A-81763, DECEMBER 15, 1936, 16 COMP. GEN. 583

A-81763: Dec 15, 1936

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STIPULATIONS IN THE SOLICITATION OF BIDS FOR GOVERNMENT NEEDS WHERE THE BIDDERS ARE DEALERS AND NOT MANUFACTURERS. IS TO REQUEST PRICES WITHOUT EXCLUSION OF THE EXCISE TAX. ON THE BASIS THAT NO TAX EXEMPTION CERTIFICATES WILL BE GIVEN DEALER CONTRACTORS. WHERE PURCHASES ARE SUCH THAT BIDS MAY BE EXPECTED FROM BOTH MANUFACTURERS AND DEALERS. PROVIDED THE PRICES BID ARE IN FACT TAX EXCLUSIVE. ARE FOR INCLUSION IN ANY CONTRACT MADE AND ENTERED INTO BY ANY EXECUTIVE DEPARTMENT. IN CONNECTION WITH ANY CONTRACT TO WHICH SAID PROVISIONS ARE APPLICABLE. WILL BE SUBJECT TO REJECTION. DEALER WILL BE DEEMED AGENT ACTING FOR UNDISCLOSED PRINCIPAL" AND THE "MANUFACTURER IS PARTY TO CONTRACT AND CONSEQUENTLY RESPONSIBLE FOR CONFORMING TO LABOR STIPULATIONS THEREIN.

A-81763, DECEMBER 15, 1936, 16 COMP. GEN. 583

CONTRACTS - TAX-EXEMPTION CERTIFICATES AND INCLUSION OF WALSH-HEALEY ACT LABOR, ETC., STIPULATIONS IN THE SOLICITATION OF BIDS FOR GOVERNMENT NEEDS WHERE THE BIDDERS ARE DEALERS AND NOT MANUFACTURERS, THE PREFERABLE COURSE WITH REGARD TO ANY EXCISE TAX IMPOSED BY THE REVENUE ACT OF 1932, AS AMENDED, IS TO REQUEST PRICES WITHOUT EXCLUSION OF THE EXCISE TAX, ON THE BASIS THAT NO TAX EXEMPTION CERTIFICATES WILL BE GIVEN DEALER CONTRACTORS, BUT WHERE PURCHASES ARE SUCH THAT BIDS MAY BE EXPECTED FROM BOTH MANUFACTURERS AND DEALERS, INVITATIONS FOR BIDS SHOULD REQUEST BIDS ON BOTH A TAX INCLUSION AND EXCLUSION BASIS, AND "TAX EXEMPTION CERTIFICATES" MAY BE ISSUED ON THE BASIS OF THE AWARD AS MADE, WHETHER TO DEALER OR MANUFACTURER, PROVIDED THE PRICES BID ARE IN FACT TAX EXCLUSIVE. THE PROVISIONS OF THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, RELATIVE TO MINIMUM AGES AND WAGES OF EMPLOYEES, MAXIMUM HOURS, WORKING CONDITIONS, ETC., ARE FOR INCLUSION IN ANY CONTRACT MADE AND ENTERED INTO BY ANY EXECUTIVE DEPARTMENT, INDEPENDENT ESTABLISHMENT, OR OTHER AGENCY OR INSTRUMENTALITY OF THE UNITED STATES, ETC., FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, SUPPLIES, ARTICLES, AND EQUIPMENT IN ANY AMOUNT EXCEEDING $10,000, UNLESS SPECIALLY EXCEPTED THEREFROM. ANY BID WHICH BY QUALIFICATION UNDERTAKES TO AVOID COMPLIANCE WITH THE PROVISIONS OF THE WALSH-HEALEY ACT OF JUNE 30, 1936, RELATIVE TO MINIMUM AGES AND WAGES OF EMPLOYEES, MAXIMUM HOURS, WORKING CONDITIONS, ETC., IN CONNECTION WITH ANY CONTRACT TO WHICH SAID PROVISIONS ARE APPLICABLE, IN ANY WAY, OR BY ANY MEANS, WILL BE SUBJECT TO REJECTION. THE SECRETARY OF LABOR HAS PROVIDED, UNDER AUTHORITY OF THE WALSH HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, THAT "WHERE A DEALER INSTEAD OF FILLING A GOVERNMENT ORDER FROM HIS OWN STOCK QUOTES MANUFACTURER'S PRICE, AND HAS FACTORY SHIP DIRECT TO GOVERNMENT, DEALER WILL BE DEEMED AGENT ACTING FOR UNDISCLOSED PRINCIPAL" AND THE "MANUFACTURER IS PARTY TO CONTRACT AND CONSEQUENTLY RESPONSIBLE FOR CONFORMING TO LABOR STIPULATIONS THEREIN," ETC. REDUCTION OF THE CONTRACT PRICE OTHERWISE IN EXCESS OF $10,000 TO AN AMOUNT BELOW THAT LIMIT BY REASON OF PROMPT PAYMENT DISCOUNT PROVISION, DOES NOT AUTHORIZE THE NONINCLUSION IN THE CONTRACT OF THE LABOR STIPULATIONS, ETC., OF THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, THE TOTAL PRICE NAMED IN THE CONTRACT BEING THE CONTRACT PRICE INSOFAR AS THE APPLICATION OF SAID ACT IS CONCERNED. INVITATIONS FOR BIDS WHICH WILL DEVELOP CONTRACTS IN EXCESS OF $10,000 SHOULD GIVE NOTICE TO BIDDERS THAT THE LABOR STIPULATIONS, ETC., OF THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, WILL BE APPLICABLE, BUT IF AWARDS ARE MADE THEREUNDER BY REASON OF SPLITTING, OR OTHERWISE, LESS THAN $10,000 IN AMOUNT, THE PROVISIONS OF SAID ACT NEED NOT BE INCLUDED. WHERE, AFTER SUCH AWARDS, THERE IS LEFT A BALANCE OF NOT MUCH MORE THAN $10,000 IN AMOUNT FOR POSSIBLE AWARD TO SOME OTHER BIDDER, THE INTEREST OF THE GOVERNMENT REQUIRES A READVERTISING OF THE REMAINING NEEDS, A BETTER PRICE BEING POSSIBLE BECAUSE OF RECOGNITION BY THE BIDDERS THAT SUCH LABOR STIPULATIONS MIGHT NOT BE FOR INCLUSION IN CONNECTION WITH THE READVERTISEMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, DECEMBER 15, 1936:

