B-56265, MAY 10, 1950, 29 COMP. GEN. 451

B-56265: May 10, 1950

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CONTRACTS - VEHICLE MAINTENANCE - FLAT-RATE TYPE - OPTION TO RENEW WHILE THE PERIOD COVERED BY POST OFFICE DEPARTMENT CONTRACTS FOR THE STORAGE AND SERVICING OF GOVERNMENT-OWNED TRUCKS IS LIMITED BY SECTIONS 3732 AND 3679. THIS OFFICE WOULD NOT OBJECT TO THE POST OFFICE DEPARTMENT CONTRACTING ON A FLAT-RATE MAINTENANCE BASIS PROVIDED IT IS ADMINISTRATIVELY DETERMINED THAT SUCH TYPE OF CONTRACTING IS IN THE BEST INTERESTS OF THE GOVERNMENT. 1950: REFERENCE IS MADE TO YOUR LETTER OF MARCH 23. IT IS STATED IN YOUR LETTER THAT THE PRESENT SERVICING AND STORING CONTRACTS. - WHICH ARE ON AN ITEM-BY-ITEM BASIS. WHICH ARE OF 12 MONTHS' DURATION TERMINATING AT THE END OF THE FISCAL YEAR - ARE OBJECTIONABLE FROM AN ADMINISTRATIVE STANDPOINT BECAUSE OF THE EXHAUSTIVE PREAUDIT REQUIRED OF CONTRACTORS' BILLS AND THE ADVERSE EFFECT THAT SUCH SHORT-TERM CONTRACTS HAVE ON MOTOR VEHICLE OPERATIONS.

B-56265, MAY 10, 1950, 29 COMP. GEN. 451

CONTRACTS - VEHICLE MAINTENANCE - FLAT-RATE TYPE - OPTION TO RENEW WHILE THE PERIOD COVERED BY POST OFFICE DEPARTMENT CONTRACTS FOR THE STORAGE AND SERVICING OF GOVERNMENT-OWNED TRUCKS IS LIMITED BY SECTIONS 3732 AND 3679, REVISED STATUTES, TO THE FISCAL YEAR CURRENT AT THE TIME OF THEIR EXECUTION, THERE WOULD BE NO OBJECTION TO THE INCLUSION IN SUCH CONTRACTS OF A PROVISION RESERVING TO THE GOVERNMENT AN OPTION TO RENEW FROM YEAR TO YEAR. IN VIEW OF THE POST OFFICE DEPARTMENT BEING IN A POSITION TO MAKE ACCURATE DETERMINATIONS AS TO THE FAIRNESS AND JUSTICE OF RATES SPECIFIED IN CONTRACTS FOR STORAGE AND SERVICING OF GOVERNMENT-OWNED TRUCKS AND THERE BEING NO STATUTORY PROHIBITION AGAINST FLAT-RATE MAINTENANCE CONTRACTS, THIS OFFICE WOULD NOT OBJECT TO THE POST OFFICE DEPARTMENT CONTRACTING ON A FLAT-RATE MAINTENANCE BASIS PROVIDED IT IS ADMINISTRATIVELY DETERMINED THAT SUCH TYPE OF CONTRACTING IS IN THE BEST INTERESTS OF THE GOVERNMENT.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, MAY 10, 1950:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 23, 1950, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER PROPOSED "GUARANTEED MAINTENANCE" CONTRACTS FOR THE SERVING AND STORING OF GOVERNMENT-OWNED HIGHWAY POST OFFICE VEHICLES LEGALLY MAY BE ENTERED INTO FOR SPECIFIED PERIODS NOT EXCEEDING FOUR YEARS, AND AT A FLAT CHARGE PER MILE OF OPERATION.

