B-13987, JANUARY 10, 1941, 20 COMP. GEN. 358

B-13987, JANUARY 10, 1941, 20 COMP. GEN. 358

CONTRACTS - MOTOR TRANSPORTATION SERVICES - TERMINATION AND ADVERTISING REQUIREMENTS THE QUESTION WHETHER TERMINATION OF A TRANSPORTATION CONTRACT--- OBTAINED BY THE CONTRACTOR THROUGH MISREPRESENTATION AS TO ITS APPLICATION TO THE INTERSTATE COMMERCE COMMISSION FOR A CERTIFICATE UNDER THE MOTOR CARRIER ACT, 1935--- WOULD BE IN THE INTERESTS OF THE UNITED STATES IS A MATTER WITHIN THE DISCRETION OF THE ADMINISTRATIVE OFFICE INVOLVED, AND THE GENERAL ACCOUNTING OFFICE WILL NOT OBJECT TO OTHERWISE PROPER PAYMENTS FOR PERFORMANCE BY OTHER PARTIES OF THE SERVICES COVERED BY THE CONTRACT IF IT BE TERMINATED AFTER 30 DAYS' NOTICE IN WRITING AS SPECIFIED IN THE PROVISION THEREIN FOR TERMINATION. SINCE SECTION 321 (A) OF PART II, TITLE III, OF THE TRANSPORTATION ACT OF 1940, SPECIFICALLY AUTHORIZES THE PROCUREMENT OF TRANSPORTATION SERVICES WITHOUT ADVERTISING FOR BIDS WHEN THE SERVICES REQUIRED CAN BE PROCURED FROM ANY COMMON CARRIER LAWFULLY OPERATING IN THE TERRITORY WHERE SUCH SERVICES ARE TO BE PERFORMED, DECISION REPORTED IN 18 COMP. GEN. 641 IS NOT FOR APPLICATION TO PROCUREMENT OF MOTOR CARRIER TRANSPORTATION SERVICES UNDER THE CIRCUMSTANCES CONTEMPLATED BY SAID SECTION.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, JANUARY 10, 1941:

THERE HAS BEEN CONSIDERED YOUR LETTER OF DECEMBER 12, 1940, AS FOLLOWS:

PURSUANT TO PROCEDURE PROMULGATED IN YOUR DECISION OF FEBRUARY 7, 1939, TO THE SECRETARY OF STATE (18 COMP. GEN. 641), BIDS WERE SOLICITED FOR THE TRANSPORTATION OF SUBSISTENCE AND HOSPITAL SUPPLIES FROM THE VETERANS' ADMINISTRATION SUPPLY DEPOT, PERRY POINT, MARYLAND, TO VARIOUS POINTS OF DESTINATION AND AS A RESULT CONTRACT VAM-15347 WAS AWARDED TO ROBERT C. MACKEY, INC., ELKTON, MARYLAND, AND COPY FORWARDED TO GENERAL ACCOUNTING OFFICE ON JUNE 3, 1940. THIS CONTRACT COVERS TRANSPORTATION FROM PERRY POINT, MARYLAND, TO BRONX, NEW YORK; LYONS, NEW JERSEY; COATESVILLE, PENNSYLVANIA; ROANOKE, VIRGINIA; PHOEBUS, VIRGINIA; AND FROM BALTIMORE, MARYLAND, TO PERRY POINT, MARYLAND, AND RUNS FROM JULY 1, 1940, TO JUNE 30, 1941, UNLESS CANCELLED ON THIRTY DAYS' NOTICE ON THE PART OF EITHER PARTY AS PROVIDED THEREIN.

THE BID INVITATION TRANSMITTED TO EACH PROSPECTIVE BIDDER A FORM FOR EXECUTION TO INDICATE WHETHER THE BIDDER HAD OPERATING RIGHTS FROM AND TO THE POINTS INDICATED, AND ROBERT C. MACKEY, INC., EXECUTED A CERTIFICATE, NOW A PART OF THE CONTRACT, TO THE EFFECT THAT IT HAS OPERATING RIGHTS FROM AND TO THE POINTS INDICATED.

THERE HAS BEEN CERTAIN CORRESPONDENCE, COPIES OF WHICH ARE ENCLOSED, BETWEEN THE INTERSTATE COMMERCE COMMISSION AND THE VETERANS' ADMINISTRATION, FROM WHICH IT WILL BE NOTED THAT THE INTERSTATE COMMERCE COMMISSION DESIRES THE VETERANS' ADMINISTRATION TO TERMINATE THE CONTRACT WITH ROBERT C. MACKEY, INC., ON THE PREMISE THAT ROBERT C. MACKEY, INC., IS WITHOUT AUTHORITY FROM THE INTERSTATE COMMERCE COMMISSION TO LAWFULLY PERFORM ITS CONTRACT. PLEASE ADVISE WHETHER THIS MAY BE DONE, RETURNING THE ENCLOSURES WITH YOUR REPLY.

