A-59431, DECEMBER 31, 1934, 14 COMP. GEN. 498

A-59431: Dec 31, 1934

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IS EXCEPTED FROM THE REQUIREMENT FOR FURNISHING A CERTIFICATE OF COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT. THERE IS NO AUTHORITY FOR THE TERMINATION OF THE CONTRACT SOLELY FOR FAILURE OF THE MUNICIPALITY TO COMPLY WITH A PROVISION ILLEGALLY INSERTED IN THE CONTRACT FOR COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT. WHEREIN DECISION HAS BEEN REQUESTED WHETHER YOU ARE AUTHORIZED TO TERMINATE CONTRACT VAM 7346. IT IS STATED IN THE OPINION OF NOVEMBER 17. THE FACTS WERE FOUND TO BE AS FOLLOWS: 1. WHICH BIDS WERE SO OPENED ON THAT DATE. WERE THE SOLE BIDDERS AND CONSTITUTE THE SOLE SOURCES OF SUPPLY IN THAT NEIGHBORHOOD. THE UNITED STATES SHALL HAVE THE RIGHT TO CANCEL THIS CONTRACT FOR FAILURE TO COMPLY WITH THIS PROVISION * * *" THIS SEPARATELY SIGNED SHEET CONTAINED ALSO THE USUAL CERTIFICATE OF COMPLIANCE AS REQUIRED BY PARAGRAPH 1 (A) OF EXECUTIVE ORDER NO. 6646.

A-59431, DECEMBER 31, 1934, 14 COMP. GEN. 498

CONTRACTS - TERMINATION - NONCOMPLIANCE WITH ILLEGAL PROVISION A CONTRACT ENTERED INTO BY A MUNICIPALITY TO FURNISH A VETERANS' ADMINISTRATION FACILITY WITH ELECTRIC CURRENT, NOT TO BE CARRIED OUT WHOLLY, OR IN PART, FROM FUNDS LOANED, OR GRANTED BY ANY AGENCY OF THE UNITED STATES, IS EXCEPTED FROM THE REQUIREMENT FOR FURNISHING A CERTIFICATE OF COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT, AND THERE IS NO AUTHORITY FOR THE TERMINATION OF THE CONTRACT SOLELY FOR FAILURE OF THE MUNICIPALITY TO COMPLY WITH A PROVISION ILLEGALLY INSERTED IN THE CONTRACT FOR COMPLIANCE WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, DECEMBER 31, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF DECEMBER 22, 1934, WITH ENCLOSURES, WHEREIN DECISION HAS BEEN REQUESTED WHETHER YOU ARE AUTHORIZED TO TERMINATE CONTRACT VAM 7346, DATED JULY 16, 1934, WITH THE CITY OF ALEXANDRIA, LA., FOR THE DELIVERY OF ELECTRIC CURRENT DURING THE PERIOD FROM JULY 1, 1934, TO JUNE 30, 1935, TO THE VETERANS' ADMINISTRATION FACILITY AT ALEXANDRIA, LA., IN ACCORDANCE WITH THE RECOMMENDATION CONTAINED IN AN OPINION DATED NOVEMBER 17, 1934, OF A SPECIAL BOARD FOR GOVERNMENT CONTRACTS BRANCH, NATIONAL INDUSTRIAL RECOVERY ADMINISTRATION.

IT IS STATED IN THE OPINION OF NOVEMBER 17, 1934, BY THE SPECIAL BOARD FOR GOVERNMENT CONTRACTS BRANCH, NATIONAL INDUSTRIAL RECOVERY ADMINISTRATION, UNDER THE HEADING "FINDINGS OF FACT," THAT UPON DUE HEARING AND CONSIDERATION OF THE ENTIRE CASE, THE FACTS WERE FOUND TO BE AS FOLLOWS:

1. MAY 14, 1934, THE VETERANS' ADMINISTRATION AT ALEXANDRIA, LOUISIANA, ISSUED INVITATIONS FOR BIDS FOR FURNISHING ELECTRIC CURRENT TO ITS FACILITY LOCATED BETWEEN ALEXANDRIA AND PINEVILLE, LOUISIANA, FOR A PERIOD OF ONE YEAR COMMENCING JULY 1, 1934, BIDS TO BE OPENED 2 P.M., THURSDAY, MAY 31, 1934, WHICH BIDS WERE SO OPENED ON THAT DATE. RESPONDENT AND PINEVILLE ELECTRIC COMPANY, PINEVILLE, LA., WERE THE SOLE BIDDERS AND CONSTITUTE THE SOLE SOURCES OF SUPPLY IN THAT NEIGHBORHOOD. MAY 28, 1934, THE CITY OF ALEXANDRIA, BY ITS MAYOR UPON SAID INVITATION, SUBMITTED A BID OR PROPOSAL WHICH CONTAINED AMONG OTHERS, THIS PROVISION:

"THIS PROPOSAL IF ACCEPTED SHALL BECOME A CONTRACT AND SHALL REMAIN IN FORCE DURING THE PERIOD ABOVE STATED UNLESS TERMINATED AT THE REQUEST OF EITHER PARTY AFTER THIRTY DAYS' NOTICE IN TING.'

THE PROPOSAL ALSO CONTAINED A PAGE SEPARATELY SIGNED BY THE MAYOR OF THE CITY OF ALEXANDRIA UNDER DATE OF MAY 26, 1934, READING IN PART, ESSENTIALLY, AS FOLLOWS:

"CONTRACTOR SHALL COMPLY * * * WITH THE * * * PRESIDENT'S REEMPLOYMENT AGREEMENT, AND THE UNITED STATES SHALL HAVE THE RIGHT TO CANCEL THIS CONTRACT FOR FAILURE TO COMPLY WITH THIS PROVISION * * *"

THIS SEPARATELY SIGNED SHEET CONTAINED ALSO THE USUAL CERTIFICATE OF COMPLIANCE AS REQUIRED BY PARAGRAPH 1 (A) OF EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934. THE PERTINENT PART OF SAID CERTIFICATE AS REGARDS THIS CASE IS:

"IT IS HEREBY CERTIFIED THAT THE UNDERSIGNED * * * HAS BECOME A PARTY TO AND IS COMPLYING WITH AND WILL CONTINUE TO COMPLY WITH THE * * * PRESIDENT'S REEMPLOYMENT AGREEMENT AND THAT ALL OTHER CONDITIONS AND REQUIREMENTS OF EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934, ARE BEING, AND WILL BE COMPLIED WITH.'

ON JUNE 5, 1934, THE VETERANS' ADMINISTRATION AT ALEXANDRIA, LOUISIANA, TRANSMITTED TO THE VETERANS' ADMINISTRATION IN WASHINGTON, THE CITY'S BID, TOGETHER WITH THE ONLY OTHER BID RECEIVED, WHICH WAS FROM PINEVILLE ELECTRIC CO., AND RECOMMENDED THAT THE CITY'S BID, WHICH WAS LOW, BE ACCEPTED. ON JUNE 26, 1934, THE BUREAU IN WASHINGTON BY TELEGRAM TO THE MAYOR OF ALEXANDRIA ACCEPTED THE CITY'S PROPOSAL FOR ELECTRIC CURRENT, WITH A PROVISO THAT A CLAUSE BE INSERTED RELATIVE TO RATES BEING SUBJECT TO CHANGE. ON JULY 2, 1934, THE CITY, BY THE MAYOR, WROTE INTO AND UPON ITS ORIGINAL BID OF MAY 28, THE REQUIRED PROVISO, AND ON JULY 7, 1934, THE VETERANS' ADMINISTRATION AT ALEXANDRIA RETURNED THE CITY'S PROPOSAL, SO CORRECTED, TO THE ADMINISTRATION IN WASHINGTON. ON JULY 16, 1934, THE ADMINISTRATION IN WASHINGTON WROTE THE ADMINISTRATION IN ALEXANDRIA AUTHORIZING IT TO NOTIFY THE CITY OF THE ACCEPTANCE OF ITS PROPOSAL; AND THIS WAS DONE ON OR ABOUT THAT DATE. THE CONTRACT IS NUMBERED VAM 7346. THE DATE IS JULY 16, 1934. THE CITY IS OWNER AND OPERATOR OF A MUNICIPAL POWER PLANT AND FURNISHES THE ELECTRIC CURRENT THROUGH ITS MUNICIPAL PLANT.

