B-18280, JULY 23, 1941, 21 COMP. GEN. 56

B-18280: Jul 23, 1941

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THE WEATHER BUREAU MAY NOT ENTER INTO SEVERAL CONTRACTS FOR THE SUPPLYING OF RADIOSONDES BY NEGOTIATION WITH BIDDERS WHO HAVE SUBMITTED BIDS ON A COMPETITIVE ADVERTISING-FOR-BIDS BASIS. NOTWITHSTANDING THAT PROCUREMENT IN SUCH MANNER IS ADMINISTRATIVELY DESIRED IN ORDER TO OBVIATE INTERRUPTIONS. IN DELIVERIES WHICH MIGHT OCCUR IF THE PROCUREMENT WERE ON A COMPETITIVE ADVERTISING-FOR-BIDS BASIS REQUIRING AWARD TO ONLY A SINGLE CONTRACTOR- - THE LOWEST RESPONSIBLE BIDDER. 1941: I HAVE YOUR LETTER OF JUNE 25. AS FOLLOWS: DURING THE FISCAL YEAR 1942 THE WEATHER BUREAU WILL PURCHASE APPROXIMATELY 30. THESE INSTRUMENTS HAVE BEEN DESIGNATED AS ESSENTIAL TO NATIONAL DEFENSE AND HAVE BEEN GIVEN A PRIORITY RATING OF A-1-D.

B-18280, JULY 23, 1941, 21 COMP. GEN. 56

CONTRACTS - AWARDS - SPLITTING WHILE STRICT COMPLIANCE WITH THE ADVERTISING FOR BIDS REQUIREMENTS OF SECTION 3709, REVISED STATUTES, MAY OCCASION CERTAIN DIFFICULTIES UNDER PRESENT CONDITIONS, SUCH CONDITIONS IN THEMSELVES DO NOT SERVE TO ABROGATE THE STATUTE, OR TO AUTHORIZE EITHER THE ADMINISTRATIVE OR THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO DISPENSE WITH ITS REQUIREMENTS IN THEIR DISCRETION. EVEN UNDER PRESENT CONDITIONS, THE WEATHER BUREAU MAY NOT ENTER INTO SEVERAL CONTRACTS FOR THE SUPPLYING OF RADIOSONDES BY NEGOTIATION WITH BIDDERS WHO HAVE SUBMITTED BIDS ON A COMPETITIVE ADVERTISING-FOR-BIDS BASIS, IN THE ABSENCE OF LEGISLATIVE AUTHORIZATION SO TO CONTRACT, NOTWITHSTANDING THAT PROCUREMENT IN SUCH MANNER IS ADMINISTRATIVELY DESIRED IN ORDER TO OBVIATE INTERRUPTIONS, OF FAR-REACHING EFFECT, IN DELIVERIES WHICH MIGHT OCCUR IF THE PROCUREMENT WERE ON A COMPETITIVE ADVERTISING-FOR-BIDS BASIS REQUIRING AWARD TO ONLY A SINGLE CONTRACTOR- - THE LOWEST RESPONSIBLE BIDDER. PROCEDURE FOR ADVERTISING ON A COMPETITIVE BID BASIS, SO AS TO OBVIATE THE POSSIBLE OBJECTIONABLE DELAYS, OUTLINED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF COMMERCE, JULY 23, 1941:

I HAVE YOUR LETTER OF JUNE 25, 1941, AS FOLLOWS:

DURING THE FISCAL YEAR 1942 THE WEATHER BUREAU WILL PURCHASE APPROXIMATELY 30,000 RADIOSONDES AT A COST OF APPROXIMATELY $600,000. THESE INSTRUMENTS HAVE BEEN DESIGNATED AS ESSENTIAL TO NATIONAL DEFENSE AND HAVE BEEN GIVEN A PRIORITY RATING OF A-1-D.

