B-30185, NOVEMBER 19, 1942, 22 COMP. GEN. 484

B-30185: Nov 19, 1942

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A MAXIMUM PRICE WHICH IS BELOW THE ACCEPTED BID PRICE IS ESTABLISHED PURSUANT TO THE EMERGENCY PRICE CONTROL ACT OF 1942 FOR THE INVOLVED MATERIAL. IT IS PROPER TO REDUCE THE CONTRACT PRICE TO CONFORM TO THE ESTABLISHED CEILING PRICE. ARE SUBMITTED TO THIS OFFICE FOR FILING WHEREIN THE CONTRACT PRICE HAS BEEN REDUCED TO CONFORM TO THE MAXIMUM PRICE ESTABLISHED PURSUANT TO THE EMERGENCY PRICE CONTROL ACT OF 1942 FOR THE CONTRACT MATERIAL. IT IS PROPER AND ADVISABLE TO INSERT IN INVITATIONS FOR BIDS FOR THE SALE BY THE GOVERNMENT OF WASTE OR SCRAP MATERIAL. AS TO WHICH MAXIMUM PRICES HAVE BEEN ESTABLISHED PURSUANT TO THE EMERGENCY PRICE CONTROL ACT OF 1942. A PROVISION CALLING ATTENTION TO THE SAID ACT AND ADVISING PROSPECTIVE BIDDERS THAT BIDS AT PRICES IN EXCESS OF SUCH MAXIMUM PRICES WILL NOT BE CONSIDERED.

B-30185, NOVEMBER 19, 1942, 22 COMP. GEN. 484

SALES - SURPLUS, ETC., PROPERTY - EFFECT OF GOVERNMENT PRICE-FIXING ORDERS WHERE, AFTER ACCEPTANCE OF THE HIGHEST BID OFFERING TO PURCHASE WASTE OR SCRAP MATERIAL FROM A FEDERAL AGENCY, A MAXIMUM PRICE WHICH IS BELOW THE ACCEPTED BID PRICE IS ESTABLISHED PURSUANT TO THE EMERGENCY PRICE CONTROL ACT OF 1942 FOR THE INVOLVED MATERIAL, IT IS PROPER TO REDUCE THE CONTRACT PRICE TO CONFORM TO THE ESTABLISHED CEILING PRICE, EVEN THOUGH SUCH REDUCTION RESULTS IN A PRICE BELOW THOSE OFFERED BY UNSUCCESSFUL BIDDERS. WHEN CONTRACTS COVERING THE SALE OF SCRAP MATERIAL, ETC., ARE SUBMITTED TO THIS OFFICE FOR FILING WHEREIN THE CONTRACT PRICE HAS BEEN REDUCED TO CONFORM TO THE MAXIMUM PRICE ESTABLISHED PURSUANT TO THE EMERGENCY PRICE CONTROL ACT OF 1942 FOR THE CONTRACT MATERIAL, REFERENCE SHOULD BE MADE TO THIS DECISION AND TO THE REGULATIONS OF THE PRICE ADMINISTRATOR ESTABLISHING THE MAXIMUM PRICE. IT IS PROPER AND ADVISABLE TO INSERT IN INVITATIONS FOR BIDS FOR THE SALE BY THE GOVERNMENT OF WASTE OR SCRAP MATERIAL, AS TO WHICH MAXIMUM PRICES HAVE BEEN ESTABLISHED PURSUANT TO THE EMERGENCY PRICE CONTROL ACT OF 1942, A PROVISION CALLING ATTENTION TO THE SAID ACT AND ADVISING PROSPECTIVE BIDDERS THAT BIDS AT PRICES IN EXCESS OF SUCH MAXIMUM PRICES WILL NOT BE CONSIDERED; ALSO, NO OBJECTION WILL BE MADE BY THIS OFFICE TO CONSIDERING A BID AT A PRICE IN EXCESS OF THE CEILING PRICE AS HAVING BEEN QUOTED AT SUCH CEILING PRICE, PROVIDED BIDDERS ARE CLEARLY SO ADVISED IN THE INVITATION FOR BIDS.

