A-64719, AUGUST 17, 1935, 15 COMP. GEN. 142

A-64719: Aug 17, 1935

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BIDS WERE OPENED FOR THE FURNISHING OF PACKING HOUSE PRODUCTS FOR THE PERIOD SEPTEMBER 1 TO OCTOBER 31. AMONG OTHER BIDS RECEIVED WAS THAT OF ARMOUR AND COMPANY. ALONG WITH THE PROPOSAL SUBMITTED BY THEM WAS ATTACHED "SPECIAL REQUIREMENTS" WHICH WAS MADE A PART OF THE CONTRACT. OVER THE FOURTH PARAGRAPH OF THESE REQUIREMENTS THIS CONCERN HAS PASTED A CLAUSE WHICH READS: "PRICES QUOTED HEREIN ARE SUBJECT TO NO ADJUSTMENT AND IF ACCEPTED MUST BE PAID IN FULL TO ARMOUR AND COMPANY. NO CLAIM FOR REFUND OR ABATEMENT WILL BE ACCEPTED.'. ALSO THEY HAVE ATTACHED TO THE PROPOSAL A LETTER IN WHICH IT IS STATED THAT THEY HAVE ADDED A CLAUSE IN REGARD TO TAXES ON THEIR BID DELETING THE CLAUSE UNDER SPECIAL REQUIREMENTS RELATING TO TAXES.

A-64719, AUGUST 17, 1935, 15 COMP. GEN. 142

ADVERTISING - BIDS - QUALIFIED THE DELETION BY THE LOWEST BIDDER OF A PROVISION IN ADVERTISED SPECIFICATIONS IN THE NATURE OF A CONCESSION TO BIDDERS DOES NOT REQUIRE THE REJECTION OF HIS BID.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, AUGUST 17, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF AUGUST 14, 1935, REQUESTING DECISION ON THE BASIS OF FACTS STATED IN A LETTER DATED AUGUST 13, 1935, FROM THE VETERANS' ADMINISTRATION FACILITY IN THIS CITY, IN PERTINENT PART, AS FOLLOWS:

ON FRIDAY, AUGUST 9, 1935, BIDS WERE OPENED FOR THE FURNISHING OF PACKING HOUSE PRODUCTS FOR THE PERIOD SEPTEMBER 1 TO OCTOBER 31, 1935.

AMONG OTHER BIDS RECEIVED WAS THAT OF ARMOUR AND COMPANY. ALONG WITH THE PROPOSAL SUBMITTED BY THEM WAS ATTACHED "SPECIAL REQUIREMENTS" WHICH WAS MADE A PART OF THE CONTRACT, AND THEY DELETED THAT PORTION OF THE SPECIAL REQUIREMENTS WHICH RELATES TO BIDS EXCLUDING A STATE TAX AND PRICES BID INCLUDING FEDERAL TAXES, ETC. OVER THE FOURTH PARAGRAPH OF THESE REQUIREMENTS THIS CONCERN HAS PASTED A CLAUSE WHICH READS:

"PRICES QUOTED HEREIN ARE SUBJECT TO NO ADJUSTMENT AND IF ACCEPTED MUST BE PAID IN FULL TO ARMOUR AND COMPANY. NO CLAIM FOR REFUND OR ABATEMENT WILL BE ACCEPTED.'

ALSO THEY HAVE ATTACHED TO THE PROPOSAL A LETTER IN WHICH IT IS STATED THAT THEY HAVE ADDED A CLAUSE IN REGARD TO TAXES ON THEIR BID DELETING THE CLAUSE UNDER SPECIAL REQUIREMENTS RELATING TO TAXES; HOWEVER, SHOULD THERE BE AN OBJECTION REGARDING THE CLAUSE, THEY DESIRE TO WITHDRAW THEIR BID ON ALL PORK PRODUCTS, IN WHICH CASE THEY WOULD WITHDRAW THEIR ADDITIONAL CLAUSE.

IT MIGHT BE WELL TO MENTION THAT THIS FACILITY RECEIVED ELEVEN BIDS FOR PACKING HOUSE PRODUCTS AND ARMOUR AND COMPANY WAS THE ONLY CONCERN WHO MODIFIED THE SPECIAL REQUIREMENTS.

