A-84043, MARCH 5, 1937, 16 COMP. GEN. 815

A-84043: Mar 5, 1937

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THERE IS NO OBJECTION TO THE ISSUANCE OF INVITATIONS FOR BIDS FOR DELIVERY F.O.B. IS AS FOLLOWS: REFERENCE IS MADE TO YOUR DECISION OF AUGUST 18. SINCE IT IS IMPOSSIBLE TO DETERMINE IN ADVANCE WHICH STATIONS WILL REQUIRE SUCH ITEMS DURING THE CONTRACT PERIOD. BIDS ARE INVITED FOR FURNISHING ALL OF THE ITEMS THAT MAY BE REQUIRED AT ANY OF THE STATIONS WITHIN EACH OF THE CORPS AREAS. IN VIEW OF THE FACT THAT THE DESTINATIONS ARE NOT KNOWN AT THE TIME OF INVITING BIDS. IT IS MANIFESTLY IMPOSSIBLE TO CALL FOR ALTERNATE BIDS. THERE IS PRESENTED THE QUESTION OF WHETHER THERE WOULD RESULT ANY MATERIAL SAVING TO THE GOVERNMENT IF THE SHIPMENT IS LESS THAN A CARLOAD LOT. THE MAJORITY OF ORDERS FOR FIRE EXTINGUISHERS PLACED AGAINST AN INDEFINITE QUANTITY CONTRACT ARE FOR COMPARATIVELY SMALL QUANTITIES.

A-84043, MARCH 5, 1937, 16 COMP. GEN. 815

ADVERTISING - BIDS - F.O.B. DELIVERY REQUIREMENTS - SMALL QUANTITIES AND DESTINATION UNKNOWN WHERE, IN CONNECTION WITH THE PURCHASE OF GOVERNMENT MATERIALS AND SUPPLIES, THE GOVERNMENT DESTINATION CANNOT BE DEFINITELY DETERMINED IN ADVANCE, THERE IS NO OBJECTION TO THE ISSUANCE OF INVITATIONS FOR BIDS FOR DELIVERY F.O.B. ANY DESTINATION WITHIN A REASONABLY LIMITED AND DEFINED AREA AS WELL AS F.O.B. BIDDER'S SHIPPING POINT. THE RULE STATED IN 16 COMP. GEN. 272, IN CONNECTION WITH THE PURCHASE OF GOVERNMENT MATERIALS AND SUPPLIES, THAT INVITATIONS FOR BIDS INVOLVING SHIPMENTS WEIGHING 100 POUNDS OR LESS NEED REQUIRE BIDS ON F.O.B. GOVERNMENT DESTINATION BASIS ONLY, MAY BE EXTENDED TO SHIPMENTS BETWEEN 100 AND 200 POUNDS IF, BECAUSE OF THE LOW RATE CLASSIFICATION OF THE ARTICLES INVOLVED AND OTHER FACTORS, NO MATERIAL SAVING WOULD ACCRUE FROM SHIPMENT ON GOVERNMENT BILL OF LADING.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, MARCH 5, 1937:

YOUR LETTER OF FEBRUARY 17, 1937, IS AS FOLLOWS:

REFERENCE IS MADE TO YOUR DECISION OF AUGUST 18, 1936, 16 COMP. GEN. 149, IN WHICH YOU STATE THAT THE PUBLIC INTEREST, AS WELL AS FAIRNESS TO ALL BIDDERS, REQUIRES THAT BIDS BE REQUESTED ON THE BASIS OF BOTH F.O.B. BIDDER'S SHIPPING POINT AND F.O.B. GOVERNMENT DESTINATION.

THE WAR DEPARTMENT EXECUTES FROM TIME TO TIME INDEFINITE QUANTITY CONTRACTS FOR SUCH ITEMS AS FIRE HOSE, FIRE EXTINGUISHERS, ETC. SINCE IT IS IMPOSSIBLE TO DETERMINE IN ADVANCE WHICH STATIONS WILL REQUIRE SUCH ITEMS DURING THE CONTRACT PERIOD, BIDS ARE INVITED FOR FURNISHING ALL OF THE ITEMS THAT MAY BE REQUIRED AT ANY OF THE STATIONS WITHIN EACH OF THE CORPS AREAS. IN VIEW OF THE FACT THAT THE DESTINATIONS ARE NOT KNOWN AT THE TIME OF INVITING BIDS, IT IS MANIFESTLY IMPOSSIBLE TO CALL FOR ALTERNATE BIDS, BUT INSTEAD BIDS MUST BE INVITED EITHER F.O.B. ANY DESTINATION WITHIN A DEFINITE GEOGRAPHICAL AREA, SUCH AS A CORPS AREA, OR F.O.B. BIDDER'S SHIPPING POINT. IN INVITING BIDS FOR DELIVERY F.O.B. BIDDER'S SHIPPING POINT FOR SHIPMENT ON A GOVERNMENT BILL OF LADING, THERE IS PRESENTED THE QUESTION OF WHETHER THERE WOULD RESULT ANY MATERIAL SAVING TO THE GOVERNMENT IF THE SHIPMENT IS LESS THAN A CARLOAD LOT. FOR EXAMPLE, THE MAJORITY OF ORDERS FOR FIRE EXTINGUISHERS PLACED AGAINST AN INDEFINITE QUANTITY CONTRACT ARE FOR COMPARATIVELY SMALL QUANTITIES, SUCH AS TEN EXTINGUISHERS WEIGHING LESS THAN TWO HUNDRED (200) POUNDS. IN THE OPINION OF THE WAR DEPARTMENT, THE SHIPMENT OF SUCH SMALL QUANTITIES ON A GOVERNMENT BILL OF LADING WILL NOT RESULT IN ANY MATERIAL SAVING BUT, ON THE CONTRARY, WILL IN MOST CASES BE LESS ADVANTAGEOUS TO THE GOVERNMENT BY REASON OF THE INCREASED AMOUNT OF PAPER WORK AND THE DELAYS ATTENDANT TO SECURING PROPERLY EXECUTED BILLS OF LADING FROM THE CONTRACTORS.

