A-81913, DECEMBER 16, 1936, 16 COMP. GEN. 590

A-81913: Dec 16, 1936

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IS BY NECESSARY IMPLICATION AUTHORIZED BY SAID STATUTE. IS SUBJECT TO REJECTION. " THE BIDDER APPARENTLY REGARDING AS HIS SUBCONTRACTOR THE MANUFACTURER OF THE PRODUCT OFFERED FOR DELIVERY FROM THE PLACE WHERE THE MANUFACTURER'S PLANT IS LOCATED. THE MANUFACTURER IS NOT THE SUBCONTRACTOR OF THE BIDDER. THE BIDDER IS IN FACT AN AUTHORIZED DEALER OR DISTRIBUTING AGENT OF THE MANUFACTURER. THE BID IS FOR REJECTION AS BEING AN AVOIDANCE OF THE REQUIREMENTS OF SAID ACT. AS FOLLOWS: REFERENCE IS MADE TO THE DEPARTMENT'S TELEGRAM DATED NOVEMBER 2. WHICH READS AS FOLLOWS: "DEPARTMENT UNDERSTANDS CERTAIN FIRMS WHICH HAVE FILED WITH THEIR BIDS EXCEPTIONS TO PUBLIC. THE RULING WAS PUBLISHED ON PAGES 1891 AND 1892.

A-81913, DECEMBER 16, 1936, 16 COMP. GEN. 590

CONTRACTS - WALSH-HEALEY ACT REQUIREMENTS - BIDS QUALIFIED AS TO COMPLIANCE A REGULATION ISSUED BY THE SECRETARY OF LABOR, UNDER AUTHORITY GRANTED TO ADMINISTER THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, REQUIRING CONTRACTORS, SUBJECT TO THE PROVISIONS OF SAID ACT, TO MAINTAIN RECORDS OF EMPLOYMENT RELATIVE TO NAMES, ADDRESSES, SEX, AGE, OCCUPATION, RATES OF WAGES, HOURS WORKED, ETC., OF EMPLOYEES ENGAGED ON SUCH CONTRACTS, IS BY NECESSARY IMPLICATION AUTHORIZED BY SAID STATUTE, AND A BID WHICH BY QUALIFICATION UNDERTAKES TO AVOID COMPLIANCE WITH THE REQUIREMENTS OF SAID STATUTE AND REGULATION, IS SUBJECT TO REJECTION. WHERE A BIDDER QUALIFIES HIS BID AS TO THE LABOR STIPULATIONS, ETC., OF THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, BY THE INSERTION OF AN EXCEPTION AS TO "ASSUMING RESPONSIBILITY COMPLIANCE TO LAW BY SUBCONTRACTORS," THE BIDDER APPARENTLY REGARDING AS HIS SUBCONTRACTOR THE MANUFACTURER OF THE PRODUCT OFFERED FOR DELIVERY FROM THE PLACE WHERE THE MANUFACTURER'S PLANT IS LOCATED, AND THE MANUFACTURER IS NOT THE SUBCONTRACTOR OF THE BIDDER, BUT THE BIDDER IS IN FACT AN AUTHORIZED DEALER OR DISTRIBUTING AGENT OF THE MANUFACTURER, THE BID IS FOR REJECTION AS BEING AN AVOIDANCE OF THE REQUIREMENTS OF SAID ACT, SUCH A DEALER BEING DEEMED, UNDER REGULATIONS OF THE SECRETARY OF LABOR, AN AGENT FOR AN UNDISCLOSED PRINCIPAL, THE MANUFACTURER.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF STATE, DECEMBER 16, 1936:

YOUR LETTER OF NOVEMBER 21, 1936, SUBMITS WITH REQUEST FOR DECISION ON THE QUESTIONS STATED IN THE LETTER OF NOVEMBER 11, 1936, FROM THE AMERICAN COMMISSIONER, INTERNATIONAL BOUNDARY COMMISSION, UNITED STATES AND MEXICO, AS FOLLOWS:

REFERENCE IS MADE TO THE DEPARTMENT'S TELEGRAM DATED NOVEMBER 2, 1936, ADDRESSED TO THE AMERICAN COMMISSIONER, WHICH READS AS FOLLOWS:

"DEPARTMENT UNDERSTANDS CERTAIN FIRMS WHICH HAVE FILED WITH THEIR BIDS EXCEPTIONS TO PUBLIC, NO. 846, SEVENTY-FOURTH CONGRESS, MAY BE ABOUT TO REQUEST WITHDRAWAL OF SUCH EXCEPTIONS IN THE LIGHT OF A RECENT RULING OF THE UNITED STATES DEPARTMENT OF LABOR, THE RULING WAS PUBLISHED ON PAGES 1891 AND 1892, FEDERAL REGISTER, OCTOBER 20, 1936.'

