B-127415, MAY 31, 1956

B-127415: May 31, 1956

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PRICE: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 22. IN RESPONSE TO OUR REQUEST THE POST OFFICE DEPARTMENT HAS FURNISHED A REPORT WHICH IS TO THE EFFECT THAT AS THE RESULT OF A SURVEY OF ROUTE NO. 18438. IT WAS CONCLUDED THAT A SUBSTANTIAL SAVING COULD BE REALIZED BY READVERTISING THE ROUTE AND ON THE BASIS OF SUCH CONCLUSION THE ROUTE WAS INCLUDED IN THE GENERAL ADVERTISEMENT OF FEBRUARY 16. BURRUS WERE INITIATED WITH THE RESULT THAT AN AGREEMENT WAS OBTAINED FROM HIM TO HAVE HIS COMPENSATION ADJUSTED DOWNWARD IN THE AMOUNT OF $791.25 PER ANNUM. THE FIELD OFFICIALS OF THE POST OFFICE DEPARTMENT ARE REPORTED TO HAVE RECOMMENDED ACCEPTANCE OF THE AGREEMENT AND THAT MR. THE FIELD TRANSPORTATION OFFICIALS WERE ACCORDINGLY INSTRUCTED TO ADVISE THE POSTMASTERS INVOLVED THAT NO NEW AWARD WOULD BE MADE FOR ROUTE NO. 18438.

B-127415, MAY 31, 1956

TO MR. NOAH E. PRICE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 22, 1956, WITH ENCLOSURES, REQUESTING THAT A MAIL CONTRACT FOR STAR ROUTE NO. 18438 BE CANCELLED AND THAT THE GOVERNMENT'S REQUIREMENTS IN THE MATTER BE ADVERTISED AND THE CONTRACT AWARDED ON A COMPETITIVE BID BASIS.

IN RESPONSE TO OUR REQUEST THE POST OFFICE DEPARTMENT HAS FURNISHED A REPORT WHICH IS TO THE EFFECT THAT AS THE RESULT OF A SURVEY OF ROUTE NO. 18438, ON SEPTEMBER 1, 1955, IT WAS CONCLUDED THAT A SUBSTANTIAL SAVING COULD BE REALIZED BY READVERTISING THE ROUTE AND ON THE BASIS OF SUCH CONCLUSION THE ROUTE WAS INCLUDED IN THE GENERAL ADVERTISEMENT OF FEBRUARY 16, 1956, ISSUED BY THE DEPARTMENT. SUBSEQUENT TO THE ISSUANCE AND RELEASE OF THE ADVERTISEMENT AND FOLLOWING RECEIPT OF A COMPLAINT FROM THE CONTRACT HOLDER, MR. MAURICE L. BURRUS, THAT HE HAD NOT BEEN GIVEN AN OPPORTUNITY TO NEGOTIATE FOR A REDUCTION IN PAY AND RENEWAL AT A REDUCED RATE IN LIEU OF READVERTISEMENT, NEGOTIATIONS WITH MR. BURRUS WERE INITIATED WITH THE RESULT THAT AN AGREEMENT WAS OBTAINED FROM HIM TO HAVE HIS COMPENSATION ADJUSTED DOWNWARD IN THE AMOUNT OF $791.25 PER ANNUM. THE FIELD OFFICIALS OF THE POST OFFICE DEPARTMENT ARE REPORTED TO HAVE RECOMMENDED ACCEPTANCE OF THE AGREEMENT AND THAT MR. BURRUS BE PERMITTED TO RENEW HIS CONTRACT FOR FOUR MORE YEARS BEGINNING JULY 1, 1956, PURSUANT TO THE ACT OF JUNE 19, 1948, 62 STAT. 477. THE FIELD TRANSPORTATION OFFICIALS WERE ACCORDINGLY INSTRUCTED TO ADVISE THE POSTMASTERS INVOLVED THAT NO NEW AWARD WOULD BE MADE FOR ROUTE NO. 18438, THAT THE PRESENT CONTRACT WOULD BE RENEWED, AND THAT BIDDERS SHOULD BE SO ADVISED.

THE ACT OF JUNE 19, 1948, AUTHORIZES THE POSTMASTER GENERAL, IN HIS DISCRETION AND BY MUTUAL AGREEMENT WITH ANY STAR-ROUTE CONTRACTOR, TO RENEW HIS CONTRACT AT THE RATE PREVAILING AT THE END OF THE CONTRACT TERM. THE ACT PROVIDES ALSO THAT THE POSTMASTER GENERAL MAY IN HIS DISCRETION AND UNDER SUCH REGULATIONS AS HE MAY PRESCRIBE, WITH THE CONSENT OF THE CONTRACTOR AND WITHOUT REGARD TO THE PROVISIONS OF SECTIONS 3958 AND 3961 OF THE REVISED STATUTES, AS AMENDED (U.S.C. 1940 EDITION, TITLE 39, SECS. 438 AND 441) READJUST THE COMPENSATION OF A STAR-ROUTE CONTRACTOR FOR INCREASED OR DECREASED COSTS OCCASIONED BY CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM WHICH COULD NOT REASONABLY HAVE BEEN ANTICIPATED AT THE TIME OF MAKING HIS ORIGINAL PROPOSAL OR EXECUTING HIS BOND FOR A RENEWAL CONTRACT AS PROVIDED IN THE ACT.

THE LEGISLATIVE HISTORY OF THE STATUTE INDICATES THAT IT WAS THE DELIBERATE AND CLEAR INTENT OF CONGRESS TO ELIMINATE THE NECESSITY FOR COMPETITIVE BIDDING FOR STAR ROUTE CONTRACTS IN CASES WHERE A CONTRACTOR HAD RENDERED FAITHFUL AND SATISFACTORY SERVICE AND WISHED TO EXTEND HIS CONTRACT, AND WHERE THE POSTMASTER GENERAL WAS SATISFIED THAT THE RATE CHARGED WAS FAIR AND REASONABLE. ONE OF THE STATED PURPOSES WAS TO REMOVE THE INSECURITY OF STAR-ROUTE CONTRACTORS OCCASIONED BY ALLEGED "CUT- THROAT" BIDDING WHEN THE ROUTES WERE READVERTISED UPON THE EXPIRATION OF THE FOUR-YEAR CONTRACTS PROVIDED BY LAW. ALSO, THE STATUTE CLEARLY INDICATES A CONGRESSIONAL INTENT TO GRANT THE POSTMASTER GENERAL AUTHORITY TO READJUST THE COMPENSATION OF A STAR-ROUTE CONTRACTOR FOR INCREASED OR DECREASED COSTS OCCASIONED BY CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM.

SINCE, AS INDICATED ABOVE, THE PRESENT CONTRACT HOLDER HAS AGREED TO REDUCE HIS CONTRACT PRICE PRIOR TO THE EXPIRATION OF THE PRESENT CONTRACT PERIOD, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT THERE IS NO LEGAL BASIS UPON WHICH WE WOULD BE WARRANTED IN QUESTIONING THE PROPOSED ADMINISTRATIVE ACTION IN THE MATTER.