A-95481, JUNE 14, 1938, 17 COMP. GEN. 1073

A-95481: Jun 14, 1938

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CONTRACTS - AWARDS IN EXCESS OF ADVERTISED QUANTITY - VESSEL CONSTRUCTION WHERE THE ADVERTISING FOR BIDS FOR CONSTRUCTION OF AN AGGREGATE OF 12 VESSELS WAS ON THE BASIS OF EACH BIDDER BUILDING FROM 1 TO 6 VESSELS. THERE IS NO OBJECTION. WHERE IT IS ADMINISTRATIVELY DETERMINED IN THE INTEREST OF THE UNITED STATES. 1938: THERE WAS RECEIVED JUNE 6. THE FACTS WITH RESPECT TO THE PROPOSED TRANSACTION ARE FULLY SET OUT IN THE OPINION OF THE GENERAL COUNSEL OF THE COMMISSION. A COPY OF WHICH IS HERETO ATTACHED. THAT ITS PROPOSED ACTION IN ACCEPTING THE OFFERS OF THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY WILL BE EXTREMELY ADVANTAGEOUS TO THE NATIONAL INTEREST AND SHOULD BE TAKEN.

A-95481, JUNE 14, 1938, 17 COMP. GEN. 1073

CONTRACTS - AWARDS IN EXCESS OF ADVERTISED QUANTITY - VESSEL CONSTRUCTION WHERE THE ADVERTISING FOR BIDS FOR CONSTRUCTION OF AN AGGREGATE OF 12 VESSELS WAS ON THE BASIS OF EACH BIDDER BUILDING FROM 1 TO 6 VESSELS, AND NOT ON AN ANY OR ALL BASIS, THERE IS NO OBJECTION, WHERE IT IS ADMINISTRATIVELY DETERMINED IN THE INTEREST OF THE UNITED STATES, TO THE INCREASE OF THE AGGREGATE AWARD TO 16, WITH AWARD TO A SINGLE BIDDER NOT IN EXCESS OF THE LIMITATION OF 6 AS STATED IN THE INVITATION FOR BIDS, THE BID OPENING INVOLVED HAVING BEEN ONLY APPROXIMATELY A MONTH AGO, THE BIDDERS HAVING BEEN ON AN EVEN COMPETITIVE BASIS, AND THERE HAVING BEEN OBTAINED UNDER THE ADVERTISING AS MADE SUCH COMPETITIVE BIDDING AS THE PARTICULAR INDUSTRY AFFORDS. 14 COMP. GEN. 766, 15 ID. 573, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, UNITED STATES MARITIME COMMISSION, JUNE 14, 1938:

THERE WAS RECEIVED JUNE 6, 1938, YOUR UNDATED LETTER AS FOLLOWS:

THE UNITED STATES MARITIME COMMISSION, PURSUANT TO ITS STATUTORY DUTIES WITH RESPECT TO THE NATIONAL DEFENSE, THE DEVELOPMENT OF FOREIGN AND DOMESTIC COMMERCE, AND ESPECIALLY TO SECURE A MERCHANT MARINE OF THE CHARACTER CONTEMPLATED BY THE MERCHANT MARINE ACT OF 1936, DESIRES TO ENTER INTO CONTRACTS FOR THE CONSTRUCTION OF FOUR CARGO VESSELS, TWO BY THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND TWO BY THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY.

THE FACTS WITH RESPECT TO THE PROPOSED TRANSACTION ARE FULLY SET OUT IN THE OPINION OF THE GENERAL COUNSEL OF THE COMMISSION, A COPY OF WHICH IS HERETO ATTACHED.

