A-58385, A-58452, NOVEMBER 5, 1934, 14 COMP. GEN. 360

A-58385,A-58452: Nov 5, 1934

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THE COMPENSATION PAYABLE TO A CONTRACTOR FOR THE TRANSPORTATION OF THE AIR MAIL UNDER A TEMPORARY CONTRACT THEN IN FORCE WAS NOT ONLY LIMITED BY THE TERMS OF THE TEMPORARY CONTRACT. THE TERMS OF THE TEMPORARY CONTRACT WERE FURTHER LIMITED BY THE RATES STATED IN THE ACT. NO TEMPORARY CONTRACT WAS AUTHORIZED TO BE EXTENDED UNLESS THE CONTRACTOR AGREED IN WRITING TO COMPLY WITH ALL THE PROVISIONS OF THE ACT DURING THE EXTENDED PERIOD. TO CERTAIN OTHER SIMILAR CONTRACTS WHERE THE DIFFERENCES ARE THE SAME. THE MAIL WAS TRANSPORTED BY AIR OVER SOME OF THE ROUTES OR PARTS THEREOF BY THE ARMY AIR SERVICE UNTIL THERE WAS ADVERTISEMENT FOR BIDS AND CONTRACTING. WAS FOR A PERIOD OF 3 MONTHS FROM THE DATE OF COMMENCEMENT OF SERVICE THEREUNDER.

A-58385, A-58452, NOVEMBER 5, 1934, 14 COMP. GEN. 360

CONTRACTS - TRANSPORTATION OF AIR MAIL UNDER THE PROVISIONS OF SECTION 3 (A) AND (G) OF THE ACT OF JUNE 12, 1934, 48 STAT. 933, THE COMPENSATION PAYABLE TO A CONTRACTOR FOR THE TRANSPORTATION OF THE AIR MAIL UNDER A TEMPORARY CONTRACT THEN IN FORCE WAS NOT ONLY LIMITED BY THE TERMS OF THE TEMPORARY CONTRACT, BUT THE TERMS OF THE TEMPORARY CONTRACT WERE FURTHER LIMITED BY THE RATES STATED IN THE ACT, AND NO TEMPORARY CONTRACT WAS AUTHORIZED TO BE EXTENDED UNLESS THE CONTRACTOR AGREED IN WRITING TO COMPLY WITH ALL THE PROVISIONS OF THE ACT DURING THE EXTENDED PERIOD.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, NOVEMBER 5, 1934:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER, WITHOUT DATE, RECEIVED OCTOBER 24, 1934, AND TO YOUR TWO LETTERS OF OCTOBER 25, 1934, WITH ENCLOSURES, CONCERNING DIFFERENCES BETWEEN THE POST OFFICE DEPARTMENT AND THE POST OFFICE DEPARTMENT DIVISION OF THIS OFFICE WITH RESPECT TO THE PROPER INTERPRETATION OF CERTAIN PROVISIONS IN THE ACT OF JUNE 12, 1934, 48 STAT. 933, AS APPLIED TO CONTRACT DATED MAY 4, 1934, BETWEEN THE UNITED STATES AND UNITED AIR LINES, INC., FOR THE TRANSPORTATION OF MAIL BY AIR OVER ROUTE NO. AM-1 FROM NEWARK, N.J., VIA CERTAIN DESIGNATED POINTS TO OAKLAND, CALIF., AND RETURN, AND TO CERTAIN OTHER SIMILAR CONTRACTS WHERE THE DIFFERENCES ARE THE SAME.

AS THE SAME RULE OR LEGAL PRINCIPLE APPEARS APPLICABLE TO ALL OF THESE CONTRACTS, IT SEEMS PROPER AT THIS TIME TO LIMIT CONSIDERATION TO THIS CONTRACT WITH THE UNITED AIR LINES, INC.

