A-57785, APRIL 18, 1935, 14 COMP. GEN. 766

A-57785: Apr 18, 1935

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CONTRACTS - VARIATION CLAUSE - PURCHASE OF TRUCKS THE VARIATION CLAUSE IN THE STANDARD FORM OF GOVERNMENT CONTRACT IS NOT PROPERLY FOR CONSIDERATION IN CONFERRING ANY AUTHORITY FOR THE PURCHASE OF ADDITIONAL TRUCKS. WHICH REQUIREMENT YOU HAVE BEEN HERETOFORE INFORMED WAS IMPROPER IN GOVERNMENT SPECIFICATIONS. A SUPPLEMENTAL AGREEMENT WAS ENTERED INTO INCREASING THE NUMBER OF TRUCKS TO BE DELIVERED BY 36. THE QUARTERMASTER GENERAL OF THE ARMY WAS REQUESTED IN LETTER DATED FEBRUARY 16. WAS ENTERED INTO AS A RESULT OF BIDS RECEIVED ON INVITATION FOR BIDS NO. 398-35-12 ISSUED BY THE HOLABIRD QUARTERMASTER DEPOT ON JULY 24. THEY WERE DIVIDED INTO SIX ITEMS. THE ORIGINAL AWARD TO THE FARGO MOTOR CORPORATION WAS FOR 1.

A-57785, APRIL 18, 1935, 14 COMP. GEN. 766

CONTRACTS - VARIATION CLAUSE - PURCHASE OF TRUCKS THE VARIATION CLAUSE IN THE STANDARD FORM OF GOVERNMENT CONTRACT IS NOT PROPERLY FOR CONSIDERATION IN CONFERRING ANY AUTHORITY FOR THE PURCHASE OF ADDITIONAL TRUCKS, THE NUMBER OF WHICH SHOULD BE DEFINITELY STATED IN THE CONTRACT ON THE BASIS OF THE ADVERTISED SPECIFICATIONS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, APRIL 18, 1935:

CONTRACT W-398-QM-4468, DATED SEPTEMBER 12, 1934, WITH THE FARGO MOTOR CORPORATION, REQUIRED THE DELIVERY OF 1,897 MOTOR TRUCKS HAVING CERTAIN CHARACTERISTICS, INCLUDING PISTON DISPLACEMENT OF NOT LESS THAN 205 CUBIC INCHES, AND WHICH REQUIREMENT YOU HAVE BEEN HERETOFORE INFORMED WAS IMPROPER IN GOVERNMENT SPECIFICATIONS, AND THE CONTRACT CONTAINED A PROVISION FOR VARIATION OF NOT EXCEEDING 25 PERCENT. ON OCTOBER 13,1934, A SUPPLEMENTAL AGREEMENT WAS ENTERED INTO INCREASING THE NUMBER OF TRUCKS TO BE DELIVERED BY 36; 4 CHANGE ORDERS OF OCTOBER 13, 1934, INCREASED THE NUMBER BY 169, 82, 8, AND 200 TRUCKS, RESPECTIVELY; 2 CHANGE ORDERS OF OCTOBER 17, 1934, INCREASED THE NUMBER BY 163 AND 352, RESPECTIVELY; AND 2 CHANGE ORDERS OF OCTOBER 26, 1934, INCREASED THE NUMBER BY 4 AND 78, RESPECTIVELY. AS THIS INCREASE LARGELY EXCEEDED THE 25 PERCENT VARIATION CLAUSE IN THE CONTRACT, THE QUARTERMASTER GENERAL OF THE ARMY WAS REQUESTED IN LETTER DATED FEBRUARY 16, 1935, TO FURNISH A REPORT WITH RESPECT THERETO, AND HE HAS REPORTED IN LETTER OF FEBRUARY 27, 1935, AS FOLLOWS:

REFERENCE YOUR LETTER OF FEBRUARY 16, 1935, FILE A-JA-CC, TO THE QUARTERMASTER GENERAL, CONTRACT W 398 QM-4468 WITH THE FARGO MOTOR CORPORATION DATED SEPTEMBER 12, 1934, WAS ENTERED INTO AS A RESULT OF BIDS RECEIVED ON INVITATION FOR BIDS NO. 398-35-12 ISSUED BY THE HOLABIRD QUARTERMASTER DEPOT ON JULY 24, 1934. THE ABOVE INVITATION FOR BIDS COVERED REQUIREMENTS FOR A TOTAL OF 2,493 TRUCKS, 1 1/2-TON, MOTOR GASOLINE (4-WHEEL 2 REAR-WHEEL DRIVE), LIGHT CHASSIS WITH CARGO BODIES, IN ACCORDANCE WITH U.S. ARMY TENTATIVE SPECIFICATION PWA-LP-91 511 DATED JULY 21, 1934. DUE TO VARIATIONS IN MINOR DETAILS OF THE VEHICLES TO BE FURNISHED UNDER THIS INVITATION, THEY WERE DIVIDED INTO SIX ITEMS.

