A-86965, JULY 7, 1937, 17 COMP. GEN. 7

A-86965, JULY 7, 1937, 17 COMP. GEN. 7

CONTRACTS - PASSENGER-CARRYING VEHICLES - WALSH-HEALEY ACT AND PURCHASE PRICE LIMITATION REQUIREMENTS - AWARD IN EXCESS OF LIMITATIONS WHERE, BECAUSE OF ANTICIPATED AWARD IN AMOUNT LESS THAN $10,000, ADVERTISED SPECIFICATIONS CONTAINED A PROVISION THAT THE LABOR, ETC., STIPULATIONS OF THE WALSH-HEALEY ACT OF JUNE 30, 1936, 49 STAT. 2036, WERE NOT FOR APPLICATION, AWARD IN EXCESS OF THAT AMOUNT, WITHOUT INCLUSION IN THE CONTRACT OF THE MANDATORY PROVISIONS OF SAID ACT, EVEN IF OTHERWISE CORRECT, WOULD BE UNAUTHORIZED AND ILLEGAL. TRADE-IN ALLOWANCE MAY NOT BE USED TO REDUCE BID PRICE ON MOTOR PROPELLED PASSENGER-CARRYING VEHICLE, OTHERWISE IN EXCESS OF THE $750 STATUTORY PURCHASE-PRICE LIMITATION, TO AN AMOUNT WITHIN SUCH LIMITATION, NOTWITHSTANDING THERE WOULD BE MADE AVAILABLE THEREBY, IN AN ISOLATED AND UNUSUAL CASE, A LOWER BID FOR ACCEPTANCE, AS THE SPECIFIC STATUTORY PURCHASE-PRICE LIMITATION CONTAINED IN THE ACT OF JUNE 23, 1936, 49 STAT. 1854, INCLUDES THE VALUE OF ANY VEHICLE EXCHANGED, AND AS THE EARLIER GENERAL STATUTE--- SECTION 3709, REVISED STATUTES, ALSO CONTEMPLATING ECONOMY IN GOVERNMENT PURCHASES--- IS FOR APPLICATION ONLY WITHIN SAID PURCHASE-PRICE LIMITATION.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, JULY 7, 1937:

THERE HAS BEEN BROUGHT TO MY ATTENTION CONTRACT NO. W-1092-ENG-5448, NOVEMBER 24, 1936, WITH THE AUTOMOBILE SALES CO., MEMPHIS, TENN., COVERING THE PURCHASE OF 13 TERRAPLANE SEDAN AUTOMOBILES AT $778.94 EACH F.O.B. DETROIT, MICH., TOTAL $10,126.22, FOR DELIVERY TO MEMPHIS, TENN., WITH TRADE-IN ALLOWANCE OF $3,475 ON 13 USED CARS.

PERTINENT PROVISIONS OF THE SPECIFICATIONS ACCOMPANYING THE INVITATION FOR BIDS WERE AS OLLOWS:

WALSH-HEALEY ACT.--- THE PROVISIONS OF THE ACT OF JUNE 30, 1936, PUBLIC, NO. 846--- 74TH CONGRESS, AND THE REGULATIONS ADOPTED BY THE SECRETARY OF LABOR PURSUANT THERETO, ARE NOT APPLICABLE TO THIS PROCUREMENT.

DETERMINING FACTORS WHICH WILL BE CONSIDERED IN ADDITION TO PRICES BID WILL BE THE SUITABILITY OF THE VEHICLES BID UPON, ANY DISCOUNT OFFERED, ADHERENCE TO THE CONSTRUCTION DETAILS SPECIFIED, TRADE-IN ALLOWANCE OFFERED FOR THE USED VEHICLES, CASH PRICE OFFERED FOR THE USED VEHICLES, ANY TRANSPORTATION COSTS TO BE PAID BY THE UNITED STATES, AVAILABILITY OF REPLACEMENT PARTS AND TIME OF SHIPMENT. OTHER THINGS BEING EQUAL, PREFERENCE WILL BE GIVEN THE BIDDER OFFERING THE SHORTEST TIME FOR COMPLETE SHIPMENT.

