A-84283, MARCH 6, 1937, 16 COMP. GEN. 824

A-84283, MARCH 6, 1937, 16 COMP. GEN. 824

ADVERTISING - BIDS - REJECTION - DELETION OF FEDERAL MARKETING AGREEMENT OR LICENSE PROVISION THE DELETION BY A BIDDER OF A PROVISION IN SPECIFICATIONS FOR THE PURCHASE OF DAIRY PRODUCTS REQUIRING COMPLIANCE WITH APPLICABLE FEDERAL MARKETING AGREEMENTS AND LICENSES IN EFFECT AT THE OPENING OF BIDS, BEING IMMATERIAL WHERE NO SUCH AGREEMENTS OR LICENSES WERE IN EFFECT AT THAT DATE, REJECTION OF THE BID IS NOT REQUIRED OR JUSTIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, MARCH 6, 1937:

THERE WAS RECEIVED MARCH 1 YOUR LETTER OF FEBRUARY 23, 1937, REQUESTING DECISION ON A QUESTION PRESENTED AS FOLLOWS:

* * * AT CLEVELAND, OHIO, BIDS WERE SOLICITED FOR DAIRY PRODUCTS COVERING THE NEEDS OF COAST GUARD UNITS BASING AT THAT PLACE WITH THE FOLLOWING RESULTS:

* * * * * * * * * * * * * * (TABLE OMITTED) * * * * * * * * * * * * * *

IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED IN CIRCULAR LETTER NO. 133, ISSUED BY THE BRANCH OF SUPPLY, PROCUREMENT DIVISION, TREASURY DEPARTMENT, THERE WAS ATTACHED TO AND MADE A PART OF THE INVITATIONS FOR BIDS, THE FOLLOWING PROVISION:

"IF, ON THE DATE OF THE OPENING OF THIS BID, THERE IS IN EFFECT MARKETING AGREEMENT AND/OR LICENSE APPROVED AND EXECUTED BY THE SECRETARY OF AGRICULTURE UNDER THE PROVISIONS OF THE AGRICULTURAL ADJUSTMENT ACT FOR ANY OF THE COMMODITIES LISTED IN THIS PROPOSAL, THE CONTRACTOR SHALL COMPLY WITH ALL PROVISIONS OF SAID MARKETING AGREEMENT AND/OR LICENSE, OR ANY AMENDMENTS THEREOF, WITHOUT REGARD TO WHETHER THE CONTRACTOR IS HIMSELF A PARTY TO THE SAID MARKETING AGREEMENT AND/OR LICENSE. IF THE CONTRACTOR FAILS TO COMPLY WITH THE PROVISIONS OF THE MARKETING AGREEMENT AND/OR LICENSE, OR ANY AMENDMENTS THEREOF, THE GOVERNMENT MAY BY WRITTEN NOTICE TO THE CONTRACTOR TERMINATE THE CONTRACTOR'S RIGHT TO PROCEED WITH THE CONTRACT AND PURCHASE IN THE OPEN MARKET, OR OTHERWISE, THE UNDELIVERED PORTION OF THE COMMODITY OR COMMODITIES INVOLVED AND THE CONTRACTOR AND HIS SURETY SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COST OCCASIONED THE GOVERNMENT THEREBY. PROVIDED, THAT THE DETERMINATION OF THE SECRETARY OF AGRICULTURE OF ANY FAILURE OF THE CONTRACTOR TO COMPLY WITH THE TERMS OF THE MARKETING AGREEMENT AND/OR LICENSE FOR THE COMMODITY OR COMMODITIES INVOLVED SHALL BE FINAL AND CONCLUSIVE ON THE CONTRACTOR.'

THIS CLAUSE WAS STRICKEN OUT BY SWIFT AND COMPANY WITH THE NOTATION BELOW: "NO SUBCONTRACTOR.'

THIS OFFICE HAS BEEN ADVISED OVER THE TELEPHONE BY A REPRESENTATIVE OF THE DEPARTMENT OF AGRICULTURE THAT THERE ARE NO MARKETING AGREEMENTS, LICENSES, AND/OR ORDERS IN EFFECT IN THE CLEVELAND AREA.

