B-143850, MAR. 16, 1961

B-143850: Mar 16, 1961

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TO POSTMASTER GENERAL: REFERENCE IS MADE TO LETTER DATED DECEMBER 7. THE RECORD SHOWS THAT A CHANGE WAS MADE IN THE CONTRACT BY CONTRACT ROUTE SERVICE ORDER NO. 171 EFFECTIVE OCTOBER 20. IN CONSIDERATION OF THIS CHANGE THE CONTRACTOR WAIVED THE ONE MONTH'S INDEMNITY PAYMENT TO WHICH IT WAS ENTITLED UNDER THE CONTRACT AND THEREAFTER THE CONTRACT AS THUS MODIFIED WAS RENEWED FOR A SIX-YEAR PERIOD COMMENCING APRIL 1. IT IS STATED IN THE LETTER OF DECEMBER 7. THAT THE CONTRACT CONTAINED A PROVISION EXPRESSLY AUTHORIZING CHANGES IN SERVICE BASED UPON REGULATIONS NOW APPEARING IN 39 CFR 94.21 (E) AND THAT ALTHOUGH THE SUBSTITUTED SERVICE POSSIBLY WAS OF SUFFICIENT LENGTH TO BE ESTABLISHED AS A SEPARATE INDEPENDENT ROUTE.

B-143850, MAR. 16, 1961

TO POSTMASTER GENERAL:

REFERENCE IS MADE TO LETTER DATED DECEMBER 7, 1960, FROM THE FORMER GENERAL COUNSEL OF YOUR DEPARTMENT CONCERNING THE PROCUREMENT OF HIGHWAY POST OFFICE SERVICE (HPO) UNDER ADVERTISED CONTRACT NO. HPO 63 C ENTERED INTO MARCH 3, 1955, WITH GENERAL HIGHWAY SERVICES, INC., DALLAS, TEXAS.

THE RECORD SHOWS THAT A CHANGE WAS MADE IN THE CONTRACT BY CONTRACT ROUTE SERVICE ORDER NO. 171 EFFECTIVE OCTOBER 20, 1958, WHICH CANCELED OUT PART B COVERING SERVICE FROM SAGINAW TO LUDINGTON, MICHIGAN, OR APPROXIMATELY ONE-HALF OF THE SERVICE CONTRACTED FOR, AND SUBSTITUTED A NEW ROUTE FROM SAGINAW TO TOLEDO, OHIO, WITHOUT ADVERTISING IN ACCORDANCE WITH THE PROVISIONS OF 41 U.S.C. 5 AS APPARENTLY REQUIRED BY THE HIGHWAY POST OFFICE SERVICE ACT OF 1955, NOW CODIFIED IN CHAPTER 99, 39 U.S.C. 6351- 6355. IN CONSIDERATION OF THIS CHANGE THE CONTRACTOR WAIVED THE ONE MONTH'S INDEMNITY PAYMENT TO WHICH IT WAS ENTITLED UNDER THE CONTRACT AND THEREAFTER THE CONTRACT AS THUS MODIFIED WAS RENEWED FOR A SIX-YEAR PERIOD COMMENCING APRIL 1, 1959, AND ENDING MARCH 31, 1965.

