A-64615, OCTOBER 26, 1935, 15 COMP. GEN. 344

A-64615: Oct 26, 1935

Additional Materials:

Contact:

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

 

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

1935: THERE WAS RECEIVED YOUR LETTER OF AUGUST 13. COAST GUARD HEADQUARTERS IS IN RECEIPT OF A COMMUNICATION FROM THE COMMANDER. THE QUESTION OF WHETHER IT IS PROPER TO REJECT HIS BID BECAUSE OF HIS REFUSAL IS REFERRED TO YOU FOR DECISION. WAS CONSIDERED IN A DECISION OF THIS OFFICE AUGUST 9. THE CONCLUSION WAS REACHED THAT THE REQUIREMENT WAS TOO BROAD IN ITS TERMS. IT WAS CONSIDERED THAT SUCH A REQUIREMENT RENDERED THE UNDERTAKING OF BOTH THE CONTRACTOR AND THE GOVERNMENT TOO VAGUE. THE BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA WERE INFORMED THAT SUCH A PROVISION COULD BE VIEWED ONLY AS A REQUEST TO BIDDERS THAT BIDS BE SUBMITTED UPON THE BASIS THAT THE CONTRACTOR SHOULD COMPLY WITH THE PROVISIONS OF ANY AND ALL MARKETING AGREEMENTS AND LICENSES AND AMENDMENTS TO EITHER IN EFFECT AT THE TIME OF CONTRACTING OR THEREAFTER PLACED INTO EFFECT.

A-64615, OCTOBER 26, 1935, 15 COMP. GEN. 344

CONTRACTS - SPECIFICATIONS - MARKETING AND PRICE ADJUSTMENT PROVISIONS - READVERTISEMENT ALL BIDS SUBMITTED IN CONNECTION WITH ADVERTISED SPECIFICATIONS CONTAINING THE MARKETING AGREEMENT COMPLIANCE AND PRICE ADJUSTMENT CLAUSE SET OUT IN CIRCULAR LETTER NO. 89 OF THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, SHOULD BE REJECTED AND READVERTISEMENT HAD, ELIMINATING SAID CLAUSE AND SUBSTITUTING THEREFOR THE PROVISION APPROVED IN 13 COMP. GEN. 181 FOR INCLUSION IN PROPOSALS AND CONTRACTS FOR AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, OCTOBER 26, 1935:

THERE WAS RECEIVED YOUR LETTER OF AUGUST 13, 1935, AS FOLLOWS:

THE U.S. COAST GUARD HEADQUARTERS IS IN RECEIPT OF A COMMUNICATION FROM THE COMMANDER, NEW ORLEANS DIVISION, STATING THAT CERTAIN DEALERS AT MOBILE, ALABAMA, AND NEW ORLEANS, LOUISIANA, IN SUBMITTING THEIR BIDS FOR DAIRY PRODUCTS, REFUSE TO AGREE TO THE PROVISIONS REQUIRED BY CIRCULAR LETTER NO. 89, ISSUED BY THE PROCUREMENT DIVISION, CONCERNING COMPLIANCE WITH A.A.A. MARKETING AGREEMENTS AND/OR LICENSES.

INASMUCH AS THE LOWEST BIDDER REFUSES TO COMPLY, THE QUESTION OF WHETHER IT IS PROPER TO REJECT HIS BID BECAUSE OF HIS REFUSAL IS REFERRED TO YOU FOR DECISION.

THE SPECIFICATION REQUIREMENT PROVIDED IN CIRCULAR LETTER NO. 89, MAY 8, 1935, OF THE PROCUREMENT DIVISION, WAS CONSIDERED IN A DECISION OF THIS OFFICE AUGUST 9, 1935, TO THE BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA. THE CONCLUSION WAS REACHED THAT THE REQUIREMENT WAS TOO BROAD IN ITS TERMS, IN THAT IT PLACED A BIDDER UNDER OBLIGATION OF COMPLIANCE NOT ONLY WITH EXISTING MARKETING AGREEMENTS, ETC., IN CONFORMITY WITH THE AGRICULTURAL ADJUSTMENT ACT OF MAY 12, 1933, 48 STAT. 31, ET SEQ., AND EXISTING AMENDMENTS THERETO, BUT WITH FUTURE MARKETING AGREEMENTS PURSUANT TO SUPPLEMENTARY AND POSSIBLY FUTURE LEGISLATION, ON THE ONE HAND, WHILE ON THE OTHER HAND IT PROPOSED TO OBLIGATE THE UNITED STATES TO PAY ANY INCREASED COSTS OCCASIONED BY COMPLIANCE WITH FUTURE MARKETING AGREEMENTS. IT WAS CONSIDERED THAT SUCH A REQUIREMENT RENDERED THE UNDERTAKING OF BOTH THE CONTRACTOR AND THE GOVERNMENT TOO VAGUE, UNCERTAIN, AND INDEFINITE, AND, ACCORDINGLY, THE BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA WERE INFORMED THAT SUCH A PROVISION COULD BE VIEWED ONLY AS A REQUEST TO BIDDERS THAT BIDS BE SUBMITTED UPON THE BASIS THAT THE CONTRACTOR SHOULD COMPLY WITH THE PROVISIONS OF ANY AND ALL MARKETING AGREEMENTS AND LICENSES AND AMENDMENTS TO EITHER IN EFFECT AT THE TIME OF CONTRACTING OR THEREAFTER PLACED INTO EFFECT, AND THAT THE LOW BID, IF OTHERWISE PROPER, MIGHT NOT BE REJECTED BECAUSE SUCH BIDDER REFUSED TO AGREE TO COMPLY WITH SUCH REQUEST.

