A-75428, JUNE 16, 1936, 15 COMP. GEN. 1103

A-75428: Jun 16, 1936

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ARE WITHOUT LEGAL JUSTIFICATION. APPROPRIATED MONEYS ARE NOT AVAILABLE FOR PAYMENT UNDER CONTRACTS AWARDED ON SUCH BASIS. A COPY OF THIS ADVERTISEMENT IS ENCLOSED. YOUR DECISION IS RESPECTFULLY REQUESTED AS TO WHETHER APPROPRIATED MONEYS WILL BE AVAILABLE FOR PAYMENT ON THE RESULTANT CONTRACT IF AN AWARD IS MADE TO THE REO MOTOR CAR COMPANY AS LOWEST BIDDER UNDER THIS ADVERTISEMENT. THE QUESTION TO WHICH YOUR ATTENTION IS DIRECTED IS WHETHER THE SPECIFICATIONS AND CONDITIONS OF THIS ADVERTISEMENT ARE IN ACCORDANCE WITH THE PRINCIPLES ESTABLISHED BY YOUR OFFICE FOR PROPER ADVERTISING IN THE PURCHASE OF MOTOR VEHICLES. RECENT DECISIONS HAVE EMPHASIZED YOUR OBJECTION TO SPECIFICATIONS WHEREIN MECHANICAL DETAILS ARE MADE CONTROLLING IN LIMITING COMPETITION TO THE CLASS OF VEHICLE REQUIRED.

A-75428, JUNE 16, 1936, 15 COMP. GEN. 1103

CONTRACTS - SPECIFICATIONS - AUTOMOBILES - MINIMUM PRICE PAYMENT PROVISION THE ESTABLISHING OF AUTOMOBILE LIST PRICE GROUPS AS A MEANS OF DETERMINING THOSE CARS MEETING PARTICULAR SERVICE REQUIREMENTS, AND THE STATING OF AN APPROXIMATE MINIMUM PRICE IN ADVERTISED SPECIFICATIONS TO BE PAID FOR AN AUTOMOBILE, ARE WITHOUT LEGAL JUSTIFICATION, AND APPROPRIATED MONEYS ARE NOT AVAILABLE FOR PAYMENT UNDER CONTRACTS AWARDED ON SUCH BASIS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, JUNE 16, 1936:

THERE HAS BEEN CONSIDERED YOUR LETTER OF MAY 16, 1936, WITH ENCLOSURES, AS FOLLOWS:

ON APRIL 21 THIS DEPARTMENT ISSUED U.S.D.I. 1341 FOR ONE 4-DOOR SEDAN FOR THE USE OF THE PUBLIC WORKS ADMINISTRATION PROJECT ENGINEER AT PIOCHE, NEV. A COPY OF THIS ADVERTISEMENT IS ENCLOSED, TOGETHER WITH AN ABSTRACT OF THE BIDS RECEIVED.

YOUR DECISION IS RESPECTFULLY REQUESTED AS TO WHETHER APPROPRIATED MONEYS WILL BE AVAILABLE FOR PAYMENT ON THE RESULTANT CONTRACT IF AN AWARD IS MADE TO THE REO MOTOR CAR COMPANY AS LOWEST BIDDER UNDER THIS ADVERTISEMENT.

THE QUESTION TO WHICH YOUR ATTENTION IS DIRECTED IS WHETHER THE SPECIFICATIONS AND CONDITIONS OF THIS ADVERTISEMENT ARE IN ACCORDANCE WITH THE PRINCIPLES ESTABLISHED BY YOUR OFFICE FOR PROPER ADVERTISING IN THE PURCHASE OF MOTOR VEHICLES. RECENT DECISIONS HAVE EMPHASIZED YOUR OBJECTION TO SPECIFICATIONS WHEREIN MECHANICAL DETAILS ARE MADE CONTROLLING IN LIMITING COMPETITION TO THE CLASS OF VEHICLE REQUIRED. YOUR DECISION OF FEBRUARY 18, 1936 (A-70183), CAUSED A READVERTISEMENT FOR THE AUTOMOBILE INVOLVED IN THAT CASE, WITH SPECIFICATIONS CONTAINING NO SPECIFIC LIMITATIONS AND DEPENDING ENTIRELY ON A STATEMENT OF SERVICE REQUIREMENTS TO DESIGNATE THE ACCEPTABLE CLASS OF VEHICLE. THE UNSATISFACTORY RESULT OF DEPENDENCE ON SERVICE REQUIREMENTS WAS REPORTED TO YOU BY THIS DEPARTMENT IN A LETTER DATED APRIL 20, CONCERNING U.S.D.I.1291, IN WHICH THE DIFFICULT SITUATION WAS EXPLAINED IN DETAIL AND TO WHICH YOUR REPLY IS ANTICIPATED WITH INTEREST.

