B-10272, JUNE 7, 1940, 19 COMP. GEN. 980

B-10272, JUNE 7, 1940, 19 COMP. GEN. 980

CONTRACTS - DURATION - ADDITIONAL QUANTITY OPTIONS SECTIONS 3679, 3732, 3733, AND 3735, REVISED STATUTES, REQUIRE THAT, UNLESS OTHERWISE AUTHORIZED, THE GOVERNMENT SHALL NOT BE COMMITTED BY CONTRACT OR PURCHASE BEYOND THE EXTENT AND AVAILABILITY OF APPROPRIATIONS, AND, AS TO SUPPLIES AND STATIONERY, FOR A PERIOD LONGER THAN A YEAR. AN OPTION FOR PURCHASE BY THE GOVERNMENT OF QUANTITIES IN ADDITION TO THOSE SPECIFIED IN A CONTRACT CREATES NO OBLIGATION ON THE PART OF THE UNITED STATES UNTIL THE OPTION HAS BEEN EXERCISED AND IS NOT OBJECTIONABLE PER SE EVEN THOUGH ITS DURATION SHOULD EXTEND A REASONABLE TIME INTO THE SUCCEEDING FISCAL YEAR, BUT AN OBLIGATION RESULTING FROM THE EXERCISE OF THE OPTION IS SUBJECT TO ALL APPLICABLE RESTRICTIONS OF SECTIONS 3679, 3732, 3733, AND 3735, REVISED STATUTES. A CONTRACTUAL RESERVATION BY THE GOVERNMENT OF THE RIGHT TO PURCHASE ADDITIONAL QUANTITIES OF THE SUBJECT MATTER OF THE CONTRACT INDEFINITELY OR FOR AN UNREASONABLE PERIOD WITHOUT GETTING THE BENEFIT OF SUCH COMPETITION AS THE INDUSTRY AFFORDS AT THE TIME THE NEED IS DEFINITELY ASCERTAINED, IS PLAINLY NOT COMPATIBLE WITH THE INTENT OF SECTION 3709, REVISED STATUTES. A CONTRACTUAL RESERVATION BY THE GOVERNMENT OF THE RIGHT TO PLACE ORDERS FOR ADDITIONAL QUANTITIES AFTER THE FISCAL YEAR IN WHICH THE CONTRACT WAS EXECUTED DOES NOT RESULT IN OBLIGATING THE UNITED STATES MERELY BECAUSE OF AUTHORITY IN THE APPROPRIATION ACT TO ENTER INTO CONTRACTS PRIOR TO THE NEXT FISCAL YEAR IN AN AMOUNT IN EXCESS OF THE APPROPRIATION, BUT THE EXERCISE OF THE OPTION PRIOR TO THE NEXT FISCAL YEAR WOULD OPERATE AS AN OBLIGATION EVEN THOUGH NO APPROPRIATED FUNDS HAD BEEN MADE AVAILABLE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, CIVIL AERONAUTICS AUTHORITY, JUNE 7, 1940:

THERE HAS BEEN RECEIVED A LETTER OF MAY 11, 1940, FROM THE COORDINATOR AND SECRETARY, CIVIL AERONAUTICS AUTHORITY, AS FOLLOWS:

ON APRIL 10, 1940, THE CIVIL AERONAUTICS AUTHORITY ENTERED INTO CONTRACT CAA-2519 WITH THE AMERICAN BUILDERS, 615 ALASKA STREET, SEATTLE, WASHINGTON, FOR THE PURCHASE OF FIFTEEN SECTIONAL WOOD FRAME QUARTERS BUILDINGS, ALASKA TYPE. PAYMENT FOR THE FIFTEEN BUILDINGS WILL BE MADE FROM THE CIVIL AERONAUTICS AUTHORITY APPROPRIATION " ESTABLISHMENT OF AIR NAVIGATION FACILITIES" FOR THE FISCAL YEAR ENDING JUNE 30, 1940.

THE CONTRACT CONTAINS A "REPEAT ORDER" CLAUSE READING AS FOLLOWS:

"THE GOVERNMENT RESERVES THE RIGHT TO PLACE ONE OR MORE REPEAT ORDERS AND THE SUCCESSFUL BIDDER AGREES TO FURNISH AT THE UNIT PRICE QUOTED UNDER ITEMS 202 TO 205, INCLUSIVE, ADDITIONAL QUANTITIES AS OUTLINED THEREIN. THE GOVERNMENT MAY ISSUE ONE OR MORE REPEAT ORDERS OR NO REPEAT ORDERS, AS THE CIVIL AERONAUTICS AUTHORITY'S CONSTRUCTION PROGRAM REQUIRES. HOWEVER, IN NO EVENT SHALL THE TOTAL OF REPEAT ORDERS EXCEED THE MAXIMUM QUANTITY OF FIFTEEN UNITS. SUCH REPEAT ORDER OR ORDERS, IF PLACED, WILL BE ISSUED ON OR BEFORE JUNE 30, 1941.'