THE COMMISSION DEFINITELY FEELS THAT IN THIS MATTER THE GOVERNMENT HAS RECEIVED THE FULL ADVANTAGE OF COMPETITIVE BIDDING, THAT ITS PROPOSED ACTION IN ACCEPTING THE OFFERS OF THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY WILL BE EXTREMELY ADVANTAGEOUS TO THE NATIONAL INTEREST AND SHOULD BE TAKEN; AND IT IS REQUESTED, THEREFORE, THAT YOUR PREFERRED ATTENTION BE GIVEN TO THIS MATTER SO THAT THE COMMISSION MAY BE ADVISED BY YOU IF, IN YOUR OPINION, THE COMMISSION'S PROPOSED ACTION IS AUTHORIZED IN LAW SO THAT AN ACCOUNT FOR THE CONSTRUCTION OF THESE VESSELS WILL BE PASSED BY YOU FOR PAYMENT.

THE ATTACHED COPY OF THE OPINION OF THE GENERAL COUNSEL OF THE COMMISSION, DATED JUNE 4, 1938, AND DIRECTED TO THE "COMMISSION" IS AS FOLLOWS:

CONSTRUCTION OF SHIPS BY THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY.

YOU HAVE REQUESTED MY OPINION AS TO WHETHER OR NOT THE COMMISSION IS AUTHORIZED IN LAW TO ACCEPT THE OFFERS OF THE ABOVE COMPANIES FOR THE CONSTRUCTION OF TWO SHIPS EACH. THE FACTS INVOLVED ARE AS FOLLOWS:

PURSUANT TO THE TERMS OF THE MERCHANT MARINE ACT, 1936, THE COMMISSION, ON APRIL 8, 1938, INVITED SEALED BIDS FOR THE CONSTRUCTION OF TWELVE SINGLE-SCREW CARGO VESSELS. I ATTACH HERETO A COPY OF THIS INVITATION FOR BIDS. THE VESSELS IN QUESTION WERE TO BE PROPELLED BY STEAM TURBINE AND BY DIESEL ENGINES, AND THE INVITATION CONTAINED A PROVISION THAT:

"NOT MORE THAN SIX VESSELS OF EITHER OR BOTH DESIGNS WILL BE AWARDED FOR CONSTRUCTION AT A SINGLE YARD OR PLANT.'

THE FORM OF BID PROVIDED FOR BIDS ON ONE TO SIX VESSELS, OR, IN OTHER WORDS, FOR ONE VESSEL OR FOR EACH OF TWO, THREE, FOUR, FIVE, OR SIX. THE SUN SHIPBUILDING AND DRYDOCK COMPANY OF CHESTER, PENNSYLVANIA, BID $2,075,000 EACH FOR FOUR VESSELS AND $2,065,000 EACH FOR SIX VESSELS, DIESEL PROPULSION, THE BID BEING ON A FIXED-PRICE BASIS. THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY OF KEARNEY, NEW JERSEY, BID $1,995,000 EACH FOR FOUR VESSELS AND $1,967,000 EACH FOR SIX VESSELS, STEAM PROPULSION, THE BID BEING ON AN ADJUSTED-PRICE BASIS. ON MAY 5, 1938, THE COMMISSION ACCEPTED THE BID OF THE SUN SHIPBUILDING AND DRYDOCK COMPANY FOR THE CONSTRUCTION OF FOUR DIESEL PROPELLED VESSELS AND THE BID OF THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY FOR THE CONSTRUCTION OF FOUR STEAM-DRIVEN VESSELS AND DELAYED OTHER ACTION PENDING AN INVESTIGATION OF THE ABILITY, EXPERIENCE, FINANCIAL RESOURCES, EQUIPMENT, AND OTHER QUALIFICATIONS OF ONE OF THE BIDDERS, LATER DETERMINED BY THE COMMISSION, PURSUANT TO STATUTORY AUTHORITY, NOT TO BE A RESPONSIBLE BIDDER.