APROPOS THIS MATTER, IT IS REQUESTED THAT YOU ADVISE WHETHER IN VIEW OF THE PROVISIONS OF SECTION 321 (A), PART II, TITLE III OF THE INTERSTATE COMMERCE ACT OF SEPTEMBER 18, 1940 ( PUBLIC, NO. 785--- 76TH CONGRESS): " THAT SECTION 3709, REVISED STATUTES ( U.S.C., 1934 EDITION, TITLE 41, SEC. 5), SHALL NOT HEREAFTER BE CONSTRUED AS REQUIRING ADVERTISING FOR BIDS IN CONNECTION WITH THE PROCUREMENT OF TRANSPORTATION SERVICES WHEN THE SERVICES REQUIRED CAN BE PROCURED FROM ANY COMMON CARRIER LAWFULLY OPERATING IN THE TERRITORY WHERE SUCH SERVICES ARE TO BE PERFORMED," IT IS NOW NECESSARY TO ADVERTISE FOR COMPETITIVE BIDS PURSUANT TO YOUR DECISION OF FEBRUARY 7, 1939, TO THE SECRETARY OF STATE (18 COMP. GEN. 641) BEFORE ENGAGING THE TRANSPORTATION SERVICES OF A MOTOR CARRIER.

THE TRANSPORTATION OF SUPPLIES BETWEEN SOME OF THE POINTS COVERED BY THE CONTRACT CLEARLY CONSTITUTES TRANSPORTATION IN INTERSTATE COMMERCE. SECTION 206 (A) OF THE MOTOR CARRIER ACT, 1935, AS AMENDED, 49 STAT. 551 (49 U.S.C., SECTION 306 (A) (, AND AS IN FORCE AT THE TIME OF THE SUBMISSION AND ACCEPTANCE OF THE BID OF ROBERT C. MACKEY, INC., CONTAINED THE FOLLOWING PERTINENT PROVISIONS:

EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION AND IN SECTION 310A, NO COMMON CARRIER BY MOTOR VEHICLE SUBJECT TO THE PROVISIONS OF THIS PART SHALL ENGAGE IN ANY INTERSTATE OR FOREIGN OPERATION ON ANY PUBLIC HIGHWAY, OR WITHIN ANY RESERVATION UNDER THE EXCLUSIVE JURISDICTION OF THE UNITED STATES, UNLESS THERE IS IN FORCE WITH RESPECT TO SUCH CARRIER A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY ISSUED BY THE COMMISSION AUTHORIZING SUCH OPERATIONS: PROVIDED, HOWEVER, THAT, SUBJECT TO SECTION 310, IF ANY SUCH CARRIER OR PREDECESSOR IN INTEREST WAS IN BONA FIDE OPERATION AS A COMMON CARRIER BY MOTOR VEHICLE ON JUNE 1, 1935, OVER THE ROUTE OR ROUTES OR WITHIN THE TERRITORY FOR WHICH APPLICATION IS MADE AND HAS SO OPERATED SINCE THAT TIME, * * * THE COMMISSION SHALL ISSUE SUCH CERTIFICATE WITHOUT REQUIRING FURTHER PROOF THAT PUBLIC CONVENIENCE AND NECESSITY WILL BE SERVED BY SUCH OPERATION, AND WITHOUT FURTHER PROCEEDINGS, IF APPLICATION FOR SUCH CERTIFICATE WAS MADE TO THE COMMISSION AS PROVIDED IN PARAGRAPH (B) OF THIS SECTION AND WITHIN ONE HUNDRED AND TWENTY DAYS AFTER OCTOBER 1, 1935, AND IF SUCH CARRIER WAS REGISTERED ON JUNE 1, 1935, UNDER ANY CODE OF FAIR COMPETITION REQUIRING REGISTRATION, THE FACT OF REGISTRATION SHALL BE EVIDENCE OF BONA FIDE OPERATION TO BE CONSIDERED IN CONNECTION WITH THE ISSUANCE OF SUCH CERTIFICATE. * * * PENDING THE DETERMINATION OF ANY SUCH APPLICATION THE CONTINUANCE OF SUCH OPERATION SHALL BE LAWFUL: * * *