THE ACT OF CONGRESS APPROVED MARCH 16, 1939, PUBLIC, NO. 8, 76TH CONGRESS, MAKING APPROPRIATIONS FOR THE EXECUTIVE OFFICE AND SUNDRY INDEPENDENT BUREAUS, BOARDS, COMMISSIONS, AND OFFICES FOR THE FISCAL YEAR ENDING JUNE 30, 1940, APPROPRIATED SEVEN MILLION DOLLARS UNDER THE TITLE " ESTABLISHMENT OF AIR NAVIGATION FACILITIES" AND STATED THAT IN ADDITION TO THAT AMOUNT THE ADMINISTRATOR MIGHT, PRIOR TO JULY 1, 1940, ENTER INTO CONTRACTS FOR THE PURCHASE, CONSTRUCTION, AND INSTALLATION OF AIR NAVIGATION AIDS NOT IN EXCESS OF TWO MILLION DOLLARS. THE ACT OF CONGRESS APPROVED APRIL 18, 1940, MAKING APPROPRIATIONS FOR THE EXECUTIVE OFFICE AND SUNDRY INDEPENDENT BUREAUS, BOARDS, COMMISSIONS, AND OFFICES FOR THE FISCAL YEAR ENDING JUNE 30, 1941, APPROPRIATED $5,265,280.00 UNDER THE TITLE " ESTABLISHMENT OF AIR NAVIGATION FACILITIES" OF WHICH AMOUNT $2,000,000.00 SHALL BE AVAILABLE FOR THE PAYMENT OF CONTRACTUAL OBLIGATIONS AUTHORIZED TO BE INCURRED PRIOR TO JULY 1, 1940.

CONTRACT CAA-2519 WAS MADE BEFORE FUNDS FOR THE FISCAL YEAR 1941 HAD BEEN APPROPRIATED, AND THEREFORE WE RESPECTFULLY REQUEST YOU TO ADVISE US WHETHER WE ARE AUTHORIZED TO PLACE REPEAT ORDERS UNDER THIS CONTRACT SUBSEQUENT TO JUNE 30, 1940, WITHOUT FURTHER ADVERTISING. IF SO, IS IT ON THE THEORY THAT THE REPEAT-ORDER PROVISION IS A CONTRACTUAL OBLIGATION INCURRED UNDER THE AUTHORITY OF THE 1940 APPROPRIATION ACT, EVEN THOUGH NO FUNDS WILL BE OBLIGATED UNTIL THE REPEAT ORDER IS PLACED? IN THE EVENT REPEAT ORDERS SUBSEQUENT TO JUNE 30, 1940, WITHOUT FURTHER ADVERTISING ARE AUTHORIZED AND IF THE AUTHORITY FOR THAT FEATURE OF THE CONTRACT IS THE SPECIAL AUTHORITY GIVEN THE ADMINISTRATOR IN THE 1940 APPROPRIATION ACT TO MAKE CONTRACTUAL OBLIGATIONS PRIOR TO JULY 1, 1940, WOULD THE REPEAT ORDER BE PERMISSIBLE, WITHOUT FURTHER ADVERTISING, IN THE ABSENCE OF THAT SPECIAL AUTHORITY, IF THE CONTRACT WERE IN THE SAME FORM, FOR THE SAME TYPE OF MATERIAL, AND OTHERWISE MADE UNDER THE SAME CONDITIONS?

SECTION 3732 U.S. REVISED STATUTES STATES:

"NO CONTRACT OR PURCHASE ON BEHALF OF THE UNITED STATES SHALL BE MADE UNLESS THE SAME IS AUTHORIZED BY LAW OR IS UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT, EXCEPT IN THE WAR AND NAVY DEPARTMENTS, FOR CLOTHING, SUBSISTENCE, FORAGE, FUEL, QUARTERS, TRANSPORTATION, OR MEDICAL AND HOSPITAL SUPPLIES, WHICH, HOWEVER, SHALL NOT EXCEED THE NECESSITIES OF THE CURRENT YEAR.'