RADIOSONDES ARE SENT ALOFT TWICE DAILY FROM APPROXIMATELY FORTY STATIONS IN THE CONTINENTAL UNITED STATES, IN ALASKA, IN THE CARIBBEAN, AND ON SHIPS AT SEA. THE RADIOSONDE IS CARRIED ON A BALLOON TO A HEIGHT OF APPROXIMATELY TWELVE MILES AT WHICH ALTITUDE THE BALLOON BURSTS AND THE INSTRUMENT DESCENDS ON A PARACHUTE. MANY ARE RECOVERED AND AFTER RECONDITIONING ARE AGAIN USED. DURING ITS FLIGHT THE RADIOSONDE TRANSMITS SIGNALS WHICH ARE RECORDED AND FROM WHICH THE PRESSURE, TEMPERATURE, AND HUMIDITY ARE DETERMINED.

THE ESSENTIAL CHARACTER OF THESE INSTRUMENTS AND THE EXTREME HAZARD TO AIRCRAFT OPERATION INHERENT IN INTERRUPTION OF RADIOSONDE UPPER AIR SOUNDINGS MAKES IT HIGHLY UNDESIRABLE THAT THEIR SUPPLY BE DEPENDENT UPON A SINGLE SOURCE. PROCUREMENT BY COMPETITIVE BIDDING PROVIDES ONLY ONE SOURCE OF SUPPLY AND DOES NOT ASSURE THAT SUCH SOURCE WILL BE DEPENDABLE, SINCE AWARD MUST BE MADE TO THE LOWEST BIDDER WHO IS THOUGHT TO BE RESPONSIBLE, BUT WHO MAY PROVE OTHERWISE. EVEN THOUGH THE MANUFACTURER RECEIVING THE AWARD BE SATISFACTORY IN EVERY WAY THERE REMAIN THE DANGERS OF FIRE, STRIKES, OR MATERIAL SHORTAGES WHICH MAY INTERRUPT PRODUCTION. DURING THE PAST YEAR A COMPANY MANUFACTURING RADIOSONDES ( JULIEN P. FRIEZ AND SONS, DIVISION OF BENDIX AVIATION CORPORATION, IN BALTIMORE) HAD A FIRE IN ITS RADIOSONDE ASSEMBLY DEPARTMENT WHICH INTERRUPTED DELIVERIES FOR ABOUT SIX WEEKS. FORTUNATELY FOR THE WEATHER BUREAU, FRIEZ WAS NOT THEIR SOURCE OF RADIOSONDES AT THAT TIME.

IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IT IS PROPOSED THAT RADIOSONDES SHOULD BE PURCHASED FROM TWO OR MORE SOURCES OF COMPETITION AND NEGOTIATION. A RECENT DECISION OF THE ATTORNEY GENERAL INDICATES THAT SUCH NEGOTIATION AND DIVISION OF CONTRACTS BASED ON JOINT ACTION WITH TWO OR MORE CONTRACTORS MAY BE PERMISSIBLE IN THE PRESENT EMERGENCY. THE ATTORNEY GENERAL IS QUOTED AS STATING THAT "SOME OF THESE ACTS, IF ACCOMPLISHED BY PRIVATE CONTRACT OR ARRANGEMENT WITHIN AN INDUSTRY AND CARRIED ON FOR PRIVATE ADVANTAGE, WOULD PROBABLY CONSTITUTE VIOLATIONS OF THE ANTITRUST LAWS, * * *. ON THE OTHER HAND, IT IS OBVIOUS THAT IN THE PRESENT EMERGENCY ACTS PERFORMED BY INDUSTRY UNDER THE DIRECTION OF PUBLIC AUTHORITY, AND DESIGNED TO PROMOTE PUBLIC INTEREST, AND NOT ACHIEVE PRIVATE ENDS DO NOT CONSTITUTE VIOLATIONS OF THE ANTITRUST LAWS * * *.'

