A-56927, AUGUST 29, 1934, 14 COMP. GEN. 170

A-56927: Aug 29, 1934

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ARE TO BE MADE SUBJECT TO THE APPROVAL OF SOME SPECIFIED OFFICER OF THE POST OFFICE DEPARTMENT. WHERE THE ADVERTISEMENT AND THE CONTRACT DO NOT SHOW THAT THE CONTRACT IS TO BE SUBJECT TO APPROVAL IT BECOMES A LEGAL OBLIGATION AS TO BOTH PARTIES IMMEDIATELY UPON ACCEPTANCE BY THE POSTMASTER AND IS EFFECTIVE FROM THAT DATE UNLESS SPECIFICALLY PROVIDED THEREIN THAT IT SHALL BE EFFECTIVE FROM A LATER DATE. LESS 1 PERCENT FOR PAYMENT WITHIN 10 DAYS WAS ACCEPTED BY THE ACTING POSTMASTER. THE FOURTH ASSISTANT POSTMASTER GENERAL ADVISED THE POSTMASTER AS FOLLOWS: YOU ARE INFORMED THAT THE AWARD. IS APPROVED: * * * THE ABOVE CONCERN SHOULD BE NOTIFIED IMMEDIATELY OF THIS AWARD. CONTAINING A STATEMENT AS FOLLOWS: EMERGENCY PURCHASES PENDING THE NEGOTIATION OF A CONTRACT THERE WERE FOUR BIDS OF 10 3/4 CENTS.

A-56927, AUGUST 29, 1934, 14 COMP. GEN. 170

CONTRACTS - POSTAL SERVICE - APPROVAL WHERE CONTRACTS OF POSTMASTERS FOR SUPPLIES, ETC., ARE TO BE MADE SUBJECT TO THE APPROVAL OF SOME SPECIFIED OFFICER OF THE POST OFFICE DEPARTMENT, THE ADVERTISED SPECIFICATIONS AND THE CONTRACT SHOULD SPECIFICALLY SO PROVIDE, AND IN SUCH CASES POSTMASTERS SHOULD ISSUE THE ADVERTISEMENTS TO SECURE BIDS AND TENTATIVELY ACCEPT THE LOWEST RESPONSIBLE BID AND FORWARD THE PAPERS TO THE POST OFFICE DEPARTMENT SO THAT APPROVAL MAY BE GIVEN PRIOR TO THE DATES WHEN PERFORMANCE SHOULD BEGIN UNDER THE CONTRACTS. WHERE THE ADVERTISEMENT AND THE CONTRACT DO NOT SHOW THAT THE CONTRACT IS TO BE SUBJECT TO APPROVAL IT BECOMES A LEGAL OBLIGATION AS TO BOTH PARTIES IMMEDIATELY UPON ACCEPTANCE BY THE POSTMASTER AND IS EFFECTIVE FROM THAT DATE UNLESS SPECIFICALLY PROVIDED THEREIN THAT IT SHALL BE EFFECTIVE FROM A LATER DATE.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, AUGUST 29, 1934:

THERE HAS BEEN BROUGHT TO MY ATTENTION THE PROCEDURE FOLLOWED BY THE POST OFFICE DEPARTMENT IN CONTRACTING FOR THE FURNISHING OF GASOLINE FOR USE IN THE MOTOR VEHICLE SERVICE AT COLUMBUS, OHIO POST OFFICE, AND FOR THE STORAGE OF GOVERNMENT-OWNED TRUCKS AT MISSOULA, MONT.

