B-125260, JAN. 26, 1960

B-125260, JAN. 26, 1960

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO A LETTER DATED SEPTEMBER 2, 1959, FROM THE ACTING POSTMASTER GENERAL, RELATING TO OUR DECISION OF JANUARY 23, 1956, B- 125260, PUBLISHED AT 35 COMP. GEN. 411, IN WHICH IT WAS HELD THAT THE WORDS "ACTUALLY ENGAGED IN BUSINESS," AS USED IN SECTION 425A OF TITLE 39, U.S.C., SHOULD BE CONSTRUED AS MEANING A BUSINESS OTHER THAN THAT OF PERFORMING CONTRACTS FOR THE TRANSPORTATION OF THE MAIL. ALSO, THERE HAS BEEN RECEIVED A LETTER DATED NOVEMBER 6, 1959, WITH ENCLOSURES, FROM THE GENERAL COUNSEL OF YOUR DEPARTMENT, SUBMITTING CERTAIN ADDITIONAL FACTS IN SUPPORT OF THE REQUEST FOR RECONSIDERATION.

RESPECTING THE HOLDING IN THE DECISION OF JANUARY 23, 1956, IT WAS STATED IN THE LETTER OF SEPTEMBER 2, 1959, THAT FROM TIME TO TIME BIDS FOR STAR ROUTE SERVICE HAVE BEEN RECEIVED FROM FIRMS, COMPANIES, OR CORPORATIONS WHICH ARE ENGAGED IN TRANSPORTING MAIL, AND IT WAS POINTED OUT THAT, IF THE SOLE BUSINESS THESE CONCERNS PERFORM IN THE AFFECTED COUNTIES IS THE TRANSPORTATION OF MAIL UNDER ANOTHER EXISTING MAIL CONTRACT, THE DECISION OF JANUARY 23, 1956, WOULD APPEAR TO REQUIRE YOUR DEPARTMENT TO REJECT THEIR BIDS IF THEY WERE THE LOW BIDDERS. IT WAS THEN REQUESTED THAT WE RECONSIDER THE DECISION OF JANUARY 23, 1956, SINCE IT GIVES RISE TO PROBLEMS UNDER THE STAR ROUTE SERVICE LAWS.

IN OUR DECISION DATED AUGUST 6, 1956, B-125260, WE STATED THAT AS TO STAR ROUTE CONTRACTS, AWARD OF WHICH IS STILL SUBJECT TO THE REQUIREMENTS OF SECTION 3 OF THE ACT OF MAY 31, 1950, 39 U.S.C. 425, WE HAD NOT BEEN ADVISED THAT ANY QUESTION HAD ARISEN WHICH WOULD INVOLVE APPLICATION OF THE DECISION OF JANUARY 23, 1956, AND THAT, THEREFORE, WE FELT THAT FURTHER CONSIDERATION OF THE MATTER WITH RESPECT TO SUCH CONTRACTS WOULD NOT BE PROPER AT THAT TIME. SPECIFICALLY, YOU REQUEST THAT WE RECONSIDER OUR DECISION THAT A FIRM, COMPANY, OR CORPORATION WHICH ONLY TRANSPORTS MAIL UNDER AN EXISTING CONTRACT IN THE AFFECTED COUNTIES DOES NOT MEET THE REQUIREMENTS OF SECTION 425A OF TITLE 39, U.S.C.

IN SUPPORT OF THE REQUEST FOR RECONSIDERATION, IT WAS REPORTED IN THE LETTER OF NOVEMBER 6, 1959, THAT AS A RESULT OF THE DECISION OF JANUARY 23, 1956, IN A NUMBER OF INSTANCES, PERSONS WHO HAVE INDICATED THEY WERE INTERESTED IN SUBMITTING BIDS HAVE BEEN ADVISED BY YOUR REGIONAL OFFICES THAT THEY WERE NOT ELIGIBLE TO BID; THAT IT IS BELIEVED THE STAR ROUTE CARRIERS ASSOCIATION HAS DISSEMINATED INFORMATION TO ITS MEMBERS ABOUT THE LIMITATION AND THAT AS A RESULT, IN A NUMBER OF CASES, BIDS WERE NOT BEING RECEIVED FROM PERSONS WHO WOULD OTHERWISE SUBMIT BIDS, THUS REDUCING THE AMOUNT OF COMPETITION THAT MIGHT OTHERWISE BE OBTAINED. AS A THIRD INSTANCE IN WHICH A PROBLEM HAS ARISEN, IT IS REPORTED THAT IN SOME CASES THE CONTRACT WAS ORIGINALLY VALIDLY AWARDED BECAUSE THE FIRM WAS ALSO ENGAGED IN BUSINESS OTHER THAN MAIL TRANSPORTATION, BUT THAT, HOWEVER, IN THE MEANTIME, THE FIRM HAS SOLD OUT THE OTHER BUSINESS AND IS NOW SOLELY ENGAGED IN THE TRANSPORTATION OF MAIL. A QUESTION THEREFORE ARISES AS TO WHETHER UNDER THE DECISION OF JANUARY 23, 1956, YOUR DEPARTMENT MAY RENEW THE CONTRACT PURSUANT TO THE SIXTH PARAGRAPH OF SECTION 434 OF TITLE 39 U.S.C.