COMPTROLLER GENERAL WARREN TO THE FEDERAL SECURITY ADMINISTRATOR, NOVEMBER 19, 1942:

I HAVE YOUR LETTER OF NOVEMBER 7, 1942, AS FOLLOWS:

ON FEBRUARY 11, 1942, THE SURGEON GENERAL OF THE PUBLIC HEALTH SERVICE INSTRUCTED THE MEDICAL OFFICERS IN CHARGE OF THE MARINE HOSPITALS TO SOLICIT BIDS FOR THE SALE OF CERTAIN WASTE MATERIALS OF THESE HOSPITALS DURING THE FISCAL YEAR ENDING JUNE 30, 1943, IN ACCORDANCE WITH SECTION 3709 OF THE REVISED STATUTES. IN RESPONSE TO SUCH SOLICITATIONS BIDS WERE RECEIVED BY THE VARIOUS HOSPITALS AT VARIOUS TIMES DURING FEBRUARY, MARCH, AND APRIL 1942. SEE ATTACHED STATEMENTS AND CERTIFICATES OF AWARD.

AFTER THE BIDS WERE RECEIVED BUT BEFORE ANY CONTRACTS WERE ENTERED INTO, CERTAIN OF THE COMMODITIES IN QUESTION BECAME SUBJECT TO THE EMERGENCY PRICE CONTROL ACT OF 1942, AND REGULATIONS PROMULGATED THEREUNDER. THE GENERAL MAXIMUM PRICE REGULATION (7 F.R. 3153, 3330, 3666, 3990, 3991, 4339, 4487, 4659, 4738, 5027, 5276, 5192, 5365, 5445, 5484, 5565) BECAME EFFECTIVE MAY 18, 1942, AS APPLIED TO RETAIL SALES OF ALL FAT-BEARING AND OIL-BEARING ANIMAL WASTE MATERIALS, SUCH AS GARBAGE, KITCHEN GREASE, BONES, FATS, AND MEAT SCRAPS, WHICH THE REGULATION PROVIDED COULD NOT BE SOLD AT PRICES IN EXCESS OF THE HIGHEST PRICE CHARGED FOR SUCH COMMODITIES DURING MARCH 1941. ON AUGUST 1, 1942, THE BASE PERIOD FOR FIXING THE CEILING PRICES OF SUCH ARTICLES WAS CHANGED FROM MARCH 1941, TO NOVEMBER 1941 ( AMENDMENT NO. 2, SUPPLEMENTARY REGULATION NO. 14, 7 F.R. 6008). FEBRUARY 23, 1942, USED EGG CASES, WHICH ARE AMONG THE COMMODITIES COVERED BY SOME OF THE CONTRACTS, BECAME SUBJECT TO TEMPORARY REGULATION NO. 2, WHICH WAS SUPERSEDED BY MAXIMUM PRICE REGULATION NO. 117, EFFECTIVE APRIL 23, 1942 (7 F.R. 4586). COPIES OF THE ABOVE-MENTIONED REGULATIONS ARE ATTACHED.

IT HAVING BECOME NECESSARY FOR SANITARY REASONS TO PROVIDE FOR THE IMMEDIATE DISPOSITION OF THESE WASTE PRODUCTS, THE EXECUTIVE ASSISTANT TO THE ADMINISTRATOR OF THE FEDERAL SECURITY AGENCY, ON JULY 16, 1942, CONDITIONALLY APPROVED AWARDS TO THE HIGHEST QUALIFIED BIDDER AT EACH OF THE VARIOUS HOSPITALS, PENDING DETERMINATION BY THE OFFICE OF PRICE ADMINISTRATION AS TO THE APPLICABILITY OF ITS REGULATORY MEASURES TO THE CONTRACTS IN QUESTION. SEE ATTACHED COPY OF LETTER DATED JULY 6, 1942, FROM ACTING SURGEON GENERAL TO THE ADMINISTRATOR BEARING APPROVAL OF EXECUTIVE ASSISTANT TO THE ADMINISTRATOR.

THEREAFTER THE FOLLOWING CHECKS AND ACCOMPANYING SCHEDULES OF COLLECTIONS WERE RECEIVED COVERING PAYMENTS BY CONTRACTORS FOR THE PURCHASE OF WASTE MATERIALS FROM CERTAIN OF THE OSPITALS:

UNITED STATES MARINE HOSPITAL, CHICAGO, ILLINOIS CHECK NO. 426430 DATED AUGUST 5, 1942, IN AMOUNT OF $16.22 FROM DARLING AND COMPANY, CHICAGO, ILLINOIS, FOR 199 POUNDS FAT AT $8.15 CWT.

