A-65231, APRIL 17, 1936, 15 COMP. GEN. 920

A-65231: Apr 17, 1936

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PROCEDURE IN CONTRACTING FOR PUBLIC UTILITIES SERVICES - EFFECTIVE DATE OF SUBSTITUTE AGREEMENTS IN THE ABSENCE OF COMPETITION THERE IS NO OBJECTION TO ENTERING INTO AGREEMENTS FOR PUBLIC UTILITIES SERVICES AT STIPULATED RATES "UNTIL FURTHER NOTICE. PAYMENT MAY NOT BE MADE FOR ELECTRIC SERVICE IN AN AMOUNT STIPULATED IN A SUBSTITUTE AGREEMENT WHICH IS IN EXCESS OF THE RATE STATED IN THE ORIGINAL CONTRACT. YOUR LETTER IS IN PART AS FOLLOWS: ON FEBRUARY 3. REFERENCE WAS MADE TO DECISION A-42640. IT WAS SHOWN THAT TO RENEW AN AGREEMENT EACH FISCAL YEAR WOULD SERVE NO PURPOSE THAT COULD NOT BE ACCOMPLISHED BY THE USE OF THE EXISTING AGREEMENT. UNLESS THE RATES WERE CHANGED BY COMPETENT AUTHORITY.

A-65231, APRIL 17, 1936, 15 COMP. GEN. 920

PROCEDURE IN CONTRACTING FOR PUBLIC UTILITIES SERVICES - EFFECTIVE DATE OF SUBSTITUTE AGREEMENTS IN THE ABSENCE OF COMPETITION THERE IS NO OBJECTION TO ENTERING INTO AGREEMENTS FOR PUBLIC UTILITIES SERVICES AT STIPULATED RATES "UNTIL FURTHER NOTICE," WITHOUT NECESSITY FOR NEW AGREEMENTS OR ANNUAL RENEWALS EXCEPT TO COVER CHANGES IN RATES OR SERVICE UNLESS THE INTERESTS OF THE GOVERNMENT REQUIRE OTHERWISE IN A PARTICULAR CASE, THE ORIGINAL AGREEMENTS AND ALL CHANGES TO BE FILED IN THE GENERAL ACCOUNTING OFFICE, AND THE VOUCHERS TO CITE THE AGREEMENT INVOLVED AND BEAR A STATEMENT BY A RESPONSIBLE OFFICER OF THE PUBLIC UTILITY CONCERNED AS TO THE RATES CHARGED. PAYMENT MAY NOT BE MADE FOR ELECTRIC SERVICE IN AN AMOUNT STIPULATED IN A SUBSTITUTE AGREEMENT WHICH IS IN EXCESS OF THE RATE STATED IN THE ORIGINAL CONTRACT, EFFECTIVE "UNTIL FURTHER NOTICE," PRIOR TO THE DATE OF ACTUAL RECEIPT OF THE SUBSTITUTE AGREEMENT BY THE PROPER ADMINISTRATIVE REPRESENTATIVE OF THE GOVERNMENT.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, APRIL 17, 1936:

CONSIDERATION HAS BEEN GIVEN TO THE MATTERS CONTAINED IN YOUR LETTER OF DECEMBER 31, 1935, CONCERNING CONTRACT API-1460, DATED JANUARY 8, 1935, WITH THE WEST POINT LIGHT AND WATERWORKS PLANT FOR FURNISHING ELECTRICITY TO THE AGRICULTURAL EXPERIMENT STATION AT WEST POINT, MISS. THE FORM OF THE CONTRACT HAD BEEN QUESTIONED BECAUSE IT PROVIDED FOR FURNISHING ELECTRICITY AT STIPULATED RATES "UNTIL FURTHER NOTICE" INSTEAD OF FOLLOWING THE GENERAL PREVAILING PRACTICE IN GOVERNMENT CONTRACTING FOR PUBLIC UTILITY SERVICES, OF COVERING ONLY THE EXISTING FISCAL YEAR WITH PROVISION FOR AFFIRMATIVE RENEWALS FROM YEAR TO YEAR AT THE OPTION OF THE GOVERNMENT.