IT IS STATED IN YOUR LETTER THAT THE PRESENT SERVICING AND STORING CONTRACTS--- WHICH ARE ON AN ITEM-BY-ITEM BASIS, WITH A FLAT RATE FOR EACH ITEM, AND WHICH ARE OF 12 MONTHS' DURATION TERMINATING AT THE END OF THE FISCAL YEAR - ARE OBJECTIONABLE FROM AN ADMINISTRATIVE STANDPOINT BECAUSE OF THE EXHAUSTIVE PREAUDIT REQUIRED OF CONTRACTORS' BILLS AND THE ADVERSE EFFECT THAT SUCH SHORT-TERM CONTRACTS HAVE ON MOTOR VEHICLE OPERATIONS. THE TERM "GUARANTEED MAINTENANCE" IS DEFINED IN YOUR LETTER TO MEAN THAT THE CONTRACTOR WOULD GUARANTEE TO MAINTAIN THE VEHICLES IN FIRST-CLASS OPERATING CONDITION UNDER A CONTRACT WHICH WOULD COVER THE FURNISHING OF MECHANICAL LABOR, LUBRICATION, WASHING OF VEHICLES, CLEANING, TIRES AND TIRE SERVICE, OILS AND GREASES, STORAGE, GASOLINE, AND REPLACEMENT PARTS, OR ANY COMBINATION OF THOSE SERVICES, AT THE DISCRETION OF THE POST OFFICE DEPARTMENT. REPAIRS DUE TO COLLISION DAMAGE WOULD BE COVERED BY A FLAT HOURLY RATE FOR LABOR, PLUS REPLACEMENT PARTS IN ACCORDANCE WITH GOVERNMENT CONTRACTS IN EFFECT.

SECTION 1 OF THE ACT OF JULY 11, 1940, 54 STAT. 756, 39 U.S.C. 505, PROVIDES AS FOLLOWS:

WHEREVER IT IS FOUND THAT ADEQUATE RAILROAD FACILITIES ARE NOT AVAILABLE, THE POSTMASTER GENERAL IS AUTHORIZED TO CONTRACT FOR CARRYING THE MAILS AND RAILWAY POSTAL CLERKS ON ROUTES BETWEEN POINTS WHERE, IN HIS JUDGMENT, THE CONDITIONS JUSTIFY THE OPERATION OF SUCH SERVICE IN MOTOR VEHICLES ESPECIALLY DESIGNED AND EQUIPPED FOR THE DISTRIBUTION OF MAIL EN ROUTE: PROVIDED, THAT SUCH VEHICLES SHALL BE CONSTRUCTED, FITTED UP, MAINTAINED, AND OPERATED IN ACCORDANCE WITH SUCH SPECIFICATIONS, RULES, AND REGULATIONS AS HE MAY PRESCRIBE: PROVIDED, FURTHER, THAT THE POSTMASTER GENERAL IS AUTHORIZED, WITHIN HIS DISCRETION, TO TRANSPORT AND PROVIDE FOR THE DISTRIBUTION OF MAILS IN GOVERNMENT-OWNED MOTOR VEHICLES ON SUCH ROUTES BETWEEN POINTS WHERE IN HIS JUDGMENT THE CONDITIONS JUSTIFY THE OPERATION OF SUCH SERVICE: PROVIDED FURTHER, THAT ALL LAWS AND REGULATIONS GOVERNING STAR ROUTE SERVICE, NOT IN CONFLICT WITH SECTIONS 505-508 OF THIS TITLE, SHALL BE APPLICABLE TO CONTRACTS MADE UNDER THE AUTHORITY OF SAID SECTIONS: AND PROVIDED FURTHER, THAT NO CONTRACT SHALL BE AWARDED FOR A PERIOD OF LESS THAN TWO YEARS NOR IN EXCESS OF FOUR YEARS, AND THAT PAYMENT FOR SUCH SERVICE SHALL BE FROM THE APPROPRIATIONS FOR INLAND TRANSPORTATION BY STAR ROUTES.

