A-11651, NOVEMBER 27, 1925, 5 COMP. GEN. 385

A-11651: Nov 27, 1925

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ARE TO BE SIGNED BY BOTH PARTIES AT THE END THEREOF AFTER ALL NEGOTIATIONS WITH RESPECT THERETO ARE COMPLETED. 1925: I HAVE YOUR LETTER OF OCTOBER 21. IT WAS HELD THAT. IS NOT AUTHORIZED EVEN THOUGH DELIVERY IS TO BE MADE IMMEDIATELY. FORMAL CONTRACTS ARE NECESSARY EXCEPT IN THOSE CASES IN WHICH THE THING PURCHASED AND THE MONEY IN PAYMENT THEREFOR PASSES BETWEEN THE VENDOR AND VENDEE AT THE SAME ME.'. PURCHASES OF SUPPLIES AND PROCUREMENT OF SERVICES FOR THE NAVAL SERVICE ARE GOVERNED BY SECTION 3744. WHICH ARE GOVERNED BY THAT PART OF THE ACT OF 2 MARCH. WHEN IN THE OPINION OF THE PROPER ADMINISTRATIVE OFFICERS SUCH LIMITATION OF AMOUNT IS NOT DESIGNED TO EVADE PURCHASE UNDER FORMAL CONTRACT OR BOND AND EQUALLY OR MORE ADVANTAGEOUS TERMS CAN THEREBY BE SECURED.'.

A-11651, NOVEMBER 27, 1925, 5 COMP. GEN. 385

CONTRACTS, PROPOSAL AND ACCEPTANCE - FOREIGN PURCHASES CONTRACTS FOR THE PURCHASE OF SUPPLIES FOR THE UNITED STATES NAVAL SERVICE IN FOREIGN COUNTRIES, COMPOSED OF A PROPOSAL AND ACCEPTANCE EMBODIED IN A SINGLE WRITTEN INSTRUMENT, WHICH, THOUGH NOT STRICTLY IN THE CUSTOMARILY PRESCRIBED FORM OF A FORMAL CONTRACT, ARE TO BE SIGNED BY BOTH PARTIES AT THE END THEREOF AFTER ALL NEGOTIATIONS WITH RESPECT THERETO ARE COMPLETED, MAY BE ACCEPTED AS A PRACTICAL COMPLIANCE WITH THE PROVISIONS OF SECTION 3744, REVISED STATUTES, UPON A SATISFACTORY SHOWING AS TO COMPLIANCE WITH ALL APPLICABLE STATUTORY REQUIREMENTS RELATIVE TO ADVERTISING, LOWEST PRICE AVAILABLE, ETC.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, NOVEMBER 27, 1925:

I HAVE YOUR LETTER OF OCTOBER 21, 1925 (FILE 16801-1660-P), AS FOLLOWS:

IN YOUR DECISION OF 19 NOVEMBER, 1923, DIRECTED TO THE INTERIOR DEPARTMENT (3 COMP. GEN. 314), IT WAS HELD THAT---

"PURCHASE OF SUPPLIES FOR THE INTERIOR DEPARTMENT BY PROPOSAL AND ACCEPTANCE WITHOUT A FORMAL CONTRACT, UNDER SECTION 3744, REVISED STATUTES, IS NOT AUTHORIZED EVEN THOUGH DELIVERY IS TO BE MADE IMMEDIATELY. FORMAL CONTRACTS ARE NECESSARY EXCEPT IN THOSE CASES IN WHICH THE THING PURCHASED AND THE MONEY IN PAYMENT THEREFOR PASSES BETWEEN THE VENDOR AND VENDEE AT THE SAME ME.'