YOUR LETTER IS IN PART AS FOLLOWS:

ON FEBRUARY 3, 1934, THE AUDIT DIVISION OF THE GENERAL ACCOUNTING OFFICE RAISED THE SAME QUESTION IN CONNECTION WITH CONTRACT API-1009 WITH THE CONSOLIDATED GAS SERVICE COMPANY, LAWTON, OKLAHOMA. REFERENCE WAS MADE TO DECISION A-42640, DATED JULY 2, 1932, ADDRESSED TO THE SECRETARY OF AGRICULTURE. IN THE CORRESPONDENCE BETWEEN THE CLAIMS DIVISION AND THE BUREAU OF PLANT INDUSTRY, IT WAS SHOWN THAT TO RENEW AN AGREEMENT EACH FISCAL YEAR WOULD SERVE NO PURPOSE THAT COULD NOT BE ACCOMPLISHED BY THE USE OF THE EXISTING AGREEMENT, AS IT WOULD SIMPLY BE A COPY OF THE ORIGINAL AGREEMENT WITHOUT ANY CHANGE WHATSOEVER, UNLESS THE RATES WERE CHANGED BY COMPETENT AUTHORITY, AND IN THIS CASE NEW AGREEMENTS WOULD BE PROCURED AND SENT TO YOUR OFFICE FOR FILING (LETTER OF MARCH 7, 1934). REPLY TO THIS CORRESPONDENCE, YOUR LETTER OF APRIL 24, 1934, A-54716, WAS RECEIVED, IN WHICH APPEARS THE FOLLOWING LANGUAGE:

"UNDER THE CIRCUMSTANCES DISCLOSED BY THE PRESENT RECORD, IT APPEARS THAT A RENEWAL OF THE EXISTING INFORMAL GAS CONTRACT WOULD ACCOMPLISH NO USEFUL PURPOSE, INASMUCH AS THERE HAS BEEN NO CHANGE IN THE GAS RATE STIPULATED THEREIN. ACCORDINGLY, PAYMENTS FOR THE GAS CONSUMED UNDER SAID INFORMAL CONTRACT OF JULY 1, 1932, IN ACCORDANCE WITH ITS TERMS, WILL NOT BE QUESTIONED BY THIS OFFICE.'

AS CONTRACT API-1460, DATED JANUARY 8, 1935, WITH THE WEST POINT LIGHT AND WATERWORKS PLANT FOR FURNISHING ELECTRIC CURRENT TO THE AGRICULTURAL EXPERIMENT STATION AT WEST POINT, MISSISSIPPI, IS COMPARABLE WITH THE ONE QUESTIONED BY YOUR OFFICE AND LATER APPROVED BY YOUR LETTER OF APRIL 24, 1934, A-54716, IT IS NOT THOUGHT THAT A NEW AGREEMENT SHOULD BE ENTERED INTO EACH FISCAL YEAR, OR THAT YOU WILL REQUIRE A STATEMENT SHOWING MONTHLY PAYMENTS MADE UNDER THE ABOVE MENTIONED CONTRACT SINCE ITS EFFECTIVE DATE.

IF YOU WILL REFER TO CONTRACT MENTIONED ABOVE, API-1460, IT WILL BE NOTED THAT THIS CONTRACT DOES NOT INVOLVE THE GOVERNMENT IN ANY PAYMENTS IN ANY FISCAL YEAR WHATSOEVER, BUT THAT IT IS SIMPLY A QUOTATION OF RATES THAT WILL BE PAID IF THE GOVERNMENT ELECTS TO USE SUCH CURRENT WHEN DESIRED. INFORMAL INFORMATION HAS BEEN RECEIVED FROM MR. E. B. PATTERSON, DEPUTY CLERK OF THE WEST POINT LIGHT AND WATERWORKS PLANT, THAT THERE IS NO STATE LAW OR CITY ORDINANCE PROHIBITING THE CITY FROM GIVING THE GOVERNMENT A SEPARATE RATE.

