A-93313, MARCH 22, 1938, 17 COMP. GEN. 770

A-93313: Mar 22, 1938

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BITUMINOUS COAL ACT OF 1937 - EFFECT ON GOVERNMENT CONTRACTS - DISCOUNT EXCLUSION IN BID EVALUATION THERE IS NO DUTY ON THE PURCHASING AGENCIES OF THE GOVERNMENT TO ASCERTAIN WHETHER THE PRICES AT WHICH COAL IS OFFERED ARE BELOW THOSE FIXED UNDER AUTHORITY OF THE BITUMINOUS COAL ACT OF 1937. WHERE THE DISCOUNT OFFERED WAS DISREGARDED IN MAKING THE AWARD. BIDS WERE OPENED AT THE BUREAU OF MINES EXPERIMENT STATION. IF THE CAPACITY OF THE BIN WILL PERMIT. THERE IS LISTED BELOW AN ABSTRACT OF THE BIDS RECEIVED: CHART NET PRICE WITH BIDDERS GROSS BID TERMS (1) DISCOUNT PER TON DEDUCTED SNYDER COAL CO. PROMPT PAYMENT DISCOUNTS NOT ALLOWED UNDER COAL ACT. 2 QUOTATION IS ON BASIS OF RAIL DELIVERY WHEREAS WE REQUIRE TRUCK DELIVERY. 3 NO REPLY RECEIVED.

A-93313, MARCH 22, 1938, 17 COMP. GEN. 770

BITUMINOUS COAL ACT OF 1937 - EFFECT ON GOVERNMENT CONTRACTS - DISCOUNT EXCLUSION IN BID EVALUATION THERE IS NO DUTY ON THE PURCHASING AGENCIES OF THE GOVERNMENT TO ASCERTAIN WHETHER THE PRICES AT WHICH COAL IS OFFERED ARE BELOW THOSE FIXED UNDER AUTHORITY OF THE BITUMINOUS COAL ACT OF 1937, 50 STAT. 72, OR AURHORITY IN ANY CONTRACTING OFFICER OF THE GOVERNMENT TO REJECT A BID MERELY BECAUSE THE PRICE OR DISCOUNT OFFERED MAY CONTRAVENE SOME CODE OR REGULATION UNDER THE SAID ACT, AND WHERE THE DISCOUNT OFFERED WAS DISREGARDED IN MAKING THE AWARD, PAYMENT SHOULD NOT BE MADE WITHOUT DEDUCTION OF THE DISCOUNT IF MADE WITHIN THE PERIOD SPECIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, MARCH 22, 1938:

THERE HAS BEEN RECEIVED YOUR LETTER OF MARCH 11, 1938, AS FOLLOWS:

ON FEBRUARY 14, 1938, BIDS WERE OPENED AT THE BUREAU OF MINES EXPERIMENT STATION, 4800 FORBES STREET, PITTSBURGH, PA., FOR 800 TONS OF 3/4 INCH SLACK COAL, TO BE DELIVERED IN THE BIN AT THE POWER PLANT AT 4800 FORBES STREET, VIA TRUCK, DURING THE PERIOD FROM FEBRUARY 21 TO JUNE 30, 1938, 600 TONS TO BE DELIVERED AT THE RATE OF APPROXIMATELY 75 TONS PER WEEK, IF THE CAPACITY OF THE BIN WILL PERMIT, BETWEEN FEBRUARY 21 AND APRIL 16, AND THE REMAINING 200 TONS TO BE DELIVERED AT AN APPROXIMATELY UNIFORM RATE BETWEEN APRIL 17 AND JUNE 30.

THERE IS LISTED BELOW AN ABSTRACT OF THE BIDS RECEIVED:

CHART

NET PRICE WITH

BIDDERS GROSS BID TERMS (1) DISCOUNT

PER TON DEDUCTED SNYDER COAL CO----------------- $2.04 1 PERCENT 10 $2.0196

DAYS. A. W. JARVIS----- ------------- 2.05 ---DITTO---- 2.0295 E. M. OLIVER-------------- ---- 2.12 2 PERCENT 10 2.0776

DAYS. J. B. HURLEY--------- --------- 2.20 10 PERCENT 10 1.98

DAYS COLLINS AND SCHWEINBERG----- -- 2.25 1 PERCENT 10 2.2275

DAYS. YOUGHIOGHENY AND OHIO COAL CO-- 2.33 NET--------- 2.33 STEEL CITY GAS COAL CO--------- 2.38 ---DITTO---- 2.38 MUTUAL SUPPLY CO-------------- - 2.47 -- DITTO----/2/2.47 UNION COLLIERIES---------------/3) ------------ - ----- WM. WHITE----------------------/3) ------------- ---- - WILDWOOD COAL CO---------------/3) ------------- ------

