B-10208, JUNE 24, 1940, 19 COMP. GEN. 1017

B-10208, JUNE 24, 1940, 19 COMP. GEN. 1017

CONTRACTS - CONGRESSIONAL INTEREST WHILE UNDER A NARROW TECHNICAL INTERPRETATION, SECTION 3741, REVISED STATUTES, WHICH REQUIRES THAT THERE SHALL BE INSERTED IN EVERY GOVERNMENT CONTRACT "AN EXPRESS CONDITION THAT NO MEMBER OF OR DELEGATE TO CONGRESS SHALL BE ADMITTED TO ANY SHARE OR PART OF SUCH CONTRACT," LENDS ITSELF TO THE VIEW THAT INCLUSION OF ITS EXPRESS CONDITION IN A CONTRACT WITHOUT PREVIOUS REFERENCE THERETO IN INVITATIONS TO BID, ETC., IS SUFFICIENT COMPLIANCE WITH ITS REQUIREMENTS, IT WOULD APPEAR THAT INVITATIONS TO BID, ETC. SHOULD PUT BIDDERS ON NOTICE OF THE EXPRESS CONDITION. ACCEPTANCE OF A BID OR PROPOSAL IN WHICH THERE HAS NOT ALREADY BEEN INSERTED THE CONDITION REQUIRED IN EVERY GOVERNMENT CONTRACT BY SECTION 3741, REVISED STATUTES,"THAT NO MEMBER OF OR DELEGATE TO CONGRESS SHALL BE ADMITTED TO ANY SHARE OR PART OF SUCH CONTRACT," WOULD NOT BE IN CONFORMITY WITH THE STATUTORY REQUIREMENT, FOR THE BID WHEN ACCEPTED CONSTITUTES A CONTRACT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE NAVY, JUNE 24, 1940:

THERE HAS BEEN BROUGHT TO MY ATTENTION CONTRACT NO. N95M-155, NOVEMBER 3, 1939, WITH THE IMPERIAL LAUNDRY CO., BIRMINGHAM, ALABAMA, FOR LAUNDERING HAND TOWELS.

UPON EXAMINATION OF THE CONTRACT IN THIS OFFICE IT WAS NOTED THAT THE EXPRESS CONDITION REQUIRED BY SECTION 3741, REVISED STATUTES, STIPULATING THAT NO MEMBER OF OR DELEGATE TO CONGRESS SHALL BE ADMITTED TO ANY SHARE OR PART OF ANY CONTRACT OR AGREEMENT ENTERED INTO BY OR ON BEHALF OF THE UNITED STATES, WAS INCLUDED IN A PURCHASE ORDER ISSUED PURSUANT TO THE CONTRACT, BUT THAT NO REFERENCE TO SAID CONDITION WAS MADE IN THE INVITATION TO BID, ACCEPTANCE OF WHICH CONSTITUTED THE CONTRACT. LETTER OF FEBRUARY 2, 1940, THE AUDIT DIVISION OF THIS OFFICE REQUESTED THAT FUTURE SIMILAR ADVERTISEMENTS FOR BIDS INCLUDE INFORMATION TO BIDDERS THAT THE EXPRESS CONDITION REQUIRED BY SAID STATUTE WOULD BE INCLUDED IN ANY CONTRACT ENTERED INTO PURSUANT THERETO. THE REPLY OF FEBRUARY 19, 1940, FROM THE QUARTERMASTER, HEADQUARTERS U.S. MARINE CORPS, IS IN PERTINENT PART AS FOLLOWS:

THE STATUTE REFERRED TO MENTIONS SPECIFICALLY THAT THE REQUIREMENTS COVERED THEREBY MUST BE INCORPORATED IN THE CONTRACT, IMPLYING THAT SAME NEED NOT BE INCORPORATED IN THE PROPOSAL. IMPROPER AS THIS MAY SEEM BECAUSE, GRANTED THAT WHATEVER REQUIREMENT APPEARS IN A CONTRACT SHOULD BE CONDITIONED FOR IN THE PROPOSAL COVERING, THE FACT REMAINS THAT THE REQUIREMENTS OF THE STATUTE IN QUESTION DO NOT APPEAR IN ANY MARINE CORPS BID FORMS; NEITHER DO THEY APPEAR IN ANY OF THE U.S. STANDARD FORMS OF BIDS OR IN THE STANDARD FORM OF INSTRUCTIONS TO BIDDERS. SUCH REQUIREMENTS DO APPEAR IN STANDARD FORM NO. 33 ( REVISED), BUT, THEN, THIS IS A COMBINATION FORM, I.E., INVITATION, BID AND ACCEPTANCE ( SHORT FORM CONTRACT).

IN VIEW OF THIS FACT, IS IT POSSIBLE THAT THE REQUIREMENTS IN QUESTION NEED NOT BE INCORPORATED IN PROPOSALS, AS LONG AS THEY APPEAR IN THE ORDER, INASMUCH AS ALREADY STATED, THE STATUTE DOES MENTION SPECIFICALLY CONTRACTS AND MAKES NO MENTION OF BIDS? IN ANY EVENT, IF THE MARINE CORPS PROPOSAL FORMS ARE INCORRECT BY SUCH OMISSION, THEN THE STANDARD FORMS OF PROPOSALS ARE LIKEWISE INCORRECT. FURTHERMORE, IT APPEARS THAT YOU RAISE THE QUESTION AT HAND ONLY WHERE MARINE CORPS FORMS ARE INVOLVED, BUT NOT WHERE STANDARD FORMS ARE INVOLVED. THIS RAISES THE QUESTION AS TO WHY YOU DIFFERENTIATE WHEN THE SAME PRINCIPLE IS INVOLVED.

AS A MATTER OF INFORMATION, THERE HAS BEEN NO CHANGE MADE IN THE USE OF MARINE CORPS AND STANDARD PROPOSAL FORMS IN THE PAST AND IT IS ONLY RECENTLY THAT YOU HAVE BEEN RAISING THIS QUESTION, WHICH IS LIKEWISE NOT UNDERSTOOD.

PENDING A REPLY HERETO, THE MATTER REFERRED TO IN THE CONCLUDING SENTENCE OF LETTER FROM THIS OFFICE DATED 26 JANUARY 1940, FILE 149-4, ADDRESSED TO YOUR OFFICE, WILL BE HELD IN ABEYANCE. THIS LETTER MADE REPLY TO YOURS DATED 17 JANUARY 1940, FILE A-JRA-CE.

BY LETTER OF APRIL 1, 1940, THE AUDIT DIVISION INFORMED THE COMMANDANT, U.S. MARINE CORPS, THAT WHILE THE SUBJECT CONTRACT WOULD NOT BE FURTHER QUESTIONED BY REASON OF FAILURE TO INCLUDE IN THE INVITATION FOR BIDS THE EXPRESS CONDITION REQUIRED BY SECTION 3741, REVISED STATUTES, FUTURE SIMILAR INVITATIONS FOR BIDS SHOULD INCLUDE THE INFORMATION TO BIDDERS THAT THE EXPRESS CONDITION WOULD BE INCORPORATED IN ANY CONTRACT ENTERED INTO PURSUANT THERETO. IN REPLY THERE WAS RECEIVED FROM THE QUARTERMASTER, HEADQUARTERS U.S. MARINE CORPS, A LETTER OF APRIL 13, 1940, IN PERTINENT PART AS FOLLOWS:

IT APPEARS THAT YOU HAVE FAILED TO CONSIDER THE FACTS SET FORTH IN LETTER DATED 19 FEBRUARY 1940, IN THAT YOU SUGGEST THE MARINE CORPS CHANGE ITS OWN PROPOSAL FORM, BUT THEN WHAT SHOULD BE DONE IN INSTANCES WHERE STANDARD FORM PROPOSALS ARE USED, BEARING IN MIND THAT THE SAME PRINCIPLE IS INVOLVED IN THE OPINION OF THIS OFFICE, REGARDLESS OF WHICH FORM IS UTILIZED.

