B-380, JANUARY 21, 1939, 18 COMP. GEN. 620

B-380: Jan 21, 1939

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THE LATTER PROVISION IS NOT CONFINED IN ITS APPLICATION TO THE UNITED STATES BECAUSE OF THE PROVISIONS OF THE FORMER. NOR DO THE PROVISIONS OF THE FORMER JUSTIFY THE PURCHASE OF MATERIALS AND SUPPLIES IN EUROPE WITHOUT COMPLIANCE WITH THE ADVERTISING REQUIREMENTS OF SECTION 3709 WHERE THE AMOUNT OF THE PURCHASE IS IN EXCESS OF THE STIPULATED AMOUNT. ARE CONTRACTS OF PURCHASE AND SALE AND NOT CONTRACTS FOR WORK WITHIN THE MEANING OF THAT TERM AS USED IN A LEGISLATIVE PROVISION AUTHORIZING THE CONTRACTING FOR WORK IN THE DISCRETION OF THE ADMINISTRATIVE OFFICERS AND WITHOUT REGARD TO THE REQUIREMENTS OF EXISTING LAWS OR REGULATIONS. IS UNAUTHORIZED. 1939: REFERENCE IS MADE TO YOUR REPLIES OF AUGUST 26.

B-380, JANUARY 21, 1939, 18 COMP. GEN. 620

CONTRACTS - DISCRETIONARY EXPENDITURES - STATUTORY CONSTRUCTION AND LACK OF ADVERTISING - CONTRACTS FOR WORK AND CONTRACTS OF PURCHASE AND SALE DISTINGUISHED THE LEGISLATIVE PROVISIONS "THAT NOTWITHSTANDING THE REQUIREMENTS OF EXISTING LAWS OR REGULATIONS AND UNDER SUCH TERMS AND CONDITIONS AS THE COMMISSION MAY IN ITS DISCRETION DEEM NECESSARY AND PROPER, THE COMMISSION MAY CONTRACT FOR WORK IN EUROPE, * * *: PROVIDED FURTHER, THAT THE COMMISSION MAY PURCHASE MATERIALS AND SUPPLIES WITHOUT REGARD TO SECTION 3709 OF THE REVISED STATUTES * * * WHEN THE AGGREGATE AMOUNT INVOLVED DOES NOT EXCEED $500,: " RELATE TO DISTINCT TYPES OF TRANSACTIONS, AND THE LATTER PROVISION IS NOT CONFINED IN ITS APPLICATION TO THE UNITED STATES BECAUSE OF THE PROVISIONS OF THE FORMER, NOR DO THE PROVISIONS OF THE FORMER JUSTIFY THE PURCHASE OF MATERIALS AND SUPPLIES IN EUROPE WITHOUT COMPLIANCE WITH THE ADVERTISING REQUIREMENTS OF SECTION 3709 WHERE THE AMOUNT OF THE PURCHASE IS IN EXCESS OF THE STIPULATED AMOUNT. CONTRACTS FOR FURNITURE, AND THE FURNISHING OF STONE FOR AN AMERICAN MILITARY CEMETERY IN EUROPE, INVOLVING ONLY PAYMENT OF THE CONTRACT PRICE UPON DELIVERY AND ACCEPTANCE OF THE COMPLETED PRODUCT WITH NO DIRECT CONCERN ON THE PART OF THE UNITED STATES AS TO THE LABOR NECESSARY FOR THE PERFORMANCE OF THE CONTRACT OR THE TIME AND MANNER OF ITS PERFORMANCE, ARE CONTRACTS OF PURCHASE AND SALE AND NOT CONTRACTS FOR WORK WITHIN THE MEANING OF THAT TERM AS USED IN A LEGISLATIVE PROVISION AUTHORIZING THE CONTRACTING FOR WORK IN THE DISCRETION OF THE ADMINISTRATIVE OFFICERS AND WITHOUT REGARD TO THE REQUIREMENTS OF EXISTING LAWS OR REGULATIONS, AND THE CONTRACTING FOR SUCH SUPPLIES WITHOUT ADVERTISING, WHERE NOT OTHERWISE EXCEPTED, IS UNAUTHORIZED.

ACTING COMPTROLLER GENERAL ELLIOTT TO MARK M. BOATNER, SPECIAL DISBURSING AGENT, AMERICAN BATTLE MONUMENTS COMMISSION, JANUARY 21, 1939:

REFERENCE IS MADE TO YOUR REPLIES OF AUGUST 26, 1938, TO NOTICES OF EXCEPTIONS TAKEN IN THE AUDIT OF YOUR ACCOUNTS FOR SEPTEMBER 1935, WITH RESPECT TO PAYMENTS MADE ON VOUCHER NO. 227, TO STUART AND TURNER, LONDON, ENGLAND, FOR FURNITURE SUPPLIED TO THE AMERICAN BATTLE MONUMENTS COMMISSION UNDER CONTRACT NO. ABM-P-282, DATED MAY 15, 1935; AND ON VOUCHER NO. 226, TO ANCIENS ETABLISSEMENTS, CIVET, POMMIER AND CIE.,PARIS, FRANCE, FOR STONE FURNISHED FOR THE COMMISSION.

