A-11774, NOVEMBER 23, 1925, 5 COMP. GEN. 376

A-11774: Nov 23, 1925

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

1925: I HAVE YOUR LETTER OF OCTOBER 30. REQUIRING THAT A FORMAL CONTRACT AND BOND BE EXECUTED FOR ALL CONSTRUCTION WORK FOR WHICH BIDS ARE ACCEPTED. THE WORK INVOLVED IN THIS INSTANCE MAY BE PERMITTED TO BE PERFORMED BY THE LOWEST BIDDER WITHOUT FORMAL CONTRACT OR BOND IN VIEW OF THE FACT THAT THE AMOUNT INVOLVED IS ONLY $65 AND THE BIDDER REFUSES TO ENTER INTO A FORMAL CONTRACT AND EXECUTE A BOND FOR THE PERFORMANCE OF THE WORK ON THE GROUND THAT THE AMOUNT OF THE CONTRACT IS ENTIRELY TOO SMALL IN PROPORTION TO THE TROUBLE AND EXPENSE INVOLVED IN EXECUTING SUCH PAPERS. THE BOND WHICH IS PROVIDED FOR BY THE ACT WAS INTENDED TO PERFORM A DOUBLE FUNCTION. IN VIEW OF YOUR STATEMENT THAT CONSIDERABLE DIFFICULTY HAS BEEN ENCOUNTERED IN PLACING ORDERS FOR REPAIR WORK ON PUBLIC BUILDINGS AND PUBLIC WORKS UNDER THE CONTROL OF THE AGRICULTURAL DEPARTMENT AND THAT THE RELUCTANCE TO GIVE BOND IS ALMOST UNIVERSAL.

A-11774, NOVEMBER 23, 1925, 5 COMP. GEN. 376

CONTRACTS, INFORMAL - REPAIRS TO PUBLIC BUILDINGS AND PUBLIC WORKS MINOR REPAIRS OR ADDITIONS TO PUBLIC BUILDINGS OR PUBLIC WORKS, UNDER THE CONTROL OF THE DEPARTMENT OF AGRICULTURE, MAY BE MADE BY A PROPOSAL AND ACCEPTANCE AGREEMENT WITHOUT THE EXECUTION OF A MORE FORMAL CONTRACT AND BOND WHERE THE COST OF SUCH REPAIRS OR ADDITIONS DOES NOT EXCEED $500.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, NOVEMBER 23, 1925:

I HAVE YOUR LETTER OF OCTOBER 30, 1925, TRANSMITTING THREE BIDS FOR REPAIR WORK ON AN INSTRUMENT TOWER AT THE WEATHER BUREAU STATION IN INDIANAPOLIS, IND., AND REQUESTING DECISION WHETHER, NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH 73 OF THE FISCAL REGULATIONS OF THE DEPARTMENT OF AGRICULTURE, REQUIRING THAT A FORMAL CONTRACT AND BOND BE EXECUTED FOR ALL CONSTRUCTION WORK FOR WHICH BIDS ARE ACCEPTED, THE WORK INVOLVED IN THIS INSTANCE MAY BE PERMITTED TO BE PERFORMED BY THE LOWEST BIDDER WITHOUT FORMAL CONTRACT OR BOND IN VIEW OF THE FACT THAT THE AMOUNT INVOLVED IS ONLY $65 AND THE BIDDER REFUSES TO ENTER INTO A FORMAL CONTRACT AND EXECUTE A BOND FOR THE PERFORMANCE OF THE WORK ON THE GROUND THAT THE AMOUNT OF THE CONTRACT IS ENTIRELY TOO SMALL IN PROPORTION TO THE TROUBLE AND EXPENSE INVOLVED IN EXECUTING SUCH PAPERS. YOU ALSO REQUEST DECISION AS TO WHETHER THE PROVISIONS OF PARAGRAPH 73, SUPRA, MAY BE AMENDED TO PROVIDE FOR ACCEPTANCE OF BIDS ON CONSTRUCTION OR REPAIR WORK OF $500 OR LESS WITHOUT EXECUTION OF FORMAL CONTRACT OR REQUIREMENT OF BOND, THE PROVISIONS THEREOF TO REMAIN THE SAME AS TO WORK COSTING MORE THAN $500.

