B-15566, MARCH 27, 1941, 20 COMP. GEN. 572

B-15566: Mar 27, 1941

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CONTRACTS - RENEWAL OPTIONS - APPROPRIATION AND ADVERTISING REQUIREMENTS A CONTRACT FOR FURNISHING EQUIPMENT AND SUPPLIES TO THE GOVERNMENT DURING THE CURRENT FISCAL YEAR WHICH RESERVES TO THE GOVERNMENT AN OPTION TO RENEW THE CONTRACT FROM YEAR TO YEAR FOR SEVERAL YEARS SHOULD BE RENEWED ONLY AFTER FUNDS HAVE BEEN MADE AVAILABLE FOR THE SUCCEEDING YEAR IN VIEW OF THE TERMS OF SECTIONS 3679. A CONTRACT FOR FURNISHING EQUIPMENT AND SUPPLIES TO THE GOVERNMENT DURING THE CURRENT FISCAL YEAR WHICH RESERVES TO THE GOVERNMENT AN OPTION TO RENEW THE CONTRACT FROM YEAR TO YEAR FOR SEVERAL YEARS SHOULD BE RENEWED ONLY AFTER FUNDS HAVE BEEN MADE AVAILABLE AND AFTER ASCERTAINING THAT ACCEPTANCE OF THE CONTRACT FOR THE SUCCEEDING FISCAL YEAR WILL BE IN THE INTEREST OF THE GOVERNMENT AS EVIDENCED BY COMPETITIVE BIDS FOR THE SAME SERVICE SECURED WITHIN A REASONABLE TIME PRIOR THERETO.

B-15566, MARCH 27, 1941, 20 COMP. GEN. 572

CONTRACTS - RENEWAL OPTIONS - APPROPRIATION AND ADVERTISING REQUIREMENTS A CONTRACT FOR FURNISHING EQUIPMENT AND SUPPLIES TO THE GOVERNMENT DURING THE CURRENT FISCAL YEAR WHICH RESERVES TO THE GOVERNMENT AN OPTION TO RENEW THE CONTRACT FROM YEAR TO YEAR FOR SEVERAL YEARS SHOULD BE RENEWED ONLY AFTER FUNDS HAVE BEEN MADE AVAILABLE FOR THE SUCCEEDING YEAR IN VIEW OF THE TERMS OF SECTIONS 3679, 3732, AND 3735, REVISED STATUTES, WHICH, IN EFFECT, PROHIBIT ANY CONTRACT OR OBLIGATION BEYOND THE EXTENT AND AVAILABILITY OF EXISTING APPROPRIATIONS IN THE ABSENCE OF SPECIFIC AUTHORITY. A CONTRACT FOR FURNISHING EQUIPMENT AND SUPPLIES TO THE GOVERNMENT DURING THE CURRENT FISCAL YEAR WHICH RESERVES TO THE GOVERNMENT AN OPTION TO RENEW THE CONTRACT FROM YEAR TO YEAR FOR SEVERAL YEARS SHOULD BE RENEWED ONLY AFTER FUNDS HAVE BEEN MADE AVAILABLE AND AFTER ASCERTAINING THAT ACCEPTANCE OF THE CONTRACT FOR THE SUCCEEDING FISCAL YEAR WILL BE IN THE INTEREST OF THE GOVERNMENT AS EVIDENCED BY COMPETITIVE BIDS FOR THE SAME SERVICE SECURED WITHIN A REASONABLE TIME PRIOR THERETO.

COMPTROLLER GENERAL WARREN TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, MARCH 27, 1941:

I HAVE YOUR LETTER OF MARCH 14, 1941, AS FOLLOWS:

IN THE COMMISSION'S CONTRACT NO. CS-247 FOR THE FISCAL YEAR 1941, COPY ATTACHED, COVERING THE FURNISHING OF RECORDAK EQUIPMENT AND SUPPLIES THERE APPEAR THE FOLLOWING CLAUSES:

" THIS CONTRACT SHALL BE RENEWABLE AT THE OPTION OF THE GOVERNMENT FOR A PERIOD EXPIRING JUNE 30, 1942 AND SHALL THEREAFTER BE RENEWABLE AT THE OPTION OF THE GOVERNMENT FOR PERIODS OF ONE YEAR NOT TO EXTEND BEYOND JUNE 30, 1946.