AS WILL BE NOTED FROM THE ENCLOSURES HEREWITH, THE ABOVE MENTIONED TELEGRAM CONCERNS INVITATIONS FOR BIDS TO FURNISH TWO TRACTORS, THE COST OF WHICH WILL EXCEED THE SUM OF $10,000, AND THEREFORE THE CONTRACT WILL COME UNDER THE PROVISIONS OF THE ACT OF JUNE 30, 1936, PUBLIC, NO. 846, 74TH CONGRESS.

THE "ABSTRACT OF BIDS RECEIVED," WHICH FORMS A PART OF THIS FILE,SHOWS THAT SEVEN INVITATIONS WERE MAILED, THAT THREE BIDS WERE RECEIVED, AND THAT THE NET DELIVERED COST FOR TWO TRACTORS WOULD BE AS FOLLOWS:

CHART

(1-A) (1-B) TRI-STATE EQUIPMENT CO ------------- $12,328.72 $12,412.64 MCWIRTER-MCCLURE MACH. CO ----------- 12,871.23

12,712.59 R. L. HARRISON COMPANY -------------- 13,652.80 13,739.10

THE NOTATION ON THE OFFER OF THE LOWEST BIDDER VARIES THE TERMS OF THE PROPOSED CONTRACT AS FOLLOWS:

"THIS BID SUBJECT TO FOLLOWING EXCEPTIONS:

"1. ASSUMING RESPONSIBILITY COMPLIANCE TO LAW BY SUBCONTRACTORS.

"2. KEEPING OF RECORDS AS APPLICABLE TO THEIR OR OUR BUSINESS.'

THE REGULATIONS FOR THE ADMINISTRATION OF THE ACT PUBLISHED IN THE SEPTEMBER 19TH ISSUE OF THE FEDERAL REGISTER, VOL. I, NO. 135, P. 1626, CONTAIN THE FOLLOWING:

"ARTICLE 1. INSERTION OF STIPULATIONS.--- EXCEPT AS HEREINAFTER DIRECTED, IN EVERY CONTRACT MADE AND ENTERED INTO BY AN EXECUTIVE DEPARTMENT * * * THE CONTRACTING OFFICER SHALL CAUSE TO BE INSERTED * * * THE FOLLOWING STIPULATIONS * * *.'

IN ACCORDANCE WITH THESE REGULATIONS THE PRESCRIBED STIPULATIONS WERE INCLUDED IN THE INVITATIONS DATED OCTOBER 21, 1936, AS ARTICLE 20.

APPARENTLY MINIMUM WAGE RATES HAVE NOT AS YET BEEN DETERMINED FOR THIS INDUSTRY BY THE DEPARTMENT OF LABOR, ON THE OTHER HAND, IT IS UNDERSTOOD THAT THE PROVISIONS OF THE ACT WITH REFERENCE TO HOURS, CONDITIONS OF EMPLOYMENT, ETC., ARE IN FULL FORCE AND EFFECT AS OF SEPTEMBER 28, 1936.

IT APPEARS FROM CERTAIN CLAUSES OF THE LAW AND REGULATIONS THAT ALL BIDDERS ARE CLASSED EITHER AS MANUFACTURERS OR REGULAR DEALERS. IN THIS INSTANCE THE COMPANY SUBMITTING THE LOWEST BID, WHILE APPEARING TO BE AN INDEPENDENT DEALER, IS PROBABLY A MIDDLEMAN AND DOES NOT TAKE TITLE TO THE GOODS OFFERED FOR SALE. THE REPRESENTATIVE OF THE LOW BIDDER BELIEVES THAT NONE OF ITS EMPLOYEES WOULD COME WITHIN THE PROVISIONS OF THE LAW BECAUSE THEY HAVE NO DUTIES TO PERFORM IN CONNECTION WITH FILLING THE ORDER, AND THAT ARTICLE 102 OF THE REGULATIONS DESIGNATING THE ,EMPLOYEES AFFECTED" WOULD NOT APPLY TO THE LOCAL BIDDER.

