A-82722, FEBRUARY 9, 1937, 16 COMP. GEN. 744

A-82722: Feb 9, 1937

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AWARD IS MADE ON SEVERAL ITEMS TO BIDDERS WHO QUOTED ON ONLY A PORTION OF THE ITEMS INVOLVING AN AGGREGATE OF LESS THAN $10. THERE IS NO OBJECTION TO AWARD OF OTHER ITEMS AGGREGATING SUBSTANTIALLY LESS THAN $10. IF IT IS ADMINISTRATIVELY FOUND THAT THE PRICES BID ARE REASONABLE AND THE BID IS OTHERWISE ACCEPTABLE. AS FOLLOWS: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 4. BIDS WERE OPENED AT 2:00 P.M. FOUR BIDS WERE RECEIVED. AFTER THE BIDS WERE OPENED. THIS TELEGRAM WILL BE FOUND WITH THE COMPANY'S BID. AWARDS WERE MADE TO THE CLEVELAND TRACTOR COMPANY FOR FOUR TRACTORS AT THE PRICES QUOTED UNDER ITEMS 1A. NO AWARD WAS MADE UNDER ITEM 1B FOR THE TWO TRACTORS COVERED THEREBY. THE CATERPILLAR TRACTOR COMPANY WAS LOW.

A-82722, FEBRUARY 9, 1937, 16 COMP. GEN. 744

CONTRACTS - WALSH-HEALEY ACT REQUIREMENTS - QUALIFIED BIDS AND AWARDS BELOW APPLICABILITY LIMITATIONS WHERE, IN THE PURCHASE OF VARIOUS ITEMS OF TRACTOR EQUIPMENT INVOLVING AN AGGREGATE VALUE IN EXCESS OF $10,000, AWARD IS MADE ON SEVERAL ITEMS TO BIDDERS WHO QUOTED ON ONLY A PORTION OF THE ITEMS INVOLVING AN AGGREGATE OF LESS THAN $10,000, THERE IS NO OBJECTION TO AWARD OF OTHER ITEMS AGGREGATING SUBSTANTIALLY LESS THAN $10,000 TO ANOTHER BIDDER--- LOW IN PRICE AS TO THESE ITEMS--- WHO EXCEPTED TO THE WALSH-HEALEY ACT PROVISIONS INCLUDED IN THE ADVERTISED SPECIFICATIONS, NOTWITHSTANDING SAID BID IN THE AGGREGATE EXCEEDED $10,000, IF IT IS ADMINISTRATIVELY FOUND THAT THE PRICES BID ARE REASONABLE AND THE BID IS OTHERWISE ACCEPTABLE, THERE NOT BEING IN SUCH CASE ANY INDUCEMENT UPON READVERTISEMENT FOR OTHER BIDDERS TO OFFER MORE FAVORABLE PRICES IN ORDER TO COME WITHIN THE EXCEPTION LIMIT OF SAID ACT. 16 COMP. GEN. 583, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, FEBRUARY 9, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF JANUARY 29, 1937, WITH INCLOSURES, AS FOLLOWS:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 4, 1937, (A-82722), WHICH REFERS TO A TELEGRAM UNDER DATE OF DECEMBER 30, 1936, RECEIVED BY YOU FROM THE CATERPILLAR TRACTOR COMPANY, PEORIA, ILLINOIS, WHEREIN THE COMPANY PROTESTS AGAINST READVERTISEMENT OF CERTAIN TRACTORS UNDER THIS DEPARTMENT'S TRANSACTION U.S.D.A. 7619. YOU REQUEST A DETAILED ADMINISTRATIVE REPORT COVERING WHATEVER ACTION THE DEPARTMENT HAS IN MIND TO TAKE IN THE PREMISES, TOGETHER WITH THE USUAL COLLATERAL PAPERS.

UNDER BID TRANSACTION U.S.D.A. 7619, WHICH COVERED TRACTOR EQUIPMENT OF AN AGGREGATE VALUE IN EXCESS OF $10,000, THUS BRINGING THE TRANSACTION UNDER THE PROVISIONS OF PUBLIC ACT NO. 846, SEVENTY-FOURTH CONGRESS, BIDS WERE OPENED AT 2:00 P.M., NOVEMBER 10, 1936. FOUR BIDS WERE RECEIVED. THE ALLIS CHALMERS MANUFACTURING COMPANY QUOTED ON ALL ITEMS AND TOOK NO EXCEPTIONS TO THE PROVISIONS OF THE SPECIFICATIONS, WHICH INCLUDED THE REPRESENTATIONS AND STIPULATIONS OF PUBLIC ACT NO. 846, SEVENTY-FOURTH CONGRESS.

