A-76552, JUNE 26, 1936, 15 COMP. GEN. 1136

A-76552: Jun 26, 1936

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - RENTAL-PURCHASE - ACCEPTANCE OF OTHER THAN LOWEST BID - DISTRICT OF COLUMBIA ACCEPTANCE BY THE DISTRICT OF COLUMBIA OF OTHER THAN THE LOW BID IN CONNECTION WITH THE RENTAL-PURCHASE OF A CALCULATING MACHINE IS UNAUTHORIZED. NOTWITHSTANDING THE TRIAL PERIOD ADMINISTRATIVELY EXPECTED TO BE REQUIRED BEFORE PURCHASE DETERMINATION COULD BE MADE IS OF SUCH DURATION AS TO CAUSE THE INITIALLY HIGHER BID TO BECOME THE LOWEST BID BECAUSE OF THE VARYING RENTAL PAYMENT APPLICATION TO PURCHASE PRICE PROVISIONS OF THE BIDS. THERE WAS RECEIVED A LETTER OF MAY 15 FROM THE PURCHASING OFFICER. BIDS WERE OBTAINED FROM THE UNDERWOOD ELLIOTT FISHER. THIS MACHINE WOULD NOT SERVE OUR PURPOSE BECAUSE IT IS A TYPE REQUIRING A TRAINED OPERATOR TO USE IT ADVANTAGEOUSLY.

A-76552, JUNE 26, 1936, 15 COMP. GEN. 1136

CONTRACTS - RENTAL-PURCHASE - ACCEPTANCE OF OTHER THAN LOWEST BID - DISTRICT OF COLUMBIA ACCEPTANCE BY THE DISTRICT OF COLUMBIA OF OTHER THAN THE LOW BID IN CONNECTION WITH THE RENTAL-PURCHASE OF A CALCULATING MACHINE IS UNAUTHORIZED, NOTWITHSTANDING THE TRIAL PERIOD ADMINISTRATIVELY EXPECTED TO BE REQUIRED BEFORE PURCHASE DETERMINATION COULD BE MADE IS OF SUCH DURATION AS TO CAUSE THE INITIALLY HIGHER BID TO BECOME THE LOWEST BID BECAUSE OF THE VARYING RENTAL PAYMENT APPLICATION TO PURCHASE PRICE PROVISIONS OF THE BIDS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, BOARD OF COMMISSIONERS, DISTRICT OF COLUMBIA, JUNE 26, 1936:

IN RESPONSE TO LETTER OF THIS OFFICE DATED APRIL 27, 1936, REQUESTING CERTAIN INFORMATION RELATIVE TO CONTRACT NUMBERED DCI-5437, ENTERED INTO SEPTEMBER 23, 1935, WITH THE MARCHANT CALCULATING MACHINE CO. FOR THE RENTAL-PURCHASE OF A CALCULATING, COMPUTING, NONLISTING MACHINE, THERE WAS RECEIVED A LETTER OF MAY 15 FROM THE PURCHASING OFFICER, DISTRICT OF COLUMBIA, AS FOLLOWS:

THE SUBJECT OF YOUR LETTER HAS BEEN TAKEN UP WITH THE PUBLIC UTILITIES COMMISSION, WHICH HAS ADVISED THIS OFFICE AS FOLLOWS:

"OUR VALUATION BUREAU EARLY IN SEPTEMBER ADVISED THAT THEY REQUIRED AN ELECTRICALLY OPERATED MACHINE FOR MAKING CALCULATIONS AND COMPUTATIONS ON APPRAISAL WORK. BIDS WERE OBTAINED FROM THE UNDERWOOD ELLIOTT FISHER, BURROUGHS, MONROE, AND MARCHANT COMPANIES. THE UNDERWOOD ELLIOTT FISHER COMPANY SUBMITTED A BID COVERING A LISTING TYPE ADDING MACHINE NOT STRICTLY COMPLYING WITH THE SPECIFICATIONS AND WOULD NOT DO THE WORK REQUIRED.

"THE BURROUGHS ADDING MACHINE COMPANY SUBMITTED A RENTAL BID OF $22.50 PER MONTH AND PURCHASE BID OF $270.00. THIS MACHINE WOULD NOT SERVE OUR PURPOSE BECAUSE IT IS A TYPE REQUIRING A TRAINED OPERATOR TO USE IT ADVANTAGEOUSLY. IT IS A VERY FAST ADDING MACHINE, BUT PAST EXPERIENCE HAS DEMONSTRATED TO OUR VALUATION FORCE THAT WITHOUT SUCH AN EFFICIENT OPERATOR IT IS SLOW AND AWKWARD IN ALL OTHER OPERATIONS. OUR VALUATION WORK REQUIRES A ROTARY TYPE CALCULATOR.

