B-71468, DECEMBER 5, 1947, 27 COMP. GEN. 315

B-71468, DECEMBER 5, 1947, 27 COMP. GEN. 315

BONDS - PERFORMANCE - DISTRICT OF COLUMBIA SUPPLY CONTRACTS WHILE IT MAY BE INFERRED FROM THE PROVISO TO THE ACT OF JUNE 26, 1912--- DISPENSING WITH THE NECESSITY OF PERFORMANCE BONDS IN THE CASE OF SUPPLY CONTRACTS OF THE DISTRICT OF COLUMBIA NOT EXCEEDING $1,000--- THAT SUCH BONDS WOULD BE REQUIRED IN CONNECTION WITH ALL SUPPLY CONTRACTS FOR MORE THAN $1,000, PROCUREMENTS BY THE DISTRICT OF COLUMBIA OF SUPPLIES (OTHER THAN MATERIALS OR SUPPLIES FOR CONSTRUCTION OR STREET IMPROVEMENT WORK BY CONTRACTORS) ARE NOT REQUIRED TO BE SUPPORTED BY PERFORMANCE BONDS, EVEN THOUGH THE CONTRACT BE FOR MORE THAN $1,000.

ACTING COMPTROLLER GENERAL FISHER TO THE PRESIDENT, BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA, DECEMBER 5, 1947:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 28, 1947, REQUESTING TO BE ADVISED WHETHER THE LAW REQUIRES THAT PERFORMANCE BONDS BE OBTAINED IN SUPPORT OF ALL CONTRACTS MADE BY THE DISTRICT OF COLUMBIA FOR THE PROCUREMENT OF SUPPLIES, MATERIALS AND EQUIPMENT, WHERE THE COST OF SUCH SUPPLIES, MATERIALS AND EQUIPMENT IS $1,000 OR MORE.

YOU INVITE ATTENTION TO CHAPTER 8 ( CONTRACTS), TITLE 1 OF THE DISTRICT OF COLUMBIA CODE, AND TO A CERTAIN PROVISION IN THE ACT OF SEPTEMBER 1, 1916, 39 STAT. 676, AT PAGE 688, AND STATE, IN PART:

RECENTLY, SOME DOUBT WAS EXPRESSED, AFTER A PERUSAL OF THE LAW ON THE SUBJECT, THAT CONGRESS INTENDED THAT PERFORMANCE BONDS SHOULD BE REQUIRED ON ALL SUPPLY CONTRACTS OF THE DISTRICT OF COLUMBIA. THERE IS NO QUESTION, HOWEVER, THAT PERFORMANCE BONDS ARE REQUIRED ON CONSTRUCTION CONTRACTS, AS THE MONETARY INTERESTS OF LABOR AND MATERIAL MEN MUST BE PROTECTED IN ANY CONSTRUCTION CONTRACT WITH A GENERAL CONTRACTOR. THAT PERFORMANCE BONDS SHOULD BE REQUIRED ON SOME TYPES OF SUPPLY CONTRACTS THERE IS LITTLE DOUBT, BUT THIS CAN BE DETERMINED ADMINISTRATIVELY AT THE TIME OF SOLICITATION OF PROPOSALS, ESPECIALLY IN CASES WHERE THE PUBLIC INTEREST MUST BE PROTECTED, SUCH AS THE PURCHASE OF LITTLE KNOWN OR SPECIAL TYPES OF EQUIPMENT WHERE A GUARANTEE PROVISION IN THE CONTRACT FOR A DEFINITE PERIOD OF TIME IS ESSENTIAL AND THE SUPPORT OF A PERFORMANCE BOND IS VERY DESIRABLE. AND *COM*PET*1**

AS YOU HAVE INDICATED, THE PROVISIONS OF THE ACT OF JULY 7, 1932, 47 STAT. 608, SUPERSEDING THOSE OF THE ACT OF FEBRUARY 28, 1899, 30 STAT. 906 ( SECTION 1-804 OF THE CODE), RELATING TO CONTRACTS FOR THE CONSTRUCTION OF PUBLIC BUILDINGS, THE PROSECUTION AND COMPLETION OF PUBLIC WORKS, AND THE ALTERATION AND REPAIR OF PUBLIC BUILDINGS AND WORKS, LEAVE NO DOUBT AS TO THE REQUIREMENT FOR BONDS IN SUCH CASES. SEE, ALSO, THE PROVISIONS OF CHAPTER 6 ( REPAIR AND CONSTRUCTION), TITLE 7 OF THE DISTRICT OF COLUMBIA CODE, CONCERNING BOND REQUIREMENTS IN CONNECTION WITH CONTRACTS FOR THE CONSTRUCTION, REPAIR AND MAINTENANCE OF STREETS, SEWERS, ETC. HOWEVER, AN EXAMINATION OF THE PERTINENT SECTIONS OF THE DISTRICT OF COLUMBIA CODE AND OF THE BASIC STATUTES FROM WHICH THEY ARE DERIVED FAILS TO REVEAL ANY EXPRESS DIRECTION OF THE CONGRESS THAT PERFORMANCE BONDS BE OBTAINED IN SUPPORT OF CONTRACTS FOR THE PROCUREMENT OF SUPPLIES GENERALLY.

