A-36524, MAY 29, 1931, 10 COMP. GEN. 528

A-36524, MAY 29, 1931, 10 COMP. GEN. 528

BIDS - NAVAL SUPPLIES - BID BOND SECTION 3719, REVISED STATUTES, AS AMENDED BY THE ACT OF MAY 25, 1896, 29 STAT. 136, APPLICABLE TO PROPOSALS TO FURNISH SUPPLIES TO THE NAVY DEPARTMENT IS NOT SATISFIED WHEN THE BID BOND DOES NOT ACCOMPANY THE BID AND IS NEITHER MAILED NOR RECEIVED UNTIL AFTER THE BIDS ARE OPENED. TELEGRAM FROM THE SURETY COMPANY STATING THAT SUCH A BID BOND HAD BEEN EXECUTED AND WAS BEING MAILED CAN NOT BE ACCEPTED AS COMPLIANCE WITH THESE STATUTES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, MAY 29, 1931:

THERE HAS BEEN RECEIVED, IN REFERENCE TO OFFICE LETTER DATED MAY 8, 1931, YOUR LETTER OF MAY 15, 1931, WITH ACCOMPANYING PAPERS, RELATIVE TO THE PROPOSAL OF DAVID C. REID CO. FOR THE DELIVERY OF BUNKER OIL UNDER NAVY SCHEDULE 5512.

THE SCHEDULE 5512 DOES NOT SHOW WHEN IT WAS ADVERTISED, BUT IT PROVIDED THAT PROPOSALS WOULD BE OPENED AT 10 A.M., MAY 1, 1931, IN THE BUREAU OF SUPPLIES AND ACCOUNTS, NAVY DEPARTMENT, WASHINGTON, FOR FURNISHING ESTIMATED QUANTITIES OF FUEL OIL FOR THE PERIOD FROM JULY 1, 1931, TO JUNE 30, 1932, AT VARIOUS POINTS, WITH NOTICE THAT IF AWARD WAS MADE FOR THE PERIOD ENDING DECEMBER 31, 1931, THE ESTIMATED QUANTITIES WOULD BE REDUCED BY ONE-HALF. THE ATTENTION OF PROSPECTIVE BIDDERS WAS INVITED IN THE SCHEDULE TO THE ACT OF FEBRUARY 28, 1931, 46 STAT. 1442, WHICH CONTAINED A PROVISION THAT NO PART OF THE APPROPRIATION SHOULD BE AVAILABLE FOR THE PURCHASE OF ANY KIND OF FUEL OIL OF FOREIGN PRODUCTION FOR ISSUE, DELIVERY, OR SALE TO SHIPS AT POINTS EITHER IN THE UNITED STATES OR ITS POSSESSIONS WHERE DOMESTIC OIL MAY BE SECURED, NOTWITHSTANDING THAT OIL OF DOMESTIC PRODUCTION MIGHT COST MORE THAN OIL OF FOREIGN PRODUCTION,"IF SUCH EXCESS COST IN THE OPINION OF THE SECRETARY OF THE NAVY, WHICH SHALL BE CONCLUSIVE, BE NOT REASONABLE.' ATTACHED TO THE SCHEDULE WAS THE STANDARD GOVERNMENT FORM OF BID TO BE EXECUTED BY THE BIDDERS AND WHICH CONTAINED, AT THE FOOT THEREOF, THE FORM OF A BID BOND, WITH NOTIFICATION THAT THE BOND MUST BE EXECUTED WHEN THE TOTAL AMOUNT OF ALL CLASSES BID ON EXCEEDED $500. BIDDERS WERE NOTIFIED THAT IF THE BID BOND WAS NOT EXECUTED THE "BID IS INFORMAL AND WILL NOT BE CONSIDERED.' THE REQUIREMENT OF THE LAW IN THIS RESPECT IS CONTAINED IN SECTION 3719, REVISED STATUTES, AS AMENDED BY THE ACT OF MAY 25, 1896, 29 STAT. 136, AS FOLLOWS:

