B-10996, APRIL 26, 1941, 20 COMP. GEN. 677

B-10996, APRIL 26, 1941, 20 COMP. GEN. 677

VEHICLES - MOTOR - PASSENGER-CARRYING - PURCHASE PRICE LIMITATION AND TRANSPORTATION COSTS IN DETERMINING WHETHER THE PURCHASE PRICE OF A PASSENGER-CARRYING MOTOR VEHICLE, EXCLUSIVE OF TRANSPORTATION COST, IS WITHIN THE STATUTORY LIMIT, THE TRANSPORTATION COST WHICH MAY BE DEDUCTED FROM THE DESTINATION BID PRICE IS THE ACTUAL COST OF TRANSPORTATION, AT THE LOWEST AVAILABLE RATE, OF THE FINISHED VEHICLE FROM THE DESIGNATED ASSEMBLY PLANT OR OTHER DESIGNATED POINT OF ORIGIN FROM WHICH IT IS ACTUALLY SHIPPED AS A FINISHED VEHICLE TO THE POINT AT WHICH IT IS DELIVERED TO THE GOVERNMENT, AND NOT THE TRANSPORTATION COST FROM SOME FACTORY WHERE THE INDIVIDUAL PARTS ARE MANUFACTURED. 17 COMP. GEN. 854, AMPLIFIED. WHERE BOTH THE DESTINATION AND SHIPPING POINT PRICES QUOTED BY A BIDDER EXCEED THE STATUTORY PURCHASE PRICE LIMITATION ON PASSENGER CARRYING MOTOR VEHICLES, THE BID AS A WHOLE SHOULD BE REJECTED WITHOUT CONSIDERATION OF TRANSPORTATION COSTS FROM SHIPPING POINT TO DESTINATION. IN DETERMINING WHETHER THE PURCHASE PRICE OF A PASSENGER-CARRYING MOTOR VEHICLE, EXCLUSIVE OF TRANSPORTATION COST, IS WITHIN THE STATUTORY LIMIT, THE ONLY TRANSPORTATION COST FOR CONSIDERATION IS THE ACTUAL COST OF TRANSPORTATION AT THE LOWEST AVAILABLE RATE, WHETHER GOVERNMENT, COMMERCIAL, OR OTHER RATE AVAILABLE TO THE BIDDER FROM THE POINT OF ORIGIN OF BIDDER'S SELECTION FROM WHICH DELIVERY IS TO BE MADE TO DESTINATION. THE FACT THAT A STRICT APPLICATION OF THE STATUTORY PURCHASE PRICE LIMITATION ON PASSENGER-CARRYING MOTOR VEHICLES MAY UPON OCCASION RESULT IN A SLIGHT EXCESS COST TO THE GOVERNMENT DOES NOT JUSTIFY A DISREGARD OF ITS MANDATORY PROVISIONS.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE INTERIOR, APRIL 26, 1941:

THERE HAVE BEEN BROUGHT TO MY ATTENTION CONTRACTS COVERING THE PURCHASE OF PASSENGER-CARRYING AUTOMOBILES FOR YOUR DEPARTMENT, AS FOLLOWS:

I-1-IND-19756, FEBRUARY 6, 1940, WITH OSCAR HALL CO., ESCONDIDO, CALIF., FOR THE PURCHASE OF ONE FORD STANDARD TUDOR SEDAN, F.O.B. DESTINATION, SAN DIEGO, CALIF., FOR $822.75, WITH TRADE-IN ALLOWANCE OF $325 FOR THREE USED MOTOR VEHICLES. ON THIS CONTRACT BIDDER OFFERED DELIVERY F.O.B. EITHER DESTINATION OR POINT OF HIS SELECTION, ESCONDIDO, CALIF., APPARENTLY HIS PLACE OF BUSINESS, FOR $822.75, NAMING NO OTHER POINT OF ORIGIN, FACTORY OR OTHERWISE. THE PURCHASING OFFICER SUBTRACTED FROM THE BID AS SUBMITTED THE SUM OF $190.70, SAID TO BE THE AMOUNT OF FREIGHT ON A SIMILAR VEHICLE FROM DETROIT, MICH., IN AN UNDERTAKING TO BRING THE BID PRICE WITHIN THE $750 STATUTORY PRICE LIMIT, AND AWARDED THE CONTRACT AT THE BID PRICE.

I-1-IND-19904, JUNE 10, 1940, WITH VELLENGA MOTOR CO., INC., SISSETON. S.DAK., FOR THE PURCHASE OF ONE FOUR-DOOR FORD SEDAN, F.O.B. RUSHVILLE, NEBR., FOR $840, LESS TRADE-IN ALLOWANCE OF $245 AND EXCISE TAX OF $19.95. UNDER THIS CONTRACT THE BIDDER OFFERED DELIVERY F.O.B. SHIPPING POINT OF BIDDER'S SELECTION, DETROIT, MICH., FOR $781, AND DESTINATION DELIVERY FOR $840. BUT NOTWITHSTANDING IT WAS SELF-EVIDENT THAT THE FACTORY PRICE OF THE VEHICLE WAS $781, AND THAT THE BIDDER HAD INCLUDED ONLY $59 IN THE DESTINATION PRICE TO COVER TRANSPORTATION COST, AND THAT THE FACTORY PRICE WAS $31 IN EXCESS OF THE MAXIMUM STATUTORY PRICE LIMIT FOR PASSENGER-CARRYING AUTOMOBILES, THE PURCHASING OFFICER ARBITRARILY SUBSTRACTED $100.56 OR $41.56 MORE THAN HAD BEEN INCLUDED BY THE BIDDER AS REPRESENTING FREIGHT COST, AND AWARDED THE CONTRACT WITHOUT REGARD FOR AND IN CONTRAVENTION OF THE STATUTE REQUIREMENTS.

I-1-IND-23058, JULY 31, 1940, WITH F. E. NORTHWAY, INC., OKLAHOMA CITY, OKLA., FOR ONE FOUR-DOOR FORD SEDAN, F.O.B. OKLAHOMA CITY FOR $826, LESS $443.75 TRADE-IN ALLOWANCE. IN THIS CASE THE BIDDER NAMED OKLAHOMA CITY, OKLA., BOTH AS SHIPPING POINT AND DESTINATION AND OFFERED THE PRICE OF $826. STANDARD FORM NO. 1036 ATTACHED TO THIS CONTRACT, STATED IN PERTINENT PART, THAT AWARD WAS MADE TO F. E. NORTHWAY, INC; "AT $826.00 F.O.B. OKLAHOMA CITY, OKLA., LESS TRADE-IN ALLOWANCE FOR USED CAR OF $443.75 OR NET OF $382.25, THE CHEAPEST BID MEETING THE SERVICE REQUIREMENTS OF THE SPECIFICATIONS.' NO STATEMENT WAS MADE WITH REFERENCE TO ANY DEDUCTION FROM THE EXCESS BID TO COVER THE COST OF FREIGHT FROM ANY POINT.

I-1-IND-23066, AUGUST 12, 1940, WITH THIEF RIVER MOTORS, INC., FOR TWO TWO-DOOR FORD SEDANS AT $806.45 OR $1,612.90, F.O.B. THIEF RIVER FALLS, MINN., WITH $485 TRADE-IN ALLOWANCE, THE DESTINATION BEING CASS LAKE, MINN. STANDARD FORM NO. 1036, ATTACHED TO THIS CONTRACT, STATED IN PART AS FOLLOWS:

* * * AWARD WAS MADE TO THIEF RIVER MOTORS, INC., 2 CARS AT $806.45 EACH, OR $1,612.90, LESS EXCISE TAX OF $44.40, LESS TRADE-IN ALLOWANCE ON USED CARS OF $485.00, OR $1,083.50 NET F.O.B. THIEF RIVER FALLS, MINNESOTA, LOWEST BID MEETING REQUIREMENTS OF THE SPECIFICATIONS.

NOTE.--- DOES NOT EXCEED $750.00 STATUTORY LIMITATION AS SHOWN BELOW:

GROSS AMOUNT OF BID F.O.B. THIEF RIVER FALLS,

MINNESOTA--------------------------------------- $1,568.50

LESS FREIGHT FROM POINT OF ORIGIN, DETROIT,

MICHIGAN---------------------------------------- 129.61

PRICE OF TWO CARS AT POINT OF ORIGIN----------- 1,438.89

PRICE OF ONE CAR AT POINT OF ORIGIN------------ 719.445

I-1-IND-23067, AUGUST 12, 1940, WITH H. W. WOOD MOTOR CO., EVERETT, WASH., FOR DELIVERY OF ONE FOUR-DOOR PLYMOUTH SEDAN, F.O.B. DESTINATION MARYSVILLE, WASH., FOR $908.75, LESS TRADE-IN ALLOWANCE OF $255, AND EXCISE TAX OF $15.75. STANDARD FORM NO. 1036, ATTACHED TO THIS CONTRACT, BORE NOTATION AS FOLLOWS:

* * * AWARD WAS MADE TO H. W. WOOD MOTOR CO., AT $908.75 F.O.B. DESTINATION, LESS EXCISE TAX OF $15.75 LESS TRADE-IN ALLOWANCE OF $255.00 OR $638.00 NET, LOWEST BID MEETING REQUIREMENTS OF THE SPECIFICATIONS.

GROSS AMOUNT OF BID DELIVERED------------------------- $893.00

LESS FREIGHT FROM POINT OF ORIGIN, DETROIT, MICH---- 150.88

PRICE AT POINT OF ORIGIN-------------------------- 742.12

THE SPECIFICATIONS ACCOMPANYING THE LAST FOUR CONTRACTS ABOVE MENTIONED PROVIDED THAT:

B-7. BID PRICES EXCEEDING $750 PER UNIT AT POINT OF ORIGIN (FACTORY OR ASSEMBLY PLANT) CANNOT BE CONSIDERED, BECAUSE OF A STATUTORY LIMITATION TO THAT AMOUNT AS A MAXIMUM. BIDDERS ARE REQUESTED TO REFRAIN FROM SUBMITTING SUCH OFFERS.

PRESUMABLY THE SPECIFICATIONS ACCOMPANYING THE INVITATION FOR BIDS UNDER THE HALL CONTRACT INCLUDED THE SAME PROVISION, ALTHOUGH GENERAL PROVISIONS OF THE SPECIFICATIONS UNDER "B" ARE NOT ATTACHED TO THIS CONTRACT.

SPECIFICATIONS ATTACHED TO ALL OF THE SUBJECT CONTRACTS INCLUDED THE FOLLOWING PROVISION:

F-1 (C) IF A BID F.O.B. OUR DESTINATION IS SUBMITTED, DESCRIBE THE PROPOSED METHODS OF TRANSPORTATION FROM POINT OF ORIGIN (FACTORY OR ASSEMBLY PLANT) TO OUR DESTINATION:

UNDER THIS HEADING HALL COMPANY STATED:

TRUCK AWAY.

THE VELLENGA COMPANY STATED:

BY RAILROAD.

THE F. E. NORTHWAY, INC., STATED:

VIA RAILROAD.

THIEF RIVER MOTORS, INC., STATED:

ON HAND AT THIEF RIVER FALLS, MINN.

OVERLAND TO CASS LAKE, MINN.

ALSO, THAT COMPANY STATED:

WE MUST HAVE ORDER BY AUG. 12, 1940, TO ASSURE DELIVERY. STOCK ON HAND.

UNDER F-1 (C) H. W. WOOD MOTOR CO., EVERETT, WASH., STATED:

RAIL LOS ANGELES ASSEMBLY PLANT TO EVERETT, WASHINGTON.

DRIVE EVERETT, WASHINGTON, TO MARYSVILLE, WASHINGTON.

