A-73514, JUNE 30, 1936, 15 COMP. GEN. 1143

A-73514: Jun 30, 1936

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1936: THERE WAS RECEIVED YOUR LETTER OF APRIL 6. 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. THERE IS A DIFFERENCE BETWEEN FREIGHT RATES GENERALLY. 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.

A-73514, JUNE 30, 1936, 15 COMP. GEN. 1143

CONTRACTS - COAL PURCHASES - BITUMINOUS COAL CONSERVATION ACT, 1935 THE SUPREME COURT OF THE UNITED STATES HAVING HELD UNCONSTITUTIONAL CERTAIN PROVISIONS OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935 (49 STAT. 991), CONTRACTING FOR BITUMINOUS COAL FOR THE NAVY SHOULD BE WITHOUT REGARD TO SECTIONS 4, 12, OR 14 OF SAID ACT.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, JUNE 30, 1936:

THERE WAS RECEIVED YOUR LETTER OF APRIL 6, 1936, TRANSMITTING A LETTER TO YOU OF MARCH 19, 1936, FROM THE CHIEF, BUREAU OF SUPPLIES AND ACCOUNTS, AS FOLLOWS:

1. IN DECISION OF THE COMPTROLLER GENERAL A-61651, DATED 19 JULY 1935, THE FOLLOWING APPEARS:

"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.'

2. SECTION 4 (G) OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935 (49 STAT. 1007) READS AS FOLLOWS:

"THE PRICE PROVISIONS OF THIS ACT SHALL NOT BE EVADED OR VIOLATED BY OR THROUGH THE USE OF DOCKS OR OTHER STORAGE FACILITIES OR TRANSPORTATION FACILITIES, OR BY OR THROUGH THE USE OF SUBSIDIARIES, AFFILIATED SALES, OR TRANSPORTATION COMPANIES, OR OTHER INTERMEDIARIES OR INSTRUMENTALITIES, OR BY OR THROUGH THE ABSORPTION, DIRECTLY OR INDIRECTLY, OF ANY TRANSPORTATION OR INCIDENTAL CHARGE OF WHATSOEVER KIND OR CHARACTER, OR ANY PART THEREOF. THE COMMISSION IS HEREBY AUTHORIZED, AFTER INVESTIGATION AND HEARING, AND UPON NOTICE TO THE INTERESTED PARTIES, TO MAKE AND ISSUE RULES AND REGULATIONS TO MAKE THIS SUBSECTION EFFECTIVE.'

3. BASED UPON THE FOREGOING, IT IS REQUESTED THAT DECISION BE OBTAINED FROM THE COMPTROLLER GENERAL AS TO WHETHER BIDS ON BITUMINOUS COAL FOR THE NAVY, IN WHICH IT IS AGREED TO EQUALIZE LAND-GRANT FREIGHT RATES, MAY BE CONSIDERED AS BEING ON A PAR WITH BIDS UNDER WHICH THE LOWEST LAND-GRANT FREIGHT RATES APPLY, PROVIDED MINE PRICES AND COAL QUALITY ARE THE SAME.

SUBSEQUENT TO THE LETTERS OF MARCH 19 AND APRIL 6, 1936, TO WIT, ON MAY 18, 1936, THE SUPREME COURT OF THE UNITED STATES HELD IN THE CASE OF CARTER V. CARTER COAL CO. ET AL., THAT SO MUCH OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935 (49 STAT. 991, 1011), AS ATTEMPTED TO PROVIDE CODES, ETC., FOR THE PURPOSE OF REGULATING LABOR AND PRICES AT THE MINES TRANSCENDED THE AUTHORITY VESTED IN THE CONGRESS UNDER THE CONSTITUTION, WITH THE RESULT THAT CONTRACTING BY THE UNITED STATES FOR THE NEEDED COAL SHOULD BE WITHOUT REGARD TO SECTIONS 4, 12, OR 14 OF THE BITUMINOUS COAL CONSERVATION ACT OF 1935. (SEE IN THIS CONNECTION TREASURY DEPARTMENT, PROCUREMENT DIVISION, CIRCULAR LETTERS NO. 164, DATED MAY 19, 1936, AND NO. 172, DATED JUNE 22, 1936.)