THE ATTENTION OF PROSPECTIVE BIDDERS IS INVITED TO THE FACT THAT THE NEW VEHICLES WILL BE PROCURED AT THE LEAST COST TO THE UNITED STATES, TRADE-IN VALUE OR CASH PRICES BID ON THE USED VEHICLES CONSIDERED, AND FOR THAT REASON THE HIGHEST CASH BID OFFERED FOR THE USED VEHICLES WHEN MOST ADVANTAGEOUS TO THE UNITED STATES WILL BE ACCEPTED, EVEN THOUGH CONTRACT FOR FURNISHING THE NEW VEHICLES IS AWARDED TO ANOTHER BIDDER.

DELIVERY.--- ALL OF THE AUTOMOBILES SHALL BE DELIVERED F.O.B. CONTRACTOR'S PLANT AND TRANSPORTED FROM THAT POINT TO MEMPHIS, TENNESSEE, BY THE CONTRACTOR, OR BY THE GOVERNMENT, WHICHEVER IS MORE ADVANTAGEOUS TO THE GOVERNMENT.

SEVEN BIDS WERE RECEIVED, AMONG THEM THAT OF THE AUTOMOBILE SALES CO., OF MEMPHIS, TENN., WHICH OFFERED TERRAPLANE AUTOMOBILES AT $778.94 EACH F.O.B. DETROIT, MICH., WITH RAIL TRANSPORTATION COST OF $45 EACH, A TRADE- IN ALLOWANCE OF $3,475, OR A CASH OFFER OF $1,735 FOR 13 USED VEHICLES, AND THAT OF THE GENERAL MOTORS CORPORATION, PONTIAC DIVISION, OFFERING PONTIAC AUTOMOBILES AT $650.25 EACH F.O.B. PONTIAC, MICH., RAIL TRANSPORTATION OF $50.14 EACH, AND A TRADE-IN ALLOWANCE OF $1,110, AND NO CASH OFFER FOR THE USED VEHICLES. ATTACHED TO THE BID OF THE AUTOMOBILE SALES CO. WAS A TYPED STATEMENT THAT IF THE VEHICLES OFFERED SHOULD BE BROUGHT DOWN FROM THE FACTORY BY DRIVERS' CONVOY THE TRANSPORTATION CHARGES WOULD BE $22.50 INSTEAD OF $45 PER CAR. THE PONTIAC BID MADE NO REFERENCE TO DELIVERY BY DRIVER'S CONVOY.

THE ABSTRACT OF BIDS SHOWS THAT AWARD WAS RECOMMENDED TO THE PONTIAC COMPANY FOR THE PURCHASE OF THE NEW VEHICLES AS THE LOWEST BIDDER "WHOSE BID PRICE IS WITHIN THE MAXIMUM STATUTORY LIMIT OF $750, AS FIXED BY THE ACT OF MARCH 15, 1934," AND THAT THE CASH OFFER OF THE AUTOMOBILE SALES CO. OF $1,735 FOR THE USED CARS BE ACCEPTED, AND THAT NO AWARD BE MADE ON THE ITEM OF RAIL TRANSPORTATION, AS IT WOULD BE CHEAPER TO SHIP ON GOVERNMENT BILL OF LADING.

HOWEVER, IT DEVELOPED THAT ACCEPTANCE OF THE BID OF THE AUTOMOBILE SALES CO., TOGETHER WITH THE TRADE-IN ALLOWANCE FOR THE OLD AUTOMOBILES AND DELIVERY OF THE NEW VEHICLES BY DRIVERS' CONVOY, WOULD RESULT IN A SLIGHTLY LOWER NET COST TO THE GOVERNMENT, AND AWARD TO THAT COMPANY WAS MADE ACCORDINGLY, WITHOUT INCLUSION IN THE CONTRACT OF THE STIPULATIONS REQUIRED BY THE WALSH-HEALEY ACT.

