A-95480, JUNE 14, 1938, 17 COMP. GEN. 1070

A-95480: Jun 14, 1938

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ADVERTISING - BIDS - STENOGRAPHIC REPORTING SERVICE - PUBLIC SALES PRICE LIMITATIONS AND OFFERS NOT IN ACCORDANCE WITH THE SPECIFICATIONS INVOLVING UNCERTAINTY OF GOVERNMENT COST THE INCLUSION IN AN INVITATION FOR BIDS FOR STENOGRAPHIC REPORTING SERVICE OF A STATEMENT OF THE AMOUNT TO BE CHARGED THE PUBLIC FOR COPIES IS FOR THE PURPOSE OF PREVENTING AN EXORBITANT PRICE TO THE PUBLIC AND WHEN SUCH CHARGES ARE NOT EXORBITANT THEY MAY BE DISREGARDED IN THE AWARD OF THE CONTRACT. IS AS FOLLOWS: ON MAY 14. ATTACHED PLEASE FIND ABSTRACT OF THE BIDS WHICH WERE OPENED AT 10:00 A.M. YOU WILL NOTE THAT THREE PROPOSALS WERE NOT CONSIDERED BECAUSE OF FAILURE OF THE BIDDERS TO PROVIDE THE REQUISITE BID BOND.

A-95480, JUNE 14, 1938, 17 COMP. GEN. 1070

ADVERTISING - BIDS - STENOGRAPHIC REPORTING SERVICE - PUBLIC SALES PRICE LIMITATIONS AND OFFERS NOT IN ACCORDANCE WITH THE SPECIFICATIONS INVOLVING UNCERTAINTY OF GOVERNMENT COST THE INCLUSION IN AN INVITATION FOR BIDS FOR STENOGRAPHIC REPORTING SERVICE OF A STATEMENT OF THE AMOUNT TO BE CHARGED THE PUBLIC FOR COPIES IS FOR THE PURPOSE OF PREVENTING AN EXORBITANT PRICE TO THE PUBLIC AND WHEN SUCH CHARGES ARE NOT EXORBITANT THEY MAY BE DISREGARDED IN THE AWARD OF THE CONTRACT. WHERE IN CONNECTION WITH AN INVITATION FOR BIDS FOR STENOGRAPHIC REPORTING SERVICE A BIDDER, WITHOUT REQUIREMENT OF THE SPECIFICATIONS, OFFERS REFUNDS OR REBATES TO THE GOVERNMENT DEPENDENT UPON HIS SALES TO THE PUBLIC, THE BID SHOULD BE DISREGARDED IN MAKING AWARD, THE OFFER NOT ONLY BEING UNFAIR TO THE OTHER BIDDERS, BUT INVOLVING ALSO AN UNCERTAINTY OF COST TO THE GOVERNMENT NOT CAPABLE OF BEING RENDERED CERTAIN BY ELEMENTS NOT CONTROLLED BY THE CONTRACTOR.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, NATIONAL LABOR RELATIONS BOARD, JUNE 14, 1938:

YOUR LETTER OF JUNE 6, 1938, IS AS FOLLOWS:

ON MAY 14, 1938, THE NATIONAL LABOR RELATIONS BOARD ISSUED INVITATIONS TO BID FOR STENOGRAPHIC REPORTING SERVICE TO BE RENDERED THE BOARD DURING THE FISCAL YEAR 1939. ATTACHED PLEASE FIND ABSTRACT OF THE BIDS WHICH WERE OPENED AT 10:00 A.M., MAY 25, 1938, AND A COPY OF THE FORM OF INVITATION TO BID. YOU WILL NOTE THAT THREE PROPOSALS WERE NOT CONSIDERED BECAUSE OF FAILURE OF THE BIDDERS TO PROVIDE THE REQUISITE BID BOND. THE OTHER BIDDERS FULFILLED THIS REQUIREMENT.

