A-69419, MAY 4, 1936, 15 COMP. GEN. 954

A-69419: May 4, 1936

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CONTRACTS - DEFINITE QUANTITIES - ADDITIONAL NEEDS WHERE A CONTRACT PROVIDES FOR THE FURNISHING OF A DEFINITE QUANTITY WITH AN ALLOWABLE VARIATION THE EXECUTION OF ADDITIONAL CONTRACTS AFTER THE EXPIRATION OF THE ORIGINAL CONTRACT TO BE EFFECTIVE RETROACTIVELY TO THE DATE OF THE ORIGINAL CONTRACT AND TO COVER DELIVERIES IN EXCESS OF THE ALLOWABLE VARIATION THEREIN IS WITHOUT LEGAL EFFECT. THE ADDITIONAL NEEDS WERE FOR INCLUSION IN THE ORIGINAL INVITATION FOR BIDS OR. APPEARS TO HAVE BEEN SENT TO THREE FIRMS. IT ADVISED PROSPECTIVE BIDDERS THE GOVERNMENT'S NEED WAS 75 POUNDS OF DRY ICE PER DAY TO BE DELIVERED DURING ANY OF THE 24 HOURS OF ANY DAY. ONLY TWO BIDS APPEAR TO HAVE BEEN RECEIVED.

A-69419, MAY 4, 1936, 15 COMP. GEN. 954

CONTRACTS - DEFINITE QUANTITIES - ADDITIONAL NEEDS WHERE A CONTRACT PROVIDES FOR THE FURNISHING OF A DEFINITE QUANTITY WITH AN ALLOWABLE VARIATION THE EXECUTION OF ADDITIONAL CONTRACTS AFTER THE EXPIRATION OF THE ORIGINAL CONTRACT TO BE EFFECTIVE RETROACTIVELY TO THE DATE OF THE ORIGINAL CONTRACT AND TO COVER DELIVERIES IN EXCESS OF THE ALLOWABLE VARIATION THEREIN IS WITHOUT LEGAL EFFECT. THE ADDITIONAL NEEDS WERE FOR INCLUSION IN THE ORIGINAL INVITATION FOR BIDS OR, IF ARISING AFTER AWARD THEREON, FOR ADVERTISING IN THE ABSENCE OF AN EMERGENCY REQUIRING OTHERWISE, AND AWARD TO THE LOWEST RESPONSIBLE BIDDER.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR, FEDERAL EMERGENCY RELIEF ADMINISTRATION, MAY 4, 1936:

THERE HAS COME TO MY ATTENTION THE PROCEDURE FOLLOWED BY THE FEDERAL EMERGENCY RELIEF ADMINISTRATION, OKLAHOMA CITY, OKLA., IN CONTRACTING FOR DRY ICE COVERING THE PERIOD OCTOBER 16, 1934, TO FEBRUARY 21, 1935, UNDER CONTRACTS AS FOLLOWS:

ERA-34-994, DATED OCTOBER 16, 1934, WITH DRY ICE, INC., FOR 75 POUNDS PER DAY, AT 3 CENTS PER POUND, DELIVERED IN OKLAHOMA CITY, OKLAHOMA, OVERA PERIOD OF 60 DAYS.

ERA-34-1794, DATED OCTOBER 16, 1934, WITH DRY ICE, INC., FOR 1,000 POUNDS PER DAY, AT 3 CENTS PER POUND, DELIVERED IN OKLAHOMA CITY OVER THE PERIOD OCTOBER 16, 1934, TO FEBRUARY 21, 1935.

ERA-34-1795, DATED OCTOBER 16, 1934, WITH DRY ICE, INC., FOR 200 POUNDS PER DAY, AT ?0375 PER POUND, DELIVERED F.O.B. TULSA, OKLAHOMA, OVER THE PERIOD OCTOBER 16, 1934, TO FEBRUARY 21, 1935.

THE INVITATION FOR BIDS DATED OCTOBER 15, 1934, TO BE OPENED OCTOBER 16, 1934, APPEARS TO HAVE BEEN SENT TO THREE FIRMS. IT ADVISED PROSPECTIVE BIDDERS THE GOVERNMENT'S NEED WAS 75 POUNDS OF DRY ICE PER DAY TO BE DELIVERED DURING ANY OF THE 24 HOURS OF ANY DAY, SUBJECT TO INCREASE OR DECREASE OF 25 PERCENT AND SUBJECT TO CANCELATION OF THE CONTRACT UPON WRITTEN NOTICE. ONLY TWO BIDS APPEAR TO HAVE BEEN RECEIVED, ONE FROM DRY- FROST DISTRIBUTING CO., QUOTING A PRICE OF 4 CENTS PER POUND, AND THE OTHER FROM DRY ICE, INC., QUOTING A PRICE OF 3 CENTS PER POUND, WITH A CHARGE OF 30 CENTS FOR EACH CARTON USED IN MAKING OTHER THAN LOCAL SHIPMENTS. THE LATTER BID WAS ACCEPTED OCTOBER 16, 1934, AND THE CONTRACT THUS ENTERED INTO WAS DESIGNATED AS ERA-34-994.

