A-86297, MAY 20, 1937, 16 COMP. GEN. 1019

A-86297: May 20, 1937

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THERE IS NO OBJECTION TO THE ENTERING INTO A NEGOTIATED CONTRACT. WITH THE ONLY CONCERN REPORTED TO HAVE EQUIPMENT WHICH WILL EFFICIENTLY AND ECONOMICALLY PERFORM THE SERVICES NECESSARY TO THE PREPARATION OF AN URGENTLY NEEDED NATIONAL INDEX OF EMPLOYEES' NAMES AND UNDER WHICH TITLE TO ONE OF THE MACHINES USED WILL PASS TO THE GOVERNMENT. PROVIDED THE CONTRACT PERIOD IS NOT IN EXCESS OF THAT SPECIFIED GENERALLY IN THE APPROPRIATION. AS FOLLOWS: THERE IS FORWARDED HEREWITH. SO THAT THE SOCIAL SECURITY BOARD MAY TAKE OVER THAT PORTION OF THE OLD-AGE BENEFITS PROGRAM WHICH HAS BEEN AND WILL BE CONDUCTED BY THE POST OFFICE DEPARTMENT UP TO JULY 1. INITIAL REGISTRATION OF EMPLOYEES UNDER THE SOCIAL SECURITY ACT WAS THROUGH LOCAL POST OFFICES.

A-86297, MAY 20, 1937, 16 COMP. GEN. 1019

SOCIAL SECURITY BOARD - PREPARATION OF NATIONAL NAME INDEX BY LABOR SAVING DEVICES UNDER NEGOTIATED CONTRACT IN VIEW OF THE AUTHORITY CONTAINED IN THE APPROPRIATION ACT OF JUNE 22, 1936, 49 STAT. 1606, FOR WAGE RECORDS FOR THE SOCIAL SECURITY BOARD, THERE IS NO OBJECTION TO THE ENTERING INTO A NEGOTIATED CONTRACT, AT A SAVING OVER THE COST OF MANUAL WORK WHICH WOULD OTHERWISE BE INVOLVED, WITH THE ONLY CONCERN REPORTED TO HAVE EQUIPMENT WHICH WILL EFFICIENTLY AND ECONOMICALLY PERFORM THE SERVICES NECESSARY TO THE PREPARATION OF AN URGENTLY NEEDED NATIONAL INDEX OF EMPLOYEES' NAMES AND UNDER WHICH TITLE TO ONE OF THE MACHINES USED WILL PASS TO THE GOVERNMENT, PROVIDED THE CONTRACT PERIOD IS NOT IN EXCESS OF THAT SPECIFIED GENERALLY IN THE APPROPRIATION.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, SOCIAL SECURITY BOARD, MAY 20, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF MAY 15, 1937, AS FOLLOWS:

THERE IS FORWARDED HEREWITH, FOR ADVANCE OPINION PRIOR TO AWARD A COPY OF PROPOSED CONTRACT SS-547 WITH BETTER PACKAGES, INC., OF SHELTON, CONNECTICUT, COVERING FINAL STEPS IN THE PREPARATION OF A NATIONAL INDEX OF SOME 28,000,000 NAMES, WHICH MUST BE SET UP BY JUNE 30, 1937, SO THAT THE SOCIAL SECURITY BOARD MAY TAKE OVER THAT PORTION OF THE OLD-AGE BENEFITS PROGRAM WHICH HAS BEEN AND WILL BE CONDUCTED BY THE POST OFFICE DEPARTMENT UP TO JULY 1, 1937. FOR THE MOST PART, INITIAL REGISTRATION OF EMPLOYEES UNDER THE SOCIAL SECURITY ACT WAS THROUGH LOCAL POST OFFICES, AND PRELIMINARY INQUIRIES FROM EMPLOYEES REGARDING ACCOUNT NUMBERS, DUPLICATE CARDS, AND SIMILAR MATTERS HAVE CONTINUED UNDER THEIR DIRECTION. EARLY TERMINATION OF THIS TEMPORARY ARRANGEMENT MEANS THAT THE BOARD MUST PREPARE TO CONTINUE AND AMPLIFY THIS SERVICE WITHOUT INTERRUPTION, AND AT THE SAME TIME, ANSWER EMPLOYERS' INQUIRIES REGARDING EMPLOYEES WHO HAVE LEFT THEIR SERVICE.

IN CONNECTION WITH THIS PROGRAM, A MASTER INDEX IS A NECESSITY. TO SET THIS UP, THE MASTER CARDS WHICH HAVE BEEN PUNCHED FOR EACH INDIVIDUAL REGISTERED UNDER THE SOCIAL SECURITY ACT, WILL BE MECHANICALLY SORTED IN ALPHABETICAL ORDER AND THEN USED AS CONTROL CARDS IN ELECTRIC TABULATING MACHINES TO PRINT NAMES AND INDEX DATA UPON "FLEXOLINE" STRIPS (SIMILAR TO ITEM 54-F-2325-E OF THE GENERAL SCHEDULE OF SUPPLIES). THESE STRIPS, WHICH ARE ORIGINALLY ASSEMBLED IN 7-INCH SCORED SHEETS, HAVE BEEN MADE INTO ROLLS 30 FEET LONG FOR UNIFORM FEEDING INTO THE TABULATING MACHINES, AND BEFORE FINAL INSERTION IN THE STEEL FILE PANELS, MUST BE SUFFICIENTLY SEPARATED FROM ONE ANOTHER TO PERMIT READY INTERFILING OF NEW STRIPS AT LATER DATES, THUS PERMITTING INDEFINITE EXPANSION OF THE LIST.