EVERY PROPOSAL FOR NAVAL SUPPLIES INVITED BY THE SECRETARY OF THE NAVY, UNDER THE PRECEDING SECTION, SHALL BE ACCOMPANIED BY A WRITTEN GUARANTEE, SIGNED BY ONE OR MORE RESPONSIBLE PERSONS, TO THE EFFECT THAT HE OR THEY UNDERTAKE THAT THE BIDDER, IF HIS BID IS ACCEPTED, WILL AT SUCH TIME AS MAY BE PRESCRIBED BY THE SECRETARY OF THE NAVY, GIVE BOND, WITH GOOD AND SUFFICIENT SURETIES, TO FURNISH THE SUPPLIES PROPOSED; AND NO PROPOSAL SHALL BE CONSIDERED, UNLESS ACCOMPANIED BY SUCH GUARANTEE. IF, AFTER THE ACCEPTANCE OF A PROPOSAL, AND A NOTIFICATION THEREOF TO THE BIDDER, HE FAILS TO GIVE SUCH BOND WITHIN THE TIME PRESCRIBED BY THE SECRETARY OF THE NAVY, THE SECRETARY SHALL PROCEED TO CONTRACT WITH SOME OTHER PERSON FOR FURNISHING THE SUPPLIES; AND SHALL FORTHWITH CAUSE THE DIFFERENCE BETWEEN THE AMOUNT CONTAINED IN THE PROPOSAL SO GUARANTEED AND THE AMOUNT FOR WHICH HE MAY HAVE CONTRACTED FOR FURNISHING THE SUPPLIES, FOR THE WHOLE PERIOD OF THE PROPOSAL, TO BE CHARGED UP AGAINST THE BIDDER AND HIS GUARANTOR; AND THE SAME MAY BE IMMEDIATELY RECOVERED BY THE UNITED STATES, FOR THE USE OF THE NAVY DEPARTMENT, IN AN ACTION OF DEBT AGAINST EITHER OR ALL OF SUCH PERSONS: PROVIDED, THAT THE SECRETARY OF THE NAVY, MAY, IN HIS DISCRETION ACCEPT, IN LIEU OF THE WRITTEN GUARANTY REQUIRED TO ACCOMPANY A PROPOSAL FOR NAVAL SUPPLIES, AND IN LIEU OF THE BOND REQUIRED FOR THE FAITHFUL PERFORMANCE OF A CONTRACT FOR FURNISHING SUCH SUPPLIES, A CERTIFIED CHECK, PAYABLE TO THE ORDER OF THE SECRETARY OF THE NAVY, FOR THE FULL AMOUNT OF SUCH PROPOSAL OR CONTRACT THE CHECK TO BE HELD BY THE SECRETARY OF THE NAVY UNTIL THE REQUIREMENTS OF THE PROPOSAL OR CONTRACT SHALL BE COMPLIED WITH AND AS A GUARANTY FOR COMPLIANCE WITH THE SAME.

THE PROPOSAL OF THE DAVID C. REID CO. WAS RECEIVED IN THE BUREAU OF SUPPLIES AND ACCOUNTS, NAVY DEPARTMENT PRIOR TO 10 A.M., MAY 1, 1931, DATE FIXED FOR OPENING OF THE PROPOSALS. THE BID BOND, AS PROVIDED FOR THE FORM, WAS NOT EXECUTED, THE BID BEING ACCOMPANIED BY A LETTER DATED MAY 1, 1931, FROM AN ALLEGED AGENT OF DAVID C. REID (INC.), IN PERTINENT PART AS FOLLOWS:

BID BOND DOES NOT ACCOMPANY THIS BID BUT HAS BEEN ISSUED BY STANDARD SURETY AND CASUALTY COMPANY OF NEW YORK. THE ACTUAL BOND IS BEING FORWARDED BY AIR MAIL TO THE PAYMASTER GENERAL OF THE NAVY, BUREAU OF SUPPLIES AND ACCOUNTS, NAVY DEPARTMENT, WASHINGTON, D.C. TELEGRAPHIC CONFIRMATION OF THE ISSUANCE OF THIS BID BOND HAS BEEN SENT TO YOU AND WILL HAVE BEEN RECEIVED BEFORE THE FORMAL OPENING OF THE BIDS.

THERE WAS RECEIVED IN THE BUREAU OF SUPPLIES AND ACCOUNTS PRIOR TO THE HOUR FIXED FOR OPENING OF THE BIDS A TELEGRAM DATED MAY 1, 1931, FROM THE STANDARD SURETY AND CASUALTY CO. OF NEW YORK, STATING THAT "THIS COMPANY FORWARDING AIR-MAIL BID BOND FOR DAVID C. REID FOR SCHEDULE FIFTY FIVE TWELVE OPENING OF TEN A.M. TO-DAY," AND IT IS STATED IN LETTER OF MAY 1, 1931, FROM THE STANDARD SURETY AND CASUALTY COMPANY, THAT THIS TELEGRAM WAS FILED IN NEW YORK AT 10.15 A.M. DAYLIGHT -SAVING TIME, WHICH CORRESPONDS TO 9.15 A.M. EASTERN STANDARD TIME. WHEN THE BID WAS OPENED WITH THE BID BOND NOT EXECUTED, THERE WAS STAMPED THEREON THE WORD "INFORMAL," AND ON MAY 2, 1931, THERE WAS RECEIVED IN THE BUREAU OF SUPPLIES AND ACCOUNTS A PROPOSAL OF THE DAVID C. REID CO. APPARENTLY IDENTICAL WITH THE ONE OPENED ON MAY 1, 1931, EXCEPT THAT THE BID BOND HAS BEEN EXECUTED BY THE STANDARD SURETY AND CASUALTY CO. THIS PROPOSAL AND BID BOND WERE CONTAINED IN AN ENVELOPE POSTMARKED AT 4.30 P.M., MAY 1, 1931, OR AT ABOUT THE OFFICIAL CLOSING TIME OF THE BUREAU OF SUPPLIES AND ACCOUNTS ON THE DATE THE PROPOSALS WERE OPENED.