WE ARE SUBMITTING THIS MATTER FOR YOUR DECISION AS TO WHETHER OR NOT THE PROPOSAL BY ELECTREPORTER, INC., IS THE LOW BID. THE PROPOSAL CONTAINS A FOOTNOTE AS FOLLOWS:

"IN EACH CASE WHERE A COPY OR COPIES, OR PORTIONS THEREOF, ARE SOLD TO THE PUBLIC, AS PROVIDED UNDER THIS CONTRACT THE SUM OF FORTY-FOUR CENTS PER PAGE OF THE AMOUNT RECEIVED FROM THE FIRST ONE OF SUCH COPIES SOLD WILL BE PAID TO THE BOARD BY ELECTREPORTER, INC., AS A REFUND OF ANY SUMS THAT THE BOARD SHALL HAVE PAID TO ELECTREPORTER, INC., HEREUNDER; PROVIDED, THAT THE AGGREGATE OF SUCH REFUNDS SHALL NOT BE GREATER THAN ONE THOUSAND DOLLARS ($1,000) IN EXCESS OF THE TOTAL AMOUNT PAID BY THE BOARD FOR ITS COPIES UNDER THIS CONTRACT.'

IT WILL BE NOTED THAT THE METHOD OF ARRIVING AT A PRICE TO THE BOARD GOES BEYOND THE SPECIFICATIONS SET FORTH IN THE INVITATION TO BID. IT WILL ALSO BE NOTED THAT ITEMS 7, 8, 9, AND 10 PROVIDE THAT "SINGLE COPIES OF TRANSCRIPT, OR PORTIONS THEREOF, WILL BE SOLD TO THE PUBLIC AT PRICES NOT EXCEEDING THE FOLLOWING RATES.' THE REPORTER, THEREFORE, MAY SELL TO THE PUBLIC FOR LESS THAN THE MAXIMUM PRICE QUOTED IN THE BID. THE REFUND PROCEDURE SET FORTH IN THE FOOTNOTE WOULD APPEAR TO BE CONTINGENT UPON SALES TO THE PUBLIC AT MAXIMUM PRICES. UNDER THESE CONDITIONS WE ARE UNABLE TO MAKE AN EXACT DETERMINATION OF THE COST TO THE BOARD OF REPORTING UNDER THE ELECTREPORTER, INC., BID.

INASMUCH AS THE SUCCESSFUL BIDDER MUST MAKE NATION-WIDE PLANS BEFORE JULY 1, 1938, IN ORDER TO CARRY OUT THE TERMS OF THE CONTRACT, THE BOARD WOULD APPRECIATE YOUR PROMPT ACTION AND REPLY.

BY LETTER OF JUNE 10, 1938, YOU FURNISHED THE FOLLOWING ADDITIONAL INFORMATION:

IN PURSUANCE OF YOUR REQUEST, WE HAVE ASKED THE REPORTER TO FURNISH US INFORMATION ON THE VOLUME OF PAGES REPORTED FOR THE BOARD AND AN APPROXIMATE PERCENTAGE OF THOSE IN WHICH FIRST COPIES WERE SOLD TO THE PUBLIC. WE HAVE BEEN INFORMED IN RESPONSE TO OUR REQUEST THAT UNDER THE TERMS OF ITEMS 1, 2, 3, AND 4 OF CONTRACT NO. NLB-193, THE OFFICIAL REPORTER TOOK 890,247 ORIGINAL PAGES OF TRANSCRIPT FOR THE BOARD, AND THAT PURSUANT TO THE TERMS OF ITEMS 7, 8, 9, AND 10 OF THE CONTRACT, THERE WAS NO SALE TO THE PUBLIC IN APPROXIMATELY 28 PERCENT OF THIS VOLUME OF PAGES. WE CANNOT SAY FROM THESE FIGURES THAT 71 1/2 PERCENT OF THE TOTAL NUMBER OF PAGES FURNISHED TO THE BOARD WERE SOLD TO THE PUBLIC BY THE REPORTER AS FIRST PAGES SINCE, WE ARE INFORMED BY THE REPORTER, IN SOME INSTANCES PARTIAL COPIES ONLY OF THE TRANSCRIPTS HAVE BEEN PURCHASED BY THE PUBLIC.