THIS OFFICE REQUESTED EXPLANATION AS TO EXEMPTION OF THE CONTRACT FROM THE PROVISIONS OF THE WALSH-HEALEY ACT AND THE PURCHASE OF PASSENGER- CARRYING AUTOMOBILES AT A PRICE IN EXCESS OF $750, INCLUSIVE OF TRADE-IN VALUES OF USED VEHICLES. BY SECOND ENDORSEMENT OF MAY 20, 1937, THERE WAS RECEIVED A REPORT, AS FOLLOWS:

1. THE INCLUSION OF PARAGRAPH 8 (B) INSTEAD OF PARAGRAPH 8 (A), CIRCULAR LETTER (FINANCE) 182, DATED SEPTEMBER 22, 1936, IN THE ADVERTISEMENT WAS PREDICATED ON THE ASSUMPTION THAT NO BIDS WOULD BE ACCEPTED IN EXCESS OF THE STATUTORY LIMITATION OF $750.00 PER VEHICLE, IN WHICH EVENT THE TOTAL AMOUNT INVOLVED IN THE PURCHASE OF THE THIRTEEN PASSENGER CARS WOULD HAVE BEEN LESS THAN $10,000.00.

2. AFTER BIDS HAD BEEN OPENED IT WAS DETERMINED THAT THE LOWEST BID, TRADE-IN ALLOWANCE CONSIDERED, WAS SUBMITTED BY A DEALER WHOSE BID WAS IN EXCESS OF $750.00 PER VEHICLE, TRADE-IN ALLOWANCE NOT CONSIDERED. IT WAS CLEARLY EVIDENT THAT THE BEST INTERESTS OF THE UNITED STATES WOULD BE SERVED BY AWARDING THE CONTRACT TO THE AUTOMOBILE SALES COMPANY, THE LOW BIDDER, TRADE-IN ALLOWANCE CONSIDERED, AND THAT THE DIFFERENCE BETWEEN HIS CASH ALLOWANCE FOR THE USED CARS AND HIS TRADE-IN ALLOWANCE FOR THEM ($1,740.00) SHOULD IN EFFECT BE CONSIDERED A REDUCTION IN THE LIST PRICE OF THE CARS. INASMUCH AS THE STATUTORY LIMITATION OF $750.00 WAS EXCEEDED, THE MATTER WAS REFERRED TO THE CHIEF OF ENGINEERS FOR DECISION IN LETTER DATED NOVEMBER 10, 1936, AND THE PROCUREMENT WAS AUTHORIZED IN 2ND INDORSEMENT E.D. 3316 (MEMPHIS D.O.) 5 DATED NOVEMBER 19, 1936.

3. THIS PROCUREMENT WAS CHARGED AGAINST THE APPROPRIATION: FLOOD CONTROL, MISSISSIPPI RIVER AND TRIBUTARIES.

THE STATEMENT IN THE INVITATION FOR BIDS RELATIVE TO THE WALSH HEALEY ACT WOULD HAVE BEEN PROPER HAD OTHER STATUTORY REQUIREMENTS BEEN OBSERVED IN AWARD OF THE CONTRACT, FOR IN THAT CASE THE MAXIMUM AMOUNT OF THE CONTRACT COULD NOT HAVE BEEN MORE THAN $9,750 FOR THE 13 VEHICLES, INCLUDING THE VALUE OF THE AUTOMOBILES EXCHANGED, AND THE WALSH-HEALEY ACT WOULD NOT HAVE BEEN APPLICABLE. BUT THE CONTRACT AWARDED WAS FOR FURNISHING EQUIPMENT FOR THE USE OF THE GOVERNMENT IN AN AMOUNT EXCEEDING $10,000, AND INCLUSION OF THE STIPULATIONS REQUIRED BY THE WALSH-HEALEY ACT WAS MANDATORY. THE AWARD OF THE CONTRACT WITHOUT THEIR INCLUSION WAS A VIOLATION OF THAT STATUTE.