2. ON JULY 19, 1934, COMPLAINT WAS FILED AGAINST THE CITY OF ALEXANDRIA IN CONNECTION WITH THIS CONTRACT, ALLEGING THAT THE CITY WAS NOT A SIGNATORY TO THE P.R.A., AND FURTHER, THAT THE CITY WAS NOT COMPLYING WITH THE WAGES AND HOURS PROVISIONS OF THE P.R.A. AS SET FORTH IN ELECTRIC CURRENT AND POWER INDUSTRY SUBSTITUTION TO P.R.A., RELEASE NO. 300-B, CODE NO. 174-1-02. THE CITY WAS NOTIFIED OF THE COMPLAINT, AND THE CHARGES; AND WAS REQUESTED TO FURNISH A SPECIFIC ANSWER TO THE CHARGES. ON JULY 11, 1934, THROUGH ITS MAYOR, THE CITY ANSWERED: "WE ARE COMPLYING WITH THE N.R.A. AS FAR AS IT AFFECTS PUBLICLY OWNED UTILITIES. WE ARE COOPERATING IN EVERY WAY WITH THE N.R.A.' ON JULY 24 THE CITY WAS REQUESTED, AGAIN, FOR A SPECIFIC STATEMENT REGARDING THE CHARGES OF THE COMPLAINT. AUGUST 5 THIS INQUIRY WAS ANSWERED, BUT AGAIN NO DENIAL OR REFUTATION OF THE CHARGES WAS MADE BY THE CITY. THEREAFTER, THIS SPECIAL BOARD WAS APPOINTED TO HEAR AND DETERMINE THE CHARGES. ON OCTOBER 11, 1934, THE CITY WAS NOTIFIED THE CASE WOULD BE HEARD IN WASHINGTON, D.C., AT 2 P.M., OCTOBER 19, 1934, BY THIS BOARD, THEREAFTER, THE HEARING DATE WAS POSTPONED TO :30 P.M., OCTOBER 23, 1934, ON REQUEST OF THE CITY. THE CITY AGAIN REQUESTED A POSTPONEMENT. THIS WAS DENIED, AND THE HEARING WAS HELD AT THE APPOINTED TIME AND PLACE SCHEDULED.

3. THE STATE DIRECTOR OF N.R.A. AT NEW ORLEANS IS CHARGED WITH THE DUTY OF RECORDING SIGNATURES TO THE P.R.A. IN LOUISIANA. HE STATES THAT NEITHER THE CITY NOR ITS MUNICIPALITY OWNED AND OPERATED POWER PLANT HAS SIGNED THE P.R.A. ON MAY 28, 1934, AND PRIOR TO JULY 16, 1934, NEITHER THE CITY NOR ITS MUNICIPALLY OWNED AND OPERATED POWER PLANT WAS A PARTY TO THE P.R.A., NOR WAS IT COMPLYING WITH THE WAGES AND HOURS PROVISIONS OF THE P.R.A., THE ELECTRIC CURRENT AND POWER INDUSTRY SUBSTITUTION TO P.R.A., RELEASE NO. 300-B, CODE NO. 174-1 02. THE RECORD INDICATES FURTHER THAT THE CITY IS NOT NOW SUCH A PARTY; AND IS NOT NOW SO COMPLYING.

