In reply, the bureau advised the department as follows: "Referring to your letter of the 25th ultimo relative to the matter of procuring from the Pennsylvania Railroad Co, two new test cars, the bureau has to state that it is not deemed practicable to secure competitive bids for these two cars. Judging from conversations had with the officers of the Pennsylvania Railroad Co. and also from the tone of their letter, it is evident that they consent to make these cars for the Bureau of Standards solely as an accommodation to the bureau. The bureau knows of no one else who has made cars of the type desired, or who is in a position to make such cars, and therefore strongly recommends that the offer of the Pennsylvania Railroad Co. to make these cars be promptly accepted." If it is a fact that there is no other manufacturer in a position to furnish cars of the type desired by the bureau, there would appear to be no necessity for advertising in this case. (See 14 Comp. Dec. 328.) However, if similar cars, differing only in minor details, may be secured from other manufacturers the department would appear to be without authority to sanction the purchase of cars from the Pennsylvania Company, without prior advertising. (See 22 Comp. Dec. 302.) In the case cited, it appears that the Secretary of War granted authority for the purchase in the open market of two light delivery trucks, at a cost not to exceed $1,290 each. In pursuance of this authority, the quartermaster, after obtaining prices, specification, and personally examining into the merits of these cars and the cost of maintenance and operation, decided that the Buick truck was most suitable and economical for the purpose required, and purchase was made accordingly. Payment for these cars being disallowed by the Auditor for the War Department, appeal was made to the Comptroller, who said: "In the present case no advertisements were issued nor were any proposals invited on any definite specifications as to requirements of the trucks proposed to be purchased. The dealers referred to simply furnished their price lists and descriptions of their own makes of trucks. From the data thus secured the two Buick trucks in question were selected and purchased without affording an opportunity to the other dealers to bid in a competitive way on specifications embodying requirements similar to those which were to be met by the Buick trucks. Without questioning the good faith of the officer who made the purchase or the value of the trucks secured, it is clear that the law requires advertising, in some form, for the article needed, and that a selection from a number of trucks of one that is thought best for the purpose for which a truck is needed indicates that there were requirements which were in fact a basis for invitation for bids. "From these facts it is clear that there was no compliance with section 3709, Revised Statutes, and, as the authority' granted is not a substitute for compliance with the statute, the auditor's disallowance must be affirmed.” It is noted that the proposed agreement with the Pennsylvania Co. makes no definite arrangement for payment of the cost of these cars, but merely provides that they will be furnished at cost plus overhead charges. There would appear to be no legal objection to making a purchase under such an arrangement for payment. (See 21 Comp. Dec. 134, 135.) Respectfully submitted. The SECRETARY OF COMMERCE. Referred to the Bureau of Standards. A. L. THURMAN, Solicitor. E. F. SWEET, Assistant Secretary. Mr. GORDON. The bureau did not enter into the contract before we received the opinion. Mr. BYRNS. Have you made any payment upon these cars? Mr. MOLSTER. None. We have left in the appropriation for 1917 $4,027, and it will take $4,750 to supplement that in order to protect the manufacturer. Mr. BYRNS. What is the total cost? Mr. MOLSTER. $8.758.79. There will be about $11 left over. Mr. BYRNS. What auditing or investigation was made by the bureau with reference to the actual cost of these cars, independent. of the statement that was rendered by the Pennsylvania Railroad Co.? Mr. GORDON. None, except the inspection of the cars themselves. NOTE. The bureau did not make a detailed check on the itemized account, but will do so as soon as this is received from the Pennsylvania Railroad Co. However, the bureau did make a thorough inspection of the two cars. Furthermore, a comparison of the cost of the car which the Pennsylvania Railroad Co. built for themselves in 1915 and the cost of one of the cars which they built for the bureau which was completed in 1918, will give, in our opinion. a very favorable, common-sense check. The car completed in January, 1915, cost $3,242,76, and the car completed in 1918, which is an exact duplicate of the former car, cost $4,442.75, an increase of about 35 