IN YOUR DECISION, 15 COMP. GEN. 201, IN WHICH IT WAS ADVISED THAT THE BID OF KINGAN AND COMPANY, IN THAT CASE, PROPERLY MIGHT BE REJECTED BECAUSE THAT BIDDER HAD INK-LINED A CLAUSE SIMILAR TO THE ABOVE, COGNIZANCE WAS TAKEN OF THE EXISTENCE OF A MARKETING AGREEMENT. NOTWITHSTANDING THE FACT THAT THE APPLICABILITY OF THE CLAUSE IS CONTINGENT ON THE EXISTENCE OF A MARKETING AGREEMENT, LICENSE, AND/OR ORDER, AND THE FACT THAT NO MARKETING AGREEMENTS, LICENSES, AND/OR ORDERS ARE IN EFFECT IN THAT AREA, IT IS REQUESTED THAT THIS OFFICE BE ADVISED WHETHER OR NOT THE BID OF SWIFT AND COMPANY MUST BE REJECTED BECAUSE THE CLAUSE WAS STRICKEN OUT AS INDICATED OR WHETHER OR NOT IT WOULD BE PROPER TO ACCEPT ITS BID AS TO ITEMS SEVEN AND EIGHT.

INASMUCH AS THE PERIOD COVERED BY THESE INVITATIONS COMMENCES 1 MARCH, 1937, IT IS REQUESTED THAT THIS OFFICE BE ADVISED AT AS EARLY A DATE AS POSSIBLE.

THE QUOTED PROVISION OF THE INVITATION FOR BIDS OBLIGATES A BIDDER, IF AWARDED A CONTRACT, TO COMPLY WITH ANY APPLICABLE APPROVED MARKETING AGREEMENT AND/OR LICENSE WHICH IS IN EFFECT ON THE DATE OF THE OPENING OF THE BIDS, AND ANY AMENDMENTS TO SUCH EXISTING MARKETING AGREEMENT OR LICENSE. THE BIDDER DOES NOT UNDERTAKE UNDER THE PROVISIONS, AND THE CONTRACTOR CANNOT BE REQUIRED TO COMPLY WITH MARKETING AGREEMENTS AND LICENSES APPROVED AND EXECUTED BY THE SECRETARY OF AGRICULTURE SUBSEQUENT TO THE DATE THE BIDS ARE OPENED. SEE IN THIS CONNECTION DECISION TO YOU OF OCTOBER 26, 1935, 15 COMP. GEN. 344, AND DECISIONS THERE CITED, IN WHICH WERE POINTED OUT THE OBJECTIONS TO REQUIRING A BIDDER TO COMPLY WITH SUBSEQUENT MARKETING AGREEMENTS, LICENSES, ETC., FROM THE STANDPOINT OF BOTH THE BIDDER AND THE GOVERNMENT. AS YOU HAVE POINTED OUT, IN THE CASE CONSIDERED IN THE DECISION 15 COMP. GEN. 201, THERE WAS INVOLVED AN APPLICABLE MARKETING AGREEMENT OR LICENSE EXISTING AT THE DATE OF THE OPENING OF THE BIDS.

IF, AS YOU STATE, THERE WERE NOT IN EFFECT IN THE CLEVELAND AREA, AT THE DATE THE BIDS WERE OPENED, ANY MARKETING AGREEMENTS, LICENSES, OR ORDERS "APPROVED AND EXECUTED BY THE SECRETARY OF AGRICULTURE UNDER THE PROVISIONS OF THE AGRICULTURAL ADJUSTMENT ACT" AND APPLICABLE TO THE ITEMS INVOLVED, THERE WAS NO OBLIGATION OF COMPLIANCE TO BE ASSUMED BY THE BIDDER. HENCE, THE STIPULATION IN THE BID INVITATIONS WAS INOPERATIVE AND STRIKING IT OUT DID NOT CHANGE THE EFFECT OF THE BID.

UNDER SUCH CIRCUMSTANCES, THE DELETION OF THE PROVISION BY SWIFT AND COMPANY IS IMMATERIAL, AND DOES NOT REQUIRE OR JUSTIFY THE REJECTION OF ITS BID.