WITH RESPECT TO THE CONTRACT FOR THE FURNISHING OF GASOLINE, IT APPEARS THAT UNDER DATE OF JANUARY 11, 1934, THE ACTING POSTMASTER, COLUMBUS, OHIO, ADVERTISED FOR BIDS TO BE OPENED JANUARY 17, 1934, FOR THE FURNISHING OF APPROXIMATELY 16,000 GALLONS OF GASOLINE FOR THE USE OF THE MOTOR VEHICLE SERVICE AT THE OFFICE NAMED, FOR THE PERIOD JANUARY 1 TO MARCH 31, 1934. THE BID OF THE CHECKER OIL CO. OFFERING TO FURNISH THE GASOLINE FOR THE SUM OF 10 CENTS PER GALLON, LESS 1 PERCENT FOR PAYMENT WITHIN 10 DAYS WAS ACCEPTED BY THE ACTING POSTMASTER, AND UNDER DATE OF FEBRUARY 2, 1934, THE FOURTH ASSISTANT POSTMASTER GENERAL ADVISED THE POSTMASTER AS FOLLOWS:

YOU ARE INFORMED THAT THE AWARD, AS NOTED BELOW, DURING THE PERIOD BEGINNING JANUARY 17, 1934, AND ENDING MARCH 31, 1934, IS APPROVED: * * *

THE ABOVE CONCERN SHOULD BE NOTIFIED IMMEDIATELY OF THIS AWARD. A COPY OF THIS AWARD TOGETHER WITH THE ACCEPTED BID HAS THIS DATE BEEN FILED WITH THE GENERAL ACCOUNTING OFFICE, AND THAT FACT SHOULD BE STATED UNDER PARAGRAPH B ON YOUR FORM 1526-P.

THERE APPEARS, ALSO, IN THE ACCOUNTS OF THE SAID POSTMASTER, VOUCHERS OF THE MILLER OIL CO. COVERING THE PURCHASE OF GASOLINE FROM JANUARY 1 TO FEBRUARY 5, 1934, AT A PRICE OF 10 3/4 CENTS PER GALLON, SUPPORTED BY A CERTIFICATE OF DOMESTIC PRODUCTION, AND CONTAINING A STATEMENT AS FOLLOWS:

EMERGENCY PURCHASES PENDING THE NEGOTIATION OF A CONTRACT

THERE WERE FOUR BIDS OF 10 3/4 CENTS. THE MILLER OIL COMPANY WAS SELECTED BECAUSE IT IS A COMPANY OF LOCAL CAPITAL, AND WERE WILLING TO SUPPLY GASOLINE AT THEIR BID PRICE, PENDING THE NEGOTIATION OF A CONTRACT. THE SITUATION WAS FULLY EXPLAINED TO THE MILLER COMPANY AND THEY READILY AGREED TO ALL CONDITIONS.

IT THUS APPEARS THAT THE POST OFFICE DEPARTMENT APPROVED THE CONTRACT OF THE SAID CHECKER OIL CO. BY LETTER DATED FEBRUARY 2, 1934, FOR A RETROACTIVE PERIOD BEGINNING JANUARY 17, 1934, AND IN VIEW THEREOF, BY LETTER FROM THE POST OFFICE DEPARTMENT DIVISION OF THIS OFFICE DATED MAY 8, 1934, ADDRESSED TO THE FOURTH ASSISTANT POSTMASTER GENERAL, EXPLANATION WAS REQUESTED WITH REFERENCE TO THE RETROACTIVE APPROVAL OF THE CONTRACT, AND IN LETTER OF MAY 22, 1934, THE FOURTH ASSISTANT POSTMASTER GENERAL ADVISED AS FOLLOWS:

RECEIPT IS ACKNOWLEDGED OF YOUR LETTER (P-CE) DATED THE 8TH INSTANT, MAKING REFERENCE TO A PURCHASE OF GASOLINE FOR USE IN CONNECTION WITH RAILWAY MAIL SERVICE AT COLUMBUS, OHIO, FOR THE MARCH QUARTER, 1934. HOWEVER, SINCE YOUR LETTER DISCUSSES THE PARTICULARS OF THE CONTRACT COVERING MOTOR VEHICLE SERVICE REQUIREMENTS DURING THAT PERIOD, WE ARE ASSUMING THE INFORMATION YOU REQUEST IS IN THAT CONNECTION.