WHEN THE OFFERS OF THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND FEDERAL SHIPBUILDING AND DRYDOCK COMPANY WERE ACCEPTED FOR THE CONSTRUCTION OF FOUR SHIPS EACH, THESE COMPANIES STATED THAT THEIR BIDS FOR THE CONSTRUCTION OF SIX VESSELS EACH WOULD STAND AND THAT, SHOULD THE COMMISSION SEE FIT TO INCREASE THE NUMBER OF VESSELS TO BE CONSTRUCTED FROM FOUR TO SIX, THE SIX VESSELS WOULD BE CONSTRUCTED AT THE PRICE PROVIDED FOR EACH SHIP OF SIX, WHICH IS A LOWER PRICE THAN THAT PROVIDED IN THE BIDS FOR THE CONSTRUCTION OF EACH OF FOUR SHIPS.

SINCE THE AWARD OF THE FOUR SHIPS EACH TO THESE TWO COMPANIES, THE COMMISSION HAS AWARDED THE CONSTRUCTION OF FOUR SHIPS TO THE NEWPORT NEWS SHIPBUILDING AND DRYDOCK COMPANY OF NEWPORT NEWS, VIRGINIA, THESE VESSELS TO BE STEAM DRIVEN AND TO BE CONSTRUCTED FOR $2,080,292 PER VESSEL, ADJUSTED-PRICE BASIS. IT IS TO BE NOTED THAT THE BIDS OF THE SUN SHIPBUILDING AND DRYDOCK COMPANY, THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY, AND THE NEWPORT NEWS SHIPBUILDING AND DRYDOCK COMPANY WERE THE LOWEST LEGAL BIDS RECEIVED FROM RESPONSIBLE BIDDERS AND THAT THE NEWPORT NEWS COMPANY BID ONLY ON FOUR VESSELS. THE DIFFERENCE BETWEEN THE BIDS AND THE ACTUAL CONTRACT PRICE IS BROUGHT ABOUT BY "EXTRAS," WHICH AGGREGATE IN THE BID PRICE $25,450 PER SHIP. THE ONLY QUESTION WHICH ARISES FOR DECISION IS WHETHER THE FACT THAT THE INVITATION STATED THAT BIDS WERE INVITED FOR THE CONSTRUCTION OF TWELVE SHIPS WILL OPERATE TO PREVENT THE AWARD OF TWO SHIPS EACH TO THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY AFTER FOUR SHIPS HAVE BEEN AWARDED TO EACH OF THEM AND FOUR SHIPS TO THE NEWPORT NEWS SHIPBUILDING AND DRYDOCK COMPANY, BRINGING THE TOTAL NUMBER OF SHIPS TO BE CONSTRUCTED TO SIXTEEN.