THAT STATUTE AND NUMEROUS DECISIONS APPEAR TO ESTABLISH THE GENERAL PRINCIPLE THAT, UNLESS OTHERWISE AUTHORIZED BY LAW, CONTRACTS FOR ANTICIPATED GOVERNMENT REQUIREMENTS MAY NOT BE ENTERED INTO BEFORE APPROPRIATIONS HAVE BEEN MADE FOR THE PAYMENT OF PURCHASES TO MEET THOSE REQUIREMENTS. HOWEVER, THERE IS SOME CONFUSION IN OUR MINDS AS TO WHETHER IF DELIVERIES UNDER THE CONTRACT ARE DEPENDENT ON ORDERS BEING PLACED, THE MAKING OF THE CONTRACT PRIOR TO THE APPROPRIATION WOULD BE IN VIOLATION OF THAT GENERAL PRINCIPLE. WE HAVE NOT DISCOVERED A DECISION WHICH SPECIFICALLY COVERS THE TYPE OF CONTRACT ILLUSTRATED BY CONTRACT CAA- 2519. SOME OF THE DECISIONS INDICATE THAT, SINCE NO FUNDS ARE ACTUALLY OBLIGATED UNTIL THE REPEAT ORDER IS PLACED, THERE IS NO OBJECTION TO THE CONTRACT, WHEREAS OTHERS, AS WELL AS THE STATUTE QUOTED ABOVE, INDICATE THAT SUCH A CONTRACT IS NOT AUTHORIZED. FOR EXAMPLE, IN THE COMPTROLLER GENERAL'S DECISION OF JULY 11, 1929 (9-CG-6), CONCERNING A CONTRACT FOR CEMENT FOR OWYHEE DAM IN OREGON, IT WAS HELD THAT---

"IT MAY BE STATED, IN CONCLUSION, THAT THERE IS NO LEGAL OBJECTION TO THE ACCEPTANCE OF THE LOW BID FOR DELIVERY OF 75,000 BARRELS OF CEMENT DURING THE FISCAL YEAR 1930, WITH AN OPTION IN THE UNITED STATES, SUBJECT TO APPROPRIATIONS BEING MADE, TO REQUIRE THE DELIVERY OF 425,000 BARRELS ADDITIONAL APPORTIONED OVER THE REMAINDER OF THE FISCAL-YEAR PERIODS NECESSARY FOR THE CONSTRUCTION OF THE DAM BUT WITH NOTICE TO THE CONTRACTOR THAT SUCH OPTION WILL BE EXERCISED ONLY IN EVENT THE ADVERTISEMENTS FOR PROPOSALS AT THE BEGINNING OF EACH SUCCEEDING FISCAL- YEAR PERIOD SHOULD FAIL TO ELICIT PROPOSALS LOWER THAN THE OPTION PRICE STATED IN THE CONTRACT.'

ON THE OTHER HAND, IN THE COMPTROLLER GENERAL'S DECISION OF JULY 12, 1935 (A-60589) TO THE SECRETARY OF THE TREASURY,"RELATIVE TO THE PRACTICE OF THE PROCUREMENT DIVISION IN ENTERING INTO SUPPLY CONTRACTS EXTENDING BEYOND THE PERIOD OF AVAILABILITY OF THE APPROPRIATION INVOLVED AND FOR PERIODS OF MORE THAN ONE YEAR," IT WAS HELD THAT,

"WHERE CONTRACTS FOR THE PURCHASE OF SUPPLIES IN WHICH NO DEFINITE QUANTITY IS REQUIRED TO BE PURCHASED, AS APPEARS TO BE THE CASE IN THIS INSTANCE, AND HENCE NO LEGAL OBLIGATION IS IMPOSED ON THE GOVERNMENT UNTIL AN ORDER IS PLACED--- OTHER THAN THE OBLIGATION NOT TO PURCHASE ELSEWHERE- -- THERE WOULD APPEAR NO LEGAL OBJECTION TO SUCH A PRACTICE, PROVIDED SUCH CONTRACTS DO NOT EXCEED ONE YEAR. HOWEVER, THE AWARD OF SUCH CONTRACTS FOR A PERIOD GREATER THAN ONE YEAR, AS IN THIS CASE WHERE THE CONTRACT WAS AWARDED FOR A PERIOD OF 15 MONTHS, WOULD CLEARLY APPEAR TO BE IN CONTRAVENTION OF SECTION 3735, REVISED STATUTES, WHICH PROVIDES THAT IT SHALL BE UNLAWFUL FOR THE EXECUTIVE DEPARTMENTS TO MAKE CONTRACTS FOR STATIONERY OR OTHER SUPPLIES FOR A LONGER TERM THAN ONE YEAR FROM THE TIME THE CONTRACT IS MADE.'