THIS MATTER IS REFERRED TO YOU WITH A REQUEST THAT YOU ADVISE THIS FACILITY, WHETHER, IN VIEW OF THE FACT THIS CONCERN HAS MODIFIED THE SPECIAL REQUIREMENTS, WE SHOULD REJECT THAT PART OF THE PROPOSAL PERTAINING TO PORK PRODUCTS AND MAKE AWARD FOR THESE PARTICULAR ITEMS TO THE CONCERN MAKING THE NEXT LOWEST BID, AND ACCEPT ALL ITEMS WITH THE EXCEPTION OF PORK PRODUCTS, OR SHOULD THE ENTIRE PROPOSAL BE REJECTED.

THE REFERRED-TO PROVISION IN THE ADVERTISED SPECIFICATIONS, WHICH WAS DELETED BY ARMOUR AND O., IS AS FOLLOWS:

PRICES BID HEREIN ARE EXCLUSIVE OF ANY STATE TAX IMPOSED UPON THE PURCHASE OR SALE OF THE PRODUCT NAMED, THE UNITED STATES NOT BEING LIABLE, DIRECTLY OR INDIRECTLY, FOR THE PAYMENT OF SUCH TAX (DECISION UNITED STATES SUPREME COURT, MAY 14, 1928, PANHANDLE OIL COMPANY VS. STATE OF MISSISSIPPI).

PRICES BID HEREIN INCLUDE ANY FEDERAL TAX HERETOFORE IMPOSED BY THE CONGRESS WHICH IS APPLICABLE TO THE MATERIAL ON THIS BID. IF ANY SALES TAX, PROCESSING TAX, ADJUSTMENT CHARGE, OR OTHER TAXES OR CHARGES ARE IMPOSED OR CHANGED BY THE CONGRESS AFTER THE DATE SET FOR THE OPENING OF THIS BID AND MADE APPLICABLE DIRECTLY UPON THE PRODUCTION, MANUFACTURE, OR SALE OF THE SUPPLIES COVERED BY THIS BID, AND ARE PAID BY THE CONTRACTOR ON THE ARTICLES OR SUPPLIES HEREIN CONTRACTED FOR, THEN THE PRICES NAMED IN THIS BID WILL BE INCREASED OR DECREASED ACCORDINGLY, AND ANY AMOUNT DUE THE CONTRACTOR AS A RESULT OF SUCH CHANGE WILL BE CHARGED TO THE GOVERNMENT AND ENTERED ON VOUCHERS (OR INVOICES) AS SEPARATE ITEMS.

THE DELETION OF THE FIRST PARAGRAPH IS NOT MATERIAL FOR THE REASON THAT STATES ARE WITHOUT AUTHORITY TO TAX SALES TO THE FEDERAL GOVERNMENT AS HELD IN THE REFERRED-TO PANHANDLE OIL CO. CASE, 277 U.S. 218, AND GRAYSBURG OIL CO. V. TEXAS, 278 U.S. 582, REVERSING 3 S.W./2D) 427. AS TO THE SECOND PARAGRAPH OF THE DELETION, FEDERAL TAXES IN EFFECT AND PAID ON THE PRODUCTS BECOME A PART OF THE COST THEREOF. LASH'S PRODUCTS CO. V. UNITED STATES, 278 U.S. 175, 13 COMP. GEN. 87. PRESUMABLY ALL BIDDERS TOOK INTO CONSIDERATION THE AMOUNT OF SUCH TAXES IN EFFECT WHEN THEY SUBMITTED THEIR BIDS. THE FURTHER PROVISION IN SAID SECOND PARAGRAPH, THAT THE PRICES WOULD BE READJUSTED ON THE BASIS OF SUBSEQUENT TAXES MADE EFFECTIVE IS IN THE NATURE OF A CONCESSION IN FAVOR OF THE BIDDER- CONTRACTOR SO THAT HE MAY KNOW IN COMPUTING HIS COSTS AS A BASIS OF HIS BID THAT HE IS NOT REQUIRED TO INCLUDE AN AMOUNT THEREIN AS ANTICIPATED TAXES. IF SUCH BIDDER-CONTRACTOR SEES FIT TO REJECT THE CONCESSION, AS IN THIS CASE, AND THE BID IS NEVERTHELESS THE LOWEST BID RECEIVED, SUCH BID MAY BE ACCEPTED, IF OTHERWISE PROPER.