IT IS CONTENDED THAT THE LANGUAGE CONTAINED IN THE FIRST PROVISO OF THE ABOVE-QUOTED STATUTE CONFERS AMPLE AUTHORITY FOR THE NEGOTIATION OF "GUARANTEED MAINTENANCE" CONTRACTS OF UP TO FOUR YEARS' DURATION. THE NATURAL AND APPROPRIATE PURPOSE OF SUCH A PROVISO, HOWEVER, IS TO LIMIT OR MODIFY THAT PART OF THE STATUTE WHICH IMMEDIATELY PRECEDES IT AND, GENERALLY, SHOULD BE CONSTRUED WITH REFERENCE TO THE PRECEDING CLAUSE OR PROVISION. THE PART OF THE INSTANT STATUTE WHICH IMMEDIATELY PRECEDES THE PROVISO IN QUESTION HAS REFERENCE TO THE OPERATION OF THE HIGHWAY POST OFFICE SERVICE IN PRIVATE MOTOR VEHICLES OPERATED UNDER CONTRACTS FOR CARRYING THE MAILS. SINCE GOVERNMENT-OWNED, AS DISTINGUISHED FROM CONTRACTOR-OWNED, MOTOR VEHICLES ARE INVOLVED HERE, IT IS NOT APPARENT HOW SUCH PROVISO PROPERLY MAY BE CONSTRUED AS AUTHORITY FOR THE MAINTENANCE OF GOVERNMENT-OWNED MOTOR VEHICLES. ALSO, IT IS APPARENT THAT THE SPECIAL AUTHORITY FOR THE EXECUTION OF CONTRACTS OF TWO TO FOUR YEARS' DURATION CONFERRED BY SECTION 1 OF THE SAID ACT OF JULY 11, 1940, IS LIMITED IN ITS APPLICATION TO CONTRACTS FOR CARRYING THE MAILS. HENCE, THE CONCLUSION IS REQUIRED THAT CONTRACTS FOR MAINTENANCE OF GOVERNMENT-OWNED VEHICLES FALL SQUARELY WITHIN THE GENERAL PROHIBITION CONTAINED IN SECTIONS 3732 AND 3679, REVISED STATUTES, AS AMENDED, AGAINST INVOLVING THE GOVERNMENT IN ANY CONTRACT BEYOND THE EXTENT OF THE AVAILABILITY OF EXISTING APPROPRIATIONS. 28 COMP. GEN. 553. ON THE OTHER HAND, WHILE THE PERIOD COVERED BY THE CONTEMPLATED CONTRACTS WOULD HAVE TO BE LIMITED TO THE FISCAL YEAR CURRENT AT THE TIME OF EXECUTION OF THE AGREEMENTS, THERE WOULD BE NO LEGAL OBJECTION TO INCLUDING AN APPROPRIATE PROVISION IN THE CONTRACTS RESERVING TO THE GOVERNMENT AN OPTION TO RENEW THE SAME FROM YEAR TO YEAR--- NOT TO EXCEED FOUR YEARS--- ON THE BASIS SPECIFIED IN THE AGREEMENTS. SEE 29 COMP. GEN. 91.

WITH RESPECT TO THE QUESTION AS TO THE LEGAL VALIDITY OF GUARANTEED MAINTENANCE CONTRACTS PROVIDING FOR A FLAT CHARGE PER MILE OF OPERATION, YOU STATE IN YOUR LETTER THAT, ON THE BASIS OF SERVICING CONTRACTS HERETOFORE ENTERED INTO BY YOUR DEPARTMENT WHICH CONSTITUTE A TRUE REFLECTION OF WAGE SCALES AND OTHER COST FACTORS IN ALL SECTIONS OF THE COUNTRY AND WHICH WOULD BE USED AS A ,YARDSTICK," YOUR DEPARTMENT WOULD BE IN A POSITION TO MAKE ACCURATE DETERMINATIONS AS TO WHETHER THE RATES SPECIFIED IN THE CONTEMPLATED CONTRACTS WERE FAIR AND JUST IN RELATION TO THE SERVICES PERFORMED. ACCORDINGLY, AND SINCE THERE APPEARS TO BE NO STATUTORY PROHIBITION AGAINST FLAT-RATE MAINTENANCE CONTRACTS AS SUCH, THIS OFFICE WOULD NOT OBJECT TO THE EXECUTION OF CONTRACTS OF THAT TYPE IF IT BE ADMINISTRATIVELY DETERMINED THAT SUCH TYPE OF CONSTRUCTING IS IN THE BEST INTERESTS OF THE GOVERNMENT. ALSO, THERE IS PERCEIVED NO OBJECTION TO INCLUDING, AT THE DISCRETION OF YOUR DEPARTMENT, ANY OR ALL OF THE ABOVE MENTIONED SERVICES.