THE ORIGINAL AWARD TO THE FARGO MOTOR CORPORATION WAS FOR 1,897 VEHICLES FOLLOWED BY A DELAYED AWARD FOR 495 ADDITIONAL, MAKING A TOTAL OF 2,392 VEHICLES. THIS TOTAL OF 2,392 VEHICLES WAS AWARDED TO THE FARGO MOTOR CORPORATION, TOGETHER WITH 101 VEHICLES AWARDED TO THE CHEVROLET MOTOR COMPANY MADE A TOTAL OF 2,493 VEHICLES, OR THE NUMBER OF VEHICLES FOR WHICH BIDS WERE REQUESTED.

INCREASES TO THE FARGO MOTOR CORPORATION WERE MADE FOR 597 VEHICLES UNDER THE PROVISION OF THE INVITATION AUTHORIZING THE UNITED STATES TO INCREASE THE QUANTITIES BY NOT MORE THAN TWENTY-FIVE PERCENT DURING THE LIFE OF THE CONTRACT. IN MAKING THESE INCREASES THE CONTRACT WAS CONSIDERED AS A WHOLE AND INCREASES WERE MADE SO THAT THE TOTAL OF VEHICLES UNDER CONTRACT DID NOT EXCEED THE NUMBER FOR WHICH ADVERTISING WAS OBTAINED, PLUS THE AUTHORIZED INCREASE OF TWENTY-FIVE PERCENT.

OF COURSE, THE CONCLUSION STATED IN THE LETTER OF FEBRUARY 27, 1935, IS NOT IN ACCORD WITH THE TERMS OF THE CONTRACT OR THE LAW. THE CONTRACT OF SEPTEMBER 12, 1934, WAS FOR A DEFINITE QUANTITY OF TRUCKS, NAMELY, 1,897 AND THE SO-CALLED "DELAYED AWARD OF 495" ADDITIONAL TRUCKS DID NOT CONSTITUTE A PART OF THE CONTRACT FOR THE COMPUTATION OF THE 25 PERCENT VARIATION AND THE NUMBER OF TRUCKS NAMED IN THE ADVERTISEMENT LIKEWISE FORMED NO BASIS THEREFOR.

MOREOVER, THE VARIATION CLAUSE IN THE STANDARD FORM OF CONTRACT AND AS GENERALLY USED IS FOR THE PURPOSE OF MAKING ALLOWANCE FOR VARIATIONS IN MANUFACTURE OR DELIVERY AND IS NOT PROPERLY FOR CONSIDERATION IN CONFERRING ANY AUTHORITY FOR THE PURCHASE OF SUCH EQUIPMENT AS TRUCKS, THE NUMBER OF WHICH SHOULD BE DEFINITELY STATED IN THE CONTRACT ON THE BASIS OF THE ADVERTISED SPECIFICATIONS SO THAT PROSPECTIVE BIDDERS MAY TAKE INTO CONSIDERATION THE AVAILABILITY OF THEIR PLANTS TO MANUFACTURE THE CONTRACT QUANTITY, HAVING REGARD FOR THE FACT THAT MANUFACTURERS OF TRUCKS HAVE A COMMERCIAL MARKET TO MEET ALONG WITH THE GOVERNMENT MARKET AND THAT OVERTIME, ETC., NECESSARILY RESULTS IN HIGHER PRICES.

THE PUBLIC NEED FOR VEHICLES IS A MATTER FOR DEFINITE ASCERTAINMENT AND STATEMENT IN THE ADVERTISED SPECIFICATIONS AND IN EVENT THE NEED HAS BEEN UNDERESTIMATED, THE ADDITIONAL QUANTITY OF TRUCKS IN THIS CASE 597, SHOULD BE CONTRACTED FOR ON THE BASIS OF AN ADVERTISEMENT FOR BIDS THEREFOR.

NO FURTHER QUESTION WILL BE RAISED WITH RESPECT TO THE ADDITIONAL TRUCKS ORDERED UNDER THIS PARTICULAR CONTRACT BUT THE PROPER ADMINISTRATIVE ACTION SHOULD BE TAKEN TO DISCONTINUE SUCH PROCEDURE AS NOT IN ACCORDANCE WITH LAW.