A-51199, MAY 3, 1934, 13 COMP. GEN. 315

A-51199: May 3, 1934

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ARE QUESTIONS OF LAW FOR THE DETERMINATION OF THE GENERAL ACCOUNTING OFFICE AND ARE NOT FOR DETERMINATION BY ADMINISTRATIVE OFFICERS DRAWING THE SPECIFICATIONS OR IN CHARGE OF THE PERFORMANCE OF THE CONTRACT. PROTESTS OF BIDDERS WHEN SUBMITTED TO THE ADMINISTRATIVE OFFICERS ARE FOR TRANSMISSION WITH REPORTS AND RECOMMENDATIONS TO THE GENERAL ACCOUNTING OFFICE FOR DECISION. NAVY DISBURSING OFFICER FOR DECISION WHETHER HE IS AUTHORIZED TO MAKE PAYMENT OF $56. THERE WAS TRANSMITTED. WHICH PROMPTED THE DISBURSING OFFICER TO REQUEST A DECISION ARE BASED UPON A MISUNDERSTANDING OF THE FACTS OF THE CASE. THE SEVERAL STEPS IN THIS TRANSACTION ARE STATED IN CHRONOLOGICAL ORDER. - REPRESENTATIVES OF THE CONSOLIDATED MACHINE TOOL CORPORATION WERE HEARD ORALLY.

A-51199, MAY 3, 1934, 13 COMP. GEN. 315

CONTRACTS - SPECIFICATIONS - INTERPRETATION THE LEGAL EFFECT OF SPECIFICATIONS AND OF BIDS SUBMITTED THEREON, GOING TO THE AVAILABILITY OF APPROPRIATIONS, ARE QUESTIONS OF LAW FOR THE DETERMINATION OF THE GENERAL ACCOUNTING OFFICE AND ARE NOT FOR DETERMINATION BY ADMINISTRATIVE OFFICERS DRAWING THE SPECIFICATIONS OR IN CHARGE OF THE PERFORMANCE OF THE CONTRACT. PROTESTS OF BIDDERS WHEN SUBMITTED TO THE ADMINISTRATIVE OFFICERS ARE FOR TRANSMISSION WITH REPORTS AND RECOMMENDATIONS TO THE GENERAL ACCOUNTING OFFICE FOR DECISION.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, MAY 3, 1934:

THERE HAS BEEN RECEIVED YOUR SECOND INDORSEMENT DATED APRIL 13, 1934, TRANSMITTING A REQUEST DATED APRIL 3, 1934, FROM CAPT. J. H. KNAPP (SC), NAVY DISBURSING OFFICER FOR DECISION WHETHER HE IS AUTHORIZED TO MAKE PAYMENT OF $56,950 ON AN APPROVED VOUCHER STATED IN FAVOR OF THE INGERSOLL MILLING CO., REFERENCE BEING MADE TO DECISION OF THIS OFFICE OF DECEMBER 28, 1933. THERE WAS TRANSMITTED, ALSO, FIRST INDORSEMENT DATED APRIL 10, 1934, IN WHICH THE PAYMASTER GENERAL OF THE NAVY MAKES THE FOLLOWING COMMENT:

2. IT APPEARS THAT THE CONCLUSIONS EXPRESSED BY THE COMPTROLLER GENERAL OF THE UNITED STATES, WHICH PROMPTED THE DISBURSING OFFICER TO REQUEST A DECISION ARE BASED UPON A MISUNDERSTANDING OF THE FACTS OF THE CASE. ORDER TO GIVE A CLEAR UNDERSTANDING, THE SEVERAL STEPS IN THIS TRANSACTION ARE STATED IN CHRONOLOGICAL ORDER, AS FOLLOWS:

SEPTEMBER 5, 1933.--- BIDS OPENED IN THE BUREAU OF SUPPLIES AND ACCOUNTS.

SEPTEMBER 21, 1933.--- CONSOLIDATED MACHINE TOOL CORPORATION FILED A LETTER WITH THE PAYMASTER GENERAL CLAIMING RIGHT TO THE AWARD ON THE BASIS OF THE DISCOUNT OFFERED.