UPON RECEIPT OF THE FOREGOING CONTRACTS HERE FOR EXAMINATION AND FILING PURSUANT TO LAW, IT APPEARED THAT THE PROCEDURE FOLLOWED HAD BEEN AT VARIANCE WITH STATUTORY REQUIREMENTS AND NUMEROUS DECISIONS OF THIS OFFICE. ACCORDINGLY, THE AUDIT DIVISION OF THIS OFFICE ADDRESSED LETTERS OF SUBSTANTIALLY THE SAME TENOR TO THE PURCHASING OFFICER OF THE INTERIOR DEPARTMENT, REQUESTING EXPLANATION AND JUSTIFICATION FOR THE PROCEDURE FOLLOWED IN EACH INSTANCE.

IN REPLY TO OFFICE LETTER OF MAY 3, 1940, RELATIVE TO THE HALL CONTRACT, THERE WAS RECEIVED A LETTER OF MAY 23, 1940, IN PERTINENT PART, AS FOLLOWS:

WHILE IT IS TRUE THAT THE CONTRACTOR ALSO SUBMITTED AN F.O.B. SHIPPING POINT PRICE OF $822.75, IT IS POINTED OUT THAT THE SHIPPING POINT NAMED BY HIM WAS ESCONDIDO, CALIFORNIA, HIS PLACE OF BUSINESS, WHICH LOCATION IS NOT THE POINT OF ORIGIN FOR FORD CARS NOR IS LONG BEACH, CALIFORNIA, WHICH IS THE ASSEMBLY PLANT SUPPLYING THIS DEALER. DETROIT, MICHIGAN, IS THE FACTORY, OR PARENT PLANT, LOCATION FOR FORD CARS FROM WHICH POINT GOVERNMENT FREIGHT WAS FIGURED ON 3,084 LBS., THE SHIPPING WEIGHT SHOWN BY THE BIDDER, RESULTING IN A FIGURE OF $190.70, WHICH AMOUNT WAS USED IN DETERMINING WHETHER THE VEHICLE PRICE WAS WITHIN THE $750 STATUTORY LIMITATION.

THE BASIS FOR USING DETROIT, MICHIGAN, AS THE POINT OF ORIGIN IN THIS CASE IS IN ACCORDANCE WITH COMPTROLLER GENERAL'S DECISION A-93731 DATED APRIL 16, 1938, AND THE BASIS FOR USING GOVERNMENT FREIGHT RATES IN DETERMINING TRANSPORTATION CHARGES IS IN ACCORDANCE WITH COMPTROLLER GENERAL'S DECISION A-90487 DATED JULY 19, 1938.

WITH REFERENCE TO THE LAST PARAGRAPH OF YOUR LETTER, YOU ARE ADVISED THAT IN RESPONSE TO OFFICE LETTER OF JANUARY 25 OSCAR HALL COMPANY STATED: "OUR OPTION PERIOD STILL REMAINS 10 DAYS FROM THE ACCEPTANCE OF OUR BID.'

TO THIS LETTER THE AUDIT DIVISION REPLIED, UNDER DATE OF SEPTEMBER 16, 1940, IN MATERIAL PART, AS FOLLOWS:

UNDER THE CONDITIONS APPEARING IN THIS CASE, THE ADMINISTRATIVE ACTION IN SUBTRACTING THE AMOUNT OF $190.70 FROM THE PRICE OFFERED BY OSCAR HALL COMPANY AS REPRESENTING THE AMOUNT OF TRANSPORTATION COST ON A SIMILAR VEHICLE FROM DETROIT, MICHIGAN, TO DESTINATION AT GOVERNMENT RATES CONSTITUTED THE PURCHASE OF VEHICLE ON AN ENTIRELY DIFFERENT BASIS,FROM THAT OFFERED BY THE BIDDER, AND RESULTED IN PAYMENT TO THE CONTRACTOR OF $822.75 FOR THE AUTOMOBILE, INCLUDING THE TRADE-IN ALLOWANCE ON THE THREE USED VEHICLES, INSTEAD OF A MAXIMUM AMOUNT OF $750 ALLOWED BY THE STATUTE, OR AN EXCESS OF $72.75.

ACCORDINGLY, UPON THE FACTS PRESENTED, CREDIT MAY NOT BE ALLOWED FOR PAYMENT MADE IN ANY AMOUNT IN EXCESS OF $750, INCLUDING THE TRADE-IN ALLOWANCE OF $325 FOR THE USED VEHICLES.

OFFICE LETTERS AS ABOVE RELATIVE TO THE HALL AND OTHER CONTRACTS REFERRED TO ABOVE ELICITED REPLIES FROM THE PURCHASING OFFICER, DEPARTMENT OF THE INTERIOR, ADDRESSED TO THE AUDIT DIVISION OF THIS OFFICE, WHICH UNDER ALL THE CIRCUMSTANCES, IT IS DEEMED PROPER TO QUOTE INSOFAR AS HERE MATERIAL.

LETTER OF NOVEMBER 4, 1940, RE OSCAR HALL CONTRACT:

IT IS NOTED THAT DESPITE THE EXPLANATION SUBMITTED BY THIS OFFICE IN LETTER OF MAY 23, YOU HAVE DECLARED THIS PURCHASE TO HAVE BEEN IN EXCESS OF THE PRICE-LIMITING STATUTE BY THE AMOUNT OF $72.75, AND THAT CREDIT WOULD NOT BE ALLOWED FOR PAYMENT OF SUCH EXCESS.

THIS OFFICE IS UNABLE TO FIND ANY LOGIC IN THE THIRD PARAGRAPH OF YOUR LETTER WHICH APPARENTLY IS THE BASIS FOR YOUR DECLARATION. THE WHOLE SUBSTANCE APPEARS TO BE THAT THIS OFFICE WAS WRONG. NO REASON IS GIVEN FOR THIS DECLARATION, AND THERE IS NO REFUTATION OF THE FACTS AND CONCLUSIONS REPORTED BY THIS OFFICE IN LETTER OF MAY 23.

UNDER THE CIRCUMSTANCES, THERE IS DOUBT WHETHER A FURTHER REPORT WILL DISSOLVE THE MISUNDERSTANDING; HOWEVER, THIS OFFICE PRESENTS FOR YOUR CAREFUL CONSIDERATION THE FOLLOWING JUSTIFICATION FOR THE PURCHASE HERE INVOLVED:

THE DECISION IN 17 COMP. GEN. 854 READS IN PART AS FOLLOWS:

"/3) WHERE DESTINATION PRICES, ONLY, ARE QUOTED AND ARE IN EXCESS OF $750, FOR PURPOSES OF EVALUATION AND DETERMINATION IF THE ACTUAL PRICE OF THE AUTOMOBILE IS WITHIN THE STATUTORY LIMIT, THERE PROPERLY MAY BE DEDUCTED FROM THE AMOUNT OF THE BID THE ACTUAL COST OF TRANSPORTATION FROM FACTORY TO DESTINATION BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT.'

THE BID OF OSCAR HALL COMPANY ON ITEM 8, WHICH RESULTED IN CONTRACT I-1- IND-19756, WAS IN EFFECT A QUOTATION OF DESTINATION PRICE ONLY, BECAUSE THE ALTERNATE QUOTATION," F.O.B. BIDDER'S SHIPPING POINT," ESCONDIDO, CALIFORNIA WAS AT THE SAME PRICE AND, THEREFORE, OF NO PRACTICAL INTEREST TO THE GOVERNMENT. BY NO STRETCH OF THE IMAGINATION CAN THIS ALTERNATE QUOTATION, F.O.B. ESCONDIDO, CALIFORNIA, BE CONSTRUED AS A "FACTORY" PRICE. IT COULD BE CONSTRUED AS A QUOTATION FOR DELIVERY AT AN "INTERMEDIATE POINT" (SEE GENERAL RULE (4) IN 17 COMP. GEN. 854) BUT IN THIS INSTANCE SUCH CONSTRUCTION SERVES NO PRACTICAL PURPOSE, BECAUSE OF THE IDENTICAL PRICES. THE ,FACTORY," FOR PURPOSES OF THE RULE (3) QUOTED ABOVE, IS LOCATED AT DETROIT, MICHIGAN, THE OFFER BEING ON A FORD AUTOMOBILE.

ACCORDINGLY, IN EVALUATING THE BID OF OSCAR HALL COMPANY, IN THE AMOUNT OF $822.75 F.O.B. DESTINATION, SAN DIEGO, CALIFORNIA, THERE WAS COMPUTED THE TRANSPORTATION COST FROM DETROIT, MICHIGAN, TO DESTINATION BY ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT, AND THIS AMOUNTED TO $190.70. APPLYING RULE (3) QUOTED ABOVE, THIS AMOUNT WAS DEDUCTED FROM THE DESTINATION PRICE TO ASCERTAIN WHETHER THAT PRICE WAS FOR CONSIDERATION UNDER THE PRICE-LIMITING STATUTE. THE COST OF THE AUTOMOBILE EXCLUSIVE OF TRANSPORTATION COSTS, AS EVALUATED IN THIS MANNER, WAS FOUND TO BE $632.05, WHICH WAS WITHIN THE STATUTORY LIMITATION. THE BID, WAS THEREFORE, ACCEPTED.

IF THE PROCEDURE FOLLOWED IN THIS INSTANCE, AS OUTLINED ABOVE, IS NOT EXACTLY IN ACCORDANCE WITH 17 COMP. GEN. 854, THIS OFFICE WOULD APPRECIATE BEING INFORMED EXACTLY IN WHAT RESPECT IT DEVIATES THEREFROM.

LETTER OF NOVEMBER 5, 1940, RE F. E. NORTHWAY, INC., CONTRACT:

THE DECISION IN 17 COMP. GEN. 854 READS IN PART AS FOLLOWS:

"/3) WHERE DESTINATION PRICES, ONLY, ARE QUOTED AND ARE IN EXCESS OF $750, FOR PURPOSES OF EVALUATION AND DETERMINATION IF THE ACTUAL PRICE OF THE AUTOMOBILE IS WITHIN THE STATUTORY LIMIT, THERE PROPERLY MAY BE DEDUCTED FROM THE AMOUNT OF THE BID THE ACTUAL COST OF TRANSPORTATION FROM FACTORY TO DESTINATION BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT (17 COMP. GEN. 580).'

THE BID OF F. E. NORTHWAY, INC., ON ITEM 2, WHICH RESULTED IN CONTRACT I- 1-IND-23058, WAS IN EFFECT A QUOTATION OF DESTINATION PRICE ONLY, BECAUSE THE ALTERNATE QUOTATION "F.O.B. BIDDER'S SHIPPING POINT" WAS IDENTICAL AS TO PRICE AND POINT OF DELIVERY, I.E., $826 F.O.B. OKLAHOMA CITY, OKLAHOMA. THE ALTERNATE OFFER "F.O.B. BIDDER'S SHIPPING POINT" SERVED ABSOLUTELY NO PRACTICAL PURPOSE, AND WAS THEREFORE DISREGARDED. THE "FACTORY," FOR PURPOSES OF THE RULE QUOTED ABOVE, IS LOCATED AT DETROIT, MICHIGAN, THE OFFER BEING ON A FORD AUTOMOBILE. ACCORDINGLY, IN EVALUATING THE BID OF F. E. NORTHWAY, INC., IN THE AMOUNT OF $826 F.O.B. DESTINATION, OKLAHOMA CITY, OKLAHOMA, THERE WAS COMPUTED THE TRANSPORTATION COST FROM DETROIT, MICHIGAN, TO DESTINATION BY ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT, AND THIS AMOUNTED TO $78.74. APPLYING RULE (3) QUOTED ABOVE, THIS AMOUNT WAS DEDUCTED FROM THE DESTINATION PRICE TO ASCERTAIN WHETHER THAT PRICE WAS FOR CONSIDERATION UNDER THE PRICE LIMITING STATUTE. THE COST OF THE AUTOMOBILE EXCLUSIVE OF TRANSPORTATION COSTS, AS EVALUATED IN THIS MANNER, WAS FOUND TO BE $747.26, WHICH WAS WITHIN THE STATUTORY LIMITATION. THE BID WAS THEREFORE ACCEPTED.