per cent. Please note that this increase of 35 per cent took place between the years 1915 and 1918, during which time articles constructed of steel or iron have advanced anywhere from 50 to 300 per cent in almost every line of manufacture. Mr. BYRNS. There was no effort made to ascertain the amount of material and the cost of the material and the amount of labor? Mr. GORDON. The Pennsylvania Railroad Co. will submit that at any time, if desired. Mr. BYRNS. I understand, but I want to know whether the bureau itself made any independent investigation to determine the accuracy of the statement rendered? Mr. MOLSTER. The bill has never been submitted for payment to the disbursing office. We will require an itemized statement of the cost of the articles and labor that went into the cars. Mr. BYRNS. Do you not think that that should have been done before an estimate was submitted? You may find that there has been an overcharge-I do not mean necessarily through any evil intent, but through a mistake. Mr. MOLSTER. I do not know that the disbursing officer could go into that. Mr. SISSON. How did you arrive at this amount? Mr. MOLSTER. They have rendered a voucher, but it is not separated into an itemized statement such as we would require in the disbursing office. Mr. BYRNS. That would be a matter for the bureau itself? Mr. MOLSTER. Yes, sir. Mr. BYRNS. Can you tell us what the percentage was? Mr. MOLSTER. Cost plus overhead charges. Mr. BYRNS. What do you include under the overhead charges? Mr. MOLSTER. That is what the railroad company includes. They have a way of figuring those things that is known to themselves, and yet I really think it is a very equitable way. Mr. BYRNS. Then, so far as that bureau is concerned, there was actually no limit upon the amount of the overhead charges? Mr. MOLSTER. There is this, they do not do that work for making a profit. As Mr. Gordon has stated, they were conferring a favor on the bureau by building these cars at cost plus the overhead charges, and no profit was figured in. Mr. SISSON. Ten per cent? Mr. MOLSTER. No, sir. Mr. BYRNS. They have rendered a statement as to the actual cost, but it is not intemized as to material and labor and it does not show how much the overhead was? Mr. MCLSTER. No, sir. Mr. BYRNS. They just submitted a lump statement? Mr. MOLSTER. Yes, sir. Mr. BYRNS. And you can not tell us what the overhead charges were? Mr. MOLSTER. No, sir. Mr. BYRNS. Would you be able to procure that information and furnish it to the committee within the next few days? Mr. MOLSTER. Yes, sir; I think so. Mr. GORDON. We would have to write to the Pennsylvania Railroad Co. BUREAU OF STANDARDS, Washington, D. C. ALTOONA, PA., GENTLEMEN: In compliance with your request of the 5th instant I am inclosing herewith itemized statement showing the cost of one " Y4," 80,000 capacity test weight car and one “T6" 40,000 capacity test weight car, built at Juniata shop for the Bureau of Standards. The voucher forms accompanying your letter of the 6th instant are returned herewith as regular bill on our own forms was prepared covering these two cars and forwarded to you on June 12. Yours, truly, J. T. WALLIS, General Superintendent Motive Power Pennsylvania Railroad Co. Statement showing the audited cost of 1 Y4" 80,000 capacity test weight car for United States Government built on S. O. 2598 at Juniata shops. Labor Material: 2 11-inch train mine hose. 2 circular rubber gaskets. 2 V-7691 draft gear fol. blocks. 4 V-7696 brake hanger fulcrums_ 2 V-7697 coupler carriers.. 8 V-7700 pedestal jaws--- 1 V-7690 brake chain anchor_ 2 V-6834 lamp sockets.. 1 V-4337 brake sheave_ 2 V-7302 lamp sockets- 3 V-7692 hinges... 1 V-7693 fulcrum for cover. 3 V-7698 hinges. 4 V-7899 sockets. 1 V-8379 pawl plates_ 2 sets rollers and races for journal boxes_ 2 instruction badge plates_ 3 g-inch lock washers 96 g-inch lock washers $797.50 518. 38 $4.44 2.98 14. 31 13.02 9.46 1. 19 1. 18 .17 2.97 .44 3.52 7.48 .30 1,011. 90 3. 48 .04 .53 4 V-8408 retaining ring 4 V-8409 filling ring.. 4 V-8410 adjusting nut. 1 V-3380 hand wheel. 1 V-1659 clevis__ 1 V-8581 weight-adjusting box... 50 V-27255 weights-- 2 friction draft cylinders_ 4 ellip springs E-283- 2 pairs 36-inch steel plate wheels on axles_. 4 V-8407 journal-box cap_ 25 by 7 inch couplers_. 1 dead-lever fulcrum. 4 brake-shoe keys--- 1 No. 2 brake beam, right.. 1 No. 2 brake beam, left_ 1 V-6708 dead-lever fulcrum bracket_ 2 V-6614 step and fulcrums_. 2 45° angles___. 2 14-inch unions_ 2 14-inch ells.. 2 14-inch tees_. 21-inch ells.. 2 pounds rivets___ 4 by 1 inch stove bolts. 1 by 4 nch bolt--- 3 feet No. 1 chain_ 2 3-inch butt hinges.. 1 6 inch hasp---. $0.12 .57 27.50 7.00 2.86 1.89 2.46 .87 . 13 10.45 46. 20 29.70 49.53 139.70 5. 19 22.28 23 .20 2. 62 2.62 .77 41 . 33 .77 .15 .11 .18 .09 .01 .02 .07 .05 .08 |