THE CATERPILLAR TRACTOR COMPANY QUOTED ON ALL ITEMS, BUT TOOK CERTAIN EXCEPTIONS TO THE PROVISIONS OF THE ACT (SEE ITS BID). BY TELEGRAM DATED DECEMBER 23, 1936, AFTER THE BIDS WERE OPENED, THE CATERPILLAR TRACTOR COMPANY REQUESTED PERMISSION TO WITHDRAW FROM ITS BID THE QUALIFYING EXCEPTIONS IT CONTAINED. THIS TELEGRAM WILL BE FOUND WITH THE COMPANY'S BID.

THE CLEVELAND TRACTOR COMPANY AND THE INTERNATIONAL HARVESTER COMPANY QUOTED ON ONLY A PORTION OF THE TRACTORS CALLED FOR AND IN AMOUNTS NOT IN EXCESS OF $10,000 IN THE AGGREGATE.

UNDER DATE OF DECEMBER 30, 1936, AND IN CONFORMITY WITH YOUR DECISION OF DECEMBER 15, 1936 (A-81763), ADDRESSED TO THIS DEPARTMENT, AWARDS WERE MADE TO THE CLEVELAND TRACTOR COMPANY FOR FOUR TRACTORS AT THE PRICES QUOTED UNDER ITEMS 1A, 1D, AND 1F, AND TO THE INTERNATIONAL HARVESTER COMPANY FOR FOUR TRACTORS UNDER ITEM 2, THESE AWARDS BEING ON THE BASIS OF LOWEST BIDS AS TO PRICE RECEIVED, FREIGHT CONSIDERED.

NO AWARD WAS MADE UNDER ITEM 1B FOR THE TWO TRACTORS COVERED THEREBY, FUNDS BEING NO LONGER AVAILABLE.

ON THE REMAINING THREE TRACTORS COVERED BY THE ADVERTISEMENT, I.E., ONE UNDER ITEM 1H AND TWO UNDER ITEM 2, THE CATERPILLAR TRACTOR COMPANY WAS LOW. HOWEVER, THE TOTAL AMOUNT OF THE CONTRACT WHICH WOULD HAVE RESULTED FROM AN AWARD OF THESE TRACTORS TO THAT COMPANY WOULD HAVE BEEN LESS THAN $10,000, AND AS THE COMPANY HAD BID SEVERALLY ON ALL ITEMS NO AWARD WAS MADE TO IT, YOUR DECISION (A 81763), ALREADY REFERRED TO, BEING INTERPRETED AS NOT PERMITTING AWARDS IN AMOUNTS NOT IN EXCESS OF $10,000 WHERE PROPOSALS HAVE BEEN SUBMITTED AGGREGATING IN EXCESS OF THAT AMOUNT, AND THEREBY PRESUMABLY CONTAINING AN ELEMENT OF COST BASED UPON COMPLIANCE WITH THE PROVISIONS OF PUBLIC ACT NO. 846, SEVENTY-FOURTH CONGRESS. THE CIRCUMSTANCES THE DEPARTMENT HAS BELIEVED THAT READVERTISEMENT FOR THE REMAINING ITEMS IS IN ORDER, AND PROPOSES SUCH READVERTISEMENT UNLESS ADVISED BY YOU TO THE CONTRARY.

THERE ARE ENCLOSED A COPY OF THE ADVERTISEMENT, THE ORIGINAL BID OF THE CATERPILLAR TRACTOR COMPANY, A TABULATION OF ALL BIDS RECEIVED, AND PERTINENT COLLATERAL PAPERS. PLEASE RETURN ALL PAPERS WITH YOUR REPLY.

IT APPEARS FROM THE PAPERS TRANSMITTED WITH YOUR LETTER THAT THE CATERPILLAR TRACTOR COMPANY SUBMITTED BIDS COVERING ALL ITEMS OF THE INVITATION FOR PROPOSALS, AND THAT THE AGGREGATE AMOUNT OF ITS BIDS WAS IN EXCESS OF $10,000. THE COMPANY ATTACHED TO ITS BID CERTAIN "EXCEPTIONS TO REPRESENTATIONS AND STIPULATIONS REQUIRED BY PUBLIC ACT NO. 846, SEVENTY- FOURTH CONGRESS AND REGULATIONS PROMULGATED BY THE SECRETARY OF LABOR.' IN VIEW OF THE CONCLUSION HEREIN REACHED THESE EXCEPTIONS DO NOT REQUIRE CONSIDERATION AT THIS TIME.