SEPTEMBER 21 TO 25.--- REPRESENTATIVES OF THE CONSOLIDATED MACHINE TOOL CORPORATION WERE HEARD ORALLY, FIRST BY THE CONTRACTING OFFICER, THEN THE PAYMASTER GENERAL OF THE NAVY, AND THE ASSISTANT SECRETARY OF THE NAVY, EACH OF WHOM DECIDED THAT THE DISCOUNT COULD NOT BE TAKEN WITHIN THE TERMS OF THE ADVERTISEMENT FOR BIDS.

SEPTEMBER 25, 1933.--- NOTICE OF AWARD MAILED TO SUCCESSFUL BIDDER.

SEPTEMBER 25, 1933.--- CONSOLIDATED MACHINE TOOL CORPORATION FILED A PROTEST WITH THE COMPTROLLER GENERAL OF THE UNITED STATES.

SEPTEMBER 26, 1933.--- COMPTROLLER GENERAL FORWARDED CONSOLIDATED MACHINE TOOL CORPORATION'S PROTEST TO THE SECRETARY OF THE NAVY FOR REPORT.

SEPTEMBER 28, 1933.--- COMPTROLLER GENERAL'S LETTER ROUTED THROUGH OFFICIAL CHANNELS, RECEIVED IN THE BUREAU OF SUPPLIES AND ACCOUNTS.

SEPTEMBER 29, 1933.--- CONTRACT, PURSUANT TO AWARD OF SEPTEMBER 25TH, MAILED TO THE CONTRACTOR FOR EXECUTION.

SEPTEMBER 29, 1933.--- BUREAU OF SUPPLIES AND ACCOUNTS REPORTED FACTS RELATING TO AWARD TO THE JUDGE ADVOCATE GENERAL OF THE NAVY.

SEPTEMBER 30, 1933.--- COMPTROLLER GENERAL'S LETTER OF SEPTEMBER 28 (2D LETTER) RECEIVED IN NAVY DEPARTMENT.

SEPTEMBER 30, 1933.--- CONTRACT SIGNED BY THE CONTRACTOR.

OCTOBER 10, 1933.--- SECRETARY OF THE NAVY SIGNED LETTER TO THE COMPTROLLER GENERAL REPLYING TO THE COMPTROLLER GENERAL'S TWO LETTERS OF SEPTEMBER 26 AND 28.

OCTOBER 20, 1933.--- CONTRACT SIGNED IN THE BUREAU OF SUPPLIES AND ACCOUNTS.

OCTOBER 27, 1933.--- CONTRACT TRANSMITTED TO THE GENERAL ACCOUNTING OFFICE, VIA TREASURY DEPARTMENT SECTION OF SURETY BONDS.

3. THESE MACHINES WERE REQUIRED FOR USE IN THE GUN-CARRIAGE SHOP AND BREECH MECHANISM SHOP AT THE NAVY YARD, WASHINGTON, FOR THE PROMOTION OF THE SHIP-BUILDING PROGRAM AUTHORIZED BY THE PRESIDENT OF THE UNITED STATES AS A MEANS OF INCREASING THE NATIONAL DEFENSE AND AS AN AID IN RELIEVING THE WIDESPREAD UNEMPLOYMENT.

4. THE EVIDENT PURPOSE REQUIRED EXPEDITIOUS ACTION IN THE AWARD OF THE CONTRACT. THE AWARD WAS DELAYED FOR NEARLY ONE WEEK SO THAT THE CONSOLIDATED MACHINE TOOL CORPORATION MIGHT BE HEARD AND ANY VALID PROTEST DULY CONSIDERED. THE NAVY DEPARTMENT WAS NOT WARRANTED IN DELAYING THE PROCUREMENT OF THESE MACHINES AS AN AID IN THE PROMOTION OF THE PRESIDENT'S PROGRAM FOR A LONGER PERIOD THAN WAS NECESSARY TO SATISFY THE DEPARTMENT THAT ITS COURSE OF ACTION WAS CORRECT AND PROPER AND IN FULL COMPLIANCE WITH THE GOVERNING LAW.

