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UNITED STATES POST OFFICE
10 To be opened a
BIDS INVITED FROM
DELIVERT S MED N
(1) Erneste. Gee Bonudry... Insas.Atlantete. She (2) Atlanta. Kalmar Willya. Inga.. Atlanta, (8) Atlanta Hla.Co,. Atlantio.Ah. (4) Cental.charelato Atlantah...he (obandar. Hatora, Incas.Atlanta. Gade (*) CAC.Iruck.and. Carch, Atlanta, Gho. (Dain. Conch.com1101. Varront. An....Wasbington. to India. Coach.co... Kant, Ohio.
PRICES QUOTED AND TIME DISCOUNTS
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ABSTRACT OF BIDDERS AND BIDS/
Subject: Ronta...ex. 32 Yob
Resuell of Advertisement No......
Recommend awards he made as indicated by red child
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Post OFFICE DEPARTMENT,
September 23, 1955. Subject: Puchase of 32 “Pony Express” vehicles. From: The Solicitor. To: Bureau of Facilities, Chief of Procurement.
You transmitted for my review a proposed contract with Twin Coach Co., of Kent, Ohio, for the furnishing of 32, three-quarter-ton "Pony Express' mail vehicles.
Twin Coach submitted the only bid to lease the vehicles at the rate of 55 cents per hour. The invitation contained the following clause:
"It is understood and agreed that this contract is for a term beginning October 1, 1955, and ending June 30, 1956, and may be renewed by the Government, with the consent of the contractor, each successive Federal fiscal year, by 30 days' written notice; subject to termination by either party after 180 days, by 30 days' written notice; but in no case shall this contract be continued beyond June 30, 1959."
It is also provided that the Government may purchase the vehicles at the termination of the contract and apply all the rental payments theretofore made to the purchase price of $2,150 per vehicle.
This office assumes that bids were solicited as the result of this office's memorandum to you dated August 8, 1955 (JTD: cac, 12-B) in which the view was expressed that the proposed purchase of the vehicles without advertising would be illegal.
Ordinarily the purchase of motor vehicles for the Post Office Department is made through General Services Administration in accordance with section 304.02 of chapter II, of title I of that agency's personal property management regulations. Section 304.02 reads in part:
"All executive agencies, except the Department of Defense within the continental United States and Alaska shall procure through the Administration, as needed, the following new motor-propelled vehicles for the carriage of passengers and freight: passenger automobiles, station wagons, carryalls, ambulances, buses [sic], motorcycles, motor scooters, trucks of less than 25,000 pounds gross weight, and trailers of not less than 5 tons and not more than 12 tons pay load. * * *"
The vehicles in question are not experimental and presumably are new. ACcordingly, if the Government were obligated to purchase the vehicles at the termination of the contract term the proposed contract would be illegal since it would be an attempt to evade the requirement that new motor vehicles, with certain exceptions, be purchased through General Services Administration. However, in the instant case, the Government is not obligated to purchase and may never do so. Accordingly, although there may be some thought at the time bids were solicited that the vehicles might eventually be purchased, it is my opinion that the lack of a definite obligation to purchase saves the contract from being one to illegally evade the requirement that new vehicles be purchased from GSA. In the event it should later be decided to purchase the vehicles, the above-cited GSA regulation would not be violated since the vehicles would not be “new” but would be "used.”
A further question is caused by the fact that this contract is for the 1956 fiscal year and the Government is given the option, with the consent of the contractor to renew for successive fiscal years. Ordinarily, contracts containing options to renew are legal only if the renewal options become effective by the taking of an affirmative action by the Government. Then the affirmative action to exercise the option can only be taken after it has been determined, after an informal or formal solicitation of bids, that the exercise of the option would be in the best interests of the United States (28 Comp. Gen. 553; 20 Comp. Gen. 572; 19 Comp. Gen. 980). Since this contract can be renewed only after affirmative action on the part of the Government, that phase of the usual problem is not applicable here.
The rule requiring readvertising before renewal options can be exercised evolved from cases in which the original contract was entered into under authority conferred by an appropriation act. When the fiscal year ended, the contract ended also. It was held that essentially the renewal of the original contract was the entering into of a new contract. The legality of the renewed contract was to be judged as though an original contract was being entered into (20 Comp. Dec. 612). In such circumstances, advertisement would seem legally required to comply with title 41, United States Code, section 5.
The instant contract is not dependent upon authority conferred by an appropriation act. It is the hire of “equipages for the city delivery service" and thus is a contract "authorized by law” which could be entered into for a term of up to 4 years (39 U. S. C. 802). The reasons which ordinarily preclude the exercise of the option to renew without the prior solicitation of bids do not exist here. Since the Department could have solicited bids for a contract to run from October 1, 1955, to September 30, 1959, in substance renewal without advertising does not violate any requirement that Congress wanted to see observed. Accordingly, it is my opinion that any doubts in the matter should be resolved by holding that it is not necessary to solicit bids prior to exercising the option. Of course, you would not be precluded from taking that act if you should so desire.
In summary it is my opinion that the proposed contract may legally be entered into.
LOUIS J. DOYLE
LEASE EXHIBIT 4
SEPTEMBER 10, 1955. Re proposal for the leasing of 32 trucks. Mr. R. D. SCHLEGEL, Director, Division of Vehicles, Bureau of Facilities,
Post Office Department, Washington, D. C.: This is in reply to your letter of August 17, 1955, RDS: GBM, relative to the above subject.
Enclosed is the results of our advertisement. The announcement was carried in the morning and evening papers of Atlanta and bids were invited from 19 dealers and manufacturers. Twin Coach Co., of Kent, Ohio, submitted the only bid. Their bid is for $0.55 per hour. Please note the exception attached to original bid of Twin Coach Co. Abstract and certificate of award is also attached.
