A-15733, OCTOBER 28, 1926, 6 COMP. GEN. 295

A-15733, OCTOBER 28, 1926, 6 COMP. GEN. 295

CONTRACTS - STENOGRAPHIC REPORTING - ADVERTISING WHILE STENOGRAPHIC REPORTING IS PRIMARILY A PERSONAL SERVICE FOR PERFORMANCE BY REGULAR EMPLOYEES, WHEN CONGRESS BY STATUTE AUTHORIZES ITS PROCUREMENT BY CONTRACT, THE PROCEDURE MUST BE GENERALLY AS IN MATTERS OF CONTRACT BY OBTAINING THE SERVICE THROUGH COMPETITIVE BIDS TO BE SOLICITED UNDER SECTION 3709, REVISED STATUTES, AT LEAST ONCE EACH FISCAL YEAR.

COMPTROLLER GENERAL MCCARL TO CHAIRMAN, BOARD OF TAX APPEALS, OCTOBER 28, 1926:

I HAVE YOUR LETTER OF OCTOBER 5, 1926, IN REPLY TO MY LETTER OF SEPTEMBER 30, 1926, WITH REFERENCE TO THE CONTRACT FOR THE SUPPLYING OF STENOGRAPHIC TRANSCRIPTS OF PROCEEDINGS BEFORE YOUR BOARD. YOU STATE IN PART THAT:

IN DECEMBER, 1924, BIDS WERE OPENED FOR CONTRACT REPORTING FOR THIS BOARD. THERE WERE 19 BIDDERS. THE BIDS RAN FROM $1 PER PAGE TO 30 CENTS PER PAGE. THE BIDS WERE AS FOLLOWS:

PER PAGE TWO BIDDERS, AT --------------------------------------- $1.00 ONE BIDDER, AT ---------------------------------------- .75 ONE BIDDER, AT ----- ---------------------------------- .70 ONE BIDDER, AT -------------- ------------------------- .62 TWO BIDDERS, AT ---------------------- ----- ----------- .60 ONE BIDDER, AT -------------------------------- ------- .58 NINE BIDDERS, AT -------------------------------------- .55 ONE BIDDER, AT ---------------------------------------- .50 ONE BIDDER, AT --- ------------------------------------- .30

THE LOWEST BIDDER WAS ELIMINATED AFTER INVESTIGATION DISCLOSED THAT HE HAD BEEN DISBARRED FROM PRACTICE IN VIRGINIA AND ILLINOIS, AND THAT DISBARMENT PROCEEDINGS WERE PENDING AGAINST HIM IN THE COURTS OF MASSACHUSETTS.

THE ONLY REMAINING BID WAS AT 50 CENTS PER PAGE FOR ORIGINAL COPY. BUT FOR CARBON COPIES THIS BID WAS 15 CENTS PER PAGE, AS AGAINST 5 CENTS BID BY THOSE BIDDING 55 CENTS FROM ORIGINALS. SO THAT, IN REALITY, THE 55- CENT BID WAS THE LOWEST BID RECEIVED FROM A RESPONSIBLE PERSON.

THE CONTRACT WAS AWARDED TO FLOYD E. MOORE, TRADING AS MOORE REPORTING CO., AND ACCORDINGLY, ON JANUARY 6, 1925, A CONTRACT WAS EXECUTED BETWEEN MR. MOORE AND THE BOARD. A COPY OF THAT CONTRACT IS ON FILE IN YOUR OFFICE. THE LAST CLAUSE OF THAT CONTRACT IS AS FOLLOWS:

"IT IS MUTUALLY UNDERSTOOD AND AGREED THAT THIS AGREEMENT SHALL REMAIN IN FORCE AND EFFECT UNTIL REVOKED BY THE PARTY OF THE SECOND PART, ACTING UNDER THE INSTRUCTIONS OF THE UNITED STATES BOARD OF TAX APPEALS, OR BY THE PARTY OF THE FIRST PART AFTER 30 DAYS' NOTICE IN WRITING, THE ONE PARTY IN EITHER CASE TO OTHER.'

