A-56144, JULY 7, 1934, 14 COMP. GEN. 21

A-56144: Jul 7, 1934

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CONTRACTS - BIDS - INDEBTEDNESS OF BIDDERS THE GOVERNMENT IN ITS CAPACITY AS A PURCHASER IS DISTINCT FROM THE GOVERNMENT. THE FACT THAT A BIDDER FOR GOVERNMENT BUSINESS IS INDEBTED TO THE UNITED STATES. IS NOT FOR CONSIDERATION IN AWARDING CONTRACT TO THE LOWEST RESPONSIBLE BIDDER. WERE SOLICITED FROM SEVERAL OWNERS OF OFFICE BUILDINGS IN RICHMOND. BIDS WERE RECEIVED FROM THREE SUCH BUILDINGS AS FOLLOWS: 222-4 EAST BROAD STREET . 858.82 THE SPACE OFFERED AT 222-4 EAST BROAD STREET WAS FOUND SUITABLE FOR THE PURPOSE FOR WHICH IT IS TO BE USED AND AS THE BID WAS THE LOWEST RECEIVED IT WAS ACCEPTED. WHICH IS THE OWNER OF THE STATE-PLANTERS BANK BUILDING. WHICH LOAN IS STILL OUTSTANDING. THE BID OF THE STATE-PLANTERS BANK BUILDING IS THE HIGHEST OF THOSE RECEIVED FOR THE REQUIRED SPACE.

A-56144, JULY 7, 1934, 14 COMP. GEN. 21

CONTRACTS - BIDS - INDEBTEDNESS OF BIDDERS THE GOVERNMENT IN ITS CAPACITY AS A PURCHASER IS DISTINCT FROM THE GOVERNMENT, OR A CORPORATE AGENCY THEREOF, IN ITS CAPACITY AS A LENDER OF MONEY, AND THE FACT THAT A BIDDER FOR GOVERNMENT BUSINESS IS INDEBTED TO THE UNITED STATES, OR A CORPORATE AGENCY THEREOF, IS NOT FOR CONSIDERATION IN AWARDING CONTRACT TO THE LOWEST RESPONSIBLE BIDDER.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, JULY 7, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF JUNE 12, 1934, AS FOLLOWS:

PROPOSALS FOR OFFICE SPACE FOR THE FISCAL YEAR 1935 FOR USE OF THE COLLECTOR OF INTERNAL REVENUE AT RICHMOND, VA., WERE SOLICITED FROM SEVERAL OWNERS OF OFFICE BUILDINGS IN RICHMOND. BIDS WERE RECEIVED FROM THREE SUCH BUILDINGS AS FOLLOWS:

222-4 EAST BROAD STREET ------------------------------- $8,400.00

RICHMOND TRUST BUILDING ------------------------------- 8,700.00

STATE-PLANTERS BANK BUILDING -------------------------- 9,858.82

THE SPACE OFFERED AT 222-4 EAST BROAD STREET WAS FOUND SUITABLE FOR THE PURPOSE FOR WHICH IT IS TO BE USED AND AS THE BID WAS THE LOWEST RECEIVED IT WAS ACCEPTED. IT NOW APPEARS THAT THE STATE-PLANTERS BANK, WHICH IS THE OWNER OF THE STATE-PLANTERS BANK BUILDING, ONE OF THE BIDDERS, BORROWED A LARGE SUM OF MONEY FROM THE RECONSTRUCTION FINANCE CORPORATION, WHICH LOAN IS STILL OUTSTANDING. THE BID OF THE STATE-PLANTERS BANK BUILDING IS THE HIGHEST OF THOSE RECEIVED FOR THE REQUIRED SPACE. THE COLLECTOR'S OFFICE IS NOW LOCATED IN THE STATE PLANTERS BANK BUILDING UNDER LEASE FOR THE CURRENT FISCAL YEAR. IT IS SAID THAT IF THE COLLECTOR'S OFFICE IS MOVED FROM THIS BUILDING, OTHER PRIVATE OFFICES WHO CONDUCT BUSINESS WITH THE COLLECTOR'S OFFICE ALSO WILL LIKELY MOVE OUT OF THE BUILDING. IT IS CONTENDED THAT THE LOSS OF THESE RENTALS WILL LESSEN THE INCOME OF THE STATE-PLANTERS BANK. THE QUESTION HAS ARISEN WHETHER THIS IS A MATTER THAT SHOULD HAVE BEEN TAKEN INTO CONSIDERATION WHEN THE AWARD OF CONTRACTS FOR FURNISHING THE SPACE WAS BEFORE THE BUREAU OF INTERNAL REVENUE.

