A-13009, FEBRUARY 20, 1926, 5 COMP. GEN. 649

A-13009: Feb 20, 1926

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THE ACCEPTANCE OF OTHER THAN THE LOWEST BID IS AUTHORIZED WHERE THE BID OF THE LOWEST BIDDER CONTAINS A PROVISION THAT INTEREST MUST BE PAID BY THE UNITED STATES IN THE EVENT THE INVOICES ARE NOT PAID WITHIN A STIPULATED TIME. 1926: I HAVE READ YOUR LETTER OF FEBRUARY 6. LETTERS WERE ADDRESSED TO EIGHT COMPANIES REQUESTING BIDS FOR FURNISHING 100 GALLONS OF PAINT TO THE DEPARTMENT WITH THE RESULT THAT SEVEN PROPOSALS WERE RECEIVED FROM AS MANY BIDDERS. I. DU PONT DE NEMOURS AND COMPANY WAS THE LOWEST. THERE IS. IF THIS BID WERE ACCEPTED IT WOULD BE WITH THE FULL KNOWLEDGE THAT THIS ACCOUNT. IT IS CONCEIVABLE. THERE IS THE POSSIBILITY. THAT THE MATTER WILL NOT BE SETTLED UNTIL SUCH TIME IN THE FUTURE WHEN THE INTEREST ADDED TO THE AMOUNT OF THE BID WOULD AMOUNT TO MORE THAN THE NEXT LOWEST BID.

A-13009, FEBRUARY 20, 1926, 5 COMP. GEN. 649

INTEREST - ADVERTISING, ACCEPTANCE OF OTHER THAN THE LOWEST BID IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY THEREFOR, THE UNITED STATES MAY NOT BE OBLIGATED TO PAY INTEREST ON THE AMOUNT OF AN INVOICE NOT PAID WITHIN A SPECIFIED TIME. THE ACCEPTANCE OF OTHER THAN THE LOWEST BID IS AUTHORIZED WHERE THE BID OF THE LOWEST BIDDER CONTAINS A PROVISION THAT INTEREST MUST BE PAID BY THE UNITED STATES IN THE EVENT THE INVOICES ARE NOT PAID WITHIN A STIPULATED TIME.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, FEBRUARY 20, 1926:

I HAVE READ YOUR LETTER OF FEBRUARY 6, 1926, AS FOLLOWS:

ON JANUARY 15, 1926, LETTERS WERE ADDRESSED TO EIGHT COMPANIES REQUESTING BIDS FOR FURNISHING 100 GALLONS OF PAINT TO THE DEPARTMENT WITH THE RESULT THAT SEVEN PROPOSALS WERE RECEIVED FROM AS MANY BIDDERS, OF WHICH THAT SUBMITTED BY E. I. DU PONT DE NEMOURS AND COMPANY WAS THE LOWEST. THERE IS, HOWEVER, A CONDITION STAMPED UPON THE FACE OF THE PROPOSAL READING AS FOLLOWS:

"TERMS--- NET CASH 30 DAYS. INT. OF 5 PERCENT PER ANNUM ON OVERDUE

ACCOUNTS FROM DUE DATE TO DATE OF PAYMENT.' WHICH RAISES SOME QUESTION WHETHER THE AMOUNT OF THE BID EVENTUALLY WOULD BE THE LOWEST. IF THIS BID WERE ACCEPTED IT WOULD BE WITH THE FULL KNOWLEDGE THAT THIS ACCOUNT, AS IN THE CASE OF OTHERS IN FAVOR OF E. I. DU PONT DE NEMOURS AND COMPANY, WOULD BE SENT TO THE GENERAL ACCOUNTING OFFICE FOR DIRECT SETTLEMENT AND THERE APPLIED UNDER THE SET-OFF PRINCIPLE TO THE INDEBTEDNESS OF THE COMPANY TO THE UNITED STATES. IT IS CONCEIVABLE, OF COURSE, THAT THE MATTER MIGHT BE SETTLED IN A COMPARATIVELY SHORT TIME AFTER THE DATE THE PAYMENT UNDER THIS CONTRACT BECAME DUE, IN WHICH EVENT INTEREST ADDED TO THE ORIGINAL BID WOULD STILL LEAVE IT THE LOWEST BID. ON THE OTHER HAND, THERE IS THE POSSIBILITY, INDEED THE PROBABILITY, THAT THE MATTER WILL NOT BE SETTLED UNTIL SUCH TIME IN THE FUTURE WHEN THE INTEREST ADDED TO THE AMOUNT OF THE BID WOULD AMOUNT TO MORE THAN THE NEXT LOWEST BID.

YOUR DECISION, THEREFORE, IS REQUESTED, BEFORE ANY ACTION IS TAKEN IN THE PREMISES, AS TO WHETHER THE CONTRACT SHOULD BE AWARDED TO E. I. DU PONT DE NEMOURS AND COMPANY NOTWITHSTANDING THE POSSIBILITIES TO BE ANTICIPATED FROM THE PROVISION STAMPED UPON THE BID, AND INTENDED BY THE COMPANY AS A PART OF THE CONTRACT OR WHETHER, UNDER THE CIRCUMSTANCES, THE CONTRACT SHOULD BE AWARDED TO THE NEXT LOWEST BIDDER.

IN SO FAR AS THERE IS CONCERNED THE INDEBTEDNESS TO THE UNITED STATES OF E. I. DU PONT DE NEMOURS AND CO., AS APPEARING ON THE BOOKS OF THIS OFFICE AS GUARANTORS OF DU PONT ENGINEERING O., YOU ARE INFORMED THAT A SETTLEMENT AND ADJUSTMENT THEREOF HAS NOW BEEN REACHED AND PAYMENTS TO SAID COMPANY IF OTHERWISE CORRECT ARE NOT REQUIRED TO BE WITHHELD ON ACCOUNT OF SAID INDEBTEDNESS.

IT MAY BE STATED AS A GENERAL RULE THAT INTEREST IS NOT RECOVERABLE FROM THE UNITED STATES, SHECKLES V. DISTRICT OF COLUMBIA, 246 U.S. 338, AND THE COMMON LAW RULE THAT DELAY OR DEFAULT IN PAYMENT, UPON WHICH, IN THE ABSENCE OF EXPRESS AGREEMENT, THE RIGHT TO RECOVER INTEREST RESTS, CAN NOT BE ATTRIBUTED TO THE SOVEREIGN, HAS BEEN ADOPTED BY THE CONGRESS. UNITED STATES V. NORTHERN AMERICAN TRANSPORTATION AND TRADING COMPANY, 253 U.S. 330.

IN THE ABSENCE OF SPECIFIC STATUTORY AUTHORITY THEREFOR NO CONTRACTING OFFICER CAN LEGALLY OBLIGATE THE GOVERNMENT TO PAY INTEREST ON THE AMOUNT OF INVOICES NOT PAID WITHIN A SPECIFIED TIME. SEE DECISION OF FEBRUARY 1, 1926, A-12671.

IF IN THE INSTANT MATTER THE LOWEST BIDDERS (E. I. DU PONT DE NEMOURS AND CO.) INSIST THAT THE PROVISION FOR THE INTEREST BE INCORPORATED IN AND MADE A PART OF THE CONTRACT, THE BID SHOULD BE REJECTED AND THE CONTRACT AWARDED TO THE NEXT LOWEST RESPONSIBLE BIDDER.