B-25633, MAY 18, 1942, 21 COMP. GEN. 1019

B-25633, MAY 18, 1942, 21 COMP. GEN. 1019

STATUTORY FOREIGN PRODUCTS PURCHASE RESTRICTIONS--- WAIVER AUTHORITY UNDER FIRST WAR POWERS ACT THE PROVISIONS IN THE NAVAL APPROPRIATION ACTS FOR 1942 AND 1943 PROHIBITING THE PROCUREMENT OF ARTICLES OF FOOD OR CLOTHING NOT GROWN OR PRODUCED IN THE UNITED STATES OR ITS POSSESSIONS ARE NOT PROVISIONS OF LAW "RELATING TO THE MAKING * * * OF CONTRACTS" WHICH MAY BE DISREGARDED UNDER AUTHORITY OF SECTION 201 OF THE FIRST WAR POWERS ACT, 1941, EMPOWERING THE PRESIDENT TO AUTHORIZE CERTAIN GOVERNMENT DEPARTMENTS AND AGENCIES IN THE EXERCISE OF THEIR WARTIME FUNCTIONS TO ENTER INTO CONTRACTS WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO THE MAKING, ETC., OF CONTRACTS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE NAVY, MAY 18, 1942:

I HAVE YOUR LETTER OF APRIL 23, 1942, AS FOLLOWS:

THE NAVAL APPROPRIATION ACTS FOR THE FISCAL YEARS 1942 AND 1943 CONTAIN A PROVISO READING AS FOLLOWS:

"THAT NO PART OF THIS OR ANY OTHER APPROPRIATION CONTAINED IN THIS ACT SHALL BE AVAILABLE FOR THE PROCUREMENT OF ANY ARTICLE OF FOOD OR CLOTHING NOT GROWN OR PRODUCED IN THE UNITED STATES OR ITS POSSESSIONS, EXCEPT TO THE EXTENT THAT THE SECRETARY OF THE NAVY SHALL DETERMINE THAT ARTICLES OF FOOD OR CLOTHING GROWN OR PRODUCED IN THE UNITED STATES OR ITS POSSESSIONS CANNOT BE PROCURED OF SATISFACTORY QUALITY AND IN SUFFICIENT QUANTITIES AND AT REASONABLE PRICES AS AND WHEN NEEDED, AND EXCEPT PROCUREMENTS BY VESSELS IN FOREIGN WATERS AND BY ESTABLISHMENTS LOCATED OUTSIDE THE CONTINENTAL UNITED STATES, EXCEPT THE TERRITORIES OF HAWAII AND ALASKA, FOR THE PERSONNEL ATTACHED THERETO.'

THE FIRST WAR POWERS ACT, 1941, PROVIDES THAT THE PRESIDENT MAY AUTHORIZE GOVERNMENT DEPARTMENTS ENGAGED IN WAR FUNCTIONS "TO ENTER INTO CONTRACTS * * * AND TO MAKE ADVANCE, PROGRESS AND OTHER PAYMENTS THEREON, WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO MAKING * * * OF CONTRACTS.' THIS ACT BECAME LAW ON DECEMBER 18, 1941, AFTER THE DATE OF APPROVAL OF THE NAVAL APPROPRIATION ACT, 1942, ON MAY 6, 1941; BUT THE NAVAL APPROPRIATION ACT, 1943, WAS ENACTED SUBSEQUENTLY, ON FEBRUARY 7, 1942.

IT CLEARLY APPEARS THAT CONTRACTS MAY BE MADE UNDER THE AUTHORITY OF THE FIRST WAR POWERS ACT, 1941, AND PAYMENT THEREFOR MAY BE MADE, WITHOUT REGARD TO THE SUBJECT PROVISO AS CONTAINED IN THE NAVAL APPROPRIATION ACT, 1942, ON MAY 6, 1941; BUT THE NAVAL APPROPRIATION ACT, 1943, WAS ENACTED SUBSEQUENTLY, ON FEBRUARY 7, 1942.