THERE HAS BEEN RECEIVED YOUR LETTER OF NOVEMBER 14, 1936, WITH INCLOSURES AS FOLLOWS:

UNDER DATE OF OCTOBER 28, 1936, THE DIVISION OF PURCHASE, SALES, AND TRAFFIC OF THIS DEPARTMENT OPENED CERTAIN BIDS AS FOLLOWS: U.S.D.A. 7379, FOR 183 PASSENGER CARS; U.S.D.A. 7525, FOR 20 ONE-HALF TON PICK UP TRUCKS; AND U.S.D.A. 7526, FOR 22 SEDAN DELIVERY TRUCKS.

AS THESE THREE BID SOLICITATIONS BORE DATES OF SEPTEMBER 28, 1936, OR LATER, AND THE ESTIMATED TOTAL COST OF THE EQUIPMENT UNDER EACH WAS IN EXCESS OF $10,000, THE CONTRACT STIPULATIONS REQUIRED BY PUBLIC ACT NO. 846, 74TH CONGRESS, WERE INCLUDED.

U.S.D.A. 7379

UNDER U.S.D.A. 7379 THREE BIDS WERE RECEIVED, FROM THE NORTHWEST MOTOR COMPANY, OF CHEVY CHASE, MARYLAND, THE OURISMAN CHEVROLET SALES CO., INC., OF WASHINGTON, D.C., AND THE GENERAL MOTORS CORPORATION (CHEVROLET DIVISION), DETROIT, MICHIGAN, RESPECTIVELY.

THE NORTHWEST MOTOR COMPANY AND THE OURISMAN CHEVROLET SALES CO., INC., SUBMITTED QUOTATIONS ON PRACTICALLY ALL OF THE VEHICLES ADVERTISED FOR, WHILE THE GENERAL MOTORS CORPORATION (CHEVROLET DIVISION) BID ONLY ON FIFTEEN UNITS UNDER ITEM 6, WHICH COVERED SEVENTEEN SEDANS. THE TOTAL AMOUNT OF THE GENERAL MOTORS BID WAS $9,994.95, LESS 5 PERCENT, 20 CALENDAR DAYS.

IN ITS PROPOSAL THE NORTHWEST MOTOR COMPANY STATED:

"OUR BID PRICE DOES NOT INCLUDE FEDERAL EXCISE TAX AND IS PREDICATED UPON TAX-EXEMPTION CERTIFICATES BEING SUPPLIED.

"IN THE EVENT THAT YOUR DEPARTMENT IS NOT INCLINED TO SUPPLY US WITH FEDERAL EXCISE-TAX-EXEMPTION CERTIFICATES, ADD TO OUR BID PRICE PER UNIT AS FOLLOWS: ITEM 1, $17.90. ITEM 37, $18.14. ITEM 44, $16.38. ITEM 47, $16.91. ITEM 49, $15.50. ITEM 52, $17.49.

"AS STATED ABOVE, THIS ADDITION IS ONLY TO APPLY IN THE EVENT THAT YOUR DEPARTMENT DOES NOT SUPPLY US WITH FEDERAL EXCISE-TAX EXEMPTION AND IT IS CLEARLY STATED THAT THIS ADDITIONAL CHARGE IS APPLICABLE PER UNIT THAT YOU MAY PURCHASE UNDER THE VARIOUS ITEMS.'

IN ADDITION, THIS COMPANY STATED:

"IT IS EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO, THAT THE MANUFACTURER OF THE ARTICLES DESCRIBED IN THIS CONTRACT, WHERE THE MANUFACTURER IS A CORPORATION OR A PERSON OTHER THAN THE BIDDER HEREIN, SHALL IN NO DEGREE OR MANNER BE BOUND BY THE TERMS AND CONDITIONS REOF.'

THE OURISMAN CHEVROLET SALES CO., INC., IN ITS PROPOSAL, MADE THE FOLLOWING STATEMENT REGARDING EXCISE TAX:

"THE PRICES QUOTED ARE EXCLUSIVE OF FEDERAL EXCISE TAX IMPOSED UNDER SECTION 606, REVENUE ACT OF 1932. IT WILL BE NECESSARY TO SECURE AN EXEMPTION CERTIFICATE WITH THE ORDER.'

U.S.D.A. 7525

UNDER U.S.D.A. 7525, THREE BIDS WERE RECEIVED, FROM THE NORTHWEST MOTOR COMPANY, CHEVY CHASE, MARYLAND, THE GENERAL MOTORS CORPORATION (CHEVROLET DIVISION), AND THE INTERNATIONAL HARVESTER COMPANY, RESPECTIVELY.