BOTH OF THE ABOVE-CITED CONTRACTS WERE EXECUTED WITHOUT ADVERTISING FOR PROPOSALS PRIOR TO MAKING AWARD OF THE CONTRACTS. PAYMENTS UNDER BOTH CONTRACTS WERE MADE FROM THE APPROPRIATION ,OX906--- AMERICAN BATTLE MONUMENTS COMMISSION," AND EXCEPTIONS THERETO WERE TAKEN IN THE AUDIT FOR THE REASON THAT THE ACT OF JUNE 16, 1933, 48 STAT. 285, GOVERNING THE CONDITIONS FOR EXPENDITURES FROM THAT APPROPRIATION, DOES NOT AUTHORIZE PAYMENT FOR PURCHASES MADE IN DISREGARD OF THE ADVERTISING REQUIREMENTS OF SECTION 3709, REVISED STATUTES, WHERE THE AMOUNT INVOLVED EXCEEDS $500. THE PERTINENT PROVISIONS OF THE CITED ACT ARE AS FOLLOWS:

* * * PROVIDED, THAT NOTWITHSTANDING THE REQUIREMENTS OF EXISTING LAWS OR REGULATIONS AND UNDER SUCH TERMS AND CONDITIONS AS THE COMMISSION MAY IN ITS DISCRETION DEEM NECESSARY AND PROPER, THE COMMISSION MAY CONTRACT FOR WORK IN EUROPE, AND ENGAGE, BY CONTRACT OR OTHERWISE, THE SERVICES OF ARCHITECTS, FIRMS OF ARCHITECTS, AND OTHER TECHNICAL AND PROFESSIONAL PERSONNEL: PROVIDED FURTHER, THAT THE COMMISSION MAY PURCHASE MATERIALS AND SUPPLIES WITHOUT REGARD TO SECTION 3709 OF THE REVISED STATUTES (U.S.C., TITLE 41, SEC. 5) WHEN THE AGGREGATE AMOUNT INVOLVED DOES NOT EXCEED $500. * * *

IN URGING THAT CREDIT BE ALLOWED FOR THE PAYMENTS HERE IN QUESTION, YOU SUGGEST THAT SUCH EXPENDITURES ARE AUTHORIZED BY THE FIRST PROVISO QUOTED ABOVE, ON THE THEORY THAT THE COMMISSION IS AUTHORIZED TO CONTRACT IN EUROPE WITHOUT REGARD TO THE REQUIREMENTS OF SECTION 3709, REVISED STATUTES, RELATIVE TO ADVERTISING FOR PROPOSALS. IT IS FURTHER SUGGESTED IN YOUR REPLIES TO THE EXCEPTIONS THAT THE SECOND PROVISO QUOTED ABOVE SHOULD BE REGARDED AS RELATING ONLY TO PURCHASES OF SUPPLIES AND MATERIALS IN THE UNITED STATES, RATHER THAN AS A LIMITATION UPON THE AMOUNTS OF CONTRACTS WHICH MAY BE MADE BY THE COMMISSION IN EUROPE, AND YOU HAVE SOUGHT TO ESTABLISH THESE POINTS BY REFERENCE TO THE LEGISLATIVE AND ADMINISTRATIVE HISTORY OF THE TWO PROVISIONS.

THE LANGUAGE OF EACH PROVISION IS CLEAR AND UNAMBIGUOUS, AND THERE APPEARS TO BE NO NECESSITY FOR AN INTERPRETATION WHICH WOULD GIVE TO EITHER PROVISION ANY MEANING OTHER THAN THAT WHICH MAY BE GATHERED FROM THE ACT ITSELF. EACH PROVISO RELATES TO AN ENTIRELY DISTINCT TYPE OF TRANSACTION AND THERE APPEARS TO BE NO CONFLICT BETWEEN THE TWO OF THEM. THE FIRST PROVISO, WHICH WAS ORIGINALLY ENACTED IN THE ACT OF APRIL 22, 1926, 44 STAT. 307, RELATES (SO FAR AS IS HERE MATERIAL) TO CONTRACTS FOR WORK IN EUROPE; THE SECOND PROVISO, WHICH APPEARED ORIGINALLY IN THE ACT OF FEBRUARY 20, 1929, 45 STAT. 1232, RELATES TO THE PURCHASE OF MATERIALS AND SUPPLIES, WITHOUT LIMITATION AS TO THE PLACE OF PURCHASE. BOTH PROVISIONS WERE REENACTED IN THE ACT OF JUNE 16, 1933, SUPRA, WITHOUT MODIFICATION.

