B-78175, SEP 16, 1948

B-78175: Sep 16, 1948

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PRESENTING FOR DECISION CERTAIN QUESTIONS WHICH HAVE ARISEN IN CONNECTION WITH CONTRACTS FOR CARRYING MAILS ON STAR ROUTES BY REASON OF THE ENACTMENT OF PUBLIC LAW 669. OF EXISTING FACTS OUTLINED IN SAID LETTER SUBSTANTIALLY AS FOLLOWS: IT IS STATED THAT THE UNITED STATES IS DIVIDED INTO FOUR CONTRACT SECTIONS AND THAT CONTRACTS ARE AWARDED FOR TERMS OF FOUR YEARS. GENERAL ADVERTISEMENT WAS ISSUED DECEMBER 16. A JOINT RESOLUTION WAS ENACTED BY THE CONGRESS AND APPROVED BY THE PRESIDENT READING AS FOLLOWS: "RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES OF THE UNITED STATES OF AMERICA IN CONGRESS ASSEMBLED. THAT THE POSTMASTER GENERAL IS AUTHORIZED AND DIRECTED TO WITHHOLD THE AWARDING OF STAR ROUTE CONTRACTS FOR WHICH BIDS HAVE BEEN RECEIVED IN THE SECOND CONTRACT SECTION FOR A PERIOD OF SIXTY DAYS AFTER MARCH 30.

B-78175, SEP 16, 1948

PRECIS-UNAVAILABLE

THE HONORABLE, THE POSTMASTER GENERAL, MR. DONALDSON:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF JULY 8, 1948, PRESENTING FOR DECISION CERTAIN QUESTIONS WHICH HAVE ARISEN IN CONNECTION WITH CONTRACTS FOR CARRYING MAILS ON STAR ROUTES BY REASON OF THE ENACTMENT OF PUBLIC LAW 669, APPROVED JUNE 19, 1948, AND OF EXISTING FACTS OUTLINED IN SAID LETTER SUBSTANTIALLY AS FOLLOWS:

IT IS STATED THAT THE UNITED STATES IS DIVIDED INTO FOUR CONTRACT SECTIONS AND THAT CONTRACTS ARE AWARDED FOR TERMS OF FOUR YEARS. GENERAL ADVERTISEMENT WAS ISSUED DECEMBER 16, 1947, INVITING PROPOSALS FOR CARRYING THE MAILS OF THE UNITED STATES ON STAR ROUTES IN THE SECOND CONTRACT SECTION FROM JULY 1, 1948, TO JUNE 30, 1952, AND THE ADVERTISEMENT PROVIDED THAT AWARDS OF CONTRACTS WOULD BE ANNOUNCED ON OR BEFORE APRIL 6, 1948. HOWEVER, A JOINT RESOLUTION WAS ENACTED BY THE CONGRESS AND APPROVED BY THE PRESIDENT READING AS FOLLOWS:

"RESOLVED BY THE SENATE AND HOUSE OF REPRESENTATIVES OF THE UNITED STATES OF AMERICA IN CONGRESS ASSEMBLED, THAT THE POSTMASTER GENERAL IS AUTHORIZED AND DIRECTED TO WITHHOLD THE AWARDING OF STAR ROUTE CONTRACTS FOR WHICH BIDS HAVE BEEN RECEIVED IN THE SECOND CONTRACT SECTION FOR A PERIOD OF SIXTY DAYS AFTER MARCH 30, 1948."

IT IS POINTED OUT THAT THE PURPOSE OF THE JOINT RESOLUTION WAS TO DEFER AWARDING CONTRACTS IN THE SECOND CONTRACT SECTION IN ORDER THAT THE CONTRACTORS IN THAT SECTION MIGHT DERIVE BENEFITS FROM ANY NEW LEGISLATION THAT MIGHT BE ENACTED. THEREAFTER, PUBLIC LAW 669 WAS ENACTED BY THE CONGRESS AND APPROVED BY THE PRESIDENT JUNE 19, 1948, READING AS FOLLOWS:

"THE POSTMASTER GENERAL MAY, IN HIS DISCRETION AND IN THE INTEREST OF THE POSTAL SERVICE, NOTWITHSTANDING THE PROVISIONS OF SECTION 3949 OF THE REVISED STATUTES, AS AMENDED (U.S.C., 1940 EDITION, TITLE 39, SEC. 429), BY MUTUAL AGREEMENT WITH THE HOLDER OF ANY STAR ROUTE CONTRACT, RENEW SUCH CONTRACT AT THE RATE PREVAILING AT THE END OF THE CONTRACT TERM, FOR ADDITIONAL TERMS OF FOUR YEARS WITH SUCH BOND AS MAY BE REQUIRED BY THE POSTMASTER GENERAL. ANY SUCH CONTRACT MAY BE TERMINATED AT THE END OF ANY FOUR-YEAR TERM AT THE OPTION OF THE POSTMASTER GENERAL OR THE CONTRACTOR OR TERMINATED AT ANY TIME BY OPERATION OF ANY EXISTING LAW.

"THE POSTMASTER GENERAL MAY, IN HIS DISCRETION AND UNDER SUCH REGULATIONS AS HE MAY PRESCRIBE, WITH THE CONSENT OF THE CONTRACTOR, AND WITHOUT REGARD TO THE PROVISIONS OF SECTIONS 3958 AND 3961 OF THE REVISED STATUTES, AS AMENDED (U.S.C. 1940 EDITION, TITLE 39, SECS. 438 AND 441), READJUST THE COMPENSATION OF A STAR ROUTE CONTRACTOR FOR INCREASED OR DECREASED COSTS OCCASIONED BY CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM WHICH COULD NOT REASONABLY HAVE BEEN ANTICIPATED AT THE TIME OF MAKING HIS ORIGINAL PROPOSAL OR EXECUTING HIS BOND FOR A RENEWED CONTRACT AS PROVIDED HEREIN."

YOUR LETTER STATES THAT THE LEGISLATIVE HISTORY OF THE MEASURE CLEARLY INDICATES THE INTENT OF THE CONGRESS THAT THIS ACT APPLY TO THE CONTRACTORS IN THE SECOND CONTRACT SECTION. THEREFORE, ALL BIDS SUBMITTED IN RESPONSE TO THE GENERAL ADVERTISEMENT OF DECEMBER 16, 1947, WERE REJECTED; AND THIS MADE IT NECESSARY THAT PRACTICALLY ALL OF THE CONTRACTS WHICH NORMALLY WOULD HAVE EXPIRED JUNE 30, 1948, BE CONTINUED IN FORCE TO DECEMBER 31, 1948, AS PROVIDED BY A LAW (39 U.S.C. 434), READING IN PART AS FOLLOWS:

"*** IN ALL CASES OF REGULAR CONTRACTS THE CONTRACT MAY, IN THE DISCRETION OF THE POSTMASTER GENERAL, BE CONTINUES IN FORCE BEYOND ITS EXPRESS TERMS FOR A PERIOD NOT EXCEEDING SIX MONTHS, UNTIL A NEW CONTRACT WITH THE SAME OR OTHER CONTRACTORS SHALL BE MADE BY THE POSTMASTER GENERAL."

THESE CONTRACTS ALSO CONTAIN THE FOLLOWING PROVISION:

"THAT THIS CONTRACT MAY, IN THE DISCRETION OF THE POSTMASTER GENERAL, BE CONTINUED IN FORCE BEYOND ITS EXPRESS TERMS FOR A PERIOD NOT EXCEEDING SIX MONTHS UNTIL A NEW CONTRACT WITH THE SAME OR OTHER CONTRACTORS SHALL BE MADE BY THE POSTMASTER GENERAL."

YOU STATE THAT IF THE LEGISLATION IN QUESTION HAD BEEN ENACTED EARLY IN THE SESSION OF THE CONGRESS, THE NECESSARY ADJUSTMENTS COULD HAVE BEEN MADE IN THE COMPENSATION OF THE CONTRACTORS AND CONTRACTS WOULD HAVE BEEN RENEWED AT THE INCREASED RATES FOR THE FOUR YEAR TERM BEGINNING JULY 1, 1948. HOWEVER, AS THE LEGISLATION WAS NOT APPROVED UNTIL JUNE 19, 1948, THERE WAS NOT SUFFICIENT TIME TO MAKE READJUSTMENTS IN THE COMPENSATION OF CONTRACTORS OR RENEW SUCH CONTRACTS AT THE RATES PREVAILING AT THE END OF THE CONTRACT TERM, JUNE 30, 1948.