IN THE CASE HERE PRESENTED, THE GENERALLY ACCEPTED PRINCIPLE OF CLASSIFYING COMMODITIES AS TO QUALITY BY THEIR MARKET PRICES HAS BEEN APPLIED TO AUTOMOBILES IN ORDER TO ESTABLISH A BASIS FROM WHICH TO OPERATE IN ADVERTISING AND PURCHASING VEHICLES OF DIFFERENT QUALITY TO MEET DIFFERENT SERVICE NEEDS. IT SEEMS EVIDENT THAT SOME SUCH BASIS MUST BE FOUND IF THE PRESENT DIFFICULTIES IN ADVERTISING FOR MOTOR VEHICLES ARE TO BE AVOIDED. YOU ARE REQUESTED TO GIVE CONSIDERATION TO THIS CLASSIFICATION PRINCIPLE AS ANOTHER STEP IN THE CONSTANT EFFORT OF THIS DEPARTMENT TO SOLVE THE PROBLEM OF AUTOMOBILE SPECIFICATIONS IN A WAY ACCEPTABLE TO ALL CONCERNED.

FOR YOUR FURTHER INFORMATION IN THIS CASE, AND REFERRING SPECIFICALLY TO THE LIST-PRICE MINIMUM OF $845 FOR 4-DOOR SEDANS AS SET FORTH IN U.S.D.I. 1341, THE DEPARTMENT HAS USED PUBLISHED LIST PRICES TO ESTABLISH FIVE PRICE GROUPS, AS FOLLOWS:

GROUP I, $575 TO $590.

GROUP II, $625 TO $675.

GROUP III, $720 TO $815.

GROUP IV, $845 TO $895.

GROUP V, $935 AND UP. AS TO THE STATUTORY LIMITATION OF $750, THE USUAL DISCOUNT ALLOWED THE GOVERNMENT FROM LIST PRICES IS SUFFICIENT IN MOST CASES TO BRING THE PRICES IN GROUPS III AND IV BELOW $750; FOR EXAMPLE, THE BID OF THE REO MOTOR CAR COMPANY UNDER U.S.D.I. 1341 OFFERED A REO FLYING CLOUD MODEL 6 G, LISTED AT $845 FOR $768.16 LESS $25 TIME DISCOUNT, MAKING THE NET PRICE $743.16 F.O.B. LANSING, MICH.; AND THE GENERAL MOTORS CORPORATION OFFERED A BUICK MODEL 41, LISTED AT $885 FOR $749.88 F.O.B. FLINT, MICH. OTHER CARS IN THESE GROUPS ON WHICH BIDS WERE INVITED WERE THE HUDSON DE LUXE 8, THE DE SOTO AIR STREAM, THE CHRYSLER 6, AND THE NASH AMBASSADOR 6.

THE NEED OF ADEQUATE AND DEPENDABLE TRANSPORTATION FOR THE PROJECT ENGINEER AT PIOCHE IS SUCH AS TO JUSTIFY, IN MY OPINION, THE PURCHASE OF A CAR IN THE DESIGNATED PRICE CLASS.

YOUR PROMPT CONSIDERATION OF THIS PROBLEM AND EARLY DECISION THEREOF ARE RESPECTFULLY REQUESTED.

THE CONGRESS HAS PROVIDED BY STATUTE THAT NO APPROPRIATION AVAILABLE FOR THE EXECUTIVE DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS OF THE GOVERNMENT SHALL BE EXPENDED TO PURCHASE ANY MOTOR PROPELLED,PASSENGER-CARRYING VEHICLE (WITH CERTAIN EXCEPTIONS NAMED IN THE STATUTE), AT A COST IN EXCESS OF $750, INCLUDING THE VALUE OF ANY VEHICLE WHICH MAY BE EXCHANGED. SEE ACT OF MAY 14, 1935, 49 STAT. AT PAGE 243, AND EARLIER STATUTES. IT WOULD APPEAR TO BE NOT OPEN TO ARGUMENT THAT IT WAS THE PURPOSE OF THE CONGRESS TO CONFINE EXPENDITURES FOR PASSENGER-CARRYING VEHICLES FOR THE USE OF GOVERNMENT EMPLOYEES AND REPRESENTATIVES TO THE LOWER PRICED CLASS OF AUTOMOBILES. AS WAS POINTED OUT IN MY DECISION TO YOU OF MAY 9, 1936, A-72378, THE STATUTORY LIMITATION FIXES THE MAXIMUM PRICE WHICH MAY BE PAID UNDER ANY CIRCUMSTANCES, AND AFFORDS NO AUTHORITY TO PAY $750 FOR AN AUTOMOBILE, IF IN FACT A CHEAPER VEHICLE WILL ADEQUATELY PERFORM THE WORK TO BE DONE.