GENERALLY RATES FOR ELECTRICITY, GAS, WATER, AND OTHER PUBLIC UTILITY SERVICES ARE FIXED SUBJECT TO CHANGE BY REGULATORY OR OTHER PUBLIC BODIES, AND WHILE IN SOME INSTANCES THE GOVERNMENT MAY BE GIVEN BETTER RATES THAN GIVEN OTHER USERS, THERE IS SELDOM AVAILABLE ANY COMPETITION BETWEEN DIFFERENT COMPANIES FOR SUPPLYING A PARTICULAR CLASS OF SERVICE IN A GIVEN LOCALITY, AND THUS, GENERALLY, NO USEFUL PURPOSE COULD BE SERVED BY PRIOR ADVERTISING PURSUANT TO SECTION 3709, REVISED STATUTES, OR FOR CONTRACTING IN ADVANCE FOR SERVICE AT DEFINITELY FIXED AND UNCHANGEABLE RATES FOR A DEFINITE PERIOD IN THE FUTURE. AS AGREEMENTS TO PROVIDE SUCH SERVICES AT STIPULATED RATES "UNTIL FURTHER NOTICE" DO NOT IMPOSE ANY OBLIGATION ON THE GOVERNMENT EXCEPT AS THE SERVICES IS ACTUALLY USED IT SEEMS CLEAR THEY ARE NOT IN CONTRAVENTION OF SECTIONS 3679 AND 3732, REVISED STATUTES. (SEE A 54716, APRIL 24, 1934, CITED IN YOUR LETTER, AND A-60589, JULY 12, 1935.) FURTHERMORE, ALTHOUGH SERVICE MAY BE CONTINUED AT THE STIPULATED RATES FOR PERIODS BEYOND A YEAR WITHOUT AN AFFIRMATIVE RENEWAL FROM YEAR TO YEAR OF SUCH AGREEMENTS, AND UNTIL THERE IS AN AUTHORIZED CHANGE IN THE RATES OR SERVICE, AS SUCH AGREEMENTS DO NOT OBLIGATE OR PURPORT TO OBLIGATE THE GOVERNMENT FOR ANY PERIOD IN EXCESS OF A YEAR, OR FOR ANY DEFINITE PERIOD EXCEPT AS THE GOVERNMENT MAY SUBSEQUENTLY DECIDE TO CONTINUE THE SERVICE, THEY DO NOT APPEAR TO CONTRAVENE SECTION 3735, REVISED STATUTES (CF. A-60589, SUPRA).

ACCORDINGLY, WHERE NO COMPETITION IS AVAILABLE IN SECURING NECESSARY SERVICES OF THE CHARACTER IN QUESTION THERE APPEARS AT THIS TIME NO LEGAL OBJECTION TO THE PROCEDURE OF TAKING AGREEMENTS TO FURNISH SUCH SERVICES AT STIPULATED RATES "UNTIL FURTHER NOTICE" WITHOUT THE NECESSITY FOR NEW AGREEMENTS OR ANNUAL RENEWALS EXCEPT AS REQUIRED TO COVER CHANGES IN RATES OR SERVICE, AND THE ADOPTION OF SUCH PROCEDURE BY ADMINISTRATIVE OFFICERS GENERALLY IS AUTHORIZED, EXCEPT WHERE IT MAY APPEAR THAT THE INTERESTS OF THE GOVERNMENT IN PARTICULAR CASES OR ACCOUNTING REQUIREMENTS IN THE FUTURE NECESSITATE MODIFICATION. THE ORIGINAL ADMINISTRATIVELY APPROVED AGREEMENTS TOGETHER WITH ALL SUBSEQUENT CHANGES SHOULD BE FILED PROMPTLY IN THIS OFFICE, OF COURSE, AND ALL VOUCHERS FOR PAYMENTS UNDER SUCH AGREEMENTS SHOULD CITE THE CONTRACT NUMBER AND DATE OF THE AGREEMENT, ORIGINAL OR MODIFIED, UNDER WHICH THE SERVICE WAS USED. THE ATTACHED BILL OR INVOICE SHOULD BEAR A STATEMENT BY A RESPONSIBLE OFFICER OF THE PUBLIC UTILITY CONCERNED AS TO WHETHER THERE HAS BEEN ANY CHANGE IN RATES AVAILABLE TO THE PUBLIC GENERALLY SINCE THE LAST PRIOR PAYMENT UNDER THE CONTRACT AND IF SO, THE AMOUNT THEREOF.