PROPOSALS FOR CARRYING THE MAILS OF THE UNITED STATES ON STAR ROUTES IN THE SECOND CONTRACT SECTION FROM JULY 1, 1944, TO JUNE 30, 1948, WERE SUBMITTED TO THE DEPARTMENT DURING THE PERIOD FROM DECEMBER 7, 1943, TO FEBRUARY 23, 1944. IT IS STATED THAT THERE HAS BEEN A DECIDED INCREASE IN THE COST OF LIVING AND THAT THE COST OF EQUIPMENT AND THE MAINTENANCE THEREOF HAS ALSO INCREASED MATERIALLY SINCE THE PROPOSALS WERE SUBMITTED. YOU THEREFORE SUGGEST THAT, TO COMPLY WITH THE PROVISIONS OF PUBLIC LAW 669 AND THE INTENT OF THE CONGRESS, AS INDICATED BY REPORT NO. 2003, IT SEEMS INCUMBENT THAT PROPER ADJUSTMENTS BE MADE AS EARLY AS PRACTICABLE IN THE COMPENSATION OF THE CONTRACTORS IN THE SECOND CONTRACT SECTION WHOSE CONTRACTS HAVE BEEN CONTINUED IN FORCE AND WHO DESIRE TO EXECUTE RENEWAL CONTRACTS. IT IS FURTHER SUGGESTED THAT IN ORDER TO APPLY THE PROVISIONS OF PUBLIC LAW 669 EQUITABLY IN ALL INSTANCES, IT SEEMS THAT ANY ADJUSTMENTS MADE IN THE COMPENSATION SHOULD BEGIN ON THE SAME DATE, EVEN THOUGH IT WILL NOT BE PRACTICABLE TO DECIDE ON ALL ADJUSTMENTS AT THE SAME TIME. YOU INDICATE, ALSO, THE DESIRABILITY OF HAVING THE RENEWAL CONTRACTS IN THE SECOND CONTRACT SECTION EXPIRE JUNE 30, 1952, THE NORMAL EXPIRATION DATE OF CONTRACTS IN THAT SECTION, ALTHOUGH THEY WOULD NECESSARILY BECOME EFFECTIVE AFTER JULY 1, 1948, AND WOULD BE FOR PERIODS LESS THAN FOUR YEARS.

IT IS FURTHER STATED THAT DURING THE PAST TEN OR TWELVE YEARS SEVERAL BILLS HAVE BEEN CONSIDERED BY THE CONGRESS HAVING FOR THEIR PURPOSE THE MATTER OF PROVIDING A MORE PERMANENT TENURE FOR STAR ROUTE CONTRACTORS AND READJUSTMENT OF THEIR COMPENSATION; AND THAT IT IS A WELL-KNOWN FACT THAT MANY CONTRACTORS THROUGHOUT THE COUNTRY HAVE SUBMITTED BIDS AT UNUSUALLY LOW RATES IN ORDER TO CONTINUE AS CONTRACTORS IN ANTICIPATION OF THE ENACTMENT OF LEGISLATION WHICH WOULD PROVIDE COMPENSATION COMMENSURATE WITH THE SERVICE RENDERED. IN THAT CONNECTION, YOU INVITE ATTENTION TO THE FOLLOWING EXCERPT FROM REPORT NO. 2003, REFERRED TO ABOVE:

"SINCE THE STAR ROUTE CONTRACTS ARE LET ON A 4-YEARS BASIS, CHANGING ECONOMIC CONDITIONS HAVE, IN MANY INSTANCES, CAUSED A CRITICAL FINANCIAL CRISIS TO THE STAR ROUTE CARRIERS. IN THE VIEW OF THE COMMITTEE, THESE HOLDERS OF GOVERNMENT CONTRACTS FOR CARRYING THE MAIL SHOULD NOT BE FORCED IN TO SITUATIONS WHICH REQUIRE THEM TO CARRY THE MAIL AT A LOSS. THEY HAVE A RIGHT TO EXPECT A RETURN FOR THEIR WORK WHICH WILL PERMIT THEM PROPER STANDARDS OF LIVING. IN THE OPINION OF THE COMMITTEE EXTENSIONS OR REVISIONS OF CONTRACTS WHEN MADE SHOULD TAKE INTO CONSIDERATION THESE HUMAN ELEMENTS."

