A-4554, AUGUST 25, 1924, 4 COMP. GEN. 208

A-4554: Aug 25, 1924

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OR REPAIR PUBLIC BUILDINGS OR PUBLIC WORKS ARE REQUIRED BEFORE COMMENCING WORK THEREON TO EXECUTE THE USUAL PENAL BOND WITH GOOD AND SUFFICIENT SURETIES. 1924: I HAVE YOUR LETTER OF AUGUST 7. YOU STATE IN PARAGRAPH TWO OF YOUR LETTER THAT: * * * PARAGRAPH 73 OF THE FISCAL REGULATIONS OF THE DEPARTMENT REQUIRES THAT "A FORMAL CONTRACT AND BOND MUST BE REQUIRED FOR ALL CONSTRUCTION WORK FOR WHICH BIDS ARE ACCEPTED.'. IT IS NOW PROPOSED TO CHANGE THE REGULATION BY ELIMINATING THE WORDS "FORMAL" AND "AND BOND. " SO THAT THE SENTENCE WILL READ "A WRITTEN CONTRACT MUST BE REQUIRED FOR ALL CONSTRUCTION WORK FOR WHICH BIDS ARE ACCEPTED. " THE PURPOSE OF THE CHANGE BEING TO ELIMINATE THE NECESSITY OF SECURING BONDS TO COVER CONTRACTS IN CONSTRUCTION WORK WHERE THE AMOUNT INVOLVED IS SMALL.

A-4554, AUGUST 25, 1924, 4 COMP. GEN. 208

BONDS, SURETY - PUBLIC CONTRACTS UNDER THE ACT OF AUGUST 13, 1894, AS AMENDED BY THE ACT OF FEBRUARY 24, 1905, 33 STAT. 811, ALL PERSONS WHO CONTRACT TO CONSTRUCT, COMPLETE, OR REPAIR PUBLIC BUILDINGS OR PUBLIC WORKS ARE REQUIRED BEFORE COMMENCING WORK THEREON TO EXECUTE THE USUAL PENAL BOND WITH GOOD AND SUFFICIENT SURETIES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, AUGUST 25, 1924:

I HAVE YOUR LETTER OF AUGUST 7, 1924, REQUESTING DECISION AS TO WHETHER BY AMENDING THE FISCAL REGULATIONS OF THE DEPARTMENT OF AGRICULTURE YOU MAY DISPENSE WITH THE REQUIREMENTS OF THE ACT OF AUGUST 13, 1894, AS AMENDED BY THE ACT OF FEBRUARY 24, 1905, 33 STAT. 811.

YOU STATE IN PARAGRAPH TWO OF YOUR LETTER THAT:

* * * PARAGRAPH 73 OF THE FISCAL REGULATIONS OF THE DEPARTMENT REQUIRES THAT "A FORMAL CONTRACT AND BOND MUST BE REQUIRED FOR ALL CONSTRUCTION WORK FOR WHICH BIDS ARE ACCEPTED.' IT IS NOW PROPOSED TO CHANGE THE REGULATION BY ELIMINATING THE WORDS "FORMAL" AND "AND BOND," SO THAT THE SENTENCE WILL READ "A WRITTEN CONTRACT MUST BE REQUIRED FOR ALL CONSTRUCTION WORK FOR WHICH BIDS ARE ACCEPTED," THE PURPOSE OF THE CHANGE BEING TO ELIMINATE THE NECESSITY OF SECURING BONDS TO COVER CONTRACTS IN CONSTRUCTION WORK WHERE THE AMOUNT INVOLVED IS SMALL. FOR INSTANCE, IN THE CASE OF A CONTRACT FOR CONSTRUCTION WORK INVOLVING AN EXPENDITURE OF $50, IF A BOND BE REQUIRED, THE COST IS AUTOMATICALLY RAISED TO $55, $50 THE COST OF THE WORK, PLUS $5, THE COST OF THE BOND.

THE STATUTE AS AMENDED PROVIDES THAT 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.

IT SEEMS CLEAR THAT THE STATUTE, AS AMENDED, WAS ENACTED FOR THE PURPOSE OF PROTECTING THOSE WHO FURNISH LABOR AND MATERIAL TO PUBLIC CONTRACTORS IN ADDITION TO PROVIDING SECURITY AND INDEMNITY TO THE UNITED STATES.

GENERALLY A CONTRACT WHICH HAS FOR ITS PURPOSE THE CONSTRUCTION OF A PUBLIC BUILDING, OR THE PROSECUTION AND COMPLETION OR REPAIR OF ANY PUBLIC WORK, COMES WITHIN THE REQUIREMENT OF THE ACT AS AMENDED, AND IN SUCH CASES THE CONTRACTOR WOULD BE REQUIRED TO FURNISH A BOND CONTAINING THE CONDITIONS SET OUT IN THE STATUTE BEFORE COMMENCING WORK UNDER ANY SUCH CONTRACT; THEREFORE, DEPARTMENTAL REGULATIONS DISPENSING WITH THE REQUIREMENTS OF THE STATUTE WOULD NOT BE AUTHORIZED.