B-106275, MAR 3, 1952

B-106275: Mar 3, 1952

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PRECIS-UNAVAILABLE THE SECRETARY OF AGRICULTURE: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 25. IT IS STATED THAT AGENCIES OF THE DEPARTMENT GENERALLY ENTER INTO CONTRACTS FOR PUBLIC UTILITIES AND OTHER CONTINUING SERVICES. THAT THE VOLUME OF SUCH CONTRACTS IS ILLUSTRATED BY THE FACT THAT. 108 UTILITY CONTRACTS WERE IN EFFECT AS OF JUNE 30. 587 AMENDMENTS WERE MADE DURING THE FISCAL YEAR. IS TIME CONSUMING. THAT IT IS ESTIMATED THAT 90 PERCENT OF ALL OF SUCH CONTRACTS ARE WITHIN THE $500 EXCEPTION OF 3709 REVISED STATUTES. THE REVISED PLAN SUBMITTED FOR APPROVAL IS OUTLINED IN YOUR LETTER AS FOLLOWS: "1. CONTRACTS WILL NOT BE EXECUTED. WHEN THERE IS A CONTINUING NEED FOR SUPPLIES AND OTHER SERVICES.

B-106275, MAR 3, 1952

PRECIS-UNAVAILABLE

THE SECRETARY OF AGRICULTURE:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 25, 1951, REQUESTING APPROVAL OF A PROPOSED REVISED PLAN UNDER WHICH THERE WOULD BE ELIMINATED WITHIN THE DEPARTMENT THE MAKING OF CERTAIN CONTRACTS OR AGREEMENTS INVOLVING CONTINUING SERVICES OR SUPPLIES SUCH AS ICE, LAUNDRY, TOWELS, STORAGE AND UTILITIES SUCH AS GAS, TELEPHONE, WATER AND ELECTRICITY.

IT IS STATED THAT AGENCIES OF THE DEPARTMENT GENERALLY ENTER INTO CONTRACTS FOR PUBLIC UTILITIES AND OTHER CONTINUING SERVICES; THAT THE VOLUME OF SUCH CONTRACTS IS ILLUSTRATED BY THE FACT THAT, IN ONE AGENCY ALONE, 3,108 UTILITY CONTRACTS WERE IN EFFECT AS OF JUNE 30, 1950; THAT 1,587 AMENDMENTS WERE MADE DURING THE FISCAL YEAR, EXCLUDING UTILITIES SERVICES FURNISHED UNDER FEDERAL SUPPLY SCHEDULE CONTRACTS; THAT NEGOTIATION, HANDLING, RETAINING AND STORAGE OF THIS LARGE VOLUME OF CONTRACTS, AMENDMENTS AND RELATED PAPERS BY THE DEPARTMENT AND THIS OFFICE, AS WELL AS THE OTHER DEPARTMENTS AND ESTABLISHMENTS OF THE GOVERNMENT, IS TIME CONSUMING, COSTLY, AND OF QUESTIONABLE BENEFIT IN PROTECTING THE GOVERNMENT'S INTEREST; AND THAT IT IS ESTIMATED THAT 90 PERCENT OF ALL OF SUCH CONTRACTS ARE WITHIN THE $500 EXCEPTION OF 3709 REVISED STATUTES, AS AMENDED, 41 U.S.C. 5, RELATING TO ADVERTISING. ALSO, YOU STATE THAT THE EXECUTION OF FORMAL CONTRACTS IN THE CASES REFERRED TO IN YOUR LETTER PRESENTS HEAVY ADMINISTRATIVE BURDENS.

THE REVISED PLAN SUBMITTED FOR APPROVAL IS OUTLINED IN YOUR LETTER AS FOLLOWS:

"1. CONTRACTS WILL NOT BE EXECUTED, EXCEPT WHEN ADMINISTRATIVELY DEEMED NECESSARY TO PROPERLY PROTECT THE INTERESTS OF THE GOVERNMENT, WHEN THERE IS A CONTINUING NEED FOR SUPPLIES AND OTHER SERVICES, REGARDLESS OF THE NUMBER OF PAYMENTS INVOLVED, WHEN IT IS CONTEMPLATED THAT THE AGGREGATE COST IN ANY ONE CASE WILL NOT EXCEED THE OPEN MARKET LIMITATION WITHIN THE FISCAL YEAR. A PURCHASE ORDER OR OTHER EQUIVALENT DOCUMENT WILL BE ISSUED AT THE TIME THE NEED FOR SUCH SUPPLIES OR SERVICES ARISE AND WILL BE AVAILABLE FOR USE IN THE SUBSEQUENT AUDIT OF OPERATIONS.