THE MARINE CORPS CAN EASILY RECTIFY THE ALLEGED OMISSION ON ITS OWN PROPOSAL FORM, BUT CANNOT APPARENTLY RECTIFY THE MATTER ON THE STANDARD FORM, WHICH IS APPROVED BY THE PRESIDENT. OR IS THIS OFFICE TO UNDERSTAND THAT YOU ARE NOT INTERESTED IN THIS MATTER WHEN STANDARD PROPOSAL FORMS ARE INVOLVED. IF SUCH IS THE CASE, THIS UNQUESTIONABLY IS NOT BEING CONSISTENT.

STEPS TO HAVE THE MARINE CORPS PROPOSAL FORMS RECTIFIED WILL BE HELD IN ABEYANCE UNTIL FURTHER INFORMATION AND INSTRUCTIONS ARE RECEIVED IN THE PREMISES.

SECTION 3741, REVISED STATUTES, 41 U.S.C. 22, SUBJECT TO CERTAIN AMENDMENTS FROM JANUARY 25, 1934, TO AUGUST 26, 1937, INCLUSIVE, HERE IRRELEVANT, IS AS FOLLOWS:

IN EVERY CONTRACT OR AGREEMENT TO BE MADE OR ENTERED INTO, OR ACCEPTED BY OR ON BEHALF OF THE UNITED STATES, THERE SHALL BE INSERTED AN EXPRESS CONDITION THAT NO MEMBER OF OR DELEGATE TO CONGRESS SHALL BE ADMITTED TO ANY SHARE OR PART OF SUCH CONTRACT OR AGREEMENT, OR TO ANY BENEFIT TO ARISE THEREUPON.

APPARENTLY IT WAS THE VIEW OF THE INTERDEPARTMENTAL BOARD OF CONTRACTS AND ADJUSTMENTS, WHICH FORMULATED AND PROMULGATED FOR DEPARTMENTAL USE THE UNITED STATES STANDARD FORMS TO WHICH THE QUARTERMASTER REFERS IN HIS LETTER OF FEBRUARY 19, 1940, THAT THE INSERTION OF THE "EXPRESS CONDITION" IN A CONTRACT OR AGREEMENT MADE BY OR ON BEHALF OF THE GOVERNMENT WAS SUFFICIENT COMPLIANCE WITH THE STATUTE, FOR, AS HE OBSERVES, THOSE FORMS MAKE NO REFERENCE TO THE STATUTORY REQUIREMENT. BUT AN ANALYSIS OF THE PHRASEOLOGY OF THE STATUTE JUSTIFIES QUESTION AS TO THE CORRECTNESS OF THAT VIEW, HAVING IN MIND THE FUNDAMENTAL PRINCIPLE OF CONTRACT LAW THAT A PROPOSAL AND ACCEPTANCE CONSTITUTES A CONTRACT BETWEEN THE PARTIES. IT IS TO BE NOTED THE STATUTE REQUIRES THAT IN EVERY CONTRACT OR AGREEMENT TO BE MADE OR ENTERED INTO OR ACCEPTED BY OR ON BEHALF OF THE UNITED STATES, THERE SHALL BE INSERTED AN EXPRESS CONDITION, ETC. IT WOULD APPEAR TO HAVE BEEN THE INTENT OF THE CONGRESS THAT SUCH AN EXPRESS CONDITION SHOULD BE A CONDITION PRECEDENT TO THE MAKING OR ENTERING INTO OF ANY CONTRACT OR AGREEMENT, OR ACCEPTANCE OF ANY PROPOSAL OFFERED TO THE GOVERNMENT FOR A CONTRACT OR AGREEMENT, PRIOR TO ITS ACCEPTANCE BY OR ON BEHALF OF THE UNITED STATES, RATHER THAN BE MADE PART OF A PURCHASE ORDER SUBSEQUENTLY ISSUED PURSUANT TO A CONTRACT OR AGREEMENT ALREADY MADE, ENTERED INTO, OR ACCEPTED. IF THIS BE TRUE, AND IT WOULD APPEAR TO BE THE LOGICAL DEDUCTION FROM THE LANGUAGE OF THE ACT, ACCEPTANCE OF A BID OR PROPOSAL IN WHICH THERE HAS NOT ALREADY BEEN INSERTED THE EXPRESS CONDITION PRESCRIBED WOULD NOT BE IN CONFORMITY WITH THE STATUTORY REQUIREMENT, FOR THE BID WHEN ACCEPTED CONSTITUTES A CONTRACT. ESPECIALLY WOULD THIS APPEAR TO BE TRUE WHERE ACCEPTANCE OF A BID LEAVES NOTHING TO BE DONE FURTHER SAVE TO ISSUE PURCHASE ORDERS PURSUANT THERETO. IT WAS SAID BY THE COURT IN PROFFIT V. UNITED STATES, 42 CT.1CLS. 248, IN REFERRING TO GOVERNMENT CONTRACTS:

* * * IT IS WELL SETTLED THAT THE COMMON-LAW RULE WHEREBY ALL PRIOR UNDERSTANDINGS ARE MERGED IN THE SUBSEQUENT WRITTEN CONTRACT CANNOT BE STRICTLY APPLIED TO CONTRACTS OF THIS CHARACTER, BECAUSE THEY ARE REQUIRED TO BE MADE BY ADVERTISEMENTS, BIDS, AND ACCEPTANCES. THESE THREE STEPS CONSTITUTE THE REAL CONTRACT, AND THE WRITTEN INSTRUMENT IS MERELY A REDUCTION TO FORM OF THE INTENTION OF THE PARTIES, AS EXPRESSED IN THE PRIOR ADVERTISEMENT, BID, AND ACCEPTANCE. * * * IF THIS BE TRUE WHEN BID AND ACCEPTANCE CONTEMPLATE A REDUCTION TO WRITING OF THE CONTRACT AT A LATER TIME, IT WOULD APPEAR TO APPLY WITH EVEN GREATER FORCE TO CASES WHERE NO SUCH FUTURE ACTION IS IN VIEW.

REFERRING TO THE SUGGESTION THAT "THE MARINE CORPS CAN EASILY RECTIFY THE ALLEGED OMISSION ON ITS OWN PROPOSAL FORM, BUT CANNOT APPARENTLY RECTIFY THE MATTER ON THE STANDARD FORM, WHICH IS APPROVED BY THE PRESIDENT," ATTENTION IS INVITED TO BUREAU OF THE BUDGET CIRCULAR NO. 207, JUNE 29, 1927, ANNOUNCING ADOPTION, AMONG OTHERS, FOR GENERAL USE OF STANDARD FORMS NOS. 30, 31, 32, AND 33, COMPRISING INVITATION FOR BID, BID, SUPPLY CONTRACT, AND SHORT CONTRACT FORMS, RESPECTIVELY, WHICH EXPRESSLY PROVIDES THAT "ADDITIONAL STIPULATIONS OR INSTRUCTIONS DEEMED NECESSARY, BUT NOT INCONSISTENT WITH THE PROVISIONS OF THESE FORMS NOR INVOLVING QUESTIONS OF POLICY, MAY BE INCORPORATED IN THE SPECIFICATIONS, SCHEDULES, OR OTHER ACCOMPANYING PAPERS.' THERE WOULD APPEAR TO BE NO INCONSISTENCY OR QUESTION OF POLICY IN THE INCLUSION WITH AND AS A PART OF INVITATIONS FOR BIDS OF A CONDITION EXPRESSLY REQUIRED BY A STATUTE OF THE UNITED STATES.