THE QUESTION OF THE EFFECTIVE DATE OF SUCH CONTRACT, WHEN NOT APPROVED PRIOR TO THE BEGINNING OF THE QUARTER, IS A QUESTION WHICH HAS NEVER BEEN DEFINITELY AND OFFICIALLY DECIDED. IT HAS BEEN THE POLICY OF THIS BUREAU TO APPROVE SUCH CONTRACTS PRIOR TO THE BEGINNING OF THE QUARTERLY PERIOD INSOFAR AS PRACTICAL; AND WHERE IT HAS NOT BEEN PRACTICAL TO APPROVE SUCH AGREEMENTS PRIOR TO THE BEGINNING OF THE QUARTER, WE HAVE, AS A GENERAL RULE APPROVED THE AWARDS AS OF THE BEGINNING OF THE QUARTERLY CONTRACT PERIOD.

THEORETICALLY, OF COURSE, THE AGREEMENT, HAVING BEEN MADE SUBJECT TO THE APPROVAL OF THE DEPARTMENT, IS NOT BINDING AS AN ENFORCEABLE CONTRACT UNTIL APPROVED BY THE DEPARTMENT. HOWEVER, THE POSTMASTER IS REQUIRED UNDER THE PROVISIONS OF SECTION 3709 OF THE REVISED STATUTES TO MAKE THE AWARD TO THE LOWEST BIDDER AS TO PRICE, AND SECTION 3709 OF THE REVISED STATUTES DOES NOT AUTHORIZE THIS BUREAU TO WITHHOLD APPROVAL OF THE POSTMASTER'S AWARD WHERE THE AWARD WAS, IN FACT, MADE TO THE LOWEST BIDDER AS TO PRICE.

IN THE INSTANT CASE, IT APPEARS THAT BIDS WERE NOT OPENED AT COLUMBUS, OHIO, UNTIL 10 A.M., JANUARY 17 LAST. FROM THE INFORMATION SUBMITTED, IT IS PATENT THAT THE CHECKER OIL COMPANY WAS THE LOW BIDDER AS TO PRICE AND UNDER THE PROVISIONS OF SECTION 3709 OF THE REVISED STATUTES THE POSTMASTER WAS OBLIGATED TO MAKE A TENTATIVE AWARD TO THAT CONCERN AT THAT TIME.

HAVING NO ADVICE TO THE CONTRARY, WHEN APPROVAL OF THE AWARD WAS UP FOR CONSIDERATION BY THIS BUREAU, WE ASSUMED THAT THE POSTMASTER HAD PROCEEDED IN ACCORDANCE WITH STATUTORY REQUIREMENTS AND MADE A TENTATIVE AWARD TO THE LOWEST BIDDER.

AT THE TIME OUR APPROVAL OF AWARD WAS ISSUED ON FEBRUARY 2 LAST, THIS BUREAU HAD NO KNOWLEDGE OF ANY EMERGENCY ARRANGEMENTS HAVING BEEN MADE BY THE POSTMASTER. HE NATURALLY ASSUMED THAT ANY EMERGENCY PURCHASES WHICH MIGHT BE NECESSARY WOULD BE MADE FROM THE LOW BIDDER TO WHOM A TENTATIVE AWARD SHOULD HAVE BEEN MADE ON JANUARY 17 LAST.

THE FIRST VOUCHERS TO REACH THIS BUREAU WHICH CONTAINED INFORMATION OF THE EMERGENCY PURCHASES AND ARRANGEMENTS WITH THE MILLER OIL COMPANY DID NOT REACH THIS BUREAU UNTIL FEBRUARY 8, SIX DAYS AFTER THE APPROVAL OF AN AWARD TO THE CHECKER OIL COMPANY.

IN THIS CASE, AS WELL AS IN MANY OTHERS, OUR APPROVAL OF AN AWARD IS MADE RETROACTIVE TO THE TIME THAT THE LOW BID WAS ASCERTAINED BECAUSE IT IS OUR JUDGMENT THAT THE OBLIGATION OF THE POSTMASTER APPLIES AT THE TIME THE LOW BID IS ASCERTAINED.