THE CONTRACT UNDER DISCUSSION CONTEMPLATES SEPARATION OF THE STRIPS AFTER PRINTING, ARRANGING THEM IN GROUPS OF APPROXIMATELY 42 EACH, AND FINAL INSERTION OF THE INDIVIDUAL GROUPS IN THE PANELS--- RETAINING THEIR ORIGINAL ALPHABETIC SEQUENCE THROUGHOUT THE PROCESS. MANUAL PERFORMANCE OF THE VARIOUS STEPS INVOLVED WOULD BE UNWISE AND EXPENSIVE, IN VIEW OF THE RECENT DEVELOPMENT OF EFFICIENT EQUIPMENT THAT WILL PERFORM THIS SERVICE IN THE SHORTEST POSSIBLE TIME AND WITH THE HIGHEST DEGREE OF ACCURACY.

RECENT ADVERTISING AND SOLICITATION OF PROSPECTIVE MANUFACTURERS BY THE TREASURY DEPARTMENT ON THEIR PROPOSAL NO. 8465-SP-4-19, AS PROVIDED IN SECTION 3709, REVISED STATUTES, AND AN INDEPENDENT INVESTIGATION BY THE SOCIAL SECURITY BOARD ALONG THE SAME LINES, HAVE DEFINITELY ESTABLISHED THE FACT THAT, AT THE PRESENT TIME, THERE EXISTS BUT ONE MACHINE, NEWLY DEVELOPED AND MANUFACTURED BY BETTER PACKAGES, INC., WHICH HAS APPLIED FOR PATENTS, THAT WILL EFFICIENTLY AND ECONOMICALLY PERFORM THIS FUNCTION.

WHILE DIRECT PURCHASE OF THE EQUIPMENT CANNOT BE MADE FOR REASONS STATED IN A LETTER FROM THE PROCUREMENT DIVISION, TREASURY DEPARTMENT DATED MAY 8, ARRANGEMENTS MUST BE MADE TO COMPLETE THE TASK OF SLITTING AND INSERTING THE 28,000,000 FLEXOLINE NAME STRIPS INTO PANELS ON OR BEFORE JUNE 30. PERFORMANCE OF THIS TASK BY THE PROPOSED CONTRACTOR WITH THE USE OF EQUIPMENT IN HIS POSSESSION NOT ONLY WILL ASSURE COMPLETION OF THE JOB WITHIN THE REQUIRED TIME BUT WILL EFFECT A SUBSTANTIAL SAVING OF MONEY TO THE GOVERNMENT. THE ONLY ALTERNATIVE WOULD BE TO PERFORM THE TASK BY MANUAL METHODS INVOLVING THE SERVICES OF A CONSIDERABLE NUMBER OF EMPLOYEES AND A MUCH LARGER EXPENDITURE OF FUNDS. ESTIMATES BASED UPON TESTS MADE IN OUR BALTIMORE OFFICES, WHICH FAIRLY REFLECT ACTUAL WORKING CONDITIONS, INDICATE THE COST OF DOING THE JOB MANUALLY WOULD BE $1.67 PER THOUSAND, WHILE THE RATE PROPOSED BY THE CONTRACTOR IS $1.00 PER THOUSAND. THE TOTAL COST FOR MANUAL OPERATION WOULD AMOUNT TO $46,760, WHILE THE AMOUNT OF THE PROPOSED CONTRACT IS $28,000, EFFECTING NET SAVING OF $18,760 AND INSURING PERFORMANCE OF THE WORK BY JULY 1, 1937, WHICH WOULD NOT BE ASSURED BY MANUAL OPERATION EXCEPT THROUGH THE EMPLOYMENT OF A LARGE NUMBER OF TEMPORARY EMPLOYEES OR THE DIVERSION OF EXISTING EMPLOYEES FROM OTHER URGENT WORK.

UNDER THE TERMS OF THE CONTRACT, IT ALSO WILL BE NOTED THAT A COMPLETE SINGLE UNIT OF ANY EQUIPMENT EMPLOYED WILL BECOME THE PROPERTY OF THE GOVERNMENT UPON COMPLETION OF THE CONTRACT, THUS BEING AVAILABLE FOR FURTHER USE WHEN NEEDED.