PRELIMINARILY, IT MAY BE SAID THAT UNDER THE AIR MAIL ACT OF FEBRUARY 2, 1925, 43 STAT. 805, AS AMENDED, THE THEN POSTMASTER GENERAL HAD ENTERED INTO A NUMBER OF CONTRACTS, MADE EXTENSIONS THEREOF, AND ISSUED ROUTE CERTIFICATES FOR PERIODS OF 10 YEARS FOR THE TRANSPORTATION OF AIR MAIL. ON FEBRUARY 9, 1934, THE PRESENT POSTMASTER GENERAL CANCELED A NUMBER OF SUCH EXISTING CONTRACTS AND ROUTE CERTIFICATES. AFTER SOME LITTLE DELAY, THE MAIL WAS TRANSPORTED BY AIR OVER SOME OF THE ROUTES OR PARTS THEREOF BY THE ARMY AIR SERVICE UNTIL THERE WAS ADVERTISEMENT FOR BIDS AND CONTRACTING, IN THIS CASE ON MAY 4, 1934, WITH PRIVATE CONCERNS FOR THE TRANSPORTATION OF MAIL BY AIR. THIS CONTRACT OF MAY 4, 1934, WITH THE UNITED AIR LINES, INC., WAS FOR A PERIOD OF 3 MONTHS FROM THE DATE OF COMMENCEMENT OF SERVICE THEREUNDER, WHICH COULD BE EXTENDED FOR TWO PERIODS OF NOT MORE THAN 3 MONTHS EACH OR PORTIONS THEREOF, AT THE OPTION OF THE POSTMASTER GENERAL, AT A RATE NOT GREATER THAN THAT PAID FOR THE FIRST 3 MONTHS' PERIOD WHICH WAS STIPULATED IN THE CONTRACT AT 38 CENTS PER AIRPLANE-MILE FOR THE INITIAL UNIT OF 70 CUBIC FEET OF AIR-MAIL SPACE WITH ADDITIONAL SPACE TO BE FURNISHED UPON DEMAND AT THE RATE OF $0.54285 PER CUBIC FOOT OF AIR-MAIL SPACE, SUBJECT TO THE RESTRICTION THAT IN NO CASE WOULD THE RATE BE IN EXCESS OF 42 CENTS PER AIRPLANE MILE. SHORTLY AFTER SERVICE WAS COMMENCED UNDER THE CONTRACT, AND AFTER A SENATE INVESTIGATION OF COMPLAINTS, ETC., OF THE CONTRACTORS WHOSE CONTRACTS AND ROUTE CERTIFICATES HAD BEEN CANCELED, THERE WAS ENACTED THE ACT OF JUNE 12, 1934, WHICH PROVIDED, IN PERTINENT PART, IN SECTION 3 (A) AND (G) AS FOLLOWS:

SEC. 3. (A) THE POSTMASTER GENERAL IS AUTHORIZED TO AWARD CONTRACTS FOR THE TRANSPORTATION OF AIR MAIL BY AIRPLANE BETWEEN SUCH POINTS AS HE MAY DESIGNATE, AND FOR INITIAL PERIODS OF NOT EXCEEDING ONE YEAR, TO THE LOWEST RESPONSIBLE BIDDERS TENDERING SUFFICIENT GUARANTY FOR FAITHFUL PERFORMANCE IN ACCORDANCE WITH THE TERMS OF THE ADVERTISEMENT AT FIXED RATES PER AIRPLANE-MILE: PROVIDED, THAT WHERE THE POSTMASTER GENERAL HOLDS THAT A LOW BIDDER IS NOT RESPONSIBLE OR QUALIFIED UNDER THIS ACT, SUCH BIDDER SHALL HAVE THE RIGHT TO APPEAL TO THE COMPTROLLER GENERAL WHO SHALL SPEEDILY DETERMINE THE ISSUE, AND HIS DECISION SHALL BE FINAL: PROVIDED FURTHER, THAT THE BASE RATE OF PAY WHICH MAY BE BID AND ACCEPTED IN AWARDING SUCH CONTRACTS SHALL IN NO CASE EXCEED 33 1/3 CENTS PER AIRPLANE- MILE FOR TRANSPORTING A MAIL LOAD NOT EXCEEDING THREE HUNDRED POUNDS. PAYMENT FOR TRANSPORTATION SHALL BE AT THE BASE RATE FIXED IN THE CONTRACT FOR THE FIRST THREE HUNDRED POUNDS OF MAIL OR FRACTION THEREOF PLUS ONE- TENTH OF SUCH BASE RATE FOR EACH ADDITIONAL ONE HUNDRED POUNDS OF MAIL OR FRACTION THEREOF, COMPUTED AT THE END OF EACH CALENDAR MONTH ON THE BASIS OF THE AVERAGE MAIL LOAD CARRIED PER MILE OVER THE ROUTE DURING SUCH MONTH, EXCEPT THAT IN NO CASE SHALL PAYMENT EXCEED 40 CENTS PER AIRPLANE MILE.