THE ARGUMENT ADVANCED IN THE SECOND PARAGRAPH OF THE REPORT, SUPRA, IN EXPLANATION OF PURCHASE AT A PRICE PROHIBITED BY STATUTE IS OBVIOUSLY UNTENABLE. THE ACT OF JUNE 23, 1936, 49 STAT. 1854, AND PREVIOUS STATUTES PROHIBIT THE PURCHASE OF ANY MOTOR-PROPELLED PASSENGER-CARRYING VEHICLE AT A COST, COMPLETELY EQUIPPED FOR OPERATION, AND INCLUDING THE VALUE OF ANY VEHICLE EXCHANGED, IN EXCESS OF $750. THE LANGUAGE OF THE STATUTE IS EXPLICIT AND WOULD APPEAR TOO PLAIN TO LEAVE ROOM FOR QUESTION. IT MAKES NO DISTINCTION BETWEEN THE CASH VALUE AND THE EXCHANGE VALUE OF THE USED VEHICLE, EITHER TO THE CONTRACTOR OR THE GOVERNMENT. THE "VALUE OF ANY VEHICLE EXCHANGED" MANIFESTLY HAS REFERENCE TO THE AMOUNT OFFERED BY A BIDDER FOR THE OLD VEHICLE AS A PART OF THE PURCHASE PRICE OF THE NEW, AND THE GOVERNMENT IS NOT CONCERNED WITH WHAT A BIDDER WOULD OTHERWISE PAY FOR THE USED VEHICLE IN CASH, EXCEPT IN CASE A CASH OFFER EXCEEDS A TRADE-IN ALLOWANCE. THE PRICE OF THE NEW VEHICLE, INCLUDING THE EXCHANGE VALUE OF THE OLD, MAY NOT EXCEED $750 PER AUTOMOBILE. THE PLAIN EFFECT OF THE STATUTE IS TO PRECLUDE CONSIDERATION OF ANY BID OFFERING A PASSENGER- CARRYING AUTOMOBILE AT A FACTORY PRICE IN EXCESS OF $750, EITHER INCLUSIVE OR EXCLUSIVE OF THE TRADE-IN ALLOWANCE ON THE USED AUTOMOBILE. THAT IS THE PLAIN, OBVIOUS, AND RATIONAL MEANING OF THE STATUTE, WHICH, AS SAID BY THE COURT IN LYNCH V. ALWORTH STEPHENS CO., 267 U.S. 364,"IS ALWAYS TO BE PREFERRED TO ANY CURIOUS, NARROW, HIDDEN SENSE THAT NOTHING BUT THE EXIGENCY OF A HARD CASE AND THE INGENUITY AND STUDY OF AN ACUTE AND POWERFUL INTELLECT WOULD DISCOVER.' THE PRICE-LIMITING STATUTES MAKE NO PROVISION THAT THE DIFFERENCE BETWEEN THE BIDDER'S CASH ALLOWANCE FOR USED AUTOMOBILES AND HIS TRADE-IN ALLOWANCE "SHOULD IN EFFECT BE CONSIDERED A REDUCTION IN THE LIST PRICE OF THE CARS," AND AFFORDS NO BASIS FOR AN ADMINISTRATIVE READING OF SUCH AN INTERPRETATION INTO THE STATUTE.

IN THIS INSTANCE THE FACTORY PRICE OF THE TERRAPLANE CARS--- $778.94 EACH, OR $10,126.22, INCLUDING THE AMOUNT OF $3,475 FOR THE USED CARS- - WAS $28.94 PER VEHICLE HIGHER THAN THE MAXIMUM PRICE AUTHORIZED TO BE PAID FOR A PASSENGER-CARRYING AUTOMOBILE, OR A TOTAL OF $376.22 FOR THE 13 CARS PURCHASED. THEREFORE THE AWARD TO THE AUTOMOBILE SALES CO. WAS A VIOLATION OF THE PRICE-LIMITING STATUTE.