THE "PROBLEMS" INVOLVED IN THIS CASE APPEAR TO CONSIST OF THE DESIRE OF YOUR DEPARTMENT TO HAVE A WIDER FIELD OF COMPETITION AVAILABLE FOR THE AWARD OF CONTRACTS FOR STAR ROUTE SERVICE THAN IS PERMISSIBLE UNDER OUR INTERPRETATION OF SECTION 425A OF TITLE 39, U.S.C. THAT IS TO SAY, OUR DECISION OF JANUARY 23, 1956, CONSTRUING THE WORDS "ACTUALLY ENGAGED IN BUSINESS," AS USED IN THE CITED SECTION, IS BELIEVED BY YOU TO BE RESTRICTIVE OF THE AUTHORITY YOU FEEL YOUR DEPARTMENT SHOULD HAVE IN AWARDING CONTRACTS FOR STAR ROUTE SERVICE WITHIN THE TERMS OF THE ACT.

IN OUR DECISION OF JANUARY 23, 1956, CONSIDERATION WAS GIVEN TO THE AUTHORITY CONTAINED IN THE CITED SECTION AND IN CONSTRUING THE LANGUAGE CONTAINED THEREIN EVERY EFFORT WAS MADE TO GIVE COMPLETE EFFECT TO THE LEGISLATIVE INTENT. IT WAS OUR CONSIDERED OPINION THAT THE CONGRESS CLEARLY INTENDED TO BAR CORPORATE CONTRACTORS FROM BIDDING FOR STAR ROUTE SERVICE UNLESS ACTUALLY ENGAGED IN BUSINESS IN THE SAME LOCALITY, AND TO THAT END WE HELD THAT---

"* * * TO EFFECTUATE THIS EVIDENT INTENT AND TO OBVIATE THE POSSIBILITY OF A CORPORATE CONTRACTOR BECOMING AUTOMATICALLY ELIGIBLE FOR NEW CONTRACTS BY VIRTUE OF ITS PRE-EXISTING CONTRACTS--- WHICH AN INDIVIDUAL COULD NOT DO--- WE CONCLUDE THAT THE WORDS "ACTUALLY ENGAGED IN BUSINESS" MUST BE CONSTRUED AS MEANING A BUSINESS OTHER THAN THAT OF PERFORMING CONTRACTS OF THE KIND DEALT WITH BY THE ACT.'

WE HAVE CAREFULLY RECONSIDERED THE MATTER IN THE LIGHT OF THE STATEMENTS CONTAINED IN YOUR LETTERS OF SEPTEMBER 2 AND NOVEMBER 6, 1959. HOWEVER, CONSIDERING THE OBVIOUS POLICY OF THE CONGRESS TO PROTECT HOLDERS OF STAR ROUTE CONTRACTS IN THEIR HOME COMMUNITIES AGAINST OUTSIDE COMPETITION--- AS INDICATED BOTH IN THE RESIDENCE RESTRICTION CONTAINED IN SECTION 3 OF THE ACT OF MAY 31, 1940, 54 STAT. 228, AND IN THE AUTHORITY TO RENEW STAR ROUTE CONTRACTS WITHOUT ADVERTISING GRANTED BY THE ACT OF JUNE 19, 1948, 62 STAT. 477--- WE DO NOT FEEL JUSTIFIED IN ENLARGING, BY CONSTRUCTION OF THE STATUTE, THE CONTRACTING AUTHORITY VESTED IN YOUR DEPARTMENT BEYOND THE LIMITS WHICH WE FEEL WERE INTENDED BY THE CONGRESS. IF YOU FEEL THAT THE STATUTE AS SO INTERPRETED IMPOSES TOO GREAT A RESTRICTION UPON THE POSTAL SERVICE, WE CAN ONLY SUGGEST THAT YOUR DEPARTMENT MAKE APPROPRIATE RECOMMENDATIONS IN THAT RESPECT TO THE CONGRESS, AS WAS DONE IN CONNECTION WITH THE HIGHWAY POST OFFICE SERVICE.

NOTHING CONTAINED HEREIN SHOULD BE CONSIDERED AS DENYING THE RIGHT OF YOUR DEPARTMENT TO RENEW ANY EXISTING CONTRACT FOR STAR ROUTE SERVICE BY MUTUAL AGREEMENT AS AUTHORIZED BY THE 1948 ACT AS AMENDED, 39 U.S.C. 434.