B-12733, OCTOBER 9, 1940, 20 COMP. GEN. 194

B-12733, OCTOBER 9, 1940, 20 COMP. GEN. 194

CONTRACTS - NATIONAL DEFENSE PURPOSES - EFFECT OF ADMINISTRATIVE ELECTION TO ADVERTISE FOR BIDS THE PRINCIPLES WHICH PROPERLY MAY BE APPLIED IN CONTRACTING FOR NATIONAL DEFENSE PURPOSES WITHOUT ADVERTISING FOR BIDS PURSUANT TO THE AUTHORITY IN SECTION 1 (A) OF THE ACT OF JULY 2, 1940, LIKEWISE MAY BE APPLIED IN AWARDING CONTRACTS UNDER SAID SECTION AFTER ADVERTISING, AND THE ADMINISTRATIVE ELECTION TO ADVERTISE WOULD NOT PRECLUDE NEGOTIATION OF A CONTRACT WITH OTHER THAN THE LOWEST BIDDER OR WITH A NONBIDDER, ON THE TERMS ADVERTISED OR ON MODIFIED TERMS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, OCTOBER 9, 1940:

I HAVE YOUR LETTER OF OCTOBER 4, 1940, AS FOLLOWS:

ON AUGUST 31, 1940, THE ADVISORY COMMISSION TO THE COUNCIL OF NATIONAL DEFENSE UNANIMOUSLY AGREED TO AND ADOPTED A STATEMENT OF LABOR REQUIREMENTS AS A GUIDE FOR CONTRACTORS WHO ARE PARTICIPATING IN THE NATIONAL DEFENSE PROGRAM. ON SEPTEMBER 6 THE COMMISSION LIKEWISE ADOPTED CERTAIN GENERAL PRINCIPLES GOVERNING THE LETTING OF NATIONAL DEFENSE CONTRACTS. THESE TWO DOCUMENTS WERE THEREUPON TRANSMITTED TO THE PRESIDENT, WHO REGARDED THEM AS "OF SUCH IMPORTANCE AS TO JUSTIFY MY SENDING THEM TO THE MEMBERS OF THE SENATE AND THE HOUSE OF REPRESENTATIVES AS A MATTER OF INFORMATION. THE VALUES OF THESE POLICIES AND PRINCIPLES TO THE GOVERNMENT, TO INDUSTRY, AGRICULTURE, LABOR, AND TO THE COUNTRY, SECTIONALLY AND AS A WHOLE, WILL BE SEEN AT NCE" (1HOUSE DOC. NO. 950, 76TH CONG., 3D SESS., SEPT. 13, 1940).

THERE APPEARS TO BE NO DOUBT THAT CONSIDERATION MAY BE GIVEN TO THESE PRINCIPLES IN THE AWARD OF CONTRACTS PROVIDED RESORT IS HAD TO PROCUREMENT WITHOUT ADVERTISING UNDER THE AUTHORITY OF SECTION 1 (A) OF THE ACT OF JULY 2, 1940 ( PUBLIC, NO. 703, 76TH CONG.). HOWEVER, THE QUESTION HAS ARISEN AS TO WHETHER CONSIDERATION MAY BE GIVEN TO THESE PRINCIPLES IN THE AWARD OF CONTRACTS WHEN RESORT IS HAD TO FORMAL ADVERTISING. THAT IS TO SAY, MAY A LOW BID RECEIVED IN RESPONSE TO A FORMAL INVITATION FOR BIDS, WHICH IS OTHERWISE ACCEPTABLE, BE REJECTED BECAUSE AN AWARD TO THE BIDDER WOULD VIOLATE ANY ONE OR ALL OF THE PRINCIPLES ADOPTED BY THE ADVISORY COMMISSION?

THE COORDINATOR OF PROCUREMENT, MR. DONALD NELSON, FEELING THAT THE USE OF FORMAL ADVERTISING IN MANY CASES IS PREFERABLE TO NEGOTIATION, PROVIDED THAT THE PRINCIPLES ENUNCIATED MAY BE PROPERLY INCORPORATED IN FORMAL ADVERTISING, HAS RECOMMENDED THAT THIS QUESTION BE PRESENTED TO YOU.

SINCE THE AVAILABILITY OF APPROPRIATED FUNDS FOR THE MAKING OF PAYMENTS UNDER CONTRACTS AWARDED IN ACCORDANCE WITH THESE PRINCIPLES IS INVOLVED, AND IN ORDER THAT THE DEFENSE PROGRAM MAY NOT BE DELAYED, YOUR EARLY DECISION IN THE MATTER IS REQUESTED.