ENCLOSED HEREWITH PLEASE FIND LETTER OF JUNE 7, 1938, FROM ELECTREPORTER, INC., AND THEIR STATEMENT OF THE COST OF REPORTING, UNDER THE BID IN QUESTION, AS COMPARED TO THE BID OF DANIEL W. ROSS. FOR FURTHER INFORMATION ON THIS POINT, WE SUBMIT OUR SCHEDULE OF THE COST OF REPORTING UNDER THE ELECTREPORTER, INC., BID FROM THE VIEWPOINT OF RETURNS TO THE REPORTER, REFUNDS TO THE BOARD, AND NET COST TO THE BOARD. BOTH SCHEDULES ARE CALCULATED ON ITEM 3 OF THE BID WHICH, ACCORDING TO ESTIMATE WILL COMPRISE APPROXIMATELY 90 PERCENT OF THE WORK TO BE DONE.

THE ENCLOSED LETTER FROM ELECTREPORTER OCCASIONS THE FOLLOWING COMMENTS. IN PARAGRAPH 2 IT IS STATED THAT THERE SHALL BE A REFUND TO THE GOVERNMENT OF 44 CENTS PER PAGE ON EACH FIRST COPY OF TRANSCRIPT SOLD. CONSIDERATION IS GIVEN TO THE ACTUAL BID WHICH STATES THAT 44 CENTS PER PAGE OF THE AMOUNT RECEIVED WILL BE REFUNDED. IN OUR LETTER OF JUNE 6TH, ATTENTION WAS CALLED TO THE FACT THAT THE REPORTER, IN HIS DISCRETION, MAY SELL FOR A LESSER AMOUNT.

SERIOUS QUESTIONS ARISE IN CONNECTION WITH DELAYED SALES AND COLLECTIONS FROM THE PURCHASERS OF TRANSCRIPTS. IT IS NOT UNLIKELY THAT THE SALE OF TRANSCRIPTS MIGHT TAKE PLACE AS LATE AS ONE YEAR AFTER THE ACTUAL REPORTING. UNDER THIS CONDITION, THE BOARD'S FINANCIAL POSITION ON THE CONTRACT MAY BE PLACED IN A DOUBTFUL STATUS FOR AN UNREASONABLE LENGTH OF TIME. WE HAVE BEEN INFORMED THAT IT IS FREQUENTLY NECESSARY FOR REPORTERS TO ENGAGE THE SERVICES OF ATTORNEYS AND COLLECTORS IN AN EFFORT TO COLLECT SUMS OF MONEY DUE THEM FOR TRANSCRIPTS SOLD TO THE PUBLIC. IT IS NOT IMPOSSIBLE THAT SOME ACCOUNTS MAY NEVER BE COLLECTED. UNDER THE USUAL BUSINESS PRACTICE OF PAYING THE COLLECTOR A PERCENTAGE OF THE AMOUNT COLLECTED, THE RECEIPTS FOR TRANSCRIPTS SOLD WOULD BE REDUCED AND IT APPEARS THAT WITH THE FIXED REFUND TO THE BOARD EFFORTS TO COLLECT MIGHT NOT BE STIMULATED.

IN THE EVENT OF DECEASE IN SALES TO THE PUBLIC BELOW 75 PERCENT OF ORIGINAL PAGES, ELECTREPORTER, INC., IS SHELTERED BY THE BOARD'S OBLIGATION TO PAY 36 CENTS PER PAGE, BUT NO SUCH PROTECTION IS AFFORDED TO THE BOARD. IN THE EVENT OF INCREASE IN SALES TO THE PUBLIC, THE BIDDER LIMITS THE REFUND.