THE NORTHWEST MOTOR COMPANY BID ON THE ENTIRE 20 PICK-UP TRUCKS, AT $508.89 EACH, A TOTAL OF $10,177.80, LESS A PROMPT PAYMENT DISCOUNT OF 10 PERCENT, 20 CALENDAR DAYS. HERE AGAIN THIS COMPANY QUOTES WITHOUT THE FEDERAL EXCISE TAX AND STATES THAT IF IT IS NOT SUPPLIED WITH THE TAX EXEMPTION CERTIFICATES $10.18 SHALL BE ADDED TO THE UNIT PRICE. IT ALSO MAKES THE SAME STATEMENT REGARDING THE MANUFACTURER OF THE EQUIPMENT AS APPEARED IN ITS PROPOSAL UNDER U.S.D.A. 7379.

THE GENERAL MOTORS CORPORATION BID ON ONLY 17 OF THE 20 UNITS CALLED FOR UNDER ITEM 2 AT A UNIT PRICE OF $560.26, OR A TOTAL OF $9,524.42, LESS A DISCOUNT OF 5 PERCENT, 20 CALENDAR DAYS.

THE INTERNATIONAL HARVESTER COMPANY BID ONLY ON 10 OF THE 20 UNITS UNDER ITEM 1 AT A UNIT PRICE OF $505.00, OR A TOTAL OF $5,050.00, LESS $15.00 PER UNIT FOR PAYMENT IN 30 DAYS.

U.S.D.A. 7526

UNDER U.S.D.A. 7526 TWO BIDS WERE RECEIVED, FROM THE NORTHWEST MOTOR COMPANY, OF CHEVY CHASE, MARYLAND, AND THE OURISMAN CHEVROLET SALES CO., INC., WASHINGTON, D.C., RESPECTIVELY.

THE NORTHWEST MOTOR COMPANY BID UNDER ITEM 1 ON THE FULL QUANTITY OF 22 TRUCKS AT DETROIT, MICHIGAN, AND AGAIN EXCLUDED THE FEDERAL TAX, BUT MADE THE STATEMENT THAT UNLESS THE FEDERAL TAX-EXEMPTION CERTIFICATES WERE FURNISHED, ITS PRICE SHOULD BE INCREASED BY $12.55 PER UNIT. IT ALSO MADE THE SAME STATEMENT REGARDING THE MANUFACTURER OF THE TRUCKS AS WAS MADE IN THE LAST PARAGRAPH OF THE LETTER ACCOMPANYING ITS BID UNDER U.S.D.A. 7379.

THE OURISMAN CHEVROLET SALES CO., INC., BID ON THE FULL QUANTITY OF 22 TRUCKS UNDER THE DESTINATION ITEMS 2 AND 3 AND STATED THAT ITS PRICE WAS EXCLUSIVE OF FEDERAL EXCISE TAX, AND THAT ,IT WILL BE NECESSARY THAT EXEMPTION CERTIFICATE BE FURNISHED WITH THE PURCHASE ORDER.'

BEFORE THE DEPARTMENT ANALYZES THE THREE SETS OF PROPOSALS, YOUR DECISION IS RESPECTFULLY REQUESTED ON SEVERAL QUESTIONS ARISING UNDER THE RESPONSES RECEIVED.

1. IN THE EVENT THAT THE TAX-EXCLUDED PRICES OF THE NORTHWEST MOTOR COMPANY OR THE PRICES OF THE OURISMAN CHEVROLET SALES CO., INC., ARE LOW ON ANY ITEMS OF THESE BIDS, AND AWARDS ARE MADE TO THEM, MAY THE DEPARTMENT PROPERLY TURN OVER TO THEM, AS REGULAR DEALERS OF THE FORD MOTOR COMPANY AND THE CHEVROLET MOTOR COMPANY, RESPECTIVELY, THE TAX EXEMPTION CERTIFICATES DEMANDED BY THEM? IN THIS CONNECTION IT MAY BE STATED THAT CONTRACTING AND PURCHASING OFFICERS, BOTH WITHIN THIS DEPARTMENT AND IN OTHER DEPARTMENTS AND AGENCIES OF THE GOVERNMENT, HAVE NOT BEEN FOLLOWING A UNIFORM PRACTICE WITH RESPECT TO THE MATTER OF ISSUING TAX-EXEMPTION CERTIFICATES TO DEALERS WHO ARE NOT MANUFACTURERS, PRODUCERS, OR IMPORTERS, IN CONNECTION WITH SUPPLIES SOLD BY SAID DEALERS, THE PURCHASE PRICE OF WHICH DOES NOT INCLUDE A FEDERAL TAX, FOR THE EXCLUSIVE USE OF THE GOVERNMENT UNDER THE PROVISIONS OF THE REVENUE ACT OF 1932 (47 STAT. 169-289), AS AMENDED BY THE REVENUE ACT OF AUGUST 30, 1935.