"THE MECHANICAL DIFFERENCE BETWEEN THE BURROUGHS AND MARCHANT MACHINES INDICATES THAT THE MARCHANT IS APPROXIMATELY FIVE TIMES FASTER FOR OUR TYPE OF WORK. THE BURROUGHS DOES NOT HAVE A LARGE ENOUGH CARRY-OVER CAPACITY, BEING LIMITED TO 10 DIALS, WHEREAS THE MARCHANT HAS 18. OUR OPERATORS ALSO ADVISE THAT THE MARCHANT IS MUCH EASIER TO OPERATE BECAUSE THREE FACTORS ARE SHOWN AT THE SAME TIME. AS A FURTHER EXAMPLE OF THE MARCHANT'S MECHANICAL SUPERIORITY FOR OUR TYPE OF VALUATION WORK, IT CAN CARRY TWO MULTIPLICATION ANSWERS AT THE SAME TIME, ONE ON THE RIGHT AND THE OTHER ON THE LEFT HAND SIDE, AND THEN SUBTRACT ONE FROM THE OTHER. THIS CAN BE DONE WITHOUT CLEARING THE MACHINE AT ANY TIME. IN THE END IT ALSO SHOWS BOTH MULTIPLIERS, BOTH MULTIPLICANDS, AND BOTH ANSWERS. THE BURROUGHS TOTAL AFTER EACH OPERATION WOULD HAVE TO BE CLEARED, AND THIS TAKES FIVE TIMES LONGER.

"EITHER THE MARCHANT OR MONROE MACHINE WOULD HAVE FULLY COMPLIED WITH THE SPECIFICATIONS AND SERVED OUR PURPOSE. THE RENTAL PRICE ON THE MONROE MACHINE WOULD HAVE BEEN $17.50 PER MONTH AND THE PURCHASE PRICE MONROE MACHINE WOULD HAVE BEEN $17.50 PER MONTH AND THE PURCHASE PRICE $386.75. HOWEVER, ONLY THREE MONTHS' RENTAL COULD BE APPLIED TOWARD THE PURCHASE PRICE. IN EVENT THAT AT THE EXPIRATION OF THE ESTIMATED SIX MONTHS' PERIOD THE PUBLIC UTILITIES COMMISSION HAD DECIDED TO TAKE ADVANTAGE OF THE OPTION TOWARD THE PURCHASE OF THIS MACHINE, ONLY THREE MONTHS' RENTAL, OR $52.50 OF THE $105 RENTAL CHARGED, WHICH WOULD HAVE ACCUMULATED TO THAT TIME, COULD HAVE BEEN APPLIED TO THE PURCHASE, AND THE TOTAL COST IF PURCHASED AT THAT TIME WOULD HAVE BEEN---

TABLE

PURCHASE PRICE ------------------------------------------------- $386.75

RENTAL CHARGED FOR SIX MONTHS AT $17.50 PER MONTH ----- $105.00

PORTION OF RENTAL CHARGE CREDITABLE TO PURCHASE PRICE,

THREE MONTHS AT $17.50 PER MONTH -------------------- 52.50

PORTION OF RENTAL CHARGE NOT CREDITABLE TO PURCHASE PRICE ------ 52.50

ACTUAL COST TO THE PUBLIC UTILITIES COMMISSION FOR THE

MONROE MACHINE ---------------------------------------------- 439.25

"THE PURCHASE PRICE ON THE MARCHANT MACHINE WAS $425.00 AND THE RENTAL PRICE $25.00 PER MONTH. AT THE EXPIRATION OF THE SIX MONTHS' ESTIMATED PERIOD $150.00 RENTAL WOULD HAVE ACCUMULATED AND ONLY $275.00 WOULD HAVE BEEN STILL DUE FOR THE COMMISSION TO COMPLETE THE PURCHASE OF THE MACHINE.

"THE ESSENCE OF THE COMPARISON IS THAT ON A SIX MONTHS' RENTAL BASIS AND EXERCISE OF THE OPTION TO MAKE PURCHASE, THE MONROE MACHINE WOULD HAVE COST $439.25, WHEREAS THE MARCHANT MACHINE WOULD HAVE COST ONLY $425.00. THE MARCHANT BID WAS ACCEPTED IN THE FIRST INSTANCE BECAUSE IT WAS THE WELL-CONSIDERED JUDGMENT OF THE COMMISSION THAT DECISION AS TO PURCHASE COULD NOT BE MADE WITHIN THREE MONTHS, SINCE THE LENGTH OF THE JOB AND PERIOD OF USE OF THE MACHINE WERE DEPENDENT UPON FACTORS WHICH WOULD BECOME KNOWN ONLY AS THE WORK DEVELOPED.'

