A-75336, JUNE 1, 1936, 15 COMP. GEN. 1045

A-75336: Jun 1, 1936

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ADVERTISING - BIDS - EQUALIZING FREIGHT RATES WHERE PRICES ARE QUOTED F.O.B. PROVIDED THE RESULT OF SUCH EQUALIZATION CAN BE READILY AND ACCURATELY DETERMINED BEFORE AWARD IS MADE. AS FOLLOWS: REFERENCE IS MADE TO YOUR DECISION OF JULY 19. TO THE SECRETARY OF AGRICULTURE RELATIVE TO THE APPLICATION OF EQUALIZATION OF FREIGHT RATES WHERE PRICES ARE QUOTED F.O.B. IN WHICH YOU STATE: "WHILE NO FURTHER QUESTION WILL BE RAISED WITH RESPECT TO THIS PARTICULAR CONTRACT. THIS MATERIAL IS URGENTLY NEEDED FOR FENCING AREAS WHICH ADJOIN AGRICULTURAL STOCK RAISING COMMUNITIES FOR PROTECTION OF MIGRATORY WATERFOWL ON GOVERNMENT REFUGES. WHICH CONSTRUCTION WILL BE PERFORMED BY C.C.C. IN ACCORDANCE WITH ABOVE-QUOTED INSTRUCTIONS THE FOLLOWING CLAUSES WERE INSERTED IN THIS INVITATION UNDER HEADING .

A-75336, JUNE 1, 1936, 15 COMP. GEN. 1045

ADVERTISING - BIDS - EQUALIZING FREIGHT RATES WHERE PRICES ARE QUOTED F.O.B. BIDDERS' SHIPPING POINTS, BIDS PROPOSING TO EQUALIZE THE LOWEST NET TRANSPORTATION RATE AVAILABLE TO THE GOVERNMENT MAY NOW BE CONSIDERED EVEN THOUGH SUCH RATE INVOLVES NO LAND-GRANT DEDUCTION, PROVIDED THE RESULT OF SUCH EQUALIZATION CAN BE READILY AND ACCURATELY DETERMINED BEFORE AWARD IS MADE.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, JUNE 1, 1936:

THERE HAS BEEN RECEIVED YOUR LETTER OF MAY 15, 1936, AS FOLLOWS:

REFERENCE IS MADE TO YOUR DECISION OF JULY 19, 1935 (A-61651), TO THE SECRETARY OF AGRICULTURE RELATIVE TO THE APPLICATION OF EQUALIZATION OF FREIGHT RATES WHERE PRICES ARE QUOTED F.O.B. BIDDERS' SHIPPING POINTS, AND PARTICULARLY TO THE LAST PARAGRAPH, IN WHICH YOU STATE:

"WHILE NO FURTHER QUESTION WILL BE RAISED WITH RESPECT TO THIS PARTICULAR CONTRACT, PROPER ADMINISTRATIVE ACTION SHOULD BE TAKEN TO CORRECT THE SITUATION BY PROHIBITING, IF DEEMED DESIRABLE, BIDS OFFERING TO EQUALIZE FREIGHT RATES WITH OTHER SPECIFIED POINTS, BUT IN ALL CASES PERMITTING OFFERS TO EQUALIZE GENERALLY GOVERNMENT LAND-GRANT RATES WITH COMPETITORS.'

ON MARCH 23, 1936, THIS DEPARTMENT ISSUED INVITATION U.S.D.A. NO. 4528 FOR BIDS (COPY OF SPECIFICATIONS ENCLOSED) ON FENCING MATERIAL, INCLUDING STEEL LINE POSTS, STEEL GATE POSTS, STEEL CORNER POSTS, SPIRAL METAL FENCE STAYS, BARBED WIRE, AND WOVEN WIRE GATES. THIS MATERIAL IS URGENTLY NEEDED FOR FENCING AREAS WHICH ADJOIN AGRICULTURAL STOCK RAISING COMMUNITIES FOR PROTECTION OF MIGRATORY WATERFOWL ON GOVERNMENT REFUGES, WHICH CONSTRUCTION WILL BE PERFORMED BY C.C.C. LABOR ASSIGNED TO THIS DEPARTMENT FOR THIS SPECIFIC PURPOSE. IN ACCORDANCE WITH ABOVE-QUOTED INSTRUCTIONS THE FOLLOWING CLAUSES WERE INSERTED IN THIS INVITATION UNDER HEADING ,GENERAL CONDITIONS.'

