B-2880, AUGUST 19, 1939, 19 COMP. GEN. 233

B-2880, AUGUST 19, 1939, 19 COMP. GEN. 233

ADVERTISING - BIDS - EVALUATION - USE OF DOUBTFUL FREIGHT RATES AS THE USE OF A DOUBTFUL RATE IN EVALUATING BIDS F.O.B. DESTINATION, TRANSPORTATION AT GOVERNMENT EXPENSE, MAY RESULT IN THE WRONG CONTRACTOR GETTING THE BUSINESS AND A DELIVERY COST IN EXCESS OF THAT WHICH WOULD HAVE BEEN INCURRED IF THE AWARD HAD BEEN MADE TO ANOTHER BIDDER, THE INTERESTS OF BOTH THE GOVERNMENT, AND COMPETING BIDDERS, REQUIRE THAT THERE BE USED ONLY THE LOWEST RATES WHICH THERE IS SOUND REASON FOR BELIEVING WILL BE OBTAINABLE BY THE GOVERNMENT IN MAKING THE PARTICULAR SHIPMENT, AND THE USE, IN CONNECTION WITH THE AUDIT AND SUSPENSION OF CREDIT OF PAID TRANSPORTATION VOUCHERS, OF RATES WHICH, WHILE NOT CLEARLY APPLICABLE, ARE NEVERTHELESS JUSTIFIED ON THE BASIS OF RESOLVING ALL REASONABLE DOUBTS IN FAVOR OF THE GOVERNMENT, DOES NOT WARRANT THE CONCLUSION THAT THOSE RATES ARE AVAILABLE FOR BID EVALUATION PURPOSES.

COMPTROLLER GENERAL BROWN TO THE SECRETARY OF WAR, AUGUST 19, 1939:

WITH REFERENCE TO PREVIOUS CORRESPONDENCE, THERE IS ENCLOSED FOR YOUR INFORMATION A COPY OF MY LETTER OF TODAY TO KING BROS. OF ANNISTON, ALA., RELATIVE TO THEIR PROTEST AGAINST THE AWARD OF CONTRACTS UNDER INVITATION 58-39-6 FOR THE CONSTRUCTION OF PORTABLE, DEMOUNTABLE HOUSES FOR THE CIVILIAN CONSERVATION CORPS.

IN VIEW OF THE REFERENCE, IN YOUR REPORT UPON THE MATTER, TO SUSPENSIONS OF PAID VOUCHERS AS INVOLVING THE USE BY THIS OFFICE OF RATINGS SIMILAR TO THOSE USED IN EVALUATING THE BIDS, IT SEEMS PROPER TO BRING TO ATTENTION THAT THE PURPOSE TO BE SERVED IN THE AUDIT OF TRANSPORTATION ACCOUNTS MAY VERY WELL JUSTIFY THE USE, IN A SUSPENSION OF CREDIT, OF RATES WHICH MAY BE, NEVERTHELESS, NOT SO CLEARLY APPLICABLE AS TO WARRANT THE CONCLUSION THAT THEY WOULD BE AVAILABLE FOR CONTEMPLATED TRANSPORTATION SERVICE SUCH AS IS INVOLVED IN EVALUATING BIDS. AS INDICATED IN THE ATTACHED COPY OF LETTER TO KING BROS., IT IS NECESSARY IN THE PROPER AUDIT OF ACCOUNTS THAT ALL REASONABLE DOUBTS AS TO THE APPLICABILITY OF RATES BE RESOLVED IN FAVOR OF THE GOVERNMENT, THERE BEING FOR CONSIDERATION, ALSO, THAT THE CARRIERS MAY, UNDER SECTION 22 OF THE INTERSTATE COMMERCE ACT, GIVE THE GOVERNMENT THE BENEFIT OF RATES NOT STRICTLY APPLICABLE ACCORDING TO TARIFF. THE FACT, HOWEVER, THAT SUCH PROCEDURE MAY BE PROPER AND DULY REQUIRED IN THE AUDIT TO ACCOUNTS INVOLVING PAYMENTS MADE OR TO BE MADE TO CARRIERS IS NOT TO BE TAKEN AS ESTABLISHING THAT SUCH RATES ARE PROPERLY FOR USE IN EVALUATING BIDS UNDER INVITATIONS FOR FURNISHING MATERIALS AND SUPPLIES. IN MAKING SUCH EVALUATIONS THERE SHOULD BE CONSIDERED, OF COURSE, THE FACT THAT THERE ARE INVOLVED NOT ONLY THE RIGHTS OF THE GOVERNMENT, AS SHIPPER, AND THE RAILROAD COMPANIES, AS CARRIERS, BUT, ALSO, THE RIGHTS OF MATERIALLY INTERESTED THIRD PARTIES, NAMELY, BIDDERS AND PROSPECTIVE CONTRACTORS. ALSO, THERE SHOULD BE CONSIDERED THE FACT THAT IF THERE BE USED IN THE EVALUATION A RATE WHICH IT MAY ULTIMATELY BE FOUND CANNOT BE OBTAINED ON THE SHIPMENT, THE RESULT MAY BE THAT THE WRONG CONTRACTOR WOULD GET THE BUSINESS AND THAT THE DELIVERED COST TO THE GOVERNMENT WILL BE GREATER THAN IF THE AWARD HAD BEEN MADE TO ANOTHER BIDDER. CONSEQUENTLY, THE MERE FACT THAT THIS OFFICE IN AUDIT OF ACCOUNTS OF A DISBURSING OFFICER OR A CARRIER MAY HAVE TENTATIVELY APPLIED A CERTAIN RATE OR CLASSIFICATION IS NOT, ALONE, SUFFICIENT TO WARRANT OR JUSTIFY THE USE OF THAT RATE OR CLASSIFICATION IN THE EVALUATION OF BIDS. ON THE CONTRARY, IT WOULD SEEM THAT THE INTERESTS OF THE GOVERNMENT AS WELL AS THE INTERESTS OF COMPETING BIDDERS WOULD REQUIRE THAT THERE BE USED IN THE EVALUATING OF BIDS ONLY THE LOWEST RATES WHICH THERE IS SOUND REASON FOR BELIEVING WILL BE OBTAINABLE BY THE GOVERNMENT IN MAKING THE PARTICULAR SHIPMENT INVOLVED.