IF YOU SHOULD DISAGREE WITH THE CONCLUSION THAT THE BID OF F. E. NORTHWAY, INC., WAS IN EFFECT A QUOTATION OF DESTINATION PRICE ONLY, PLEASE NOTICE THAT THE ALTERNATE OFFER "F.O.B. SHIPPING POINT" OKLAHOMA CITY, OKLAHOMA, MIGHT THEN BE CONSIDERED AN "INTERMEDIATE POINT" UNDER RULE (4) IN 17 COMP. GEN. 854, AND THE ULTIMATE RESULT OF THE EVALUATION WOULD BE THE SAME.

IF THE PROCEDURE FOLLOWED IN THIS INSTANCE, AS OUTLINED ABOVE, IS NOT EXACTLY IN ACCORDANCE WITH 17 COMP. GEN. 854, THIS OFFICE WOULD APPRECIATE BEING INFORMED EXACTLY IN WHAT RESPECT IT DEVIATES THEREFROM.

LETTER OF NOVEMBER 4, 1940, RE THIEF RIVER MOTORS, INC., AND H. W. WOOD MOTOR CO. CONTRACTS:

IN THE DECISION OF THE ACTING COMPTROLLER GENERAL TO THIS DEPARTMENT, APRIL 16, 1938 (17 COMP. GEN. 854), THE FOLLOWING STATEMENTS APPEAR:

"/3) WHERE DESTINATION PRICES ONLY ARE QUOTED AND ARE IN EXCESS OF $750, FOR PURPOSES OF EVALUATION AND DETERMINATION IF THE ACTUAL PRICE OF THE AUTOMOBILE IS WITHIN THE STATUTORY LIMIT, THERE PROPERLY MAY BE DEDUCTED FROM THE AMOUNT OF THE BID THE ACTUAL COST OF TRANSPORTATION FROM FACTORY TO DESTINATION BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT. 17 COMP. GEN. 580.

"/4) WHERE PRICES ARE QUOTED FOR DELIVERY AT AN INTERMEDIATE POINT, AND OTHERWISE ARE ACCEPTABLE, THERE MAY BE DEDUCTED FROM SUCH PRICES, FOR THE PURPOSES STATED IN THE PRECEDING PARAGRAPH, THE COST OF TRANSPORTATION FROM FACTORY TO SUCH INTERMEDIATE POINT.'

THE BID OF THIEF RIVER MOTORS, INC., ON ITEM 2, WHICH RESULTED IN CONTRACT I-1-IND-23066, OFFERED TWO (2) 1940 MODEL FORD 2-DOOR SEDAN AUTOMOBILES F.O.B.'BIDDERS'S SHIPPING POINT" THIEF RIVER FALLS, MINNESOTA, AT $806.45 EACH, TOTAL $1,612.90. THE F.O.B. POINT APPLICABLE TO THIS OFFER WAS NEITHER THE FORD FACTORY ( DETROIT, MICHIGAN) NOR THE ADVERTISED DESTINATION ( CASS LAKE, MINNESOTA), BUT, UNDER RULE (4) QUOTED ABOVE, WAS AN "INTERMEDIATE POINT.' THE TRANSPORTATION COST FROM FACTORY ( DETROIT, MICHIGAN) TO THIEF RIVER FALLS, MINNESOTA, BY ROUTE AND MEANS MOST ADVANTAGEOUS TO THE GOVERNMENT WAS COMPUTED AND FOUND TO EXCEED THE SIMILAR COST FROM FACTORY TO DESTINATION, WHICH WAS $129.61. THEREFORE, IN EVALUATING WITH RESPECT TO THE $750 LIMITATION, IT WAS CONSIDERED PROPER TO DEDUCT ONLY THE LESSER COST, $129.61, FROM FACTORY TO DESTINATION. THERE WAS SPECIFIC AUTHORITY FOR DEDUCTING THE TRANSPORTATION COST FROM FACTORY TO THE INTERMEDIATE POINT, BUT IN THIS INSTANCE SUCH DEDUCTION WOULD HAVE SEEMED LESS IN ACCORD WITH THE GENERAL PRINCIPLE STATED, BECAUSE OF THE PECULIAR CIRCUMSTANCES THAT THE TRANSPORTATION COST FROM FACTORY TO DESTINATION WAS LESS THAN FROM FACTORY TO THE INTERMEDIATE POINT.

EVALUATION OF THE BID OF THIEF RIVER MOTORS, INC., BY THE METHOD STATED, AND AS SET FORTH ON THE FORM 1036 ATTACHED TO THE CONTRACT, SHOWED THAT THE PRICE-LIMITING STATUTE, AS INTERPRETED IN 17 COMP. GEN. 854, WAS NOT VIOLATED IN THIS CONTRACT.

THE BID OF H. W. WOOD MOTOR CO. ON ITEM 6, WHICH RESULTED IN CONTRACT I-1 -IND-23067, OFFERED ONE (1) PLYMOUTH 4-DOOR SEDAN AUTOMOBILE F.O.B. THE ADVERTISED DESTINATION, MARYSVILLE, WASHINGTON, FOR $908.75. FOR PURPOSES OF EVALUATION, THERE WAS DEDUCTED THE INCLUDED FEDERAL EXCISE TAX ($15.75) AND, UNDER RULE (3) QUOTED ABOVE, THE COMPUTED COST OF TRANSPORTATION FROM THE FACTORY ( DETROIT, MICHIGAN) TO DESTINATION ( MARYSVILLE, WASHINGTON) IN THE AMOUNT OF $150.88. THE COST THUS EVALUATED, EXCLUSIVE OF TAX AND TRANSPORTATION COST, WAS $742.12, AS STATED ON THE FORM 1036, AND WAS WITHIN THE STATUTORY LIMITATION.

IT HAS BEEN AND STILL IS THE UNDERSTANDING OF THIS OFFICE THAT IN APPLYING THE RULES (3) AND (4) QUOTED ABOVE, THE TERM "FACTORY" IS NOT SYNONYMOUS WITH THE TERM "ASSEMBLY PLANT," INSOFAR AS THE AUTOMOTIVE INDUSTRY IS CONCERNED. THIS UNDERSTANDING IS BASED ON COMMON KNOWLEDGE, READILY VERIFIABLE, THAT THE "ASSEMBLY PLANTS" OF THE LEADING MANUFACTURERS ( CHEVROLET, FORD, AND PLYMOUTH), DO NOT MANUFACTURE, BUT MERELY ASSEMBLE THE VEHICLES WHICH ARE ACTUALLY MANUFACTURED IN THE FACTORIES LOCATED IN OR NEAR DETROIT, MICHIGAN. IF THIS UNDERSTANDING IS CORRECT, AND THERE IS NO EVIDENCE HERE TO THE CONTRARY, YOUR REFERENCE TO THE SHIPMENT BEING MADE FROM THE " LOS ANGELES ASSEMBLY PLANT" IN THIS INSTANCE IS IRRELEVANT.

WITH REFERENCE TO YOUR CITATION OF THE DECISION B-2072, THIS DECISION WAS RENDERED TO THE DEPARTMENT OF AGRICULTURE IN REGARD TO CASES WHEN THE PRICES OFFERED F.O.B. VARIOUS "ASSEMBLY PLANTS," IN ADDITION TO PRICE F.O.B.'MAIN FACTORY," WERE ALL WITHIN THE STATUTORY LIMITATION. THE DECISION IN 17 COMP. GEN. 854 COVERED PROBLEMS SIMILAR TO THE CONTRACTS HERE INVOLVED, AND WAS DIRECTED TO THIS DEPARTMENT IN RESPONSE TO A SPECIFIC REQUEST FOR ADVICE. OBVIOUSLY, WHEN THE TWO DECISIONS MAY APPEAR TO BE IN CONFLICT, THIS OFFICE MUST BE GUIDED BY THE SPECIFIC INSTRUCTIONS OF THE ACTING COMPTROLLER GENERAL TO THE DEPARTMENT OF THE INTERIOR UNTIL INSTRUCTED OTHERWISE BY A SUPERSEDING DECISION.

FOR THE REASONS STATED, THIS OFFICE BELIEVES THAT THE CONTRACTS HERE INVOLVED SHOULD NOT BE QUESTIONED FURTHER IN REGARD TO COMPLIANCE WITH THE PRICE-LIMITING STATUTE.

THE FILES OF THIS OFFICE REVEAL SIMILAR QUESTIONS RAISED BY YOUR OFFICE AND SIMILAR REPLIES BY THIS OFFICE ON MANY CONTRACTS DURING THE PAST TWO YEARS, INVOLVING MUCH CORRESPONDENCE RELATING TO THE SAME SUBJECT, THE FREQUENT REITERATION BY THIS OFFICE OF THE SAME BASIS FOR THE EVALUATION METHOD. IN MOST CASES THE FIRST REPORT WAS NOT FURTHER QUESTIONED, INDICATING THAT IT WAS ACCEPTABLE. IT WOULD BE MUTUALLY ADVANTAGEOUS TO HAVE A DEFINITE UNDERSTANDING, BY MEANS OF AN AUTHORITATIVE DECISION, AS TO WHETHER THE METHODS OF THIS OFFICE ARE INCORRECT OR THE QUESTIONS RAISED BY YOUR OFFICE ARE UNNECESSARY IN THE PARTICULAR MATTERS HERE INVOLVED.

LETTER OF NOVEMBER 5, 1940, RE VELLENGA MOTOR CO., INC., CONTRACT:

THE BID OF VELLENGA MOTOR COMPANY ON ITEM 2, WHICH RESULTED IN CONTRACT I -1-IND-19904, OFFERED ON FORD, 1940 MODEL, 4-DOOR SEDAN AUTOMOBILE AT THE FOLLOWING PRICES:

F.O.B. DESTINATION: RUSHVILLE, NEBRASKA----------- $840.00

F.O.B. BIDDER'S SHIPPING POINT: DETROIT,

MICHIGAN-------------------------------------------- $781.00

(BOTH PRICES INCLUDED $19.95 FEDERAL EXCISE TAX.) THE TRANSPORTATION COST FROM FACTORY TO DESTINATION BY THE ROUTE AND MEANS MOST ADVANTAGEOUS TO THE GOVERNMENT WAS COMPUTED ON THE BASIS OF THE SHIPPING WEIGHT OF 2,982 POUNDS STATED IN THE BID, AND WAS FOUND TO BE $100.56. ACCORDINGLY, IT WAS IMMEDIATELY APPARENT, AND WITHOUT REFERENCE TO THE EFFECT OF THE PRICE-LIMITING STATUTE, THAT OF THE TWO PRICES QUOTED, THE F.O.B. DESTINATION PRICE WAS DEFINITELY MORE ADVANTAGEOUS TO THE GOVERNMENT. THENCEFORTH, THE BID PRICE F.O.B. DETROIT, MICHIGAN, WAS DISREGARDED INSOFAR AS ASCERTAINING THE LOW BID WAS CONCERNED.

THIS OFFICE DESIRES TO EMPHASIZE THE POINT THAT THE BID PRICE F.O.B. DETROIT, MICHIGAN, WHICH IN THIS CASE (A FORD AUTOMOBILE) IS UNQUESTIONABLY A BID PRICE F.O.B.'FACTORY," WAS ELIMINATED FROM CONSIDERATION ON TWO COUNTS, NAMELY, THAT IT WAS NOT THE LOWEST BID, AND THAT IT WAS IN EXCESS OF THE STATUTORY PRICE LIMITATION. IT DOES NOT APPEAR PARTICULARLY IMPORTANT AS TO WHICH COUNT HAS PRIORITY, BECAUSE THE EFFECT IS THE SAME. IF THIS OFFICE HAD ACCEPTED THIS BID PRICE F.O.B. DETROIT, MICHIGAN, THE ACTION WOULD HAVE VIOLATED 3709 R.S. AS WELL AS THE PRICE-LIMITING STATUTE.