A SOMEWHAT SIMILAR PROVISION HAD BEEN PROPOSED BY THE ADMINISTRATOR OF VETERANS' AFFAIRS FOR INCLUSION IN ADVERTISEMENTS FOR BIDS FOR FURNISHING DAIRY PRODUCTS TO THE VETERANS' ADMINISTRATION, AND BY DECISION OF JANUARY 2, 1934, 13 COMP. GEN. 181, IT WAS DETERMINED THAT THE EFFECT OF SUCH A STIPULATION WOULD BE TO RENDER INDEFINITE AND UNCERTAIN THE CONSIDERATION STIPULATED IN GOVERNMENT CONTRACTS, AND SINCE THE PURPOSE OF CONTRACTING WAS TO MAKE THE RIGHTS OF THE PARTIES DEFINITE AND CERTAIN, THE STIPULATION WAS OBJECTIONABLE. IN SAID DECISION TO THE ADMINISTRATOR OF VETERANS' AFFAIRS THERE WAS APPROVED FOR INCLUSION IN PROPOSALS AND CONTRACTS FOR AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF, A STIPULATION, NOT SO BROAD IN ITS SCOPE, AS FOLLOWS:

IF, ON THE DATE OF THE OPENING OF THIS BID, THERE IS IN EFFECT MARKETING AGREEMENT AND/OR LICENSE APPROVED AND EXECUTED BY THE SECRETARY OF AGRICULTURE UNDER THE PROVISIONS OF THE AGRICULTURAL ADJUSTMENT ACT FOR ANY OF THE COMMODITIES LISTED IN THIS PROPOSAL, THE CONTRACTOR SHALL COMPLY WITH ALL PROVISIONS OF SAID MARKETING AGREEMENT AND/OR LICENSE, OR ANY AMENDMENTS THEREOF, WITHOUT REGARD TO WHETHER THE CONTRACTOR IS HIMSELF A PARTY TO THE SAID MARKETING AGREEMENT AND/OR LICENSE. IF THE CONTRACTOR FAILS TO COMPLY WITH THE PROVISIONS OF THE MARKETING AGREEMENT AND/OR LICENSE, OR ANY AMENDMENTS THEREOF, THE GOVERNMENT MAY BY WRITTEN NOTICE TO THE CONTRACTOR TERMINATE THE CONTRACTOR'S RIGHT TO PROCEED WITH THE CONTRACT AND PURCHASE IN THE OPEN MARKET, OR OTHERWISE THE UNDELIVERED PORTION OF THE COMMODITY OR COMMODITIES INVOLVED AND THE CONTRACTOR AND HIS SURETY SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COST OCCASIONED THE GOVERNMENT THEREBY. PROVIDED, THAT THE DETERMINATION OF THE SECRETARY OF AGRICULTURE OF ANY FAILURE OF THE CONTRACTOR TO COMPLY WITH THE TERMS OF THE MARKETING AGREEMENT AND/OR LICENSE FOR THE COMMODITY OR COMMODITIES INVOLVED SHALL BE FINAL AND CONCLUSIVE ON THE CONTRACTOR.

THERE IS INCLOSED A COPY OF A DECISION OF SEPTEMBER 12, 1935, A 64860, 15 COMP. GEN. 201, TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, IN WHICH HE WAS INFORMED THAT THE INCLUSION OF THE PARAGRAPH, SUPRA, WAS PROPER AND THAT THE REFUSAL OF A BIDDER TO UNDERTAKE COMPLIANCE THEREWITH JUSTIFIED THE REJECTION OF HIS BID.

IN THE PRESENT CASE, THE PROPER PROCEDURE WOULD APPEAR TO BE THE REJECTION OF ALL BIDS AND READVERTISEMENT OF THE GOVERNMENT NEEDS, ELIMINATING THE OBJECTIONABLE PARAGRAPH FROM THE INVITATION FOR BIDS AND SUBSTITUTING THEREFOR THE PROVISION RELATIVE TO COMPLIANCE WITH MARKETING AGREEMENTS, AS HEREINBEFORE QUOTED. THERE MIGHT BE ADDED A NOTICE TO BIDDERS THAT REFUSAL TO AGREE TO THE REQUIREMENT WILL BE CONSIDERED AS JUSTIFYING REJECTION OF AN OTHERWISE ACCEPTABLE BID.

ADVERTISEMENTS FOR FUTURE NEEDS OF YOUR DEPARTMENT FOR AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF SHOULD CARRY THE APPROVED PARAGRAPH RATHER THAN THE ONE PROVIDED BY CIRCULAR LETTER NO. 89 OF THE PROCUREMENT DIVISION.