(G) AUTHORITY IS HEREBY CONFERRED UPON THE POSTMASTER GENERAL TO PROVIDE AND PAY FOR THE CARRIAGE OF MAIL BY AIR IN CONFORMITY WITH THE TERMS OF ANY CONTRACT LET BY HIM PRIOR TO THE PASSAGE OF THIS ACT, OR WHICH MAY BE LET PURSUANT TO A CALL FOR COMPETITIVE BIDS THEREFOR ISSUED PRIOR TO THE PASSAGE OF THIS ACT, AND TO EXTEND ANY SUCH CONTRACT FOR AN ADDITIONAL PERIOD OR PERIODS NOT EXCEEDING NINE MONTHS IN THE AGGREGATE AT A RATE OF COMPENSATION NOT EXCEEDING THAT ESTABLISHED BY THIS ACT NOR THAT PROVIDED FOR IN THE ORIGINAL CONTRACT: PROVIDED, THAT NO SUCH CONTRACT MAY BE SO EXTENDED UNLESS THE CONTRACTOR SHALL AGREE IN WRITING TO COMPLY WITH ALL THE PROVISIONS OF THIS ACT DURING THE EXTENDED PERIOD OF THE CONTRACT.

OBVIOUSLY, THE ACT OF JUNE 12, 1934, CONSTITUTED LEGISLATIVE RATIFICATION OF THE ACTION OF THE POSTMASTER GENERAL IN ADVERTISING AND CONTRACTING ON A TEMPORARY BASIS FOR THE TRANSPORTATION OF THE AIR MAIL OVER AIR MAIL ROUTES SUBJECT TO THE RESTRICTIONS AND LIMITATIONS CONTAINED THEREIN. THE PERTINENT RESTRICTIONS AND LIMITATIONS ARE THOSE STATED IN THE ABOVE- QUOTED SECTION 3 (A) AND (G) OF THE ACT OF JUNE 12, 1934, TO THE EFFECT THAT NOTWITHSTANDING WHAT COMPENSATION MAY HAVE BEEN STATED IN THE TEMPORARY CONTRACTS, THE BASE RATE OF PAY SHOULD IN NO CASE EXCEED 33 1/3 CENTS PER AIRPLANE MILE FOR TRANSPORTING A MAIL LOAD NOT EXCEEDING 300 POUNDS PLUS ONE-TENTH OF SUCH BASE FOR EACH ADDITIONAL 100 POUNDS OF MAIL OR FRACTION THEREOF COMPUTED AT THE END OF EACH CALENDAR MONTH, BUT IN NO CASE SHOULD THE AGGREGATE PAYMENTS TO THE CONTRACTOR EXCEED 40 CENTS PER AIRPLANE MILE. ALSO, THE POSTMASTER GENERAL WAS AUTHORIZED TO EXTEND ANY SUCH TEMPORARY CONTRACTS FOR AN ADDITIONAL PERIOD OR PERIODS NOT EXCEEDING 9 MONTHS IN THE AGGREGATE AT A RATE OF COMPENSATION NOT EXCEEDING "THAT ESTABLISHED BY THIS ACT NOR THAT PROVIDED FOR IN THE ORIGINAL CONTRACT.' NO CONTRACT COULD BE SO EXTENDED "UNLESS THE CONTRACTOR SHALL AGREE IN WRITING TO COMPLY WITH ALL THE PROVISIONS OF THIS ACT DURING THE EXTENDED PERIOD OF THE CONTRACT.' THAT IS TO SAY, THE ACT OF JUNE 12, 1934, APPEARS TO BE CLEAR THAT IN NO EVENT COULD THE COMPENSATION UNDER THE TEMPORARY CONTRACT AS EXTENDED FOR TRANSPORTATION OF THE MAIL EXCEED THE AMOUNT STATED IN THE CONTRACT, AND IN NO EVENT COULD THE AMOUNT PAYABLE UNDER THE CONTRACT FROM APPROPRIATED MONEYS EXCEED THE BASE RATE OF 33 1/3 CENTS PER AIRPLANE MILE FOR TRANSPORTING A MAIL LOAD NOT EXCEEDING 300 POUNDS WITH AN INCREASE OF ONE-TENTH OF SUCH BASE RATE FOR EACH ADDITIONAL 100 POUNDS OF MAIL OR FRACTION THEREOF, BUT IN NO CASE TO EXCEED 40 CENTS PER AIRPLANE MILE. THE COMPENSATION PAYABLE TO A CONTRACTOR FOR THE TRANSPORTATION OF THE AIR MAIL WAS NOT ONLY LIMITED BY THE TERMS OF THE TEMPORARY CONTRACT BUT THE TERMS OF THE TEMPORARY CONTRACT WERE FURTHER LIMITED BY THE ACT OF JUNE 12, 1934, SO THAT NO PAYMENT FROM APPROPRIATED MONEYS COULD BE MADE IN EXCESS OF 33 1/3 CENTS PER AIRPLANE MILE FOR A LOAD NOT EXCEEDING 300 POUNDS WITH AN INCREASE OF ONE-TENTH OF SUCH BASE RATE FOR EACH ADDITIONAL 100 POUNDS AND IN NO CASE TO EXCEED 40 CENTS PER AIRPLANE MILE--- AND NO TEMPORARY CONTRACT COULD BE EXTENDED UNLESS THE CONTRACTOR SHOULD AGREE IN WRITING TO COMPLY WITH ALL THE PROVISIONS OF THE ACT DURING THE EXTENDED PERIOD. AS TO THE EFFECT OF A SIMILAR STATUTORY LIMITATION ON CONTRACTING, SEE CONSOLIDATED SUPPLY CO. V. UNITED STATES, 59 CT.CLS. 197.