THE CONTRACT ABOVE REFERRED TO, OF JANUARY 6, 1925, WAS CONSIDERED BY MR. MOORE AND BY THE BOARD AS A CONTINUING CONTRACT, IN VIEW OF THE PROVISION THEREIN THAT IT SHOULD REMAIN IN FORCE AND EFFECT UNTIL REVOKED. FOR THAT REASON IT WAS NOT DEEMED NECESSARY FORMALLY TO RENEW THE CONTRACT AT THE BEGINNING OF THIS CURRENT FISCAL YEAR. HOWEVER, IN VIEW OF THE QUESTION WHICH HAD ARISEN AS TO COPY PRICES IN EMERGENCIES, IT WAS THOUGHT DESIRABLE BY BOTH CONTRACTING PARTIES THAT SOME PROVISION SHOULD BE MADE FOR MEETING SUCH A SITUATION IN FUTURE. AT FIRST THE PARTIES DEEMED IT NECESSARY ONLY TO INDORSE THE OLD CONTRACT BY ADDING THE DESIRED PROVISION. EXCEPT FOR THIS, IT WAS NOT DEEMED NECESSARY TO DO AUGHT BUT CONTINUE UNDER THE OLD CONTRACT.

AFTER DISCUSSION BETWEEN THE PARTIES IT WAS DECIDED THAT THE OLD CONTRACT SHOULD BE REDRAFTED TO INCORPORATE THESE DESIRED PROVISIONS, AND THIS WAS DONE. THE CONTRACT WAS NOT CHANGED IN MATERIAL PARTICULARS OTHERWISE, EXCEPT THAT MR. MOORE AGREED TO REPORT ANYWHERE IN THE UNITED STATES UPON DISCRETION OF THE BOARD AT THE PRICES CONTAINED IN THE CONTRACT. THIS WAS AND IS BELIEVED TO BE HIGHLY BENEFICIAL TO THE GOVERNMENT.

IN VIEW OF THE PROVISIONS OF THE CONTRACT OF JANUARY 6, 1925 (QUOTED ABOVE), IT IS RESPECTFULLY SUBMITTED THAT THE BOARD'S CONTRACT WAS A CONTINUING ONE AND THAT THERE WAS NO NECESSITY FOR INVITING BIDS AND PROPOSALS FOR A NEW CONTRACT FOR THE CURRENT YEAR. THE PRESENT EXISTING CONTRACT IS BELIEVED TO BE A VALID AND LEGAL CONTRACT, AND IT IS FURTHER SUBMITTED THAT THE LAW RELATIVE TO SUCH CONTRACTS HAS BEEN COMPLIED WITH.

SECTION 3679 OF THE REVISED STATUTES, AS AMENDED BY THE ACT OF FEBRUARY 27, 1906, 34 STAT. 49, PROHIBITS INVOLVING THE GOVERNMENT IN ANY CONTRACT OR OTHER OBLIGATION FOR THE FUTURE PAYMENT OF MONEY IN EXCESS OF THE ANNUAL APPROPRIATION UNDER WHICH MADE, UNLESS SUCH CONTRACT OR OBLIGATION IS AUTHORIZED BY LAW; AND SECTION 3732, REVISED STATUTES, PROHIBITS THE MAKING OF CONTRACTS AND PURCHASES UNLESS THE SAME IS AUTHORIZED BY LAW OR UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT, WITH CERTAIN EXCEPTIONS NOT HERE INVOLVED. THESE PROVISIONS AND OTHER PROVISIONS, SUCH AS SECTION 3709, REQUIRING COMPETITION BY ADVERTISING IN THE MAKING OF GOVERNMENT CONTRACT AND PURCHASES NEGATIVE A PROCEDURE WHICH WOULD PERMIT CONTRACTING OR OBLIGATING THE GOVERNMENT FOR A LONG PERIOD OF TIME OR AN INDEFINITE TIME. THEREFORE, A CONTRACT UNDER AUTHORITY OF AN ANNUAL APPROPRIATION AND PURPORTING TO COVER A PERIOD BEYOND THE END OF THE FISCAL YEAR FOR WHICH THE APPROPRIATION WAS MADE MAY NOT BE CONSIDERED AS OBLIGATING THE GOVERNMENT BEYOND THE SAID FISCAL YEAR. THE CONTRACT IN QUESTION DOES NOT EVEN CONTAIN A PROVISION THAT IT IS MADE SUBJECT TO AN APPROPRIATION. HOWEVER, SUCH STIPULATION DOES NOT OVERCOME THE RESTRICTION OF MAKING CONTRACTS BY COMPETITION.