PURCHASES OF SUPPLIES AND PROCUREMENT OF SERVICES FOR THE NAVAL SERVICE ARE GOVERNED BY SECTION 3744, REVISED STATUTES, AS FOLLOWS:

"IT SHALL BE THE DUTY OF THE SECRETARY OF WAR, OF THE SECRETARY OF THE NAVY, AND OF THE SECRETARY OF THE INTERIOR TO CAUSE AND REQUIRE EVERY CONTRACT MADE BY THEM SEVERALLY ON BEHALF OF THE GOVERNMENT, OR BY THEIR OFFICERS UNDER THEM APPOINTED TO MAKE SUCH CONTRACTS, TO BE REDUCED TO WRITING, AND SIGNED BY THE CONTRACTING PARTIES WITH THEIR NAMES AT THE END THEREOF,"

EXCEPTING MATTERS WHICH DO NOT EXCEED $500.00, IN VALUE, WHICH ARE GOVERNED BY THAT PART OF THE ACT OF 2 MARCH, 1907 (34 STAT. 1193), WHICH READS AS FOLLOWS:

"HEREAFTER THE PURCHASE OF SUPPLIES AND THE PROCUREMENT OF SERVICES FOR ALL BRANCHES OF THE NAVAL SERVICE MAY BE MADE IN OPEN MARKET IN THE MANNER COMMON AMONG BUSINESS MEN WITHOUT FORMAL CONTRACT OR BOND, WHEN THE AGGREGATE OF THE AMOUNT REQUIRED DOES NOT EXCEED $500.00, AND WHEN IN THE OPINION OF THE PROPER ADMINISTRATIVE OFFICERS SUCH LIMITATION OF AMOUNT IS NOT DESIGNED TO EVADE PURCHASE UNDER FORMAL CONTRACT OR BOND AND EQUALLY OR MORE ADVANTAGEOUS TERMS CAN THEREBY BE SECURED.'

IN MAKING PURCHASES OF SUPPLIES AFLOAT AND IN FOREIGN COUNTRIES DIFFICULTY IS EXPERIENCED IN MAKING FORMAL WRITTEN CONTRACTS, ESPECIALLY WITH FOREIGN COMPRADORS OR SHIP'S CHANDLERS IN PORTS WHERE A FOREIGN LANGUAGE IS SPOKEN.

IT IS BELIEVED THAT THE REQUIREMENTS OF THE LAW AND THE INTENTION OF YOUR DECISION WOULD BE MET AND THE FINALITY OF A CONTRACT SECURED WHEN PURCHASES ARE MADE AFLOAT OR IN FOREIGN COUNTRIES AFTER SUBMISSION OF COMPETITIVE PROPOSALS IN THE REGULAR MANNER AND AFTER AWARD HAS BEEN MADE BY THE INSERTION AT THE END OF THE ACCEPTED PROPOSAL OVER THE SIGNATURES OF THE CONTRACTING OFFICER AND OF THE CONTRACTOR OF THE FOLLOWING:

"THE ABOVE OFFER IS MADE AND ACCEPTED FOR ITEMS ------- ON THE TERMS AND CONDITIONS STATED HEREON AND ACKNOWLEDGED BY THE FOLLOWING SIGNATURES, IT BEING A CONDITION HEREOF THAT NO MEMBER OF OR DELEGATE TO THE CONGRESS OF THE UNITED STATES SHALL BE ADMITTED TO ANY SHARE OR PART OF THIS AGREEMENT OR TO ANY BENEFIT TO ARISE THEREFROM," AND THAT SUCH DOCUMENT BE THE CONTRACT TO COVER THE PURCHASE CONCERNED.

IT IS REQUESTED THAT YOU ADVISE THIS DEPARTMENT WHETHER THE EXECUTION OF A CONTRACT BY THE NAVY FISCAL OFFICERS AFLOAT OR IN FOREIGN COUNTRIES IN THE MANNER DESCRIBED ABOVE WILL BE ACCEPTABLE TO YOUR OFFICE IN THE AUDIT OF THE ACCOUNTS COVERING SUCH PURCHASES.