WITH RESPECT TO THE FURNISHING OF STORAGE SPACE FOR GOVERNMENT-OWNED TRUCKS, IT APPEARS THAT UNDER DATE OF FEBRUARY 14, 1934, THE POSTMASTER AT MISSOULA, MONT., ADVERTISED FOR BIDS TO BE OPENED FEBRUARY 17, 1934, FOR FURNISHING STORAGE SPACE FOR FIVE GOVERNMENT OWNED TRUCKS ON A MONTHLY BASIS UNTIL JUNE 30, 1934, AND MCBRIDE AND JONES SUBMITTED A BID OF $3.75 PER TRUCK PER MONTH WHICH WAS ACCEPTED FEBRUARY 17 BY THE POSTMASTER WHO MADE THE FOLLOWING NOTATION ON THE BID:

THIS THE PROPOSAL OF MCBRIDE AND JONES, BEING LOWEST OF TWO BIDS RECEIVED, IS RECOMMENDED FOR ACCEPTANCE AT THE ABOVE SPECIFIED PRICE; TO BE EFFECTIVE MARCH 1, 1934, AND SUBMITS IT TO THE POST OFFICE DEPARTMENT FOR APPROVAL.

THERE WAS IN EXISTENCE AT THE TIME THE ABOVE PROPOSALS WERE SOLICITED A CONTRACT FOR STORAGE OF THE FIVE TRUCKS AT $5 PER MONTH PER TRUCK. THE POST OFFICE DEPARTMENT ADVISED THE POSTMASTER OF THE APPROVAL OF THE CONTRACT BY LETTER DATED FEBRUARY 28, 1934, CERTIFYING A CHANGE IN ALLOWANCE FOR THE SERVICE FROM $5 TO $3.75 PER MONTH PER TRUCK, EFFECTIVE APRIL 1, 1934. THE POSTMASTER MADE PAYMENT FOR THE MONTH OF MARCH AT $5 PER MONTH UNDER THE OLD CONTRACT CLAIMING CREDIT THEREFOR IN HIS ACCOUNTS FOR THE QUARTER ENDING MARCH 31, 1934. IN LETTER FROM THE POST OFFICE DEPARTMENT DIVISION OF THIS OFFICE DATED JULY 3, 1934, ADDRESSED TO THE FOURTH ASSISTANT POSTMASTER GENERAL, INFORMATION WAS REQUESTED AS TO THE REASONS FOR NOT CERTIFYING THE DECREASED ALLOWANCE AS OF THE EFFECTIVE DATE OF THE NEW AGREEMENT, AND IN REPLY THERETO, IN LETTER OF JULY 10, 1934, IT WAS STATED THAT:

IN ANSWER TO YOUR LETTER OF THE 3D INSTANT, INITIALS P-CE, RELATIVE TO THE TRUCK STORAGE CONTRACT AT MISSOULA, MONT., FOR THE FISCAL YEAR ENDED JUNE 30, 1934, I WISH TO INVITE YOUR ATTENTION TO THE ENCLOSED COPY OF OUR LETTER OF FEBRUARY 28, 1934, TO THE POSTMASTER APPROVING THE ACCEPTANCE OF THE PROPOSAL OF MCBRIDE AND JONES AT THE RATE OF $3.75 PER TRUCK PER MONTH, EFFECTIVE APRIL 1, 1934.