IT CLEARLY APPEARS THAT CONTRACTS MAY BE MADE UNDER THE AUTHORITY OF THE FIRST WAR POWERS ACT, 1941, AND PAYMENT THEREFOR MAY BE MADE, WITHOUT REGARD TO THE SUBJECT PROVISO AS CONTAINED IN THE NAVAL APPROPRIATION ACT, 1942, INASMUCH AS THAT PROVISO IS OBVIOUSLY A "PROVISION OF LAW RELATING TO THE MAKING * * * OF CONTRACTS" WITHIN THE MEANING OF THE FIRST WAR POWERS ACT, 1941.

IT FURTHER APPEARS, HOWEVER, THAT SOME QUESTION MAY POSSIBLY BE RAISED WITH RESPECT TO THE EFFECT TO BE GIVEN TO THE SIMILAR PROVISO OF THE NAVAL APPROPRIATION ACT, 1943, SINCE THAT ACT BECAME LAW SUBSEQUENT TO THE FIRST WAR POWERS ACT.

FROM THE BROAD TERMS OF THE FIRST WAR POWERS ACT, AS WELL AS FROM THE STATED LEGISLATIVE PURPOSE THEREOF ("AN ACT TO EXPEDITE THE PROSECUTION OF THE WAR EFFORT"), IT WOULD APPEAR THAT IT WAS THE INTENTION OF THE CONGRESS TO PERMIT THE MAKING OF WAR CONTRACTS WITHOUT REGARD TO RESTRICTIVE STATUTES RELATING TO GOVERNMENT CONTRACTS, REGARDLESS OF WHETHER OR NOT THE STATUTES WERE EXISTING AT THE TIME OF ENACTMENT OF THE FIRST WAR POWERS ACT, 1941.

THIS CONCLUSION IS SUPPORTED BY THE FACT THAT THE EXPRESSION "WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING * * * TO THE MAKING * * * OF CONTRACTS IS NOT QUALIFIED BY THE WORD "EXISTING" OR ANY EQUIVALENT THEREOF. FURTHERMORE, THE PROVISIONS OF THE FIRST WAR POWERS ACT RELATING TO THE MAKING OF CONTRACTS, ARE NOT SELF EXECUTING; THEREFORE THAT ACT AND SUBSEQUENT RESTRICTIVE STATUTES MAY COEXIST WITHOUT CONFLICT, AND THE PROVISIONS OF LATER STATUTES MAY BE GIVEN EFFECT GENERALLY, UNLESS AND UNTIL THE AUTHORITY OF THE FIRST WAR POWERS ACT IS INVOKED BY ACTION OF THE PRESIDENT. EVEN WHEN THAT IS DONE, THE LATER RESTRICTIVE STATUTES WILL LOSE THEIR EFFECT ONLY AS TO CONTRACTS SPECIFICALLY ENTERED INTO UNDER AUTHORITY OF THE FIRST WAR POWERS ACT. THIS CIRCUMSTANCE WOULD APPEAR TO NEGATIVE THE POSSIBLE ARGUMENT THAT CONGRESS WOULD HAVE BEEN DOING A USELESS ACT BY INCLUDING THE RESTRICTIVE PROVISO IN THE NAVAL APPROPRIATION ACT, 1943, UNLESS IT WAS INTENDED THAT THIS PROVISION SHOULD OVERRIDE THE AUTHORITY OF THE FIRST WAR POWERS ACT.

TO CLEAR UP ANY POSSIBLE DOUBT, HOWEVER, YOUR OPINION IS REQUESTED ASTO WHETHER CONTRACTS MAY BE MADE UNDER AUTHORITY OF THE FIRST WAR POWERS ACT, 1941, WITHOUT REGARD TO THE ABOVE-QUOTED PROVISO OF THE NAVAL APPROPRIATION ACT, 1943.

ALTHOUGH THE SO-CALLED " BUY AMERICAN ACT," 47 STAT. 1520, HAS BEEN IN EFFECT SINCE MARCH 3, 1933, THE SPECIFIC STATUTORY PROVISION QUOTED IN YOUR LETTER PROHIBITING THE PROCUREMENT OF ARTICLES OF FOOD OR CLOTHING NOT GROWN OR PRODUCED IN THE UNITED STATES OR ITS POSSESSIONS, FIRST APPEARED IN THE FIFTH SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT, 1941, APPROVED APRIL 5, 1941, PUBLIC LAW 29, 55 STAT. 125. SEE HOUSE REPORT 301, 77TH CONGRESS, ON THAT LEGISLATION, PAGES 10-11. THEREAFTER, THE PROVISION WAS INSERTED IN THE NAVAL APPROPRIATION ACT, 1942, 55 STAT. 159, IN THE FORM AS QUOTED IN YOUR LETTER, IN ORDER THAT IT WOULD CONFORM WITH SAID PROVISION AS CONTAINED IN THE FIFTH SUPPLEMENTAL NATIONAL DEFENSE APPROPRIATION ACT, 1941. SEE PAGE 3 OF HOUSE REPORT 454, 77TH CONGRESS.