UPON THE BASIS OF THE FOREGOING CIRCUMSTANCES, YOU REQUEST A DECISION ON THE FOLLOWING QUESTIONS:

"(1) WOULD IT BE PROPER TO MAKE READJUSTMENTS IN THE COMPENSATION OF STAR ROUTE CONTRACTORS TO TAKE EFFECT PRIOR TO THE DATE OF THE ORDERS AUTHORIZING SUCH READJUSTMENTS?

"(2) WOULD THERE BY ANY OBJECTION TO THE EXECUTION OF RENEWAL CONTRACTS WITH THE PRESENT CONTRACTORS IN THE SECOND CONTRACT SECTION FOR PERIODS LESS THAN FOUR YEARS, IN ORDER THAT ALL CONTRACTS IN THAT SECTION MAY EXPIRE ON JUNE 30, 1952?

"(3) IN DETERMINING THE MATTER OF READJUSTING THE COMPENSATION OF STAR ROUTE CONTRACTORS WE EXPECT TO TAKE INTO CONSIDERATION THE HUMAN ELEMENTS MENTIONED IN EXCERPT FROM REPORT NO. 2003, AS WELL AS 'INCREASED OR DECREASED COSTS OCCASIONED BY CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM WHICH COULD NOT REASONABLY HAVE BEEN ANTICIPATED AT THE TIME OF MAKING THEIR ORIGINAL PROPOSALS.' WILL THERE BE ANY OBJECTION ON THE PART OF YOUR OFFICE TO THIS PROCEDURE?"

THE GENERAL RULE IS THAT STATUTES ARE CONSTRUED AND APPLIED PROSPECTIVELY AND NOT RETROACTIVELY UNLESS A RETROACTIVE CONSTRUCTION IS REQUIRED BY EXPRESS LANGUAGE OR BY NECESSARY IMPLICATION. SEE 26 COMP.GEN. 592, AND CASES CITED THEREIN. HENCE, PUBLIC LAW 669 MAY NOT BE REGARDED AS GRANTING STAR ROUTE CONTRACTORS ANY RIGHT TO A READJUSTMENT IN COMPENSATION PRIOR TO THE DATE OF THE APPROVAL OF THE STATUTE, TO WIT, JUNE 19, 1948. HOWEVER, SINCE IT IS OBVIOUS THAT THE FACTS AND CIRCUMSTANCES PROPERLY FOR ADMINISTRATIVE CONSIDERATION NECESSARILY WILL VARY IN THE CASE OF EACH INDIVIDUAL CONTRACTOR, AND THAT IT WILL BE A PRACTICAL IMPOSSIBILITY TO DECIDE ON ALL ADJUSTMENTS AT THE SAME TIME, IT IS BELIEVED EQUITABLE AND CONSISTENT WITH THE PURPOSE OF THE LAW TO HOLD THAT SUCH ADJUSTMENTS MAY BE MADE PRIOR TO THE DATE OF THE ADMINISTRATIVE ORDER-- BUT NOT PRIOR TO JUNE 19, 1948-- PROVIDED, OF COURSE, THAT THE "CHANGED CONDITIONS" REFERRED TO IN THE ACT AND OTHER RELEVANT FACTORS PROPERLY FOR CONSIDERATION EXISTED ON THE DATE THE READJUSTMENT IS MADE EFFECTIVE. YOUR FIRST QUESTION, THEREFORE, IS ANSWERED IN THE AFFIRMATIVE.