THE DEALERS CONTEND THAT THE TAX-EXEMPTION CERTIFICATES ISSUED TO THEM ARE MERELY EVIDENCE THAT THE PURCHASE PRICE TO THE GOVERNMENT INCLUDED NO FEDERAL TAX, AND THAT THE MANNER IN WHICH A TAX-EXEMPTION CERTIFICATE REACHES THE MANUFACTURER, WHETHER IT BE BY DIRECT DELIVERY TO HIM UPON HIS REQUEST THEREFOR, OR BY DELIVERY THROUGH A DEALER, IS IMMATERIAL; THAT IS TO SAY, THAT THE ISSUING OF THE TAX-EXEMPTION CERTIFICATES TO DEALERS UNDER THE CIRCUMSTANCES OUTLINED ABOVE, CANNOT POSSIBLY OPERATE AGAINST THE INTEREST OF THE GOVERNMENT FOR THE REASON THAT WERE THE DEALERS TO PRESENT SUCH TAX-EXEMPTION CERTIFICATES TO THE BUREAU OF INTERNAL REVENUE, THEY WOULD NOT BE HONORED AS NOT BEING PRESENTED BY THE PROPER CLAIMANT. IN ORDER TO SHOW THEIR GOOD FAITH IN THE MATTER, CERTAIN DEALERS HAVE GONE SO FAR AS TO SAY THAT THEY WOULD HAVE NO OBJECTION, EVEN THOUGH PURCHASES WERE MADE FROM THE DEALERS DIRECT OF MANUFACTURED GOODS UNDER CERTIFICATES TO THE EFFECT THAT FEDERAL TAXES WERE NOT INCLUDED AS PART OF THE PURCHASE PRICE, TO THE CONTRACTING OFFICER ISSUING THE TAX-EXEMPTION CERTIFICATE COVERING THE GOODS DIRECT TO THE MANUFACTURER UPON REQUEST BY HIM; BUT THAT THIS WOULD MEAN THAT THE DEALERS IN QUESTION WOULD HAVE TO CONDUCT NEGOTIATIONS WITH THE MANUFACTURER IN ORDER TO ACQUAINT HIM WITH THE NATURE OF THE GOODS SOLDAND THAT SUCH PROCEDURE WOULD MAKE SEEMINGLY UNNECESSARY WORK FOR THE DEALERS.

THE DEPARTMENT IS NOT LOATH TO RECOGNIZE THE REASONABLENESS OF THIS ARGUMENT AND THE WILLINGNESS UPON THE PART OF THE DEALERS TO COOPERATE FOR THE SAKE OF REGULAR PROCEDURE, BUT IT IS FELT THAT IN VIEW OF CERTAIN REGULATIONS ISSUED BY THE INTERNAL REVENUE BUREAU OF THE TREASURY DEPARTMENT, REFERRED TO HEREINAFTER, AND THE IMPLICATIONS OF CERTAIN DECISIONS IN POINT EMANATING FROM YOUR OFFICE, THAT THE ISSUANCE OF TAX- EXEMPTION CERTIFICATES TO DEALERS IS NOT JUSTIFIED UNDER ANY CIRCUMSTANCES. THE COMMISSIONER OF INTERNAL REVENUE HAS ISSUED REGULATIONS AND AMENDMENTS TO EXISTING REGULATIONS TO MEET THE CONDITIONS OF THE REVENUE ACT OF 1935. THESE REGULATIONS HAVE BEEN APPROVED BY THE ACTING SECRETARY OF TREASURY ON NOVEMBER 12, 1935, AND ARE DESIGNATED AS TREASURY DECISIONS 4604 AND 4605. IT IS TO BE GATHERED FROM ARTICLE 17 OF T.D. 4605 AND ARTICLE 24 OF T.D. 4604 THAT THE RESPONSIBILITY FOR THE ISSUANCE OF THE EXEMPTION CERTIFICATES RUNS SOLELY AND ENTIRELY TO MANUFACTURERS, PRODUCERS, OR IMPORTERS. THERE IS NOTHING THEREIN WHICH WOULD APPEAR SPECIFICALLY, OR BY IMPLICATION, TO AUTHORIZE THE ISSUANCE OF SUCH EXEMPTION CERTIFICATES TO DEALERS.

THE SAME IS TRUE WITH RESPECT TO THE FOLLOWING PARAGRAPHS QUOTED FROM 15 C.G. 591:

"THESE REGULATIONS AND THE REGULATIONS WHICH THEY AMEND PRESCRIBE IN DETAIL THE PROCEDURE TO BE FOLLOWED BY THE MANUFACTURER, PRODUCER, OR IMPORTER TO OBTAIN A CREDIT AGAINST THE TAX OR A REFUND THEREOF, BOTH WHERE A SALE IS MADE BY THE MANUFACTURER, PRODUCER, OR IMPORTER, DIRECT TO THE UNITED STATES, OR TO OTHERS WHO RESELL TO THE UNITED STATES. THE WHOLE PROCEDURE IS DEPENDENT UPON THE PRODUCTION BY THE MANUFACTURER, PRODUCER, OR IMPORTER OF EVIDENCE SATISFACTORY TO THE COMMISSIONER OF INTERNAL REVENUE THAT THE ARTICLES INVOLVED HAVE IN FACT BEEN SOLD EITHER DIRECTLY OR THROUGH OTHER PURCHASERS, FOR THE EXCLUSIVE USE OF THE UNITED STATES AND THAT THE UNITED STATES HAS NOT PAID THE AMOUNT OF THE TAX AS A PART OF THE PURCHASE PRICE OR OTHERWISE.

"IN VIEW OF THE TERMS OF THE LAW AND THE REGULATIONS OF THE COMMISSIONER OF INTERNAL REVENUE, IT APPEARS DESIRABLE IN FUTURE SPECIFICATIONS TO REQUIRE ONLY THAT WHERE THE BIDDER IS MANUFACTURER, PRODUCER, OR IMPORTER OF ANY ARTICLE SUBJECT TO EXCISE TAX UNDER TITLE IV OF THE REVENUE ACT OF 1932, AS AMENDED, THE BIDDER STATE WHETHER THE AMOUNT OF SUCH TAX HAS BEEN CONSIDERED IN FIXING THE AMOUNT OF HIS BID AND WHETHER HE HAS CLAIMED OR WILL CLAIM EXEMPTION FROM, CREDIT FOR, OR REFUND OF SUCH TAX WITH RESPECT TO THE SALE OF SAID ARTICLES.'