IN THE CERTIFICATE ATTACHED TO ITS BID, ROBERT C. MACKEY, INC., REPRESENTED THAT IT WAS ON JUNE 1, 1935, AND CONTINUOUSLY THEREAFTER, IN BONA FIDE OPERATION AS A COMMON CARRIER OVER THE ROUTES OR WITHIN THE TERRITORY COVERED BY ITS BID, AND THAT IT HAD, WITHIN THE TIME PRESCRIBED BY LAW, MADE DUE APPLICATION TO THE INTERSTATE COMMERCE COMMISSION FOR A CERTIFICATE OR PERMIT, AS PROVIDED IN THE MOTOR CARRIER ACT, 1935, AND IT IS STATED IN THE CERTIFICATE THAT SUCH REPRESENTATION IS MADE AS AN INDUCEMENT TO THE UNITED STATES GOVERNMENT TO EMPLOY THE SERVICES OF THE CARRIER, AND AS A PART OF THE CONSIDERATION FOR SUCH EMPLOYMENT.

THE CONTRACTOR'S ACCEPTED BID CONTAINED THE FOLLOWING PROVISION:

THIS BID, IF ACCEPTED, SHALL BECOME A CONTRACT AND SHALL REMAIN IN FORCE DURING THE PERIOD ABOVE STATED UNLESS TERMINATED AT THE REQUEST OF EITHER PARTY AFTER THIRTY (30) DAYS NOTICE IN WRITING.

INCLUDED IN THE PAPERS TRANSMITTED WITH YOUR SUBMISSION IS COPY OF A LETTER ADDRESSED TO YOUR ADMINISTRATION OCTOBER 31, 1940, BY THE DIRECTOR, BUREAU OF MOTOR CARRIERS, INTERSTATE COMMERCE COMMISSION. SAID LETTER, INSOFAR AS HERE MATERIAL, IS AS FOLLOWS:

THE STANDING OF ROBERT C. MACKEY, INC., UPON THE RECORDS OF THIS COMMISSION IS ADEQUATELY SHOWN IN THE ATTACHED RECOMMENDED REPORT AND ORDER IN THE MATTER OF THE APPLICATION OF ROBERT C. MACKEY, INC., DOCKET NO. MC-42346. IN THIS RECOMMENDED REPORT, SERVED AUGUST 20, 1940, THERE IS SET FORTH A HISTORY OF THE VARIOUS STEPS TAKEN UPON THE APPLICATION OF THIS CARRIER. OF IMMEDIATE INTEREST IS THE RECITAL ON SHEET 4, COMMENCING WITH LINE 12, THAT AT THE FIRST HEARING UPON THE APPLICATION ( JUNE 16, 1939), APPLICANT AND OPPOSING MOTOR CARRIERS REACHED AN AGREEMENT AS TO THE EXTENT OF THE AUTHORITY WHICH SHOULD BE GRANTED TO HIM, WHICH PROVIDED FOR THE TRANSPORTATION OF SPECIFIED COMMODITIES "BETWEEN PROVIDENCE, MD., AND POINTS WITHIN TEN MILES THEREOF IN THE STATE OF MARYLAND * * * ON THE ONE HAND AND POINTS WITHIN 100 MILES OF PROVIDENCE, ON THE OTHER; " AND ,POINTS IN NEW JERSEY, AND VIRGINIA ON THE OTHER.' CAMP PERRY ( PERRYVILLE), MARYLAND, IT APPEARS, IS NOT WITHIN TEN MILES OF PROVIDENCE, MARYLAND. WHILE IT IS NOT SET FORTH IN THE RECOMMENDED REPORT, THE APPLICATION OF THE CARRIER, AS ITS REQUEST, WAS AMENDED IN ACCORDANCE WITH THE AGREEMENT MENTIONED. A SECOND HEARING WAS HELD ON THE APPLICATION ON OCTOBER 19, 1939, AND THE AMENDMENT ABOVE REFERRED TO WAS CONFIRMED, SO, ON MAY 29, 1940, WHEN THE CARRIER SUBMITTED CERTIFICATE TO YOUR ORGANIZATION AS TO ITS MOTOR CARRIER AUTHORITY, ITS PENDING APPLICATION ON FILE, AS AMENDED, DID NOT COVER PERRY POINT, MARYLAND, OR PERRYVILLE, MARYLAND.