IT IS STATED IN THE LETTER OF DECEMBER 7, 1960, THAT THE CONTRACT CONTAINED A PROVISION EXPRESSLY AUTHORIZING CHANGES IN SERVICE BASED UPON REGULATIONS NOW APPEARING IN 39 CFR 94.21 (E) AND THAT ALTHOUGH THE SUBSTITUTED SERVICE POSSIBLY WAS OF SUFFICIENT LENGTH TO BE ESTABLISHED AS A SEPARATE INDEPENDENT ROUTE, SUCH ACTION WOULD HAVE RESULTED IN AN OVER- ALL INCREASE IN SERVICE COSTS WITHOUT ANY COMPENSATING BENEFIT TO THE GOVERNMENT. FOLLOWING REVIEW OF THE HISTORY OF THE LEGISLATION RELATING TO THE HIGHWAY POST OFFICE SERVICE AND REFERENCES TO THE PRACTICE WHICH HAS BEEN DEVELOPED ADMINISTRATIVELY IT IS URGED IN THE LETTER THAT THE ISSUANCE OF CHANGE ORDER NO. 171 WAS IN ACCORDANCE WITH LAW, THE REGULATIONS AND THE STATED DEPARTMENTAL PRACTICE. IN SUPPORT OF THIS POSITION IT IS STATED THAT NEITHER THE CONTRACT, NOR THE REGULATIONS, NOR THE HIGHWAY POST OFFICE SERVICE ACT OF 1955 IMPOSED ANY EXPRESS LIMITATIONS UPON THE POSTMASTER GENERAL'S AUTHORITY TO INCREASE OR DECREASE SERVICE OR TO CHANGE ROUTE TERMINI. HOWEVER, AS A MATTER OF ADMINISTRATIVE PRACTICE, IT IS STATED, THAT THE DEPARTMENT DOES NOT MAKE CHANGES WHICH HAVE THE EFFECT OF CONVERTING AN EXISTING HPO SERVICE CONTRACT INTO AN ENTIRELY DIFFERENT CONTRACT; THAT IF THE PROPOSED ROUTE CHANGES WOULD HAVE THAT EFFECT, REGULAR SERVICE WOULD BE OBTAINED AFTER ADVERTISING. IN APPARENT CONFLICT WITH THIS STATEMENT, HOWEVER, REFERENCE IS MADE IN THE LETTER TO ANOTHER ADMINISTRATIVE PRACTICE TO THE EFFECT THAT SINCE HIGHWAY POST OFFICE SERVICE ROUTES QUITE OFTEN GIVE THE APPEARANCE OF SPOKES EMANATING FROM A HUB, SERVICE COVERED BY SUCH SPOKES MAY BE DISCONTINUED AND REPLACED BY CONTRACT CHANGES WITHOUT ADVERTISING FOR OTHER SPOKES COVERING NEWLY ESTABLISHED REGULAR SERVICE ROUTES ON THE APPARENT THEORY THIS ACTION IS AUTHORIZED AS LONG AS ONE ANCHOR REMAINS THE SAME. WE ALSO UNDERSTAND THE ADMINISTRATIVE PRACTICE TO BE THAT IN CASES OF SIMULTANEOUS ADDITIONS AND REDUCTIONS IN MILEAGE ALL DOUBTS MAY BE RESOLVED IN FAVOR OF ADDING THE MILEAGE WITHOUT ADVERTISING IF THE LENGTH OF THE ROUTE, AS HERE, IS NOT THEREBY INCREASED. IT IS ALSO POINTED OUT IN THE LETTER THAT EACH ROUTE MAY REQUIRE THREE VEHICLES INCLUDING ONE STANDBY; THAT HPO VEHICLES ARE REQUIRED BY LAW TO BE ESPECIALLY DESIGNED AND EQUIPPED AND COST APPROXIMATELY $20,000 EACH WHICH MUST BE AMORTIZED OVER THE CONTRACT TERM AND CONSEQUENTLY COSTS THAT MIGHT BE PROHIBITIVE FOR SHORT INDEPENDENT ROUTES ARE AN IMPORTANT FACTOR FOR CONSIDERATION. CURRENT INSTRUCTIONS OF YOUR DEPARTMENT PROVIDE THAT "A COMPLETELY NEW ROUTE MAY NOT BE ADDED TO A PRESENT CONTRACT AS AN EXTENSION * * *.' (REGIONAL MANUAL, SECTION 523.511C).