THE REQUIREMENT IN THE SPECIFICATIONS IN THIS INSTANCE THAT "THIS DEPARTMENT HAS DETERMINED THE CLASS OF CARS THAT WILL BE ACCEPTABLE AS MEETING THE SERVICE REQUIREMENTS, AND THAT THIS CLASS IS DESIGNATED BY THE ADVERTISED LIST PRICE GROUP $845 AND UP FOR FOUR-DOOR SEDANS" APPARENTLY EXCLUDED FROM COMPETITION APPROXIMATELY 15 TYPES OF SEDAN AUTOMOBILES RANGING IN LIST PRICE FROM $500 TO $840, SOME OF THEM SUBSTANTIALLY ABOVE THE STATUTORY PRICE LIMIT OF $750; REQUIRED ANY BIDDER TO OFFER AN AUTOMOBILE AT LEAST $95 UNDER THE PRICE DEMANDED OF THE PUBLIC; AND NECESSARILY RESULTED IN MAINTAINING BID PRICES APPROXIMATELY AT THE VERY MAXIMUM PRICE FIXED BY THE STATUTE. OF THE SEVEN BIDDERS SOLICITED ONLY THREE RESPONDED. ONE OF THE THREE BIDS WAS $200 ABOVE THE STATUTORY PRICE LIMIT AND, OF COURSE, NOT FOR CONSIDERATION; ANOTHER ALSO WAS ABOVE THE LIMIT, THOUGH BROUGHT WITHIN IT BY DISCOUNT ALLOWANCE; AND THE THIRD WAS JUST 12 CENTS LESS THAN THE MAXIMUM PERMITTED BY THE STATUTE. PRESUMABLY OTHER MANUFACTURERS INVITED TO BID DID NOT DESIRE TO MAKE THE SACRIFICE IN PRICE REQUIRED BY THE SPECIFICATIONS.

THE DECISIONS OF THIS OFFICE HAVE BEEN CONSISTENTLY TO THE EFFECT THAT IN THE PURCHASE OF AUTOMOBILES FOR THE USE OF THE UNITED STATES SPECIFICATIONS SHOULD STATE THE ACTUAL NEEDS IN THE SERVICE TO BE PERFORMED, WITHOUT RESTRICTIVE REQUIREMENTS WHICH ARE NOT JUSTIFIED BY THE FACTS BUT WHICH SERVE TO ELIMINATE FROM COMPETITION AUTOMOBILES OTHERWISE COMPETITIVE WITHIN THE CLASS OF CARS AUTHORIZED TO BE PURCHASED. IT HAS BEEN HELD ALSO THAT WHEN THERE IS NEED OF A VEHICLE OF STURDIER CONSTRUCTION THAN THOSE IN THE RECOGNIZED LIGHTWEIGHT CLASS THE SPECIFICATIONS SHOULD BE SO DRAWN AS TO SHOW THE USE TO WHICH THE CAR IS TO BE PUT AND TO INDICATE CLEARLY THE NEED FOR AN AUTOMOBILE OF GREATER WEIGHT OR STURDINESS THAN THE LIGHT/WEIGHT AUTOMOBILES (13 COMP. GEN. 226). WHILE SERVICE REQUIREMENTS OUTLINED IN THE PRESENT SPECIFICATIONS INDICATE THE NEED OF A VEHICLE OF STURDINESS AND SUSTAINED PERFORMANCE ABILITY AND MIGHT JUSTIFY EXCLUSION OF AUTOMOBILES IN THE RECOGNIZED LIGHTWEIGHT CLASS, THERE APPEARS NOTHING TO SHOW THE NECESSITY FOR AN AUTOMOBILE HAVING A LIST PRICE OF $845, AND NO SHOWING THAT ANY ONE OF A DOZEN OR MORE MAKES WITH A SUBSTANTIALLY LOWER LIST PRICE WOULD NOT BE ADEQUATE TO PERFORM THE WORK TO BE DONE. A STATEMENT IN THE SPECIFICATIONS AS TO THE APPROXIMATE MINIMUM PRICE WHICH THE DEPARTMENT WILL PAY FOR AN AUTOMOBILE IS NOT A STATEMENT OF SERVICE REQUIREMENTS AND IS WITHOUT LEGAL JUSTIFICATION.

IT MAY BE CONCEDED THAT AUTOMOBILES OF A HIGHER PRICE ARE MORE DESIRABLE THAN THOSE WITHIN THE $750 LIMIT FROM A STANDPOINT OF COMFORT AND APPEARANCE, AND, IN FACT, SUPERIOR IN MECHANICAL CONSTRUCTION AND PERFORMANCE; BUT SINCE THE CONGRESS HAS SEEN FIT TO SET THE MAXIMUM PRICE LIMIT AT $750, THE PROVISIONS OF SECTION 3709, REVISED STATUTES, REQUIRE THAT THERE BE OPPORTUNITY FOR FREE AND OPEN COMPETITION WITHIN THAT PRICE, AND ANY UNDERTAKING TO EXCLUDE COMPETITION BY FIXING MINIMUM LIST PRICE IN ORDER TO CONTROL BIDDING IS UNAUTHORIZED. SUCH AN EFFORT OPERATES AS EVASION, RATHER THAN OBSERVANCE, OF THE REQUIREMENTS OF SECTION 3709, REVISED STATUTES.

YOU ARE ADVISED, THEREFORE, THAT APPROPRIATED MONEYS WILL NOT BE AVAILABLE FOR PAYMENTS UNDER ANY CONTRACT AWARDED PURSUANT TO THE RESTRICTIVE SPECIFICATIONS IN THIS INSTANCE.