A-51319, A-54559, APRIL 2, 1934, 13 COMP. GEN. 255

A-51319,A-54559: Apr 2, 1934

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BIDDERS MUST SIGN A CERTIFICATE THAT THEY HAVE COMPLIED AND WILL CONTINUE TO COMPLY WITH THE APPLICABLE APPROVED CODE OF FAIR COMPETITION FOR THEIR TRADE OR INDUSTRY OR. IN THE EVENT A BID IS ACCEPTED. THE QUESTION WHETHER A BIDDER HAS COMPLIED WITH A CODE OF FAIR COMPETITION OR WHETHER A CONTRACTOR HAS CONTINUED TO COMPLY WITH SUCH CODE OR REEMPLOYMENT AGREEMENT IS NOT ONE FOR THE DETERMINATION OF THE CONTRACTING OFFICER. IS FOR THE ADMINISTRATOR OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16. THERE IS FOR CONSIDERATION. THERE ARE TRANSMITTED HEREWITH COPIES OF AN INVITATION FOR BIDS FOR SUPPLYING GASOLINE AT KEYPORT. THERE IS FOR CONSIDERATION. THE PROPOSITION OF WHETHER OR NOT THE BID IS RESPONSIVE TO THE SPECIFICATIONS.

A-51319, A-54559, APRIL 2, 1934, 13 COMP. GEN. 255

CONTRACTS - CODES OF FAIR COMPETITION - COMPLIANCE UNDER EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934, BIDDERS MUST SIGN A CERTIFICATE THAT THEY HAVE COMPLIED AND WILL CONTINUE TO COMPLY WITH THE APPLICABLE APPROVED CODE OF FAIR COMPETITION FOR THEIR TRADE OR INDUSTRY OR, IF NO CODE, THEN WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT, AND IN THE EVENT A BID IS ACCEPTED, THE CONTRACTOR MUST STIPULATE TO CONTINUE TO COMPLY THEREWITH. THE QUESTION WHETHER A BIDDER HAS COMPLIED WITH A CODE OF FAIR COMPETITION OR WHETHER A CONTRACTOR HAS CONTINUED TO COMPLY WITH SUCH CODE OR REEMPLOYMENT AGREEMENT IS NOT ONE FOR THE DETERMINATION OF THE CONTRACTING OFFICER, BUT IS FOR THE ADMINISTRATOR OF THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, OR SUCH AGENCY AS HE SHALL DESIGNATE, AS STATED IN EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, APRIL 2, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF MARCH 26, 1934, AS FOLLOWS:

IN THE MAKING OF CONTRACTS FOR SUPPLIES FOR THE POSTAL SERVICE, UNDER THE LIMITATIONS IMPOSED UPON ADMINISTRATIVE DEPARTMENTS, THERE IS FOR CONSIDERATION, AMONG OTHER THINGS, DUE REGARD FOR ACCOUNTING REQUIREMENTS AND PROCEDURE. I AM, THEREFORE, ASKING YOUR OPINION AS TO APPROPRIATE ACTION UNDER CIRCUMSTANCES HEREINAFTER DESCRIBED.

THERE ARE TRANSMITTED HEREWITH COPIES OF AN INVITATION FOR BIDS FOR SUPPLYING GASOLINE AT KEYPORT, NEW JERSEY, FOR THE THREE-MONTHS' PERIOD BEGINNING APRIL 1, 1934, THE BID RECEIVED IN RESPONSE, AND THE DEALER'S DULY EXECUTED CERTIFICATE OF CODE COMPLIANCE MARKED "SPECIMEN.' THIS BEING THE ONLY BID RECEIVED, THE PROPOSITION OF "LOWEST BID AS TO PRICE" REQUIRES NO CONSIDERATION. THERE IS FOR CONSIDERATION, HOWEVER, THE PROPOSITION OF WHETHER OR NOT THE BID IS RESPONSIVE TO THE SPECIFICATIONS.