IN VIEW OF THE PROVISIONS OF LAW HEREINBEFORE MENTIONED, THE AGREEMENT WITH FLOYD E. MOORE, TRADING AS THE MOORE REPORTING CO., MAY BE UNDERSTOOD AS A CONTINUING OFFER BY THE SAID COMPANY TO SUPPLY STENOGRAPHIC TRANSCRIPTS OF PROCEEDINGS BEFORE THE BOARD OF TAX APPEALS FOR THE PRICES NAMED THEREIN FOR THE PARTICULAR YEAR. IT DOES NOT EXCLUDE OR RELIEVE THE ADMINISTRATIVE OFFICER CONCERNED FROM ASKING BIDS AND ASCERTAINING FROM OTHERS EACH YEAR PRICES FOR RENDERING SUCH SERVICE. UPON A REQUEST FOR BIDS, IT IS NOT AT ALL IMPROBABLE THAT THE ORIGINAL CONTRACTOR MIGHT BID TO RENDER THE SERVICES AT A PRICE LESS THAN ITS CONTINUING OFFER, BUT IN AWARDING A NEW CONTRACT IN SUCH A SITUATION AS HERE PRESENTED, CONSIDERATION SHOULD BE GIVEN THE CONTINUING OFFER ALONG WITH OTHER BIDS RECEIVED AND THE CONTRACT AWARDED TO THE LOWEST BIDDER THUS APPEARING, BUT IN NO EVENT AT A HIGHER PRICE THAN THAT MADE IN THE CONTINUING OFFER.

OBVIOUSLY, THE INTENT AND PURPOSE OF SECTION 3709, REVISED STATUTES, IS TO SECURE TO THE GOVERNMENT THE BENEFITS DERIVED FROM COMPETITION IN THE MAKING OF CONTRACTS AND IN THE PURCHASE OF SUPPLIES. WHILE THE SAID STATUTE DOES NOT REQUIRE ADVERTISING IN CASES OF PERSONAL SERVICES, THE PERSONAL SERVICES HERE INVOLVED AS A MATTER OF CONTRACT GO TO THE MANNER OF PERFORMANCE OF THE SERVICE--- WHICH IS THAT OF REPORTING--- AND BEING NOW AUTHORIZED AS A CONTRACTUAL MATTER THE PROCEDURE MUST BE GENERALLY AS IN OTHER MATTERS OF CONTRACTING BY OBTAINING THE SERVICE THROUGH COMPETITIVE BIDS.

IT APPEARS THAT THE CONTRACT WITH THE MOORE CO. WAS ORIGINALLY MADE AFTER ADVERTISING FOR BIDS. THE QUESTION OF CONTRACTING FOR THE SERVICES INSTEAD OF USING THE EMPLOYEES OF THE BOARD WAS RAISED AND THIS OFFICE IN DECISION OF OCTOBER 21, 1925, DETERMINED THAT THERE WAS THEN NO AUTHORITY TO SO CONTRACT BUT THE CONTRACT WOULD NOT BE QUESTIONED TO JUNE 30, 1926; THEREAFTER LEGISLATIVE AUTHORITY WOULD HAVE TO APPEAR FOR THE PROCEDURE. LEGISLATIVE AUTHORITY WAS OBTAINED, AND THE DECISION OF THIS OFFICE OF APRIL 2, 1926, HELD IT WAS SUFFICIENT AUTHORITY TO CONTRACT FOR SERVICES. THEREUPON, APPARENTLY, CONTRACT WAS MADE UNDER DATE OF JUNE 26, 1926, FOR THE TERM ENDING JUNE 30, 1927, AND TO CONTINUE THEREAFTER FROM YEAR TO YEAR WITHOUT FURTHER AGREEMENT.

THE DECISION OF THIS OFFICE RESTED ONLY UPON THE QUESTION OF CONTRACTING FOR THE SERVICE AS AGAINST ITS PERFORMANCE BY THE EMPLOYEES OF THE BOARD. THERE WAS NO DETERMINATION OF THE MANNER OF CONTRACTING FOR THE SERVICE. THE BOARD SEEMS TO HAVE THOUGHT THAT HAVING OBTAINED THE LEGISLATIVE AUTHORITY TO MAKE CONTRACT THERE WAS NO LIMITATION EITHER IN THE MANNER OF MAKING IT OR FOR WHAT PERIOD. THIS, OF COURSE, WAS WHOLLY IN ERROR. IS NOT CLEAR WHY THE BOARD, HAVING OBTAINED BIDS IN DECEMBER, 1924, SHOULD NOT HAVE LIKEWISE PROCEEDED TO OBTAIN BIDS EACH FISCAL YEAR SINCE. THE SITUATION IS ONE IN WHICH THAT OBJECTION WILL NOT NOW BE MADE TO CONTINUATION OF THE CONTRACT FOR THE TERM ENDING JUNE 30, 1927, BUT YOU ARE ADVISED THAT BEGINNING WITH THE FISCAL YEAR 1928 IT WILL BE NECESSARY TO MAKE A SHOWING OF COMPLIANCES WITH THE PROVISIONS OF SECTION 3709, REVISED STATUTES. SEE ALSO DECISION OF THIS DATE IN THE MATTER OF THE FEDERAL TRADE COMMISSION (A-15867).