IN OTHER DECISIONS YOU HAVE PRACTICALLY REITERATED THE FOREGOING STATEMENTS.

INFORMAL ADVICE FROM THE BUREAU OF INTERNAL REVENUE HAS INDICATED THAT THE REGULATIONS ISSUED BY THE BUREAU WERE INTENDED "MERELY AS A GUIDE" FOR THE COLLECTION OF TAXES BY THE BUREAU RATHER THAN AS AN INDEX TO BE FOLLOWED BY THE VARIOUS DEPARTMENTS IN THE MATTER OF THE ISSUANCE OF EXEMPTION CERTIFICATES, AND FURTHER, THAT THE BUREAU HAS NO OBJECTION TO THE ISSUANCE OF TAX-EXEMPTION CERTIFICATES TO REGULAR DEALERS. BUT EVEN THIS ASSURANCE DOES NOT DISPEL A CONVICTION WHICH HAS HERETOFORE BEEN HELD BY THIS DEPARTMENT THAT SUCH EXEMPTION CERTIFICATES WERE NOT MEANT TO BE ISSUED OR DELIVERED TO DEALERS. IN ORDER THAT THIS DEPARTMENT MAY FOLLOW THE CORRECT PROCEDURE WITH RESPECT TO THIS MATTER, WE ARE SUBMITTING THE QUESTION TO YOU IN THE HOPE THAT EARLY ADVICE FROM YOU WILL WARRANT OR CORRECT THE STAND WE ARE NOW TAKING WHEN CONFRONTED WITH THE FOREGOING ARGUMENTS OF REPUTABLE DEALERS.

2. IN THE EVENT QUESTION 1 IS ANSWERED IN THE NEGATIVE, (A) SHOULD THE BIDS OF THE NORTHWEST MOTOR COMPANY BE CONSIDERED AT THE INCREASED PRICE PER UNIT AND NO TAX-EXEMPTION CERTIFICATES BE FURNISHED EITHER IT OR THE FORD COMPANY? (IT WILL BE NOTED THAT THE NORTHWEST MOTOR COMPANY DOES NOT STATE SPECIFICALLY THAT THE ADDITIONAL CHARGES ARE THE EXACT AMOUNT OF THE FEDERAL TAX.) (B) AND HOW SHALL THE BID OF THE OURISMAN CHEVROLET SALES CO., INC., BE CONSIDERED?

3. WHAT EFFECT DOES THE RESERVATION REGARDING THE MANUFACTURER, CONTAINED IN EACH OF THE THREE NORTHWEST MOTOR COMPANY'S BIDS, HAVE UPON THE CONSIDERATION OF THESE BIDS IN VIEW OF THE PROVISIONS OF THE ACT OF JUNE 30, 1936, PUBLIC, NO. 846, 74TH CONGRESS?

4. UNDER U.S.D.A. 7525, IT WILL BE NOTED THAT THE NORTHWEST MOTOR COMPANY'S BID OF $508.89 PER UNIT, F.O.B. DETROIT, MICHIGAN, TOTALS $10,177.80, AND ON A TAX INCLUDED BASIS, $519.07 PER UNIT, OR A TOTAL OF $10,381.40. IN THE EVENT THAT THE CASH DISCOUNT OF 10 PERCENT, 20 DAYS IS CONSIDERED IN MAKING THE AWARD, BOTH OF THESE TOTAL PRICES ARE REDUCED BELOW $10,000; IF ACCEPTANCE BE MADE ON THIS BASIS (TOTAL AWARD WITH PROMPT PAYMENT DISCOUNT DEDUCTED) SHOULD THE REPRESENTATIONS AND STIPULATIONS OF PUBLIC, NO. 846, 74TH CONGRESS, BE INCLUDED IN THE CCEPTANCE?

5. AS SET FORTH ABOVE, BOTH GENERAL MOTORS CORPORATION (CHEVROLET DIVISION) AND THE INTERNATIONAL HARVESTER COMPANY BID ON A LESS NUMBER OF UNITS THAN STATED IN THE BID INVITATION, THEREBY KEEPING THE TOTALS OF THEIR RESPECTIVE BIDS BELOW $10,000. IT WILL ALSO BE NOTED THAT UNDER THE DEPARTMENT'S SPECIFICATION THE RIGHT WAS RESERVED TO SPLIT ITEMS BETWEEN BIDDERS. THE DEPARTMENT HAS ALWAYS CONSIDERED THAT THIS CLAUSE ALSO PERMITTED THE BIDDER TO QUOTE ON A LESS NUMBER OF UNITS THAN THE BID ITEM CALLED FOR. THE MAIN REASON FOR ITS USE IS TO MAKE POSSIBLE THE DEVELOPMENT OF THE LOWEST POSSIBLE COST TO THE GOVERNMENT BY CONSIDERING SHIPPING-POINT AGAINST DESTINATION PRICES AND ALSO THE OFFERS OF DEALERS WHO DESIRE TO QUOTE ONLY ON THE UNITS GOING INTO THEIR PARTICULAR TERRITORY. IN VIEW OF THE HERETOFORE RECOGNIZED PRACTICE OF THIS DEPARTMENT OF SPLITTING AWARDS UNDER BIDS AND THE APPARENT COROLLARY PRIVILEGE OF THE BIDDER TO MAKE AN OFFER ON BUT PART OF THE GOODS SOLICITED, WHERE THE SPLIT-BID PROVISION IS INCLUDED, AND IN VIEW OF THE ENACTMENT OF PUBLIC, NO. 846, SUPRA, AND THE $10,000 LIMITATION PROVISION THEREIN, WE ARE NOW AT A LOSS TO KNOW WHETHER WE SHOULD MAKE AWARDS TO BIDDERS WHO OBVIOUSLY HAVE TAKEN ADVANTAGE OF THE SPLIT-BID PROVISION MERELY IN ORDER TO ESCAPE THE APPLICATION OF THE SAID PROVISION OF PUBLIC, 846. IN OTHER WORDS, WHERE IT APPEARS THAT A BIDDER HAS PURPOSELY SUBMITTED A BID UNDER $10,000, PURSUANT TO THIS PRIVILEGE SO TO DO BY VIRTUE OF THE SPLIT AWARD CLAUSE IN THE SPECIFICATIONS, IN ORDER TO AVOID THE OBLIGATIONS OF PUBLIC, 846, IS SUCH BID FOR ACCEPTANCE? THE BIDS OF THE GENERAL MOTORS CORPORATION, CHEVROLET DIVISION, AND THE INTERNATIONAL HARVESTER COMPANY IN THE INSTANT CASE SEEM TO BE DETERMINABLE ON THE BASIS OF YOUR ANSWERS TO THE QUESTION.