INASMUCH AS THE CONTRACTS WERE LET UPON COMPETITIVE BIDS, THE QUESTION IS REALLY IF IT IS NECESSARY TO HAVE A FURTHER ADVERTISEMENT IN ORDER TO SECURE THE CONSTRUCTION OF THESE FOUR SHIPS. FROM THE FACTS AS STATED, IT DEFINITELY APPEARS THAT IT CANNOT BE SAID THAT THE MENTION OF TWELVE SHIPS RATHER THAN SIXTEEN IN THE ADVERTISEMENT COULD HAVE IN ANY WAY OPERATED TO PREVENT ANY CONTRACTOR FROM BIDDING. NO CONTRACTOR WAS PERMITTED TO BID FOR THE CONSTRUCTION OF MORE THAN SIX SHIPS, AND NO CONTRACTOR IS TO BE PERMITTED UNDER THE PROPOSED ACTION TO CONSTRUCT ANY SHIP UPON WHICH HE DID NOT ENTER AN APPROVED COMPETITIVE BID. IT IS, THEREFORE, CLEAR THAT THE GOVERNMENT HAS HAD THE BENEFIT OF FULL, FREE, AND UNRESTRICTED COMPETITION, AND, FOR REASONS WHICH I SHALL LATER STATE, THE PROPOSED ACTION WILL RESULT IN DEFINITE ADVANTAGE TO THE GOVERNMENT, AND FURTHER ADVERTISEMENT WOULD PREJUDICE THE NATIONAL INTEREST. IT THUS APPEARS THAT EVERY RESULT DESIGNED TO BE BROUGHT ABOUT BY ADVERTISEMENT AND COMPETITIVE BIDDING HAS BEEN SECURED TO THE GOVERNMENT. THE SIX-SHIP LIMITATION WAS UNQUESTIONABLY SOUND AND WITHIN THE AUTHORITY OF THE COMMISSION. IT WAS ADOPTED PRINCIPALLY BECAUSE IT WAS CONSIDERED VITAL TO SECURE THE CONSTRUCTION OF THE VESSELS AS RAPIDLY AS POSSIBLE AND BECAUSE A CONTRACTOR UNDERTAKING THE CONSTRUCTION OF MORE THAN SIX SHIPS WOULD NECESSARILY TAKE TIME FOR CONSTRUCTION CONSIDERED TO BE MUCH TOO LONG. MAY BE NOTED THAT THERE IS A FURTHER ADVANTAGE DERIVED FROM THIS LIMITATION IN THAT DISTRIBUTING THESE SHIPS AMONG VARIOUS YARDS INCREASES EMPLOYMENT AND KEEPS IN OPERATION YARDS WHICH WOULD BE INSTANTLY AVAILABLE IN ANY EMERGENCY.

YOU HAVE ADVISED ME THAT WHEN THE INVITATION WAS ISSUED THE COMMISSION BELIEVED THAT IT WAS NECESSARY TO CONSTRUCT ONLY TWELVE SHIPS AT THIS TIME, BUT THAT SINCE THAT TIME EVENTS HAVE CAUSED THE COMMISSION TO DETERMINE THAT IT IS ESSENTIAL TO THE NATIONAL WELFARE TO SECURE THE CONSTRUCTION OF SIXTEEN SHIPS IMMEDIATELY. YOU ADVISED ME THAT THESE CONTRACTS MUST BE LET IMMEDIATELY IN ORDER THAT THE GOVERNMENT MAY TAKE ADVANTAGE OF AVAILABLE FACILITIES IN OUR SHIPYARDS WHICH MAY NOT BE AVAILABLE LATER, ESPECIALLY IN VIEW OF OTHER SHIP CONSTRUCTION NOW CONTEMPLATED. THESE CARGO SHIPS CAN BE BUILT IN APPROXIMATELY FOURTEEN MONTHS, AND THEIR CONSTRUCTION WILL PERMIT THE YARDS TO BUILD UP IN AN ORDERLY MANNER AN EXCELLENT FORCE WITH WHICH THE YARDS WILL BE ABLE TO CARRY ON THE CONTEMPLATED PROGRAM OF NAVY CONSTRUCTION. THE NAVY PROGRAM UNQUESTIONABLY WILL REQUIRE EXPANSION AND REHABILITATION OF THE YARDS, BUT WHILE THIS IS BEING DONE, THE CONSTRUCTION OF THESE CARGO SHIPS CAN EASILY BE HANDLED THROUGH EXISTING FACILITIES. YOU ADVISED ME THAT IF THIS CONSTRUCTION IS BEGUN IMMEDIATELY IT WILL FIT IN EXTREMELY WELL WITH THE CHANGES WHICH THE YARDS MUST MAKE AND THE PROSPECTIVE CONSTRUCTION FOR THE NAVY. YOU HAVE ADVISED ME FURTHER THAT THESE FOUR SHIPS ARE URGENTLY REQUIRED FOR NATIONAL DEFENSE AND THE DEVELOPMENT OF OUR FOREIGN AND DOMESTIC COMMERCE AND THAT THE COMMISSION HAS DETERMINED THAT, UNLESS IT TAKES ADVANTAGE OF THE BIDS SUBMITTED BY THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY, THE CONSTRUCTION PROGRAM OF THE COMMISSION AND THE MARITIME WELFARE OF THE NATION WILL RECEIVE A DAMAGING BLOW.