BECAUSE OF THE HAZARD TO THE NATIONAL DEFENSE INHERENT IN THE PROCUREMENT OF THESE INSTRUMENTS FROM A SINGLE SOURCE, I DEEM IT MY DUTY TO EXPLORE EVERY POSSIBILITY OF PROCEDURE WHICH WILL ASSURE TWO OR MORE SOURCES OF SUPPLY.

YOUR OPINION AS TO THE PROPRIETY OF PROCUREMENT OF RADIOSONDES BY COMPETITION AND NEGOTIATION IS SOLICITED.

THE STATEMENTS OF FORMER ATTORNEY GENERAL JACKSON WHICH ARE QUOTED IN YOUR LETTER WERE CONTAINED IN HIS IDENTICAL LETTERS OF APRIL 29, 1941, TO THE GENERAL COUNSEL, OFFICE OF PRODUCTION MANAGEMENT, AND TO THE ADMINISTRATOR, OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY. THE LETTERS WERE NOT OFFICIAL OPINIONS OF THE ATTORNEY GENERAL, BUT CONTAINED OUTLINES OF THE POLICY TO BE FOLLOWED BY THE DEPARTMENT OF JUSTICE WITH RESPECT TO THE ADOPTION WITHIN PARTICULAR INDUSTRIES--- AT THE REQUEST OF THE OFFICE OF PRODUCTION MANAGEMENT OR THE OFFICE OF PRICE ADMINISTRATION AND CIVILIAN SUPPLY--- OF CERTAIN PRACTICES WHICH, IF ADOPTED BY THE INDUSTRIES THEMSELVES TO FURTHER PRIVATE ENDS, PROBABLY WOULD CONSTITUTE VIOLATIONS OF THE ANTITRUST LAWS.

YOUR LETTER DOES NOT STATE IN WHAT MANNER IT IS ANTICIPATED THAT CONTRACTORS MIGHT VIOLATE THE ANTITRUST LAWS IN THE EXECUTION OR PERFORMANCE OF THE PROPOSED CONTRACTS. HOWEVER, SINCE THIS OFFICE IS NOT DIRECTLY CONCERNED WITH ENFORCEMENT OF THE ANTITRUST LAWS, I ASSUME IT IS UNDERSTOOD THAT ANY QUESTION ARISING WITH REGARD TO SUCH LAWS PRIMARILY WOULD BE FOR CONSIDERATION BY THE DEPARTMENT OF JUSTICE. I ASSUME, ALSO, THAT YOUR QUESTION AS TO THE PROPRIETY OF THE PROCUREMENT OF RADIOSONDES BY "COMPETITION AND NEGOTIATION" RESULTS FROM DOUBT AS TO WHETHER THE SUGGESTED PROCEDURE WOULD VIOLATE THE APPLICABLE STATUTORY REQUIREMENTS WITH RESPECT TO ADVERTISING FOR PROPOSALS.

SECTION 3709, REVISED STATUTES, PROVIDES:

ALL PURCHASES AND CONTRACTS FOR SUPPLIES OR SERVICES, IN ANY OF THE DEPARTMENTS OF THE GOVERNMENT, EXCEPT FOR PERSONAL SERVICES, SHALL BE MADE BY ADVERTISING A SUFFICIENT TIME PREVIOUSLY FOR PROPOSALS RESPECTING THE SAME, WHEN THE PUBLIC EXIGENCIES DO NOT REQUIRE THE IMMEDIATE DELIVERY OF THE ARTICLES, OR PERFORMANCE OF THE SERVICE. WHEN IMMEDIATE DELIVERY OR PERFORMANCE IS REQUIRED BY THE PUBLIC EXIGENCY, THE ARTICLES OR SERVICE REQUIRED MAY BE PROCURED BY OPEN PURCHASE OR CONTRACT, AT THE PLACES AND IN THE MANNER IN WHICH SUCH ARTICLES ARE USUALLY BOUGHT AND SOLD, OR SUCH SERVICES ENGAGED, BETWEEN INDIVIDUALS.

