A-59888, MARCH 27, 1935, 14 COMP. GEN. 724

A-59888: Mar 27, 1935

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE FACT THAT THE CONTRACTOR MAY HAVE VIOLATED SUCH CODE IN SUBMISSION OF THE BID IS NOT EQUIVALENT TO VIOLATION OF THE APPROVED CODE BY THE CONTRACTOR IN THE PERFORMANCE OF THE CONTRACT. IT WILL BE NOTED THAT IN THIS DRAFT THE EXPENSES OF THE DESIRED SERVICE ARE NOW BROKEN DOWN INTO THE SEVERAL ELEMENTS OF COST INVOLVED. YOUR OPINION IS REQUESTED AS TO WHETHER OR NOT THE PROPOSED SPECIFICATION MEETS WITH THE REQUIREMENTS OF YOUR OFFICE AS REFLECTED IN YOUR VARIOUS DECISIONS INVOLVING CODES OF FAIR COMPETITION. AFTER NEW BIDS ARE RECEIVED. A COPY OF OUR PRESENT CONTRACT IS ON FILE IN YOUR OFFICE UNDER THE REFERENCE NUMBER ALREADY CITED. HEREWITH ARE THE NATIONAL RECOVERY ADMINISTRATION LETTER OF NOVEMBER 22.

A-59888, MARCH 27, 1935, 14 COMP. GEN. 724

CONTRACTS - CODE OF FAIR COMPETITION EXECUTIVE ORDER NO. 6646, DATED MARCH 14, 1934, CONFERS NO AUTHORITY FOR THE CANCELLATION OF A CONTRACT UNLESS IN PERFORMANCE THEREOF THE CONTRACTOR VIOLATES THE APPLICABLE APPROVED CODE OF FAIR COMPETITION, AND THE FACT THAT THE CONTRACTOR MAY HAVE VIOLATED SUCH CODE IN SUBMISSION OF THE BID IS NOT EQUIVALENT TO VIOLATION OF THE APPROVED CODE BY THE CONTRACTOR IN THE PERFORMANCE OF THE CONTRACT.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, MARCH 27, 1935:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JANUARY 21, 1935, AS FOLLOWS:

SINCE JULY 1, 1934, THIS DEPARTMENT HAS HAD A CONTRACT (A1S 10029) WITH THE WESTERN NEWSPAPER UNION, 310 EAST 45TH STREET, NEW YORK CITY, FOR PROVIDING NATIONWIDE NEWSPAPER MATRICE AND PRESS-PROOF SERVICE FOR THE AGRICULTURAL ADJUSTMENT ADMINISTRATION, COOPERATING STATE AGRICULTURAL COLLEGES, OR OTHER AUTHORIZED COOPERATING AGENCIES.

UNDER DATE OF NOVEMBER 22, 1934, THE GOVERNMENT CONTRACTS BRANCH OF THE NATIONAL RECOVERY ADMINISTRATION RECOMMENDED TO THIS DEPARTMENT THAT THE CONTRACT, WHICH DOES NOT EXPIRE BY TIME LIMITATION UNTIL JUNE 30, 1935, BE CANCELLED FORTHWITH BECAUSE THE CONTRACTOR IN BIDDING HAD VIOLATED ARTICLE VI, SECTION 1, OF THE CODE FOR THE ELECTROTYPING AND STEREOTYPING INDUSTRY BY QUOTING A PRICE PER SQUARE INCH (AS REQUESTED BY THE DEPARTMENT) INSTEAD OF A PRICE PER EACH AS REQUIRED BY THE STANDARD SCALE. (SEE ATTACHED MARKED COPY OF APPROVED CODE 179, ARTICLE 6, PAGE 423.)

ACCORDINGLY, THE DEPARTMENT HAS DRAFTED A NEW SPECIFICATION, COPY HEREWITH, ON WHICH TO SOLICIT NEW BIDS FOR THIS SERVICE FOR THE REMAINDER OF THE FISCAL YEAR. THIS DRAFT HAS THE INFORMAL APPROVAL OF THE NATIONAL RECOVERY ADMINISTRATION. IT WILL BE NOTED THAT IN THIS DRAFT THE EXPENSES OF THE DESIRED SERVICE ARE NOW BROKEN DOWN INTO THE SEVERAL ELEMENTS OF COST INVOLVED--- THIS IN ACCORD WITH TRADE CUSTOMS OF THE INDUSTRY AND IN CONSONANCE WITH THE DESIRE OF THE NATIONAL RECOVERY ADMINISTRATION.