UNCERTAINTY IN THE MANNER NO DOUBT HAS ARISEN FROM CERTAIN PROVISIONS OF THE LAW FOUND IN THE ACTS OF JUNE 26, 1912, 37 STAT. 139, 168, (SECTIONS 1 -805 AND 806 OF THE CODE), AND SEPTEMBER 1, 1916, 39 STAT. 676, 688 (SECTION 7-603 OF THE CODE). THE 1912 ACT, MAKING APPROPRIATIONS FOR USE BY THE DISTRICT OF COLUMBIA DURING THE FISCAL YEAR 1913, CONTAINED A PROVISO AS FOLLOWS:

PROVIDED FURTHER, THAT HEREAFTER FORMAL WRITTEN CONTRACTS WITH BOND FOR WORK OR THE PURCHASE OF SUPPLIES AND MATERIALS FOR THE DISTRICT OF COLUMBIA SHALL NOT BE REQUIRED IN CASES WHERE THE COST OF SUCH WORK OR SUPPLIES OR MATERIALS DOES NOT EXCEED THE SUM OF $1,000.

OBVIOUSLY, THE PURPOSE OF SAID PROVISION WAS TO DISPENSE, IN CASES WHERE THE PROCUREMENT DID NOT EXCEED $1,000, WITH REQUIREMENTS (1) THAT CONTRACTS FOR WORK OR SUPPLIES AND MATERIAL BE IN WRITING, AND (2) THAT BONDS BE FURNISHED IN CONNECTION WITH SUCH CONTRACTS.

THE PROVISION CONTAINED IN THE ACT OF SEPTEMBER 1, 1916, MAKING APPROPRIATIONS FOR USE BY THE DISTRICT OF COLUMBIA DURING THE FISCAL YEAR 1917, CLEARLY DOES NOT HAVE A MATERIAL BEARING ON THE QUESTION SINCE IT RELATES ONLY TO THE NATURE OF BONDS WHERE THEY ALREADY WERE REQUIRED BY OTHER PROVISIONS OF LAW IN THE CASE OF CERTAIN CONTRACTS FOR STREET REPAIRS. THE TERM "SUPPLIES" APPEARS TO HAVE BEEN USED IN THE SAID ACT BECAUSE, UNDER THE ACT OF JULY 5, 1884, 23 STAT. 125 (SECTION 1-810 OF THE CODE), THE MAKING OF SEPARATE CONTRACTS FOR LABOR AND MATERIALS IN EXECUTING PUBLIC WORKS HAD BEEN AUTHORIZED.

OF COURSE, AN IMPLICATION POSSIBLY COULD BE DRAWN FROM THE PROVISION IN THE 1912 ACT--- DISPENSING WITH THE NECESSITY OF PERFORMANCE BONDS WOULD BE REQUIRED IN CONNECTION WITH ALL SUPPLY CONTRACTS FOR MORE THAN $1,000. HOWEVER, THERE HAS BEEN FOUND NO INDICATION IN THE LEGISLATIVE HISTORY OF THE ACT THAT THE CONGRESS INTENDED TO IMPOSE SUCH A REQUIREMENT. THE HEARINGS BEFORE A SUBCOMMITTEE OF THE HOUSE COMMITTEE ON APPROPRIATIONS ON THE APPROPRIATION BILL INVOLVED INDICATE, AT PAGE 19 THEREOF, THAT THE PROVISION IN QUESTION MAY HAVE BEEN ADOPTED AS A RESULT OF REQUESTS FOR LEGISLATION THAT WOULD RESULT IN A VALIDATION OF CONTRACTS FOR "WORK, MATERIAL, OR SUPPLIES" ON THE BASIS OF APPROVAL THEREOF BY A MAJORITY OF THE COMMISSIONERS OF THE DISTRICT OF COLUMBIA. THE COMMISSIONERS APPEAR TO HAVE HAD IN MIND A LIBERALIZING AMENDMENT TO THE LANGUAGE OF SECTION 5 OF THE ACT OF JUNE 11, 1878, 20 STAT. 105, 106 (SECTION 7-602 OF THE CODE), WHICH REQUIRED UNANIMOUS CONSENT OF THE COMMISSIONERS AND A CERTAIN FORMALIZATION OF ALL CONTRACTS "FOR THE CONSTRUCTION, IMPROVEMENT, ALTERATION, OR REPAIRS OF THE STREETS, AVENUES, HIGHWAYS, ALLEYS, GUTTERS, SEWERS, AND ALL WORK OF LIKE NATURE.'

HENCE, IT MAY BE CONCLUDED THAT PROCUREMENTS BY THE DISTRICT OF COLUMBIA OF SUPPLIES (OTHER THAN MATERIALS OR SUPPLIES FOR CONSTRUCTION OR STREET IMPROVEMENT WORK BY CONTRACTORS) ARE NOT REQUIRED TO BE SUPPORTED BY A PERFORMANCE BOND, EVEN THOUGH THE CONTRACT IS FOR MORE THAN $1,000.