A-24969, JANUARY 11, 1929, 8 COMP. GEN. 354

A-24969: Jan 11, 1929

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THE MAXIMUM AMOUNT OF THE OBLIGATION AGAINST THE APPROPRIATION MAY BE DETERMINED AT THE TIME THE CONTRACT IS MADE. WHERE IT IS FOUND THAT A QUANTITY IN EXCESS OF THE MAXIMUM PERCENTAGE VARIANCE IS REQUIRED SUCH EXCESS SHOULD BE PURCHASED INDEPENDENTLY OF THE ORIGINAL CONTRACT AND AFTER PROPER ADVERTISING. 1929: I HAVE YOUR LETTER DATED DECEMBER 22. WHEN THERE WERE ACTUALLY DELIVERED AND PAID FOR GRAVEL AND SAND TO THE AMOUNT OF $4. YOU REFER TO THE FACT THAT THE CONTRACT WAS TO COVER DELIVERIES FOR THE FISCAL YEAR BEGINNING JULY 1. TO THE CLAUSE THAT THE QUANTITIES WERE ESTIMATED ONLY. YOU CONCLUDE WITH THE STATEMENT THAT IT WAS THE MUTUAL UNDERSTANDING THAT THE CONTRACTOR WOULD DELIVER THE REQUIREMENTS FOR THE FISCAL YEAR IRRESPECTIVE OF THE QUANTITY DESIGNATED IN CONTRACT.

A-24969, JANUARY 11, 1929, 8 COMP. GEN. 354

CONTRACTS - PURCHASES OF INDEFINITE QUANTITIES WHILE IT MAY BE PROPER IN INVITING BIDS AND MAKING CONTRACTS FOR THE FURNISHING OF SUPPLIES TO PROVIDE FOR A REASONABLE VARIANCE FROM THE QUANTITIES STATED, THIS SHOULD BE DONE BY SPECIFYING NOT EXCEEDING A MAXIMUM PERCENTAGE FOR SUCH VARIANCE--- SUCH AS 10 PERCENT OR 20 PERCENT, DEPENDING UPON THE ARTICLES OR SUPPLIES TO BE PURCHASED--- SO THAT A BIDDER MAY KNOW THE MAXIMUM QUANTITY HE MAY BE CALLED UPON TO FURNISH, AND THE MAXIMUM AMOUNT OF THE OBLIGATION AGAINST THE APPROPRIATION MAY BE DETERMINED AT THE TIME THE CONTRACT IS MADE. WHERE IT IS FOUND THAT A QUANTITY IN EXCESS OF THE MAXIMUM PERCENTAGE VARIANCE IS REQUIRED SUCH EXCESS SHOULD BE PURCHASED INDEPENDENTLY OF THE ORIGINAL CONTRACT AND AFTER PROPER ADVERTISING.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, JANUARY 11, 1929:

I HAVE YOUR LETTER DATED DECEMBER 22, 1928, IN REFERENCE TO EXCESS DELIVERIES UNDER CONTRACT NI---71S-3641, DATED MAY 27, 1927, WITH THE COLUMBIA SAND AND GRAVEL CO., WHICH CALLED FOR DELIVERY AT THE NAVY YAR, WASHINGTON, D.C., OF APPROXIMATELY 1,000 TONS OF WASH GRAVEL, 800 TONS OF CONCRETE SAND, AND 100 TONS OF BUILDING SAND, TOTAL AMOUNT OF CONTRACT $2,616, WHEN THERE WERE ACTUALLY DELIVERED AND PAID FOR GRAVEL AND SAND TO THE AMOUNT OF $4,596.35, OR $1,980.35 IN EXCESS OF THE AMOUNT PROVIDED UNDER THE TERMS OF THE CONTRACT.

YOU REFER TO THE FACT THAT THE CONTRACT WAS TO COVER DELIVERIES FOR THE FISCAL YEAR BEGINNING JULY 1, 1927, AND ENDING JUNE 30, 1928; ALSO, TO THE CLAUSE THAT THE QUANTITIES WERE ESTIMATED ONLY, THE GOVERNMENT RESERVING THE RIGHT TO ORDER MORE OR ACCEPT LESS AS THE NEEDS OF THE SERVICE DEMANDED. YOU CONCLUDE WITH THE STATEMENT THAT IT WAS THE MUTUAL UNDERSTANDING THAT THE CONTRACTOR WOULD DELIVER THE REQUIREMENTS FOR THE FISCAL YEAR IRRESPECTIVE OF THE QUANTITY DESIGNATED IN CONTRACT.

IN THE PRESENT CASE THERE WAS AN AGGREGATE OF MORE THAN 75 PERCENT IN EXCESS OF THE QUANTITIES STIPULATED IN THE CONTRACT.

WHILE IT MAY BE PROPER IN INVITING BIDS AND MAKING CONTRACTS TO PROVIDE FOR A REASONABLE VARIANCE FROM THE QUANTITIES STATED, THIS SHOULD BE DONE BY SPECIFYING NOT EXCEEDING A MAXIMUM PERCENTAGE FOR SUCH VARIANCE ---SUCH AS 10 PERCENT OR 20 PERCENT, DEPENDING UPON THE ARTICLES OR SUPPLIES TO BE PURCHASED--- SO THAT THE BIDDER MAY KNOW THE MAXIMUM QUANTITY HE MAY BE CALLED UPON TO FURNISH, AND SO THAT THE MAXIMUM AMOUNT OF THE OBLIGATION AGAINST THE APPROPRIATION MAY BE DETERMINED AT THE TIME THE CONTRACT IS MADE. AND WHERE IT IS FOUND THAT A QUANTITY IN EXCESS OF THE MAXIMUM PERCENTAGE VARIANCE IS REQUIRED SUCH EXCESS SHOULD BE PURCHASED INDEPENDENTLY OF THE ORIGINAL CONTRACT AND AFTER PROPER ADVERTISING.

IT IS POSSIBLE THAT IF BIDS HAD BEEN REQUESTED IN THE PRESENT CASE WITH A GREATER DEGREE OF DEFINITENESS AS TO THE QUANTITY LOWER BIDS MIGHT HAVE BEEN SUBMITTED, AND THAT SOME BIDDERS MAY HAVE BEEN DETERRED BECAUSE OF THE UNLIMITED QUANTITY THAT COULD HAVE BEEN CALLED FOR UNDER THE TERMS OF THE CONTRACT. SEE A-23679, DATED SEPTEMBER 26, 1928; A-24281, DATED OCTOBER 27, 1928.

HOWEVER, IN THE PRESENT CASE, THE PAYMENTS FOR THE EXCESS PURCHASED WILL NOT BE FURTHER QUESTIONED AT THIS TIME BECAUSE OF LACK OF PROPER ADVERTISING, BUT THE PROCEDURE SHOULD BE CORRECTED AS HEREIN INDICATED.