5. THE PROTEST OF THE CONSOLIDATED MACHINE TOOL CORPORATION WAS BASED UPON THE SINGLE CONTENTION THAT ITS BID WAS THE LOWEST BID ON THE BASIS OF ITS STATED BID PRICE OF $57,200 LESS ONE PERCENT DISCOUNT, WHEN COMPUTING THE DISCOUNT FROM THE COMPLETION OF PRACTICAL WORKING TESTS, OR A NET BID OF $56,687.40, FOR PAYMENT WITHIN 10 DAYS. UNDER THE PROVISIONS OF THE ADVERTISEMENT, AN OFFERED DISCOUNT BECOMES A FACTOR IN THE DETERMINATION OF THE AWARD ONLY WHEN THERE IS REASONABLE ASSURANCE THAT THE MATERIAL CAN BE ACCEPTED, PUBLIC VOUCHERS PREPARED, AND PAYMENT MADE WITHIN THE DISCOUNT PERIOD ALLOWED. THE INVITATION FOR BIDS STIPULATED THAT PAYMENT WOULD NOT BE MADE UNTIL AFTER INSTALLATION AND COMPLETION OF PRACTICAL WORKING TEST. BECAUSE OF THE NATURE OF THE INSTALLATION IT WAS DETERMINED THAT THE INSTALLATION AND INSPECTION OF THESE MACHINES WOULD REQUIRE A GREATER TIME THAN THE PERIOD ALLOWED FOR THE DEDUCTION OF THE DISCOUNT. THIS FACT AUTOMATICALLY ELIMINATED THE DISCOUNT OFFERED BY THE CONSOLIDATED MACHINE TOOL CORPORATION FROM CONSIDERATION IN THE DETERMINATION OF THE AWARD. WITH THESE FACTS SO CLEARLY ESTABLISHED, THERE COULD BE BUT ONE COURSE OPEN, THAT IS, THE AWARD TO THE INGERSOLL MILLING MACHINE COMPANY, THE LOWEST BIDDER RESPONSIVE TO THE ADVERTISEMENT.

6. THAT THE ADMINISTRATIVE FINDINGS WERE CORRECT IS SUBSTANTIATED BY THE ACTUAL TIME REQUIRED TO MAKE THE INSTALLATIONS. THE FIRST MACHINE WAS DELIVERED ON 31 JANUARY 1934, THE NEXT TWO ON 19 FEBRUARY 1934 AND THE FOURTH ON 27 FEBRUARY 1934. THE FOUR MACHINES WERE COMPLETELY INSTALLED AND FINALLY TESTED ON 15 MARCH 1934. THE SHORTEST INSTALLATION PERIOD WAS 16 DAYS AND THE LONGEST ABOUT SIX WEEKS.

THIS INDORSEMENT OF APRIL 10, 1934, EVIDENCES ADMINISTRATIVE MISCONCEPTION AND CONFUSION RESPECTING THE RESPECTIVE JURISDICTIONS OF THE NAVY DEPARTMENT AND OF THIS OFFICE. THE NAVY DEPARTMENT HAS NO JURISDICTION OR AUTHORITY IN THE MATTER OF FINAL DETERMINATION AS TO THE AVAILABILITY OF APPROPRIATED MONEYS FOR A PROPOSED USE AND THIS OFFICE IS NOT CHARGED WITH THE RESPONSIBILITY OF DETERMINING FOR THE NAVY DEPARTMENT ITS NEED FOR EQUIPMENT WITH WHICH TO PERFORM AUTHORIZED WORK. AFTER ALL OF THESE YEARS, THERE SHOULD NOT BE CONFUSION AS TO THE RESPECTIVE JURISDICTIONS AND RESPONSIBILITY IN THESE MATTERS.

IT IS A FACT THAT THE NAVY DEPARTMENT HAD PURCHASED AND HAD IN USE AT THE WASHINGTON NAVY YARD, WHERE THESE MACHINES WERE TO BE INSTALLED, MILLING MACHINES MANUFACTURED BY THE CONSOLIDATED TOOL CORPORATION AND NOWHERE IN THIS ENTIRE TRANSACTION WAS ANY QUESTION BASED ON FACTS RAISED BY THE NAVY DEPARTMENT THAT THE MACHINES OFFERED BY THE CONSOLIDATED TOOL CORPORATION WOULD NOT MEET THE NEEDS AS STATED IN THE ADVERTISED SPECIFICATIONS. RATHER, THE QUESTION CONCERNED A MATTER PRIMARILY WITHIN THE JURISDICTION OF THIS OFFICE AS TO WHETHER THE BID OF THE INGERSOLL MILLING MACHINE CO. OR THE BID OF THE CONSOLIDATED TOOL CORPORATION OFFERED THE LOWEST PRICE TO THE GOVERNMENT--- THE LEAST CHARGE AGAINST APPROPRIATED MONEYS--- FOR MACHINES MEETING THE NEEDS. THE NAVY DEPARTMENT HAD NO JURISDICTION OR RESPONSIBILITY IN THE MATTER OF THE DETERMINATION OF SUCH A QUESTION, YET, APPARENTLY, SOME OFFICERS OF THAT DEPARTMENT UNDERTOOK TO HOLD A HEARING WITH RESPECT THERETO AND AWARDED THE CONTRACT OVER THE WRITTEN PROTEST OF THE LOW BIDDER AND WITH NOTICE THAT THE PROTESTING BIDDER HAD FILED OR WOULD FILE IN THIS OFFICE A PROTEST WITH A VIEW TO HAVING THIS OFFICE MAKE AN AUTHORITATIVE DETERMINATION AS TO WHICH WAS THE LOWEST BID.