PARAGRAPH (C) SECTION 1, OF EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934, REQUIRES THAT ALL CONTRACTS AUTHORIZED BY ANY AGENCY OF THE UNITED STATES SHALL CONTAIN A PROVISION TO THE EFFECT THAT THE PARTY OR PARTIES AWARDED ANY SUCH CONTRACT SHALL COMPLY WITH EACH APPROVED CODE OF FAIR COMPETITION TO WHICH THEY ARE SUBJECT. SECTION 4 OF EXECUTIVE ORDER NO. 6646, RECITES THAT ALL PROVISIONS OF APPROVED CODES OF FAIR COMPETITION SHALL APPLY TO THE MAKING AND PERFORMANCE OF CONTRACTS WITH OR SALES TO AGENCIES OF THE UNITED STATES.

THERE IS ENCLOSED HEREWITH A COPY OF EXHIBIT NO. 4, WHEREIN THE ADMINISTRATOR OF THE CODE OF FAIR COMPETITION FOR THE PETROLEUM INDUSTRY, WHO IS DESIGNATED AS THE FINAL AUTHORITY IN MATTERS OF CODE COMPLIANCE, APPROVED AND PROMULGATED AN INTERPRETATION OF CONTRACTS WHICH IS IN PART AS FOLLOWS:

"9. NO OTHER OR DIFFERENT COMMERCIAL DISCOUNTS SHALL BE GIVEN TO CONSUMERS.'

(1) THE MAKING OF A CONTRACT IS NOW DEPENDENT UPON ADMINISTRATIVE ACTION. THIS ADMINISTRATIVE ACTION MUST BE PREDICATED UPON AN ADMINISTRATIVE FINDING ON THE FACTS BEFORE US. IS ADMINISTRATIVE CONSIDERATION TO BE LIMITED TO FINDINGS THAT THE CERTIFICATE OF CONTINUED CODE COMPLIANCE IS DULY EXECUTED OR MUST THE OFFICIAL, AS THE MAKER OF A CONTRACT, GIVE CONSIDERATION TO THE QUESTION OF WHETHER OR NOT PERFORMANCE OF THE STIPULATIONS RELATIVE TO DELIVERY AND PRICE WILL CONTRAVENE THE CONTRACT STIPULATION REQUIRED UNDER PARAGRAPH (C) SECTION 1 OF EXECUTIVE ORDER NO. 6646?

(2) AS A PARTY TO THE MAKING OF A CONTRACT, ARE WE JOINTLY RESPONSIBLE WITH THE BIDDER IN SEEING THAT ALL PROVISIONS OF THE STIPULATIONS OF THE CONTRACT ARE SUSCEPTIBLE OF PERFORMANCE UNDER THE LAW AND UNDER THE PROVISIONS OF THE APPLICABLE, APPROVED CODE, WHICH HAS THE FORCE AND EFFECT OF LAW?

(3) IF WE SHOULD ACCEPT A PROPOSAL OF THE TENOR OF THE ATTACHED COPY ON THE THEORY THAT PERFORMANCE OF THE CONTRACT AND CONTINUED COMPLIANCE WITH CODE PROVISIONS ARE FOR THE SOLE CONSIDERATION OF THE BIDDER, AND IT SHOULD BE LATER DETERMINED BY THE ADMINISTRATOR OF THE CODE FOR THE PETROLEUM INDUSTRY THAT PERFORMANCE OF THE STIPULATIONS AS TO DELIVERY AND PRICE CONSTITUTES VIOLATION OF THE CODE AND WE INVOKE THE FORFEITURE CLAUSE AND PROCEED THEREUNDER, DO WE, IN EFFECT, FORCE THE CONTRACTOR TO A CONTINUED NONCOMPLIANCE WITH THE CODE FOR THE DURATION OF THE CONTRACT PERIOD?

(4) TO STATE THE PROPOSITION SIMPLY, IS THE PROPOSITION OF CONFLICTING TERMS IN A PROPOSAL FOR THE CONSIDERATION OF AN ADMINISTRATIVE DEPARTMENT IN ARRIVING AT A FINDING WHICH IS TO SERVE AS A LEGITIMATE BASIS FOR THE ACCEPTANCE OR NONACCEPTANCE OF A PROPOSAL FOR FURNISHING SUPPLIES?