"IF BIDDER DESIRES TO OFFER AN ADDITIONAL ALLOWANCE TO EQUALIZE GOVERNMENT LAND-GRANT FREIGHT RATES, THE FOLLOWING CLAUSE ONLY WILL BE CONSIDERED AND BIDDER MUST SIGNIFY IN THE SPACE PROVIDED BY "YES" OR "NO" WHETHER SUCH CLAUSE IS AGREEABLE.

"WE WILL MAKE AN ADDITIONAL ALLOWANCE TO EQUALIZE THE LOWEST, NOT APPLICABLE LAND-GRANT FREIGHT RATE FROM THE SHIPPING POINT OF ANY BIDDER.

YES NO

"ANY BID QUOTING A FREIGHT ALLOWANCE THAT IS SUBJECT TO A DIFFERENTIAL AT TIME OF SHIPMENT IS INDEFINITE AND THEREFORE WILL NOT BE CONSIDERED.

"UNNECESSARY "RIDERS" WHICH MERELY DUPLICATE CONDITIONS STATED IN THE SCHEDULES OR DUPLICATING DATA ENTERED ON STANDARD FORM 33 (REVISED) SERVE NO USEFUL PURPOSE, ARE CONFUSING, AND ARE NOT DESIRED. BIDDERS ARE CAUTIONED NOT TO ATTACH SUCH "RIDERS.'"

IT IS THE EXPERIENCE OF THIS DEPARTMENT THAT EQUALIZATION OF LAND GRANT RATES, RATHER THAN LAND-GRANT SAVINGS RESULTS IN A DECIDED MONETARY SAVING TO THE GOVERNMENT.

BIDS WERE OPENED ON THIS MATERIAL APRIL 17, 1936, AND IN RESPONSE TO THIS INVITATION, THE FOLLOWING OFFERS WERE RECEIVED:

THE MOMSEN-DUNNEGAN-RYAN COMPANY OF EL PASO, TEXAS, STRUCK OUT OUR STANDARD PARAGRAPH ON EQUALIZATION, AS QUOTED ABOVE, AND INSERTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE THE SAVINGS DUE TO THE USE OF SUCH LAND-GRANT RATES.'

BID RECEIVED FROM THE REPUBLIC STEEL CORPORATION, CHICAGO, STRUCK OUT OUR STANDARD PARAGRAPH AND INSERTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNTS NECESSARY TO EQUALIZE SUCH LOWER DELIVERED COSTS.'

BID RECEIVED FROM THE RICHARDSON LUMBER COMPANY OF MOUND CITY, MISSOURI, REPLIED "NO" TO THE ABOVE-MENTIONED STANDARD PARAGRAPH AND QUOTED ONLY AT DESTINATION.

THE CLAY EQUIPMENT CORP., CEDAR FALLS, IOWA, SUBMITTED BID AND REPLIED "NO" TO OUR STANDARD PARAGRAPH AND QUOTED ONLY AT DESTINATIONS.

SWEET'S STEEL COMPANY, WILLIAMSPORT, PENNSYLVANIA, DELETED ABOVE MENTIONED STANDARD PARAGRAPH AND OFFERED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE SUCH LOWER DELIVERED T.'