THE TRI-STATE EQUIPMENT COMPANY, THROUGH ITS REPRESENTATIVE, MR. MCNAY, HAS PRESENTED THE ORIGINAL OF A TELEGRAM DATED NOVEMBER 2, 1936, WHICH READS AS FOLLOWS:

PEORIA, ILL., NOV. 2, 4:48 P.M. TRI-STATE EQUIPMENT CO.,

(ATTN. MCNAY.)

GOOD NEWS REGARDING IBC BID GERARD REILLY, ACTING COMMISSIONER, LABOR DEPARTMENT, WITH RESPECT WALSH-HEALEY ACT SAYS EXCEPTIONS AS TO RECORD KEEPING AND RESPONSIBILITY FOR SUBCONTRACTORS CANNOT BE CONSIDERED SUFFICIENT BASIS IN ANY RESPECT FOR PASSING OVER LOW BID AND THAT WHERE QUESTIONS ARISE CONCERNING APPLICATION WALSH-HEALEY ACT ALL BIDS MUST BE REFERRED TO WASHINGTON FOR APPROVAL AS COVERED BY SECTION FIVE OF THE ACT. REILLY TOLD US WE AT LIBERTY QUOTE HIM ON ABOVE ALSO THAT HIS PUBLICATION APPEARING ON PAGE EIGHTEEN NINETY TWO OF FEDERAL REGISTER IS INTENDED RELIEVE BIDDERS FROM NECESSITY TAKING EXCEPTIONS AS YOU TOOK THIS INSTANCE.

CATERPILLAR TRACTOR CO.,

L. I. REYNOLDS.

NO REQUEST FOR WITHDRAWAL OF EXCEPTIONS HAS BEEN RECEIVED.

THE SECOND LOW BIDDER, MCWHIRTER-MCCLURE COMPANY OFFERED NO EXCEPTIONS TO PUBLIC ACT NO. 846. THERE WAS LATER RECEIVED FROM THIS BIDDER A TELEGRAM DATED NOVEMBER 3, 1936, ADVISING OF FACTORY COMPLIANCE WITH THE WALSH- HEALEY ACT. A COPY OF THIS TELEGRAM IS ENCLOSED HEREWITH.

THE HIGH BIDDER, R. L. HARRISON COMPANY, INC., SUBMITTED PRIOR TO THE OPENING OF THE BIDS A TELEGRAM TAKING EXCEPTION TO ALL PROVISIONS OF THE WALSH-HEALEY ACT. A COPY OF THIS TELEGRAM, DATED OCTOBER 30, 1936, IS ENCLOSED HEREWITH.

IT IS RESPECTFULLY REQUESTED THAT THE ENCLOSED BIDS, TOGETHER WITH THE ABSTRACT OF BIDS RECEIVED, BE FORWARDED TO THE COMPTROLLER GENERAL OF THE UNITED STATES FOR DECISION AS TO WHETHER THE EXCEPTIONS TO ACT OF JUNE 30, 1936, PUBLIC, NO. 846, 74TH CONGRESS, NOTED BY THE LOWEST BIDDER ARE TO BE CONSIDERED AS JUSTIFYING REJECTION OF AN OTHERWISE ACCEPTABLE BID.

INASMUCH AS THIS EQUIPMENT IS NEEDED DURING THE PRESENT PERIOD OF NONFLOW OF IRRIGATION WATER IN THE RIO GRANDE, A DECISION IS REQUESTED AT THE EARLIEST POSSIBLE DATE.