UPON EVALUATION OF ALL BIDS IT WAS FOUND THAT THE CATERPILLAR TRACTOR COMPANY WAS LOW BIDDER ON ONLY THREE ITEMS, ONE TRACTOR AT $1,204.95 DELIVERED WHITTIER, CALIFORNIA, AND TWO TRACTORS AT $2,410 EACH F.O.B. PEORIA, ILLINOIS, OR A TOTAL OF $6,024.95. YOU STATE THAT AWARDS HAVE BEEN MADE FOR THE OTHER ITEMS TO BE PURCHASED, AND YOU PROPOSE TO WITHHOLD AWARD TO THE LOW BIDDER ON THESE UNITS, AND READVERTISE THEM, MY DECISION TO YOU OF DECEMBER 15, 1936, A-81763 (16 COMP. GEN. 583),"BEING INTERPRETED AS NOT PERMITTING AWARDS IN AMOUNTS NOT IN EXCESS OF $10,000 WHERE PROPOSALS HAVE BEEN SUBMITTED AGGREGATING IN EXCESS OF THAT AMOUNT, AND THEREBY PRESUMABLY CONTAINING AN ELEMENT OF COST BASED UPON COMPLIANCE WITH THE PROVISIONS OF PUBLIC ACT NO. 846, SEVENTY-FOURTH CONGRESS.' TO THIS SUGGESTION, IT MAY BE POINTED OUT THAT SINCE THE CATERPILLAR TRACTOR COMPANY SPECIFICALLY EXCEPTED TO THE REQUIREMENT OF COMPLIANCE WITH THE WALSH-HEALEY ACT AND THE REGULATIONS OF THE SECRETARY OF LABOR ISSUED PURSUANT THERETO, THERE WOULD APPEAR LITTLE REASON FOR ANY PRESUMPTION THAT THIS PARTICULAR BIDDER HAD INCLUDED IN ITS BID PRICE AN ELEMENT OF COST BASED UPON COMPLIANCE WITH PROVISIONS OF THE ACT. HOWEVER, THAT MATTER DOES NOT APPEAR FOR CONSIDERATION HERE.

THE PROPOSED ADMINISTRATIVE ACTION INDICATES MISUNDERSTANDING OF MY DECISION OF DECEMBER 15, 1936, SUPRA. THAT DECISION CONSIDERED, INTER ALIA, THE EFFECT OF A RESERVATION IN CERTAIN BIDS OF NORTHWEST MOTOR COMPANY, APPARENTLY RELIEVING THE FORD MOTOR COMPANY--- THE MANUFACTURER OF THE AUTOMOBILES OFFERED BY THE DEALER--- FROM ALL RESPONSIBILITY FOR COMPLIANCE WITH THE PROVISIONS OF THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, THE CONTRACT FOR AWARDING BEING IN EXCESS OF $10,000. WAS STATED IN SAID DECISION THAT---

* * * 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. * * *

ALSO, IT WAS HELD THAT---

* * * 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- HEALEYACT, WOULD BE INFLUENCED TO OFFER THE GOVERNMENT A LOWER PRICE, WITH A VIEW OF COMING WITHIN THE EXCEPTION LIMIT OF THE ACT.