THE ACT OF AUGUST 13, 1894, AS AMENDED BY THE ACT OF FEBRUARY 24, 1905, 33 STAT. 811, PROVIDES IN PART:

THAT HEREAFTER ANY PERSON OR PERSONS ENTERING INTO A FORMAL CONTRACT WITH THE UNITED STATES FOR THE CONSTRUCTION OF ANY PUBLIC BUILDING OR THE PROSECUTION AND COMPLETION OF ANY PUBLIC WORK, OR FOR REPAIRS UPON ANY PUBLIC BUILDING OR PUBLIC WORK SHALL BE REQUIRED BEFORE COMMENCING SUCH WORK, TO EXECUTE THE USUAL PENAL BOND, WITH GOOD AND SUFFICIENT SURETIES, WITH THE ADDITIONAL OBLIGATION THAT SUCH CONTRACTOR OR CONTRACTORS SHALL PROMPTLY MAKE PAYMENTS TO ALL PERSONS SUPPLYING HIM OR THEM WITH LABOR AND MATERIALS IN THE PROSECUTION OF THE WORK PROVIDED FOR IN SUCH CONTRACT; *

AS INDICATED IN 4 COMP. GEN. 208, THE BOND WHICH IS PROVIDED FOR BY THE ACT WAS INTENDED TO PERFORM A DOUBLE FUNCTION--- IN THE FIRST INSTANCE, TO SECURE TO THE GOVERNMENT THE FAITHFUL PERFORMANCE OF ALL OBLIGATIONS WHICH A CONTRACTOR MIGHT ASSUME TOWARD IT; AND, IN THE SECOND PLACE, TO PROTECT THIRD PERSONS FROM WHOM THE CONTRACTOR OBTAINED MATERIALS OR LABOR.

THE ACT OF AUGUST 13, 1894, SUPRA, AS AMENDED, DOES NOT SPECIFICALLY REQUIRE THAT A FORMAL CONTRACT BE ENTERED INTO IN ALL CASES OF CONSTRUCTION OF PUBLIC BUILDINGS OR REPAIR WORK ON SUCH BUILDINGS OR REPAIRS ON PUBLIC WORKS. HOWEVER, FOR THE OBVIOUS REASONS, SUCH A CONTRACT SHOULD BE ENTERED INTO IN ALL CASES OF CONSTRUCTION OR MAJOR REPAIRS OF PUBLIC BUILDINGS OR PUBLIC WORKS.

THIS OFFICE FULLY REALIZES THE IMPRACTICABILITY OF REQUIRING THE EXECUTION OF A FORMAL CONTRACT AND A BOND IN ALL CASES OF MINOR REPAIRS TO PUBLIC BUILDINGS OR PUBLIC WORKS, ETC., AND IN THE ABSENCE OF SPECIFIC LEGISLATION TO THE CONTRARY, AND IN VIEW OF YOUR STATEMENT THAT CONSIDERABLE DIFFICULTY HAS BEEN ENCOUNTERED IN PLACING ORDERS FOR REPAIR WORK ON PUBLIC BUILDINGS AND PUBLIC WORKS UNDER THE CONTROL OF THE AGRICULTURAL DEPARTMENT AND THAT THE RELUCTANCE TO GIVE BOND IS ALMOST UNIVERSAL, IT WOULD SEEM THAT THE RIGHTS OF THE UNITED STATES WOULD BE FULLY PROTECTED AND THAT IT WOULD BE TO THE INTEREST OF THE GOVERNMENT TO MAKE SUCH MINOR REPAIRS, ETC., TO PUBLIC WORKS OR PUBLIC BUILDINGS, NOT TO EXCEED $500, BY PROPOSAL AND ACCEPTANCE WITHOUT THE EXECUTION OF A MORE FORMAL CONTRACT AND A BOND, THE PROPOSAL AND ACCEPTANCE TO FORM THE AGREEMENT IN THE ABSENCE OF THE MORE FORMAL INSTRUMENT.

ACCORDINGLY, I HAVE TO ADVISE THAT A FORMAL CONTRACT AND BOND NEED NOT BE REQUIRED IN THE SPECIFIC CASE PRESENTED, AND THAT YOU ARE AUTHORIZED TO AMEND PARAGRAPH 73, FISCAL REGULATIONS, AS INDICATED IN YOUR SUBMISSION. 5 COMP. GEN. 138.