ALL PROPOSALS COVERING TRUCK STORAGE ARE SUBJECT TO THE APPROVAL OF THIS BUREAU. HOWEVER, IN THIS PARTICULAR INSTANCE THE POSTMASTER'S RECOMMENDATION AND BIDS WERE NOT RECEIVED AT THIS BUREAU UNTIL FEBRUARY 20, 1934, AND, ON ACCOUNT OF THE LARGE NUMBER OF SIMILAR CASES AWAITING ATTENTION, FORMAL ACCEPTANCE WAS NOT AUTHORIZED UNTIL FEBRUARY 28, 1934, AND WAS APPARENTLY TOO LATE TO CHANGE QUARTERS ON MARCH 1ST. OUR AUTHORIZATION SPECIFIED THAT IN THE EVENT THE CHANGE IN QUARTERS HAD ALREADY BEEN MADE THE DEPARTMENT SHOULD BE NOTIFIED ACCORDINGLY, IT BEING THOUGHT THAT THE POSTMASTER MIGHT HAVE ASSUMED THAT THE DEPARTMENT WOULD ACCEPT THE LOW BID. IT APPEARS, HOWEVER, THAT THE POSTMASTER AWAITED OFFICIAL APPROVAL BEFORE CHANGING QUARTERS, WHICH WAS RECEIVED TOO LATE TO TAKE ADVANTAGE OF THE REDUCED RATE EFFECTIVE MARCH 1, 1934.

IN VIEW OF THE CIRCUMSTANCES IT IS HOPED THAT YOUR OFFICE MAY FIND IT POSSIBLE TO RESTORE THE AMOUNT HELD IN SUSPENSION.

ORDINARILY A PROPOSAL AND ACCEPTANCE BY AN OFFICER AUTHORIZED TO CONTRACT IN THE POST OFFICE DEPARTMENT OR POSTAL SERVICE CONSTITUTES A CONTRACT BINDING ON BOTH PARTIES THERETO. UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313; COMPARE UNITED STATES V. NEW YORK AND PORTO RICO STEAMSHIP CO., 239 U.S. 88. BOTH OF THESE CONTRACTS CONSIST OF A PROPOSAL AND ACCEPTANCE BY THE RESPECTIVE POSTMASTERS ON STANDARD FORM NO. 33, STANDARD GOVERNMENT SHORT FORM OF CONTRACT FOR SUPPLIES, AND THERE IS CONTAINED IN NEITHER FORM A PROVISION TO THE EFFECT THAT THE CONTRACT SHOULD NOT BECOME BINDING UNLESS AND UNTIL APPROVED BY THE POSTMASTER GENERAL OR OTHER OFFICER OF THE POST OFFICE DEPARTMENT. ATTENTION IS INVITED TO THE OPINION OF THE SUPREME COURT OF THE UNITED STATES IN MONROE V. UNITED STATES, 184 U.S. 524, WHERE THE ADVERTISED SPECIFICATIONS AND THE CONTRACT PROVIDED THAT "THIS CONTRACT SHALL BE SUBJECT TO THE APPROVAL OF THE CHIEF OF ENGINEERS, UNITED STATES ARMY," AND THE COURT STATED THAT:

* * * THE APPROVAL, THEREFORE, DID NOT CONSIST OF SOMETHING PRECEDENT, BUT WAS TO CONSIST OF SOMETHING SUBSEQUENT. THAT WHICH PRECEDED WAS INDUCEMENT ONLY, AND CONTEMPLATED AN INSTRUMENT OF BINDING AND REMEDIAL FORM, AND HENCE TO CONTAIN COVENANTS IMPOSING OBLIGATIONS AND GIVING RIGHTS AND REMEDIES, CONTAINING PROVISIONS OF THE TIME OF PERFORMANCE AND THE MANNER OF IT; PROVISIONS FOR CHANGES AND FOR EXTRA WORK--- INDEED, OF THE PROVISIONS WHICH PRUDENCE AND NECESSITY REQUIRE AND THOSE WHICH THE STATUTES OF THE UNITED STATES MIGHT REQUIRE. AND THE FINAL RIGHT TO SEE THAT THIS WAS DONE, THE PARTIES AGREED, SHOULD BE DEVOLVED ON THE CHIEF OF ENGINEERS, AND IT WAS NOT SATISFIED BY PRIOR INSTRUCTIONS. IN OTHER WORDS, A FINAL REVIEWING AND APPROVING JUDGMENT WAS GIVEN TO THE CHIEF OF ENGINEERS, AND WAS GIVEN BY A COVENANT SO EXPRESSED AS TO CONSTITUTE A CONDITION PRECEDENT TO THE TAKING EFFECT OF THE CONTRACT. IF THE COVENANT DID NOT MEAN THAT, IT WAS IDLE. CONSTRUED AS PROSPECTIVE, IT HAD A NATURAL PURPOSE. THE ENGAGEMENT OF THE PARTIES DID NOT END WITH THE BID AND ITS ACCEPTANCE. THE PERFORMANCE OF THE WORK WAS TO BE SECURED, AND THE FINAL JUDGMENT OF WHAT WAS NECESSARY FOR THAT, AS WE HAVE ALREADY SAID, WAS TO BE GIVEN BY THE CHIEF OF ENGINEERS.