IT SEEMS THAT THE PROPOSAL OF THE DAVID C. REID CO. TO FURNISH 500,000 BARRELS OF OIL AT CAVITE, MANILA, P.I., DURING THE PERIOD FROM JULY 1, 1931, TO JUNE 30, 1932, WAS AT THE RATE OF $1.31 PER BARREL, AND THAT THE PROPOSAL OF THE UNION OIL CO. OF CALIFORNIA WAS AT THE RATE OF $1.32 PER BARREL, AND THE LATTER COMPANY HAS SUGGESTED IN LETTER OF MAY 19, 1931, THAT THE DAVID C. REID CO. WAS NOT A MANUFACTURER OF, OR REGULAR DEALER IN, BUNKER OIL, AS CONTEMPLATED BY THE TERMS OF SECTION 3722, REVISED STATUTES, WHICH PROVIDES, AMONG OTHER THINGS, THAT "NO PERSON SHALL BE RECEIVED AS A CONTRACTOR WHO IS NOT A MANUFACTURER OF, OR REGULAR DEALER IN, THE ARTICLES WHICH HE OFFERS TO SUPPLY.' THE FACTS BEFORE THIS OFFICE AT THIS TIME ARE NOT SUFFICIENT TO DETERMINE WHETHER THE DAVID C. REID CO. IS A MANUFACTURER OF, OR REGULAR DEALER IN, BUNKER OIL, THOUGH IT IS NOTED THAT A LETTER OF MAY 8, 1931, FROM THE DAVID C. REID CO., CARRIES THE LETTERHEAD STATEMENT THAT THIS COMPANY IS "OIL TANK AND STEAMER BROKERS," AND IT IS CONTENDED BY THE UNION OIL OIL CO., THAT AS OIL AND TANK-STEAMER BROKERS, THIS COMPANY ACTS AS A BROKER BETWEEN PETROLEUM MANUFACTURERS AND TANK OWNERS, OR COMPANIES WHICH SELL TO THE PUBLIC.

THE ONLY QUESTION NOW HERE FOR DECISION IS WHETHER THE BID SUBMITTED BY THE DAVID C. REID CO. COMPLIED WITH THE ABOVE-QUOTED PROVISION OF SECTION 3719, REVISED STATUTES, AS AMENDED BY THE ACT OF MAY 25, 1896, 29 STAT. 136, AND IT APPEARS CLEAR THAT IT DID NOT. THE DECISION IN 7 COMP. GEN. 568, 569, TO WHICH REFERENCE IS MADE, IS NOT IN POINT. THAT DECISION CONCERNED A BID BOND SUBMITTED UNDER THE INTERIOR DEPARTMENT, AND THE STATUTES INVOLVED IN THAT CASE DO NOT CONTAIN SUCH A SPECIFIC REQUIREMENT AS IS CONTAINED IN SECTION 3719, REVISED STATUTES, AS AMENDED WHICH IS THAT EVERY PROPOSAL FOR NAVY SUPPLIES "SHALL BE ACCOMPANIED BY A WRITTEN GUARANTEE, SIGNED BY ONE OR MORE RESPONSIBLE PERSONS, CONSTITUTING A BID BOND.' THE TELEGRAPHIC STATEMENT THAT A BID BOND HAD BEEN EXECUTED AND WAS BEING MAILED BY THE STANDARD SURETY AND CASUALTY CO. WAS NOT THE BID BOND WHICH WAS IN FACT REQUIRED TO BE EXECUTED ON THE STANDARD FORM PRESCRIBED BY THE PRESIDENT FOR UNIFORM USE THROUGHOUT THE GOVERNMENT SERVICE. THE BID BOND WAS, IN FACT, RECEIVED THE DAY FOLLOWING THE OPENING OF THE PROPOSALS, AND IT DID NOT, IN FACT, ACCOMPANY THE PROPOSAL WHICH WAS OPENED ON MAY 1, 1931, AT 10 A.M. THE TELEGRAPHIC STATEMENT OF MAY 1, 1931, DID NOT HAVE THE EFFECT OF MAKING THE BID BOND RECEIVED MAY 2, 1931, ACCOMPANY THE BID RECEIVED MAY 1, 1931. A BID BOND WOULD APPEAR TO BE EFFECTIVE AS TO THE UNITED STATES FROM DELIVERY, ONLY TO THE UNITED STATES AND THIS BOND WAS NOT MAILED UNTIL 4.30 P.M. ON MAY 1, 1931, AFTER THE PROPOSAL HAD BEEN OPENED AT 10 A.M.

ANSWERING THE QUESTION SPECIFICALLY, YOU ARE ADVISED THAT UNDER THE FACTS AND CIRCUMSTANCES DISCLOSED THE PROPOSAL DID NOT COMPLY WITH SECTION 3719, REVISED STATUTES, AS AMENDED BY THE ACT OF MAY 25, 1896, 29 STAT. 136, AND MUST BE DISREGARDED.