IT THUS APPEARS THAT THIS PROVISION WAS INCORPORATED INTO AN APPROPRIATION ACT FOR THE FIRST TIME ON APRIL 5, 1941, OR MORE THAN 9 MONTHS BEFORE THE FIRST WAR POWERS ACT, 1941, 55 STAT. 838, AND THAT LIKE PROVISIONS HAVE BEEN CONTAINED IN OTHER APPROPRIATION ACTS ENACTED BOTH PRIOR AND SUBSEQUENT TO SAID FIRST WAR POWERS ACT, 1941.

TITLE II, SECTION 201, FIRST WAR POWERS ACT, 1941, 55 STAT. 839, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

THE PRESIDENT MAY AUTHORIZE ANY DEPARTMENT OR AGENCY OF THE GOVERNMENT EXERCISING FUNCTIONS IN CONNECTION WITH THE PROSECUTION OF THE WAR EFFORT, IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE PRESIDENT FOR THE PROTECTION OF THE INTERESTS OF THE GOVERNMENT, TO ENTER INTO CONTRACTS AND INTO AMENDMENTS OR MODIFICATIONS OF CONTRACTS HERETOFORE OR HEREAFTER MADE AND TO MAKE ADVANCE, PROGRESS AND OTHER PAYMENTS HEREON, WITHOUT REGARD TO THE PROVISIONS OF LAW RELATING TO THE MAKING, PERFORMANCE, AMENDMENT, OR MODIFICATION OF CONTRACTS WHENEVER HE DEEMS SUCH ACTION WOULD FACILITATE THE PROSECUTION OF THE WAR: * * *

THE VIEW IS EXPRESSED IN YOUR LETTER THAT THE PROVISION IN THE NAVAL APPROPRIATION ACTS FOR 1942, 55 STAT. 159, AND 1943, 56 STAT. 62, PROHIBITING THE PROCUREMENT OF ARTICLES OF FOOD OR CLOTHING NOT GROWN OR PRODUCED IN THE UNITED STATES OR ITS POSSESSIONS, IS A PROVISION OF LAW ,RELATING TO THE MAKING * * * OF CONTRACTS" WITHIN THE MEANING OF THE FIRST WAR POWERS ACT, 1941, AND, THEREFORE, THAT CONTRACTS FOR FOOD OR CLOTHING MAY BE MADE UNDER AUTHORITY OF THAT ACT WITHOUT REGARD TO SAID LIMITATION PROVISIONS IN THE NAVAL APPROPRIATION ACTS.

WITH RESPECT TO TITLE II, SECTION 201, FIRST WAR POWERS ACT, 1941, IT IS STATED IN THE HOUSE REPORT ON THE LEGISLATION ( HOUSE REPORT 1507, 77TH CONG.) AS FOLLOWS:

TITLE II OF THE BILL IS INTENDED TO SPEED UP THE PROCUREMENT OF WAR MATERIEL. IT EMPOWERS THE PRESIDENT, WHENEVER HE DEEMS SUCH ACTION WOULD FACILITATE THE PROSECUTION OF THE WAR, TO AUTHORIZE AGENCIES TO ENTER INTO CONTRACTS WITH A MAXIMUM OF SPEED, SUBJECT TO SUCH RULES AND REGULATIONS AS HE SHALL PRESCRIBE TO PROTECT THE INTEREST OF THE GOVERNMENT. UNDER THIS PROVISION THE PRESIDENT MAY AUTHORIZE AGENCIES, AMONG OTHER THINGS: (A) TO ENTER INTO CONTRACTS WITHOUT COMPETITIVE BIDDING IN THOSE CASES WHERE BIDDING IS STILL REQUIRED; (B) TO ENTER INTO CONTRACTS WITHOUT PERFORMANCE BONDS; (C) TO AMEND OR MODIFY CONTRACTS; (D) TO MAKE PROGRESS PAYMENTS ON CONTRACTS.