IT WAS STATED IN DARRAGH V. UNITED STATES, 33 CT.CLS. 377, THAT THE CONTRACT IN THAT CASE WHICH LIKEWISE STATED THAT IT WAS SUBJECT TO APPROVAL OF A SUPERIOR OFFICER, THE QUARTERMASTER GENERAL, WAS NOT A CONDITION OF DEFEASANCE "BUT A CONDITION PRECEDENT TO THE LEGAL EFFECT OF THE GREEMENT" AND THAT THE "ALLEGED AGREEMENT HAD NO VITALITY AS A CONTRACT UNTIL APPROVED BY THE QUARTERMASTER GENERAL; AND AS IS SAID IN EFFECT IN THE FILOR CASE (9 WALL. 45), SO FAR AS THE LEGAL LIABILITY OF THE GOVERNMENT IS CONCERNED IT WAS A NULLITY.'

IN VIEW OF THE CONCLUSIONS REACHED BY THE COURTS IN THE CASES REFERRED TO AND OTHER CASES WHERE THE APPROVAL OF A SUPERIOR OFFICER IS REQUIRED, IT CANNOT BE CONCLUDED THAT A CONTRACT HAS ANY BINDING EFFECT UNTIL APPROVED AND THAT THE APPROVAL IS PROSPECTIVE AND NOT RETROSPECTIVE IN OPERATION. WHERE CONTRACTS OF POSTMASTERS FOR SUPPLIES, ETC., ARE TO BE MADE SUBJECT TO THE APPROVAL OF SOME SPECIFIED OFFICER OF THE POST OFFICE DEPARTMENT, THE ADVERTISED SPECIFICATIONS AND THE CONTRACT SHOULD SPECIFICALLY SO PROVIDE, AND IN SUCH CASES POSTMASTERS SHOULD ISSUE THE ADVERTISEMENTS TO SECURE BIDS AND TENTATIVELY ACCEPT THE LOWEST RESPONSIBLE BID AND FORWARD THE PAPERS TO THE POST OFFICE DEPARTMENT SO THAT APPROVAL MAY BE GIVEN PRIOR TO THE DATES WHEN PERFORMANCE SHOULD BEGIN UNDER THE CONTRACTS.

WHERE, HOWEVER, THE ADVERTISEMENT AND THE CONTRACT DO NOT SHOW THAT THE CONTRACT IS TO BE SUBJECT TO APPROVAL IT BECOMES A LEGAL OBLIGATION AS TO BOTH PARTIES IMMEDIATELY UPON ACCEPTANCE BY THE POSTMASTER AND IS EFFECTIVE FROM THAT DATE UNLESS SPECIFICALLY PROVIDED THEREIN THAT IT SHALL BE EFFECTIVE FROM A LATER DATE.

THE PAYMENTS HEREINBEFORE MENTIONED WILL NOT BE FURTHER QUESTIONED, IF OTHERWISE CORRECT, BUT HEREAFTER THE PROCEDURE IN THE MATTER OF SUCH CONTRACTS SHOULD BE IN ACCORDANCE WITH THE RULES HEREIN STATED.