THE QUOTED STATUTE CONTEMPLATES THAT ALL PERSONS, INSOFAR AS THEIR INDIVIDUAL SITUATIONS PERMIT, SHALL BE ENABLED TO COMPETE FOR GOVERNMENT BUSINESS UPON AN EQUAL BASIS, AND THAT THERE SHALL BE SECURED TO THE UNITED STATES THE BENEFITS WHICH MAY BE EXPECTED TO FLOW FROM FREE AND OPEN COMPETITION. SEE 18 COMP. GEN. 641, 643; IBID; 117, 118; 13 ID. 284, 286, AND CASES CITED IN THOSE DECISIONS, PARTICULARLY UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313, 318, WHERE THE SUPREME COURT OBSERVED THAT BY COMPLIANCE WITH THE STATUTE,"THE GOVERNMENT IS GIVEN THE BENEFIT OF THE COMPETITION OF THE MARKET AND EACH BIDDER IS GIVEN THE CHANCE FOR A BARGAIN.' SEE, ALSO, UNITED STATES V. BROOKRIDGE FARM, INC., 111 F. (2D) 461, 463 ( C.C.A. 10TH, 1940).

CLEARLY, BIDDERS WOULD NOT BE IN FREE AND OPEN COMPETITION FOR GOVERNMENT BUSINESS UPON AN EQUAL BASIS IF, AFTER ADVERTISING FOR PROPOSALS, THE GOVERNMENT SHOULD ENTER INTO NEGOTIATIONS WITH ONE OR MORE BIDDERS WITH A VIEW TOWARDS THE AWARDING OF CONTRACTS ON A BASIS DIFFERING EITHER FROM THE ADVERTISEMENT FOR PROPOSALS OR FROM THE SUBMITTED COMPETITIVE BIDS. 17 COMP. GEN. 554, 558-559. IT LONG HAS BEEN RECOGNIZED, THEREFORE, THAT THE PURPOSES OF THE STATUTE CAN BE EFFECTUATED ONLY BY THE AWARDING OF A CONTRACT TO THE LOWEST RESPONSIBLE BIDDER; AND THAT IS WHAT THE STATUTE REQUIRES. O-BRIEN V. CARNEY ET AL., 6 F.1SUPP. 761, CITING SCOTT V. UNITED STATES, 44 CT.CLS. 524; 17 COMP. GEN. 554, SUPRA.

I AM NOT UNAWARE THAT STRICT COMPLIANCE WITH THE APPLICABLE STATUTORY REQUIREMENTS MAY OCCASION CERTAIN DIFFICULTIES UNDER PRESENT CONDITIONS. HOWEVER, SUCH CONDITIONS IN THEMSELVES DO NOT SERVE TO ABROGATE THE STATUTE, OR TO AUTHORIZE EITHER THE ADMINISTRATIVE OR THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO DISPENSE WITH ITS REQUIREMENTS IN THEIR DISCRETION. THAT NO SUCH DISCRETION MAY BE EXERCISED WITHOUT STATUTORY AUTHORITY IS PLAINLY EVIDENCED BY THE FACT THAT THE CONGRESS ITSELF, IN RECENT MONTHS, SPECIFICALLY HAS AUTHORIZED THE EXERCISE OF ADMINISTRATIVE DISCRETION WITH RESPECT TO ADVERTISING FOR CERTAIN PROCUREMENTS. SEE, FOR EXAMPLE, THE ACT OF JUNE 28, 1940, 54 STAT. 676, AUTHORIZING THE AWARD OF CERTAIN CONTRACTS BY NEGOTIATIONS, AND THE ACT OF MARCH 5, 1940, 54 STAT. 45, AUTHORIZING THE SECRETARY OF THE NAVY OR THE SECRETARY OF WAR TO MAKE MULTIPLE AWARDS FOR AIRCRAFT, AIRCRAFT PARTS, AND ACCESSORIES THEREFOR, UNDER CERTAIN CIRCUMSTANCES. ALSO, SEE 20 COMP. GEN. 194.

