A-56572, JULY 20, 1934, 14 COMP. GEN. 59

A-56572, JULY 20, 1934, 14 COMP. GEN. 59

CONTRACTS - EXTENSIONS - NATIONAL RECOVERY ADMINISTRATION WHILE NO OBJECTION WILL BE MADE TO THE EXERCISING BY THE NATIONAL RECOVERY ADMINISTRATION OF AN OPTION FOR THE EXTENSION OF THE CONTRACT FOR A LIMITED PERIOD NOT EXTENDING BEYOND THE LIFE OF THE APPROPRIATION AVAILABLE THEREFOR, WHEN RESERVED IN AN ORIGINAL CONTRACT FOR STENOGRAPHIC REPORTING SERVICES AWARDED AFTER DUE COMPETITION, ANY AMENDMENT OF THE CONTRACT TO PROVIDE FOR FURTHER EXTENSIONS THEREOF BEYOND OPTION RESERVED IN THE ORIGINAL CONTRACT WOULD RENDER IT SELF PERPETUATING AND WOULD BE IN CONTRAVENTION OF SECTION 3709, REVISED STATUTES. WHERE A CONTRACTOR VOLUNTARILY ASSENTS TO A REDUCTION IN THE PRICE TO BE PAID FOR SERVICES RENDERED THE GOVERNMENT WITHOUT REQUIRING IN CONSIDERATION THEREFOR ANY AMENDMENT OF THE CONTRACT FOR THE BENEFIT OF THE CONTRACTOR BEYOND ITS ORIGINAL SPECIFICATIONS, SUCH REDUCTION IS IN THE INTEREST OF THE GOVERNMENT AND THERE WOULD BE NO LEGAL OBJECTION TO ITS ACCEPTANCE.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF COMMERCE, JULY 20, 1934:

THERE HAS BEEN RECEIVED YOUR LETTER OF JUNE 25, 1934, AS FOLLOWS:

AT THE REQUEST OF THE NATIONAL RECOVERY ADMINISTRATION, THE DIVISION OF PURCHASES AND SALES FOR THIS DEPARTMENT ENTERED INTO A CONTRACT (CC 1893) WITH JESSE L. WARD FOR FURNISHING ALL SERVICES AND MATERIALS NECESSARY FOR STENOGRAPHICALLY REPORTING ALL HEARINGS AND CONFERENCES FOR THE NATIONAL RECOVERY ADMINISTRATION, INCLUDING THE NATIONAL LABOR BOARD, AND JOINT HEARINGS WITH THE AGRICULTURAL ADJUSTMENT ADMINISTRATION, OR ANY OTHER GOVERNMENT AGENCY, COVERING SUBJECTS OR MATTERS INVOLVING THE NATIONAL RECOVERY ADMINISTRATION; FOR FURNISHING TRANSCRIPTS OF SUCH HEARINGS AND CONFERENCES TO BE HELD AND OF THOSE HERETOFORE HELD; AND DUPLICATING TENTATIVE CODES AND OTHER MATTER FOR THE PERIOD FROM OCTOBER 30, 1933, TO JUNE 30, 1934. THIS CONTRACT CONTAINS THE PROVISION THAT "* * * THE NATIONAL RECOVERY ADMINISTRATION RESERVES THE RIGHT TO REQUIRE THE CONTRACTOR AND THE CONTRACTOR WILL BE REQUIRED TO CONTINUE THE CONTRACT FOR A FURTHER PERIOD OF SIX MONTHS OR LESS AT THE PRICES QUOTED HEREIN.'

THE NATIONAL RECOVERY ADMINISTRATION WILL DESIRE TO AMEND THE EXTENDED CONTRACT AS SOON AS IT WILL HAVE BECOME EFFECTIVE, AS FOLLOWS:

CANCEL ITEM 1-A, WHICH STIPULATES 25 CENTS PER HUNDRED WORDS, AND SUBSTITUTE THEREFOR "RATE PER 100 WORDS FOR ORIGINAL OR FIRST COPY, 24 CENTS PER 100 WORDS," AND INSERT IN THE CONTRACT THE FOLLOWING PROVISIONS:

"THE NATIONAL RECOVERY ADMINISTRATION RESERVES THE RIGHT TO REQUIRE THE CONTRACTOR TO CONTINUE THE CONTRACT FOR PERIODS OF SIX MONTHS, THE FIRST OF SUCH PERIODS TO BEGIN JANUARY 1, 1934, AND CONTINUE THROUGH JUNE 30, 1934.

"IN ALL OTHER RESPECTS THE CONTRACT WILL REMAIN IN FORCE AND EFFECT AS STIPULATED IN THE ORIGINAL CONTRACT CC-1893.'