ONE OF THE OBJECTIVES OF THIS PROVISION IS TO FACILITATE THE LETTING OF DEFENSE CONTRACTS TO SMALL BUSINESSMEN WHO IN MANY CASES CANNOT MAKE THE GOODS AT AS LOW A PRICE AS THE BIG CORPORATIONS, WHO ARE OFTEN NOT IN A POSITION TO FURNISH PERFORMANCE BONDS, AND WHO NEED PROGRESS PAYMENTS.

FOLLOWING THE PRESIDENT'S DECLARATION OF A NATIONAL EMERGENCY IN SEPTEMBER 1939, CERTAIN RESTRICTIONS ON PROCUREMENT ARRANGEMENTS WERE, FROM TIME TO TIME, LIFTED BY DIFFERENT STATUTES SO THAT IN MOST RESPECTS PROCUREMENT PROCEDURE WAS MADE FLEXIBLE. NEVERTHELESS, SOME RESTRICTIONS REMAIN IN FORCE. TITLE II, IN EFFECT, LIBERALIZES EXISTING STATUTES RELATING TO PROCUREMENT AND PERMITS ELIMINATION OF RESTRICTIONS SO AS TO GIVE THE PROCUREMENT AGENCIES THE FLEXIBILITY THEY NEED IN THE PROCUREMENT OF WAR MATERIEL. (A SUBSTANTIALLY COMPLETE LIST OF STATUTES INVOLVED IS APPENDED TO THIS REPORT.) THE LIST APPENDED TO THE REPORT CONSISTS OF A NUMBER OF STATUTES RELATING TO (1) ADVERTISING FOR BIDS FOR GOVERNMENT CONTRACTS; (2) REQUIREMENTS FOR FURNISHING BONDS IN CONNECTION WITH GOVERNMENT CONTRACTS, AND (3) ADVANCE AND PARTIAL PAYMENTS. IT DOES NOT INCLUDE ANY REFERENCE TO ANY PROVISION RELATIVE TO PROCUREMENT OF ARTICLES OF FOOD OR CLOTHING NOT GROWN OR PRODUCED IN THE UNITED STATES OR ITS POSSESSIONS, AS CONTAINED IN THE NAVAL APPROPRIATION ACT, 1942, OR IN ANY OTHER ACT.

NOT ONLY IS THIS PROVISION NOT INCLUDED IN THIS SO-CALLED "SUBSTANTIALLY COMPLETE LIST OF STATUTES INVOLVED," BUT IT SEEMS CLEAR FROM THE DEBATES ON THE LEGISLATION IN BOTH HOUSE AND SENATE--- PARTICULARLY FROM STATEMENTS MADE BY THOSE IN CHARGE OF THE LEGISLATION -- THAT IT WAS NOT INTENDED THAT RESTRICTIVE STATUTORY PROVISIONS OF THIS CHARACTER SHOULD BE RENDERED INOPERATIVE IN THE CASE OF CONTRACTS FOR PROCUREMENT OF WAR MATERIALS OR IN ANY WAY AFFECTED BY THE TERMS OF THE FIRST WAR POWERS ACT, 1941. THUS, MR. SUMNERS OF TEXAS, IN CHARGE OF THE LEGISLATION IN THE HOUSE, STATED WITH REFERENCE TO TITLE II, AMONG OTHER THINGS, THAT:

IT AUTHORIZES THE LETTING OF CONTRACTS WITHOUT COMPETITIVE BIDDING. THIS, AS YOU KNOW, HAS OF COURSE BEEN DONE PRETTY LARGELY ALREADY IN CERTAIN SITUATIONS. THE REASON THE ADMINISTRATION ASKED FOR THIS AS EXPLAINED TO US IS THAT FREQUENTLY SMALL CONTRACTORS ARE UNABLE TO COMPLY WITH REQUIREMENTS WITH REFERENCE TO BONDS AND THINGS OF THAT SORT. SOMETIMES THEY ARE NOT ABLE TO MAKE THESE WAR MATERIALS AS CHEAPLY AS BIG CONCERNS CAN. FREQUENTLY THEIR FINANCIAL CONDITION REQUIRES ADVANCES. WAS BECAUSE OF THESE CONDITIONS THAT THIS PROVISION WAS INSERTED IN THE BILL IN ORDER THAT WE MIGHT HAVE AN OPPORTUNITY TO GIVE THE SMALL MANUFACTURER A CHANCE TO PARTICIPATE IN THE PRODUCTION OF WAR MATERIALS. (PAGE 10118, CONGRESSIONAL RECORD OF DECEMBER 16, 1941. ALSO, SEE PAGES 10120 TO 10124 THEREOF.)