THE OPINION CONCLUDED WITH A RECOMMENDATION THAT THE CONTRACT BE CANCELED AND THE DECISION DATED NOVEMBER 26, 1934, OF THE ADMINISTRATIVE OFFICER OF THE NATIONAL INDUSTRIAL RECOVERY ADMINISTRATION, GOVERNMENT CONTRACTS BRANCH, WAS THAT THE CITY OF ALEXANDRIA, LA., WAS NOT, AS IT AFFIRMED IN ITS CERTIFICATE OF COMPLIANCE, A SIGNATORY TO THE PRESIDENT'S REEMPLOYMENT AGREEMENT AND WAS NOT, AS IT AFFIRMED, COMPLYING WITH THE HOURS AND PROVISIONS OF ELECTRIC CURRENT AND POWER INDUSTRY SUBSTITUTE TO P.R.A., RELEASE NO. 300-B, CODE NO. 174-1-02. UPON RECEIPT OF SUCH RECOMMENDATION THE VETERANS' ADMINISTRATION APPEARS TO HAVE MADE INFORMAL INQUIRY OF THE CONTRACTS BRANCH, NATIONAL INDUSTRIAL RECOVERY ADMINISTRATION, AND RECEIVED AN AFFIRMATIVE REPLY DATED DECEMBER 16, 1934, AS TO WHETHER IT HAD GIVEN CONSIDERATION TO ADMINISTRATIVE ORDER X-17 OF APRIL 11, 1934, ISSUED BY THE ADMINISTRATOR FOR INDUSTRIAL RECOVERY, ACTING UNDER PARAGRAPH 5 OF EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934, WHEREIN THERE WERE EXCEPTED FROM THE REQUIREMENTS OF SAID EXECUTIVE ORDER---

ALL CONTRACTS, LEASES, OR PURCHASES OF ANY NATURE MADE WITH OR/FROM ANY STATE GOVERNMENT, OR OF ANY POLITICAL SUBDIVISION OR MUNICIPALITY THEREOF EXCEPTING AS PROVIDED IN PARAGRAPH 1 (E).

THE EXCEPTION IN THE REFERRED-TO PARAGRAPH 1 (E) OF EXECUTIVE ORDER NO. 6646 OF MARCH 14, 1934, INCLUDES CONTRACTS AND PURCHASE ORDERS ISSUED BY ANY STATE, MUNICIPAL CORPORATION , ETC., IN CONNECTION WITH PROJECTS CARRIED OUT, OR TO BE CARRIED OUT, WHOLLY, OR IN PART, FROM FUNDS LOANED OR GRANTED BY ANY AGENCY OF THE UNITED STATES. THIS CONTRACT OF JULY 16, 1934, WITH THE CITY OF ALEXANDRIA, LA., FOR THE DELIVERY OF ELECTRIC CURRENT TO THE VETERANS' ADMINISTRATION FACILITY IN THAT CITY IS NOT SUCH A CONTRACT AS CONTEMPLATED BY PARAGRAPH 1 (E) OF THE EXECUTIVE ORDER OF MARCH 14, 1934. ON THE CONTRARY, IT IS A CONTRACT WITH A MUNICIPALITY WITHIN THE TERMS OF ADMINISTRATIVE ORDER X-17 OF APRIL 11, 1934, ISSUED BY THE ADMINISTRATOR FOR INDUSTRIAL RECOVERY AND WHICH WAS BROUGHT TO THE ATTENTION OF THE HEADS OF ALL DEPARTMENTS AND ESTABLISHMENTS CONCERNED IN CIRCULAR LETTER NO. 13, DATED APRIL 16, 1934, ISSUED BY THE PROCUREMENT DIVISION, TREASURY DEPARTMENT.