IT IS, OF COURSE, IMPORTANT THAT BY TAKING THE PROPOSED ACTION THE COMMISSION WILL REDUCE THE PER SHIP COST MATERIALLY. WITH RESPECT TO THE SUN SHIPBUILDING AND DRYDOCK COMPANY, THE PRICE PER SHIP WILL BE REDUCED FROM $2,080,292 TO $2,070,292, OR $10,000 PER SHIP; AND WITH RESPECT TO THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY, THE PRICE WILL BE REDUCED FROM $2,002,292 TO $1,972,292, OR $30,000 PER SHIP. YOU HAVE BEEN ADVISED BY YOUR FINANCIAL AND TECHNICAL STAFF, AND ACTING UPON THEIR ADVISE HAVE DETERMINED THAT THE SHIPBUILDING MARKET IS "ON THE RISE" AND THAT BY ACCEPTING THE OFFERS OF THESE TWO COMPANIES FOR THE CONSTRUCTION OF THESE FOUR SHIPS, THE TONNAGE WILL BE ACQUIRED AT A SMALLER COST THAN WOULD BE POSSIBLE IF FURTHER ADVERTISEMENT SHOULD BE REQUIRED BEFORE THE CONTRACTS MAY BE LET.

THE REASONING APPLIED WITH RESPECT TO THE MODIFICATION OF CONTRACTS LET UPON COMPETITIVE BIDS APPEARS TO APPLY TO THE PRESENT SITUATION. SHEALEY ON "THE LAW OF GOVERNMENT CONTRACTS," SECOND EDITION, PAGE 92, IT IS STATED THAT:

"* * * THE PURPOSE IN REQUIRING ADVERTISING MUST NOT BE LOST SIGHT OF, TO WIT, THE SECURING FOR THE GOVERNMENT THE BENEFIT OF COMPETITION IN THE SUBMISSION OF BIDS. IT IS THEN QUITE APPARENT THAT A MODIFICATION WHICH WOULD BRING INTO OPERATION, INSOFAR AS ITS SUBJECT MATTER IS CONCERNED, SUBSTANTIALLY A NEW CONTRACT, WOULD NOT BE RECOGNIZED AS A VALID EXERCISE OF THE POWER. IN SUCH CASES THERE SHOULD BE A READVERTISEMENT. NO HARD AND FAST RULE CAN BE LAID DOWN, BUT THE SPIRIT OF THE STATUTE SHOULD AT ALL TIMES BE OBSERVED.'

IT IS MY OPINION THAT IN THE INSTANT CASE TO HOLD THAT THE COMMISSION MAY NOT TAKE ADVANTAGE OF THE SIX-SHIP BIDS OF THE SUN SHIPBUILDING AND DRYDOCK COMPANY AND THE FEDERAL SHIPBUILDING AND DRYDOCK COMPANY WOULD BE TO LOSE SIGHT OF THE PURPOSE IN REQUIRING ADVERTISING, TO WIT, THE SECURING FOR THE GOVERNMENT THE BENEFIT OF COMPETITION IN THE SUBMISSION OF BIDS. EVERY PROSPECTIVE BIDDER HAD AN OPPORTUNITY TO BID FOR THE CONSTRUCTION OF SIX SHIPS. NO PERSON WAS PERMITTED TO BID FOR THE CONSTRUCTION OF MORE THAN SIX SHIPS REGARDLESS OF THE TOTAL NUMBER TO BE CONSTRUCTED. NO MORE THAN SIX SHIPS (UPON WHICH EVERY PERSON WAS ENTITLED TO BID) ARE TO BE AWARDED TO ANY CONTRACTOR. NO BIDDER CAN OBJECT THAT FULL OPPORTUNITY WAS NOT PRESENTED TO HIM TO BID ON EQUAL TERMS OR THAT HIS BID WOULD HAVE BEEN LESS HAD HE KNOWN THAT SIXTEEN SHIPS WERE TO BE CONSTRUCTED. TO SAY THAT MERELY BECAUSE CONTRACTS FOR THE CONSTRUCTION OF FOUR SHIPS EACH HAVE BEEN AWARDED TO THESE TWO COMPANIES ACCEPTANCE OF THEIR CONTINUING OFFERS TO CONSTRUCT SIX SHIPS WOULD CONSTITUTE SUCH A SUPPLEMENT TO AN EXISTING CONTRACT THAT THE ACCEPTANCE IS FORBIDDEN BY LAW WOULD, IN MY OPINION, EXALT FORM OVER SUBSTANCE. NO REASON SO TO HOLD CAN BE CITED, AND, ESPECIALLY IN VIEW OF THE MATERIAL ADVANTAGES TO BE GAINED BY THE GOVERNMENT, SUCH A HOLDING APPEARS WHOLLY UNJUSTIFIED.