THE CITED SECTION 1 (A) OF THE ACT OF JULY 2, 1940, PUBLIC, NO. 703, ENTITLED AN ACT " TO EXPEDITE THE STRENGTHENING OF THE NATIONAL DEFENSE," PROVIDES:

THAT (A) IN ORDER TO EXPEDITE THE BUILDING UP OF THE NATIONAL DEFENSE THE SECRETARY OF WAR IS AUTHORIZED OUT OF THE MONEYS APPROPRIATED FOR THE WAR DEPARTMENT FOR NATIONAL-DEFENSE PURPOSES FOR THE FISCAL YEAR ENDING JUNE 30, 1941, WITH OR WITHOUT ADVERTISING, (1) TO PROVIDE FOR THE NECESSARY CONSTRUCTION, REHABILITATION, CONVERSION, AND INSTALLATION AT MILITARY POSTS, DEPOTS, STATIONS, OR OTHER LOCALITIES, OF PLANTS, BUILDINGS, FACILITIES, UTILITIES, AND APPURTENANCES, THERETO (INCLUDING GOVERNMENT- OWNED FACILITIES AT PRIVATELY OWNED PLANTS AND THE EXPANSION OF SUCH PLANTS, AND THE ACQUISITION OF SUCH LAND, AND THE PURCHASE OR LEASE OF SUCH STRUCTURES, AS MAY BE NECESSARY), FOR THE DEVELOPMENT, MANUFACTURE, MAINTENANCE, AND STORAGE OF MILITARY EQUIPMENT, MUNITIONS, AND SUPPLIES, AND FOR SHELTER; (2) TO PROVIDE FOR THE DEVELOPMENT, PURCHASE, MANUFACTURE, SHIPMENT, MAINTENANCE, AND STORAGE OF MILITARY EQUIPMENT, MUNITIONS, AND SUPPLIES, AND FOR SHELTER, AT SUCH PLACES AND UNDER SUCH CONDITIONS AS HE MAY DEEM NECESSARY; AND (3) TO ENTER INTO SUCH CONTRACTS (INCLUDING CONTRACTS FOR EDUCATIONAL ORDERS, AND FOR THE EXCHANGE OF DETERIORATED, UNSERVICEABLE, OBSOLESCENT, OR SURPLUS MILITARY EQUIPMENT, MUNITIONS, AND SUPPLIES FOR OTHER MILITARY EQUIPMENT, MUNITIONS AND SUPPLIES OF WHICH THERE IS A SHORTAGE), AND TO AMEND OR SUPPLEMENT SUCH EXISTING CONTRACTS, AS HE MAY DEEM NECESSARY TO CARRY OUT THE PURPOSES SPECIFIED IN THIS SECTION: * * * ( ITALICS SUPPLIED.)

THIS EXPRESS AUTHORITY TO NEGOTIATE WITHOUT ADVERTISING SUCH CONTRACTS AS MAY BE DEEMED NECESSARY TO CARRY OUT THE PURPOSES SPECIFIED IN THE SECTION COMPREHENDS THE LESSER AUTHORITY TO UTILIZE ADVERTISING TO THE EXTENT ADMINISTRATIVELY DEEMED APPROPRIATE IN MAKING CONTRACTS UNDER SUCH SECTION WITHOUT RESTRICTING FINAL ADMINISTRATIVE DETERMINATION OF THE BIDDER TO WHOM THE CONTRACT SHOULD BE AWARDED. HENCE, IN SUCH CASES, AN ADMINISTRATIVE ELECTION TO ADVERTISE, RATHER THAN TO NEGOTIATE WITH A SINGLE CONTRACTOR, DOES NOT NECESSARILY REQUIRE MAKING THE AWARD TO THE LOWEST BIDDER REGARDLESS OF ANY OR ALL OTHER CONSIDERATIONS. AS ALL BIDS MAY BE REJECTED AND A CONTRACT NEGOTIATED WITH ANY ONE OF THE BIDDERS OR WITH A NONBIDDER ON THE TERMS ADVERTISED, OR ON MODIFIED TERMS, WITHIN THE AUTHORITY TO NEGOTIATE SUCH CONTRACTS WITHOUT ADVERTISING, THERE WOULD APPEAR NO LEGAL OBJECTION TO THE REJECTION OF THE BIDS OF ONE OR MORE LOWER BIDDERS AND THE AWARDING OF THE CONTRACT TO A HIGHER BIDDER CONSISTENTLY WITH THE PRINCIPLES WHICH PROPERLY MAY BE ADMINISTRATIVELY APPLIED IN THE NEGOTIATION OF CONTRACTS WITHOUT ADVERTISING. THE GREATER INCLUDES THE LESSER, AND TO THE EXTENT THAT SUCH CONTRACTS MAY BE NEGOTIATED WITHOUT ADVERTISING, THEY MAY BE MADE ON THE SAME CONDITIONS AFTER ADVERTISING.