only

Unable to make his latest bid due to the closure, Mr. Gabriel stated to Lighthouse News, “I asked the GSA about the closing and was told that only higher bids made between 9am and 3 pm could extend the deadline which is why the sales were concluded. That did not make sense to me because the Invitation to Bid says timely bids received before 3 pm would extend the auction. Even though 4 bids were made within the 24 hours before the 3 pm August 27 deadline none counted to extend the sale because they were not made within a specific 6 hour period 9 am to 3 pm that is not even stated in the invitation for bids.”

He continued, “I believe the auction should have been continued for another day and that the termination was improper under the stated rules for the sale. No where in the Invitation of bid does it state that only bids from 9 am to 3 pm only will extend the sale and that earlier bids made between 3 pm of the date before and 9 am of the final day will not do so. A day is 24 hours not 6 hours. I have asked that the issue be reviewed by the GSAs’ legal department. If not reversed, I may file a lawsuit to reopen the sale.”

Meta Cushing, GSA contact, in reply to Lighthouse News, confirmed that one of the bidders had emailed her. “He has asked us to do a legal review of our online auction process for these two New York lights which we will do. We will respond to him in writing on Tuesday.”

“The auction closes at 3:00 PM Eastern when there are no bids during the business day. The Invitation for Bids for both West Bank and Old Orchard lights states this, as does the website. The only way the auction could have been kept open is if someone had made a bid before 3:00 PM.”

“The fact that there were no bids for either is why the auctions closed.”

Except there clearly were bids. And business day? That’s stated nowhere on the website, nor in the IFB, and is subject to wide interpretation of the hours anyway.

Judge’s Gavel Rather Than Auctioneer’s Gavel May Decide Outcome

Although the matter will be reviewed by the GSA, it appears they are clearly in the wrong trying to defend the computer errors. Maybe the Year 2000 bug hit them late, and their computer system thinks a day has only 6 hours. But just in case they reject the idea of reopening the auction where it left off, Mr. Gabriel has prepared a preliminary draft of complaint for Federal Court to have them review the terms of sale.

“Actually it all comes down to an error in the computer program because I was told that it was set to only recognize bids after 9 am to do the extension. Had it been properly set to recognize any bid after 3 p.m then the extension would have taken place automatically. Basically the GSA staff is in the position of defending a computer error which I do not think would work before a Judge and I do not think an attorney for the GSA would want to argue a losing point.”

“It actually is in the best interests of the GSA to continue the sale because they will get at least $15,000 more for each lighthouse and probably much more because there were two more bidders besides me on West Bank who were cut off from making higher bids.”

Update:

Added August 30. In another email from Meta Cushing, she responds to my questions of these business hours, and why the bids of the entire day were not acceptable.

Thank you for your interest in the program (NHLPA) and process which allows GSA to offer these lights for sale.

It is clearly shown and known by informed bidders that the trigger for the close is 3:00 PM. Yes, people bid right before 9:00 AM, the start of the business day… they want to be high bidder of course! That happened nearly every day since the soft close started and the onsite inspections earlier in August.

FYI the bids are excellent. Offshores are valued considerably less than onshore properties. They have no utilities at all and restoring them, according to the standards of the Secretary of the Interior (see IFB), and outfitting them is very expensive, esp. when they are so far from land. This is one of the reasons these two lights had no successful applications from nonprofits when we offered them in 2007 as no cost public benefit conveyances.

The Government has actually given several lights away to new stewards, organizations/towns that the National Park Service selects via a rigorous application process. This is no ordinary surplus property! The structures are considered national treasures.

If you want to learn more about the National Historic Lighthouse Preservation Act (NHLPA) program which allows us to offer these unique lights, first to nonprofits and public entities, and then to public sale of we find no steward, please go to www.cr.nps.gov/maritime. It is a
wonderful program.

And yet again, there is no mention of these business hours, either in the IFB or on the site. The program they use certainly accepts these bids, so why won’t the government? It’s certainly to their benefit to maintain the high number of bids (they were incremented at $15,000 as of August 26) and to gain the most amount of money possible for these lights.

About Michael Gabriel

Readers of this site will remember that Michael Lynn Gabriel is the owner of two lighthouses, Bloody Point and Fourteen Foot Bank. Both were acquired in GSA auctions. Mr. Gabriel is an attorney in Nevada, author of many legal texts and associated with Attorneys Et Al, LLC, an online continuing education site. He has also served as a Judge Pro Tem and served as a Special Master of the State Bar of California. Mr. Gabriel served on the California State Bar’s Committee On Corporate Taxation and was a founding member of the Tax Planning Section of the Kern County Bar Association. He served on the Mental Health Advisory Board of Lake County California. In addition, he was also an Independent candidate for the California State Senate in 1994.

But those of us in the Lighthouse World know him as a man that loves lighthouses, and is often the last chance for some of the poorest orphans in the World of Beacons. Coming soon will be an article on the hidden costs of buying lighthouses at auction.

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