A-55633, A-66101, DECEMBER 30, 1935, 15 COMP. GEN. 566

A-55633,A-66101: Dec 30, 1935

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ONE OF THEM IS THE BATES MANUFACTURING COMPANY. WHICH FOR PURPOSES OF THIS LETTER WE WILL USE AS AN EXAMPLE COVERING THE SITUATION WITH REGARD TO ALL OF THEM. THAT IS TO SAY. THE BATES MANUFACTURING COMPANY IS A MANUFACTURER OF TEXTILES BUT SELLS NO TEXTILES. IS A SELLER OF TEXTILES ON A COMMISSION BASIS BUT MANUFACTURES NO TEXTILES. PROVIDES THAT IT IS OUR JOB TO DISPOSE OF THEIR PRODUCTS AND THEIR JOB TO MAKE THE PRODUCTS. THAT THEY ARE TO REFRAIN FROM MAKING ANY SALES EXCEPT THROUGH US. WE ARE PERFECTLY WILLING TO ASSUME THESE RESPONSIBILITIES. KNOWING THAT THE BATES MANUFACTURING COMPANY WILL BACK US UP AND TAKE OFF OUR HANDS ANY GOODS IN CASE OF NEED. WE WOULD FIND OURSELVES REPRESENTING OURSELVES AS SOMETHING WHICH WE ARE NOT.

A-55633, A-66101, DECEMBER 30, 1935, 15 COMP. GEN. 566

AGENTS CONTRACTING WITH THE UNITED STATES ALL CONTRACTS WITH THE UNITED STATES SHOULD BE IN THE NAME OF THE PRINCIPAL, THERE NOT BEING A MATTER OF UNDISCLOSED PRINCIPALS OR AGENTS FOR DISCLOSED PRINCIPALS IN SUCH CONTRACTS, BUT AN AGENT MAY SUBMIT BIDS AND SIGN CONTRACTS ON BEHALF OF A PRINCIPAL UPON FILING WITH THE BID AND CONTRACT A PROPERLY EXECUTED POWER OF ATTORNEY FROM THE PRINCIPAL.

COMPTROLLER GENERAL MCCARL TO BLISS FABYAN AND CO., INC., DECEMBER 30, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF OCTOBER 1, 1935, AS FOLLOWS:

THIS COMPANY ACTS AS SELLING AGENTS FOR A GREAT MANY TEXTILE MILLS. ONE OF THEM IS THE BATES MANUFACTURING COMPANY, WHICH FOR PURPOSES OF THIS LETTER WE WILL USE AS AN EXAMPLE COVERING THE SITUATION WITH REGARD TO ALL OF THEM.

WE DESIRE TO GET A RULING ON THE METHOD OF SUBMITTING BIDS FOR GOVERNMENT CONTRACT. THAT IS TO SAY, WHETHER TO SUBMIT BIDS IN THE NAME OF BLISS FABYAN AND CO., INC., OR WHETHER TO SUBMIT THEM AS FOLLOWS:

BLISS FABYAN AND CO., INC.,

SELLING AGENTS FOR BATES MANUFACTURING COMPANY.

THE BATES MANUFACTURING COMPANY IS A MANUFACTURER OF TEXTILES BUT SELLS NO TEXTILES. BLISS FABYAN AND CO., INC., IS A SELLER OF TEXTILES ON A COMMISSION BASIS BUT MANUFACTURES NO TEXTILES, AND AT NO TIME OWNS ANY. THE CONTRACT EXISTING BETWEEN THE BATES MANUFACTURING COMPANY AND BLISS FABYAN AND CO. PROVIDES THAT IT IS OUR JOB TO DISPOSE OF THEIR PRODUCTS AND THEIR JOB TO MAKE THE PRODUCTS, AND THAT THEY ARE TO REFRAIN FROM MAKING ANY SALES EXCEPT THROUGH US. WHEN WE BID ON A CONTRACT, UNLESS WE SHOW OUR NAME AS SELLING AGENTS FOR THE MILL, THEN WE MUST NAME OURSELVES AS THE SUPPLIER. WE APPRECIATE THAT IN SIGNING THIS SORT OF AN AGREEMENT WE ASSUME THE RESPONSIBILITIES OF A SUPPLIER. WE ARE PERFECTLY WILLING TO ASSUME THESE RESPONSIBILITIES, KNOWING THAT THE BATES MANUFACTURING COMPANY WILL BACK US UP AND TAKE OFF OUR HANDS ANY GOODS IN CASE OF NEED, BUT WE WOULD FIND OURSELVES REPRESENTING OURSELVES AS SOMETHING WHICH WE ARE NOT. THE MILL IS THE SUPPLIER. WE, BLISS FABYAN AND CO., INC., CANNOT PROPERLY PASS TITLE FOR SOMETHING WHICH WE DO NOT OWN, EXCEPT IN THE NAME OF THE MILL.