IN ACCEPTING THE BID PRICE OF THIS SAME BIDDER F.O.B. DESTINATION, IN THE AMOUNT OF $840, THERE WAS NO VIOLATION OF EITHER STATUTE, AS UNDERSTOOD BY THIS OFFICE. THE LOWEST BID MEETING SPECIFICATIONS, TRADE-IN ALLOWANCE CONSIDERED, WAS ACCEPTED, THUS SATISFYING 3709 R.S. THE COST OF THE AUTOMOBILE SO PURCHASED, EXCLUSIVE OF TRANSPORTATION COST FROM FACTORY TO DESTINATION, WAS WITHIN THE STATUTORY LIMITATION, THUS SATISFYING THAT STATUTE.

IT IS APPARENT THAT YOUR OBJECTION IN THIS INSTANCE IS BASED ON AN INTERPRETATION OF CERTAIN LANGUAGE IN 17 COMP. GEN. 854 WHICH YOU QUOTED AS FOLLOWS:

"NO BID OFFERING A PASSENGER-CARRYING VEHICLE AT A FACTORY PRICE IN EXCESS OF $750 EITHER INCLUSIVE OR EXCLUSIVE OF TRADE-IN VALUE OF ANY VEHICLE TO BE EXCHANGED, IS LEGALLY FOR CONSIDERATION UNDER THE $750 STATUTORY PRICE LIMITATION.'

YOU APPARENTLY INTERPRET THE WORD "BID" AS ALL-INCLUSIVE, THAT IS, TO INCLUDE ALL OF THE VARIOUS OFFERS THAT A BIDDER MAY MAKE FOR DELIVERY AT POINTS OTHER THAN DESTINATION. BY SUCH INTERPRETATION, YOU REQUIRE THE REJECTION OF ALL SUCH OFFERS WHEN ONE OF THEM IS F.O.B. FACTORY IN EXCESS OF $750. THE ABSURDITIES THAT MAY RESULT FROM SUCH INTERPRETATION ARE MANY, OF WHICH THE FOLLOWING IS A REASONABLE EXAMPLE:

BID NO. 1.--- FORD COUPE:

F.O.B. WASHINGTON, D.C.--------------------------------- $800

F.O.B. DETROIT, MICHIGAN--------------------------------755

BID NO. 2.--- FORD COUPE:

F.O.B. WASHINGTON, D.C.--------------------------------- $820

FREIGHT ON GOVERNMENT BILL OF LADING FROM DETROIT---------- 70

F.O.B. DETROIT, MICHIGAN------------------------------ NO BID UNDER YOUR INTERPRETATION, BID NO. 1 IS FOR CONSIDERATION, BUT AWARD MAY BE MADE ON BID NO. 2. THE GOVERNMENT PAYS $20 MORE FOR THE SAME VEHICLE, BECAUSE BIDDER NO. 1 HAPPENED TO INCLUDE IN HIS BID AN OFFER F.O.B. FACTORY WHICH EXCEEDED THE STATUTORY LIMITATION.

THIS OFFICE BELIEVES THAT SUCH INTERPRETATION IS INCORRECT, BECAUSE IT LEADS TO ABSURDITIES AND TO EXCESSIVE EXPENDITURES OF PUBLIC MONIES, IN DIRECT VIOLATION OF THE OBVIOUS PURPOSE OF THE PRICE LIMITING STATUTE WHICH IT PRESUMES TO PROTECT. IT IS ADMITTEDLY NOT THE FUNCTION OF THIS OFFICE TO INTERPRET THE LAW, BUT IT SEEMS PROPER TO PROTEST WHAT APPEARS TO BE AN INCORRECT INTERPRETATION, ESPECIALLY SINCE THE EXPERIENCE OF THIS OFFICE IN PROCURING AUTOMOBILES INDICATES THAT THOUSANDS OF DOLLARS ANNUALLY MAY BE WASTED THEREBY.

ON THE BASIS OF THE FACTS AND CONCLUSIONS HEREIN CONTAINED, AND FOR THE CONSERVATION OF PUBLIC MONIES, THIS OFFICE REQUESTS THAT YOU REVIEW AND REVISE YOUR INTERPRETATION OF THE DECISION IN 17 COMP. GEN. 854 TO BE IN ACCORD WITH THESE CONCLUSIONS, AND THAT THIS AND SIMILAR PURCHASES BE NOT FURTHER QUESTIONED IN REGARD TO THE PRICE-LIMITING STATUTE.

IT WILL BE SEEN FROM THE FOREGOING THAT THE PURCHASING OFFICER OF YOUR DEPARTMENT HAS RELIEF FOR JUSTIFICATION OF THE PROCEDURE FOLLOWED IN THESE CASES UPON HIS APPARENT INTERPRETATION OF OFFICE DECISION OF APRIL 16, 1938, TO YOU, 17 COMP. GEN. 854, AND UPON HIS APPARENT VIEW THAT THE MAIN FACTORY WHERE AUTOMOBILES OR COMPONENT PARTS MAY BE MANUFACTURED IS THE "POINT OF ORIGIN" OF AUTOMOBILES PURCHASED FOR THE GOVERNMENT IN EVERY INSTANCE, IRRESPECTIVE OF ANY POINT FROM WHICH OR AT WHICH A BIDDER MAY PROPOSE DELIVERY OR MAY NAME AS THE POINT OF ORIGIN OF HIS SELECTION, OR FROM WHICH DELIVERY ACTUALLY MAY BE MADE. SUCH A PROPOSITION OR VIEW WAS NEGATIVED IN A DECISION OF MARCH 27, 1939, TO THE SECRETARY OF AGRICULTURE, B-2072, MANY MONTHS BEFORE ANY OF THE CONTRACTS HERE UNDER CONSIDERATION WERE CONSUMMATED, AND WHILE, AS SUGGESTED BY YOUR PURCHASING OFFICER, THAT DECISION CONSIDERED CERTAIN CASES WHERE PRICES SUBMITTED, INCLUSIVE OF TRANSPORTATION COSTS, WERE WITHIN THE STATUTORY PRICE LIMIT, FOR THE REASON THAT THE SUBMISSION OF THE SECRETARY OF AGRICULTURE IN THAT INSTANCE HAD REFERENCE TO SPECIFIC INSTANCES CITED THEREIN, THE PRINCIPLE STATED AND RULE LAID DOWN WOULD APPEAR TO BE APPLICABLE IN ANY CASE--- THAT THERE WAS NO LEGAL AUTHORITY FOR TREATING PURPORTED MAIN FACTORY PRICES ARBITRARILY ARRIVED AT AS ACTUAL PRICES OF THE VEHICLES IN EVERY INSTANCE WITHOUT REGARD TO PRICES QUOTED FOR DELIVERY AT OR FROM SOME OTHER POINT OR POINTS OF ORIGIN OF BIDDER'S SELECTION, AND WITHOUT REGARD TO THE ACTUAL POINT OF ORIGIN. IT IS TO BE NOTED IN THIS CONNECTION THAT THE INSTANCES CITED IN THE SUBMISSION OF THE SECRETARY OF AGRICULTURE WERE THOSE IN WHICH BIDS WERE RECEIVED FROM MANUFACTURERS OF THE VEHICLES INVOLVED, THE PURPORTED PRICES OF SOME ITEMS FOR DELIVERY F.O.B.'MAIN FACTORY LOCATION" AND ON OTHERS FOR DELIVERY AT VARIOUS ASSEMBLY PLANTS. IT WAS SAID THAT WHILE BIDDERS MIGHT AND SHOULD BE REQUESTED TO SUBMIT PRICES FOR DELIVERY BOTH F.O.B. GOVERNMENT DESTINATION AND F.O.B. POINT OF BIDDER'S SELECTION--- FACTORY OR OTHERWISE--- THERE WAS NO LEGAL COMPULSION UPON A BIDDER, EITHER MANUFACTURER OR DEALER, TO SUBMIT FACTORY PRICES IN EVERY INSTANCE, WHATEVER THEY MIGHT BE, OR TO UNDERTAKE DELIVERY AT SOME POINT OTHER THAN HIS OWN SELECTION, FACTORY OR OTHERWISE. FORTIORI, WOULD THE RULE STATED IN THAT DECISION BE FOR APPLICATION WHEN THERE IS NO SHOWING AS TO ACTUAL FACTORY OR ASSEMBLY PLANT PRICES, NO SHOWING OF WHAT AMOUNT IS ACTUALLY INCLUDED IN A BID FOR COST OF TRANSPORTATION, AND THE ONLY "VEHICLE PRICE" ARRIVED AT IS A PURELY SUPPOSITIONAL OR THEORETICAL PRICE BASED UPON A MERE ASSUMPTION THAT IF A BID HAD BEEN RECEIVED QUOTING A PRICE F.O.B.'MAIN FACTORY," IT WOULD HAVE BEEN THE PRICE ARBITRARILY DETERMINED BY SUBTRACTION FROM THE AMOUNT OF DESTINATION BID OF A SUM EQUAL TO THE ADMINISTRATIVELY COMPUTED TRANSPORTATION COST FROM THE PURPORTED "MAIN FACTORY.' THE DECISION APPEARING IN 17 COMP. GEN. 854, QUOTED FROM AND RELIEF UPON BY THE PURCHASING OFFICER OF YOUR DEPARTMENT IN SUPPORT OF ADMINISTRATIVE ACTION IN THESE MATTERS WAS RENDERED IN RESPONSE TO YOUR SUBMISSION OF MARCH 26, 1938, IN WHICH THE SPECIFIC QUESTION PRESENTED WAS WHETHER A BID OF THE GENERAL MOTORS CORPORATION, CHEVROLET DIVISION, OFFERING A VEHICLE F.O.B. WHARF AT SAN FRANCISCO, CALIFORNIA, FOR OCEAN TRANSSHIPMENT, AT A PRICE OF $755.86, PROPERLY WAS FOR CONSIDERATION AS OFFERING A VEHICLE, EXCLUSIVE OF TRANSPORTATION COSTS INVOLVED IN DELIVERY WITHIN THE STATUTORY PRICE LIMIT. TWO OTHER BIDS IN THAT CASE OFFERED AUTOMOBILES F.O.B. DETROIT, MICH., AND IT APPEARED FROM THE SUBMISSION THAT TRANSPORTATION COSTS FROM DETROIT, MICH., TO SAN FRANCISCO, CALIF., ON THE VEHICLES OFFERED IN THOSE TWO BIDS, WHILE DIFFERING VERY SLIGHTLY, AMOUNTED TO APPROXIMATELY $126 EACH. IT WAS POINTED OUT THAT THE PARENT PLANTS OF BOTH THE GENERAL MOTORS CORPORATION, CHEVROLET DIVISION, AND THE FORD MOTOR CO. WERE LOCATED IN MICHIGAN, AND IT WAS REASONABLE TO ASSUME THAT TRANSPORTATION FROM THOSE PLANTS TO SAN FRANCISCO ON THE VEHICLES OFFERED WOULD BE APPROXIMATELY THE SAME OR COMPARABLE, AND IT WAS CONCLUDED THAT---

* * * FOR THE PURPOSE OF DETERMINING WHETHER BIDS ARE WITHIN THE STATUTORY PRICE LIMIT, THERE WOULD APPEAR NO LEGAL OR OTHER OBJECTION TO CONSIDERATION OF THE ACTUAL COST OF TRANSPORTATION FROM FACTORY TO OCEAN SHIPPING POINT BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT ON VEHICLES OFFERED AT F.O.B. OCEAN SHIPPING POINT PRICES. IN THE PRESENT CASE IT MAY BE ASSUMED THAT SUCH ACTUAL COST OF TRANSPORTATION WOULD EXCEED THE DIFFERENCE BETWEEN THE BID PRICES F.O.B. SAN FRANCISCO, AND THE STATUTORY MAXIMUM OF $750. IT IS MANIFEST THAT THE DECISION HAD DIRECT AND PARTICULAR REFERENCE TO THE CONCRETE FACTS THERE PRESENTED AND THAT THE CONCLUSION REACHED WAS PREMISED UPON THE FACT THAT THE TWO OTHER BIDS QUOTED PRICES F.O.B. DETROIT, MICH., UPON FINISHED ARTICLES--- THAT IS TO SAY, VEHICLES "COMPLETELY EQUIPPED FOR OPERATION" AS REQUIRED BY THE PRICE LIMIT STATUTES, AND THAT THE DECISION WAS NOT FOR APPLICATION UNDER ALL CIRCUMSTANCES OR WHERE THE FACTS MIGHT DIFFER.

