A-82043, JANUARY 21, 1937, 16 COMP. GEN. 670

A-82043: Jan 21, 1937

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IS EVEN MORE OBJECTIONABLE THAN THE PROPOSED CONTRACTS FOR INDEFINITE SERVICES REFERRED TO IN 16 COMP. WHEREIN IT WAS HELD THAT THERE IS NO LEGAL JUSTIFICATION FOR GIVING PARTICULAR CONTRACTORS A NATION-WIDE MONOPOLY TO FURNISH CERTAIN SERVICES. PAYMENTS ARE NOT AUTHORIZED FOR SERVICES RENDERED UNDER SAID CONTRACT EXCEPT FOR PARTITIONS REQUIRED AT WASHINGTON. NO QUANTITIES WHATEVER WERE SPECIFIED. UPON EXAMINATION OF THE CONTRACT IT WAS NOTED THAT THE NEEDS OF THE GOVERNMENT WERE ADVERTISED ONLY TO THE EXTENT OF SENDING CIRCULAR LETTERS TO THREE DEALERS HAVING OFFICES IN WASHINGTON. THERE WAS RECEIVED A LETTER DATED OCTOBER 17. WHILE RESULTING FROM NEW INVITATIONS TO BID WHICH WERE EXTENDED UNDER DATE OF JULY 21.

A-82043, JANUARY 21, 1937, 16 COMP. GEN. 670

CONTRACTS - NATION-WIDE SERVICES - ADVERTISING RESTRICTED TO WASHINGTON, D.C. A CONTRACT FOR FURNISHING AND INSTALLING FOR AN ENTIRE FISCAL YEAR AN INDEFINITE QUANTITY OF MOVABLE METAL AND GLASS PARTITIONS FOR BUILDINGS OCCUPIED BY THE FEDERAL HOUSING ADMINISTRATION IN WASHINGTON, D.C., "AND OTHER LOCATIONS WITHIN THE UNITED STATES," AWARDED AFTER ONLY VERY LIMITED ADVERTISING AT WASHINGTON, IS EVEN MORE OBJECTIONABLE THAN THE PROPOSED CONTRACTS FOR INDEFINITE SERVICES REFERRED TO IN 16 COMP. GEN. 258, WHEREIN IT WAS HELD THAT THERE IS NO LEGAL JUSTIFICATION FOR GIVING PARTICULAR CONTRACTORS A NATION-WIDE MONOPOLY TO FURNISH CERTAIN SERVICES, THEREBY EXCLUDING OTHER CONTRACTORS THROUGHOUT THE UNITED STATES EQUIPPED AND WILLING TO RENDER SUCH SERVICES LOCALLY AT POSSIBLY MORE ADVANTAGEOUS PRICES TO THE GOVERNMENT, AND PAYMENTS ARE NOT AUTHORIZED FOR SERVICES RENDERED UNDER SAID CONTRACT EXCEPT FOR PARTITIONS REQUIRED AT WASHINGTON, D.C.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, FEDERAL HOUSING ADMINISTRATION, JANUARY 21, 1937:

THERE HAS COME TO MY ATTENTION CONTRACT NO. FH-248, ENTERED INTO AUGUST 8, 1936, WITH THE E. F. HAUSERMAN CO., CLEVELAND, OHIO, FOR THE FURNISHING AND INSTALLING DURING THE FISCAL YEAR ENDING JUNE 30, 1937, OF MOVABLE METAL AND GLASS PARTITIONS TO MATCH AND INTERMEMBER WITH PARTITIONS NOW IN PLACE IN BUILDINGS OCCUPIED BY THE FEDERAL HOUSING ADMINISTRATION IN WASHINGTON, D.C., "AND OTHER LOCATIONS WITHIN THE UNITED STATES.' THE CONTRACTOR'S ACCEPTED PROPOSAL STATED THAT PARTITIONS WOULD BE FURNISHED AND ERECTED AT STIPULATED UNIT PRICES "IN ANY CITY IN THE UNITED STATES IN WHICH THE UNDERSIGNED HAS AN OFFICE OR AGENT.' NO QUANTITIES WHATEVER WERE SPECIFIED, EITHER FOR WASHINGTON OR ANY OTHER CITY.