YOU WILL NOTE THAT THE RECOMMENDED REPORT AND ORDER DOES NOT PROVIDE FOR ANY AUTHORITY TO TRANSPORT ANY COMMODITIES TO OR FROM CAMP PERRY, MARYLAND, OR PERRYVILLE, MARYLAND. UNDER THE PROVISIONS OF THE ACT AND AGREEABLE TO THE NOTICE SERVED UPON IT, THE CARRIER HAD TWENTY DAYS FROM THE DATE OF SERVICE OF THE RECOMMENDED REPORT AND ORDER, TO FILE EXCEPTIONS THERETO, IF IT WAS NOT SATISFIED WITH THE FINDINGS OR THE ORDER. THE APPLICANT, THE RECORD SHOWS, DID NOT FILE ANY EXCEPTIONS AND APPARENTLY WAS CONTENT TO ACCEPT THE FINDINGS OF THE EXAMINER AND THE RECOMMENDED REPORT. HOWEVER, THE REPORT HAS NOT BECOME FINAL DUE TO THE FACT THAT OTHER PARTIES IN INTEREST HAVE FILED EXCEPTIONS, NONE OF WHICH, HOWEVER, INVOLVE SERVICE INTO OR OUT OF CAMP PERRY, MARYLAND, OR PERRYVILLE, MARYLAND. IT THEREFORE APPEARS THAT THE TRANSPORTATION BY MOTOR VEHICLE OF PROPERTY IN INTERSTATE COMMERCE BEING PERFORMED BY ROBERT C. MACKEY, INC., UNDER CONTRACT WITH THE VETERANS' ADMINISTRATION IS WITHOUT LAWFUL AUTHORITY OR COLOR OF AUTHORITY.

FROM THE QUOTED PORTION OF THE DIRECTOR'S LETTER, AND FROM THE EXAMINER'S RECOMMENDED REPORT AND ORDER, MENTIONED THEREIN, IT APPEARS THAT THE CONTRACTOR FILED APPLICATION, UNDER SECTION 206 (A) OF THE MOTOR CARRIER ACT, 1935, FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY AUTHORIZING IT TO OPERATE AS A COMMON CARRIER BY MOTOR VEHICLE IN INTERSTATE COMMERCE, AS REPRESENTED IN THE CERTIFICATE ATTACHED TO ITS BID. IT FURTHER APPEARS, HOWEVER, THAT SUCH APPLICATION DOES NOT COVER TRANSPORTATION OF SUPPLIES TO OR FROM PERRY POINT, OR PERRYVILLE, MD., ONE OF THE TERMINAL POINTS INVOLVED IN THE CONTRACT. THUS THE AWARD WAS OBTAINED ON THE STRENGTH OF A MISREPRESENTATION.

WHILE THE REPORT OF THE BUREAU OF MOTOR CARRIERS IS TO THE EFFECT THAT THE CONTRACTOR'S REPRESENTATIONS ARE FALSE, IT IS NOTED THAT SUCH REPORT IS BASED UPON A RECOMMENDED REPORT BY THE INTERSTATE COMMERCE COMMISSION, AND THAT THE CONTRACTOR'S APPLICATION FOR A CERTIFICATE OF CONVENIENCE AND NECESSITY IS STILL PENDING. IT IS NOTED, ALSO, THAT WHILE THE RECORD INCLUDES A COPY OF A LETTER ADDRESSED TO THE CONTRACTOR MAY 29, 1940, BY THE BUREAU OF MOTOR CARRIERS, QUESTIONING THE CONTRACTOR'S AUTHORITY TO PERFORM THE SERVICES COVERED BY THE CONTRACT, NOTHING IS INCLUDED IN THE RECORD TO INDICATE THE NATURE OF ANY REPLY WHICH MAY HAVE BEEN MADE BY THE CONTRACTOR TO SAID LETTER.

BUT, HOWEVER THESE MATTERS MAY BE, THE QUESTION AS TO WHETHER THE TERMINATION OF THE CONTRACT, UNDER THE CONTRACT PROVISION RELATIVE TO TERMINATION, WOULD BE IN THE INTERESTS OF THE UNITED STATES IS A MATTER WITHIN YOUR DISCRETION. SEE, GENERALLY, 18 COMP. GEN. 826, 828. ACCORDINGLY, THIS OFFICE WILL NOT OBJECT TO OTHERWISE PROPER PAYMENTS FOR PERFORMANCE BY OTHER PARTIES OF THE SERVICES COVERED BY THE INSTANT CONTRACT IF SAID CONTRACT BE TERMINATED AFTER 30 DAYS' NOTICE IN WRITING. CF. DECISION OF DECEMBER 12, 1936, A-82127, TO THE SECRETARY OF AGRICULTURE, WITH RESPECT TO A SIMILAR MATTER.