" FAILURE OF CONGRESS TO APPROPRIATE FUNDS.--- IF THE OPERATIONS OF THIS CONTRACT EXTEND BEYOND THE CURRENT FISCAL YEAR, IT IS UNDERSTOOD THAT THE CONTRACT IS MADE CONTINGENT UPON CONGRESS MAKING THE NECESSARY APPROPRIATIONS FOR EXPENDITURES THEREUNDER AFTER SUCH CURRENT YEAR HAS EXPIRED. IN CASE SUCH APPROPRIATION AS MAY BE NECESSARY TO CARRY OUT THIS CONTRACT IS NOT MADE, THE CONTRACTOR HEREBY RELEASES THE GOVERNMENT FROM ALL LIABILITY DUE TO THE FAILURE OF CONGRESS TO MAKE SUCH APPROPRIATIONS.

" ALTHOUGH PRICES ARE QUOTED ON INDIVIDUAL ITEMS ABOVE, THIS BID IS SUBMITTED ON AN ALL OR NONE BASIS, I.E., ON THE BASIS THAT ALL OF THE ITEMS OF THE BID WILL BE CONSIDERED AS A WHOLE AND ALL ITEMS WILL BE AWARDED TO ONE BIDDER. THIS CLAUSE IS APPENDED TO THIS BID BECAUSE OF OUR FULL REALIZATION THAT ALL INTEGRAL PARTS OF THE MICROFILMING TECHNIQUE ARE INTERDEPENDENT AND MUST BE CLOSELY SUPERVISED AND CONTROLLED AS A COMPLETE UNIT IN ORDER TO OBTAIN SATISFACTORY MICROPHOTOGRAPHIC RESULTS. IT IS READILY APPARENT THAT THE QUALITY OF THE FINISHED MICROFILM PRODUCT IS CONTINGENT, NOT ONLY UPON THE TYPE OF PHOTOGRAPHING INSTRUMENT USED, THE TYPE OF FILM USED, AND THE MANNER IN WHICH THE FILM IS PROCESSED, BUT ALSO AND EQUALLY IMPORTANT ON THE PROPER CORRELATION OF ALL OF THESE FACTORS TO PRODUCE SATISFACTORY RESULTS.'

THE ABOVE CLAUSES WERE INSERTED IN THE CONTRACT BECAUSE THE COMMISSION HAS A CONTINUING PROBLEM ON HAND OF PHOTOGRAPHING AND PRESERVING A LARGE VOLUME OF ITS OFFICIAL RECORDS, AND IT WAS DESIRED TO BE ASSURED THAT THE CONTRACTOR HAD THE FACILITIES FOR CONTINUING THIS SERVICE UNTIL SUCH TIME THAT THE WORK MAY BE COMPLETED OR AT LEAST TEMPORARILY COMPLETED AS FUNDS MIGHT PERMIT.

THESE CLAUSES WERE ALSO INSERTED IN THE CONTRACT WITH A VIEW OF OBTAINING PRICES AS FAVORABLE AS POSSIBLE IN THE INTEREST OF THE GOVERNMENT BY INDICATING TO THE BIDDERS THAT THE WORK WOULD CONTINUE FOR SOME TIME IN THE FUTURE.

DUE TO THE PRESENT UPWARD TREND OF PRICES AT THE PRESENT TIME IT WOULD PROBABLY ALSO BE IN THE INTEREST OF THE GOVERNMENT NOT TO RE ADVERTISE, PROVIDED THE CONTRACT WITH THE AFOREMENTIONED CLAUSES IS LEGAL IN ALL RESPECTS.

