A-81095, NOVEMBER 12, 1936, 16 COMP. GEN. 484

A-81095: Nov 12, 1936

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FOR A VETERANS' ADMINISTRATION FACILITY MAY NOT BE CANCELED BECAUSE THE PRICES THEREIN CHARGED ARE LESS THAN THOSE FIXED BY THE STATE MILK CONTROL BOARD. IN PERTINENT PART AS FOLLOWS: RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF OCTOBER 21. IS NO. WAS FORWARDED TO THE GENERAL ACCOUNTING OFFICE OCTOBER 14. THE INVITATION FOR BIDS ON WHICH THE CONTRACT WAS BASED INCLUDED THE SAME PROVISION AS WAS INCLUDED IN CONTRACT NO. WHICH WAS THE SUBJECT OF YOUR DECISION OF OCTOBER 7. THE VETERANS' ADMINISTRATION IS IN RECEIPT OF A LETTER HEREWITH. COPY OF WHICH IS ENCLOSED. IT IS REQUESTED THAT YOU ADVISE WHETHER THE CONTRACT OF H. THE VETERANS' ADMINISTRATION FACILITIES LOCATED IN STATES WHERE MILK CONTROL LAWS ARE IN EFFECT HAVE BEEN INSTRUCTED TO OMIT FROM FUTURE INVITATIONS FOR BIDS THE REQUIREMENT SHOWING COMPLIANCE WITH STATE PRICE FIXING LAWS.

A-81095, NOVEMBER 12, 1936, 16 COMP. GEN. 484

CONTRACTS - STATE PRICE-FIXING LAWS - CONTRACTOR'S COMPLIANCE A CONTRACT FOR THE PURCHASE OF MILK, ETC., FOR A VETERANS' ADMINISTRATION FACILITY MAY NOT BE CANCELED BECAUSE THE PRICES THEREIN CHARGED ARE LESS THAN THOSE FIXED BY THE STATE MILK CONTROL BOARD.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, NOVEMBER 12, 1936:

THERE HAS BEEN RECEIVED YOUR LETTER OF NOVEMBER 4, 1936, IN PERTINENT PART AS FOLLOWS:

RECEIPT IS ACKNOWLEDGED OF YOUR LETTER OF OCTOBER 21, 1936 (A 81095), QUOTING COMMUNICATION TO YOU FROM HERLIHY BROTHERS, INC., 65 WASHINGTON STREET, SOMERVILLE, MASSACHUSETTS, IN WHICH THIS CONCERN REQUESTS CANCELLATION OF CONTRACT WITH H. P. HOOD AND SONS, INC., FOR SUPPLYING MILK TO THE VETERANS' ADMINISTRATION FACILITY, BEDFORD, MASSACHUSETTS, DURING THE PERIOD OCTOBER 1 TO DECEMBER 31, 1936.

THE CONTRACT REFERRED TO BY HERLIHY BROTHER, INC., IS NO. VA-107H 1066, DATED SEPTEMBER 28, 1936, AND WAS FORWARDED TO THE GENERAL ACCOUNTING OFFICE OCTOBER 14, 1936. THE INVITATION FOR BIDS ON WHICH THE CONTRACT WAS BASED INCLUDED THE SAME PROVISION AS WAS INCLUDED IN CONTRACT NO. VA- 111H-1080 WITH ROHRER'S MED-O-FARMS DAIRY, LANCASTER, PENNSYLVANIA, FOR FURNISHING MILK TO THE VETERANS' ADMINISTRATION FACILITY, COATESVILLE, PENNSYLVANIA, WHICH WAS THE SUBJECT OF YOUR DECISION OF OCTOBER 7, 1936 (A -79169).