WITH RESPECT TO THE DIFFERENCES IN INTERPRETATION OF THIS CONTRACT OF MAY 4, 1934, WITH THE UNITED AIR LINES, INC., YOU STATE IN ONE OF YOUR LETTERS OF OCTOBER 25, 1934, WITH REFERENCE TO A DISALLOWANCE BY THIS OFFICE IN THE AMOUNT OF $13,709.50 FOR THE SERVICE PERFORMED ON THE ROUTE FOR THE PERIOD FROM AUGUST 8 TO 31, 1934, AS FOLLOWS:

THIS DISALLOWANCE IS BASED ON A DIFFERENCE OF OPINION CONCERNING THE INTERPRETATION OF THE NEW AIR-MAIL LAW BY YOUR OFFICE. THE POST OFFICE DEPARTMENT HOLDS A CONTRACT ON ROUTE AM-1 FOR A BASIC LOAD OF 630 POUNDS AT THE RATE OF 38 CENTS PER AIRPLANE-MILE. THE RULING OF THE SOLICITOR OF THE POST OFFICE DEPARTMENT IS TO THE EFFECT THAT THE DEPARTMENT IS OBLIGATED UNDER THE CONTRACT TO PAY 38 CENTS PER MILE ON THIS CONTRACT, AND CERTIFICATION WAS ACCORDINGLY MADE IN THAT AMOUNT, AS SHOWN ON OUR ORDER OF SEPTEMBER 12, 1934, COPY OF WHICH IS ON FILE IN YOUR OFFICE.

ON THE BASIS OF THE MEMORANDA ON YOUR STATEMENT OF DIFFERENCES, IT APPEARS THAT YOUR OFFICE HAS REDUCED THE PAY TO 33 1/3 CENTS PER MILE UNDER THE TERMS OF THE ACT APPROVED JUNE 12, 1934, PUBLIC 308, 73RD CONGRESS (S. 3170). ATTENTION IS CALLED TO THE FACT, HOWEVER, THAT IN THAT ACT 33 1/3 CENTS PER MILE IS THE RATE FOR A BASIC LOAD OF ONLY 300 POUNDS. SINCE THE CONTRACTOR ON ROUTE AM-1 CARRIED AN AVERAGE LOAD OF OVER 500 POUNDS DURING THE MONTH OF AUGUST, ON THE BASIS OF THE INTERPRETATION MADE BY YOUR POST OFFICE DEPARTMENT ACCOUNTING DIVISION, THE CONTRACTOR WOULD BE ENTITLED TO 40 CENTS PER MILE UNDER THE ACT QUOTED BY YOUR OFFICE.

I AM TRANSMITTING HEREWITH A STATEMENT SHOWING THE QUANTITY OF MAIL CARRIED AND THE TOTAL MILEAGE FLOWN FOR THE PERIOD FROM AUGUST 8 TO AUGUST 31 IN THE FORM PRESCRIBED BY YOUR OFFICE IN LETTER OF OCTOBER 16, 1934 (A- 44011). IT IS NOT KNOWN WHETHER YOUR OFFICE WILL ALLOW 38 CENTS OR 40 CENTS UNDER THE CONDITIONS, BUT IT IS NOT BELIEVED THAT IT IS YOUR INTENTION TO WITHHOLD $13,709.50 FROM THE PAY DUE THE CARRIER, WHICH AMOUNT HAS BEEN EARNED NO MATTER WHAT INTERPRETATION IS HELD TO BE CORRECT. IF THE INTERPRETATION MADE BY YOUR OFFICE, WHICH WOULD ALLOW 40 CENTS PER AIRPLANE-MILE, IS HELD TO BE CORRECT, THE CARRIER OF COURSE WOULD BE ENTITLED TO AN ADDITIONAL AMOUNT OVER AND ABOVE $13,709.50 AT THE RATE OF 2 CENTS PER MILE FOR ALL SERVICE PERFORMED.