INASMUCH AS ONLY A BRIEF TIME HAS ELAPSED SINCE BIDS WERE INVITED, AND THE NUMBER OF SHIPS TO BE CONSTRUCTED EXCEEDS THE NUMBER STATED IN THE INVITATION BY ONLY 33 1/3 PERCENT, AND THE GOVERNMENT HAS RECEIVED THE FULL ADVANTAGE OF COMPETITIVE BIDDING AND WILL SECURE FINANCIAL, COMMERCIAL, AND MILITARY ADVANTAGES BY SECURING THESE FOUR SHIPS, IT IS MY OPINION THAT THE PROPOSED ACTION OF THE COMMISSION IS FULLY AUTHORIZED IN LAW.

SECTION 703 (A) OF THE MERCHANT MARINE ACT, 1936, 49 STAT. 2008, PROVIDES:

NO CONTRACT FOR THE BUILDING OF A NEW VESSEL, OR FOR THE RECONDITIONING OR RECONSTRUCTION OF ANY OTHER VESSEL, SHALL BE MADE BY THE COMMISSION WITH ANY PRIVATE SHIPBUILDER, EXCEPT AFTER DUE ADVERTISEMENT AND UPON SEALED COMPETITIVE BIDS.

ON THE BASIS OF THE SITUATION STATED BY YOUR GENERAL COUNSEL, THE QUESTION INVOLVED NARROWS DOWN TO WHETHER CONTRACTS FOR THE 4 ADDITIONAL SHIPS ON BIDS OPENED APPROXIMATELY A MONTH AGO WOULD BE MADE AFTER "DUE ADVERTISEMENT," AS REQUIRED BY THE STATUTE, IN VIEW OF THE STATEMENT IN THE ADVERTISEMENT FOR SUCH BIDS THAT BIDS WERE INVITED FOR AN AGGREGATE OF 12 VESSELS, BUT PROVIDING FURTHER THAT NOT MORE THAN 6 VESSELS WOULD BE AWARDED FOR CONSTRUCTION AT A SINGLE YARD OR PLANT.

