A-61651, JULY 19, 1935, 15 COMP. GEN. 45

A-61651: Jul 19, 1935

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THE PROTEST IS BASED ON THE GROUND THAT A PROVISION IN THE SPECIFICATIONS NOTIFYING ALL BIDDERS THAT NO CONSIDERATION WOULD BE GIVEN TO EQUALIZING FREIGHT CHARGES WITH OTHER SPECIFIED POINTS. - WHERE PURCHASES WERE MADE F.O.B. - TO THE DISADVANTAGE OF BIDDERS WHOSE SHIPPING POINTS WERE NOT ON LAND-GRANT ROUTES. YOU HAVE STATED THAT SUCH A NOTIFICATION WAS IN ACCORD WITH MY DECISION OF APRIL 11. WHICH WAS NOT CONSIDERED TO BE CONTRARY TO MY FURTHER DECISION OF MARCH 27. THE NOTIFICATION IN THE ADVERTISED SPECIFICATIONS COMPLAINED OF IS AS FOLLOWS: IN MAKING AWARD FOR THE SUPPLIES HEREIN CALLED FOR. NO CONSIDERATION WILL BE GIVEN OFFERS TO EQUALIZE FREIGHT CHARGES WITH OTHER SPECIFIED POINTS.

A-61651, JULY 19, 1935, 15 COMP. GEN. 45

CONTRACTS - BIDS - EQUALIZING FREIGHT RATES PROPER ADMINISTRATIVE ACTION SHOULD BE TAKEN, IF DEEMED DESIRABLE, PROHIBITING BIDS WHICH OFFER TO EQUALIZE FREIGHT RATES WITH OTHER SPECIFIED POINTS, BUT IN ALL CASES PERMITTING OFFERS TO EQUALIZE GENERALLY GOVERNMENT LAND-GRANT RATES WITH COMPETITORS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, JULY 19, 1935:

CONSIDERATION HAS BEEN GIVEN TO YOUR REPORTS OF MAY 23 AND JULY 5, 1935, IN RESPONSE TO MY REQUEST OF MAY 1, 1935, CONCERNING A PROTEST OF THE R. HARDESTY MANUFACTURING CO. AGAINST THE AWARD OF CONTRACT A1FS-3375, DATED APRIL 22, 1935, AS THE RESULT OF BIDS OPENED APRIL 11, 1935, BY THE FOREST SERVICE AT MISSOULA, MONT., TO THE MIDLAND IMPLEMENT CO., INC., FOR THE DELIVERY OF CERTAIN CULVERT PIPE. THE PROTEST IS BASED ON THE GROUND THAT A PROVISION IN THE SPECIFICATIONS NOTIFYING ALL BIDDERS THAT NO CONSIDERATION WOULD BE GIVEN TO EQUALIZING FREIGHT CHARGES WITH OTHER SPECIFIED POINTS, OPERATED--- WHERE PURCHASES WERE MADE F.O.B. BIDDER'S SHIPPING POINT--- TO THE DISADVANTAGE OF BIDDERS WHOSE SHIPPING POINTS WERE NOT ON LAND-GRANT ROUTES. YOU HAVE STATED THAT SUCH A NOTIFICATION WAS IN ACCORD WITH MY DECISION OF APRIL 11, 1933, A-47809, WHICH WAS NOT CONSIDERED TO BE CONTRARY TO MY FURTHER DECISION OF MARCH 27, 1934, A- 53420.

THE NOTIFICATION IN THE ADVERTISED SPECIFICATIONS COMPLAINED OF IS AS FOLLOWS:

IN MAKING AWARD FOR THE SUPPLIES HEREIN CALLED FOR, NO CONSIDERATION WILL BE GIVEN OFFERS TO EQUALIZE FREIGHT CHARGES WITH OTHER SPECIFIED POINTS. ONLY THE QUOTED PRICE OR PRICES INSERTED AGAINST THE VARIOUS ITEMS LISTED AND THE ACTUAL F.O.B. SHIPPING POINT OR POINTS SPECIFIED WILL BE CONSIDERED.

THE SITUATION CONSIDERED IN THE DECISION OF APRIL 11, 1933, TO WHICH YOU HAVE REFERRED, WAS ONE WHERE BIDDERS FOR THE DELIVERY OF STEEL PRODUCTS ESTABLISHED THE PRACTICE OF SUBMITTING PRICE QUOTATIONS ACCOMPANIED BY AN OFFER TO EQUALIZE FREIGHT WITH NAMED SHIPPING POINTS OF PROBABLE COMPETITORS, AS OUTLINED IN YOUR REPORT OF MARCH 9, 1933, WHILE THE SITUATION CONSIDERED IN THE DECISION OF MARCH 27, 1934, TO WHICH YOU HAVE ALSO REFERRED, WAS ONE CONCERNING OFFERS TO EQUALIZE GENERALLY LAND-GRANT OR GOVERNMENT RATES TO DESTINATIONS. AS STATED IN SAID DECISION OF MARCH 27, 1934, COMMERCIAL RATES, OR FREIGHT RATES AVAILABLE TO THE PUBLIC GENERALLY, ARE MATTERS OF GENERAL KNOWLEDGE TO BIDDERS AND ARE DISCLOSED IN THE TARIFFS FILED ACCORDING TO LAW, WHILE GOVERNMENT LAND-GRANT RATES ARE NOT MATTERS OF GENERAL INFORMATION AND A DIFFERENCE OF A FEW CENTS PER CWT. IN THE LAND-GRANT RATE IS SUFFICIENT TO DENY AN OTHERWISE LOW BIDDER A GOVERNMENT CONTRACT UNLESS PERMITTED TO EQUALIZE THE LAND-GRANT FREIGHT RATE WITH ITS COMPETITOR. IN OTHER WORDS, THERE IS A DIFFERENCE BETWEEN FREIGHT RATES GENERALLY, AS CONSIDERED IN THE DECISION OF APRIL 11, 1933, AND LAND-GRANT FREIGHT RATES AS CONSIDERED IN THE DECISION OF MARCH 27, 1934, AND WHILE IT IS ENTIRELY PROPER TO NOTIFY BIDDERS THAT NO CONSIDERATION WOULD BE GIVEN TO OFFERS TO EQUALIZE COMMERCIAL FREIGHT RATES WITH COMPETITORS, THERE IS NOT ONLY NO LEGAL OBJECTION TO THE CONSIDERATION OF OFFERS TO EQUALIZE THE LAND-GRANT RATES--- LAND-GRANT DEDUCTIONS FROM COMMERCIAL RATES--- BUT SUCH PROCEDURE IS PROPER DUE TO THE FACT THAT LAND-GRANT RAILROADS ARE LIMITED IN NUMBER AND BIDDERS LOCATED THEREON SHOULD NOT BE AT AN ADVANTAGE OVER OTHER BIDDERS NOT LOCATED ON LAND-GRANT LINES WHEN PURCHASES ARE MADE F.O.B. BIDDER'S SHIPPING POINT.

WHILE NO FURTHER QUESTION WILL BE RAISED WITH RESPECT TO THIS PARTICULAR CONTRACT, PROPER ADMINISTRATIVE ACTION SHOULD BE TAKEN TO CORRECT THE SITUATION BY PROHIBITING, IF DEEMED DESIRABLE, BIDS OFFERING TO EQUALIZE FREIGHT RATES WITH OTHER SPECIFIED POINTS, BUT IN ALL CASES PERMITTING OFFERS TO EQUALIZE GENERALLY GOVERNMENT LAND GRANT RATES WITH COMPETITORS.