FOR OUR FUTURE GUIDANCE IN ACTION UPON PROPOSALS NOW BEING RECEIVED FOR THE PERIOD BEGINNING APRIL 1, 1934, MAY I REQUEST AN EXPRESSION OF YOUR OPINION AS TO APPROPRIATE ACTION UNDER THE FOLLOWING CONDITIONS:

(5) WHERE THREE OR MORE BIDS ARE RECEIVED IN RESPONSE TO AN INVITATION, EACH ACCOMPANIED BY A DULY EXECUTED CERTIFICATE OF CODE COMPLIANCE, AND IT IS OBVIOUS THAT THE LOWEST BID CONTRAVENES THE PRINCIPLES STATED IN SECTION 9 OF THE ENCLOSED COPY OF EXHIBIT NO. 4, SHALL SUCH LOW BID BE ELIMINATED FROM CONSIDERATION ON AN ADMINISTRATIVE FINDING THAT IT IS NOT RESPONSIVE TO SPECIFICATIONS, MINDFUL OF THE FACT THAT ALL PROVISIONS OF THE APPROVED CODES OF FAIR COMPETITION SHALL APPLY TO BOTH THE MAKING AND THE PERFORMANCE OF A CONTRACT?

IN VIEW OF THE FACT THAT THESE QUESTIONS ARE INVOLVED IN CONTRACTS WHICH ARE TO BE COMPLETED AND BECOME EFFECTIVE ON APRIL 1, NEXT, YOUR OPINION IN THE MATTER IS DESIRED AT THE EARLIEST CONVENIENT DATE.

THE PARAGRAPHS IN YOUR LETTER CONTAINING THE QUESTIONS HAVE BEEN NUMBERED FOR CONVENIENCE IN REPLY.

SUBPARAGRAPHS (A), (B), AND (C) OF PARAGRAPH 1 OF EXECUTIVE ORDER NO. 6646 DATED MARCH 14, 1934, ARE AS FOLLOWS:

1. (A) ALL INVITATIONS TO BIDDERS HEREAFTER PROMULGATED BY OR IN BEHALF OF ANY EXECUTIVE DEPARTMENT OR INDEPENDENT ESTABLISHMENT OR OTHER AGENCY OR INSTRUMENTALITY OF THE UNITED STATES, INCLUDING GOVERNMENT-OWNED AND GOVERNMENT-CONTROLLED CORPORATIONS (ALL OF THE FOREGOING BEING HEREINAFTER DESCRIBED AS AGENCIES OF THE UNITED STATES), SHALL CONTAIN A PROVISION TO THE EFFECT THAT NO BID WILL BE CONSIDERED UNLESS IT INCLUDES OR IS ACCOMPANIED BY A CERTIFICATE DULY EXECUTED BY THE BIDDER STATING THAT THE BIDDER IS COMPLYING WITH AND WILL CONTINUE TO COMPLY WITH EACH APPROVED CODE OF FAIR COMPETITION TO WHICH HE IS SUBJECT, AND IF ENGAGED IN ANY TRADE OR INDUSTRY FOR WHICH THERE IS NO APPROVED CODE OF FAIR COMPETITION, THEN STATING THAT AS TO SUCH TRADE OR INDUSTRY HE HAS BECOME A PARTY TO AND IS COMPLYING WITH AND WILL CONTINUE TO COMPLY WITH AN AGREEMENT WITH THE PRESIDENT UNDER SECTION 4 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT.

(B) NO BID WHICH DOES NOT COMPLY WITH THE FOREGOING REQUIREMENTS SHALL BE CONSIDERED OR ACCEPTED.