UNDER THE ABOVE-CITED CONTRACT WITH STUART AND TURNER, THE CONTRACTOR AGREED TO SUPPLY ALL FURNITURE NECESSARY FOR THE RECEPTION ROOM AND HALL AT THE AMERICAN MILITARY CEMETERY, BONY, FRANCE. THE FURNITURE WAS REQUIRED TO BE IN ACCORDANCE WITH SKETCHES, PHOTOGRAPHS, AND SAMPLES SUBMITTED WITH THE FIRM'S PROPOSAL OF MAY 8, 1935, AND WAS TO BE DELIVERED TO THE COMMISSION AT PARIS, FRANCE. THE CONTRACT PROVIDES FOR PAYMENT IN THE LUMP SUM OF $1,159.50 UPON RECEIPT AND APPROVAL OF THE FURNITURE BY A MEMBER OF THE COMMISSION.

THE CONTRACT FOR THE FURNITURE, NO. ABM-P-282, MAY NOT BE REGARDED AS COMING WITHIN THE TERMS OF THE FIRST PROVISO, AUTHORIZING THE COMMISSION TO CONTRACT FOR WORK IN EUROPE "NOTWITHSTANDING THE REQUIREMENTS OF EXISTING LAWS OR REGULATIONS AND UNDER SUCH TERMS AND CONDITIONS AS THE COMMISSION MAY IN ITS DISCRETION DEEM NECESSARY AND PROPER," BECAUSE THE CONTRACT IS NOT ONE FOR ,WORK.' WHILE THE SUPPLYING OF THE FURNITURE NECESSARILY INVOLVED SOME WORK, IN THE SENSE OF LABOR, THE CONTRACT DID NOT OBLIGATE THE UNITED STATES TO PAY DIRECTLY FOR SUCH WORK OR LABOR; BUT PURPORTED TO OBLIGATE THE GOVERNMENT FOR THE PURCHASE PRICE STATED IN THE CONTRACT ONLY IF AND WHEN THE FURNITURE IN ITS COMPLETED FROM WAS DELIVERED TO AND ACCEPTED BY A REPRESENTATIVE OF THE COMMISSION. THE GOVERNMENT ACQUIRED NO INTEREST IN THE FURNITURE UNTIL IT WAS COMPLETED AND DELIVERED TO THE COMMISSION AT PARIS, AND UNTIL SUCH COMPLETION AND DELIVERY THE ONLY LIABILITY INCURRED BY THE GOVERNMENT WAS A CONTINGENT ONE, DEPENDING UPON THE ULTIMATE TENDER BY THE CONTRACTOR OF FURNITURE IN ACCORDANCE WITH THE CONTRACT TERMS.

THE COMMISSION HAD NO DIRECT CONCERN WITH THE LABOR NECESSARY FOR THE MANUFACTURE OF THE FURNITURE, AND NO CONTROL OVER THE TIME OR MANNER OF ITS PERFORMANCE. THE CONTRACTING FIRM WAS NOT OBLIGATED TO PERFORM "WORK" FOR THE GOVERNMENT, BUT ONLY TO SUPPLY FURNITURE. IT COULD HAVE PROCURED SUCH FURNITURE IN THE OPEN MARKET, WITHOUT REGARD TO THE TIME OR PLACE OF ITS MANUFACTURE, OR IT COULD HAVE MANUFACTURED SUCH FURNITURE IN ITS OWN SHOP, OR IT COULD HAVE SECURED THE PERFORMANCE OF THE NECESSARY LABOR INVOLVED BY SUBCONTRACT WITH OTHER PERSONS OR FIRMS, IN EUROPE OR ELSEWHERE--- THE ONLY THING REQUIRED OF THE CONTRACTOR WAS THAT IT TENDER TO A REPRESENTATIVE OF THE COMMISSION AT PARIS A SUPPLY OF FURNITURE CONFORMING TO THE SKETCHES, PHOTOGRAPHS, AND SAMPLES SUBMITTED WITH ITS PROPOSAL.