THERE IS NOT OVERLOOKED THE FACT THAT SECTION 3709, REVISED STATUTES, CONTEMPLATES THE PURCHASE OF EQUIPMENT FOR THE GOVERNMENT AT THE MOST REASONABLE COST, AND THAT ADMINISTRATIVE ACTION IN THIS CASE RESULTED IN A MONETARY SAVING TO THE UNITED STATES. THAT CONSIDERATION WAS NOT CONTROLLING HERE, IN VIEW OF THE EXPRESS AND MANDATORY PRICE LIMIT FIXED IN THE STATUTES. THE RULE OF STATUTORY CONSTRUCTION IS THAT WHERE A GENERAL STATUTE AND A SPECIAL STATUTE DEALING WITH THE SAME SUBJECT MATTER ARE NOT IN COMPLETE HARMONY AND CANNOT BE WHOLLY RECONCILED, THE SPECIAL STATUTE WILL PREVAIL, AND A FORTIORI IS THUS TRUE WHEN THE SPECIAL STATUTE IS LATER IN DATE OF PASSAGE. WHILE BOTH SECTION 3709, REVISED STATUTES, AND THE ACT OF JUNE 23, 1936, SUPRA, CONTEMPLATE ECONOMY TO THE GOVERNMENT, THE LATTER--- AND LATER--- STATUTE SETS A MAXIMUM LIMITATION ON THE PRICE THAT CAN BE PAID FOR PASSENGER-CARRYING AUTOMOBILES IN ANY EVENT OR BY ANY MEANS, UNLESS EXPRESSLY AUTHORIZED, AND IT IS WITHIN THE PRICE LIMIT SET BY THAT STATUTE THAT SECTION 3709, REVISED STATUTES, IS FOR APPLICATION. IF IN AN UNUSUAL AND ISOLATED INSTANCE THE APPLICATION OF THE LATER STATUTE RESULTS IN APPARENT CONFLICT, SECTION 3709, REVISED STATUTES, MUST YIELD. A BIDDER DESIRING TO COMPETE FOR GOVERNMENT BUSINESS IN THE PURCHASE OF PASSENGER-CARRYING AUTOMOBILES MAY OFFER HIS EQUIPMENT AT A PRICE WITHIN THE $750 LIMIT, AND BID AS MUCH OR AS LITTLE FOR USED VEHICLES AS HE SEES FIT, BUT HE MAY NOT BID ABOVE $750 AND BY RESORT TO THE EXPEDIENT OF "PADDING" THE TRADE-IN ALLOWANCE ON USED VEHICLES OR BY ANY OTHER MEANS DEFEAT THE EXPRESS PROVISIONS OF THE LAW.

THE ONLY PROPER PROCEDURE IN THE PRESENT MATTER WAS THAT ORIGINALLY RECOMMENDED, TO WIT, THE ACCEPTANCE OF THE BID OF THE PONTIAC CO. AS THE LOWEST BIDDER COMPLYING WITH THE $750 PRICE-LIMIT STATUTE AND THE SALE OF THE USED CARS TO THE AUTOMOBILE SALES CO. BOTH TRANSACTIONS WOULD HAVE BEEN IN COMPLIANCE WITH THE SPECIFICATIONS AND WITH THE LAW, AND ANY RESULTING DIFFERENCE TO THE GOVERNMENT FROM A PECUNIARY STANDPOINT WAS NOT A MATTER FOR ADMINISTRATIVE CONCERN SO LONG AS STATUTORY REQUIREMENTS WERE OBSERVED.

UPON THE FACTS PRESENTED THERE IS NO LEGAL AUTHORITY FOR THE PAYMENT OF ANY AMOUNT IN EXCESS OF $750 PER VEHICLE, INCLUDING THE TRADE-IN VALUE OF THE USED AUTOMOBILES, PLUS THE ACTUAL COST OF TRANSPORTATION BY DRIVERS' CONVOY FROM DETROIT, MICH., TO MEMPHIS, TENN., OR $22.50 EACH.