MR. WARD WAS AWARDED CONTRACT CC-1893 BECAUSE HIS BID WAS THE LOWEST RECEIVED FROM FOUR BIDDERS WHO RESPONDED TO THIRTEEN INVITATIONS TO BID FOR THE CONTRACT. IT IS ESTIMATED FROM PAST EXPERIENCES UNDER THIS CONTRACT THAT THE PROPOSED CHANGE IN THE CONTRACT PRICE FOR THE ORIGINAL OR FIRST COPY WILL RESULT IN A SAVING OF $1,500.00 TO THE GOVERNMENT DURING THE SIX MONTHS' PERIOD BEGINNING JULY 1ST NEXT.

IT IS THE OPINION OF THE NATIONAL RECOVERY ADMINISTRATION THAT IT WILL BE UNDESIRABLE AND DISADVANTAGEOUS TO THE GOVERNMENT SERVICE TO AGAIN ADVERTISE OR CHANGE CONTRACTORS FOR THIS SERVICE FOR THE FOLLOWING REASONS:

THE CONTRACTOR HAS UNDERBID ALL COMPETITORS ON THE TWO OCCASIONS INVITATIONS HAVE BEEN ISSUED FOR THIS WORK; THE PROPOSED AMENDMENT IS A REDUCTION OF HIS PRESENT CONTRACT PRICE; THE PRESENT PRICE IS CONSIDERED REASONABLE (AND THE LOWEST BID RECEIVED); THEREFORE, THE AMENDED PRICE IS MORE ACCEPTABLE TO THE GOVERNMENT THAN THE PRESENT CONTRACT PRICE; THE CONTRACTOR HAS ALL THE FILES NECESSARY TO FURNISH THE GOVERNMENT OR CITIZENS WITH ADDITIONAL COPIES OF ALL HEARINGS HERETOFORE HELD BY THE NATIONAL RECOVERY ADMINISTRATION AND BY THE NATIONAL LABOR BOARD, A FACTOR OF CONSIDERABLE IMPORTANCE TO THE GOVERNMENT.

YOUR PROMPT DECISION IS RESPECTFULLY REQUESTED AS TO WHETHER AFTER THE OPTION HAS BEEN EXERCISED TO EXTEND THE PRESENT CONTRACT FOR A SIX MONTHS' PERIOD BEGINNING JULY 1, 1934, IT MAY THEN BE AMENDED AS HEREIN PREVIOUSLY STATED.

IT IS NOTED THAT THE NATIONAL RECOVERY ADMINISTRATION PROPOSES TO EXERCISE ITS OPTION UNDER THE CONTRACT PROVISION QUOTED IN THE FIRST PARAGRAPH OF YOUR LETTER, SO AS TO EXTEND THE LIFE OF THE CONTRACT CC 1893, OCTOBER 30, 1933, FOR A PERIOD OF 6 MONTHS OR LESS AT THE SAME PRICE, AFTER THE END OF THE FISCAL YEAR 1934, AND TO AMEND THE CONTRACT BY PROVIDING THAT THE PRICE TO BE PAID THE CONTRACTOR UNDER ITEM 1-A SHALL BE 24 CENTS PER 100 WORDS INSTEAD OF 25 CENTS PER 100 FOR ORIGINALS, AS NOW PROVIDED, AND YOU STATE THAT IT IS ESTIMATED SUCH A REDUCTION IN PRICE WILL RESULT IN A SAVING OF $1,500 TO THE GOVERNMENT DURING THE 6 MONTHS' PERIOD BEGINNING JULY 1, 1934. IF THE CONTRACTOR ASSENTS TO SUCH REDUCTION IN THE PRICES TO BE PAID, THERE WOULD APPEAR TO BE NO LEGAL OBJECTION TO SUCH CHANGE IN THE CONTRACT.

WITH REFERENCE TO THE PROPOSAL TO FURTHER AMEND THE EXTENDED CONTRACT BY THE INSERTION OF A PROVISION THAT "THE NATIONAL RECOVERY ADMINISTRATION RESERVES THE RIGHT TO REQUIRE THE CONTRACTOR TO CONTINUE THE CONTRACT FOR PERIODS OF 6 MONTHS, THE FIRST OF SUCH PERIODS TO BEGIN JANUARY 1, 1935, AND CONTINUE THROUGH JUNE 30, 1935," THE OBVIOUS PURPOSE AND RESULT OF SUCH A PROVISION IN THE CONTRACT MANIFESTLY IS SO AT VARIANCE WITH THE PURPOSES OF SECTION 3709, REVISED STATUTES, AND RELATED STATUTES DEALING WITH GOVERNMENT CONTRACTING AS TO REQUIRE NO DISCUSSION.