IN THE ORDINARY COMMERCIAL CIVILIAN CONDUCT OF THE BUSINESS, WE OFFER GOODS AS AGENTS FOR THE MILL, WRITE THE ORDER IN THE NAME OF THE MILL, DESIGNATING OURSELVES AS SELLING AGENTS, AND WE BILL THE GOODS TO THE CUSTOMER IN THE NAME OF THE MILL, DESIGNATING OURSELVES AS AGENTS, FOR COLLECTION OF FUNDS. THEREFORE, IN OUR CIVILIAN TRANSACTIONS, THE MILL IS THE PRINCIPAL AND WE ARE THE AGENT THROUGHOUT. IN GOVERNMENT TRANSACTIONS WE ARE GENERALLY REQUESTED TO BECOME THE PRINCIPALS. AT NO TIME ARE WE ACTUALLY THE PRINCIPALS, THEREFORE, WE WOULD SEEM TO BE MISREPRESENTING THE SITUATION IN FOLLOWING THAT PROCEDURE.

THE FACT THAT FROM TIME TO TIME WE ARE THE LOW BIDDERS IN THIS OPEN BIDDING WOULD SEEM TO BE FAIRLY CONCLUSIVE EVIDENCE THAT OUR PARTICIPATION IN BIDDING AT TIMES ENABLES THE GOVERNMENT TO OBTAIN MERCHANDISE MORE CHEAPLY FROM OUR MILLS THAN CAN BE OBTAINED ELSEWHERE WHICH PRESUMABLY IS DESIRABLE FROM THE GOVERNMENT'S VIEWPOINT, AND WE, OF COURSE, ADMIT THAT THE ORDERS WE OBTAIN ARE DESIRABLE FROM OUR STANDPOINT. IN OTHER WORDS, THE RELATIONSHIP THAT WE HAVE MUTUALLY ENJOYED FROM TIME TO TIME WOULD SEEM TO BE A DESIRABLE ONE THAT SHOULD BE CONTINUED.

SOME TIME AGO, IN FACT AT THE TIME THE PROCESSING TAX WENT INTO EFFECT,WE HAD A CONTRACT WITH THE GOVERNMENT IN THE NAME OF BLISS FABYAN AND CO., INC. ACTUALLY THE CONTRACT HAD BEEN MADE AS SELLING AGENTS FOR THE BATES MANUFACTURING COMPANY ALTHOUGH THE NAME OF THE BATES MANUFACTURING COMPANY DID NOT APPEAR. OUR POSITION IN THIS CONTRACT WAS THAT OF SELLING AGENT ONLY, ON A COMMISSION BASIS. THERE WERE CERTAIN DELIVERIES OF MERCHANDISE MADE AFTER AUGUST 1, 1933, ON WHICH THE MILL HAD TO PAY A FLOOR TAX. THE GOVERNMENT DID NOT REIMBURSE THE MILL FOR THAT FLOOR TAX FOR THE REASON THAT THE MILL DID NOT APPEAR AS PART OF THE CONTRACT AND THE GOVERNMENT TOOK THE POSITION THAT THEY WERE A THIRD PARTY. THE MILL LOST A CONSIDERABLE AMOUNT OF MONEY BECAUSE OF THIS SITUATION.

TO COVER SUCH A SITUATION THAT MIGHT ARISE AGAIN AND ALSO TO MORE ACCURATELY STATE THE CAPACITY IN WHICH WE ENTER THE BID, WE DESIRE TO GET A RULING FROM YOU TO THE EFFECT THAT WE MAY ENTER ALL BIDS AS FOLLOWS:

BLISS FABYAN AND CO., INC.,

SELLING AGENTS FOR BATES MANUFACTURING COMPANY.

AS YOU WERE INFORMED IN MY DECISIONS OF JUNE 12 AND 26, 1934, THERE IS NOT A MATTER OF UNDISCLOSED PRINCIPALS IN CONTRACTING WITH THE UNITED STATES. ALSO, THE UNITED STATES DOES NOT CONTRACT WITH AN AGENT FOR A DISCLOSED PRINCIPAL. IF YOU ARE TO ACT AS PRINCIPAL, THE BIDS AND CONTRACTS BETWEEN YOU AND THE UNITED STATES SHOULD BE IN YOUR NAME. THE CONTRACTS ARE TO BE WITH THE BATES MANUFACTURING COMPANY, YOUR PRINCIPAL, THE BIDS SHOULD BE SUBMITTED AND THE CONTRACT ENTERED INTO BY SAID COMPANY, THOUGH YOU MAY ACT AS THE AGENT OF SAID COMPANY UPON THE FILING WITH THE BID AND CONTRACT A PROPERLY EXECUTED POWER OF ATTORNEY FROM THE BATES MANUFACTURING COMPANY AUTHORIZING YOU TO ACT AS SUCH AGENT IN SUBMITTING THE BID AND SIGNING THE CONTRACT ON BEHALF OF SAID COMPANY.