IT IS PROVIDED BY SECTION 3956, REVISED STATUTES, 39 U.S.C. 436, THAT "NO CONTRACT FOR CARRYING THE MAIL SHALL BE MADE FOR A LONGER TERM THAN FOUR YEARS." THUS, THE MAKING OF CONTRACTS FOR A TERM LESS THAN FOUR YEARS IS NOT PRECLUDED. WHILE PUBLIC LAW 669 REFERS TO RENEWALS OF STAR ROUTE CONTRACTS "FOR ADDITIONAL TERMS OF FOUR YEARS," IT NOWHERE APPEARS THAT IT WAS THEREBY INTENDED TO AFFECT THE RIGHT OF THE POSTMASTER GENERAL TO MAKE CONTRACTS FOR THE CARRIAGE OF MAIL COVERING PERIODS OF SHORTER DURATION. IN ANY EVENT, SINCE THE CONTRACTS INVOLVED ACTUALLY EXPIRED ON JUNE 30, 1948, AND HAVE BEEN CONTINUED IN FORCE TO DECEMBER 31, 1948, THE RENEWAL THEREOF FOR AN ADDITIONAL PERIOD OF THREE AND ONE-HALF YEARS WILL, IN FACT, RESULT IN AN ADDITIONAL TERM OF FOUR YEARS. ACCORDINGLY, AND IN ANSWER TO YOUR SECOND QUESTION, NO OBJECTION WILL BE INTERPOSED TO THE EXECUTION OF RENEWAL CONTRACTS WITH THE PRESENT CONTRACTORS IN THE SECOND CONTRACT SECTION AT ANY TIME PRIOR TO DECEMBER 31, 1948, FOR THE REMAINDER OF THE CONTRACT TERM ENDING JUNE 30, 1952.

PUBLIC LAW 669 MERELY PROVIDES THAT IN THE DISCRETION OF THE POSTMASTER GENERAL HE MAY "READJUST" THE COMPENSATION OF STAR ROUTE CONTRACTORS FOR INCREASED COSTS ATTRIBUTABLE TO CHANGED CONDITIONS DURING THE CONTRACT TERM WHICH COULD NOT REASONABLY HAVE BEEN ANTICIPATED AT THE TIME THE ORIGINAL CONTACT OR A RENEWAL THEREOF WAS ENTERED INTO. THE TERMS OF THE ACT DO NOT OTHERWISE SPECIFY OR PROVIDE ANY BASIS FOR DETERMINING THE EXTENT TO WHICH THE COMPENSATION MAY BE ADJUSTED UPWARD. IN VIEW OF THIS AMBIGUITY, RESORT TO THE LEGISLATIVE HISTORY OF THE LAW WOULD APPEAR TO BE APPROPRIATE. WHILE IT IS EVIDENT FROM A STUDY OF THE LEGISLATIVE HISTORY THAT THE PRINCIPAL PURPOSE OF THE LAW WAS TO RELIEVE THE CONTRACTORS FROM OPERATING AT A LOSS, IT IS CLEARLY INDICATED IN HOUSE REPORT NO. 2003, DATED MAY 20, 1948, OF THE COMMITTEE ON POST OFFICE AND CIVIL SERVICE, HOUSE OF REPRESENTATIVES, QUOTED IN YOUR LETTER, THAT THE REVISIONS OF THE CONTRACTS CONTEMPLATED BY THE LAW ARE TO PROVIDE THE CONTRACTORS "A RETURN FOR THEIR WORK WHICH WILL PERMIT THEM PROPER STANDARDS OF LIVING." ALSO, SEE THE STATEMENT OF CONGRESSMAN HAGEN, ONE OF THE PROPONENTS OF THE MEASURE, DURING THE DEBATES IN THE HOUSE OF REPRESENTATIVES (CON. REC., JUNE 3, 1948, PAGE 7277), TO THE EFFECT THAT UNDER THE BILL THE CONTRACTOR WOULD HAVE "THE RIGHT TO ASK FOR READJUSTMENT OF HIS CONTRACT SO HE MAY MAKE A PROFIT OR AT LEAST A LIVING AND BREAK EVEN OR BETTER AS THEY HAVE NOT BEEN ABLE TO DO IN SO MANY CASES IN RECENT YEARS."

THEREFORE, IF IN HIS DISCRETION THE POSTMASTER GENERAL SHOULD DETERMINE THAT THE COMPENSATION OF A STAR ROUTE CONTRACTOR SHOULD BE ADJUSTED UPON THE BASIS THAT HE SHOULD NOT ONLY BE RELIEVED FROM ANY LOSS BUT ALSO RECEIVE SOME REASONABLE RETURN UNDER HIS CONTRACT, IT IS MY VIEW THAT THE OBJECTIVE OF THE LAW WILL BE MET, AND NO OBJECTION THERETO WILL BE INTERPOSED BY THIS OFFICE. YOUR THIRD QUESTION IS ANSWERED ACCORDINGLY.