IT IS ASSUMED THAT THE TERM "SUPPLIES" AS USED IN SECTION 3735, U.S. REVISED STATUTES, MEANS SUPPLIES WHICH ARE CONSUMED IN THE USE THEREOF, SUCH AS FOOD, GASOLINE, LUBRICATING OIL, STATIONERY, ETC., AND THAT BUILDINGS AS DESCRIBED IN CONTRACT CAA-2519, AS WELL AS THE CEMENT PURCHASED UNDER THE CONTRACT DISCUSSED IN 9-CG-6, NOT BEING CONSUMABLE SUPPLIES, ARE NOT SUBJECT TO THE LIMITATIONS OF THAT STATUTE. HOWEVER, BOTH THE CONTRACT FOR CEMENT CONSIDERED IN 9-CG-6 AND THE CONTRACT FOR GEAR OIL REFERRED TO IN THE DECISION OF JULY 12, 1935 (A-60589) HAVE TWO FEATURES IN COMMON WITH CONTRACT CAA-2519, NAMELY, THEY PURPORT TO COVER REQUIREMENTS OF MORE THAN ONE FISCAL YEAR, AND THEY WERE ENTERED INTO BEFORE SOME OF THE APPROPRIATIONS TO BE OBLIGATED BY REPEAT ORDERS HAD BEEN MADE.

THE REPEAT ORDER UNIT PRICES ON CONTRACT CAA-2519 ARE CONSIDERABLY HIGHER THAN THE UNIT PRICE FOR THE DEFINITE QUANTITY OF FIFTEEN BUILDINGS, WHICH FACT INDICATES THE POSSIBILITY OF PRICES LOWER THAN THE REPEAT ORDER PRICES BEING OBTAINED IF NEW BIDS ARE SOLICITED WHEN ADDITIONAL DEFINITE QUANTITIES HAVE BEEN DETERMINED, AND THAT THE PLACING OF A REPEAT ORDER WOULD BE UNAUTHORIZED FOR THE SAME REASON THAT THE FURNISHING OF ADDITIONAL QUANTITIES OF CEMENT FOR THE OWYHEE DAM, WITHOUT FURTHER ADVERTISING, WAS DISAPPROVED. AT THE SAME TIME, IT IS NOT APPARENT WHEREIN THERE IS AN FUNDAMENTAL DIFFERENCE BETWEEN THE PROCUREMENT DIVISION TERM CONTRACTS, RUNNING THROUGH PORTIONS OF TWO FISCAL YEARS AND MADE PRIOR TO THE APPROPRIATIONS FOR THE SECOND FISCAL YEAR, AND CONTRACT CAA-2519; NOR THAT IT CAN BE SAID WITH CERTAINTY THAT IF THE PROCUREMENT DIVISION CONTRACTS WERE, IN ALL CASES, MADE TO COVER ONLY THE PERIODS FOR WHICH APPROPRIATIONS HAD BEEN MADE, BETTER PRICES WOULD NOT THEREBY BE OBTAINED. THE PRACTICABILITY OF THE PROCUREMENT DIVISION CONTRACTS, AS NOW BEING MADE, IS FULLY APPRECIATED, BUT, FOR THE SAME REASONS, THE REPEAT-ORDER PROVISION WAS INCLUDED IN CONTRACT CAA-2519, ALTHOUGH THE PRACTICAL BENEFITS OF THE REPEAT-ORDER PROVISIONS IN CONTRACT CAA-2519 AND THE CEMENT CONTRACT CONSIDERED IN 9-CG-6 ARE MORE LIMITED BECAUSE THE REQUIREMENTS OF ONLY ONE GOVERNMENT AGENCY ARE OR WERE TO BE SUPPLIED THEREUNDER.