(C) ALL CONTRACTS AND PURCHASE ORDERS AUTHORIZED BY ANY AGENCY OF THE UNITED STATES SHALL CONTAIN A PROVISION TO THE EFFECT THAT THE PARTY OR PARTIES AWARDED ANY SUCH CONTRACT OR PURCHASE ORDER SHALL COMPLY WITH EACH APPROVED CODE OF FAIR COMPETITION TO WHICH IT IS SUBJECT AND IF ENGAGED IN ANY TRADE OR INDUSTRY FOR WHICH THERE IS NO APPROVED CODE OF FAIR COMPETITION, THEN, AS TO SUCH TRADE OR INDUSTRY, WITH AN AGREEMENT WITH THE PRESIDENT AS AFORESAID; AND THE UNITED STATES SHALL HAVE THE RIGHT TO CANCEL ANY CONTRACT FOR FAILURE TO COMPLY WITH SUCH PROVISION AND MAKE OPEN-MARKET PURCHASES OR HAVE THE WORK CALLED FOR BY THE CONTRACT OTHERWISE PERFORMED, AT THE EXPENSE OF THE CONTRACTOR.

PARAGRAPH 3 OF SAID EXECUTIVE ORDER PROVIDES THAT:

WHENEVER A DISPUTE SHALL ARISE BETWEEN ANY AGENCY OF THE UNITED STATES AND ANY BIDDER, CONTRACTOR, SUPPLIER, OR OTHER PERSON AS TO COMPLIANCE WITH ANY CODE OF FAIR COMPETITION OR WITH AN AGREEMENT WITH THE PRESIDENT AS AFORESAID IN CONNECTION WITH ANY PROPOSAL, BID, CONTRACT, SUBCONTRACT, OR PURCHASE ORDER MENTIONED HEREIN, THE ADMINISTRATOR FOR INDUSTRIAL RECOVERY, OR SUCH AGENCY AS HE SHALL DESIGNATE, SHALL DECIDE SUCH DISPUTE AND, FOR THE PURPOSES OF ACTION UNDER THIS EXECUTIVE ORDER, SUCH DECISION SHALL BE FINAL AND CONCLUSIVE; BUT THE DETERMINATION OF SUCH AGENCY OF THE UNITED STATES SHALL BE EFFECTIVE FOR ALL PURPOSES PENDING SUCH DECISION.

AS TO QUESTIONS 1 AND 2 IN YOUR LETTER, THE ADMINISTRATIVE RESPONSIBILITY IN CONTRACTING ON BEHALF OF THE UNITED STATES IS LIMITED TO SEEING THAT THE ADVERTISED SPECIFICATIONS CONTAIN THE REQUIREMENT STATED IN SUBPARAGRAPH 1 (A) OF THE EXECUTIVE ORDER, SUPRA; THAT THE BID RECEIVED AND ACCEPTED INCLUDES OR IS ACCOMPANIED BY A CERTIFICATE EXECUTED BY THE BIDDER TO THE EFFECT INDICATED IN SAID SUBPARAGRAPH; AND THAT THE CONTRACT ENTERED INTO WITH THE ACCEPTED BIDDER OR THE PURCHASE ORDER ISSUED TO THE ACCEPTED BIDDER CONTAINS THE STIPULATION PRESCRIBED IN SUBPARAGRAPH 1 (C) OF THE EXECUTIVE ORDER. THE BIDDING IS NO RESPONSIBILITY OF THE CONTRACTING OFFICER, AND IT IS NO PART OF HIS AUTHORITY OR RESPONSIBILITY TO DETERMINE WHETHER A BID AS MADE CONTRAVENES ANY CODE. IT IS HIS DUTY TO ACCEPT THE LOW RESPONSIBLE BID CONTAINING OR ACCOMPANIED BY THE REQUIRED CERTIFICATE, AND TO SEE TO IT THAT THE CONTRACT ENTERED INTO WITH SUCH LOW BIDDER CONTAINS THE REQUIRED PROVISION WITH RESPECT TO CODE COMPLIANCE. IF, THEREAFTER, A DISPUTE SHOULD ARISE WHETHER, NOTWITHSTANDING THE CERTIFICATE ACCOMPANYING THE BID OR THE STIPULATION CONTAINED IN THE CONTRACT, THE BIDDER AND/OR CONTRACTOR HAS COMPLIED, AND WILL CONTINUE TO COMPLY WITH THE APPROVED CODE OF FAIR COMPETITION, OR, IF NO CODE, THEN WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT, SUCH DISPUTE MUST BE RESOLVED, IN THE FIRST INSTANCE, AS PROVIDED IN THE ABOVE-QUOTED TERMS OF PARAGRAPH 3 OF THE EXECUTIVE ORDER; THAT IS, BY THE ADMINISTRATOR FOR INDUSTRIAL RECOVERY, OR SUCH AGENCY AS HE SHALL DESIGNATE.