YOUR SUBMISSION IN THAT CASE REQUESTED THAT THE DECISION ON THE SPECIFIC QUESTION PRESENTED "BE MADE TO INCLUDE A STATEMENT OF GENERAL PRINCIPLES APPLICABLE TO CASES OF THIS KIND THAT MAY OCCUR IN THE FUTURE.' RESPONSE TO THAT REQUEST, THE DECISION STATED--- OR RATHER RESTATED--- AND SUMMARIZED IN GENERAL TERMS, RULES AND PRINCIPLES LAID DOWN IN NUMEROUS EARLIER DECISIONS OF THIS OFFICE CITED THEREIN, WHICH IN TURN, REFERRED TO OTHERS OF LIKE IMPORT. THE DECISION TO YOU WAS NOT INTENDED TO, AND DID NOT, ALTER, MODIFY, SUPERSEDE, LIMIT, OR DEPART FROM THE PRINCIPLES STATED IN PREVIOUS DECISIONS IN ANY WAY; AND WHILE IT DID NOT IN EVERY INSTANCE SPECIFICALLY REFER TO A POINT OF ORIGIN OF BIDDER'S SELECTION OTHER THAN THE "FACTORY" AND STANDING ALONE, UNDER A NARROW INTERPRETATION OF THE WORD "FACTORY," MIGHT BE SUSCEPTIBLE OF THE INTERPRETATION APPARENTLY PLACED UPON IT BY YOUR PURCHASING AGENT, THE DECISION STATED NO RULE AND ENUNCIATED NO PRINCIPLE (WITH THE POSSIBLE EXCEPTION OF DELIVERY AT "INTERMEDIATE POINTS") NOT THERETOFORE LAID DOWN, AND PROPERLY COULD BE READ AND INTERPRETED ONLY IN THE LIGHT OF WHAT HAD GONE BEFORE WHERE THE SAME GENERAL SUBJECT HAD BEEN TREATED WITH MORE EXACTITUDE.

REEXAMINING PRIOR DECISIONS ALONG THE SAME LINE WITH MORE DETAIL, IT APPEARS THAT THE QUESTION AS TO WHETHER THE STATUTORY PRICE LIMIT OF $750 FOR PASSENGER-CARRYING VEHICLES WAS TO BE CONSIDERED AS BEING INCLUSIVE OR EXCLUSIVE OF TRANSPORTATION COST WAS FIRST CONSIDERED BY THIS OFFICE IN REPLY TO A SUBMISSION BY YOU UNDER DATE OF JULY 14, 1934, THE DECISION BEING DATED JULY 28, 1934, AND APPEARING IN 14 COMP. GEN. 82, WHICH DECISION MAY BE CONSIDERED AS THE LEADING DECISION OF THIS OFFICE ON THAT POINT. QUESTIONS PRESENTED IN YOUR THEN SUBMISSION, SO FAR AS HERE PERTINENT, WERE AS FOLLOWS:

(1) IS THE "COST" REFERRED TO THE PRICE OFFERED BY THE BIDDER AT POINT OF DELIVERY TO THE GOVERNMENT WITHOUT TRANSPORTATION TO THE ULTIMATE DESTINATION BEING INCLUDED, OR

(2) IS THE "COST" THE PRICE TO BE PAID AT FINAL DESTINATION OR AT THE BIDDER'S DELIVERY POINT PLUS TRANSPORTATION COSTS TO ULTIMATE DESTINATION? ( ITALICS SUPPLIED.) IT WAS HELD THAT---

TRANSPORTATION COSTS OCCASIONED BY A GOVERNMENT PURCHASE OF A MOTOR PROPELLED PASSENGER-CARRYING VEHICLE--- THAT IS, TRANSPORTATION COSTS INVOLVED IN DELIVERY THEREOF--- ARE NOT A PART OF THE "COST" REFERRED TO IN SECTION 3 (A) OF THE ACT OF MARCH 15, 1934 (48 STAT. 450), QUOTED IN THE FIRST PARAGRAPH OF YOUR SUBMISSION. ALSO, IT WAS SAID THAT---

REQUESTS FOR BIDS ON SUCH VEHICLES SHOULD REQUIRE QUOTATION OF PRICE FOR DELIVERY BOTH F.O.B. GOVERNMENT'S DESTINATION AND F.O.B. POINT OF BIDDER'S SELECTION--- FACTORY OR OTHERWISE--- SO THAT THE GOVERNMENT, HAVING REGARD FOR LAND-GRANT OR OTHER ADVANTAGES AVAILABLE IN SUCH CONNECTION, MAY ACCEPT THAT BID WHICH WILL RESULT IN THE LOWEST NET CHARGES AGAINST PUBLIC MONEYS. * * * ( ITALICS SUPPLIED.) THE RULE LAID DOWN IN THAT DECISION HAS NOT BEEN DEPARTED FROM EXCEPT INSOFAR AS THE GENERAL RULE MAY HAVE BEEN CLARIFIED IN SOME MEASURE IN SUBSEQUENT DECISIONS. IN 16 COMP. GEN. 207, 210, IT WAS SAID:

IT HAS BEEN HELD * * * BIDS SHOULD BE INVITED OFFERING BOTH FACTORY, OR SHIPPING POINT, AND DESTINATION DELIVERY * * * ( ITALICS SUPPLIED.) SEE 16 ID. 448, 450 TO THE SAME EFFECT. IN 17 COMP. GEN. 580, 583, IT WAS SAID:

* * * IN THE CASE OF A LOW BIDDER OFFERING DESTINATION BID, ONLY, IN EXCESS OF $750, THERE WOULD BE PROPER FOR CONSIDERATION THE ACTUAL COST OF TRANSPORTATION FROM POINT OF ORIGIN TO DESTINATION BY THE ROUTE AND MEANS MOST ADVANTAGEOUS TO THE GOVERNMENT; 14 COMP. GEN. 82; 16 COMP. GEN. 210; ID. 448. * * * THE LANGUAGE OF THESE AND OTHER DECISIONS OF THIS OFFICE OF THE SAME TENOR NECESSARILY CONNOTES THE PRIVILEGES OF A BIDDER TO SELECT A "POINT OF ORIGIN" OTHER THAN THE MAIN OR "PARENT" FACTORY AND THE POSSIBILITY AND PROSPECT OF HIS DOING SO; AND IN NO ONE OF THESE DECISIONS WAS THERE SUGGESTED OR IMPLIED AN AUTHORITY TO SELECT THE SO-CALLED MAIN FACTORY OF THE CONTRACTOR AS THE "POINT OF ORIGIN" FOR THE PURPOSE OF DETERMINING THE LEGALITY OF THE VEHICLE PRICES, WITHOUT REGARD TO THE ACTUAL FACTS. HENCE, SINCE THE GENERAL RULES SET FORTH IN 17 COMP. GEN. 854, CITED AND CLEARLY WERE BOTTOMED UPON SUCH EARLIER DECISIONS, THE WORD FACTORY, AS USED IN THAT DECISION, MANIFESTLY WAS USED IN A GENERAL AND INCLUSIVE RATHER THAN A RESTRICTIVE AND EXCLUSIVE SENSE, AND REASONABLY COULD BE UNDERSTOOD AND INTERPRETED ONLY AS REFERRING, NOT ALONE TO THE SO -CALLED MAIN FACTORY WHERE HETEROGENOUS AND MULTIFARIOUS AUTOMOBILE PARTS MAY OR MAY NOT BE MANUFACTURED, BUT ALSO, TO ANY AND ALL SUBORDINATE PLANTS WHERE SUCH PARTS ARE ASSEMBLED INTO A FINISHED AND FULLY EQUIPPED AUTOMOBILE SUBJECT TO PURCHASE BY THE GOVERNMENT.

THE VIEW OF YOUR PURCHASING OFFICER THAT THE VARIOUS "ASSEMBLY PLANTS" OF THE MANUFACTURERS OF CHEVROLET, FORD, AND PLYMOUTH OR ANY OTHER MAKES OF AUTOMOBILES "DO NOT MANUFACTURE, BUT MERELY ASSEMBLE THE VEHICLES WHICH ARE ACTUALLY MANUFACTURED IN THE FACTORIES LOCATED IN OR NEAR DETROIT, MICH; " IS, OF COURSE, BESIDE THE POINT WHEN A VEHICLE IS, IN FACT, SHIPPED FROM AN ASSEMBLY PLANT TO GOVERNMENT DESTINATION, SINCE IN SUCH CASE THE ASSEMBLY PLANT CLEARLY IS A "BIDDER'S SHIPPING POINT," OR "POINT OF ORIGIN" OF HIS SELECTION; AND WHERE DESTINATION PRICE ONLY IS QUOTED, AND SHIPMENT IS MADE FROM AN ASSEMBLY PLANT OTHER THAN THE MAIN FACTORY, THE AMOUNT PERMISSIBLE TO BE DEDUCTED FROM THE DESTINATION PRICE IN DETERMINING WHETHER THE ACTUAL PRICE OF THE VEHICLE, EXCLUSIVE OF TRANSPORTATION COST, IS WITHIN THE STATUTORY LIMIT IS THE TRANSPORTATION COST FROM THE ASSEMBLY PLANT FROM WHICH SHIPMENT IS, OR IS TO BE, MADE TO GOVERNMENT DESTINATION, AND NOT WHAT MIGHT BE TRANSPORTATION COSTS FROM THE "MAIN FACTORY" TO DESTINATION, IF SHIPMENT WERE TO BE MADE FROM THAT POINT. MOREOVER, THE VIEW EXPRESSED BY THE PURCHASING OFFICER WOULD APPEAR TO BE IN LARGE MEASURE AT ODDS WITH PHYSICAL FACTS AND KNOWN PRACTICES IN ANY EVENT. EVEN IF ALL OF THE COMPONENT PARTS OF AN AUTOMOBILE BE MANUFACTURED IN ONE OR MORE FACTORIES, SUCH PARTS DO NOT CONSTITUTE AN AUTOMOBILE; AND IF SUCH PARTS ARE SHIPPED TO "AN ASSEMBLY PLANT" LOCATED AT SOME POINT DISTANT FROM SAID FACTORY TO BE PUT TOGETHER OR "ASSEMBLED," IT IS NOT UNTIL SUCH ASSEMBLY IS COMPLETED THAT THE MANUFACTURE OF THE AUTOMOBILE IS ACCOMPLISHED AND THAT THERE IS ACTUALLY IN EXISTENCE THE VEHICLE "COMPLETELY EQUIPPED FOR OPERATION" AS REQUIRED. IT WOULD APPEAR TO BE BEYOND DOUBT THAT THE PRICE OF A FINISHED VEHICLE, F.O.B. A PARTICULAR ASSEMBLY PLANT OR ELSEWHERE, INCLUDES THE COST OF MANUFACTURING THE PARTS AT WHATEVER POINT THEY ARE MADE, THE COST OF MANUFACTURE OF THE AUTOMOBILE AT THAT POINT. HENCE, IT IS EVIDENT THE COST OF TRANSPORTATION OF THE PARTS FROM WHEREVER MANUFACTURED TO AN ASSEMBLY PLANT ARE ABSORBED INTO THE COST AND PRICE OF THE AUTOMOBILE AND CAN NO LONGER BE LOOKED UPON AS COST OF TRANSPORTATION, THERE BEING NO LEGAL BASIS FOR DEDUCTION OF A PART OF THE PRICE OF A FINISHED AUTOMOBILE AS REPRESENTING TRANSPORTATION. THUS, WHEN A DEALER QUOTES A DESTINATION PRICE, THE ACTUAL VEHICLE PRICE TO THE GOVERNMENT IS THE AMOUNT QUOTED FOR DESTINATION DELIVERY LESS TRANSPORTATION COST ACTUALLY PAID OR TO BE PAID BY THE DEALER OR MANUFACTURER, AS THE CASE MAY BE, FROM THE ASSEMBLY PLANT OR OTHER POINT OF ORIGIN FROM WHICH DELIVERY IS IS CONTEMPLATED, AND INCLUDED IN THE DESTINATION PRICE. THEREFORE, TRANSPORTATION COSTS WHICH PROPERLY MAY BE DEDUCTED FROM A BID COVERING DESTINATION DELIVERY, ONLY, IN DETERMINING WHETHER THE PRICE OF THE VEHICLE IS WITHIN THE STATUTORY LIMIT, IS THE SAID COST OF TRANSPORTATION OF SUCH FINISHED VEHICLE FROM THE ASSEMBLY PLANT OR OTHER POINT OF ORIGIN FROM WHICH IT IS IN FACT SHIPPED AS SUCH TO THE POINT AT WHICH IT IS DELIVERED TO THE GOVERNMENT.