THE QUESTION PRESENTED BY YOUR SUBMISSION IS AS TO WHETHER THE PROPOSED PROCEDURE IN THE MATTER OF EVIDENCING CONTRACTS UNDER THE CIRCUMSTANCES STATED MAY BE ACCEPTED AS A SUBSTANTIAL COMPLIANCE WITH REQUIREMENTS OF SECTION 3744, REVISED STATUTES, RELATIVE TO THE REDUCTION OF CONTRACTS TO WRITING AND THE SIGNING AT THE END THEREOF BY THE CONTRACTING PARTIES.

IT IS ASSUMED FOR THE PURPOSE OF THIS DECISION THAT THE TERM "AFLOAT AND IN FOREIGN COUNTRIES" USED IN YOUR SUBMISSION RELATES TO PURCHASES TO BE MADE IN FOREIGN COUNTRIES AND NOT WITHIN THE TERRITORIAL JURISDICTION OF THE UNITED STATES.

THE PURCHASE OF SUPPLIES BY CONTRACT AND IN THE OPEN MARKET FOR THE NAVAL SERVICE IS GOVERNED BY THE PROVISIONS OF SECTIONS 3709, 3718 3731, 3739- 3747, REVISED STATUTES, AND THE ACT OF MARCH 2, 1907, 34 STAT. 1193.

THE PROVISIONS OF SECTION 3744, REVISED STATUTES, ARE CLEAR, AND IT HAS BEEN REPEATEDLY HELD THAT THE REQUIREMENTS OF THE ACT ARE MANDATORY AND IN EFFECT PROHIBIT AND RENDER UNLAWFUL ANY OTHER MODE OF MAKING CONTRACTS TO WHICH THE SECTION IS APPLICABLE. SEE ERIE COAL AND COKE CORPORATION V. UNITED STATES, 266 U.S. 518. IN SOUTH BOSTON IRON WORKS V. UNITED STATES, 18 CT.CLS. 165, IN DISCUSSING THE WORDS "REDUCED TO WRITING AND SIGNED BY THE CONTRACTING PARTIES WITH THEIR NAMES AT THE END THEREOF" IT WAS SAID:

* * * CONGRESS INSERTED THESE WORDS FOR A PURPOSE, AND COURTS MUST GIVE THEM EFFECT. * * * THESE ADDITIONAL WORDS CAN NOT MEAN LESS THAN THAT THE CONTRACT SHALL BE SO FULL AND COMPLETE BEFORE SIGNING THAT IT CAN BE SIGNED IN WHOLE BY BOTH PARTIES. IT EXCLUDES THE IDEA THAT ONE PARTY MAY SIGN ONE PART OF THE CONTRACT AND THE OTHER PARTY ANOTHER AND LEAVE THE COURTS TO ARRANGE A CONTRACT BY COLLECTING AND JOINING THE PIECES.

THE PRESENT SUBMISSION PROPOSES TO MEET THE REQUIREMENTS OF SECTION 3744, REVISED STATUTES, WITH RESPECT TO PURCHASES OF SUPPLIES IN FOREIGN COUNTRIES BY INCORPORATING AT THE END OF THE INSTRUMENT COMPRISING THE PROPOSAL AND ACCEPTANCE A STATEMENT TO BE SIGNED BY BOTH THE CONTRACTING OFFICER AND THE BIDDER ACKNOWLEDGING AND ACCEPTING ALL THE TERMS CONTAINED THEREIN, TOGETHER WITH A STATEMENT AS TO THE NONPARTICIPATION THEREIN BY ANY MEMBER OR DELEGATE OF CONGRESS AS REQUIRED BY SECTION 3741, REVISED STATUTES.

THE PRESENT FORM OF PROPOSAL FOR SUPPLIES AFLOAT, S. AND A. FORM NO. 106, SIGNED BY THE PARTY STATES AS FOLLOWS:

PROPOSAL FOR SUPPLIES AFLOAT

TO ------------------- U.S.S. -------------------

------------------- ------------------, 19 - ---

BID ON ALL OR ANY ITEMS AS YOU SEE FIT. IF NOT PREPARED TO SUBMIT A BID, PLEASE SO STATE OVER THE FIRM SIGNATURE AND RETURN THIS PAPER SO THAT IT MAY BE KNOWN THAT IT WAS BROUGHT TO YOUR ATTENTION; OTHERWISE YOUR NAME MAY BE DROPPED FROM THE LIST OF PROSPECTIVE BIDDERS.