QUESTION NO. 3 IS ANSWERED IN THE NEGATIVE. IF THE CONTRACTOR VIOLATES THE CODE OR THE PRESIDENT'S REEMPLOYMENT AGREEMENT, AND IT IS SO DETERMINED BY THE ADMINISTRATOR FOR INDUSTRIAL RECOVERY, OR SUCH AGENCY AS HE SHALL DESIGNATE, THE CONTRACT SHOULD BE CANCELED IN ACCORDANCE WITH THE PROVISIONS OF THE CONTRACT INSERTED THEREIN AS REQUIRED BY SUBPARAGRAPH (C) OF THE EXECUTIVE ORDER AND THE WORK PERFORMED OR SUPPLIES PROCURED AT THE EXPENSE OF THE CONTRACTOR AS THEREIN PROVIDED. THERE IS NOT INVOLVED ANY FORCING THE CONTRACTOR TO CONTINUE NONCOMPLIANCE WITH THE CODE FOR THE DURATION OF THE CONTRACT PERIOD. IN FACT, THE EXECUTIVE ORDER REQUIRES THE CANCELATION OF THE CONTRACT FOR THE REMAINDER OF THE CONTRACT PERIOD IN ORDER TO PREVENT CONTINUED NONCOMPLIANCE WITH THE CODE. OF COURSE, ANY FAILURE OF A BIDDER OR CONTRACTOR TO COMPLY WITH THE CERTIFICATE AND THE PROVISIONS OF ITS CONTRACT IS ITS OWN RESPONSIBILITY.

QUESTION NO. 4 HAS BEEN ANSWERED IN THE ANSWERS TO QUESTIONS 1 AND 2. IS NOT FOR THE CONTRACTING OFFICER OR OTHER ADMINISTRATIVE OFFICERS TO ATTEMPT TO RESOLVE CONFLICTING TERMS IN A PROPOSAL OR BID. THE CONTRACTING AND ADMINISTRATIVE OFFICERS ARE REQUIRED TO SEE WHETHER THE BID IS ACCOMPANIED BY THE REQUIRED CERTIFICATE AND THAT THE CONTRACT ENTERED INTO WITH THE ACCEPTED BIDDER CONTAINS THE REQUIRED STIPULATION WITH RESPECT TO CONTINUED COMPLIANCE WITH THE APPLICABLE CODE OR REEMPLOYMENT AGREEMENT.

QUESTION NO. 5 HAS BEEN ANSWERED IN SUBSTANCE IN THE ANSWER TO THE PRECEDING QUESTION. ANY BELIEVED VIOLATION BY THE LOW BIDDER OF THE CODES OF FAIR COMPETITION OR THE PRESIDENT'S REEMPLOYMENT AGREEMENT, AS THE CASE MAY BE--- CONTRARY TO THE CERTIFICATE ACCOMPANYING THE BID OR THE STIPULATION OF THE CONTRACT AS TO SUCH COMPLIANCE--- SHOULD BE SUBMITTED TO THE ADMINISTRATOR FOR INDUSTRIAL RECOVERY, OR SUCH AGENCY AS HE SHALL DESIGNATE FOR DETERMINATION AS TO WHETHER THERE IS, IN FACT, ANY SUCH VIOLATION.