ACCORDINGLY, IT IS REQUESTED THAT YOU ADVISE THIS DEPARTMENT WHETHER IT SHOULD HAVE TAKEN THE LOAN OF THE STATE-PLANTERS BANK FROM THE RECONSTRUCTION FINANCE CORPORATION INTO CONSIDERATION WHEN AWARD OF THE CONTRACT FOR THE SPACE WAS LET AND BECAUSE OF THE LOAN AND THE GOVERNMENT'S INTEREST IN THE MATTER COULD THE AWARD PROPERLY HAVE BEEN MADE TO THE STATE-PLANTERS BANK, NOTWITHSTANDING THE FACT THAT IT WAS THE HIGHEST BIDDER.

YOUR LETTER STATES THAT THE PROPOSAL OF THE LOW BIDDER ON PREMISES FOR USE OF THE INTERNAL REVENUE BUREAU IN RICHMOND, VA., HAS BEEN ACCEPTED. THE QUESTION RAISED BY YOUR LETTER THUS APPEARS NOT ONE FOR RENDERING OF AN ADVANCE DECISION PRIOR TO THE HEAD OF THE DEPARTMENT INCURRING AN OBLIGATION. IT IS ASSUMED THAT YOU DESIRE TO BE ADVISED FOR GUIDANCE OF ADMINISTRATIVE ACTION IN POSSIBLE FUTURE CASES OF A SIMILAR CHARACTER.

THE SUBSTANCE OF YOUR SUBMISSION IS WHETHER THERE SHOULD BE TAKEN INTO CONSIDERATION WHEN AWARDING A CONTRACT, AFTER COMPETITIVE BIDDING, THE CIRCUMSTANCE THAT A BIDDER IS INDEBTED TO THE UNITED STATES--- IN THE PRESENT INSTANCE, SUCH BIDDER NOT BEING LOW BIDDER. IN OTHER WORDS, WHETHER THE BID OF ONE WHO OWES MONEY TO THE UNITED STATES SHOULD, BECAUSE OF SUCH INDEBTEDNESS, BE ACCEPTED AT A HIGHER PRICE THAN THE LOW BID FOR MATERIAL, SERVICES, OR OTHER NEEDS OF THE GOVERNMENT. THE PROPOSITION APPEARS TO REQUIRE OR ADMIT OF NO ARGUMENT.

SECTION 3709 OF THE REVISED STATUTES AND OTHER STATUTES RELATIVE TO CONTRACTING FOR GOVERNMENT NEEDS CONTEMPLATE ACQUISITION OF PROPERTY OF ALL TYPES AT THE PRICE MOST ADVANTAGEOUS TO THE GOVERNMENT, THUS SAFEGUARDING EXPENDITURE OF GOVERNMENT MONEYS. (6 COMP. GEN. 557.) THESE STATUTES HAVE BEEN INTERPRETED CONSISTENTLY BY THE COURTS AND THIS OFFICE AS REQUIRING ACCEPTANCE OF THE PROPOSAL OF THE LOWEST RESPONSIBLE BIDDER MAKING AN OFFER MEETING THE GOVERNMENT'S NEEDS. DEPARTURE FROM THIS FOR REASONS OUTLINED IN YOUR LETTER IS NOT AUTHORIZED.

THE GOVERNMENT IN ITS CAPACITY AS A PURCHASER IS DISTINCT FROM THE GOVERNMENT OR A CORPORATE AGENCY THEREOF IN ITS CAPACITY AS A LENDER OF MONEY. GOVERNMENT AGENCIES CHARGED WITH THE LENDING OF GOVERNMENT FUNDS OPERATE IN A SEPARATE FIELD, AND IT IS TO BE ASSUMED THAT THEY WILL OBSERVE THE PROVISIONS OF STATUTES REQUIRING ADEQUATE SECURITY FOR ALL LOANS TO SAFEGUARD THE INTERESTS OF THE UNITED STATES. IN ANY EVENT, THE GOVERNMENT AS A CONTRACTOR IS NOT CONCERNED WITH THE ULTIMATE COLLECTION OF MONEYS LOANED BY A GOVERNMENTAL AGENCY AUTHORIZED TO MAKE LOANS.

IN ANSWER TO THE SPECIFIC QUESTION PRESENTED, I HAVE TO ADVISE THAT THERE WOULD HAVE BEEN NO LEGAL AUTHORITY FOR GIVING PREFERENCE TO THE HIGHEST BIDDER, MERELY BECAUSE OF ITS INDEBTEDNESS TO THE RECONSTRUCTION FINANCE CORPORATION.