ALSO, REFERRING TO THE SUGGESTION THAT THIS OFFICE RAISES THE QUESTION ONLY WHERE MARINE CORPS FORMS ARE INVOLVED, BUT NOT WHERE STANDARD FORMS ARE INVOLVED, IT MAY BE SAID THAT IT IS THE VIEW OF THIS OFFICE THAT THE EXPRESS CONDITION REQUIRED BY SECTION 3741, REVISED STATUTES, SHOULD BE INCLUDED IN EVERY INVITATION FOR BIDS OR WITH SPECIFICATIONS, SCHEDULES, OR OTHER ACCOMPANYING PAPERS, ISSUED BY ANY PURCHASING AGENCY OF THE GOVERNMENT, WHETHER ON STANDARD GOVERNMENT FORMS OR OTHERWISE. ASIDE FROM THE APPARENT INTENDMENT OF THE STATUTE, AS A MATTER OF POLICY AND CLARITY IT WOULD APPEAR DESIRABLE THAT PROSPECTIVE BIDDERS SHOULD BE APPRISED IN ADVANCE OF EVERY PERTINENT CONDITION REQUIRED AS TO ANY CONTRACT OR AGREEMENT TO BE MADE, ENTERED INTO, OR ACCEPTED BY OR ON BEHALF OF THE UNITED STATES. BUT, AS YOU NO DOUBT ARE AWARE, THE FUNCTIONS FORMERLY EXERCISED BY THE INTERDEPARTMENTAL BOARD OF CONTRACTS AND ADJUSTMENTS WERE TRANSFERRED TO THE PROCUREMENT DIVISION, TREASURY DEPARTMENT, BY ORDER OF THE SECRETARY OF THE TREASURY, APPROVED BY THE PRESIDENT ON OCTOBER 9, 1933, AND THAT DIVISION NOW IS, PRIMARILY, CHARGED WITH RESPONSIBILITY FOR PRESCRIBING AND STANDARDIZING GOVERNMENT CONTRACT FORMS. HENCE, ANY CHANGE IN STANDARD FORMS TO INCORPORATE IN INVITATIONS FOR BIDS, BID FORMS, AND INSTRUCTIONS TO BIDDERS, EITHER THE EXPRESS CONDITION REQUIRED BY THE STATUTE OR A SPECIFIC REFERENCE THERETO PROPERLY IS FOR CONSIDERATION BY THAT DIVISION.

FOR THE REASONS STATED, I AM OF THE OPINION THAT INVITATIONS FOR BIDS SHOULD PUT BIDDERS ON NOTICE OF THE EXPRESS CONDITION IN QUESTION, AND CERTAINLY THERE CAN BE NO VALID OBJECTION TO SUCH PROCEDURE. HOWEVER, IT MAY BE CONCEDED THAT THE STATUTE IS NOT ENTIRELY FREE FROM AMBIGUITY, AND, UNDER A NARROW TECHNICAL INTERPRETATION, LENDS ITSELF TO THE VIEW THAT INCLUSION OF THE EXPRESS CONDITION IN A CONTRACT WITHOUT PREVIOUS REFERENCE IS SUFFICIENT COMPLIANCE WITH ITS REQUIREMENTS.

ACCORDINGLY, THIS OFFICE WILL NOT BE REQUIRED TO OBJECT IF IT BE ADMINISTRATIVELY DEEMED TO BE CONTRARY TO THE POLICY OF YOUR DEPARTMENT TO INCORPORATE INFORMATION AS TO THE EXPRESS CONDITION REQUIRED BY SECTION 3741, REVISED STATUTES, IN INVITATIONS TO BID, OR IN SPECIFICATIONS, SCHEDULES, OR OTHER ACCOMPANYING PAPERS, IT BEING UNDERSTOOD, OF COURSE, THAT SUCH EXPRESS CONDITION IS TO BE INCLUDED IN ANY CONTRACT ENTERED INTO BY YOUR DEPARTMENT.