A-92521, FEBRUARY 18, 1938, 17 COMP. GEN. 670

A-92521: Feb 18, 1938

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WHERE IT IS OBVIOUS THAT DELIVERIES UNDER AN ESTIMATED QUANTITY CONTRACT COULD IN NO EVENT EXCEED THE STATUTORY EXEMPTION. WAS THE LOWEST BIDDER. INQUIRY WAS MADE IN OFFICE LETTER OF JANUARY 5. THERE WAS FORWARDED TO THIS OFFICE FROM YOUR ADMINISTRATION A MEMORANDUM OF JANUARY 18. IS FORWARDED WITH THE FOLLOWING EXPLANATION OF THE REJECTION OF THE BID OF SWIFT AND COMPANY: "CIRCULAR LETTER NO. 239. IN CONTRACTS OF THIS CHARACTER THE STIPULATIONS SHOULD BE INCLUDED UNLESS THE CONTRACTING OFFICER KNOWS IN ADVANCE THAT THE TOTAL AMOUNT OF THE CONTRACT WILL NOT EXCEED $10. IN RESPONSE TO WHICH THE BID OF SWIFT AND COMPANY REFERRED TO WAS SUBMITTED. THE INVITATION STATED THAT THE QUANTITIES INDICATED WERE FOR THE INFORMATION OF BIDDERS ONLY AND THAT THE CONTRACTOR WOULD.

A-92521, FEBRUARY 18, 1938, 17 COMP. GEN. 670

CONTRACTS - ESTIMATED QUANTITIES - APPLICABILITY OF STATUTORY LABOR, ETC., STIPULATION REQUIREMENTS THE ACT OF JUNE 30, 1936, 49 STAT. 2036, REQUIRING VARIOUS LABOR, ETC., STIPULATIONS IN GOVERNMENT CONTRACTS FOR THE MANUFACTURE OR FURNISHING OF MATERIALS, SUPPLIES, ETC., SPECIFICALLY EXEMPTS CONTRACTS NOT EXCEEDING $10,000, AND THIS EXEMPTION APPLIES WHETHER THE CONTRACT BE FOR A FIXED OR ESTIMATED QUANTITY, AND WHERE IT IS OBVIOUS THAT DELIVERIES UNDER AN ESTIMATED QUANTITY CONTRACT COULD IN NO EVENT EXCEED THE STATUTORY EXEMPTION, BIDDERS SHOULD NOT BE REQUESTED TO COMPLY WITH THE ACT NOR SHOULD A BID BE REJECTED BECAUSE OF A BIDDER'S REFUSAL OF COMPLIANCE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, FEBRUARY 18, 1938:

EXAMINATION OF CONTRACT VA S-3005 WITH THE HECKER PRODUCTS CORPORATION AND VA S-3017 WITH THE PACIFIC BREWING AND MALTING CO. (NATIONAL SOAP CO., DEPARTMENT) FOR THE DELIVERY OF SOAP DURING THE PERIOD FROM JANUARY 1 TO JUNE 30, 1938, SHOWS THAT AS TO ITEM 418 UNDER THE FIRST-NAMED CONTRACT AND ITEM 428 UNDER THE SECOND-NAMED CONTRACT SWIFT AND CO., AND NOT THE HECKER PRODUCTS CORPORATION OR THE PACIFIC BREWING AND MALTING CO., WAS THE LOWEST BIDDER, AND INQUIRY WAS MADE IN OFFICE LETTER OF JANUARY 5, 1938, AS TO THE REASONS FOR THE REJECTION OF THE LOW BID FOR THE DELIVERY OF THESE ITEMS.

BY LETTER OF JANUARY 25, 1938, THERE WAS FORWARDED TO THIS OFFICE FROM YOUR ADMINISTRATION A MEMORANDUM OF JANUARY 18, 1938, FROM YOUR DIRECTOR OF SUPPLIES, WITH RESPECT THERETO, AS FOLLOWS:

THE ATTACHED LETTER OF JANUARY 5, 1938, FROM THE CHIEF, CONTRACT EXAMINING SECTION, GENERAL ACCOUNTING OFFICE, ADDRESSED TO THE FINANCE SERVICE BUT ROUTED TO THE SUPPLY SERVICE, IS FORWARDED WITH THE FOLLOWING EXPLANATION OF THE REJECTION OF THE BID OF SWIFT AND COMPANY:

"CIRCULAR LETTER NO. 239, ISSUED BY THE BRANCH OF SUPPLY, PROCUREMENT DIVISION, TREASURY DEPARTMENT, UNDER DATE OF JUNE 1, 1937, QUOTED A LETTER TO THE PROCUREMENT DIVISION DATED MAY 18, 1937, FROM THE SECRETARY OF LABOR IN WHICH THE SECRETARY STATES IN PARAGRAPH 5 THAT---

" "THE QUESTION HAS ALSO ARISEN AGAIN RECENTLY AS TO WHETHER OR NOT CONTRACTING OFFICERS SHOULD OMIT THE STIPULATIONS FROM INVITATIONS TO BID ON CONTRACTS FOR INDEFINITE AMOUNTS (TERM CONTRACTS). IN CONTRACTS OF THIS CHARACTER THE STIPULATIONS SHOULD BE INCLUDED UNLESS THE CONTRACTING OFFICER KNOWS IN ADVANCE THAT THE TOTAL AMOUNT OF THE CONTRACT WILL NOT EXCEED $10,000 IN ANY EVENT.'"