UPON EXAMINATION OF THE CONTRACT IT WAS NOTED THAT THE NEEDS OF THE GOVERNMENT WERE ADVERTISED ONLY TO THE EXTENT OF SENDING CIRCULAR LETTERS TO THREE DEALERS HAVING OFFICES IN WASHINGTON, D.C. RELATIVE TO THIS, THERE WAS RECEIVED A LETTER DATED OCTOBER 17, 1936, FROM THE PURCHASING AND PROPERTY OFFICER, FEDERAL HOUSING ADMINISTRATION, IN PERTINENT PART, AS FOLLOWS:

CONTRACT FH-248, WHILE RESULTING FROM NEW INVITATIONS TO BID WHICH WERE EXTENDED UNDER DATE OF JULY 21, 1936, COVERS SERVICES IDENTICAL TO THOSE PREVIOUSLY SUPPLIED FOR THE PERIOD DECEMBER 1, 1935, TO JUNE 30, 1936, THROUGH OUR CONTRACT FH-176 AND ON MARCH 11, 1935, BY CONTRACT FH-92. PREVIOUS TO EXTENDING THE INVITATIONS TO BID WHICH RESULTED IN CONTRACT FH -176, IT WAS ADMINISTRATIVELY DETERMINED THAT IN ORDER TO MAINTAIN UNIFORMITY AND THEREBY PROVIDE FOR THE INTERCHANGING OF THE VARIOUS UNITS AS CHANGES IN LOCATION WERE NECESSARY, OUR SPECIFICATIONS SHOULD BE RESTRICTED TO PARTITIONS THAT WOULD INTERMEMBER WITH THOSE ALREADY IN POSITION. IN ADDITION TO THIS, IT WAS DEEMED ADVISABLE TO HAVE THESE SERVICES CONTRACTED FOR UNDER CONDITIONS THAT WOULD PERMIT REERECTION OF EXISTING PARTITIONS AND FURNISHING OF ADDITIONAL EQUIPMENT WHEN NEEDED TO BE COMPLETED WITHOUT DELAY, AND IN THIS RESPECT IT WAS ADMINISTRATIVELY DETERMINED THAT BIDS SHOULD BE INVITED FROM COMPANIES HAVING ESTABLISHED BRANCHES OR SERVICE FACILITIES IN WASHINGTON, D.C., SINCE THE BULK OF THE WORK TO BE DONE WOULD BE FOR THE WASHINGTON OFFICE.

REFERENCE TO THOMAS REGISTER OF MANUFACTURERS AND THE ADVERTISING SECTION OF THE WASHINGTON, D.C., TELEPHONE DIRECTORY, AND TELEPHONE INQUIRIES IN CONNECTION THERETO, BROUGHT OUT THE INFORMATION THAT THREE CONCERNS, NAMELY: THE ART METAL CONSTRUCTION COMPANY, THE GLOBE WERNICKE COMPANY, AND E. F. HAUSERMAN COMPANY, COULD MEET OUR REQUIREMENTS, AND IT WAS FOR THESE REASONS THAT WE CHOSE THE METHOD OF INVITATION EMPLOYED RATHER THAN THAT OF DISPLAY OF NOTICES IN PUBLIC PLACES IN THE INSTANCE ALSO OF CONTRACT FH-248.

WITH REFERENCE TO CONTRACT FH-92, MENTIONED IN THE LETTER ABOVE QUOTED, IT APPEARS THE CONTRACT WAS AWARDED TO THE E. F. HAUSERMAN CO., AFTER RECEIVING IDENTICAL BIDS BY TELEPHONE FROM SAID FIRM AND FROM THE GLOBE- WERNICKE CO., WASHINGTON, D.C., IT BEING STATED TO HAVE BEEN IN THE INTEREST OF THE UNITED STATES TO AWARD THE CONTRACT TO THE E. F. HAUSERMAN CO. INASMUCH AS THE PARTITIONS WERE FOR USE IN THE FEDERAL HOUSING ADMINISTRATION BUILDING, VERMONT AVENUE AND K STREET NW., WASHINGTON, D.C., AND WERE TO BE USED IN CONNECTION WITH PARTITIONS THEN BEING FURNISHED BY THE OWNER OF SAID BUILDING, WHO PRIOR TO THE SOLICITING OF BIDS HAD ORDERED PARTITIONS FROM THE E. F. HAUSERMAN CO. WITH REFERENCE TO CONTRACT FH-176, ALSO MENTIONED IN THE LETTER, SUPRA, THE AWARD WAS MADE TO THE E. F. HAUSERMAN CO. AFTER IDENTICAL BIDS HAD BEEN RECEIVED FROM THREE WASHINGTON, D.C., DEALERS, FOR THE REASON THAT AS SAID FIRM HAD BEEN AWARDED THE PREVIOUS CONTRACT IT COULD FURNISH IN A MORE SATISFACTORY MANNER PARTITIONS THAT WOULD INTERMEMBER AND INTERCHANGE WITH THE PARTITIONS PREVIOUSLY PURCHASED.