FURTHERMORE, IT MAY BE POINTED OUT THAT WHILE A BIDDER IS AT LIBERTY TO SELECT HIS POINT OF ORIGIN--- "FACTORY OR OTHERWISE"--- OF HIS OWN CHOOSING, IT SHOULD, IN EVERY INSTANCE, BE THE TRUE POINT OF ORIGIN, THAT IS TO SAY, THE FACTORY OR ASSEMBLY PLANT WHERE THE AUTOMOBILE HAS BEEN OR WILL BE COMPLETED AND SHIPPED AS A FINISHED VEHICLE TO THE DEALER OR THE GOVERNMENT DESTINATION. THERE WOULD BE NO LEGAL SANCTION FOR SELECTION EITHER BY THE BIDDER OR BY ADMINISTRATIVE OFFICERS OF A FICTITIOUS, THEORETICAL OR FALSE POINT OF ORIGIN, IN ORDER THAT THE AMOUNT ALLOWABLE BY WAY OF DEDUCTION AS FOR COSTS OF TRANSPORTATION, FREIGHT OR OTHERWISE, MAY BRING AN EXCESS DESTINATION BID PRICE WITHIN THE STATUTORY PRICE LIMIT, THE AMOUNT PROPERLY DEDUCTIBLE AS TRANSPORTATION IN SUCH CASES BEING THE AMOUNT--- AND ONLY THE AMOUNT--- ACTUALLY PAID OR TO BE PAID BY THE CONTRACTOR OR THE GOVERNMENT TO ACCOMPLISH FINAL DELIVERY, AS DISTINGUISHED FROM THE TRUE PRICE OF THE VEHICLE ITSELF AS COMPUTED BY THE BIDDER.

IN THE CASE OF THE OSCAR HALL CONTRACT, SUPRA, THE BIDDER OFFERED THE AUTOMOBILE F.O.B. DESTINATION, SAN DIEGO, CALIFORNIA, FOR THE PRICE OF $822.75, LESS TRADE-IN ALLOWANCE. IT LIKEWISE OFFERED THE VEHICLE AT THE PRICE OF $822.75 F.O.B. BIDDER'S SHIPPING POINT, NAMING ESCONDIDO, LIF., AS THE SHIPPING POINT, DELIVERY TO BE MADE BY TRUCK AWAY. THE COMPANY DID NOT NAME DETROIT, MICH., AS A SHIPPING POINT, DID NOT QUOTE ANY PRICE ON A NEW VEHICLE F.O.B. DETROIT, AND DID NOT STATE ANY AMOUNT AS INCLUDED IN THE BID PRICE FOR COST OF TRANSPORTATION FROM DETROIT, OR ELSEWHERE. THERE IS NOTHING IN THE RECORD TO SHOW OR SUGGEST THAT THE VEHICLE PURCHASED BY AND DELIVERED TO THE GOVERNMENT WAS SHIPPED AS SUCH FROM DETROIT OR EVER WAS AT ANY TIME IN DETROIT, MICH.--- THE REASONABLE INFERENCE BEING THAT THE BIDDER, APPARENTLY AN AUTHORIZED FORD DEALER, HAD THE VEHICLE WHICH IS PROPOSED TO DELIVER IN STOCK OR AVAILABLE AT ITS PLACE OF BUSINESS IN ESCONDIDO, CALIF.; THAT THE COMPANY INTENDED TO MAKE DELIVERY AT OR FROM THAT PLACE, ONLY; AND THAT IT WAS NOT THE PURPOSE OF THE COMPANY TO SELL THE VEHICLE TO THE GOVERNMENT ON ANY OTHER BASIS. UPON SUCH FACTS, THERE WAS NO AUTHORITY FOR THE ADMINISTRATIVE DEPARTMENT TO DISREGARD THE BID AS SUBMITTED AND ARBITRARILY SELECT DETROIT, MICH; AS THE BASIS FOR COMPUTING TRANSPORTATION COST, SUBTRACTING SUCH COST FROM THE BID AS SUBMITTED ON THE ASSUMPTION THAT IF A BID HAD BEEN RECEIVED ON A SIMILAR VEHICLE OFFERING AN F.O.B. DETROIT PRICE IT WOULD HAVE BEEN EQUAL TO THE REMAINDER, THUS, IN EFFECT, DISREGARDING THE BID AS SUBMITTED AND ADMINISTRATIVELY FORMULATING A NEW BID IN LIEU OF THAT WHICH THE DEALER PRESENTED. AT MOST, ALL THAT PROPERLY WAS OR WOULD HAVE BEEN PERMISSIBLE WAS TO ESTABLISH, IF POSSIBLE AND WITH CERTAINTY, THE POINT FROM WHICH THE VEHICLE HAD BEEN SHIPPED AS SUCH TO THE OSCAR HALL COMPANY, ASCERTAIN THE ACTUAL COST OF TRANSPORTATION FROM SUCH POINT BY THE MEANS MOST ADVANTAGEOUS TO THE GOVERNMENT, AND THEN TO DEDUCT SUCH AMOUNT FROM THE QUOTED DESTINATION DELIVERY PRICE IN DETERMINING WHETHER THE PURCHASE PRICE EXCEEDED THE STATUTORY LIMITATION.

IN THE CASE OF THE VELLENGA MOTOR CO. CONTRACT, THE BIDDER OFFERED A PRICE OF $781 F.O.B. BIDDER'S SHIPPING POINT, DETROIT, MICH., AND A DESTINATION PRICE OF $840, THE LATTER PROPOSAL OBVIOUSLY INCLUDING ONLY $59 FOR TRANSPORTATION--- SUCH AMOUNT NO DOUBT REPRESENTING THE ACTUAL COST OF TRANSPORTATION AVAILABLE TO THE BIDDER--- LEAVING THE FACTORY PRICE OF THE VEHICLE $781 WHETHER DELIVERY WAS ACCEPTED AT FACTORY OR DESTINATION. DISREGARDING THAT PATENT FACT, THE PURCHASING OFFICER SUBTRACTED $100.56, $41.56 IN EXCESS OF THE ACTUAL AVAILABLE TRANSPORTATION COST, AND AWARDED THE CONTRACT AS THOUGH THE PURCHASE PRICE WERE NOT IN EXCESS OF THE STATUTORY LIMITATION. WHEN IT APPEARED ON THE FACE OF THE BID THAT THE PRICE OF THE VEHICLE F.O.B. POINT OF ORIGIN WAS IN EXCESS OF $750, THE ONLY PROPER COURSE WAS THE IMMEDIATE AND UNQUALIFIED REJECTION OF THE BID AS A WHOLE. 17 COMP. GEN. 7; ID. 215; ALSO, 17 COMP. GEN. 854, TO YOU, IN WHICH (PAGE 856) IT WAS RESTATED: BID OFFERING A PASSENGER-CARRYING VEHICLE AT A FACTORY PRICE IN EXCESS OF $750 EITHER INCLUSIVE OR EXCLUSIVE OF TRADE-IN VALUE OF ANY VEHICLE TO BE EXCHANGED, IS LEGALLY FOR CONSIDERATION UNDER THE $750 STATUTORY PRICE LIMITATION. SINCE THE FACTORY PRICE OF THE VEHICLE OFFERED BY THE VELLENGA MOTOR CO. WAS $781, THE NET RESULT WAS THAT THE CONTRACTOR DELIVERED THE AUTOMOBILE IN QUESTION AT DESTINATION AT A COST OF $59 FOR TRANSPORTATION, RECEIVED $840 AS PAYMENT FOR THE VEHICLE, DEDUCTED $59 AS COST OF TRANSPORTATION, AND REALIZED A NET PRICE OF $781, OR $31 IN EXCESS OF THE STATUTORY PRICE LIMIT, FOR THE VEHICLE. THE GOVERNMENT DID NOT PAY $100.56 FOR TRANSPORTATION, WHICH AMOUNT WAS NOT THE LOWEST TRANSPORTATION COST AVAILABLE, BUT DID PAY THE CONTRACTOR $840 WHICH, AFTER DEDUCTING THE LOWEST AVAILABLE TRANSPORTATION COST OF $59, WAS $31 IN EXCESS OF THE MAXIMUM STATUTORY PRICE AUTHORIZED.

THE INTIMATION OR IMPLICATION THAT WHERE A BIDDER SUBMITS A PRICE F.O.B. POINT OF ORIGIN OF HIS SELECTION--- FACTORY OR OTHERWISE--- IN EXCESS OF $750, THE PURCHASING AGENCY SHOULD BE AT LIBERTY TO DISREGARD THE EXCESSIVE PRICE QUOTED FOR THE VEHICLE AND RESHAPE THE BID TO ITS OWN DESIRE, AND THUS RESHAPED, ACCEPT THE BID UPON THE FICTION THAT BY SUCH ADMINISTRATIVE MANIPULATION THE PRICE OF THE VEHICLE ITSELF IS BROUGHT WITHIN THE STATUTORY LIMIT, IS WITHOUT MERIT AND NOT FOR CONSIDERATION. THE PRICE LIMIT STATUTES PROVIDE THAT " NO APPROPRIATION * * * SHALL BE EXPENDED--- (A) TO PURCHASE ANY MOTOR PROPELLED PASSENGER-CARRYING VEHICLE * * * AT A COST, COMPLETELY EQUIPPED FOR OPERATION * * * IN EXCESS OF $750 * * *.' THE LANGUAGE IS EXPLICIT, PEREMPTORY, AND CONCLUSIVE. IT SHOWS THAT NO DISCRETION IS INTENDED TO BE GIVEN AND MUST BE HELD TO BE IMPERATIVE. HENDERSON'S CASE, 4 CT.1CLS, 75, 83; UNITED STATES V. SHREVEPORT GRAIN COMPANY, 287 U.S. 77, 83, CITING UNITED STATES V. HARTWELL, 6 WALL. 385.

WHEN AN ENACTMENT CLEARLY EXPRESSES THE LEGISLATIVE INTENT, THE COURTS AND ADMINISTRATIVE OFFICIALS HAVE NO RIGHT TO AMEND IT BY LIMITING OR EXTENDING ITS SCOPE. AN ENACTMENT COUCHED IN PLAIN, UNAMBIGUOUS LANGUAGE IS PRESUMED TO EXPRESS THE FULL INTENTION OF THE LEGISLATURE, AND TO MEAN NOTHING MORE AND NOTHING LESS THAN JUST WHAT IT SAYS OR NECESSARILY IMPLIES. JOHNSON V. SOUTHERN PACIFIC RAILWAY CO., 117 F. 462-465, 54 C.C.A 508; THOMAS V. WINNE, 122 F. 395-400, 58 C.C.A. 613. TO HOLD OTHERWISE WOULD SIMPLY PAVE THE WAY FOR THE USURPATION OF FUNCTIONS WHICH BELONG EXCLUSIVELY TO THE LEGISLATIVE DEPARTMENT OF THE GOVERNMENT. COOMBE V. UNITED STATES 3. F./2D) 714, 715.