UNDER DATE OF AUGUST 9, 1935, A LETTER WAS DIRECTED BY THIS OFFICE TO THE FEDERAL EMERGENCY RELIEF ADMINISTRATION, CALLING ATTENTION TO THE FACT THAT CONTRACT ERA-34-1794 APPEARED TO HAVE BEEN ENTERED INTO WITHOUT ADVERTISING ON THE BASIS OF QUOTATIONS FURNISHED UNDER THE BID SUBMITTED IN RESPONSE TO THE ADVERTISEMENT ON WHICH WAS BASED CONTRACT ERA-34-994, AND ALSO, THAT CONTRACT ERA-34-1795 APPARENTLY WAS ENTERED INTO WITHOUT ADVERTISING AND AT A HIGHER PRICE THAN THAT QUOTED IN THE BID UNDER SAID CONTRACT ERA-34-994.

IN REPLY, THE DIRECTOR OF FINANCE, FEDERAL EMERGENCY RELIEF ADMINISTRATION, TRANSMITTED A LETTER OF EXPLANATION FROM THE PURCHASING DEPARTMENT, OKLAHOMA EMERGENCY RELIEF ADMINISTRATION, OKLAHOMA CITY, OKLA., IN PERTINENT PART, AS FOLLOWS:

OUR FILES INDICATE THAT THE ORIGINAL CONTRACT NO. ERA-34-994 WAS DRAWN IN FAVOR OF DRY ICE, INCORPORATED, FOR USE OF THE COMMODITY DEPARTMENT IN THE CATTLE PROGRAM. THE QUANTITY AS CONTAINED IN THIS CONTRACT BEING INSUFFICIENT FOR THEIR NEEDS, THE DIRECTOR OF COMMODITIES VERBALLY INSTRUCTED THE VENDOR TO INCREASE THE QUANTITY, WITHOUT NOTIFYING THE PURCHASING DEPARTMENT OF THIS ACTION. ON FEBRUARY 14, 1935, THIS DEPARTMENT ISSUED CONTRACT NO. ERA-34-1794 FOR THE ADDITIONAL QUANTITY, RETROACTIVE TO OCTOBER 16, 1934, AS PER VERBAL INSTRUCTIONS OF THE COMMODITIES DIRECTOR.

CONTRACT NO. ERA-34-1795 WAS DRAWN ON THE SAME DATE, CONFIRMING VERBAL INSTRUCTIONS OF THE COMMODITIES DIRECTOR AS OF OCTOBER 16, 1934, FOR AN INCREASED AMOUNT, DELIVERY OF WHICH WAS MADE TO TULSA, OKLAHOMA. THE PRICE ON THIS CONTRACT IS BASED ON THE PREVIOUS CONTRACT, PLUS 3/4 CENT PER POUND FOR TULSA DELIVERY, DRY ICE, INCORPORATED, BEING LOCATED IN OKLAHOMA CITY.

RE-ADVERTISEMENT FOR BIDS AND COMPETITION WAS NOT OBTAINED BECAUSE OF THE FACT THAT THIS DEPARTMENT WAS NOT NOTIFIED THAT THE QUANTITY HAD BEEN INCREASED THROUGH VERBAL INSTRUCTIONS OF THE COMMODITIES DIRECTOR.

SECTION 3709, REVISED STATUTES, PROVIDES:

ALL PURCHASES AND CONTRACTS FOR SUPPLIES OR SERVICES, IN ANY OF THE DEPARTMENTS OF THE GOVERNMENT, EXCEPT FOR PERSONAL SERVICES, SHALL BE MADE BY ADVERTISING A SUFFICIENT TIME PREVIOUSLY FOR PROPOSALS RESPECTING THE SAME, WHEN THE PUBLIC EXIGENCIES DO NOT REQUIRE THE IMMEDIATE DELIVERY OF THE ARTICLES, OR PERFORMANCE OF THE SERVICE. WHEN IMMEDIATE DELIVERY OR PERFORMANCE IS REQUIRED BY THE PUBLIC EXIGENCY, THE ARTICLES OR SERVICE REQUIRED MAY BE PROCURED BY OPEN PURCHASE OR CONTRACT, AT THE PLACES AND IN THE MANNER IN WHICH SUCH ARTICLES ARE USUALLY BOUGHT AND SOLD, OR SUCH SERVICES ENGAGED, BETWEEN INDIVIDUALS.