UNITED STATES MARINE HOSPITAL, CLEVELAND, OHIO CHECK NO. 2341 DATED AUGUST 11, 1942, IN AMOUNT OF $8.02 FROM DARLING AND COMPANY, CLEVELAND, OHIO, FOR 65 POUNDS SUET AT ?07 PER LB. AND 66 POUNDS HAM FAT, ETC., AT ?0525 PER POUND.

UNITED STATES MARINE HOSPITAL, ELLIS ISLAND, NEW YORK CHECK NO. 61031 IN AMOUNT OF $9.00 FROM QUAKER SOAP COMPANY, SECAUCUS, N.J., FOR 150 POUNDS GREASE (WASTE FATS) AT ?06 PER POUND. THESE CHECKS AND SCHEDULES ARE ATTACHED. SINCE THE CHECKS WERE IN PAYMENT OF COMMODITIES PURCHASED FROM THE HOSPITALS AT RATES IN EXCESS OF THOSE SET BY THE REGULATIONS REFERRED TO, THE CHECKS HAVE NOT BEEN DEPOSITED WITH THE TREASURER OF THE UNITED STATES.

THE OFFICE OF PRICE ADMINISTRATION HAS EXPRESSED THE INFORMAL OPINION THAT IN ORDER TO COMPLY WITH THE EMERGENCY PRICE CONTROL ACT OF 1942 IT WILL BE NECESSARY FOR THE PUBLIC HEALTH SERVICE EITHER TO REDUCE ITS CONTRACT PRICES TO THE MAXIMUM PRICES PERMITTED BY THE REGULATIONS, OR TO RESCIND THE CONTRACTS AND READVERTISE. SEE ALSO ATTACHED COPIES OF COMMUNICATIONS WITH THE OFFICE OF PRICE ADMINISTRATION.

THERE IS NO ADMINISTRATIVE OBJECTION ON THE PART OF THE PUBLIC HEALTH SERVICE TO FOLLOWING EITHER OF THESE COURSES, BUT IF THE CONTRACT PRICES WERE TO BE REDUCED IN MANY CASES, INCLUDING THOSE OF THE CONTRACTORS WHOSE CHECKS ARE ATTACHED, THE HIGHEST BIDDER WOULD THEREBY BE PERMITTED TO BUY FROM THE GOVERNMENT AT LOWER PRICES THAN THOSE OFFERED BY ONE OR MORE OF THE UNSUCCESSFUL BIDDERS, AND IT IS QUESTIONED WHETHER SUCH A SITUATION IS CONSISTENT WITH SECTION 3709 OF THE REVISED STATUTES. IF THE CONTRACTS WERE TO BE RESCINDED AND NEW BIDS SOLICITED, IT IS ANTICIPATED THAT IDENTICAL BIDS AT THE CEILING PRICES WOULD BE RECEIVED FROM ALL BIDDERS AND THAT SELECTION WOULD HAVE TO BE MADE BY LOT, TO THE POSSIBLE PREJUDICE OF THE PRESENT CONTRACTORS, WHO MAY HAVE CHANGED THEIR POSITIONS UPON A BONA FIDE RELIANCE ON THE ORIGINAL CONTRACTS. OBVIOUSLY, IT WOULD BE SIMPLER ADMINISTRATIVELY TO REDUCE THE CONTRACT PRICES THAN TO READVERTISE.

IT IS ALSO ANTICIPATED THAT OTHER COMMODITIES FOR THE SALE OF WHICH CONTRACTS MAY BE ENTERED INTO UPON COMPETITIVE BIDDING AT A TIME WHEN THEY ARE NOT UNDER PRICE CONTROL MAY THEREAFTER BECOME COVERED BY LATER AMENDMENTS TO THE GENERAL MAXIMUM PRICE REGULATION DURING THE TERM OF THE CONTRACTS. YOUR DECISION IS, THEREFORE, RESPECTFULLY REQUESTED AS TO (1) WHETHER CONTRACT PRICES MAY BE REDUCED BELOW PRICES OFFERED BY UNSUCCESSFUL BIDDERS IN ORDER TO COMPLY WITH PRICE CEILINGS IMPOSED BETWEEN THE TIME OF THE RECEIPT OF BIDS AND THE APPROVAL OF AWARDS, AND (2) WHETHER SIMILAR REDUCTIONS CAN BE MADE WHEN SUCH CEILINGS BECOME OPERATIVE AFTER THE CONTRACTS ARE EXECUTED.