SUPPLY OFFICER. ------------------------------------- ------------------ ------------------ (NO. OF REQ. ------- (

-------------------- TO THE SUPPLY OFFICER, U.S.S. --------------

SIR: I HEREBY OFFER TO DELIVER ALONGSIDE THE U.S.S. --------------- AT -- ------------- WITHIN ---------- DAYS AFTER RECEIVING NOTICE OF AWARD, AT MY OWN EXPENSE AND AT THE PRICES STATED, ANY ITEM OR ITEMS BELOW ENUMERATED AS MAY BE DIRECTED; MY OFFER ON EACH INDIVIDUAL ITEM TO BE TREATED AS A COMPLETE AND SEPARATE BID; ALL DELIVERIES TO BE STRICTLY FIRST CLASS IN QUALITY AND SUBJECT TO INSPECTION ACCORDING TO NAVY REGULATIONS; THIS ACTION TO BE FINAL AND BINDING UPON ME, AND I BEING OBLIGATED TO PAY THE DIFFERENCE IN COST IF ANY OF MY DELIVERIES ARE REPLACED BY OPEN PURCHASE MADE AT THE OPTION OF THE SUPPLY OFFICER AND SAID OFFICER BEING AT LIBERTY TO GO INTO THE LOCAL MARKET AND BUY FOR MY ACCOUNT ANY ITEMS THAT I FAIL TO SATISFACTORILY DELIVER ON TIME.

TABLE ------------------------------------------------------------- -----

TOTAL

QUANTITY ARTICLES REQUIRED PER PRICE OF AMOUNT

EACH ITEM OF EACH

ITEM ---------------------------------------------------- ---------------

IT IS UNDERSTOOD THAT UNDER PRESENT PROCEDURE ACCEPTANCE OF THE OFFER IS MADE BY TYPING THEREON IN SUBSTANCE THE FOLLOWING---

ACCEPTED AS TO ITEMS CHECKED THUS

LT. U.S.N. - DIVN. SUP. OFF.

UNDER THE PROPOSED PROCEDURE THIS WOULD BE OMITTED.

IT WOULD APPEAR THAT WITH THE MATTER STATED IN YOUR SUBMISSION ADDED PERMANENTLY TO THE FORM BELOW THE SIGNING BY THE PARTY AS AN OFFER, SO THAT THERE WILL BE A SIGNING BY THE SUPPLY OFFICER AND AGAIN BY THE PARTY UNDER THE ADDED MATTER, ALSO THERE DATING THE SIGNING, THERE WILL BE A CONTRACT IN REASONABLY PROPER TERMS SIGNED AT THE END BY THE PARTIES THERETO.

IT MAY BE CONCLUDED THAT SINCE THE TERMS OF THE CONTRACT ARE THUS TO BE EMBODIED IN A SINGLE WRITTEN INSTRUMENT WHICH, THOUGH NOT STRICTLY IN THE CUSTOMARILY PRESENTED FORM OF A FORMAL CONTRACT, IS TO BE SIGNED BY BOTH PARTIES AFTER ALL NEGOTIATIONS WITH RESPECT THERETO ARE COMPLETED, I HAVE TO ADVISE THAT HAVING REGARD TO FOREIGN PURCHASING CONDITIONS THE PROCEDURE PROPOSED MAY BE ACCEPTED AS A PRACTICAL COMPLIANCE WITH THE PROVISIONS OF SECTION 3744, REVISED STATUTES, IN THE MATTER OF THESE FOREIGN PURCHASES UPON A SATISFACTORY SHOWING AS TO COMPLIANCE WITH ALL APPLICABLE STATUTORY REQUIREMENTS RELATIVE TO ADVERTISING, LOWEST PRICE AVAILABLE, ETC. ..END :