THE FACT THAT STRICT APPLICATION OF THE PRICE LIMIT STATUTES MAY UPON OCCASION, AS OUTLINED BY YOUR PURCHASING OFFICER, RESULT IN A SLIGHT EXCESS COST TO THE GOVERNMENT WAS GIVEN CONSIDERATION IN 17 COMP. GEN. 7, AFFIRMED UPON RECONSIDERATION 17 ID. 215, IN WHICH IT WAS HELD THAT THE FACT THAT COMPLIANCE WITH THE PRICE LIMIT STATUTE MIGHT RESULT IN EXCESS COST TO THE GOVERNMENT IN A PARTICULAR CASE WAS NOT A MATTER FOR ADMINISTRATIVE CONSIDERATION AS JUSTIFYING A DISREGARD OF ITS MANDATORY PROVISIONS. ADHERENCE TO STATUTORY PROVISIONS GOVERNING PURCHASES AND THE AWARDING OF CONTRACTS FOR GOVERNMENT NEEDS IS OF MORE ULTIMATE IMPORTANCE THAN AN OCCASIONAL ECONOMY IN AN ISOLATED INSTANCE WHICH MIGHT OTHERWISE BE ACCOMPLISHED, AND THE FACT THAT COMPLIANCE WITH APPLICABLE STATUTORY PROVISIONS MAY UPON OCCASION LEAD TO APPARENT ANOMALIES--- NOT "ABSURDITIES," AS SUGGESTED BY YOUR PURCHASING OFFICER -- IS NOT SUFFICIENT TO JUSTIFY A STRAINED, FORCED OR UNREASONABLE CONSTRUCTION OF THE STATUTE, WHOLLY AT VARIANCE WITH ITS MANIFEST AND UNAMBIGUOUS MEANING AND INTENT. NOR WOULD SUCH FACT APPEAR TO BE A MATTER FOR GRAVE ADMINISTRATIVE CONCERN, BEING RATHER FOR THE CONSIDERATION OF THE CONGRESS. IF SO ADVISED, THE MAKING OF THE LAW BEING AN ADMINISTRATIVE OBLIGATION UNTIL SUCH TIME AS THE CONGRESS IN ITS DISCRETION MAY SEE FIT TO ALTER OR MODIFY IT. IN THE PRESENT STATE OF THE LAW "EXECUTIVE DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS OF THE GOVERNMENT" ARE FORBIDDEN TO PURCHASE MOTOR-PROPELLED PASSENGER CARRYING VEHICLES COMPLETELY EQUIPPED FOR OPERATION, AND INCLUDING THE VALUE OF ANY VEHICLE EXCHANGED, AT ANY PRICE IN EXCESS OF $750.

THE ADMINISTRATIVE ACTION IN THE CASE OF THE VELLENGA MOTOR COMPANY CONTRACT WAS NOT ONLY IN CONTRAVENTION OF THE STATUTE BUT WAS LIKEWISE IN CONTRAVENTION OF NUMBERED PARAGRAPHS (1) AND (3) OF THE DECISION, 17 COMP. GEN. 854, 856, RELIED UPON BY YOUR PURCHASING OFFICER AS JUSTIFICATION FOR SUCH ACTION. THE FIRST OF SAID PARAGRAPHS EXPRESSLY LAID DOWN THE RULE THAT NO BID OFFERING A PASSENGER-CARRYING VEHICLE AT A FACTORY PRICE IN EXCESS OF $750 IS LEGALLY FOR CONSIDERATION UNDER THE $750 PRICE LIMITATION, WHILE THE OTHER PARAGRAPH REFERRED TO EXPRESSLY LIMITED THE AUTHORITY TO CONSIDER COST OF TRANSPORTATION IN REDUCTION OF A BID TO TO CASES IN WHICH "DESTINATION PRICES, ONLY, ARE QUOTED.' SINCE THE VELLENGA MOTOR CO. QUOTED BOTH POINT OF ORIGIN AND DESTINATION DELIVERY, BOTH IN EXCESS OF THE $750 PRICE LIMIT, THERE WAS NO AUTHORITY FOR THE PROCEDURE FOLLOWED IN CONNECTION WITH THAT TRANSACTION.

WHAT HAS BEEN SAID WITH REFERENCE TO THE PROCEDURE IN CONNECTION WITH THE VALLENGA MOTOR CO. CONTRACT APPLIES WITH EQUAL FORCE TO THE H. W. WOOD CO. CONTRACT, FOR WHILE THE WOOD CO. QUOTED DESTINATION PRICE ONLY, THE COMPANY STATED THAT DELIVERY WOULD BE MADE BY " RAIL LOS ANGELES ASSEMBLY PLANT TO EVERETT WASH.--- DRIVE EVERETT, WASH. TO MARYSVILLE, WASH.' (P. 5 OF THE BID), AND ON PAGE 6 THE SHIPPING WEIGHT OF THE VEHICLE WAS STATED TO BE 2,869 POUNDS. THUS THERE WAS GIVEN THE POINT OF ORIGIN FROM WHICH SHIPMENT WOULD BE MADE, LOS ANGELES, CALIF., ASSEMBLY PLANT, AND NOT DETROIT, MICH., AND THE SHIPPING WEIGHT OF THE VEHICLE, AND DETERMINATION AS TO WHETHER THE VEHICLE PRICE QUOTED WAS WITHIN THE STATUTORY LIMIT INVOLVED A MATTER OF SIMPLE MATHEMATICAL COMPUTATION OF THE TRANSPORTATION COST AT THE LOWEST AVAILABLE RATE FROM THE LOS ANGELES ASSEMBLY PLANT UPON THE WEIGHT OF THE VEHICLE AS SPECIFIED. SEE THE LAST SENTENCE OF THE PARAGRAPH SUGGESTED FOR INCLUSION IN INVITATIONS IN THE ABOVE CITED DECISION TO YOU, 17 COMP. GEN. 854, AS FOLLOWS:

* * * IF PRICE AT DESTINATION ONLY IS QUOTED AND THAT PRICE EXCEEDS $750, BIDDER SHOULD SHOW THE SHIPPING WEIGHT AND POINT OF ORIGIN. THERE WAS NO AUTHORITY FOR AN ADMINISTRATIVE UNDERTAKING TO "GO BEHIND" THAT BID AS SUBMITTED, ARBITRARILY CHOOSE A SHIPPING POINT OF ITS OWN SELECTION AND COMPUTE TRANSPORTATION COSTS FROM THAT POINT WITHOUT REGARD TO THE FACTS IMMEDIATELY DISCERNIBLE UPON THE FACE OF THE BID.

WHAT HAS BEEN SAID IN CONNECTION WITH THE PROCEDURE WITH REFERENCE TO THE HALL CO. CONTRACT IS APPLICABLE TO THE THIEF RIVER MOTORS, INC., CONTRACT AND TO THE CONTRACT WITH F. E. NORTHWAY, INC., FOR LIKE THE HALL CO., BOTH OF THOSE BIDDERS NAMED IDENTICAL ORIGIN AND DESTINATION POINTS, BEING THE GOVERNMENT DESTINATION, IT BEING IMMEDIATELY APPARENT THAT THESE BIDDERS ALREADY HAD THE VEHICLES WHICH THEY PROPOSED TO DELIVER. IN THE CASES THESE TWO BIDDERS, THE MOST THAT WAS PERMISSIBLE WAS TO ASCERTAIN DEFINITELY THE ACTUAL POINT OF ORIGIN, WHETHER FACTORY, ASSEMBLY PLANT, OR OTHERWISE, AND THE ACTUAL AMOUNT INCLUDED BY THE BIDDERS AS COSTS OF TRANSPORTATION FROM THAT POINT, COMPARE SUCH AMOUNT WITH THE LOWEST AMOUNT OF TRANSPORTATION COST AVAILABLE TO THE GOVERNMENT AND DEDUCT FROM THE DESTINATION BID WHICHEVER AMOUNT REPRESENTED THE MOST ADVANTAGEOUS TRANSPORTATION COST AVAILABLE. IF UPON SUCH PROCEDURE IT DEVELOPED THAT THE VEHICLE PRICE--- WHOLLY INDEPENDENT OF THE COST OF TRANSPORTATION--- WAS WITHIN THE STATUTORY LIMIT, ACCEPTANCE WAS PERMISSIBLE--- OTHERWISE NOT.

ALSO, THE PROCEDURE FOLLOWED IN THESE CASES SUGGESTS THE POSSIBILITY OF ADMINISTRATIVE MISAPPREHENSION AS TO THE PROPER BASIS OF COMPUTING TRANSPORTATION COSTS IN THESE AND SIMILAR CASES. IN 14 COMP. GEN. 82, IT WAS SAID THAT REQUESTS FOR BIDS SHOULD REQUIRE QUOTATION OF PRICE FOR DELIVERY BOTH F.O.B. GOVERNMENT'S DESTINATION AND F.O.B. POINT OF BIDDER'S SELECTION--- FACTORY OR OTHERWISE--- "SO THAT THE GOVERNMENT, HAVING REGARD FOR LAND GRANT OR OTHER ADVANTAGES AVAILABLE IN SUCH CONNECTION, MAY ACCEPT THAT BID WHICH WILL RESULT IN THE LOWEST NET CHARGE AGAINST PUBLIC MONEYS," AND IN 17 COMP. GEN. 854 IT WAS STATED THAT---

HOWEVER, IT SHOULD BE EMPHASIZED THAT IN DETERMINING WHETHER A DESTINATION OR INTERMEDIATE DELIVERY BID IN EXCESS OF $750 PER AUTOMOBILE IS ACTUALLY WITHIN THE STATUTORY LIMIT AS TO VEHICLE COST, THE MAXIMUM AMOUNT DEDUCTIBLE AS TRANSPORTATION COST IS THE AMOUNT IT WOULD COST THE GOVERNMENT--- "HAVING REGARD FOR LAND GRANT OR OTHER ADVANTAGES AVAILABLE IN SUCH CONNECTION" (14 COMP. GEN. 82/--- FOR THE TRANSPORTATION, AND WHERE SUCH ADVANTAGES WOULD EFFECT A LOWER COST THAN THE PREVAILING COMMERCIAL RATE, THE COMMERCIAL RATE IS NOT FOR APPLICATION. ( ITALICS SUPPLIED.) APPARENTLY YOUR PURCHASING OFFICER HAS INTERPRETED THOSE AND SIMILAR EXPRESSIONS AS JUSTIFYING APPLICATION OF THE GOVERNMENT FREIGHT RATE IN EVERY SUCH CASE, WITHOUT REGARD TO WHETHER SOME OTHER "MEANS AND METHOD" OF TRANSPORTATION WOULD IN FACT BE CHEAPER; BUT SUCH IS NOT THE CASE. IN A DECISION OF MAY 18, 1938, TO THE SECRETARY OF WAR, IN CONSIDERING A QUESTION SOMEWHAT SIMILAR TO THAT HERE INVOLVED, IT WAS SAID IN RELEVANT PART---

* * * THIS OFFICE HAS HELD THAT THE PRICE LIMIT IMPOSED BY THE STATUTES IS NOT INCLUSIVE OF COSTS OF TRANSPORTATION FROM FACTORY OR OTHER POINT OF SHIPMENT TO DESTINATION BY THE ROUTE AND METHOD MOST FAVORABLE TO THE UNITED STATES, TAKING INTO CONSIDERATION LAND GRANT AND OTHER ADVANTAGES AVAILABLE TO THE GOVERNMENT, BUT IT HAS BEEN EMPHASIZED THAT THE MAXIMUM AMOUNT DEDUCTIBLE AS TRANSPORTATION COST FOR THE PURPOSE OF DETERMINING WHETHER A DESTINATION OR INTERMEDIATE DELIVERY BID IN EXCESS OF $750 PER VEHICLE IS ACTUALLY WITHIN THE STATUTORY LIMITS IS THE AMOUNT IT WOULD COST THE GOVERNMENT FOR TRANSPORTATION, AND THAT WHERE SUCH ADVANTAGES WOULD EFFECT A LOWER TRANSPORTATION COST THAN COMMERCIAL RATES, COMMERCIAL RATES ARE NOT FOR APPLICATION. A-93731, APRIL 16, 1938, COPY INCLOSED (17 COMP. GEN. 854). THE CONVERSE IS EQUALLY TRUE THAT WHERE THE TRANSPORTATION COST STATED IN A BID IS LESS THAN THAT AVAILABLE TO THE GOVERNMENT IT IS THE COST FOR CONSIDERATION. APPLYING THAT RULE IN THE INSTANT CASE, IT IS OBVIOUS THAT IF " GOVERNMENT RATES" WOULD RESULT IN TRANSPORTATION COSTS OF LESS THAN $43.75 PER VEHICLE, THERE WOULD BE SO MUCH THE LESS FOR SUBTRACTION FROM THE BID * * * ON THAT ACCOUNT, WHILE IF GOVERNMENT RATES WOULD AMOUNT TO MORE THAN $43.75 PER VEHICLE, SUCH GOVERNMENT RATES WOULD NOT BE FOR CONSIDERATION, SINCE THE BIDDER OFFERED DESTINATION DELIVERY FOR THE LOWEST AVAILABLE TRANSPORTATION COSTS. THE RULE THUS STATED WOULD APPLY DIRECTLY TO THE VELLENGA CONTRACT, SINCE THE BIDDER IN THAT CASE OFFERED DESTINATION DELIVERY FOR THE LOWEST AVAILABLE TRANSPORTATION COST, THAT IS, $59, AND A HIGHER GOVERNMENT TRANSPORTATION COST WAS NOT FOR CONSIDERATION OR APPLICATION IN AN EFFORT TO BRING AN OTHERWISE UNACCEPTABLE DESTINATION BID WITHIN THE STATUTE.