THE GENERAL RULE IS THAT A CONTRACT WHICH IS BASED ON AN ANNUAL APPROPRIATION ACT MAY NOT EXTEND BEYOND THE PERIOD OF AVAILABILITY OF THAT ACT. SEE 9 COMP. GEN. 6; 14 COMP. GEN. 59. IN ADDITION TO SECTION 3732, REVISED STATUTES, CITED BY YOU, IT MAY BE POINTED OUT THAT SECTION 3679, REVISED STATUTES, ENJOINS THE EXPENDITURE, OR INVOLVEMENT OF THE GOVERNMENT IN A CONTRACT FOR THE FUTURE EXPENDITURE, OF SUMS IN EXCESS OF THE APPROPRIATIONS MADE BY THE CONGRESS. SECTION 3732 PROVIDES, WITH CERTAIN EXCEPTIONS, THAT NO CONTRACT OR PURCHASE ON BEHALF OF THE UNITED STATES SHALL BE MADE UNLESS AUTHORIZED BY LAW OR UNDER AN APPROPRIATION ADEQUATE TO ITS FULFILLMENT; SECTION 3733, THAT NO CONTRACT FOR THE ERECTION, REPAIR, OR FURNISHING OF ANY PUBLIC BUILDING OR IMPROVEMENT SHALL BIND THE GOVERNMENT TO PAY A LARGER SUM THAN APPROPRIATED FOR THE SPECIFIC PURPOSE; AND SECTION 3735, THAT NO CONTRACT SHALL BE MADE FOR STATIONERY OR OTHER SUPPLIES FOR A LONGER TERM THAN 1 YEAR FROM THE TIME THE CONTRACT IS MADE.

THE PURPORT OF THE CITED SECTIONS OF THE REVISED STATUTES IS PLAIN IN THE REQUIREMENT THAT, UNLESS OTHERWISE AUTHORIZED, THE GOVERNMENT SHALL NOT BE COMMITTED BY CONTRACT OR PURCHASE BEYOND THE EXTENT AND AVAILABILITY OF APPROPRIATIONS, AND, AS TO SUPPLIES AND STATIONERY, FOR A PERIOD LONGER THAN A YEAR. IN THE DECISION OF JULY 12, 1935, A 60589, TO WHICH THE QUOTED LETTER REFERS, IT WAS FOUND THAT THE CONTRACTS THEMSELVES DID NOT OBLIGATE GOVERNMENT FUNDS BUT THAT APPROPRIATED FUNDS WERE OBLIGATED UPON THE PLACING OF THE PURCHASE ORDERS. NEVERTHELESS, THE GOVERNMENT'S DUTY TO PURCHASE ALL SPECIFIED REQUIREMENTS CONSTITUTED CONSIDERATION FOR A VALID CONTRACT AND IT WAS HELD THAT SECTION 3735, REVISED STATUTES, PRECLUDED THE MAKING OF SUCH A SUPPLY CONTRACT FOR A PERIOD LONGER THAN 1 YEAR.

IN THE CONTRACT HERE INVOLVED THE GOVERNMENT HAS RESERVED A RIGHT TO ORDER ADDITIONAL QUANTITIES IF SUCH ORDERS ARE PLACED PRIOR TO JUNE 30, 1941. SUCH RESERVATION IS, IN EFFECT, AN OPTION IN FAVOR OF THE GOVERNMENT WHICH CREATES NO CONTRACTUAL OBLIGATION ON THE PART OF THE UNITED STATES UNLESS AND UNTIL ORDERS ARE PLACED. IF SUCH ORDERS ARE PLACED BEFORE JULY 1, 1940, THEN OBVIOUSLY THERE HAS ARISEN A CONTRACT FOR THE ADDITIONAL QUANTITY WITHIN THE MEANING OF THE AUTHORIZATION CONTAINED IN THE 1940 APPROPRIATION ACT; AND WHETHER OR NOT THE APPROPRIATION FOR THE FISCAL YEAR 1940 IS ADEQUATE FOR ITS FULFILLMENT, THE TRANSACTION IS NOT OPEN TO QUESTION, IF WITHIN THE TWO MILLION DOLLAR AUTHORIZATION, BECAUSE IT "IS AUTHORIZED BY LAW" WITHIN THE MEANING OF SECTION 3732, REVISED STATUTES. UNLESS SUCH ORDERS ARE PLACED PRIOR TO JULY 1, 1940, THERE IS NO CONTRACT FOR THE ADDITIONAL QUANTITY WITHIN THE MEANING OF THE AUTHORITY CONFERRED BY THE " INDEPENDENT OFFICES APPROPRIATION ACT, 1940," 53 STAT. 527; AND THE PROPRIETY OF ISSUANCE OF SUCH ORDERS WOULD DEPEND ON THE STATUS OF THE 1941 APPROPRIATION.