YOUR OPINION IS REQUESTED AS TO WHETHER OR NOT THE PROPOSED SPECIFICATION MEETS WITH THE REQUIREMENTS OF YOUR OFFICE AS REFLECTED IN YOUR VARIOUS DECISIONS INVOLVING CODES OF FAIR COMPETITION, AND WHETHER, AFTER NEW BIDS ARE RECEIVED, THE EXISTING CONTRACT WITH THE WESTERN NEWSPAPER UNION MAY PROPERLY BE CANCELLED AND A NEW CONTRACT AWARDED ON THE BASIS OF THE NEW BIDS.

A COPY OF OUR PRESENT CONTRACT IS ON FILE IN YOUR OFFICE UNDER THE REFERENCE NUMBER ALREADY CITED. HEREWITH ARE THE NATIONAL RECOVERY ADMINISTRATION LETTER OF NOVEMBER 22, 1934, WITH ITS ATTACHED FINDINGS, COPIES OF THE CODES OF FAIR COMPETITION FOR THE ELECTROTYPING AND STEREOTYPING INDUSTRY AND THE PHOTOENGRAVING INDUSTRY, AS WELL AS THE NECESSARY SUPPLEMENTS AND STANDARD SCALES OF THE INDUSTRIES INVOLVED.

DUE TO THE FACT THAT IT WILL BE NECESSARY, WITHIN THE NEXT THIRTY DAYS, TO PURCHASE ADDITIONAL MATRICE SERVICE IN FURTHERANCE OF THE INFORMATIONAL PROGRAMS OF THE VARIOUS COMMODITY PRODUCTION CONTROL CAMPAIGNS WHICH ARE BEING CARRIED ON BY THE AGRICULTURAL ADJUSTMENT ADMINISTRATION, AN EARLY DECISION WILL BE APPRECIATED.

APPARENTLY, THE RECOMMENDATION OF NOVEMBER 22, 1934, BY THE NATIONAL RECOVERY ADMINISTRATION THAT THE CONTRACT OF JULY 1, 1934, WITH THE WESTERN NEWSPAPER UNION BE CANCELLED HAS BEEN MADE UNDER WHAT IS SUPPOSED TO BE AUTHORITY CONFERRED BY EXECUTIVE ORDER NO. 6646 DATED MARCH 14, 1934, AND IF SO THE PERTINENT PROVISIONS THEREOF ARE AS FOLLOWS:

1. (A) ALL INVITATIONS TO BIDDERS HEREAFTER PROMULGATED BY OR IN BEHALF OF ANY EXECUTIVE DEPARTMENT OR INDEPENDENT ESTABLISHMENT OR OTHER AGENCY OR INSTRUMENTALITY OF THE UNITED STATES, INCLUDING GOVERNMENT-OWNED AND GOVERNMENT-CONTROLLED CORPORATIONS (ALL OF THE FOREGOING BEING HEREINAFTER DESCRIBED AS AGENCIES OF THE UNITED STATES), SHALL CONTAIN A PROVISION TO THE EFFECT THAT NO BID WILL BE CONSIDERED UNLESS IT INCLUDES OR IS ACCOMPANIED BY A CERTIFICATE DULY EXECUTED BY THE BIDDER, STATING THAT THE BIDDER IS COMPLYING WITH AND WILL CONTINUE TO COMPLY WITH EACH APPROVED CODE OF FAIR COMPETITION TO WHICH HE IS SUBJECT, AND IF ENGAGED IN ANY TRADE OR INDUSTRY FOR WHICH THERE IS NO APPROVED CODE OF FAIR COMPETITION, THEN STATING THAT AS TO SUCH TRADE OR INDUSTRY HE HAS BECOME A PARTY TO AND IS COMPLYING WITH AND WILL CONTINUE TO COMPLY WITH AN AGREEMENT WITH THE PRESIDENT UNDER SECTION 4 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT.