WE CONCUR WITH THE VIEW THAT UNDER THE HIGHWAY POST OFFICE SERVICE ACT OF 1955 BROAD AUTHORITY WAS GRANTED THE POSTMASTER GENERAL TO MAKE CHANGES IN HIGHWAY POST OFFICE SERVICE CONTRACTS, AS DISTINGUISHED FROM THE MORE LIMITED AUTHORITY APPLICABLE TO STAR ROUTE CONTRACTS (AND THERETOFORE APPLICABLE TO HIGHWAY POST OFFICE SERVICE CONTRACTS AS WELL), IN A MANNER WHICH WOULD IMPROVE AND EXPEDITE THE POSTAL SERVICE. THUS, IT WAS PROVIDED AS NOW CODIFIED IN 39 U.S.C. 6352 (B) THAT THE POSTMASTER GENERAL IN CONTRACTS FOR HIGHWAY POST OFFICE SERVICE MAY PROVIDE FOR INCREASING OR DECREASING THE MILEAGE AND THE HOURS OF SERVICE REQUIRED AND FOR OTHER SERVICE CHANGES, WITHOUT STATED LIMITATIONS, AND FOR READJUSTMENT OF COMPENSATION TO REFLECT SERVICE CHANGES AND INCREASED OR DECREASED COSTS ATTRIBUTABLE TO CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM UNDER CERTAIN CIRCUMSTANCES. AS APPARENTLY RECOGNIZED IN THE LETTER OF DECEMBER 7, 1960, HOWEVER, THIS AUTHORITY IS NOT UNLIMITED BUT IS SUBJECT TO THE EXPRESS PROVISIONS OF THE LAW NOW CODIFIED IN 39 U.S.C. 6352 (A) THAT THE "POSTMASTER GENERAL SHALL OBTAIN CONTRACTS FOR HIGHWAY POST OFFICE SERVICE IN ACCORDANCE WITH SECTION 5 OF TITLE 41 * * *.' THE ADMINISTRATIVE REGULATIONS RELATING TO HIGHWAY POST OFFICE SERVICE ARE SILENT WITH RESPECT TO THE MANDATORY ADVERTISING REQUIREMENTS AND ARE MEAGER AND INDECISIVE WITH RESPECT TO THE AUTHORITY PERMITTING SERVICE CHANGES IN HPO CONTRACTS. FURTHERMORE, IT IS OUR VIEW THAT THE ADMINISTRATIVE PRACTICES REFERRED TO IN THE LETTER OF DECEMBER 7, 1960, ARE NOT ENTIRELY CONSISTENT WITH THE GOVERNING STATUTES, NOR DO THEY AFFORD ADEQUATE STANDARDS AND CONTROLS REASONABLY REQUIRED FOR EFFICIENT AND UNIFORM OPERATIONS.

IT SEEMS CLEAR, IN OUR OPINION, THAT UNDER THE HIGHWAY POST OFFICE SERVICE ACT OF 1955 AND THE PROVISIONS OF 39 U.S.C. 501 THE POSTMASTER GENERAL IS CHARGED WITH THE RESPONSIBILITY OF ESTABLISHING DEFINITE STANDARDS AND CRITERIA TO IMPLEMENT THE ADVERTISING REQUIREMENTS AS WELL AS THE PROVISIONS PERMITTING THE ISSUANCE OR CONTRACT CHANGE AND EXTENSION ORDERS UNDER HIGHWAY POST OFFICE SERVICE CONTRACTS IN A MANNER WHICH WILL ASSURE COMPLIANCE WITH ALL THE PROVISIONS OF THE CONTROLLING STATUTES. THIS CONNECTION REFERENCE IS MADE TO SECTION 301 OF THE FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949, 63 STAT. 377, 393, AND TO SECTIONS 1-1.300, 1 301 AND 1-1.302-1 OF THE FEDERAL PROCUREMENT REGULATIONS CONTAINED IN THE APPENDIX, 41 U.S.C. 1959 ED., SUPP. 1, PRESCRIBING GENERAL POLICIES DESIGNED TO INSURE COMPETITION WHEN PROCUREMENT IS REQUIRED IN ACCORDANCE WITH 41 U.S.C. 5.

AS SUGGESTED IN THE LETTER OF DECEMBER 7, 1960, IN VIEW OF "THE LENGTH OF TIME THAT HAS ELAPSED SINCE THE DETERMINATION WAS MADE AND THE INTERVENING RENEWAL OF THE CONTRACT" WE WILL INTERPOSE NO FURTHER QUESTION CONCERNING THE INSTANT CONTRACT. IT IS RECOMMENDED THAT THE ADMINISTRATIVE PRACTICES AND THE PERTINENT REGULATIONS OF YOUR DEPARTMENT INCLUDING THE HIGHWAY POST OFFICE CONTRACT GENERAL PROVISIONS INCORPORATED THEREIN BE REVIEWED AND APPROPRIATELY AMENDED AND REVISED SO AS TO CLARIFY AND ESTABLISH DEFINITE CRITERIA AND STANDARDS FOR APPLICATION TO CONTRACT PROCUREMENT OF HIGHWAY POST OFFICE SERVICE AND TO THE ISSUING OF EXTENSIONS AND CHANGES IN SUCH CONTRACTS.

WE WILL APPRECIATE YOUR COMMENTS ON THIS MATTER AND ADVICE CONCERNING THE ACTION WHICH WILL BE TAKEN.