AS TO THE CASE CITED BY YOUR PURCHASING OFFICER SHOWING BID NO. 1 ON A FORD COUPE F.O.B. DETROIT, MICH., OF $755, AND DELIVERED WASHINGTON, $800, AND BID NO. 2 ON THE SAME MAKE AND MODEL OF VEHICLE, F.O.B. WASHINGTON, D.C., $820, FREIGHT ON GOVERNMENT BILL OF LADING FROM DETROIT, $70, SUCH CASE FALLS SQUARELY WITHIN THE INTERDICTION OF THE STATUTE AND APPLICABLE DECISIONS OF THIS OFFICE, AND IT MUST BE HELD THAT BID NO. 1 SUBMITTING A FACTORY PRICE IN EXCESS OF $750 IS NOT PROPERLY FOR CONSIDERATION. SINCE THE VEHICLE PRICE SUBMITTED BY BIDDER NO. 1, THAT IS, THE PURCHASE PRICE WHICH THE GOVERNMENT WOULD HAVE TO PAY FOR THE VEHICLE ITSELF IN ANY EVENT, IS IN EXCESS OF THE $750 PRICE LIMIT SPECIFICALLY AND UNEQUIVOCALLY FIXED BY LAW. A "BID," INSOFAR AS THE PRICE OF A PASSENGER-CARRYING VEHICLE IS CONCERNED, IS THE PRICE FOR WHICH A BIDDER IS WILLING TO SELL THE VEHICLE TO THE GOVERNMENT COMPLETELY EQUIPPED FOR OPERATION, AND INCLUSIVE OF EVERY EQUIPMENT AND ACCESSORY NECESSARY THERETO, ALBEIT EXCLUSIVE OF TRANSPORTATION COSTS NECESSARILY INVOLVED IN DELIVERY OF SUCH VEHICLE FROM FACTORY, ASSEMBLY PLANT, OR OTHER POINT OF BIDDER'S SELECTION FROM WHICH DELIVERY IS ACTUALLY MADE OR TO BE MADE TO DESTINATION. BIDDERS WERE INFORMED IN THE INVITATION FOR BIDS IN THE SUBJECT CONTRACTS AND, PRESUMABLY, IN THE INSTANCE CITED BY YOUR PURCHASING OFFICER THAT---

BID PRICES EXCEEDING $750 PER UNIT AT POINT OF ORIGIN (FACTORY OR ASSEMBLY PLANT) CANNOT BE CONSIDERED, BECAUSE OF A STATUTORY LIMITATION TO THAT AMOUNT AS A MAXIMUM. BIDDERS ARE REQUESTED TO REFRAIN FROM SUBMITTING SUCH OFFERS. THAT PARAGRAPH IS A CORRECT STATEMENT OF THE LAW, IS ABSOLUTELY FREE FROM ANY DOUBT OR AMBIGUITY AND LEFT TO BIDDERS NO LATITUDE TO SUBMIT A BID IN EXCESS OF $750 F.O.B. FACTORY OR ASSEMBLY PLANT. HENCE, WHEN BIDDER NO. 1 SUBMITTED A PRICE IN EXCESS OF $750 F.O.B. FACTORY, HE, IPSO FACTO, PRECLUDED CONSIDERATION OF HIS BID, NOTWITHSTANDING THE COST TO THE GOVERNMENT INCLUDING TRANSPORTATION, UNDER THE BID WITHIN THE LAW (BID NO. 2) WOULD BE SLIGHTLY HIGHER. ALSO, IT NEED HARDLY BE POINTED OUT THAT A CONTRACT AWARDED TO BIDDER NO. 1 UNDER SUCH CIRCUMSTANCES WOULD NOT BE THE CONTRACT OFFERED TO COMPETITION AND WOULD BE IN VIOLATION OF THE TERMS OF THE INVITATION FOR BIDS, 8 COMP. GEN. 299; ID. 649; 13 COMP. GEN. 169; 16 COMP. GEN. 21, 22, SINCE ALL BIDDERS WERE ON NOTICE THAT A "POINT OF ORIGIN" BID IN EXCESS OF $750 WOULD NOT AND LEGALLY COULD NOT BE CONSIDERED. WITH RESPECT TO THE PROCEDURE OF SELECTING THE "MAIN FACTORY" LOCATION AS THE POINT OF ORIGIN, REGARDLESS OF THE FACTS, IT IS TO BE NOTED THAT IN THE CONTRACTS HERE UNDER CONSIDERATION INVOLVING THE VELLENGA CO. BID SUCH PROCEDURE RESULTED IN A "FACTORY" PRICE, $719.49, WHILE UNDER THE NORTHWAY BID THE SAME PROCEDURE RESULTED IN A FACTORY PRICE OF $747.26, A DISCREPANCY OF $27.82 ON APPARENTLY IDENTICAL VEHICLES THEORETICALLY SHIPPED FROM THE SAME POINT. LIKEWISE, THE PROCESS APPLIED IN THE HALL CONTRACT CASE RESULTED IN A "FACTORY PRICE" OF $632.05 PER VEHICLE, WHILE UNDER THE THIEF RIVER MOTORS, INC., CONTRACT, THE PURPORTED "FACTORY PRICE" WAS $719.445 EACH, A DIFFERENCE OF $87.395 EACH, AGAIN, APPARENTLY, ON IDENTICAL MAKE AND MODEL OF VEHICLE.

FROM THE FOREGOING, IT MUST BE IMMEDIATELY EVIDENT THAT THE METHOD OF DETERMINATION OF VEHICLE PRICES FOLLOWED IN THE SUBJECT CONTRACTS WAS AT VARIANCE, NOT ONLY WITH THE DECISIONS OF THIS OFFICE, BUT, ALSO, WITH THE STATUTORY LIMITATIONS RELATIVE TO PASSENGER CAR PRICES AND, HENCE, UNAUTHORIZED AND NOT TO BE FOLLOWED. HOWEVER, SINCE IT APPEARS THAT THE PROCEDURE FOLLOWED IN THE CASES OF THE HALL, NORTHWAY, AND THIEF RIVER MOTORS CONTRACTS, SUPRA, WAS ATTRIBUTABLE TO ADMINISTRATIVE MISINTERPRETATION OF THE DECISION 17 COMP. GEN. 854, SUPRA, THIS OFFICE WILL NOT QUESTION FURTHER OTHERWISE PROPER PAYMENTS UNDER THOSE CONTRACTS AND OTHERS OF SIMILAR CHARACTER, HERETOFORE ENTERED INTO UPON THE SAME BASIS. BUT AS TO THE VELLENGA MOTOR CO. CONTRACT, THAT COMPANY QUOTED A FACTORY PRICE OF $781 FOR THE VEHICLE OFFERED AND ADDED $59 AS TRANSPORTATION COSTS IN ITS DESTINATION BID. THE PROCEDURE FOLLOWED IN THAT CASE WAS NOT ONLY IN DIRECT VIOLATION OF THE STATUTE BUT IN DIRECT DISREGARD AND CONTRAVENTION OF SAID DECISION. LIKEWISE THE BID OF THE H. W. WOOD MOTOR CO. CLEARLY STATED THAT DELIVERY WOULD BE MADE FROM THE LOS ANGELES, CALIF., ASSEMBLY PLANT, THUS EXCLUDING DETROIT, MICH., AS A PROPER POINT FOR COMPUTATION OF TRANSPORTATION COST. THE LANGUAGE USED LEFT NO ROOM FOR ADMINISTRATIVE DOUBT OR MISUNDERSTANDING AS TO POINT OF ORIGIN AND IMMEDIATELY NEGATIVED THE PROPRIETY OF THE METHOD INDULGED. THEREFORE, IN THE FIRST OF THESE TWO CASES THERE WILL BE ALLOWED CREDIT FOR $750, THE MAXIMUM STATUTORY PRICE LIMIT, F.O.B. POINT OF ORIGIN, PLUS $59, AS TRANSPORTATION CHARGES OFFERED BY THE BIDDER AND SHOWN TO BE THE MOST ADVANTAGEOUS AVAILABLE. IN THE SECOND OF THESE TWO CONTRACTS THE ACTUAL TRANSPORTATION COST FROM THE LOS ANGELES ASSEMBLY PLANT OF THE PLYMOUTH MOTOR CO. TO EVERETT, WASH., AT MOST ADVANTAGEOUS GOVERNMENT RATES, WILL BE COMPUTED BY THIS OFFICE AND CREDIT ALLOWED THEREFOR IN ADDITION TO THE AMOUNT OF $750 MAXIMUM PASSENGER-CARRYING VEHICLE PRICE, ALTHOUGH IT IS, OF COURSE, DOUBTFUL WHETHER SUCH " GOVERNMENT RATES" WOULD BE AS ADVANTAGEOUS AS THE RATE AVAILABLE TO THE BIDDER IN THAT CASE.

IT IS TO BE UNDERSTOOD THAT THE DECISIONS OF THIS OFFICE, AS HEREIN CONSIDERED, AND THE STATUTORY LIMITATIONS RELATIVE TO MAXIMUM PRICE FOR PASSENGER-CARRYING AUTOMOBILES ARE FOR APPLICATION IN ALL SIMILAR CONTRACTS HEREINAFTER ENTERED INTO. THAT IS TO SAY, WHERE BIDS ARE SUBMITTED OFFERING DESTINATION PRICES, ONLY, AND SUCH PRICES ARE IN EXCESS OF $750, IN DETERMINING WHETHER THE ACTUAL VEHICLE PRICE AS COMPUTED BY A BIDDER IS WITHIN THE $750 STATUTORY LIMIT, THE ONLY COST OF TRANSPORTATION PROPER FOR CONSIDERATION IS THE ACTUAL COST TRANSPORTATION AT THE RATE MOST ADVANTAGEOUS, THAT IS TO SAY, THE LOWEST AVAILABLE, WHETHER GOVERNMENT RATE, COMMERCIAL RATE, OR OTHER RATES AVAILABLE TO THE BIDDER FROM THE FACTORY, ASSEMBLY PLANT, OR OTHER POINT OF ORIGIN OF THE BIDDER'S SELECTION FROM WHICH DELIVERY ACTUALLY HAS BEEN MADE OR IS CONTEMPLATED, TO DESTINATION. IF THE APPLICATION OF THE LOW RATE AVAILABLE SHOULD BRING THE PRICE OF THE VEHICLE WITHIN THE $750 LIMIT, SUCH BID WOULD BE PROPERLY FOR CONSIDERATION, BUT OTHERWISE WOULD BE FOR IMMEDIATE REJECTION.