6. GENERALLY, WHERE REQUESTS FOR PROPOSALS HAVE INCLUDED THE STIPULATIONS REQUIRED UNDER PUBLIC, NO. 846, 74TH CONGRESS, THE ITEMS INCLUDED IN THE ADVERTISEMENT ARE EXPECTED TO DEVELOP TOTAL PRICES IN EXCESS OF $10,000, BUT UNDER A PROCEDURE OF AWARDING BY ITEMS ONE OR MORE POTENTIAL CONTRACTS NOT IN EXCESS OF $10,000 MAY BE DEVELOPED. ARE SUCH AWARDS (NOT IN EXCESS OF $10,000) TO BE MADE WITHOUT THE INCLUSION OF THE STIPULATIONS OF THE WALSH-HEALEY ACT, OR, SINCE THESE STIPULATIONS WERE EMPLOYED IN THE ADVERTISING, MUST SUCH ITEMS BE READVERTISED WITHOUT REFERENCE TO THE PROVISIONS OF PUBLIC, NO. 846, 74TH CONGRESS?

COPIES OF SPECIFICATIONS OF EACH OF THE THREE BID SOLICITATIONS ARE ATTACHED.

THE THREE SETS OF BIDS RECEIVED UNDER U.S.D.A. NO. 7379, NO. 7525, AND NO. 7526 ARE ENCLOSED. ALL BIDS SHOULD BE RETURNED WITH YOUR DECISION.

REPLYING TO YOUR FIRST QUERY AS TO WHETHER "TAX-EXEMPTION CERTIFICATES"-- - THAT IS, CERTIFICATES TO THE EFFECT THAT THE VEHICLES INVOLVED HAVE BEEN SOLD TO THE GOVERNMENT AT A PRICE EXCLUSIVE OF ANY EXCISE TAX IMPOSED BY THE REVENUE ACT OF 1932, AS AMENDED--- PROPERLY MAY BE FURNISHED THE NORTHWEST MOTOR CO., OR THE OURISMAN CHEVROLET CO., IN THE EVENT THAT EITHER'S BIDS ARE ACCEPTED, IT HAS BEEN THE VIEW OF THIS OFFICE THAT WHEN THE BIDDER IS A DEALER AND NOT A MANUFACTURER THE PREFERABLE COURSE IS FOR SAID DEALER TO SUBMIT PRICES WITHOUT REFERENCE TO THE EXCLUSION OF THE EXCISE TAX, AND THAT NO TAX EXEMPTION CERTIFICATE BE GIVEN THE DEALER CONTRACTOR BY THE PURCHASING AGENCY. IT WOULD APPEAR DOUBTFUL IF AN ADMINISTRATIVE OFFICER COULD CERTIFY WITH ANY DEGREE OF ASSURANCE THAT THE PRICE OFFERED BY A DEALER IS EXCLUSIVE OF A TAX IMPOSED UPON A MANUFACTURER, OR THAT SUCH DEALER HAS NOT ADDED SOMETHING TO HIS PRICE BECAUSE OF THE TAX, AND IT DOES NOT APPEAR THAT THE UNSUPPORTED STATEMENT OF A DEALER THAT THE BID PRICE IS TAX-EXCLUSIVE SHOULD BE ACCEPTED AS CONCLUSIVE WHEN THE SOLE PURPOSE OF SUCH STATEMENT IS TO OBTAIN AN EXEMPTION, REBATE, OR REFUND FROM THE GOVERNMENT. THE CERTIFICATE RELATIVE TO THE EXCLUSION OF THE EXCISE TAX WHICH WAS SUGGESTED IN DECISION OF JANUARY 7, 1936, 15 COMP. GEN. 588-92, FOR INCLUSION IN INVITATIONS FOR BIDS PROVIDES THAT IT IS "TO BE EXECUTED ONLY WHEN THE BIDDER IS MANUFACTURER, PRODUCER, OR IMPORTER OF ANY ARTICLE BID ON," ETC. THIS PROVISION INDICATES TO BIDDERS THAT THE TAX EXCLUSION OR INCLUSION CERTIFICATE HAS APPLICATION ONLY TO MANUFACTURERS, PRODUCERS, AND IMPORTERS AND THAT OTHER BIDDERS SHOULD SUBMIT BIDS WITHOUT EXCLUSION OF ANY AMOUNT FOR THE EXCISE TAX. HOWEVER, WHERE THE THING TO BE PURCHASED IS SUCH THAT BIDS MAY BE EXPECTED FROM MANUFACTURERS AND ALSO, FROM DEALERS WHO ARE NOT MANUFACTURERS, IT IS SUGGESTED THAT FUTURE INVITATIONS REQUEST ALL BIDDERS--- MANUFACTURERS AND DEALERS--- TO SUBMIT BIDS ON THE BASIS THAT NO EXCISE-TAX-EXEMPTION CERTIFICATES WILL BE FURNISHED, AND ALSO, IN THE ALTERNATE, ON THE BASIS THAT THE TAX IS EXCLUDED AND, THEREFORE, THAT A CERTIFICATE TO THAT EFFECT WILL BE FURNISHED. WHEN BIDS ARE SO SUBMITTED, THE BID MOST ADVANTAGEOUS TO THE GOVERNMENT WOULD BE FOR ACCEPTANCE, AND THE EXEMPTION CERTIFICATE SHOULD BE ISSUED OR WITHHELD, DEPENDENT ON THE BASIS OF THE ACCEPTED BID REGARDLESS OF WHETHER THE CONTRACTOR IS MANUFACTURER OR DEALER.

