A-89192, SEPTEMBER 28, 1937, 17 COMP. GEN. 287

A-89192: Sep 28, 1937

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IS OF TOO SERIOUS IMPORT. IN THE ABSENCE OF AN AUTHORITATIVE AND FINAL JUDICIAL DETERMINATION THAT SUCH LAWS AND REGULATIONS ARE APPLICABLE TO PURCHASES BY THE UNITED STATES OF ESSENTIAL FOODSTUFFS. IS AS FOLLOWS: THE VETERANS' ADMINISTRATION FACILITY. CERTIFIED COPY OF WHICH IS ENCLOSED. WAS SUBMITTED BY THE LEBANON VALLEY MILK CO. WHICH IS ENCLOSED TOGETHER WITH COPY OF DECISION OF THE PENNSYLVANIA COURT OF COMMON PLEAS IN THE MATTER OF COMMONWEALTH V. IT WILL BE APPRECIATED IF YOU WILL ADVISE AT AN EARLY DATE WHETHER. ATTENTION IS INVITED TO YOUR DECISION OF OCTOBER 7. THERE IS ENCLOSED LETTER OF SEPTEMBER 20. IT IS ESSENTIAL THAT A PROMPT DECISION BE RENDERED IN THIS MATTER. CERTAIN REASONS WERE STATED WHICH SEEMED TO ME CONCLUSIVE THAT A STATE MAY NOT.

A-89192, SEPTEMBER 28, 1937, 17 COMP. GEN. 287

ADVERTISING - BIDS - REJECTION - VIOLATION OF STATE PRICE-FIXING LAWS AND REGULATIONS THE QUESTION WHETHER THE LOWEST RESPONSIBLE BID, UPON INVITATION TO FURNISH MILK AND CREAM TO A VETERANS' ADMINISTRATION FACILITY, SHOULD BE REJECTED SOLELY ON THE BASIS THAT IT OFFERS A DISCOUNT IN VIOLATION OF STATE LAWS AND REGULATIONS, IS OF TOO SERIOUS IMPORT, BECAUSE OF ITS FAR- REACHING EFFECT ON FEDERAL ACTIVITIES, TO REQUIRE THE GENERAL ACCOUNTING OFFICE TO ASSUME THE BURDEN AND RESPONSIBILITY OF DECIDING THE SAME AGAINST THE INTERESTS OF THE UNITED STATES, AND IN THE ABSENCE OF AN AUTHORITATIVE AND FINAL JUDICIAL DETERMINATION THAT SUCH LAWS AND REGULATIONS ARE APPLICABLE TO PURCHASES BY THE UNITED STATES OF ESSENTIAL FOODSTUFFS, REJECTION OF THE INVOLVED BID MAY NOT BE AUTHORIZED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, SEPTEMBER 28, 937:

YOUR LETTER OF SEPTEMBER 24, 1937, IS AS FOLLOWS:

THE VETERANS' ADMINISTRATION FACILITY, COATESVILLE, PA., UNDER DATE OF SEPTEMBER 17, 1937, OPENED BIDS FOR SUPPLYING MILK AND CREAM TO THAT FACILITY DURING THE QUARTER BEGINNING OCTOBER 1, 1937. THE LOWEST BID, CERTIFIED COPY OF WHICH IS ENCLOSED, WAS SUBMITTED BY THE LEBANON VALLEY MILK CO., INC., 734 SO. 50TH ST., PHILADELPHIA, PA. THE HON. HARRY POLIKOFF, DEPUTY ATTORNEY GENERAL OF THE COMMONWEALTH OF PENNSYLVANIA, HAS REQUESTED IN A CONVERSATION OVER THE TELEPHONE THAT THIS BID BE REJECTED FOR THE REASON THAT IT VIOLATES THE REGULATIONS OF THE MILK CONTROL COMMISSION OF THE COMMONWEALTH OF PENNSYLVANIA IN THAT A CASH DISCOUNT HAS BEEN OFFERED WHILE THE REGULATIONS SPECIFICALLY PROHIBIT SUCH A DISCOUNT. MR. POLIKOFF CONFIRMED HIS TELEPHONE CONVERSATION IN A LETTER DATED SEPTEMBER 20, 1937, WHICH IS ENCLOSED TOGETHER WITH COPY OF DECISION OF THE PENNSYLVANIA COURT OF COMMON PLEAS IN THE MATTER OF COMMONWEALTH V. ROHRER, REFERRED TO BY MR. POLIKOFF IN HIS COMMUNICATION. IT WILL BE APPRECIATED IF YOU WILL ADVISE AT AN EARLY DATE WHETHER, IN VIEW OF THIS DECISION, THE BID OF THE LEBANON VALLEY MILK CO., INC., MAY BE REJECTED. APROPOS OF THIS MATTER, ATTENTION IS INVITED TO YOUR DECISION OF OCTOBER 7, 1936 (16 C.G. 348), TO THE ADMINISTRATOR OF VETERANS' AFFAIRS RELATIVE TO CANCELLATION OF CONTRACT NO. VA-111H 1080 WITH ROHRER'S MED-O-FARMS DAIRY FOR FURNISHING MILK AND CREAM TO THE VETERANS' ADMINISTRATION FACILITY, COATESVILLE, PA., DURING THE PERIOD JULY 1 TO SEPTEMBER 30, 1936, INCLUSIVE.