IT HAS BEEN HELD REPEATEDLY BY THIS OFFICE AND THE COURTS THAT THE PROVISIONS OF SECTION 3709, REVISED STATUTES, ARE DESIGNED TO GIVE ALL QUALIFIED PERSONS EQUAL OPPORTUNITY TO BID FOR GOVERNMENT BUSINESS; TO SECURE TO THE GOVERNMENT THE BENEFITS WHICH FLOW FROM COMPETITION; TO PREVENT UNJUST FAVORITISM BY OFFICERS OF THE GOVERNMENT IN MAKING PURCHASES ON PUBLIC ACCOUNT, AND TO RAISE A BAR AGAINST COLLUSION AND FRAUD IN PROCURING SUPPLIES AND LETTING OF CONTRACTS.

IT REQUIRES NO CLOSE SCRUTINY OF THE PROPOSED AMENDMENT, SUPRA, TO DISCLOSE THE FACT THAT IT IS DESIGNED TO ACCOMPLISH RESULTS DIRECTLY OPPOSITE TO THOSE ABOVE, AND CONSTITUTES THE CONTRACT SELF-PERPETUATING AT THE WILL OF THE NATIONAL RECOVERY ADMINISTRATION.

THE INCLUSION OF SUCH A PROVISION IS OBJECTIONABLE FOR THE FURTHER REASON THAT IT CONTEMPLATES EXTENDING THE CONTRACT PERIOD BEYOND THE DATE WHEN THE APPROPRIATION UNDER WHICH IT IS MADE WILL LAPSE. IN THIS CONNECTION SEE 6 COMP. GEN. 295, ID. 430; 7 ID. 48.

ACCORDINGLY, YOU ARE ADVISED THAT THE SUGGESTED AMENDMENT MAY NOT BE MADE TO THE EXTENDED CONTRACT, AND WHILE THIS OFFICE WILL NOT QUESTION AT THIS TIME THE ACTION TAKEN IN EXTENDING THE CONTRACT PERIOD TO DECEMBER 31, 1934, NO ADDITIONAL EXTENSION IS AUTHORIZED. SEE CASES CITED, SUPRA. THE REASONS ASSIGNED FOR DESIRING TO CONTINUE THE CONTRACT ARE NOT FOR CONSIDERATION.

THE RECORDS OF THIS OFFICE DISCLOSE THAT THE CONTRACT HERE INVOLVED HAS BEEN THE SUBJECT OF EXTENSIVE CORRESPONDENCE WITH AND BY THIS OFFICE; THAT THE PROVISIONS OF THE SPECIFICATIONS AND INVITATION FOR BIDS LEADING TO ITS CONSUMMATION AND THE SHORT PERIOD AFFORDED BIDDERS FOR COMPETING LED TO ACRIMONIOUS CRITICISM FROM OTHER BIDDERS AND POSSIBLE BIDDERS AND INQUIRIES FROM AT LEAST TWO CONGRESSIONAL SOURCES. IT WAS FOUND NECESSARY TO ELIMINATE CERTAIN OBJECTIONABLE RESTRICTIVE FEATURES OF THE SPECIFICATIONS AS ORIGINALLY PREPARED, AND THE ADMINISTRATOR OF THE NATIONAL RECOVERY ADMINISTRATION WAS ADVISED THAT THE INCLUSION IN THE SPECIFICATIONS OF A REQUIREMENT THAT THE SUCCESSFUL BIDDER GIVE THE WORK HIS EXCLUSIVE ATTENTION WAS NOT PROPER. A-51752, DECEMBER 6, 1933. THE ADMINISTRATOR WAS ADVISED, ALSO, THAT THIS OFFICE WOULD MAKE NO FURTHER OBJECTION TO THE AWARD OF A CONTRACT AT THAT TIME, BUT IT WAS REQUESTED THAT PROPER ADMINISTRATIVE ACTIONS BE TAKEN TO PREVENT THE ISSUANCE OF SUCH OBJECTIONABLE SPECIFICATIONS THEREAFTER.

IN VIEW OF THE ABOVE AND THE CONCLUSIONS HERE REACHED, IT IS AGAIN SUGGESTED THAT ADMINISTRATIVE ACTION BE TAKEN TO AVOID THE UNFORTUNATELY AND APPARENTLY JUST CRITICISM THAT RESULTED AT THE TIME OF THE ORIGINAL AWARD OF THE CONTRACT UNDER CONSIDERATION.