SINCE THE RESERVATION OF AN OPTION CREATES NO OBLIGATION ON THE PART OF THE UNITED STATES UNTIL IT HAS BEEN EXERCISED, IT DOES NOT APPEAR OBJECTIONABLE PER SE THAT ITS DURATION SHOULD EXTEND A REASONABLE TIME INTO THE SUCCEEDING FISCAL YEAR. THE EXERCISE OF THE OPTION BY PLACING OF ORDERS GIVES RISE TO AN OBLIGATION WHICH, OF COURSE, IS SUBJECT TO ALL APPLICABLE RESTRICTIONS OF THE CITED SECTIONS OF THE REVISED STATUTES.

HOWEVER, IT IS PLAINLY NOT COMPATIBLE WITH THE INTENT OF SECTION 3709, REVISED STATUTES, THAT A RIGHT BE RESERVED INDEFINITELY OR FOR AN UNREASONABLE PERIOD TO ORDER ADDITIONAL QUANTITIES WITHOUT GIVING THE GOVERNMENT THE BENEFIT OF SUCH COMPETITION AS THE INDUSTRY AFFORDS AT THE TIME THE NEED IS DEFINITELY ASCERTAINED. SEE 9 COMP. GEN. 6; 14 ID. 766; 14 ID. 59; 15 ID. 573; CF. 17 ID. 1073. THE AUTHORIZATION GIVEN IN THE 1940 APPROPRIATION ACT, TO ENTER INTO CONTRACTS NOT IN EXCESS OF 2 MILLION DOLLARS BEYOND THE AMOUNT APPROPRIATED, DOES NOT CONFER AUTHORITY TO PLACE SUCH ORDERS ON THE BASIS OF COMPETITIVE BIDS SECURED OVER A YEAR PREVIOUSLY. IT IS OBVIOUS THAT NO BIDDER CAN PREDICT ACCURATELY ITS COST THAT FAR IN ADVANCE. IT WOULD APPEAR THAT THE GOVERNMENT'S REQUIREMENTS FOR SECTIONAL QUARTERS BUILDINGS COVERED BY THIS CONTRACT SHOULD BE SUSCEPTIBLE OF DEFINITE ASCERTAINMENT AT THE TIME A CONTRACT IS MADE. THE DISADVANTAGES OF FAILURE TO DO SO IN THIS CASE ARE APPARENT SINCE THE ADDITIONAL QUANTITY OF 15 UNITS, IF ORDERED AFTER AUGUST 1, 1940, WILL COST THE GOVERNMENT $5,820 MORE THAN THE ORIGINAL 15 UNITS. THE PROCUREMENT DIVISION CONTRACTS, WHICH COVER THE REQUIREMENTS OF NUMEROUS EXECUTIVE AND FIELD SERVICES, ARE MANIFESTLY NOT COMPARABLE TO THE CONTRACT HERE UNDER CONSIDERATION BECAUSE (1) THEIR SCOPE RENDERS IMPOSSIBLE A DEFINITE ASCERTAINMENT OF THE NEEDS OF THE VARIOUS AGENCIES AND (2) THERE IS A DEFINITE COMMITMENT ON THE PART OF THE GOVERNMENT TO ORDER FROM THE CONTRACTOR ALL REQUIREMENTS OF SPECIFIED AGENCIES FOR THE PERIOD COVERED BY THE CONTRACT. SPECIFICALLY, YOU ARE ADVISED THAT THIS OFFICE WILL NOT OBJECT TO THE PLACING OF ORDERS, WITHOUT FURTHER COMPETITION, FOR ADDITIONAL QUANTITIES SPECIFIED UNDER THE CONTRACT IF SUCH ORDERS ARE PLACED WITHIN A REASONABLE TIME--- I.E., ON OR BEFORE AUGUST 1, 1940--- SO THAT PRICES QUOTED THEREIN MAY BE ACCEPTED AS INDICATIVE OF THE LOW COMPETITIVE PRICE WHICH MIGHT BE OBTAINED FROM THE INDUSTRY. IF SUCH ADDITIONAL ORDERS ARE PLACED THEREAFTER, IT SHOULD FIRST BE DETERMINED THAT THE PRICE QUOTED BY THE CONTRACTOR IS MORE ADVANTAGEOUS THAN CAN BE OBTAINED BY THE SOLICITATION OF BIDS AT THE TIME THE GOVERNMENT'S REQUIREMENTS ARE DEFINITELY ASCERTAINED. 9 COMP. GEN. 6.