1 TERMS NOT TAKEN INTO CONSIDERATION IN AWARDING CONTRACT. PROMPT PAYMENT DISCOUNTS NOT ALLOWED UNDER COAL ACT.

2 QUOTATION IS ON BASIS OF RAIL DELIVERY WHEREAS WE REQUIRE TRUCK DELIVERY.

3 NO REPLY RECEIVED.

BEFORE MAKING THE AWARD, TELEPHONE INQUIRY WAS MADE OF THE PITTSBURGH OFFICE OF THE COAL COMMISSION BY THE PITTSBURGH STATION OF THE BUREAU OF MINES, TO ASCERTAIN WHETHER THE REGULATIONS OF THE COMMISSION, FORBIDDING DISCOUNTS, HAD BEEN RESCINDED, AND A REPRESENTATIVE OF THE COAL COMMISSION STATED THAT SUCH REGULATIONS WERE STILL IN EFFECT AND THAT DISCOUNTS WERE NOT PERMISSIBLE. ACCORDINGLY ALL DISCOUNTS OFFERED BY THE SEVERAL BIDDERS WERE DISREGARDED AND AWARD WAS MADE TO THE SNYDER COAL COMPANY, 2915 GRAHAM BLVD., WILKINSBURG, PA., AS THAT COMPANY'S BID OF $2.04 PER TON WAS THE LOWEST, DISREGARDING DISCOUNTS. HOWEVER, J. B. HURLEY, 101 ROSS ST., PITTSBURGH, PA., WHO OFFERED A DISCOUNT OF 10 PERCENT FOR 10 DAYS PAYMENT, PROTESTED THE AWARD TO THE SNYDER COAL COMPANY ON THE GROUNDS THAT HIS BID OF $2.20 PER TON LESS A DISCOUNT OF 10 PERCENT WAS $1.98 PER TON, WHICH WAS THE LOWEST BID RECEIVED, BASING HIS PROTEST, IN A LETTER OF FEBRUARY 17, 1938, ADDRESSED TO THE CHIEF CLERK OF THE BUREAU OF MINES, ON HIS STATEMENT THAT HE WAS OFFERING A DISCOUNT ON DELIVERY OF THE COAL NOT ON THE PRICE AT THE MINE. COPY OF MR. HURLEY'S LETTER OF FEBRUARY 17 IS ENCLOSED HEREWITH, TOGETHER WITH COPY OF THE REPLY FROM THE CHIEF CLERK OF THE BUREAU OF MINES, DATED FEBRUARY 19, DIRECTING MR. HURLEY'S ATTENTION TO THE FACT THAT THERE WAS NOTHING IN HIS BID WHICH INDICATED THAT THE 10 PERCENT DISCOUNT DID NOT APPLY TO THE ENTIRE COST OF THE COAL, ANDALSO FURTHER POINTING OUT THAT IF MR. HURLEY'S CONTENTION WAS CORRECT THAT HE WAS OFFERING THE DISCOUNT ONLY ON THE TRUCKING CHARGE, HIS NET PRICE WOULD BE 12 CENTS PER TON HIGHER THAN THE BID OF THE SNYDER COAL COMPANY. THERE IS ALSO ENCLOSED COPY OF A TELEGRAM OF FEBRUARY 24 FROM MR. HURLEY TO THE CHIEF CLERK OF THE BUREAU OF MINES, AGAIN PROTESTING THE AWARD.

THERE IS ENCLOSED A COPY OF RELEASE NO. 308 OF FEBRUARY 23, 1938, ISSUED BY THE NATIONAL BITUMINOUS COAL COMMISSION, STATING THAT THE MINIMUM PRICES AND MARKETING RULES AND REGULATIONS HERETOFORE ESTABLISHED BY THE COMMISSION ARE REVOKED EFFECTIVE AS OF THE 25TH DAY OF FEBRUARY 1938, AT 11:59 P.M. TOGETHER WITH A LETTER OF FEBRUARY 25, 1938, FROM THE NATIONAL BITUMINOUS COAL COMMISSION, STATING THAT DISCOUNTS WERE PROHIBITED PRIOR TO 11:59 P.M., FEBRUARY 25, 1938.

AWARD HAS BEEN MADE TO THE SNYDER COAL COMPANY ON THIS CONTRACT, AND DELIVERIES OF COAL HAVE BEEN STARTED BECAUSE SUCH DELIVERIES WERE NECESSARY TO SUPPLY SUFFICIENT COAL TO HEAT THE BUREAU OF MINES BUILDING AT PITTSBURGH.

IN VIEW OF THE PROTEST MADE BY J. B. HURLEY, I AM SUBMITTING THIS MATTER TO YOU FOR DECISION AS TO WHETHER THE BUREAU OF MINES WAS CORRECT IN DISREGARDING ALL DISCOUNTS ON THE PROPOSALS REFERRED TO AND AWARDING THE CONTRACT TO THE SNYDER COAL COMPANY. IF IT IS DECIDED THAT AWARD SHOULD HAVE BEEN MADE TO J. B. HURLEY WHO WAS THE LOW BIDDER, CONSIDERING HIS DISCOUNT OF 10 PERCENT, INSTRUCTIONS ARE REQUESTED AS TO WHAT PAYMENT SHALL BE MADE TO THE SNYDER COAL COMPANY FOR THE COAL DELIVERED BETWEEN FEBRUARY 21 AND THE DATE OF YOUR DECISION.