THE ACT OF JUNE 30, 1936, 49 STAT. 2036, KNOWN AS THE WALSH-HEALEY ACT, REQUIRES, IN SUBSTANCE, THAT IN ANY CONTRACT MADE AND ENTERED INTO BY ANY EXECUTIVE DEPARTMENT, INDEPENDENT ESTABLISHMENT, OR OTHER AGENCY OR INSTRUMENTALITY OF THE UNITED STATES FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, SUPPLIES, ARTICLES, AND EQUIPMENT IN ANY AMOUNT EXCEEDING $10,000 THERE SHALL BE INCLUDED CERTAIN REPRESENTATIONS AND STIPULATIONS AS TO THE IDENTITY OF THE CONTRACTOR (WHETHER MANUFACTURER OF OR REGULAR DEALER IN THE MATERIALS, ETC., TO BE MANUFACTURED OR USED IN THE PERFORMANCE OF THE CONTRACT), MINIMUM WAGE RATES, MAXIMUM LABOR HOURS, MINIMUM AGE OF EMPLOYEES, AND SAFE AND SANITARY WORKING CONDITIONS, ALL AS SET OUT IN THE STATUTE. THE PURPOSE OF THE LEGISLATION IS APPARENT AND REQUIRES NO DISCUSSION.

SECTION 4 OF THE ACT AUTHORIZES AND DIRECTS THE SECRETARY OF LABOR TO ADMINISTER THE PROVISIONS OF THE STATUTE AND CONFERS AUTHORITY UPON THE SECRETARY OF LABOR TO MAKE, AMEND, AND RESCIND SUCH RULES AND REGULATIONS AS MAY BE NECESSARY TO CARRY OUT ITS PROVISIONS.

PURSUANT TO THAT AUTHORITY, THE SECRETARY OF LABOR, UNDER DATE OF SEPTEMBER 14, 1936, ISSUED REGULATIONS NO. 504, INCLUDING THE FOLLOWING PROVISION PERTINENT HERE:

ART. 501 (RECORDS OF EMPLOYMENT). EVERY CONTRACTOR SUBJECT TO THE PROVISIONS OF THE ACT AND THESE REGULATIONS SHALL MAINTAIN THE FOLLOWING RECORDS OF EMPLOYMENT, WHICH SHALL BE AVAILABLE FOR THE INSPECTION AND TRANSCRIPTION OF AUTHORIZED REPRESENTATIVES OF THE SECRETARY OF LABOR:

(A) NAME, ADDRESS, SEX, AGE, AND OCCUPATION OF EACH EMPLOYEE COVERED BY THE CONTRACT STIPULATION.

(B) WAGE AND HOUR RECORDS FOR EACH SUCH EMPLOYEE, INCLUDING THE RATE OF WAGES AND THE AMOUNT PAID EACH PAY PERIOD, THE HOURS WORKED EACH DAY AND EACH WEEK, AND THE PERIOD DURING WHICH EACH SUCH EMPLOYEE WAS ENGAGED ON A GOVERNMENT CONTRACT, WITH THE NUMBER OF SAID CONTRACT.

SUCH RECORDS SHALL BE KEPT ON FILE FOR AT LEAST 1 YEAR AFTER THE TERMINATION OF THE CONTRACT.

THE STATUTE IS MANDATORY. ITS PRESCRIBED REPRESENTATIONS AND STIPULATIONS MUST BE INCLUDED IN EVERY CONTRACT TO WHICH THE STATUTE IS APPLICABLE--- IF NOT WITHIN ANY EXCEPTION MADE BY THE SECRETARY OF LABOR PURSUANT TO SECTION 6 OF THE ACT. RULES AND REGULATIONS ISSUED BY THE SECRETARY OF LABOR WHICH "MAY BE NECESSARY TO CARRY OUT THE PROVISIONS OF THIS ACT" LIKEWISE ARE OBLIGATORY UPON CONTRACTORS WITH THE GOVERNMENT. IN ORDER THAT THE SECRETARY OF LABOR MAY BE ABLE PROPERLY TO ADMINISTER THE PROVISIONS OF SECTIONS 2, 4, AND 5 OF THE STATUTE, IF AND WHEN NECESSARY, AND TO FURNISH THE COMPTROLLER GENERAL OF THE UNITED STATES INFORMATION FOR DISTRIBUTION TO ALL AGENCIES OF THE UNITED STATES AS PRESCRIBED IN SECTION 3, IT IS PLAIN THAT CONTRACTORS WITH THE GOVERNMENT MUST BE REQUIRED TO KEEP, AND THE SECRETARY OF LABOR OR HER DESIGNATED REPRESENTATIVE MUST HAVE ACCESS TO PROPER EMPLOYMENT AND OTHER RECORDS. THE QUOTED REGULATION OF THE SECRETARY OF LABOR IS BY NECESSARY IMPLICATION AUTHORIZED BY THE STATUTE AND CLEARLY IS "WITHIN THE FRAMEWORK" OF THE LEGISLATIVE PURPOSE. PANAMA REFINING COMPANY V. RYAN, 293 U.S. 388.