THERE WAS THUS NO LEGAL REQUIREMENT THAT THE CITY OF ALEXANDRIA, LA., IN CONTRACTING WITH THE UNITED STATES FOR THE DELIVERY OF ELECTRIC CURRENT, SHOULD FURNISH A CERTIFICATE OF COMPLIANCE WITH ANY APPLICABLE APPROVED CODE OF FAIR COMPETITION OR WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT, AND THERE WAS NO AUTHORITY UNDER THE EXECUTIVE ORDER OF MARCH 14, 1934, OR OTHERWISE, TO INCLUDE ANY SUCH STIPULATION IN THE CONTRACT WITH THE CITY OF ALEXANDRIA FOR THE DELIVERY OF ELECTRIC CURRENT. THIS BEING TRUE, THERE WAS NO DISPUTE WITH RESPECT TO COMPLIANCE OR NONCOMPLIANCE IN THIS CASE WITH ANY APPLICABLE CODE OF FAIR COMPETITION OR WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT WITHIN THE JURISDICTION CONFERRED UNDER PARAGRAPH 3 OF EXECUTIVE ORDER NO. 6646 OF MARCH 14, 1934, ON THE ADMINISTRATOR OF THE NATIONAL RECOVERY ADMINISTRATION OR SUCH AGENCY AS HE SHOULD DESIGNATE. THEREFORE, SINCE THE EXECUTIVE ORDER HAD NO APPLICATION TO THIS CONTRACT, NEITHER THE SPECIAL BOARD FOR THE GOVERNMENT CONTRACTS BRANCH NOR THE ADMINISTRATIVE OFFICER OF THE NATIONAL RECOVERY ADMINISTRATION HAD ANY JURISDICTION TO ACT IN THE MATTER OF THIS CONTRACT.

WHILE IT APPEARS TO BE TRUE THAT THE CITY OF ALEXANDRIA, IN SUBMITTING A CERTIFICATE OF COMPLIANCE, ERRED IN REPRESENTING THAT IT WAS COMPLYING WITH AN APPLICABLE APPROVED CODE OF FAIR COMPETITION OR THE PRESIDENT'S REEMPLOYMENT AGREEMENT, SUCH ERROR WAS SHARED TO SOME EXTENT BY THE VETERANS' ADMINISTRATION BY INCLUDING IN THE CONTRACT A REQUIREMENT THAT THE CITY COMPLY WITH THE APPLICABLE APPROVED CODE OF COMPETITION OR WITH THE PRESIDENT'S REEMPLOYMENT AGREEMENT WHEN MUNICIPALITIES HAD BEEN EXPRESSLY EXCEPTED FROM THE TERMS OF THE EXECUTIVE ORDER OF MARCH 14, 1934, BY THE ADMINISTRATOR OF THE NATIONAL RECOVERY ADMINISTRATION IN HIS ORDER OF APRIL 11, 1934, OR MORE THAN 3 MONTHS PRIOR TO THE DATE OF THIS CONTRACT. A CONTRACT MAY NOT BE LEGALLY AND PROPERLY CANCELED OR TERMINATED BECAUSE THE CONTRACTOR MAY HAVE VIOLATED SOME TERM THEREOF WHICH WAS NOT LEGALLY AND PROPERLY INCLUDED IN THE CONTRACT.

ACCORDINGLY, YOU ARE ADVISED THAT THERE IS NO LEGAL AUTHORITY FOR THE TERMINATION OF THE CONTRACT OF JULY 16, 1934, DURING ITS TERM WITH THE CITY OF ALEXANDRIA, LA., SO LONG AS IT OTHERWISE COMPLIES WITH THE TERMS OF THE CONTRACT IN THE DELIVERY OF ELECTRIC CURRENT, AND THERE IS NOT EXERCISED BY THE GOVERNMENT THE OPTION CONTAINED THEREIN TO TERMINATE IT ON 30 DAYS' NOTICE IN WRITING BECAUSE MORE FAVORABLE TERMS TO THE GOVERNMENT MIGHT BE SECURED ELSEWHERE FOR THE DELIVERY OF SUCH CURRENT.