INVITATION NO. 32-S, IN RESPONSE TO WHICH THE BID OF SWIFT AND COMPANY REFERRED TO WAS SUBMITTED, CALLS FOR BIDS FOR SUPPLYING SOAPS, CLEANERS, AND MISCELLANEOUS DETERGENTS AS REQUIRED DURING THE PERIOD JANUARY 1, 1938, TO JUNE 30, 1938. THE INVITATION STATED THAT THE QUANTITIES INDICATED WERE FOR THE INFORMATION OF BIDDERS ONLY AND THAT THE CONTRACTOR WOULD, THEREFORE, BE REQUIRED TO FILL ALL ORDERS PLACED DURING THE CONTRACT PERIOD. THEREFORE, INASMUCH AS THE INVITATION CALLED FOR BIDS FOR SUPPLYING THE COMMODITIES REFERRED TO ON AN INDEFINITE QUANTITY BASIS, AND INASMUCH AS IT WAS NOT KNOWN AT THE TIME THE INVITATION WAS ISSUED TO WHAT EXTENT CONTRACTS WOULD EXCEED $10,000, THE PROVISIONS OF PUBLIC, NO. 846, 74TH CONGRESS WERE INCLUDED IN THE INVITATION AND BIDDERS WERE INFORMED THAT CONTRACTS AWARDED PURSUANT TO THE INVITATION WOULD BE SUBJECT TO THE PROVISIONS OF PUBLIC, NO. 846, 74TH CONGRESS. THE INSTRUCTIONS OF THE SECRETARY OF LABOR QUOTED SUPRA INFER THAT WHEN THE CONTRACTING OFFICER DOES NOT KNOW AT THE TIME BID INVITATIONS ARE ISSUED THAT CONTRACTS LESS THAN $10,000 WILL RESULT, THE STIPULATIONS SHOULD BE INCLUDED. FOR THIS REASON THEY WERE INCLUDED, AND INASMUCH AS SWIFT AND COMPANY REFUSED TO COMPLY WITH THEM, THE BID WAS REJECTED.

THE COMPTROLLER GENERAL'S DECISIONS, NAMELY, 16 COMP. GEN. 605 AND 744, REFERRED TO IN THE LETTER OF JANUARY 5, 1938, FROM THE CHIEF, CONTRACT EXAMINING SECTION, RELATE TO THE PROCUREMENT OF SPECIFIC COMMODITIES IN A DEFINITE QUANTITY AND NOT TO INDEFINITE QUANTITY CONTRACTS.

THE ACT OF JUNE 30, 1936, 49 STAT. 2036 ET SEQ., IS SPECIFIC IN ITS EXEMPTION OF CONTRACTS NOT EXCEEDING $10,000 FROM THE TERMS THEREOF, AND THIS EXEMPTION APPLIES WHETHER THE CONTRACT BE A FIXED OR ESTIMATED QUANTITY CONTRACT. ALSO, IT SHOULD HAVE BEEN OBVIOUS THAT THE DELIVERY OF THESE TWO ITEMS OF SOAP FOR COMPARATIVELY SMALL QUANTITIES COULD IN NO EVENT EXCEED $10,000, AND, IN FACT, THE CONSOLIDATED BID OF THE HECKER PRODUCTS CORPORATION FOR DELIVERY OF ALL THE SOAP, ESTIMATED AT 334,000 POUNDS, WAS AT AGGREGATE PRICE OF $8,794.22. IN OTHER WORDS, ANY CONTRACT WITH SWIFT AND CO. FOR THE DELIVERY OF THESE TWO ITEMS OF SOAP WAS NOT WITHIN THE TERMS OF THE ACT OF JUNE 30, 1936, AND THE LOW BID SHOULD NOT HAVE BEEN REJECTED AFTER REFUSAL OF THE BIDDER TO AGREE TO COMPLY WITH THE TERMS OF SAID ACT.

WHILE NO FURTHER QUESTION WILL BE RAISED WITH RESPECT TO THESE TWO CONTRACTS, THE APPROPRIATE ADMINISTRATIVE PROCEDURE SHOULD BE TAKEN TO SEE THAT BIDDERS ARE NOT REQUESTED IN THE ADVERTISED SPECIFICATIONS TO COMPLY WITH THE ACT OF JUNE 30, 1936, IN THE EVENT THE AMOUNT INVOLVED DOES NOT EXCEED $10,000.