THE EXCEPTION STATED IN THE BID OF THE TRI-STATE EQUIPMENT COMPANY AS TO THE "KEEPING OF RECORDS AS APPLICABLE TO THEIR OR OUR BUSINESS" IS AN UNDERTAKING TO AVOID COMPLIANCE WITH THE REQUIREMENTS OF THE STATUTE AND THE REGULATIONS OF THE SECRETARY OF LABOR ISSUED PURSUANT THERETO AND IS UNAUTHORIZED.

TRI-STATE EQUIPMENT CO. MADE A FURTHER EXCEPTION AS TO "ASSUMING RESPONSIBILITY COMPLIANCE TO LAW BY SUBCONTRACTORS.' ADVERTISING LITERATURE FORWARDED WITH YOUR LETTER INDICATES THAT THE TRI-STATE EQUIPMENT CO. IS AN AUTHORIZED DEALER OR DISTRIBUTING AGENT FOR THE MANUFACTURER WHOSE PRODUCT IT OFFERS, AND THIS IS CONFIRMED BY THE TENOR OF THE TELEGRAM OF NOVEMBER 2, 1936, FROM SAID MANUFACTURER TO THE BIDDER, QUOTED IN THE COMMISSIONER'S LETTER, SUPRA. THE BID OF THE TRI-STATE EQUIPMENT CO. OFFERED DELIVERY F.O.B. PEORIA, ILL., WHERE THE MANUFACTURER'S PLANT IS LOCATED, OR AT THE GOVERNMENT'S DESIGNATED DESTINATION, EL PASO, TEX. IT WOULD APPEAR TO BE UNQUESTIONABLE THAT THE MANUFACTURER IS NOT A SUBCONTRACTOR OF THE BIDDER WITHIN THE GENERAL ACCEPTATION OF THAT TERM, BUT THAT THE BIDDER IS, IN FACT, THE AUTHORIZED REPRESENTATIVE AND DISTRIBUTING AGENT OF THE MANUFACTURER. THE SECRETARY OF LABOR, UNDER DATE OF NOVEMBER 24, 1936, AMENDED THE REGULATIONS PREVIOUSLY ISSUED PURSUANT TO THIS STATUTE 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 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.

THESE RULES APPEAR TO BE APPLICABLE UNDER THE FACTS HERE PRESENTED AND THE BID OF THE TRI-STATE EQUIPMENT CO. IS TO BE CONSIDERED ACCORDINGLY. IT IS CLEAR THAT THE EXCEPTIONS STATED IN THE BID OF SAID COMPANY ARE FOR THE PURPOSE OF RELIEVING BOTH THE BIDDER AND THE MANUFACTURER OF RESPONSIBILITY FOR COMPLIANCE WITH THE REQUIREMENTS OF THE STATUTE AND THE APPLICABLE REGULATIONS ,IN THE MANUFACTURE OR PRODUCTION OR FURNISHING OF ANY OF THE MATERIALS, SUPPLIES, ARTICLES, OR EQUIPMENT IN SUCH CONTRACT.' YOU ARE INFORMED THAT THE EXCEPTIONS STATED IN THE BID OF THE TRI-STATE EQUIPMENT CO. CONSTITUTE SUCH A QUALIFICATION AS TO REQUIRE THE REJECTION OF THE BID OF THAT COMPANY FOR THAT REASON.

IT APPEARS THAT THE NEXT HIGHER BIDDER HAS SIGNIFIED ITS ABILITY AND PURPOSE TO PERFORM A CONTRACT AWARDED TO IT "IN STRICT COMPLIANCE WITH THE WALSH-HEALEY ACT" (TELEGRAM OF NOV. 3, 1936), AND ITS BID WILL BE FOR ACCEPTANCE IF OTHERWISE PROPER.