THE CIRCUMSTANCE THAT THIS PARTICULAR CONTRACTOR HAD PREVIOUSLY FURNISHED PARTITIONS FOR THE FEDERAL HOUSING ADMINISTRATION BUILDING IN WASHINGTON, D.C., CERTAINLY SHOWS NO NECESSITY OR PROVIDES NO BASIS FORGIVING THE CONTRACTOR A YEAR'S MONOPOLY TO FURNISH PARTITIONS FOR ALL FEDERAL HOUSING ADMINISTRATION OFFICES THROUGHOUT THE UNITED STATES. AS STATED ABOVE, NO QUANTITIES WERE SPECIFIED FOR EITHER WASHINGTON OR ANY OTHER CITY AND THE VIRTUAL EFFECT OF THE CONTRACT IS TO EXCLUDE ALL OTHER DEALERS, LOCAL OR GENERAL, FROM BIDDING ON, OR PARTICIPATING IN, ANY WORK OF THIS CHARACTER REQUIRED THROUGHOUT THE UNITED STATES DURING THE FISCAL YEAR, IRRESPECTIVE OF THE ADVANTAGE TO THE GOVERNMENT WHICH MIGHT BE OBTAINED BY ADVERTISING AND LOCAL COMPETITION FOR SUCH WORK WHEN AND AS ANY ACTUAL NEED THEREFOR ARISES IN DIFFERENT CITIES. IN DECISION OF SEPTEMBER 16, 1936, 16 COMP. GEN. 258, ADDRESSED TO YOU, IT WAS HELD THAT THERE IS NO LEGAL JUSTIFICATION FOR SUCH NATION-WIDE INDEFINITE CONTRACTS GIVING PARTICULAR CONTRACTORS A MONOPOLY TO FURNISH CERTAIN SERVICES AND EXCLUDING OTHER CONCERNS PROPERLY EQUIPPED AND WILLING TO RENDER SUCH SERVICES LOCALLY AT POSSIBLY MORE ADVANTAGEOUS PRICES TO THE GOVERNMENT. THE SITUATION IN THE PRESENT CASE APPEARS EVEN MORE OBJECTIONABLE IN THAT ONLY VERY LIMITED LOCAL ADVERTISING WAS USED AS A BASIS FOR ENTERING INTO A CONTRACT PURPORTING TO COVER NATION-WIDE SERVICES. FURTHERMORE, THE CONTRACT IS QUESTIONABLE FOR WANT OF CERTAINTY AND MUTUALITY IN THAT THE QUANTITY OF OFFICE PARTITIONS, IF ANY, TO BE PURCHASED THEREUNDER IS NOT SPECIFIED AND CANNOT BE ASCERTAINED ON ANY DEFINITE BASIS SPECIFIED IN THE CONTRACT. SEE WILLARD, SUTHERLAND AND COMPANY V. UNITED STATES, 262 U.S. 489; 14 COMP. GEN. 446; ID. 723.

ACCORDINGLY, YOU ARE ADVISED THAT PURCHASES UNDER THE CONTRACT IN QUESTION MAY NOT BE VIEWED AS LEGALLY AUTHORIZED EXCEPT FOR PARTITIONS REQUIRED AT WASHINGTON, D.C., AND THAT BEFORE ANY PURCHASE OF PARTITIONS IS MADE FOR USE IN CITIES OTHER THAN WASHINGTON, D.C., THE NEEDS OF THE GOVERNMENT SHOULD BE ADVERTISED IN THE LOCALITY WHERE THE SUPPLIES ARE TO BE FURNISHED AND THE WORK PERFORMED.