IT WILL BE SEEN THAT THE DECISION HAD REFERENCE TO CASES WHERE THE CONTRACT TO BE AWARDED IS IN EXCESS OF $10,000, AND TO CASES WHERE, AFTER MAKING AWARDS TO THE LOW BIDDERS ON BIDS COVERING ONLY A PORTION OF THE ADVERTISED NEEDS, THE LOW BID FOR THE BALANCE IS SLIGHTLY IN EXCESS OF $10,000, THUS INDICATING THAT ON SUCH A QUANTITY SOME OTHER DEALER OR MANUFACTURER MIGHT BID LESS THAN $10,000. SUCH A SITUATION IS NOT PRESENTED HERE. IF THE CATERPILLAR TRACTOR CO. HAD BEEN LOW BIDDER ON A SUFFICIENT NUMBER OF ITEMS TO ENTITLE IT TO AWARD OF A CONTRACT EXCEEDING $10,000 IN AMOUNT, THE PROVISIONS OF THE WALSH HEALEY ACT WOULD BE APPLICABLE TO SUCH CONTRACT, AND THERE WOULD BE FOR CONSIDERATION THE EFFECT OF THE EXCEPTIONS IN ITS BID. BUT SINCE A CONTRACT AWARDED THE COMPANY FOR ONLY THE THREE ITEMS ON WHICH IT IS THE LOW BIDDER WOULD BE WELL BELOW $10,000 IN AMOUNT, THE WALSH-HEALEY ACT IS NOT APPLICABLE, AND THE EXCEPTIONS IN THE BID OF THE CATERPILLAR TRACTOR CO. PROPERLY MAY BE DISREGARDED. SEE DECISION A 82353, DECEMBER 18, 1936 (16 COMP. GEN. 605), TO THE SECRETARY OF THE INTERIOR, IN WHICH THERE WAS AGAIN FOR CONSIDERATION THE RESERVATION IN BIDS OF THE NORTHWEST MOTOR CO., AND IN WHICH THE RULE WAS STATED AS FOLLOWS:

* * * WHERE CONTRACTS AWARDED ARE NOT IN EXCESS OF $10,000 IN AMOUNT, THERE IS NO REQUIREMENT THAT THE STATUTORY STIPULATIONS OF THE WALSH- HEALEY ACT BE INCLUDED IN THE CONTRACT. IN SUCH CASES THE STATED RESERVATION IN THE BID OF A DEALER IS SUPERFLUOUS AND DOES NOT GIVE THE BIDDER ANY COMPETITIVE ADVANTAGE OVER OTHER BIDDERS OR VARY THE OBLIGATIONS OF THE CONTRACT FROM THOSE WHICH OTHERWISE WOULD HAVE BEEN INCURRED. HENCE, THE RESERVATION IS WHOLLY IMMATERIAL IN SUCH CASES AND PROVIDES NO BASIS FOR THE REJECTION OF A BID OTHERWISE ACCEPTABLE. * * *

WHILE THE CATERPILLAR TRACTOR CO. IS THE MANUFACTURER OF THE TRACTORS OFFERED, AS DISTINGUISHED FROM A DEALER THEREIN, THERE APPEARS NO LOGICAL REASON FOR THE APPLICATION OF A DIFFERENT RULE WHEN IT DEVELOPS UPON EXAMINATION OF THE BIDS THAT THE CONTRACT FOR AWARDING TO A MANUFACTURER IS LESS THAN $10,000 IN AMOUNT.

ALSO, THERE APPEARS NO BASIS FOR READVERTISING THE THREE ITEMS HERE INVOLVED UNDER THE RULE THAT THERE SHOULD BE READVERTISEMENT WHEN THERE IS LEFT A BALANCE OF NOT MUCH MORE THAN $10,000 FOR POSSIBLE AWARD. SINCE THE PRICE OF THE THREE TRACTORS IS SUBSTANTIALLY BELOW $10,000, THERE WOULD BE NO INDUCEMENT FOR BIDDERS TO OFFER THE GOVERNMENT ANY MORE FAVORABLE PRICES IN ORDER TO COME WITHIN THE EXCEPTION LIMIT OF THE ACT, AND THERE APPEARS NO REASON TO ASSUME THAT ANY LOWER PRICES WOULD BE OBTAINED UPON READVERTISEMENT THAN THOSE OFFERED UNDER THE PRESENT BIDS.

ACCORDINGLY, YOU ARE INFORMED THAT SINCE THE CATERPILLAR TRACTOR CO. WAS LOW BIDDER ON THE THREE ITEMS REMAINING FOR AWARD, AND SINCE THE BID PRICE IS SUBSTANTIALLY BELOW $10,000 AND THERE IS NOT INVOLVED THE APPLICATION OF THE REQUIREMENTS OF THE WALSH-HEALEY ACT, THERE WILL NOT BE FOR OBJECTION BY THIS OFFICE AN AWARD TO THE CATERPILLAR TRACTOR CO. IF IT IS ADMINISTRATIVELY FOUND THAT THE PRICES BID ARE REASONABLE AND THE BID IS OTHERWISE ACCEPTABLE.