I THINK THE QUESTION MAY BE ANSWERED IN THE AFFIRMATIVE. AS POINTED OUT BY YOUR GENERAL COUNSEL, THE BIDDERS BEING LIMITED TO 6 VESSELS EACH, THE AGGREGATE NUMBER TO BE CONSTRUCTED BY THE COMMISSION WAS NOT A MATERIAL MATTER IN THE FORMULATION OF THEIR BIDS. IT APPEARS THE COMMISSION ADVERTISED FOR AND RECEIVED BIDS ON THE BASIS OF EACH BIDDER BUILDING FROM ONE TO SIX VESSELS. THIS PLACED ALL BIDDERS ON AN EVEN COMPETITIVE BASIS, AND GAVE THE COMMISSION THE BENEFIT OF THE WHOLE MARKET ON THE ADVERTISED BASIS, AND AS EACH BIDDER WAS LIMITED TO 6 VESSELS, INDIVIDUAL BIDDERS WERE NOT CONCERNED IN THE AGGREGATE NUMBER OF VESSELS ABOVE 6 WHICH THE COMMISSION WOULD CONSTRUCT. THE STATEMENT OF SUCH AGGREGATE IN THE INVITATION FOR BIDS NOT BEING AN ELEMENT OF THE BIDDING ON THE ADVERTISED BASIS OF NOT MORE THAN 6 VESSELS TO A BIDDER, IT APPEARS TO HAVE SERVED NO PURPOSE AND MIGHT HAVE BEEN OMITTED AS SURPLUSAGE. IN EFFECT THE COMMISSION HAS BEFORE IT SUCH COMPETITIVE BIDS AS THE INDUSTRY AFFORDS, OBTAINED AFTER ADVERTISING, STIPULATING THE PRICES FOR WHICH EACH BIDDER WILL CONSTRUCT FROM ONE TO SIX VESSELS OF THE TYPE WANTED, AND THE CIRCUMSTANCE THAT THE COMMISSION NOW PROPOSES TO BUILD 16 SUCH VESSELS INSTEAD OF THE 12 ORIGINALLY CONTEMPLATED DOES NOT CHANGE THE COMPETITIVE CHARACTER OF THE BIDS OR THE FACT THAT THEY WERE OBTAINED AFTER ADVERTISING, NOR WOULD IT APPEAR THAT SUCH CIRCUMSTANCE REQUIRES FURTHER ADVERTISING IF THE COMMISSION DETERMINES THAT IT WOULD BE IN THE INTEREST OF THE GOVERNMENT TO MAKE FURTHER AWARDS ON THE RECENT BIDS NOW BEFORE IT. THE SITUATION WOULD BE ENTIRELY DIFFERENT, OF COURSE, IF IT HAD BEEN OPEN TO THE BIDDERS TO SUBMIT BIDS FOR ANY OR ALL OF THE AGGREGATE NUMBER OF VESSELS TO BE CONSTRUCTED. SEE 14 COMP. GEN. 766; 15 ID. 573.

FROM THE FACTS STATED IT APPEARS THAT THE UNIT PRICES OF THE FEDERAL SHIPBUILDING AND DRYDOCK CO. FOR BUILDING EITHER FOUR OR SIX STEAM PROPELLED VESSELS WERE LESS THAN THE UNIT PRICE OF THE NEWPORT NEWS SHIPBUILDING AND DRYDOCK CO. FOR BUILDING FOUR STEAM-PROPELLED VESSELS. IT IS NOT EXPLAINED WHY, IN THESE CIRCUMSTANCES, A LOWER AGGREGATE PRICE FOR THE EIGHT STEAM VESSELS AWARDED WOULD NOT HAVE BEEN OBTAINED BY AWARDING SIX TO THE LOWER BIDDING FEDERAL SHIPBUILDING AND DRYDOCK CO. AND ONLY TWO TO THE HIGHER BIDDING NEWPORT NEWS SHIPBUILDING AND DRYDOCK CO., INSTEAD OF AWARDING FOUR VESSELS TO EACH COMPANY. THIS WOULD NOT APPEAR MATERIAL, HOWEVER, IF TWO MORE VESSELS ARE NOW AWARDED TO THE SAID LOWER BIDDER, AS THIS WOULD FILL ITS WHOLE COMPONENT OF SIX VESSELS TO WHICH THE BIDS WERE LIMITED.

YOU ARE ADVISED ACCORDINGLY THAT ON THE FACTS SUBMITTED THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO PAYMENTS OTHERWISE CORRECT AND PROPER UNDER CONTRACTS AWARDED AS PROPOSED.