IN THE PRESENT INSTANCE, IF THE BIDS OF EITHER THE NORTHWEST MOTOR CO. OR THE OURISMAN CHEVROLET CO. ARE OTHERWISE FOR ACCEPTANCE, THE TAX-EXEMPTION CERTIFICATES MAY BE FURNISHED UPON A CLEAR SHOWING THAT THE PRICES BID ARE IN FACT TAX EXCLUSIVE.

RELATIVE TO YOUR QUESTION AS TO THE EFFECT OF THE RESERVATION IN THE BIDS OF THE NORTHWEST MOTOR CO. REGARDING THE MANUFACTURER, IT IS TO BE OBSERVED THAT THE ACT OF JUNE 30, 1936, 49 STAT. 2036, KNOWN AS THE WALSH- HEALEY ACT, PROVIDES THAT IN ANY CONTRACT MADE AND ENTERED INTO BY ANY EXECUTIVE DEPARTMENT, INDEPENDENT ESTABLISHMENT, OR OTHER AGENCY OR INSTRUMENTALITY OF THE UNITED STATES, ETC., FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, SUPPLIES, ARTICLES, AND EQUIPMENT IN ANY AMOUNT EXCEEDING $10,000, THERE SHALL BE INCLUDED REPRESENTATIONS AND STIPULATIONS WHICH MAY BE SUMMARIZED AS FOLLOWS:

(A) THAT THE CONTRACTOR IS THE MANUFACTURER OF OR REGULAR DEALER IN THE MATERIALS OFFERED.

(B) MINIMUM-WAGE STIPULATION.

(C) MAXIMUM-HOUR STIPULATION.

(D) MINIMUM AGE OF EMPLOYEES STIPULATION.

(E) SAFE AND SANITARY WORKING CONDITIONS AND SURROUNDINGS.

THE STATUTE IS MANDATORY, AND ITS MANIFEST PURPOSE IS THAT RECIPIENTS OF GOVERNMENT CONTRACTS COMING WITHIN ITS TERMS SHALL BE SUBJECT TO ITS REQUIREMENTS. ALL CONTRACTS TO WHICH THE STATUTE IS APPLICABLE MUST INCLUDE THE PRESCRIBED REPRESENTATIONS AND STIPULATIONS IN EVERY INSTANCE AND WITHOUT ANY QUALIFICATION WHATEVER. HENCE, INVITATIONS FOR BIDS SHOULD INFORM PROSPECTIVE BIDDERS THAT IF THE AMOUNT OF AN AWARDED CONTRACT--- NOT WITHIN ANY OF THE EXCEPTIONS PRESCRIBED UNDER SECTION 9 OR PROVIDED FOR UNDER SECTION 6--- EXCEEDS $10,000, THE CONTRACT SHALL CONTAIN THE REPRESENTATIONS AND STIPULATIONS REQUIRED BY THE SAID ACT, AND THAT ANY BID WHICH, BY QUALIFICATIONS, UNDERTAKES TO AVOID COMPLIANCE WITH THE STATUTE IN ANY WAY, OR BY ANY MEANS, WILL BE SUBJECT TO REJECTION. THE RESERVATION IN THE BIDS OF THE NORTHWEST MOTOR CO. HERE INVOLVED CANNOT BUT BE RECOGNIZED AS AN EFFORT TO RELIEVE THE FORD MOTOR CO., THE MANUFACTURER AND ACTUAL FURNISHER OF THE AUTOMOBILES OFFERED, OF RESPONSIBILITY FOR COMPLIANCE OR NONCOMPLIANCE WITH THE REQUIREMENTS OF THE ACT, AND THE BIDS WOULD BE FOR REJECTION FOR THAT REASON.

FURTHERMORE, IT IS TO BE NOTED IN THIS CONNECTION THAT SECTION 4 OF THE SAID ACT OF JUNE 30, 1936, AUTHORIZES THE SECRETARY OF LABOR TO MAKE, AMEND, AND RESCIND SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO CARRY OUT THE PROVISIONS OF THE ACT. PURSUANT TO THAT AUTHORITY THE SECRETARY OF LABOR ISSUED A CIRCULAR LETTER TO THE HEADS OF DEPARTMENTS UNDER DATE OF NOVEMBER 10, 1936, IN PERTINENT PART AS FOLLOWS:

AGENCY CONTRACTS: WHERE A DEALER INSTEAD OF FILLING A GOVERNMENT ORDER FROM HIS OWN STOCK, QUOTES A MANUFACTURER'S PRICE, AND HAS FACTORY SHIP DIRECT TO GOVERNMENT, DEALER WILL BE DEEMED AGENT ACTING FOR UNDISCLOSED PRINCIPAL. IN SUCH CASES IT WILL BE PRESUMED THAT MANUFACTURER IS PARTY TO CONTRACT AND CONSEQUENTLY RESPONSIBLE FOR CONFORMING TO LABOR STIPULATIONS THEREIN.