J. KORBER AND COMPANY OF ALBUQUERQUE, NEW MEXICO, SUBMITTED TWO BIDS, PRICES BEING IDENTICAL ON BOTH BIDS, BUT SHIPPING POINTS DIFFERING. ONE CASE THEY ANSWERED DEFINITELY "YES" TO OUR STANDARD PARAGRAPH, AND IN THE OTHER CASE THEY DELETED SAME AND INSERTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE THE SAVING DUE TO THE USE OF SUCH LAND-GRANT RATES.'

THE POLLAK STEEL COMPANY, OF CINCINNATI, OHIO, SUBMITTED A BID AND DELETED OUR STANDARD PARAGRAPH AND INSERTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE SUCH LOWER DELIVERED COST.'

THE INLAND STEEL COMPANY, OF CHICAGO, SUBMITTED A BID AND DELETED OUR STANDARD PARAGRAPH AND SUBSTITUTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED FREIGHT COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE SUCH LOWER DELIVERED FREIGHT COST.'

THE KEYSTONE STEEL AND WIRE COMPANY, OF PEORIA, ILLINOIS, SUBMITTED A BID AND DELETED OUR STANDARD PARAGRAPH AND SUBSTITUTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE SUCH LOWER DELIVERED T.'

THE MID-STATES STEEL AND WIRE COMPANY, OF CRAWFORDSVILLE, INDIANA, SUBMITTED A BID AND DELETED OUR STANDARD PARAGRAPH AND SUBSTITUTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE SUCH LOWER DELIVERED COST.'

THE AMERICAN STEEL AND WIRE COMPANY, OF WASHINGTON, D.C., SUBMITTED A BID AND DELETED OUR STANDARD PARAGRAPH AND INSERTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT SAVINGS FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT SAVINGS FROM OUR SHIPPING POINT, WE WILL ALLOW ANY DIFFERENCE BETWEEN THE LAND-GRANT SAVINGS INVOLVED NECESSARY TO EQUALIZE SUCH LOWER DELIVERED COST.'

THE BETHLEHEM STEEL COMPANY, BETHLEHEM, PENNSYLVANIA, SUBMITTED A BID AND DELETED OUR STANDARD PARAGRAPH AND INSERTED IN LIEU THEREOF THE FOLLOWING:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE SUCH LOWER DELIVERED T.'

BID WAS RECEIVED FROM THE MISSOURI ROLLING MILL OF ST. LOUIS, MISSOURI, AND OUR STANDARD PARAGRAPH WAS DELETED AND THE FOLLOWING WAS SUBSTITUTED IN LIEU THEREOF:

"WE WILL MAKE AN ADDITIONAL ALLOWANCE TO EQUALIZE THE GREATEST LAND GRANT DEDUCTION FROM COMMERCIAL FREIGHT RATES FROM THE SHIPPING POINT OF ANY BIDDER.'

BID WAS RECEIVED FROM THE CALUMET STEEL COMPANY, CHICAGO, ILL., AND OUR STANDARD PARAGRAPH WAS DELETED AND THE FOLLOWING INSERTED IN LIEU THEREOF:

"IF THE APPLICATION OF LAND-GRANT RATES FROM THE SHIPPING POINT OF ANY OTHER BIDDER RESULTS IN A LOWER DELIVERED COST TO THE GOVERNMENT THAN THE APPLICATION OF LAND-GRANT RATES FROM OUR SHIPPING MILL, WE WILL ALLOW ANY ADDITIONAL AMOUNT NECESSARY TO EQUALIZE SUCH LOWER DELIVERED T.'

IN VIEW OF THE ABOVE-QUOTED CONDITIONS AS CONTAINED IN THIS INVITATION, AND DUE TO THE FACT THAT BIDDERS AS LISTED ABOVE DELETED A PORTION OF THE SPECIFICATIONS AND SUBSTITUTED IN LIEU THEREOF CHANGED CONDITIONS, IT IS RESPECTFULLY REQUESTED THAT YOU ADVISE WHICH, IF ANY, OF THE ABOVE-LISTED BIDS ARE RESPONSIVE TO THIS INVITATION AND ARE FOR CONSIDERATION IN THIS CASE.

