B-132296, AUG. 22, 1957

B-132296, AUG. 22, 1957

TO MR. M. O. BOAZ:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 19, 1957, PROTESTING THE RELETTING OF A MEMPHIS-SAVANNAH STAR-ROUTE MAIL CONTRACT AT A SUBSTANTIAL INCREASE IN RATES WITHOUT SOLICITING COMPETITIVE BIDS FROM PROSPECTIVE BIDDERS.

THE POST OFFICE DEPARTMENT HAS FURNISHED OUR OFFICE A REPORT WHICH IS TO THE EFFECT THAT, PURSUANT TO THE AUTHORITY CONTAINED IN 39 U.S.C. 434, THE STAR ROUTE CONTRACTOR, DURING THE TERM OF THE ORIGINAL FOUR YEARS' CONTRACT BEGINNING ON JULY 1, 1952, WAS ALLOWED AN INCREASE IN RATES BECAUSE OF CHANGED CONDITIONS WHICH COULD NOT REASONABLY HAVE BEEN ANTICIPATED AT THE TIME THE CONTRACTOR MADE HIS ORIGINAL PROPOSAL. ALSO, PURSUANT TO 39 U.S.C. 434, THE ORIGINAL CONTRACT, AS INCREASED IN PRICE, WAS RELET FOR FOUR MORE YEARS BEGINNING JULY 1, 1956.

THE LAST PARAGRAPH OF 39 U.S.C. 434 PROVIDES:

"THE POSTMASTER GENERAL MAY, IN HIS DISCRETION AND UNDER SUCH REGULATIONS AS HE MAY PRESCRIBE, WITH THE CONSENT OF THE CONTRACTOR * * * READJUST THE COMPENSATION OF A STAR-ROUTE OR SCREEN VEHICLE SERVICE CONTRACTOR FOR INCREASED OR DECREASED COSTS OCCASIONED BY CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM WHICH COULD NOT REASONABLY HAVE BEEN ANTICIPATED AT THE TIME OF MAKING HIS ORIGINAL PROPOSAL * * *.'

THE FOURTH PARAGRAPH OF 39 U.S.C. 434, INSOFAR AS PERTINENT, PROVIDES:

"THE POSTMASTER GENERAL MAY, IN HIS DISCRETION AND UNDER SUCH REGULATIONS AS HE MAY PRESCRIBE, WITH THE CONSENT OF THE CONTRACTOR * * * READJUST THE COMPENSATION OF A STAR-ROUTE OF SCREEN VEHICLE SERVICE CONTRACTOR FOR INCREASED OR DECREASED COSTS OCCASIONED BY CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM WHICH COULD NOT REASONABLY HAVE BEEN ANTICIPATED AT THE TIME OF MAKING HIS ORIGINAL PROPOSAL * * *.'

THE FOURTH PARAGRAPH OF 39 U.S.C. 434, INSOFAR AS PERTINENT, PROVIDES:

"THE POSTMASTER GENERAL MAY, IN HIS DISCRETION AND IN THE INTEREST OF THE POSTAL SERVICE, (1) NOTWITHSTANDING THE PROVISIONS OF SECTION 429 OF THIS TITLE, (WHICH REQUIRES THE AWARD OF CONTRACTS FOR CARRYING MAIL TO THE LOWEST RESPONSIBLE BIDDER AFTER ADVERTISING) BY MUTUAL AGREEMENT WITH THE HOLDER OF ANY STAR-ROUTE OR SCREEN VEHICLE SERVICE CONTRACT, RENEW SUCH CONTRACT AT THE RATE PREVAILING AT THE END OF THE CONTRACT TERM FOR ADDITIONAL TERMS OF FOUR YEARS * * *.'

IN CONSIDERING A SIMILAR CASE, B-127415, MAY 31, 1956, WE SAID:

"THE LEGISLATIVE HISTORY OF THE STATUTE INDICATED THAT IT WAS THE DELIBERATE AND CLEAR INTENT OF CONGRESS TO ELIMINATE THE NECESSITY FOR COMPETITIVE BIDDING FOR STAR ROUTE CONTRACTS IN CASES WHERE A CONTRACTOR HAD RENDERED FAITHFUL AND SATISFACTORY SERVICE AND WISHED TO EXTEND HIS CONTRACT, AND WHERE THE POSTMASTER GENERAL WAS SATISFIED THAT THE RATE CHARGED WAS FAIR AND REASONABLE. ONE OF THE STATED PURPOSES WAS TO REMOVE THE INSECURITY OF STAR ROUTE CONTRACTORS OCCASIONED BY ALLEGED "CUT- THROAT" BIDDING WHEN THE ROUTES WERE READVERTISED UPON THE EXPIRATION OF THE FOUR-YEAR CONTRACTS PROVIDED BY LAW. ALSO, THE STATUTE CLEARLY INDICATES A CONGRESSIONAL INTENT TO GRANT THE POSTMASTER GENERAL AUTHORITY TO READJUST THE COMPENSATION OF A STAR-ROUTE CONTRACTOR FOR INCREASED OR DECREASED COSTS OCCASIONED BY CHANGED CONDITIONS OCCURRING DURING THE CONTRACT TERM.'

ACCORDINGLY, IT IS CLEAR THAT NO LEGAL BASIS EXISTS TO QUESTION THE POST OFFICE DEPARTMENT'S ACTION IN THIS MATTER.