AND UNDER DATE OF NOVEMBER 24, 1936, AMENDED REGULATIONS NO. 504, SERIES A, DATED SEPTEMBER 14, 1936, BY ADDING THERETO AN ARTICLE AS FOLLOWS:

ART. 104 (DEALER AS AGENT OF UNDISCLOSED PRINCIPAL). WHENEVER A DEALER, TO WHOM A CONTRACT WITHIN THE ACT AND REGULATIONS (WALSH HEALEY ACT) HAS BEEN AWARDED, CAUSES A MANUFACTURER TO DELIVER DIRECTLY TO THE GOVERNMENT THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT REQUIRED UNDER THE CONTRACT, SUCH DEALER WILL BE DEEMED THE AGENT OF THE MANUFACTURER IN EXECUTING THE CONTRACT. AS THE PRINCIPAL OF SUCH AGENT THE MANUFACTURER WILL BE DEEMED TO HAVE AGREED TO THE STIPULATIONS CONTAINED IN THE CONTRACT.

THE BIDS OF THE NORTHWEST MOTOR COMPANY ARE FOR DELIVERY F.O.B. DETROIT, MICH., THE MANUFACTURING PLANT OF THE FORD MOTOR COMPANY, FOR SHIPMENT DIRECT TO THE GOVERNMENT. IT WOULD APPEAR THAT THESE BIDS COME SQUARELY WITHIN THE QUOTED RULES OF THE SECRETARY OF LABOR. THAT IS TO SAY, THE NORTHWEST MOTOR CO., WHICH IS A RECOGNIZED FORD DEALER IN THIS SECTION OF THE COUNTRY, IS TO BE CONSIDERED UNDER SUCH RULES AS AGENT FOR THE FORD MOTOR CO. IN THE PROPOSED CONTRACT, AND RESPONSIBILITY FOR COMPLIANCE WITH THE WALSH-HEALEY ACT STIPULATIONS IN THE CONTRACT WOULD BE CONSIDERED AS RESTING UPON THE FORD MOTOR CO. IN THE MANUFACTURE OF THE AUTOMOBILES TO BE DELIVERED.

IN THE EVENT THAT A CONTRACT WERE TO BE AWARDED THE NORTHWEST MOTOR CO. IN EXCESS OF $10,000, THE STIPULATIONS REQUIRED BY THE ACT OF JUNE 30, 1936, 49 STAT. 2036, SHOULD BE INCLUDED, NOTWITHSTANDING THE FACT THAT PROMPT PAYMENT WOULD REDUCE THE ACTUAL EXPENDITURE BELOW THE $10,000 LIMIT. THE TOTAL PRICE NAMED IN THE CONTRACT IS THE CONTRACT PRICE, INSOFAR AS APPLICATION OF THE SAID ACT IS CONCERNED, ANY REDUCTION THEREIN BEING DEPENDENT UPON A CONDITION SUBSEQUENT TO THE CONTRACT.

IT IS AN ESTABLISHED PRACTICE IN THE DEPARTMENTS AND AGENCIES OF THE GOVERNMENT TO RECEIVE AND GIVE CONSIDERATION TO BIDS OFFERING A SMALLER NUMBER OF ARTICLES THAN REQUIRED BY THE SOLICITATION, WHEN IN THE INTERESTS OF THE GOVERNMENT TO DO SO, AND THE BIDS OF THE GENERAL MOTORS CORPORATION AND THE INTERNATIONAL HARVESTER CO., IF OTHERWISE PROPER FOR ACCEPTANCE, ARE NOT TO BE REJECTED FOR THE SOLE REASON THAT THESE COMPANIES HAVE OFFERED PROPOSALS FOR LESS THAN THE ENTIRE NUMBER OF VEHICLES REQUIRED.

WHEN IT IS ANTICIPATED THAT INVITATIONS FOR BIDS WILL DEVELOP CONTRACTS IN EXCESS OF $10,000 IN AMOUNT, IT IS PROPER THAT THE ADVERTISEMENT GIVE NOTICE TO BIDDERS THAT THE ACT OF JUNE 30, 1936, WILL BE APPLICABLE TO SUCH CONTRACTS. WHEN, HOWEVER, AWARDS ARE MADE WHICH ARE LESS THAN $10,000 IN AMOUNT, THERE IS NO REQUIREMENT THAT THE STATUTORY STIPULATIONS BE INCLUDED IN THE CONTRACT. HOWEVER, WHEN SUCH AWARDS ARE MADE AND THERE IS LEFT THEREBY A BALANCE OF NOT MUCH MORE THAN $10,000 IN AMOUNT FOR POSSIBLE AWARD TO SOME OTHER BIDDER, THE INTERESTS OF THE GOVERNMENT WOULD SEEM TO REQUIRE A READVERTISING OF THE REMAINING NEEDS, BECAUSE IT MAY BE THAT BIDDERS UPON READVERTISEMENT, RECOGNIZING THAT A CONTRACT OF LESS THAN $10,000 IN AMOUNT WOULD NOT REQUIRE INCLUSION OF THE PROVISIONS OF THE WALSH HEALEY ACT, WOULD BE INFLUENCED TO OFFER THE GOVERNMENT A LOWER PRICE, WITH A VIEW OF COMING WITHIN THE EXCEPTION LIMIT OF THE ACT.

YOUR SUBMISSION IS ANSWERED ACCORDINGLY.