APROPOS OF THIS MATTER, THE VETERANS' ADMINISTRATION IS IN RECEIPT OF A LETTER HEREWITH, DATED OCTOBER 26, 1936, FROM THE ADMINISTRATOR MILK CONTROL BOARD, COMMONWEALTH OF MASSACHUSETTS, ADVISING THAT THE BID OF H. P. HOOD AND SONS, INC., VIOLATED CERTAIN PROVISIONS OF THE MASSACHUSETTS MILK CONTROL LAW, COPY OF WHICH IS ENCLOSED, TOGETHER WITH COPY OF REVISED SCHEDULE OF MINIMUM RESALE MILK AND CREAM PRICES PROMULGATED BY THE MILK CONTROL BOARD, AND IT IS REQUESTED THAT YOU ADVISE WHETHER THE CONTRACT OF H. P. HOOD AND SONS, INC., SHOULD BE TERMINATED AND WHETHER MILK, CREAM, AND BUTTERMILK REQUIRED DURING THE BALANCE OF THE CONTRACT TERM SHOULD BE PURCHASED IN THE OPEN MARKET OR OTHERWISE AND ANY EXCESS COSTS CHARGED TO H. P. HOOD AND SONS, INC.

IN ACCORDANCE WITH THE INSTRUCTIONS IN YOUR DECISION OF OCTOBER 7, 1936, THE VETERANS' ADMINISTRATION FACILITIES LOCATED IN STATES WHERE MILK CONTROL LAWS ARE IN EFFECT HAVE BEEN INSTRUCTED TO OMIT FROM FUTURE INVITATIONS FOR BIDS THE REQUIREMENT SHOWING COMPLIANCE WITH STATE PRICE FIXING LAWS.

PLEASE RETURN THE ENCLOSURES WITH YOUR REPLY.

IN ADDITION TO THE MATTERS STATED IN THE DECISION OF OCTOBER 7, 1936,A- 79168, 16 COMP. GEN. 348, TO WHICH YOU HAVE REFERRED, REFERENCE MAY BE HAD TO AN OPINION DATED OCTOBER 13, 1936, OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON, NORTHERN DIVISION, IN STIMSON MILL COMPANY V. UNITED STATES, WHERE THERE WAS INVOLVED THE MATTER OF CANCELLATION OF A NAVY CONTRACT BY REASON OF THE ALLEGED FAILURE OF THE CONTRACTOR TO COMPLY WITH THE LUMBER CODE ISSUED PURSUANT TO THE NATIONAL INDUSTRIAL RECOVERY ACT OF JUNE 16, 1933, 48 STAT. 195, ET SEQ. THE COURT THERE REFERRED TO A STATUTE SIMILAR IN ITS REQUIREMENTS TO SECTION 3709, REVISED STATUTES, AND STATED THAT:

IN MY OPINION, THAT STATUTE MAKES UNAUTHORIZED A STIPULATION BY A REPRESENTATIVE OF THE GOVERNMENT THAT THE GOVERNMENT IN SUCH A CONTRACT SHALL HAVE THE RIGHT TO CANCEL IT FOR FAILURE OF THE SUPPLIER, OR CONTRACTOR, TO PERFORM ITS STIPULATION NOT TO FURNISH THE GOVERNMENT GOODS CHEAPER THAN THE GOVERNMENT WOULD LIKE TO PAY FOR THEM AND I FIND NO OTHER AUTHORITY OR LAW WHICH GIVES A REPRESENTATIVE OF THE GOVERNMENT AUTHORITY IN THE FACE OF THAT STATUTE TO CANCEL A CONTRACT BECAUSE THE PRICE CHARGED WAS TOO LOW. FOR THOSE REASONS, THE DECISION OF THE COURT IN THIS CASE IS FOR THE PLAINTIFF, FOR THE DAMAGES SUSTAINED, AND THE COURT FINDS THAT THE PLAINTIFF MILL COMPANY SUSTAINED THE DAMAGES IN THE AMOUNT PRAYED FOR IN THE COMPLAINT AS AMENDED AT THE TRIAL.

ACCORDINGLY, YOU ARE ADVISED THAT THE CONTRACT WITH H. P. HOOD AND SONS, INC., SHOULD NOT BE CANCELED BECAUSE THE PRICES THEREIN CHARGED MAY HAVE BEEN LESS THAN THOSE FIXED BY THE MASSACHUSETTS MILK CONTROL BOARD.