SINCE THE WAR DEPARTMENT IS READY TO INITIATE SEVERAL PROCUREMENTS, AN EARLY DECISION ON THE FOLLOWING QUESTIONS IS REQUESTED:

(1) IN CASES WHERE THE GOVERNMENT DESTINATION CANNOT BE DEFINITELY DETERMINED IN ADVANCE, MAY BIDS BE INVITED FOR DELIVERY F.O.B. ANY DESTINATION WITHIN A DEFINITE AREA IF IT IS KNOWN THAT BIDDERS WILL SUBMIT BIDS ON SUCH A BASIS?

(2) IN CASES WHERE DESTINATIONS ARE KNOWN BUT INDIVIDUAL SHIPMENTS ARE TO BE SO SMALL THAT NO MATERIAL SAVING WOULD ACCRUE FROM A SHIPMENT ON A GOVERNMENT BILL OF LADING, MAY BIDS BE INVITED FOR DELIVERY F.O.B. GOVERNMENT DESTINATION ONLY?

IT WOULD SEEM ALWAYS FOR CONSIDERATION WHETHER "INDEFINITE QUANTITY CONTRACTS FOR SUCH ITEMS AS FIRE HOSE, FIRE EXTINGUISHERS, ETC., " MAY BE JUSTIFIED AS NECESSARY OR ACCEPTED AS GIVING RISE TO ANY LEGAL LIABILITY TO PAY FROM APPROPRIATED MONEYS. 14 COMP. GEN. 723. IT IS NOT PERCEIVED WHY THE NEEDS FOR THE VARIOUS AREAS MAY NOT BE ANTICIPATED FOR SUCH ITEMS SO THAT THEY MAY BE ADVERTISED DEFINITELY AND FOR LIMITED PERIODS, THUS PROBABLY RESULTING IN MORE FAVORABLE OFFERS, PARTICULARLY FROM LOCAL MANUFACTURERS OR DEALERS, THAN USUALLY WOULD BE RECEIVED FOR INDEFINITE INVITATIONS SUCH AS ARE SUGGESTED TO BE IN CONTEMPLATION.

CONCERNING YOUR FIRST QUESTION, THERE MAY ARISE CASES IN CONNECTION WITH OTHERWISE PROPER CONTRACTS FOR SUCH EQUIPMENT "WHEN THE GOVERNMENT DESTINATION CANNOT BE DEFINITELY DETERMINED IN ADVANCE" AND IN SUCH CASES THIS OFFICE WILL NOT BE REQUIRED TO OBJECT IF BIDS ARE INVITED FOR DELIVERY F.O.B. ANY DESTINATION WITHIN A REASONABLY LIMITED AND DEFINED AREA AS WELL AS F.O.B. THE BIDDER'S SHIPPING POINT.

CONCERNING YOUR SECOND QUESTION, IT WAS DECIDED IN A-66668 OF FEBRUARY 17, 1936, THAT IN CONNECTION WITH SMALL PURCHASES WHERE THE TOTAL SHIPMENT AMOUNTS TO 100 POUNDS OR LESS, CONTRACTS MADE ON THE BASIS OF "F.O.B. DESTINATION ONLY" WITHOUT A SHOWING WHETHER A SAVING WOULD HAVE RESULTED HAD THE DELIVERY BEEN TAKEN "F.O.B. BIDDER'S SHIPPING POINT" WOULD NOT BE QUESTIONED BY THIS OFFICE.

THE ENTIRE MATTER WAS THE SUBJECT OF FURTHER CONSIDERATION IN 16 COMP. GEN. 272, IN PART AS FOLLOWS:

* * * SUCH REQUIREMENT FOR BIDS ON THE BASIS OF F.O.B. BIDDER'S SHIPPING POINT AND F.O.B. DESTINATION DOES NOT NECESSARILY APPLY WHEN THE TOTAL SHIPMENTS AGGREGATE 100 POUNDS OR LESS. SEE DECISIONS OF OCTOBER 31, 1935, AND FEBRUARY 17, 1936, A-66668. IN SUCH INSTANCES WHERE THE SHIPMENT WEIGHTS 100 POUNDS OR LESS, THE SPECIFICATIONS MAY PROPERLY REQUIRE QUOTATIONS ON THE BASIS OF F.O.B., GOVERNMENT DESTINATION DELIVERIES, ONLY.

THE SAME RULE MAY BE APPLIED WHERE THE WEIGHT OF THE INDIVIDUAL SHIPMENTS WILL BE BETWEEN 100 POUNDS AND 200 POUNDS IF, DUE TO THE LOW RATE CLASSIFICATION OF THE ARTICLES INVOLVED AND OTHER FACTORS, NO MATERIAL SAVING WOULD ACCRUE FROM A SHIPMENT ON A GOVERNMENT BILL OF LADING.