(B) NO BID WHICH DOES NOT COMPLY WITH THE FOREGOING REQUIREMENTS SHALL BE CONSIDERED OR ACCEPTED.

(D) NO AGENCY OF THE UNITED STATES AND NO GOVERNMENT CONTRACTOR OR SUPPLIER SHALL HEREAFTER ACCEPT OR PURCHASE FOR THE PERFORMANCE OF ANY CONTRACT OR PURCHASE ORDER OR ENTER INTO ANY SUBCONTRACTS FOR ANY ARTICLES, MATERIALS, OR SUPPLIES, IN WHOLE OR IN PART PRODUCED OR FURNISHED BY ANY PERSON WHO SHALL NOT HAVE CERTIFIED THAT HE IS COMPLYING WITH AND WILL CONTINUE TO COMPLY WITH EACH CODE OF FAIR COMPETITION WHICH RELATES TO SUCH ARTICLES, MATERIALS, OR SUPPLIES, OR IN CASE THERE IS NO APPROVED CODE FOR THE WHOLE OR ANY PORTION THEREOF, THEN, TO THAT EXTENT, WITH AN AGREEMENT WITH THE PRESIDENT AS AFORESAID.

(E) THE FOREGOING PROVISIONS OF THIS ORDER SHALL LIKEWISE APPLY TO ALL CONTRACTS AND PURCHASE ORDERS AUTHORIZED BY ANY STATE, MUNICIPAL CORPORATION, LOCAL SUBDIVISION, PERSON, OR CORPORATION IN CONNECTION WITH PROJECTS CARRIED OUT OR TO BE CARRIED OUT, WHOLLY OR IN PART, WITH FUNDS LOANED OR GRANTED BY ANY AGENCY OF THE UNITED STATES, AND ALL CONTRACTS AND AGREEMENTS FOR THE MAKING OF ANY SUCH LOAN OR GRANT SHALL CONTAIN A PROVISION REQUIRING THE STATE, MUNICIPAL CORPORATION, LOCAL SUBDIVISION, PERSON, OR CORPORATION RECEIVING SUCH LOAN OR GRANT, TO COMPLY WITH THE PROVISIONS OF THIS ORDER; PROVIDED THAT THIS PARAGRAPH SHALL NOT BE CONSTRUED AS REQUIRING THE RESTRICTION OF THE USE OF MATERIALS TO THOSE PRODUCED WITHIN THE UNITED STATES NOR TO REQUIRE PRICE DIFFERENTIALS IN FAVOR OF SUCH MATERIALS.

2. ANY PERSON FALSELY CERTIFYING AS TO COMPLIANCE AS AFORESAID WHO SUBMITS ANY SUCH PROPOSAL, BID, CONTRACT, OR SUBCONTRACT, OR ACCEPTS ANY PURCHASE ORDER, MAY BE PUNISHED AS PROVIDED IN SECTION 10 (A) OF THE NATIONAL INDUSTRIAL RECOVERY ACT, BY A FINE OF NOT TO EXCEED FIVE HUNDRED DOLLARS ($500) OR IMPRISONMENT NOT TO EXCEED 6 MONTHS, OR BOTH, AND IN EVENT OF ANY SUCH FALSE CERTIFICATION BY ANY SUCH PERSON, ANY CONTRACT, SUBCONTRACT, OR PURCHASE ORDER TO WHICH HE IS PARTY SECURED BY OR IN FURTHERANCE OF ANY SUCH PROPOSAL OR BID MAY BE CANCELED BY THE OTHER PARTY THERETO, AND THE UNFINISHED PORTION THEREOF COMPLETED AT THE EXPENSE OF THE PERSON GUILTY OF SUCH FALSE CERTIFICATION AND HIS SURETIES, IF ANY.