"2. CONTRACTS WILL NOT BE EXECUTED FOR UTILITY SERVICES, REGARDLESS OF THE AMOUNT OR THE NUMBER OF PAYMENTS TO BE MADE, WHEN THE COMPANY'S RATES ARE FIXED OR ADJUSTED BY FEDERAL, STATE OR OTHER REGULATORY BODY, EXCEPT WHEN DEEMED TO BE IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO. RATE SCHEDULES WILL BE FILED WITH THE GENERAL ACCOUNTING OFFICE ONLY WHEN THE CERTIFIED INVOICE DOES NOT CLEARLY SHOW THE AMOUNT OF SERVICE FURNISHED AND THE APPLICABLE RATE CHARGED IN ARRIVING AT THE TOTAL AMOUNT BILLED. THIS PROCEDURE IS BASED ON A PREVIOUS OPINION WHEREIN IT WAS INDICATED THAT CONTRACTS WITH PUBLIC SERVICE CORPORATIONS FOR FIXED PERIODS ARE IMPRACTICABLE, IF NOT IMPOSSIBLE, FROM THEIR VERY NATURE (C.G. B-74297 OF APRIL 2, 1948). SINCE THE SERVICE IS A PUBLIC SERVICE AND SUBJECT TO A CONSTANT CHANGE OF CONDITIONS IT DOES NOT SEEM TO WARRANT THE ADMINISTRATIVE BURDEN AND EXPENSE OF FILING RATES SCHEDULES AND AMENDMENTS THERETO WHEN THE CERTIFIED INVOICE SHOWS THIS PERTINENT INFORMATION.

"3. ADMINISTRATIVE REGULATIONS WILL PROVIDE PROCEDURES WHICH WILL INSURE VERIFICATION AND CERTIFICATION BY RESPONSIBLE OFFICERS OR EMPLOYEES THAT SUPPLIES HAVE BEEN FURNISHED OR SERVICES HAVE BEEN RENDERED FOR THE PERIODS STATED ON THE CERTIFIED INVOICE OR VOUCHER. SUCH INTERNAL ARRANGEMENTS WOULD APPEAR TO BE ADEQUATE TO PREVENT ANY ERRONEOUS PAYMENTS."

ON THE BASIS OF THE REPRESENTATIONS CONTAINED IN YOUR LETTER, NO OBJECTION IS PERCEIVED TO THE ADOPTION OF PROPOSAL NUMBER 1 WHERE THE AGGREGATE AMOUNT INVOLVED IN SUCH PURCHASES DOES NOT EXCEED THE OPEN MARKET LIMITATION OF $500 AND THE ADOPTION OF THE PROPOSED PROCEDURE BY YOUR DEPARTMENT AND THE ADMINISTRATIVE OFFICES AND AGENCIES GENERALLY IS AUTHORIZED.

THE ADOPTION OF PROPOSAL NUMBER 2 WOULD ELIMINATE THE NECESSITY FOR THE EXECUTION OF SEPARATE CONTRACTS FOR UTILITY SERVICES BY THE VARIOUS AGENCIES IN THE SAME LOCALITY SINCE ONE RATE SCHEDULE OR RATE SCHEDULES OF THE LOCAL UTILITY COMPANY OR COMPANIES WOULD SERVE AS A BASIS FOR THE AUDIT OF PAYMENTS MADE BY ALL AGENCIES IN THE AREAS SUPPLIED WITH SERVICES BY SUCH COMPANY OR COMPANIES, ACCORDINGLY, THE ADOPTION OF SUCH PROCEDURE BY YOUR DEPARTMENT AND THE OTHER ADMINISTRATIVE OFFICES AND AGENCIES GENERALLY IS AUTHORIZED.