THE FOREGOING CLEARLY DEMONSTRATES THAT THE TRANSACTION WAS NOT A CONTRACT FOR WORK, BUT A CONTRACT FOR PURCHASE AND SALE. AS SUCH, IT IS NOT, BY THE TERMS OF THE ADVERTISING REQUIREMENT OF SECTION 3709, REVISED STATUTES. NOR DOES THE SECOND PROVISO QUOTED ABOVE EXEMPT THE TRANSACTION FROM THE OPERATION OF SAID STATUTE, BECAUSE THE AMOUNT HERE INVOLVED EXCEEDS $500. INASMUCH AS NEITHER PROVISION OF THE ACT IN QUESTION APPEARS TO JUSTIFY THE FAILURE TO ADVERTISE FOR PROPOSALS FOR SUPPLYING THE FURNITURE, THE CONTRACT MUST BE REGARDED AS CONTRAVENING THE CITED SECTION OF THE REVISED STATUTES, AND CONSEQUENTLY CREDIT MAY NOT BE ALLOWED FOR THE PAYMENT OF $1,159.50 MADE THEREUNDER TO STUART AND TURNER ON VOUCHER NO. 227, SUPRA.

ATTENTION IS INVITED TO THE FACT THAT A SIMILAR CONTRACT, NO. ABM-P 275, EXECUTED DECEMBER 3, 1934, WITH M. HIRSCH AND SONS, PARIS, FRANCE, FOR SUPPLYING FURNITURE FOR THE COMMISSION, WAS CONSIDERED IN LETTER OF THIS OFFICE, A-60312, ADDRESSED TO THE CHAIRMAN OF THE COMMISSION UNDER DATE OF MARCH 11, 1935. IT WAS THERE POINTED OUT THAT THE ACT OF JUNE 16, 1933, DOES NOT AUTHORIZE THE COMMISSION TO DISREGARD THE REQUIREMENTS OF SECTION 3709, REVISED STATUTES, IN TRANSACTIONS OF THIS TYPE. IN OFFICE LETTER OF APRIL 6, 1935, A 60312, THE ATTENTION OF THE COMMISSION WAS SPECIFICALLY INVITED TO THE FACT THAT THE MATERIAL PORTION OF THE ACT OF JUNE 16, 1933 (INSOFAR AS CONTRACTS OF THIS TYPE ARE CONCERNED), IS THE SECOND PROVISO QUOTED ABOVE, WHICH PERMITS PURCHASE OF MATERIALSAND SUPPLIES WITHOUT REGARD TO SECTION 3709, REVISED STATUTES, ONLY WHEN THE AMOUNT INVOLVED DOES NOT EXCEED $500. IT IS NOTED THAT THE PROPOSAL OF STUART AND TURNER, DATED MAY 8, 1935, WAS ACCEPTED ON MAY 15, 1935, AND THAT THE CONTRACT RESULTING THEREFROM (NO. ABM-P-282, SUPRA) WAS APPROVED BY THE CHAIRMAN OF THE COMMISSION ON JULY 16, 1935. THUS EACH MAJOR STEP IN THE TRANSACTION WAS TAKEN AFTER THE COMMISSION HAD HAD AMPLE OPPORTUNITY TO TAKE COGNIZANCE OF THE MATTERS SET FORTH IN THE FORMER COMPTROLLER GENERAL'S LETTERS OF MARCH 11 AND APRIL 6, 1935.

THE PAYMENT OF $1,340.41 ON VOUCHER NO. 226, SUPRA, IS SUBJECT TO THE SAME CONSIDERATIONS AFFECTING THE PAYMENT FOR FURNITURE UNDER THE ABOVE- DESCRIBED CONTRACT WITH STUART AND TURNER. BY THE TERMS OF THE CONTRACT OF JUNE 10, 1935, NO. ABM-P-283, WITH ANCIENS ESTABLISSEMENTS, CIVET, POMMIER AND CIE, THE CONTRACTOR AGREED TO FURNISH CERTAIN STONE FOR THE AMERICAN MILITARY CEMETERY AT THIAUCOURT, FRANCE. THE CONTRACT PROVIDED FOR PAYMENT OF A LUMP SUM PRICE OF 20,200 FRANCS, WHICH WAS TO BE PAID ONLY AFTER TOTAL DELIVERY OF THE STONE "IN CAR ON SITE," AND AFTER ACCEPTANCE BY A QUALIFIED REPRESENTATIVE OF THE COMMISSION. NOTHING APPEARS IN THE RECORD TO JUSTIFY ANY CONCLUSION OTHER THAN THAT THIS CONTRACT WAS ONE OF PURCHASE AND SALE, RATHER THAN A CONTRACT FOR "WORK" IN EUROPE. INASMUCH AS THE AMOUNT INVOLVED EXCEEDS $500, CREDIT MUST BE DENIED FOR THE PAYMENT OF $1,340.41 MADE UNDER THIS CONTRACT ON VOUCHER NO. 226, FOR THE REASONS HEREINBEFORE SET FORTH WITH REFERENCE TO VOUCHER NO. 227.