IT APPEARS THAT PURSUANT TO REQUEST OF THE SOCIAL SECURITY BOARD THE TREASURY DEPARTMENT PROCUREMENT DIVISION ADVERTISED APRIL 9, 1937, FOR BIDS TO BE OPENED APRIL 19, 1937, FOR EQUIPMENT TO SEPARATE, REARRANGE AND INSERT "FLEXOLINE" STRIPS IN PANELS AS STATED IN THE SPECIFICATIONS AND THAT ONLY ONE BID WAS RECEIVED. SUCH BID WAS SUBMITTED BY BETTER PACKAGES, INC., AT $15,000 FOR DELIVERY OF THE EQUIPMENT--- INFORMALLY REPORTED TO CONSIST OF THREE MACHINES. BY LETTER OF MAY 8, 1937, THE TREASURY DEPARTMENT PROCUREMENT DIVISION NOTIFIED THE SOCIAL SECURITY BOARD THAT AN ANALYSIS OF THE BID AND INSPECTION OF THE EQUIPMENT PROPOSED TO BE FURNISHED BY THE SOLE BIDDER LED TO THE CONCLUSION THAT THE PRICE QUOTED WAS UNREASONABLY HIGH AND NECESSITATED REJECTION OF THE BID. WAS STATED THAT THE PRODUCTION OF EQUIPMENT ADEQUATELY DESIGNED AND FABRICATED TO MEET THE HEAVY DUTY TO WHICH THE MACHINE WOULD BE SUBJECTED WOULD REQUIRE CONSIDERABLE TIME, POSSIBLY SEVERAL MONTHS. THEREUPON THE SOCIAL SECURITY BOARD APPEARS TO HAVE ENTERED INTO NEGOTIATIONS WITH BETTER PACKAGES, INC., TO USE ITS MACHINES IN THE PREPARATION OF THE NATIONAL INDEX REQUIRED TO BE SET UP BY JUNE 30, 1937, WITH AN ARRANGEMENT THAT UPON CONCLUSION OF THE WORK ONE OF THE MACHINES SHOULD BECOME THE PROPERTY OF THE UNITED STATES--- IT BEING REPORTED THAT AFTER THE INDEX HAD BEEN SET UP ONE MACHINE WOULD BE SUFFICIENT FOR THE PRESENT TO KEEP THE INDEX CURRENT.

IT IS UNDERSTOOD INFORMALLY THAT IT IS PROPOSED TO CHARGE THE APPROPRIATION CONTAINED IN THE ACT OF JUNE 22, 1936, 49 STAT. 1606, FOR WAGE RECORDS, ETC., WITH THE EXPENDITURES INCIDENTAL TO THE PROPOSED CONTRACT WITH BETTER PACKAGES, INC. SAID APPROPRIATION FOR COLLECTING AND RECORDING INITIAL BASIC DATA CONCERNING EMPLOYERS AND EMPLOYEES AUTHORIZED CERTAIN EXPENDITURES FOR OFFICE APPLIANCES AND LABOR-SAVING DEVICES AND SERVICES IN THE DISTRICT OF COLUMBIA, OR ELSEWHERE, AND:

* * * NOT TO EXCEED $250,000 FOR THE EMPLOYMENT OF PERSONS OR ORGANIZATIONS BY CONTRACT OR OTHERWISE IN THE DISTRICT OF COLUMBIA AND ELSEWHERE FOR SPECIAL ACCOUNTING, STATISTICAL, AND MECHANICAL SERVICES DETERMINED NECESSARY BY THE BOARD, WITHOUT REGARD TO SECTION 3709 OF THE REVISED STATUTES (U.S.C., TITLE 41, SEC. 5) AND THE PROVISIONS OF LAWS APPLICABLE TO THE EMPLOYMENT AND COMPENSATION OF OFFICERS AND EMPLOYEES OF THE UNITED STATES, BUT SUCH SUM OF $250,000 SHALL NOT BE AVAILABLE FOR ANY CONTRACT FOR A PERIOD OF SERVICE EXCEEDING SIX MONTHS; AND MISCELLANEOUS ITEMS, INCLUDING THOSE FOR PUBLIC INSTRUCTION AND INFORMATION DEEMED NECESSARY BY THE BOARD, $12,400,000 TO REMAIN AVAILABLE UNTIL JUNE 30, 1937; PROVIDED, THAT SECTION 3709 OF THE REVISED STATUTES (U.S.C., TITLE 41, SEC. 5) SHALL NOT BE CONSTRUED TO APPLY TO ANY PURCHASE OF SUPPLIES OR EQUIPMENT FOR THE BOARD WHEN THE AGGREGATE AMOUNT INVOLVED DOES NOT EXCEED THE SUM OF $300.

IN VIEW OF THE TERMS OF THE ACT OF JUNE 22, 1936, THE FACTS REPORTED IN YOUR LETTER OF MAY 15, 1937, AND THE ESTIMATED SAVING OF THE DIFFERENCE BETWEEN $46,760 REQUIRED FOR CLERKS TO DO THE WORK MANUALLY AND $28,000 FOR WHICH BETTER PACKAGES, INC., PROPOSED TO DO THE WORK AND DELIVER TO THE GOVERNMENT AT THE CONCLUSION THEREOF TITLE TO ONE OF THE MACHINES, THIS OFFICE IS NOT REQUIRED TO OBJECT TO THE PROPOSED CONTRACT WITH BETTER PACKAGES, INC., PROVIDED IT DOES NOT RUN FOR A PERIOD IN EXCESS OF 6 MONTHS.