IT WILL BE APPRECIATED IF YOU WILL RETURN THE ATTACHED FILE WHEN IT HAS SERVED YOUR PURPOSE.

UNDER THE PROVISIONS OF SECTION 2 (A) OF THE EMERGENCY PRICE CONTROL ACT OF 1942, APPROVED JANUARY 30, 1942, 56 STAT. 24, THE PRICE ADMINISTRATOR, PROVIDED FOR BY THE ACT, MAY, WHENEVER IN HIS JUDGMENT THE CONDITIONS SPECIFIED IN SAID SECTION OBTAIN, BY REGULATION OR ORDER ESTABLISH SUCH MAXIMUM PRICE OR MAXIMUM PRICES AS IN HIS JUDGMENT WILL BE GENERALLY FAIR AND EQUITABLE AND WILL EFFECTUATE THE PROVISIONS OF SAID ACT. PURSUANT TO THE AUTHORITY CONTAINED THEREIN, THE PRICE ADMINISTRATOR, OFFICE OF PRICE ADMINISTRATION, ISSUED A GENERAL MAXIMUM PRICE REGULATION ON APRIL 28, 1942, PROHIBITING THE DEALING IN COMMODITIES OR SERVICES AT PRICES HIGHER THAN THE MAXIMUM PRICES PERMITTED THEREIN. 7 F.R. 3153.

SECTION 4 (A) OF THE ACT OF JANUARY 30, 1942, 56 STAT. 28, PROVIDES AS FOLLOWS:

IT SHALL BE UNLAWFUL, REGARDLESS OF ANY CONTRACT, AGREEMENT, LEASE, OR OTHER OBLIGATION HERETOFORE OR HEREAFTER ENTERED INTO, FOR ANY PERSON TO SELL OR DELIVER ANY COMMODITY, OR IN THE COURSE OF TRADE OR BUSINESS TO BUY OR RECEIVE ANY COMMODITY, OR TO DEMAND OR RECEIVE ANY RENT FOR ANY DEFENSE-AREA HOUSING ACCOMMODATIONS, OR OTHERWISE TO DO OR OMIT TO DO ANY ACT, IN VIOLATION OF ANY REGULATION OR ORDER UNDER SECTION 2, OR OF ANY PRICE SCHEDULE EFFECTIVE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 206, OR OF ANY REGULATION, ORDER, OR REQUIREMENT UNDER SECTION 202 (B) OR SECTION 205 (F), OR TO OFFER, SOLICIT, ATTEMPT, OR AGREE TO DO ANY OF THE FOREGOING.

THE TERM "PERSON" AS USED IN SAID ACT IS DEFINED IN SECTION 302 (H), 56 STAT. 37, AS FOLLOWS:

THE TERM "PERSON" INCLUDES AN INDIVIDUAL, CORPORATION, PARTNERSHIP,ASSOCIATION, OR ANY OTHER ORGANIZED GROUP OF PERSONS OR LEGAL SUCCESSORS OR REPRESENTATIVE OF ANY OF THE FOREGOING, AND INCLUDES THE UNITED STATES OR ANY AGENCY THEREOF, OR ANY OTHER GOVERNMENT, OR ANY OF ITS POLITICAL SUBDIVISIONS, OR ANY AGENCY OF ANY OF THE FOREGOING: * * *