THE DISBURSING OFFICER IS NOT ONLY WITHIN THE RIGHTS ACCORDED HIM BY SECTION 8 OF THE ACT OF JULY 31, 1894, 28 STAT. 208, AS AMENDED, IN REQUESTING DECISION WHETHER HE IS AUTHORIZED TO MAKE PAYMENT UNDER SUCH CIRCUMSTANCES BUT IT WAS HIS DUTY TO MAKE SUCH REQUEST.

THE SPECIFICATIONS IN THIS CASE WERE FOR DRAFTING BY THE NAVY DEPARTMENT BUT THE LEGAL EFFECT THEREOF AND OF THE BIDS SUBMITTED THEREONGO TO THE AVAILABILITY OF THE APPROPRIATION INVOLVED FOR PAYMENTS, AND ARE QUESTIONS OF LAW FOR THE DETERMINATION OF THIS OFFICE.

THE BID FORM PREPARED BY THE NAVY DEPARTMENT INVITED BIDDERS TO STATE THE DISCOUNT WHICH WOULD BE ALLOWED FOR PAYMENT "WITHIN CALENDAR DAYS, AS FOLLOWS: WITHIN 10 DAYS ------ , WITHIN 20 DAYS ------ , WITHIN 30 DAYS -- ----- .' THE "WITHIN" PERIOD FROM WHICH THE DISCOUNT TIME IS TO BEGIN TO RUN IS NOT STATED--- WHETHER FROM DELIVERY, COMPLETION OF INSTALLATION AND WORKING TESTS, OR SOME OTHER DATE. THE CONSOLIDATED TOOL CORPORATION CLAIMED THAT THE PERIOD FOR DISCOUNT BEGAN TO RUN FROM THE DATE THE INVOICE WAS SUBMITTED AFTER THE COMPLETION OF INSTALLATION AND COMPLETION OF WORKING TESTS FOR THE REASON THAT PAYMENT COULD NOT BE MADE AT AN EARLIER DATE AND THAT ON SUCH BASIS IT WAS LOW BIDDER BY OVER $250. THERE WAS SUBSTANTIAL LEGAL BASIS THEREFOR AND HAD THE BID BEEN ACCEPTED THE DISCOUNT COULD AND WOULD HAVE BEEN TAKEN.

WHILE A DIFFERENCE OF $250 IN BIDS FOR THE DELIVERY OF MATERIAL OF AN AGGREGATE BID PRICE OF APPROXIMATELY $57,000 IS SMALL, THE BIDDER IS ENTITLED TO THE BENEFIT THEREOF AND THE PUBLIC TREASURY IS CERTAINLY ENTITLED TO THE SAVINGS WHICH MAY BE THEREBY EFFECTED. THE ADMINISTRATIVE ACTION IN THIS CASE WAS SUCH AS TO DEPRIVE THE LOW BIDDER OF THE CONTRACT AND TO DEPRIVE THE UNITED STATES OF THE SAVING OF OVER $250.