IN ADDITION TO THE ENCLOSURES, SUPRA, THERE IS ENCLOSED LETTER OF SEPTEMBER 20, 1937, TO THE VETERANS' ADMINISTRATION FROM MR. EDWIN H. RIDGWAY, DIRECTOR OF AUDITS AND INVESTIGATIONS, MILK CONTROL COMMISSION, COMMONWEALTH OF PENNSYLVANIA, COPY OF OFFICIAL GENERAL ORDER NO. B-1, AND COPY OF OFFICIAL GENERAL ORDER NO. A-11, ISSUED BY THE MILK CONTROL COMMISSION.

IT IS ESSENTIAL THAT A PROMPT DECISION BE RENDERED IN THIS MATTER, AS THE CURRENT CONTRACT FOR SUPPLYING MILK AND CREAM TO THE VETERANS' ADMINISTRATION FACILITY, COATESVILLE, PA., EXPIRES SEPTEMBER 30, 1937, AND THE NEW CONTRACT MUST BE AWARDED BEFORE THAT DATE.

PLEASE RETURN ALL OF THE ENCLOSURES WITH YOUR REPLY.

IN MY DECISION TO YOU OF OCTOBER 7, 1936, 16 COMP. GEN. 348, TO WHICH YOU REFER, CERTAIN REASONS WERE STATED WHICH SEEMED TO ME CONCLUSIVE THAT A STATE MAY NOT, THROUGH STATUTES AND REGULATIONS GOVERNING THE SALE OF MILK AND MILK PRODUCTS WITHIN THE STATE, INTERFERE WITH THE UNITED STATES IN THE FREE PROCUREMENT OF MILK AND MILK PRODUCTS NECESSARY TO THE PROPER FUNCTIONING OF AN AGENCY OF THE UNITED STATES; THAT IS TO SAY, THE STATE MAY NOT INTERFERE TO DICTATE THE TERMS AND CONDITIONS UPON WHICH THE FEDERAL GOVERNMENT MAY PROCURE SUCH NECESSARY SUPPLIES WITHIN THAT STATE WHEN THE LAWS OF THE UNITED STATES AND REGULATIONS ISSUED PURSUANT THERETO OTHERWISE ARE BEING STRICTLY OBSERVED. IT WAS ALSO STATED IN MY SAID DECISION OF OCTOBER 7, 1936, THAT UNTIL THERE HAD BEEN AUTHORITATIVE AND FINAL JUDICIAL DETERMINATION TO THE EFFECT THAT SUCH STATE STATUTES ARE APPLICABLE IN THE CASE OF SALES TO AND PURCHASES BY THE UNITED STATES, THE USES OF THE APPROPRIATED FUNDS MAY NOT BE APPROVED FOR MAKING PAYMENTS WHEN THE INVITATIONS ON WHICH THE BIDS ARE MADE RESTRICT BIDDING ON FEDERAL GOVERNMENT NEEDS TO THOSE BIDDERS SHOWING COMPLIANCE WITH SUCH STATE PRICE-FIXING LAWS.

THE OPINION ATTACHED TO YOUR SUBMISSION OF THE COURT OF COMMON PLEAS OF LANCASTER COUNTY, PA., SAID TO HAVE BEEN HANDED DOWN AUGUST 27, 1937, FINDS THAT THE BIDDER ROHRER, WHOSE CASE WAS THE SUBJECT OF MY DECISION OF OCTOBER 7, 1936, IS GUILTY OF AN OFFENSE CHARGED IN AN INDICTMENT NO. 35, MARCH TERM 1937, FOR OFFERING A DISCOUNT FOR PROMPT PAYMENT TO A FEDERAL GOVERNMENT AGENCY FROM MINIMUM PRICES PRESCRIBED BY THE PENNSYLVANIA MILK CONTROL BOARD UNDER AUTHORITY CLAIMED TO BE VESTED IN SUCH CONTROL BOARD IN ACT OF ASSEMBLY OF APRIL 30, 1935, P.L. 96, SECTION 18E.