S. E. ANDREWS,
LEASE EXHIBIT 5
AUGUST 17, 1955. Subject: Proposal for the leasing on a “lease-purchase” plan for approximately 32 trucks, standard-drive, mail delivery, 4 by 2, 34-ton, G. V. W. 4,500 pounds
(maximum) wheelbase 100-inch (maximum), Atlanta region. From : Director, division of vehicles. To: Regional vehicle manager, Atlanta, Ga.
Confirming discussion held in the Division of Vehicles August 15, 1955, it is requested that you take immediate action in advertising for 32 vehicles as described in the attached specification No. 32–54 revised July 8, 1955. It is proposed to obtain the vehicles on an hourly basis with a minimum required service of 40 hours per week and that the proposals submitted contain a unit valuation of the vehicle to be supplied in the event that the recapture provisions are made effective at any time during the term of the contract or contracts.
The invitations to bid should have wide distribution. Attached herewith as exhibit B is the type of contract that will be used upon award to the successful bidder. The bids when received should be abstracted and forwarded to me personally and the notification of award will be made from this office.
It will be appreciated if you would keep this office advised as to the progress being made in connection with obtaining vehicles on a rental basis in accordance with the attached specification.
Roy D. SCHLEGEL.
LEASE EXHIBIT 6
AUGUST 9, 1955. Subject: Purchase of 32 Twin Coaches by negotiation. From : Director of Supplies. To: Director of Vehicles.
Attached is file on above subject, including the opinion of the Solicitor on the matter.
The Solicitor's office also indicated that should it be an administrative decision to proceed with a negotiated contract, they would not be in position to defend the action and advised that if this decision was made, it should first be cleared through the General Accounting Office.
LEASE EXHIBIT 7
AUGUST 8, 1955. Subject: Purchase of 32 Twin Coach vehicles by negotiation. From: The Solicitor. To: Bureau of Facilities, Chief of Procurement.
This will reply to your memorandum dated August 1, 1955 (Div. Sup., LJS: LW), relative to the proposed procurement of 32 Twin Coach Pony Express vehicles by negotiation.
From the letter dated May 24, 1955, from the then Regional Operations Manager, H. B. Dean, it is noted that delivery was to be at the rate of 8 vehicles per month. In a memorandum dated April 27, 1955, from the chief industrial engineer, it is stated that this office expressed the view that the vehicles could be purchased under the public-exigencies provision of title 41 United States Code, section 5. My opinion is requested whether there is any legal barrier to the negotiation of the contract.
It is true that several members of my staff informally expressed the view that the vehicles could be so purchased. They have advised me that those views were based upon representations that an emergency existed and that the Department could not wait until delivery could be secured under a contract entered into after advertising for bids. If that condition still existed, I would confirm the informal advice previously given.
However, more than 3 months have elapsed and the vehicles have not yet been procured. It is my understanding that the vehicles were not procured in the 1955 fiscal year due to the fact that no funds were available. However, as long ago as April, it was known that the vehicles were needed. Lack of funds in the last months of fiscal 1955 would not have precluded advertisement for a contract to be entered into as soon as the Department's 1956 appropriations became available. Had this been done, the vehicles would either have already been procured or would be well on the way to being procured. The Comptroller General has laid down a strict test for determining whether a public exigency exists which permits procurement without advertisement. The event must be sudden, or unexpected or unforeseen. A condition which may reasonably be expected to occur about a certain time, although the exact time of its occurrence is uncertain, is not regarded as a public exigency excusing the requirement of advertising (14 Comp. Gen. 875). In the instant case, should the vehicles be procured without advertisement, even though an emergency need now exists, there is a grave risk that the General Accounting Office would hold that the exigency was at least partially due to administrative action and that procurement without advertisement is not legally justified (14 Comp. Gen. 364).
The file supplied to me indicates that the desire to procure the vehicles as soon as possible is due more to the desire to make the serviec more efficient and save money than to emergency service needs. See Mr. Dean's letter of May 24. Attention is invited to the fact that the Comptroller General has held on several occasions that the fact that the Government may be saved money does not justify the failure to advertise (11 Comp. Gen. 183; 30 Comp. Gen. 34).
In view of the foregoing, it is my opinion that it is very doubtful whether it can be said that a public exigency now exists which justifies failure to advertise. However, it is possible that actual service needs are such that the vehicles must be immediately procured. Accordingly, the file is returned so that the proper administrative officials may make determination whether a service emergency still exists. You are cautioned that even if such an emergency exists, the GAO may be unwilling to see the vehicles procured without advertising.
ABE MCGREGOR GOFF.
LEASE EXHIBIT 8
JULY 27, 1955. Subject: Procurement of 32 Twin Coach, Pony Express vehicles as requested by
the Assistant Postmaster General, Bureau of Post Office Operations. From : Director, Division of Vehicles. To: Director, Division of Supplies.
(Attention: Chief of Procurement.) Reference is made to our several discussions regarding the negotiated procurement of 32 Twin Coach Pony Express vehicles for assignment to the Atlanta, Ga., region. Attached herewith are the following:
1. Letter dated April 27, 1955, from the Chief Industrial Engineer to the Chief of Procurement, requesting the negotiated purchase of subject vehicles.
2. Letter dated June 7, 1955, from Assistant Postmaster General Abrams to Assistant Postmaster General Kieb, together with copy of letter from Regional Operations Manager Dean, now regional director, Atlanta, Ga.
3. Specification of Post Office Department, Division of Vehicles, No. 32–54, revised July 8, 1955. In view of the several deficiencies that have developed, and for which corrective action had to be taken by the Division of Vehicles, on the 254 Pony Express vehicles purchased previously, it was necessary to revise the specifications in