THE COMPENSATION TO WHICH THE CONTRACTOR IS ENTITLED UNDER THE LAW TO BE PAID FROM APPROPRIATED MONEYS FOR SERVICES PERFORMED UNDER THE EXTENDED CONTRACT IS THE RATE STATED IN THE ABOVE-QUOTED TERMS OF SECTION 3 (A) AND (G) OF THE ACT OF JUNE 12, 1934, PROVIDED SUCH RATE IS NOT IN EXCESS OF THE RATE STIPULATED IN THE EXTENDED CONTRACT. IF THE RATE STIPULATED IN THE EXTENDED CONTRACT IS LESS THAN THE RATE STATED IN SECTION 3 (A) OF THE ACT OF JUNE 12, 1934, THE CONTRACTOR IS ENTITLED TO SUCH LESSER RATE, ONLY, AS SAID ACT WAS NOT INTENDED TO AND DID NOT INCREASE THE COMPENSATION STATED IN THE EXTENDED CONTRACTS WHICH WERE ENTERED INTO AS THE RESULT OF COMPETITIVE BIDDING, BUT HAD THE EFFECT OF LIMITING THE COMPENSATION PAYABLE UNDER SUCH EXTENDED CONTRACTS TO RATES NOT IN EXCESS OF THOSE STATED IN THE ACT FOR BOTH THE BASIC LOAD OF 300 POUNDS AND FOR EACH ADDITIONAL 100 POUNDS OR FRACTION THEREOF--- PROVIDED SUCH PAYMENT DID NOT EXCEED 40 CENTS A MILE.

IT IS A QUESTION OF FACT IN EACH INSTANCE WHETHER A CONTRACTOR TRANSPORTED MORE THAN AN AVERAGE OF 300 POUNDS OF MAIL DURING ANY CALENDAR MONTH, AND WHILE THE BASIC RATE, AS STATED IN THE CONTRACT, NOT EXCEEDING 33 1/3 CENTS A MILE TO THE CONTRACTOR, IS PAYABLE FOR THE TRANSPORTATION OF 300 POUNDS OF AIR MAIL OR LESS FOR EACH CALENDAR MONTH--- UNLESS THE CONTRACT PROVIDES A LOWER RATE--- NO PAYMENTS IN EXCESS OF 33 1/3 CENTS PER AIRPLANE MILE MAY BE APPROVED BY THIS OFFICE FOR PAYMENT TO AN AIR- MAIL CONTRACTOR FOR THE TRANSPORTATION OF MAIL IN EXCESS OF THE BASIC LOAD OF 300 POUNDS WITHOUT A SHOWING ON THE APPROVED FORM AT THE TIME THE PAYMENT OF SUCH EXCESS IS CLAIMED THAT THE CONTRACTOR ACTUALLY TRANSPORTED MAIL IN EXCESS OF AN AVERAGE OF 300 POUNDS FOR THE CALENDAR MONTH IN QUESTION, BUT, IT IS REPORTED, SUCH CONTRACTOR IS NOT ENTITLED IN ANY EVENT TO PAYMENTS IN EXCESS OF 40 CENTS PER AIRPLANE MILE AND/OR IN EXCESS OF THE RATE STIPULATED IN THE EXTENDED CONTRACT WHERE SUCH STIPULATED RATES ARE LESS THAN THE RATES STATED IN SECTION 3 (A) OF THE ACT OF JUNE 12, 1934.

IT IS BELIEVED THAT THE ACCOUNTS MAY BE READILY AND EXPEDITIOUSLY SETTLED SHORTLY AFTER THE END OF EACH CALENDAR MONTH IN ACCORDANCE WITH THE FOREGOING IN THE EVENT THE POST OFFICE DEPARTMENT FURNISHES THE REQUIRED DATA AS TO THE TRANSPORTATION BY THE CONTRACTOR OF MAIL IN EXCESS OF AN AVERAGE OF 300 POUNDS PER CALENDAR MONTH WHERE THE CONTRACTOR CLAIMS COMPENSATION IN EXCESS OF THE BASIC RATE PAYABLE UNDER SECTION 3 (A) OF THE ACT OF JUNE 12, 1934, OR UNDER THE CONTRACT, WHICHEVER MAY BE LESS. HOWEVER, SHOULD ANY FURTHER QUESTION ARISE IN THE MATTER, IT IS SUGGESTED THAT SAME BE PROMPTLY SUBMITTED FOR DECISION ACCOMPANIED BY A STATEMENT OF THE ADMINISTRATIVE VIEWS IN THE MATTER.