IN ADDITION TO THE ABOVE-MENTIONED BIDS, THE FOLLOWING BIDS WERE ALSO RECEIVED IN WHICH BIDDERS OFFERED COMMERCIAL FREIGHT ALLOWANCE TO PERMIT SHIPMENT ON GOVERNMENT BILL OF LADING AND OFFERED EQUALIZATION ON THE BASIS OF THE DEPARTMENT'S SPECIFICATIONS.

JONES AND LAUGHLIN STEEL CORPORATION, PITTSBURGH, PA.

ZORK HARDWARE, EL PASO, TEXAS.

COLORADO FUEL AND IRON COMPANY, DENVER, COLO.

ARIZONA HARDWARE SUPPLY COMPANY, PHOENIX, ARIZONA.

IN CONNECTION WITH EQUALIZATION OF TRANSPORTATION CHARGES, IT IS ALSO REQUESTED THAT YOU ADVISE THIS DEPARTMENT WHETHER THE LOWEST NET RATE AVAILABLE TO THE GOVERNMENT MAY BE EQUALIZED WHEN SUCH RATE INVOLVES NO LAND-GRANT DEDUCTION. THIS QUESTION IS ASKED BECAUSE FREQUENTLY BIDS ARE RECEIVED IN WHICH THE ACTUAL LOW NET RATE DOES NOT INVOLVE LAND-GRANT DEDUCTION, AND IF IT IS POSSIBLE TO EQUALIZE SUCH RATES, A SAVING TO THE GOVERNMENT WOULD RESULT.

IT HAS BEEN INFORMALLY REPRESENTED THAT ALL PRICES ON POSTS AND WIRE SUBMITTED IN THESE BIDS ARE APPROXIMATELY IDENTICAL AND ARE INDICATIVE OF AN ADVANCE AGREEMENT AMONG BIDDERS WHICH MAY BE FOR ADMINISTRATIVE CONSIDERATION OF WHETHER THERE SHOULD BE A REPORT OF THE FACTS TO THE ATTORNEY GENERAL AND TO THE FEDERAL TRADE COMMISSION.

ON THE STATEMENT OF THE FACTS SUBMITTED IT SEEMS THE BID OF J. KORBER AND CO. (AS TO ONE SHIPPING POINT) AND THE BIDS OF JONES AND LAUGHLIN STEEL CORPORATION, ZORK HARDWARE, COLORADO FUEL AND IRON CO., AND ARIZONA HARDWARE SUPPLY CO., THE FOUR COMPANIES LAST DESIGNATED IN YOUR LETTER; ALSO, THE BIDS OF THE RICHARDSON LUMBER CO. AND OF THE CLAY EQUIPMENT CORPORATION ARE THE ONLY BIDS RESPONSIVE TO THE SPECIFICATIONS, AND THERE APPEARS NO BASIS FOR OBJECTION IF CONSIDERATION IN MAKING THE AWARD BE LIMITED TO THE SAID RESPONSIVE BIDS.

IN CONNECTION WITH EQUALIZATION OF TRANSPORTATION CHARGES NO OBJECTION APPEARS AT THIS TIME IF THE DEPARTMENT SHOULD CONSIDER BIDS PROPOSING TO EQUALIZE THE LOWEST NET RATE AVAILABLE TO THE GOVERNMENT, EVEN WHEN SUCH RATE INVOLVES NO LAND-GRANT DEDUCTION, PROVIDED THE RESULT OF SUCH EQUALIZATION CAN BE READILY AND ACCURATELY DETERMINED BEFORE AWARD IS MADE.

IT IS SUGGESTED THAT WHEN THE CONTRACTS ARE FORWARDED TO THIS OFFICE IN SUCH CASES THERE BE ANNEXED A STATEMENT OF APPROXIMATE SAVINGS RESULTING FROM THE METHOD OF EQUALIZATION EMPLOYED.