THE EXACT FACTS WITH RESPECT TO THE TRANSACTIONS IN QUESTION ARE NOT CLEARLY SHOWN IN THE EXPLANATION QUOTED ABOVE, BUT IT APPEARS THEREFROM THAT SHORTLY AFTER THE EXECUTION OF CONTRACT FOR DELIVERY F.O.B. OKLAHOMA CITY, OKLA., OF 75 POUNDS OF DRY ICE PER DAY FOR A PERIOD OF 60 DAYS, OR FROM OCTOBER 16 TO DECEMBER 14, 1934, INSTRUCTIONS WERE ISSUED TO THE CONTRACTOR TO INCREASE DELIVERIES IN OKLAHOMA CITY FROM 75 POUNDS TO 1,075 POUNDS PER DAY AT 3 CENTS PER POUND AND TO MAKE AN ADDITIONAL DELIVERY OF 200 POUNDS PER DAY TO TULSA, OKLA., AT AN INCREASE IN PRICE OF $0.0075 PER POUND, THE INCREASE IN PRICE APPARENTLY BEING INTENDED TO COVER EXTRA COST OF DELIVERY BEYOND THE LIMITS OF OKLAHOMA CITY, ALTHOUGH THE ABSENCE OF COMPETITION FOR SUCH A SERVICE HAS ELIMINATED ANY BASIS FOR COMPARISON OF THE REASONABLENESS OF SUCH A CHARGE. THE ATTEMPT ON FEBRUARY 14, 1935--- 2 MONTHS AFTER EXPIRATION OF THE ORIGINAL CONTRACT COVERING DELIVERIES FOR THE PERIOD OCTOBER 16 TO DECEMBER 14, 1934--- TO COVER, UNDER CONTRACTS PURPORTING TO BE RETROACTIVE TO OCTOBER 16, 1934, THE EXTRA QUANTITIES DELIVERED, WAS, OF COURSE, WITHOUT LEGAL EFFECT. BY THE EXPRESS TERMS OF THE ORIGINAL CONTRACT, DELIVERIES THEREUNDER WERE SUBJECT, DURING THE 60- DAY PERIOD OF SAID CONTRACT, TO AN INCREASE OF NOT TO EXCEED 25 PERCENT, AND AFTER SAID CONTRACT EXPIRED ALL ICE FURNISHED BY THE DRY ICE, INC., WAS WITHOUT ADVERTISING AND COMPETITION AS REQUIRED BY SECTION 3709, REVISED STATUTES, AND UNAUTHORIZED.

THE FACTS OF RECORD CLEARLY SHOW NO EMERGENCY EXISTED WITH RESPECT TO THE NEED FOR DRY ICE; THAT THERE WAS INVOLVED MERELY A QUESTION OF CONTRACTING TO SUPPLY THE DAILY NEEDS IN OKLAHOMA CITY AND IN TULSA, OKLA., OVER A PERIOD OF SEVERAL MONTHS. HAD A PROPER AND TIMELY SURVEY OF THESE NEEDS BEEN MADE BY THE RESPONSIBLE GOVERNMENT OFFICIALS AND THE FIGURES THUS OBTAINED USED IN THE INVITATION FOR BIDS, SHOWING A DAILY NEED OF APPROXIMATELY 1,075 POUNDS OF DRY ICE IN OKLAHOMA CITY AND 200 POUNDS PER DAY IN TULSA, OKLA., INSTEAD OF THE 75 POUNDS PER DAY AS WAS ADVERTISED, IT IS PROBABLE THE BIDS SUBMITTED IN RESPONSE THERETO WOULD HAVE BEEN SUBSTANTIALLY LOWER PER POUND THAN THOSE RECEIVED. OR, IF AN ADDITIONAL NEED DEVELOPED AFTER AWARD OF THE ORIGINAL CONTRACT THE ONLY AUTHORIZED PROCEDURE WOULD HAVE BEEN TO ADVERTISE SUCH ADDITIONAL NEED AND TO AWARD A CONTRACT THEREFOR TO THE LOWEST RESPONSIBLE BIDDER.

THIS OFFICE WILL NOT, IN THIS INSTANCE, WITHHOLD CREDIT FOR OTHERWISE PROPER PAYMENTS MADE AT THE STIPULATED PRICES, BUT THE MATTER IS BROUGHT TO YOUR ATTENTION IN ORDER THAT APPROPRIATE ADMINISTRATIVE ACTION MAY BE TAKEN TO CORRECT THE UNAUTHORIZED PROCEDURE.