TRUSTING THAT THE ABOVE ANSWERS YOUR QUESTION, I AM---

UNDER THE TERMS OF SECTION 3709, REVISED STATUTES, AND SECTION 9 OF THE ACTS OF JUNE 26, 1912 (37 STAT. 184), AND MARCH 2, 1911 (36 STAT. 975), CONTRACTS WITH THE DISTRICT OF COLUMBIA ARE REQUIRED TO BE LET TO THE LOWEST RESPONSIBLE BIDDER PROPOSING TO COMPLY WITH THE TERMS OF THE SPECIFICATIONS PERMITTING FULL AND FREE COMPETITION. IT IS ADMITTED HERE THAT THE MONROE CALCULATING MACHINE CO. OFFERED TO RENT A MACHINE MEETING ALL OF THE TERMS OF THE SPECIFICATIONS, IT BEING STATED THAT "EITHER THE MARCHANT OR MONROE MACHINE WOULD HAVE FULLY COMPLIED WITH THE SPECIFICATIONS AND SERVED OUR PURPOSE.' THE ARGUMENT FOR THE ACCEPTANCE OF THE HIGHER RENTAL BID OF THE MARCHANT CO. IS BASED ON THE STATEMENT THAT IN EVENT THE MACHINE WAS USED 6 MONTHS AND IT WAS CONCLUDED TO PURCHASE IT, THE DISTRICT OF COLUMBIA COULD AT THAT TIME ACQUIRE THE MARCHANT MACHINE AT A LESSOR COST THAN THE MONROE MACHINE FOR THE REASON THAT, UNDER THE MARCHANT BID A LARGER AMOUNT OF THE HIGHER RENTAL COULD BE CREDITED TO THE PURCHASE PRICE.

THIS IS NO SUFFICIENT LEGAL BASIS FOR REJECTION OF THE LOW-RENTAL BID MEETING THE TERMS OF THE SPECIFICATIONS. SUCH AN ARGUMENT IS BASED UPON A CONTINGENCY WHICH MIGHT OR MIGHT NOT ARISE--- THAT IS, CONCLUSION TO PURCHASE THE CALCULATING MACHINE AFTER 6 MONTHS' RENTAL. THERE APPEARS NO BASIS FOR THE ADMINISTRATIVE ASSUMPTION THAT CONCLUSION TO PURCHASE THE MACHINE WOULD BE REACHED AFTER A RENTAL PERIOD OF 6 MONTHS BUT NOT PRIOR THERETO--- IT BEING NOTED IN THIS CONNECTION THAT NOT ONLY WAS THE RENTAL COST (WITHOUT PURCHASE) OF THE MONROE MACHINE LOWER THAN THAT OF THE MARCHANT, BUT THE TOTAL COST (RENTAL AND PURCHASE) OF THE MONROE WOULD HAVE BEEN LOWER THAN THAT OF THE MARCHANT IF THE PURCHASE HAD BEEN MADE AFTER 1, 2, 3, 4, OR 5 MONTHS' RENTAL. THE ONLY QUESTION BEFORE THE PURCHASING OFFICER AT THE TIME THE CONTRACT WAS ENTERED INTO WAS THAT THERE WAS NEEDED FOR A PERIOD OF APPROXIMATELY 6 MONTHS THE USE OF A CALCULATING MACHINE AND THE CONTRACT SHOULD HAVE BEEN AWARDED ON SUCH BASIS TO THE LOWEST RESPONSIBLE BIDDER PROPOSING TO RENT A MACHINE MEETING THE TERMS OF THE SPECIFICATIONS.

HOWEVER, IT NOW APPEARS THE OPTION TO PURCHASE THE MARCHANT MACHINE WAS EXERCISED AFTER IT HAD BEEN IN USE ON A RENTAL BASIS FOR A PERIOD OF AT LEAST 6 MONTHS--- IT APPEARING THE PURCHASE WAS MADE IN APRIL 1936. ACCORDINGLY, THE RENTAL PAYMENTS, IF OTHERWISE CORRECT, AND ASSUMING THAT THE AGGREGATE AMOUNT THEREOF HAS BEEN OR WILL BE APPLIED AS PART OF THE PURCHASE PRICE OF $425, WILL NOT BE FURTHER QUESTIONED. HOWEVER, SIMILAR CONTRACTS SHOULD NOT BE AWARDED HEREAFTER UPON THE SAME BASIS AS THAT IN QUESTION HERE. SEE A-71413, MARCH 4, 1936.

THE CONTRACT IN QUESTION HERE WAS ATTACHED TO VOUCHER NO. 114529, OCTOBER 1935, ACCOUNTS OF J. R. LUSBY, DISBURSING OFFICER, DISTRICT OF COLUMBIA. SINCE THE CONTRACT WAS EXECUTORY IN CHARACTER IT SHOULD NOT HAVE BEEN ATTACHED TO THE VOUCHER ON WHICH THE FIRST PAYMENT WAS MADE UNDER THE CONTRACT BUT SHOULD HAVE BEEN FORWARDED DIRECT TO THIS OFFICE IMMEDIATELY UPON THE EXECUTION THEREOF. SEE PARAGRAPHS 20 AND 21, GENERAL REGULATIONS NO. 51, 5 COMP. GEN. 1059, 1062.