IN COMMENTING UPON THE DECISION OF THE COUNTY COMMON PLEAS COURT THE STATE DEPUTY ATTORNEY GENERAL, IN HIS LETTER OF SEPTEMBER 20, 1937, POINTS OUT THAT IT IS DISTINGUISHABLE FROM DECISIONS OF THE UNITED STATES SUPREME COURT IN ANALOGOUS MATTERS FOR THE REASON THAT HERE THERE IS NOT INVOLVED "A QUESTION OF TAXATION, BUT THE EXERCISE OF THE STATE POLICE POWER.' EXAMINATION OF THE COURT'S OPINION INDICATES THAT TO BE THE COURT'S DISTINCTION UPON WHICH ITS FINDING OF GUILT RESTS.

THE DISTINCTION SUGGESTED DOES NOT APPEAR OF SUBSTANCE. TO INTERFERE WITH THE FREE PROCUREMENT BY THE UNITED STATES OF NECESSARY FOODSTUFFS, IN ACCORDANCE WITH FEDERAL STATUTES REQUIRING AWARD TO THE LOWEST RESPONSIBLE BIDDER AFTER ADVERTISING, THROUGH THE PRESCRIBING WITHIN A STATE OF MINIMUM PRICES AND OTHER RESTRICTIONS, WOULD BE AS FATAL, OR MORE SO, TO FEDERAL AUTHORITY AS AN ATTEMPTED INTERFERENCE BY TAXATION WHICH THE UNITED STATES SUPREME COURT SO OFTEN HAS CONDEMNED, AS SET FORTH IN MY DECISION OF OCTOBER 7, 1936. IN ADDITION TO PANHANDLE OIL CO. V. KNOX, 277 U.S. 218, PREVIOUSLY CITED, SEE BUNCH V. COLE ET AL., 263 U.S. 250, 252; FAIRMONT CREAMERY CO. V. MINNESOTA, 274 U.S. 1; UNITED STATES V. MILLER (C.C.A. 8), 28 FED./2D) 846; ALSO TELEGRAPH CO. V. TEXAS, 105 U.S. 466; JOHNSON V. MARYLAND, 254 U.S. 55, 56; EX PARTE WILLMAN, 277 FED. 822; AND PEOPLE V. HUDSON RIVER CONNECTING R.CORP., 228 N.Y. 225, 126 N.E. 808.

IT WOULD SEEM TO BE AS REASONABLE TO SUGGEST THAT THE POLICE POWER OF THE STATE MIGHT BE USED TO CONTROL AND REGULATE THE MOVEMENT OF FEDERAL TROOPS ENGAGED UPON UNITED STATES BUSINESS AND PURSUANT TO THE CONSTITUTION AND LAWS OF THE UNITED STATES. THE QUESTION THUS PRESENTED IS OF TOO SERIOUS IMPORT, AND IT DOES NOT REQUIRE THAT THIS OFFICE ASSUME THE BURDEN AND RESPONSIBILITY OF DECIDING THE SAME AGAINST THE INTERESTS OF THE UNITED STATES, HAVING REGARD TO ALSO THAT THE DECISION IS THAT OF A LOWER COURT AND NOT OF THE HIGHEST APPELLATE COURT OF THE STATE.

IT IS FOR CONSIDERATION ALSO THAT THE MERE FACT A BIDDER MIGHT BE WILLING OR ACTUALLY DOES MAKE HIMSELF SUBJECT TO A POSSIBLE PENALTY UNDER A STATE REGULATION WOULD NOT NECESSARILY AFFECT HIS CIVIL LIABILITY TO PERFORM A CONTRACT MADE BY HIM WITH THE UNITED STATES TO SUPPLY IT WITH ESSENTIAL FOODSTUFFS.

UPON THE BASIS OF THE FACTS PRESENTED PAYMENTS FROM APPROPRIATED MONEYS MAY NOT BE APPROVED OTHER THAN TO THE LOWEST BIDDER YOU SHALL FIND RESPONSIBLE.