THERE IS NOT INVOLVED HERE THE PROHIBITION CONTAINED IN SECTION 9 (B) OF THE BITUMINOUS COAL ACT OF APRIL 26, 1937, 50 STAT. 87, PROHIBITING THE PURCHASE BY THE UNITED STATES OF ANY COAL PRODUCED AT ANY MINE WHERE THE PRODUCER FAILED AT THE TIME OF THE PRODUCTION TO ACCORD TO HIS OR ITS EMPLOYEES THE RIGHTS AS SET FORTH IN SUBSECTION (A) OF SAID SECTION 9. SEE 17 COMP. GEN. 400.

THE LETTER OF FEBRUARY 25, 1938, FROM THE NATIONAL BITUMINOUS COAL COMMISSION TO THE BUREAU OF MINES, IS IN PERTINENT PART, AS FOLLOWS:

YOUR ATTENTION IS DIRECTED TO AMENDED RULE 5 OF SECTION IX OF THE MARKETING RULES AND REGULATIONS APPLICABLE TO COALS OF CODE MEMBERS WITHIN DISTRICTS NOS. 1 TO 13, INCLUSIVE, WHICH RULES ARE IN EFFECT UP TO 11:59, FEBRUARY 25, READING AS FOLLOWS: "INVOICES SHALL BE PAID IN FULL IN UNITED STATES CURRENCY, OR FUNDS EQUIVALENT THERETO, ON OR BEFORE THE DUE DATE.'

YOUR ATTENTION IS FURTHER DIRECTED TO SECTION 4, PART 2, SUB-SECTION I, PARAGRAPH 6 OF THE BITUMINOUS COAL ACT OF 1937 WHICH DECLARED THESE PRACTICES AS UNFAIR METHODS OF COMPETITION AND CONSTITUTING THE SAME AS VIOLATIONS OF THE CODE, READING AS FOLLOWS: "THE PAYMENT OF ALLOWANCE IN ANY FORM OR BY ANY DEVICE OF REBATES, REFUNDS, CREDITS, OR UNEARNED DISCOUNTS, OR THE EXTENSION TO CERTAIN PURCHASERS OF SERVICES OR PRIVILEGES NOT EXTENDED TO ALL PURCHASERS UNDER LIKE TERMS AND CONDITIONS, OR UNDER SIMILAR CIRCUMSTANCES.'

NEITHER THE ACT OF APRIL 26, 1937, NOR THE ABOVE REFERRED TO RULES OF THE NATIONAL BITUMINOUS COAL COMMISSION, PROHIBIT THE GIVING OF DISCOUNT TO THE UNITED STATES FOR PROMPT PAYMENT SO LONG AS THE AMOUNT OF DISCOUNT WAS NOT SUFFICIENT TO BRING THE NET PRICE OF THE COAL BELOW THE MINIMUM PRICE ESTABLISHED BY THE NATIONAL BITUMINOUS COAL COMMISSION. SEE 50 STAT. 80. IT IS ALLEGED, AND NOT DISPROVED, THAT THE OFFER BY J. B. HURLEY OF DISCOUNT OF 10 PERCENT FOR PAYMENT WITHIN 10 DAYS WOULD NOT HAVE BROUGHT THE MINE PRICE OF HIS COAL BELOW THE MINIMUM PRICES FIXED FOR THE PARTICULAR DISTRICTS, AND, AS YOU HAVE REPORTED, THE MINIMUM PRICES WERE RESCINDED IN RELEASE NO. 308, DATED FEBRUARY 23, 1938, OR AFTER THE CONTRACT WAS ENTERED INTO.

FURTHERMORE, THERE IS NO DUTY ON THE PURCHASING AGENCIES OF THE GOVERNMENT TO ASCERTAIN WHETHER THE PRICES AT WHICH COAL IS OFFERED ARE BELOW THOSE FIXED UNDER AUTHORITY OF THE BITUMINOUS COAL ACT, AND THERE IS NO AUTHORITY IN ANY CONTRACTING OFFICER OF THE GOVERNMENT TO REJECT A BID MERELY BECAUSE THE PRICE OR DISCOUNT OFFERED MAY CONTRAVENE SOME CODE OR REGULATION UNDER THE SAID ACT.

WHILE THE CONTRACT IN THIS INSTANCE SHOULD HAVE BEEN AWARDED TO J. B. HURLEY IF THERE WAS A LIKELIHOOD OF PAYMENT BEING EFFECTED WITHIN THE 10- DAY PERIOD, IN VIEW OF ALL THE FACTS AND CIRCUMSTANCES APPEARING, PAYMENTS FOR DELIVERIES MADE BY THE SNYDER COAL COMPANY MAY BE MADE AT THE PRICE STATED IN ITS BID, TO WIT, AT $2.04 PER TON WITH DISCOUNT OF 1 PERCENT WHERE PAYMENT IS MADE WITHIN 10 DAYS.