3. WHENEVER A DISPUTE SHALL ARISE BETWEEN ANY AGENCY OF THE UNITED STATES AND ANY BIDDER, CONTRACTOR, SUPPLIER, OR OTHER PERSON AS TO COMPLIANCE WITH ANY CODE OF FAIR COMPETITION OR WITH AN AGREEMENT WITH THE PRESIDENT AS AFORESAID IN CONNECTION WITH ANY PROPOSAL, BID, CONTRACT, SUBCONTRACT, OR PURCHASE ORDER MENTIONED HEREIN, THE ADMINISTRATOR FOR INDUSTRIAL RECOVERY, OR SUCH AGENCY AS HE SHALL DESIGNATE, SHALL DECIDE SUCH DISPUTE AND, FOR THE PURPOSES OF ACTION UNDER THIS EXECUTIVE ORDER, SUCH DECISION SHALL BE FINAL AND CONCLUSIVE; BUT THE DETERMINATION OF SUCH AGENCY OF THE UNITED STATES SHALL BE EFFECTIVE FOR ALL PURPOSES PENDING SUCH DECISION.

THIS COMPANY SUBMITTED ITS BID ON THE BASIS REQUESTED BY THE GOVERNMENT AND APPARENTLY ACCOMPANIED THE BID WITH A CERTIFICATE THAT IT WAS COMPLYING WITH THE APPLICABLE APPROVED CODE OF FAIR COMPETITION AS PROVIDED IN SECTION 1 (A) OF THE ABOVE-QUOTED EXECUTIVE ORDER. THE BID WAS THEREUPON ACCEPTED AND CONTRACT ENTERED INTO IN ACCORDANCE THEREWITH AND SAID CONTRACT CONTAINED A PROVISION THAT IN THE PERFORMANCE THEREOF THE CONTRACTOR WOULD COMPLY WITH THE APPLICABLE APPROVED CODE OF FAIR COMPETITION. THE REPORT OF THE NATIONAL RECOVERY ADMINISTRATION IS TO THE EFFECT THAT IN THE SUBMISSION OF THE BID ON THE BASIS REQUESTED BY THE GOVERNMENT THE CONTRACTOR DID NOT COMPLY WITH THE APPLICABLE APPROVED CODE OF FAIR COMPETITION IN THAT THE PRICE QUOTED BY THE CONTRACTOR WAS ON A SQUARE-INCH BASIS AS REQUIRED BY THE SPECIFICATIONS INSTEAD OF A MATRIX BASE AS REQUIRED BY THE TERMS OF THE APPLICABLE APPROVED CODE. WHILE IT HAS NOT BEEN MADE TO APPEAR WHY IN SO DOING THE GOVERNMENT AND THE CONTRACTORS COMMITTED ANY FATAL ERROR IN REQUESTING AND SUBMITTING PRICES ON A PART INSTEAD OF THE WHOLE, THE MATRIX CONSISTING OF A CERTAIN NUMBER OF SQUARE INCHES, HOWEVER THAT MAY BE, AND WHILE SUCH MATTERS MAY HAVE BEEN FOR CONSIDERATION IN CONNECTION WITH ACCEPTANCE OF THE BID, IT DOES NOT APPEAR THAT THEY PROVIDE AUTHORITY FOR CANCELLATION OF THE CONTRACT--- AUTHORITY FOR CANCELLATION BEING RESTRICTED TO MATTERS OCCURRING IN CONNECTION WITH PERFORMANCE. IT IS TO BE OBSERVED THE EXECUTIVE ORDER CONFERS NO AUTHORITY FOR THE CANCELLATION OF A CONTRACT UNLESS IN THE PERFORMANCE THEREOF THE CONTRACTOR VIOLATES THE APPLICABLE APPROVED CODE OF FAIR COMPETITION, AND THE FACT THAT THE CONTRACTOR MAY HAVE VIOLATED SUCH CODE IN THE SUBMISSION OF THE BID IS NOT EQUIVALENT TO A VIOLATION OF THE APPROVED CODE BY THE CONTRACTOR IN THE PERFORMANCE OF THE CONTRACT.

ACCORDINGLY, YOU ARE ADVISED THERE EXISTS NO LEGAL AUTHORITY IN EITHER THE CONTRACT OR IN THE EXECUTIVE ORDER OF MARCH 14, 1934, FOR THE CANCELLATION OF THIS CONTRACT.