THE PLEA THAT NEED FOR HASTE IN MAKING AWARD DICTATED THE IMPROPER COURSE TAKEN MUST BE CONSIDERED AN EXCUSE RATHER THAN A REASON. A MONTH BEFORE THE CONTRACT WAS SIGNED THE LOW BIDDER RAISED THE LEGAL QUESTIONS INVOLVED IN THE MATTER AND GOING TO THE LEGALITY OF THE USE OF THE APPROPRIATION, WITH OFFICIALS OF YOUR DEPARTMENT, BUT INSTEAD OF SUBMITTING SUCH QUESTIONS HERE FOR AN AUTHORITATIVE DECISION THEREOF PURSUANT TO SECTION 8 OF THE ACT OF JULY 31, 1894, 28 STAT. 208, AS AMENDED, SUCH OFFICIALS CONDUCTED ORAL HEARINGS AND ATTEMPTED TO DECIDE AND DETERMINE SUCH LEGAL QUESTIONS. THE MATTERS WERE IN SUCH STATE WHEN THE LOW BIDDER COMPLAINED TO THIS OFFICE THAT ITS RIGHTS WERE IN DANGER AND ON SEPTEMBER 26, 1933, YOU WERE ADVISED IN WRITING BY THIS OFFICE THAT THE LOW BIDDER HAD PROTESTED THE PROPOSED IMPROPER ACTION BY YOUR DEPARTMENT AND OF THE GROUNDS OF SUCH PROTEST, AND YOU WERE REQUESTED TO SUBMIT THE FACTS HERE IN ORDER THAT THE AVAILABILITY OF THE APPROPRIATION FOR THE PROPOSED USE MIGHT BE AUTHORITATIVELY DETERMINED IN ADVANCE OF ADMINISTRATIVE ACTION FURTHER INVOLVING THE GOVERNMENT. THE MATTER WAS FURTHER BROUGHT TO YOUR ATTENTION BY LETTER OF SEPTEMBER 28, 1933. THE CONTRACT WITH THE HIGHER BIDDER IS REPORTED TO HAVE BEEN ENTERED INTO SEPTEMBER 30, 1933.

HAD YOU SUBMITTED THE QUESTIONS HERE FOR AUTHORITATIVE DECISION WHEN FIRST RAISED BY THE LOW BIDDER, SEPTEMBER 21, 1933, ACTUAL CONTRACTING MIGHT WELL HAVE BEEN ADVANCED AT LEAST 2 WEEKS SO THAT BY THE COURSE ADMINISTRATIVELY FOLLOWED TIME WAS LOST RATHER THAN GAINED.

THE SUGGESTION THAT INASMUCH AS THE MACHINES WERE FOR USE IN CONNECTION WITH THE SHIPBUILDING PROGRAM ADOPTED AS A PART OF THE RECOVERY PROGRAM AFFORDED SOME REASON FOR UNUSUAL HASTE AND POSSIBLY EXCUSE FOR THE IMPROPER COURSE FOLLOWED IS A LITTLE DIFFICULT TO UNDERSTAND, AS THERE IS NOTHING IN THE RECOVERY ACT SUGGESTING THAT THERE SHOULD NOT BE ORDERLY PROCEDURE AND LAW OBSERVANCE IN THE USES OF THE APPROPRIATION MADE FOR ITS PURPOSES. WHILE A VERY LARGE SUM OF PUBLIC MONEY WAS PROVIDED BY THE CONGRESS IN SUCH CONNECTION, THE EVIDENT PURPOSE WAS THAT IT SHOULD BE MADE TO GO AS FAR AS POSSIBLE IN PROVIDING EMPLOYMENT, ETC., RATHER THAN THAT IT SHOULD BE UNDULY DEPLETED THROUGH PAYING UNNECESSARILY HIGH PRICES FOR NEEDED EQUIPMENT. HOWEVER, AS NO OTHER EXCUSE FOR THE ADMINISTRATIVE ACTION SEEMS AVAILABLE AND INASMUCH AS THERE LIKELY WAS CONSIDERABLE CONFUSION UPON THE DEPARTMENT BEING ALLOCATED FOR EXPENDITURE SUCH A SUBSTANTIAL PORTION OF THE RECOVERY APPROPRIATION, AND IN VIEW OF THE FACT THAT THE LOSS INVOLVED IS NOT, COMPARATIVELY, VERY LARGE, AND THE CONTRACT IS UNDERSTOOD TO HAVE BEEN SATISFACTORILY COMPLETED, POSSIBLY NO VIOLENCE WILL RESULT FROM A WITHHOLDING OF FURTHER OBJECTION TO THE TRANSACTION BY THIS OFFICE. IN SUCH CONNECTION THERE IS FOR STATING, HOWEVER, THAT A SIMILAR OCCURRENCE WILL LIKELY NECESSITATE A COMPLETE WITHHOLDING OF THE APPROPRIATION FOR PAYMENTS OR DISALLOWANCE OF ALL PAYMENTS MADE.