IN THE PRESENT CASE THE ORIGINAL AGREEMENT STIPULATED, INTER ALIA, A RATE OF 3 CENTS A KILOWATT-HOUR FOR ELECTRICITY FOR HEATING AND COOLING WITH NO MINIMUM MONTHLY CHARGE, EFFECTIVE ,UNTIL FURTHER NOTICE.' SUCH AGREEMENT, API-1460, DATED JANUARY 8, 1935, WAS RECEIVED IN THIS OFFICE FEBRUARY 7, 1935. ON MAY 13, 1935, THERE WAS RECEIVED WHAT PURPORTS TO BE A SUBSTITUTE AGREEMENT API-1460, QUOTING THE SAME RATES BUT INCLUDING A MINIMUM CHARGE STIPULATION OF $1.25 A MONTH FOR HEATING AND COOLING CURRENT. PAYMENT OF THIS MINIMUM CHARGE OF $1.25 FOR THE MONTH OF MARCH 1935 WAS MADE ON VOUCHER NO. 1455874, MAY 1935 ACCOUNTS OF G. F. ALLEN, ALTHOUGH ONLY 20 KILOWATTS OF CURRENT ARE SHOWN TO HAVE BEEN USED. THE SUBSTITUTE API-1460 WAS DATED JANUARY 8, 1935, APPARENTLY TO MAKE IT CORRESPOND WITH THE ORIGINAL, AND IT HAS BEEN ADMINISTRATIVELY REPORTED THAT THE MONTHLY MINIMUM STIPULATION IN THE ORIGINAL AGREEMENT WAS INADVERTENTLY OMITTED AND THAT NO OTHER PAYMENTS OF THE MINIMUM CHARGE HAVE BEEN MADE.

THE ORIGINAL AGREEMENT, EFFECTIVE UNTIL FURTHER NOTICE, DID NOT PROVIDE FOR THE MONTHLY MINIMUM CHARGE AND THE SUBSTITUTE AGREEMENT, IRRESPECTIVE OF THE DATE SHOWN THEREON, COULD NOT OBLIGATE THE GOVERNMENT FOR THE MINIMUM MONTHLY CHARGE EXCEPT FOR PERIODS AFTER ITS ACTUAL RECEIPT BY THE PROPER ADMINISTRATIVE REPRESENTATIVE OF THE GOVERNMENT. ACCORDINGLY, THE SUSPENSION OF CREDIT FOR PAYMENT IN EXCESS OF THE STIPULATED RATE FOR CURRENT ACTUALLY USED IN MARCH 1935 WILL BE CONTINUED FOR A REPORT AS TO WHEN THE SUBSTITUTE AGREEMENT WAS ACTUALLY RECEIVED BY THE ADMINISTRATIVE OFFICER, AND THE DISBURSING OFFICER'S ACCOUNTS WILL THEN BE ADJUSTED ON THAT BASIS.

ANY PRIOR DECISIONS OF THIS OFFICE CONTRARY HERETO WILL NOT HEREAFTER BE FOLLOWED.