THE THREE BIDS SUBMITTED WITH YOUR LETTER OFFERING TO PURCHASE FATS, ETC., FROM CERTAIN U.S. MARINE HOSPITALS DURING THE PERIOD JULY 1, 1942, TO JUNE 30, 1943, ARE STATED TO SPECIFY PRICES IN EXCESS OF THE MAXIMUM PRICES ESTABLISHED THEREFOR IN REGULATIONS ISSUED BY THE PRICE ADMINISTRATOR. UNDER THE PROVISIONS OF SECTION 4 (A) OF THE ACT OF JANUARY 30, 1942, SUPRA, IT IS UNLAWFUL FOR A PERSON--- WHICH TERM UNDER SECTION 302 (H), SUPRA, INCLUDES THE UNITED STATES--- TO SELL OR DELIVER, UNDER ANY CONTRACT THERETOFORE OR THEREAFTER ENTERED INTO, ANY COMMODITY AT A PRICE IN EXCESS OF THE MAXIMUM PRICE ESTABLISHED THEREFOR UNDER SAID ACT. SEE DECISION OF MAY 25, 1942, B-25739, 21 COMP. GEN. 1046. CONSEQUENTLY, WITH RESPECT TO THE BID PRICES IN THE INSTANT CASES, STATED TO HAVE BEEN CONDITIONALLY ACCEPTED AT PRICES IN EXCESS OF THE MAXIMUM PRICES ESTABLISHED THEREFOR BY REGULATIONS OF THE PRICE ADMINISTRATOR, SUCH PRICES SHOULD BE REDUCED TO THE MAXIMUM PRICES ESTABLISHED BY THE PRICE ADMINISTRATOR FOR THE COMMODITIES COVERED BY SAID CONTRACTS. ANY OVERPAYMENTS WHICH MAY HAVE BEEN MADE BY THE CONTRACTORS UNDER SAID CONTRACTS BY THE CHECKS TRANSMITTED WITH YOUR LETTER MAY BE CREDITED TO SUBSEQUENT PURCHASES UNDER THE RESPECTIVE CONTRACTS.

WITH RESPECT TO QUESTION (1) OF YOUR LETTER, YOU ARE INFORMED THAT, IN VIEW OF THE PROVISIONS OF SECTION 4 (A) OF THE ACT OF JANUARY 30, 1942, QUOTED ABOVE, IT APPEARS PROPER TO REDUCE A CONTRACT PRICE BELOW THE PRICES OFFERED BY THE UNSUCCESSFUL BIDDERS IN ORDER TO COMPLY WITH THE MAXIMUM PRICES ESTABLISHED BY THE PRICE ADMINISTRATOR BETWEEN THE TIME OF THE RECEIPT OF THE BID AND THE APPROVAL OF THE AWARD.

QUESTION (2) OF YOUR LETTER IS ANSWERED IN THE AFFIRMATIVE ON THE BASIS OF THE REASONS SET FORTH IN THE NEXT TO THE LAST PARAGRAPH ABOVE.

WHEN CONTRACTS ARE SUBMITTED TO THIS OFFICE FOR FILING WHEREIN THE CONTRACT PRICES HAVE BEEN REDUCED TO CONFORM TO THE MAXIMUM PRICES ESTABLISHED BY THE PRICE ADMINISTRATOR, REFERENCE SHOULD BE MADE TO THE REGULATIONS OF THE PRICE ADMINISTRATOR, REDUCING THE MAXIMUM PRICES OF THE COMMODITIES COVERED BY THE CONTRACTS AND, ALSO, TO THIS DECISION.

IT MAY BE ADDED THAT IN VIEW OF THE PROVISIONS OF THE ACT OF JANUARY 30, 1942, SUPRA, THAT IT APPEARS PROPER AND ADVISABLE TO INSERT IN INVITATIONS FOR BIDS FOR THE SALE OF WASTE OR SCRAP MATERIAL AS TO WHICH MAXIMUM PRICES HAVE BEEN ESTABLISHED BY THE PRICE ADMINISTRATOR, A PROVISION CALLING ATTENTION TO THE ACT AND ADVISING PROSPECTIVE BIDDERS THAT BIDS AT PRICES IN EXCESS OF SUCH MAXIMUMS WILL NOT BE CONSIDERED; ALSO, THERE APPEARS NO OBJECTION, INSOFAR AS THIS OFFICE IS CONCERNED, TO CONSIDERING A BID AT A PRICE IN EXCESS OF THE CEILING PRICE AS HAVING BEEN QUOTED AT THE MAXIMUM PRICE, PROVIDED BIDDERS ARE CLEARLY INFORMED IN THE INVITATION TO BID THAT SUCH BID WILL BE SO REGARDED. B-24503, DATED MARCH 19, 1942.