IN THE SENATE THE LEGISLATION WAS INTRODUCED AND ITS PURPOSE EXPLAINED BY SENATOR VAN NUYS. IN ADDITION, AMONG OTHER THINGS, TO CORROBORATING THE STATEMENT OF CONGRESSMAN SUMNERS THAT A PRINCIPAL PURPOSE OF THE PROVISION IS TO AID SMALL BUSINESSMEN TO SECURE GOVERNMENT CONTRACT WORK, SENATOR VAN NUYS STATED:

* * * THE BILL WAS PREPARED IN THE DEPARTMENT OF JUSTICE; AND AT THE REQUEST OF THE DEPARTMENT, I INTRODUCED IT, * * *.

IN A MEMORANDUM PREPARED BY THE DEPARTMENT OF JUSTICE THERE ARE SET FORTH FOUR OBJECTIVES WHICH IT IS SOUGHT TO REACH BY THIS PROVISION. THE FIRST IS TO ENTER INTO CONTRACTS WITHOUT COMPETITIVE BIDDING IN THE FEW CASES WHERE COMPETITIVE BIDDING IS STILL REQUIRED; SECOND, TO ENTER INTO CONTRACTS WITHOUT PERFORMANCE BONDS; THIRD, TO AMEND CONTRACTS; FOURTH, TO MAKE PROGRESS PAYMENTS ON CONTRACTS. THOSE ARE THE FOUR OBJECTIVES INTENDED TO BE REACHED BY THIS NEW PARAGRAPH. ( PAGE 10096, CONGRESSIONAL RECORD OF DECEMBER 16, 1941.)

THE FACT THAT THE PROVISION IN QUESTION HAS BEEN CONTAINED IN NAVAL APPROPRIATION ACTS WHICH WERE ENACTED BOTH PRIOR AND SUBSEQUENT TO THE FIRST WAR POWERS ACT, AND WITHOUT ANY INDICATION IN THE LATER ENACTMENTS EITHER IN SPECIFIC TERMS OR BY NECESSARY IMPLICATION THAT THE PROVISION SHOULD BE HELD INAPPLICABLE IN THE CASE OF CONTRACTS ENTERED INTO FOR THE PURPOSE OF NATIONAL DEFENSE OR FOR THE "PROSECUTION OF THE WAR EFFORT," WOULD SEEM TO SERVE AS A FURTHER INDICATION THAT IT IS NOT PROVISION OF LAW "RELATING TO THE MAKING * * * OF CONTRACTS," AS SUGGESTED IN YOUR LETTER, WITHIN THE MEANING OF THAT TERM AS USED IN THE FIRST WAR POWERS ACT, 1941. THEREFORE, IN SPECIFIC ANSWER TO THE QUESTION PRESENTED IN YOUR LETTER, YOU ARE ADVISED THAT CONTRACTS MADE UNDER AUTHORITY OF THE FIRST WAR POWERS ACT, 1941, ARE NOT AUTHORIZED TO BE ENTERED INTO WITHOUT REGARD TO THE PROVISION OF LAW QUOTED IN YOUR LETTER WHEN THE CONSIDERATION UNDER SUCH CONTRACTS IS PAYABLE FROM FUNDS UNDER THE NAVAL APPROPRIATION ACTS FOR 1942 OR 1943.

WITH RESPECT TO THE VIEWS OF THIS OFFICE GENERALLY AS TO THE PURPOSE, APPLICATION, AND EFFECT OF SECTION 201 OF THE FIRST WAR POWERS ACT, 1941, ATTENTION IS INVITED TO THE ENCLOSED COPY OF DECISION OF MARCH 4, 1942, B- 20442, 21 COMP. GEN. 835, TO THE SECRETARY OF WAR.