IT IS IMPOSSIBLE FOR THE BOARD TO STATE IN ADVANCE JUST WHAT VOLUME OF REPORTING WILL BE MAINTAINED DURING THE FISCAL YEAR 1939 AND WHETHER OR NOT THE PERCENTAGE OF SALE OF FIRST COPIES TO THE PUBLIC WILL INCREASE OR DECREASE. THE ILLUSTRATIONS SHOWN ON OUR SCHEDULE OF COST WILL DEMONSTRATE THE SERIOUS CONSEQUENCES SHOULD THE REPORTER'S SALES FALL BELOW 50 PERCENT OF THE ORIGINAL PAGES REPORTED.

WE TRUST THAT THIS INFORMATION WILL ASSIST IN THE DETERMINATION OF THE MATTER.

THE FOLLOWING IS AN ABSTRACT OF THE FIVE BIDS TO BE CONSIDERED:

* * * * * * * * * * * * * * (TABLE OMITTED) * * * * * * * * * * * * * *

ITEMS 1 TO 4, INCLUSIVE, ARE FOR ORIGINAL AND TWO CARBON COPIES TO BE FURNISHED YOUR BOARD; ITEMS 5 AND 6, ADDITIONAL COPIES FOR YOUR BOARD; AND ITEMS 7 TO 10, INCLUSIVE, ARE FOR COPIES TO BE FURNISHED THE GENERAL PUBLIC. IT IS APPARENT FROM THE ABOVE TABULATION THAT THE BID OF THE ELECTREPORTER, INC., IS NOT THE LOW BID UNLESS THERE BE TAKEN INTO CONSIDERATION ITS OFFER TO REFUND FROM THE FIRST SALES TO THE PUBLIC. THE INCLUSION IN THE SPECIFICATIONS OF A STATEMENT OF THE AMOUNT TO BE CHARGED THE PUBLIC FOR COPIES IS FOR THE PURPOSE OF PREVENTING AN EXORBITANT PRICE TO THE PUBLIC AND WHEN SUCH CHARGES ARE NOT EXORBITANT THEY MAY BE DISREGARDED IN THE AWARD OF THE CONTRACT. THE SPECIFICATIONS, HOWEVER, DID NOT REQUEST OR REQUIRE THE BIDDERS TO STATE WHETHER OR TO WHAT EXTENT REFUNDS OR REBATES WOULD BE MADE TO THE GOVERNMENT BASED UPON SALES TO THE PUBLIC. THE CONSIDERATION OF SUCH AN OFFER, THEREFORE, IS NOT ONLY UNFAIR TO THE OTHER BIDDERS--- NOT HAVING BEEN A PART OF THE SPECIFICATIONS--- BUT UNDER SUCH AN OFFER THE NET COST TO THE GOVERNMENT WOULD BE CONTINGENT UPON AN UNCERTAIN EVENT OR CONDITION WHICH CANNOT BE EVALUATED WITH ANY DEGREE OF CERTAINTY, BEING DEPENDENT LARGELY ON THE ACTION OF THE CONTRACTOR. THE CONSIDERATION FOR GOVERNMENT CONTRACTS MUST BE CERTAIN OR CAPABLE OF BEING RENDERED CERTAIN BY ELEMENTS NOT CONTROLLED BY THE CONTRACTOR. IF THE BIDDER WERE SO CERTAIN OF THE ULTIMATE BENEFIT TO THE UNITED STATES FROM ITS OFFER, THERE WOULD SEEM TO HAVE BEEN NO REASON WHY IT COULD NOT HAVE OFFERED TO SUPPLY THE COPIES TO THE UNITED STATES EITHER FREE OF CHARGE IN THE FIRST INSTANCE OR TO HAVE OFFERED A BONUS TO THE GOVERNMENT FOR AWARDING IT THE CONTRACT WITH THE PRIVILEGE OF SALE OF COPIES TO THE PUBLIC.

UNDER THE CIRCUMSTANCES, THE BID OF THE ELECTREPORTER, INC., SHOULD BE DISREGARDED AND THE CONTRACT MAY BE AWARDED TO THE LOWEST OF THE REMAINING RESPONSIBLE BIDDERS.