IN THE DECISION REPORTED IN 18 COMP. GEN. 641, TO WHICH YOUR LETTER HAS REFERENCE, IT WAS HELD THAT---

SINCE MOTOR CARRIERS ARE AUTHORIZED TO, AND SOME WILL, GIVE LOWER RATES TO THE UNITED STATES FOR TRANSPORTATION SERVICES THAN TO THE PUBLIC GENERALLY, IT MUST BE HELD THAT SUCH SERVICES ARE TO BE OBTAINED ONLY AFTER ADVERTISING IN ACCORDANCE WITH SECTION 3709, REVISED STATUTES, IN THE ABSENCE OF AN EMERGENCY, STATUTORY AUTHORITY FOR PROCEEDING OTHERWISE, OR A CLEAR SHOWING THAT COMPETITION COULD NOT HAVE BEEN OBTAINED. IT IS APPARENT FROM THE QUOTED PORTION OF THE DECISION THAT THE HOLDING THEREIN, THAT TRANSPORTATION SERVICES ARE TO BE OBTAINED ONLY AFTER ADVERTISING IN ACCORDANCE WITH SECTION 3709, REVISED STATUTES, WAS EXPRESSLY LIMITED TO CASES WHERE THERE EXISTS NO STATUTORY AUTHORITY FOR PROCEEDING OTHERWISE.

SECTION 321 (A) OF PART II, TITLE III, OF THE TRANSPORTATION ACT OF 1940, PUBLIC, NO. 785, APPROVED SEPTEMBER 18, 1940, IS AS FOLLOWS:

NOTWITHSTANDING ANY OTHER PROVISION OF LAW, BUT SUBJECT TO THE PROVISIONS OF SECTIONS 1 (7) AND 22 OF THE INTERSTATE COMMERCE ACT, AS AMENDED, THE FULL APPLICABLE COMMERCIAL RATES, FARES, OR CHARGES SHALL BE PAID FOR TRANSPORTATION BY ANY COMMON CARRIER SUBJECT TO SUCH ACT OF ANY PERSONS OR PROPERTY FOR THE UNITED STATES, OR ON ITS BEHALF, EXCEPT THAT THE FOREGOING PROVISION SHALL NOT APPLY TO THE TRANSPORTATION OF MILITARY OR NAVAL PROPERTY OF THE UNITED STATES MOVING FOR MILITARY OR NAVAL AND NOT FOR CIVIL USE OR TO THE TRANSPORTATION OF MEMBERS OF THE MILITARY OR NAVAL FORCES OF THE UNITED STATES (OR OF PROPERTY OF SUCH MEMBERS) WHEN SUCH MEMBERS ARE TRAVELING ON OFFICIAL DUTY; AND THE RATE DETERMINED BY THE INTERSTATE COMMISSION AS REASONABLE THEREFOR SHALL BE PAID FOR THE TRANSPORTATION BY RAILROAD OF THE UNITED STATES MAIL: PROVIDED, HOWEVER, THAT ANY CARRIER BY RAILROAD OF THE UNITED STATES MAY ENTER INTO CONTRACTS FOR THE TRANSPORTATION OF THE UNITED STATES MAIL FOR LESS THAN SUCH RATE: PROVIDED FURTHER, THAT SECTION 3709, REVISED STATUTES ( U.S.C., 1934 EDITION, TITLE 41, SEC. 5), SHALL NOT HEREAFTER BE CONSTRUED AS REQUIRING ADVERTISING FOR BIDS IN CONNECTION WITH THE PROCUREMENT OF TRANSPORTATION SERVICES WHEN THE SERVICES REQUIRED CAN BE PROCURED FROM AN COMMON CARRIER LAWFULLY OPERATING IN THE TERRITORY WHERE SUCH SERVICES ARE TO BE PERFORMED.

SINCE THE SECOND PROVISO OF SECTION 321 (A) PROVIDES SPECIFIC STATUTORY AUTHORITY FOR PROCURING TRANSPORTATION SERVICES WITHOUT ADVERTISING FOR BIDS WHEN THE SERVICES REQUIRED CAN BE PROCURED FROM ANY COMMON CARRIER LAWFULLY OPERATING IN THE TERRITORY WHERE SUCH SERVICES ARE TO BE PERFORMED, THE DECISION REPORTED IN 18 COMP. GEN. 641 IS NOT FOR APPLICATION TO PROCUREMENT OF TRANSPORTATION SERVICES UNDER THE CIRCUMSTANCES CONTEMPLATED BY SAID SECTION, AND THE QUESTION IN THE CONCLUDING PARAGRAPH OF YOUR LETTER IS ANSWERED IN THE NEGATIVE.