THE QUESTION NOW ARISES, WHETHER THESE CLAUSES MEET THE REQUIREMENTS OF YOUR OFFICE AND WHETHER OR NOT THE COMMISSION MAY EXERCISE THE OPTION OF NOTIFYING THE CONTRACTOR TO CONTINUE THIS SERVICE DURING THE ENSUING FISCAL YEAR COMMENCING JULY 1, 1941, WITHOUT RESORTING TO FORMAL BIDS.

YOUR DECISION WILL BE GREATLY APPRECIATED.

THE RESERVATION BY THE GOVERNMENT OF AN OPTION TO RENEW THE CONTRACT HERE INVOLVED FOR ADDITIONAL PERIODS OF 1 YEAR, EXTENDING THROUGH JUNE 30, 1946, APPARENTLY PLACES THE GOVERNMENT UNDER NO OBLIGATION BEYOND THE CURRENT FISCAL YEAR, UNLESS AND UNTIL SUCH OPTION IS EXERCISED FOR THE SUCCEEDING FISCAL YEAR. IT IS ASSUMED THAT, NOTWITHSTANDING THE PROVISION THEREIN RELEASING THE GOVERNMENT FROM LIABILITY BECAUSE OF FAILURE OF CONGRESS TO APPROPRIATE FUNDS, THE COMMISSION WOULD NOT ATTEMPT TO EXERCISE SUCH OPTION FOR ANY FISCAL YEAR UNLESS AND UNTIL FUNDS WERE AVAILABLE THEREFOR IN ITS YEARLY APPROPRIATION. SEE SECTIONS 3679, 3732, AND 3735, REVISED STATUTES, WHICH, IN EFFECT, PROVIDE THAT, UNLESS OTHERWISE AUTHORIZED, THE GOVERNMENT SHALL NOT BE INVOLVED IN ANY CONTRACT OR OBLIGATION BEYOND THE EXTENT AND AVAILABILITY OF APPROPRIATIONS.

WHILE THE EXERCISE OF THE RESERVED OPTION UNDER THOSE CONDITIONS WOULD NOT APPEAR TO VIOLATE THE ABOVE-CITED PROVISIONS OF LAW, IT IS PLAIN THAT SUCH PROCEDURE IS NOT IN ACCORDANCE WITH THE INTENT OF SECTION 3709, REVISED STATUTES, WHICH CONTEMPLATES NOT ONLY THAT THE GOVERNMENT SHALL OBTAIN THE BENEFIT OF SUCH COMPETITION AS THE INDUSTRY AFFORDS, BUT ALSO THAT ALL QUALIFIED BIDDERS SHALL HAVE AN OPPORTUNITY TO SECURE GOVERNMENTAL BUSINESS. SEE 9 COMP. GEN. 6; 14 ID. 59; 19 ID. 980. WHILE IT MAY BE TRUE THAT PRESENT PRICES TREND UPWARD, THERE IS NO ASSURANCE THAT THIS WILL CONTINUE TO BE THE CASE DURING THE ENTIRE 6 YEAR PERIOD INVOLVED, NOR THAT OTHER QUALIFIED BIDDERS WILL BE UNABLE TO OFFER A MORE ADVANTAGEOUS PRICE DURING THAT PERIOD.

YOU ARE ADVISED, THEREFORE, THAT THE OPTION TO RENEW THE ABOVE CONTRACT ON A YEARLY BASIS SHOULD BE EXERCISED ONLY AFTER IT SHALL HAVE BEEN ASCERTAINED BOTH THAT FUNDS WILL BE AVAILABLE TO CONTINUE THE WORK FOR THAT FISCAL YEAR, AND THAT THE ACCEPTANCE OF THE CONTRACT FOR THE SUCCEEDING FISCAL YEAR WILL BE IN THE INTEREST OF THE GOVERNMENT, AS EVIDENCED BY COMPETITIVE BIDS FOR THE SAME SERVICE SECURED WITHIN A REASONABLE TIME PRIOR THERETO.