I HAVE TO ADVISE, THEREFORE, THAT THIS OFFICE WOULD NOT BE AUTHORIZED TO ALLOW CREDIT FOR PAYMENTS UNDER CONTRACTS AWARDED AFTER "COMPETITION AND NEGOTIATION," UNLESS SUCH A PROCEDURE WERE TO BE AUTHORIZED BY LEGISLATION; AND IF YOU DEEM IT NECESSARY THAT PURCHASE OF RADIOSONDES BE MADE IN THAT MANNER, THE MATTER SHOULD BE PRESENTED TO THE CONGRESS.

IT IS NOT CLEARLY UNDERSTOOD, HOWEVER, WHY THE NEEDS OF THE WEATHER BUREAU IN THIS INSTANCE COULD NOT BE MET BY ADVERTISING FOR PROPOSALS IN THE USUAL MANNER. OF COURSE, THE PUBLIC INTEREST WOULD REQUIRE THAT THE CONTRACT FOR RADIOSONDES BE AWARDED ONLY TO A RESPONSIBLE BIDDER, BUT ANY REASONABLE QUALIFICATIONS WHICH BIDDERS MIGHT BE REQUIRED TO DEMONSTRATE TO SECURE THE AWARD OF A NEGOTIATED CONTRACT COULD JUST AS WELL BE REQUIRED IN THE ADVERTISEMENT FOR PROPOSALS IN CONTEMPLATION OF AWARD UPON A TRULY COMPETITIVE BASIS. IN THIS CONNECTION, SEE MY DECISION OF JUNE 7, 1941, B-16653, TO THE SECRETARY OF THE INTERIOR, 20 COMP. GEN. 862; 19 ID. 523; 16 ID. 708; 14 ID. 305; IBID. 78.

IF AS APPEARS FROM YOUR LETTER, THE PRIMARY CONCERN OF THE BUREAU IS THE POSSIBLE INTERRUPTION IN DELIVERIES BY A SINGLE CONTRACTOR, IT IS SUGGESTED THAT THE CONSEQUENCES OF SUCH AN EVENT MIGHT BE OBVIATED BY ATTEMPTING TO SECURE IMMEDIATELY A SUPPLY OF RADIOSONDES SUFFICIENT TO GUARD AGAINST THAT CONTINGENCY. FOR EXAMPLE, BIDS MIGHT BE REQUESTED UNDER ONE ITEM FOR SUPPLYING ALL OR ANY PART OF A SPECIFIED QUANTITY OF RADIOSONDES, SUFFICIENT TO TAKE CARE OF AN EXIGENCY THAT MIGHT THEREAFTER ARISE, WITHIN A LIMITED PERIOD, AND UNDER ANOTHER ITEM FOR SUPPLYING THE REMAINDER OF THE GOVERNMENT'S REQUIREMENTS OVER THE FISCAL YEAR. PRESUMABLY, SUCH DEVICES ARE NOT MANUFACTURED EXTENSIVELY, AND THE SECURING OF A CONSIDERABLE QUANTITY AT THE OUTSET MIGHT REQUIRE THE AWARD OF MORE THAN ONE CONTRACT UNDER THE ITEM REQUIRING PROMPT DELIVERY. HOWEVER, THAT PROCEDURE WOULD NOT BE OBJECTIONABLE IF ALL BIDDERS WERE OFFERED AN EQUAL OPPORTUNITY TO SUPPLY BOTH THE IMMEDIATE AND THE PROSPECTIVE NEEDS. ALSO, IF DURING THE PERFORMANCE OF A CONTRACT A FIRE OR OTHER UNAVOIDABLE CAUSE SHOULD RENDER CONTINUED PERFORMANCE IMPOSSIBLE, PROCUREMENTS NECESSARY TO MEET SUCH EXIGENCY THEN COULD BE MADE IN THE OPEN MARKET WITHOUT ADVERTISING.