amount involved does not exceed $300 [41 U. S. C. A., Sec. 6d]-provides as follows:

"Advertisements for proposals for purchases and contracts for supplies or services for departments of Government. Except as otherwise provided by law all purchases and contracts for supplies or services in any of the departments of the Government and purchases of Indian supplies, except for personal services, shall be made by advertising a sufficient time previously for proposals respecting the same, when the public exigencies do not require the immediate delivery of the articles, or performance of the service. When immediate delivery or performance is required by the public exigency, the articles or service required may be procured by open purchase or contract, at the places in the manner in which such articles are usually bought and sold, or such services engaged, between individuals."

This Section has been construed to require that the contract be awarded to the lowest responsible bidder [10 Comp. Gen. 294; Scott v. United States, 44 Ct. Cl. 524; O'Brien v. Carney, 6 Fed. Supp. 761] but the statute is for the protection and benefit of the United States [American Smelting Co. v. United States, 259 U. S. 75, 42 S. Ct. 420, 66 L. Ed. 833] and not of the bidder.

I do not intend in this memorandum to go into the question whether the United States has power to exact, as a condition of entering into a contract, a promise to comply with the National Labor Relations Act. That power. as to a condition of compliance with prevailing wage rates, is ably sustained in a brief by Mr. Gerard D. Reilly, Acting Solicitor, Department of Labor, printed in the record of the hearings of the Walsh-Healey bill.1

In 10 Comp. Gen. 294, it was held: (a) that Congress, having provided in which cases contractors shall be required to give preference to ex-service men, a contract requirement to secure preference in other cases is unauthorized; (b) that unless specifically authorized by statute or required by public exigency, a contract for Government construction work may not be so drawn as to require preference to be given in employment of labor to American citizens and aliens with their first papers; (c) that in the absence of a statute, there is no authority to include in a government contract a requirement of compliance with prevailing rates of wages. The last holding rests on two grounds: (1) that it clashes with the intent of Section 3709, quoted above, in that it removes from competitive bidding an important element of cost and tends to defeat the object of obtaining the services or materials required at a cost no greater than the amount of the bid of the low responsible bidder after full and free competitive bidding, and (2) that such a requirement is not reasonably and clearly necessary to the accomplishment of the thing authorized by the appropriation to be done.

In a decision rendered February 9, 1937 (A-83153), however, the Comptroller General approved a stipulation in specifications to form a part of the standard construction contract similar to Article 21 of P. W. A. Form 51, approved by the Federal Emergency Administration of Public Works and revised October 1, 1935. This article is as follows:

"ART. 21. Compensation insurance.-The contractor shall provide adequate workmen's compensation insurance for all labor employed on the project who may come within the protection of such laws and shall provide, where practicable, employers' general liability insurance for the benefit of his employees not protected by such compensation laws, and proof of such insurance satisfactory to the contracting officer shall be given."

By Executive Order No. 6646 (40 U. S. C. A., Sec. 414, note), promulgated March 14, 1934, the President, without stating on what authority he was acting, required, inter alia, that all invitations to bidders should provide that

1 Hearing before a Subcommittee of the Committee on the Judiciary. House of Representatives, 74th Congress, 2nd Session, on II. R. 11554, p. 536. See also testimony beginning at p. 530. 2 At the same time the Comptroller General disapproved a clause providing that "the contractor shall take all precautions necessary for the protection against injury of all persons engaged at the site in the performance of the contract. He shall comply with all applicable provisions of the Manual of Accident Prevention in Construction, issued 1930 by the Associated General Contractors of America." The disapproval was based on the ground that no penalty for nonperformance was provided for in the contract and further that the duty attempted to be imposed upon the contractor "is more or less indefinite, and no doubt would result in higher bids

3 The order states that it is made "by virtue of authority vested in me as President of the United States." In a prior order (Executive Order No. 6246) promulgated August 10, 1933 (40 U. S. C. A., Sec. 414 note), dealing with code compliance by Government contractors the President purported to act "by virtue of authority vested in me by the (National Industrial Recovery Act)."

no bid would be considered unless accompanied by a certificate of compliance with the applicable N. R. A. code of fair competition or with the President's Reemployment Agreement; that all Government contracts and purchase orders should contain a requirement of such compliance and a provision that the United States should have the right to cancel a contract for failure to comply with such provision and to make open market purchases or have the work otherwise performed at the expense of the contractor; and that no agency of the United States and no Government contractor or supplier should accept, or purchase for performance of any contract or purchase order or enter into a subcontract for articles, materials, or supplies in whole or in part produced or furnished by one who had not executed a certificate of compliance.

The Comptroller General presuming that the Executive Order was based on Section 10 of the National Industrial Recovery Act (13 C. G. 359, 363), recogized its validity in a series of rulings (13 C. G. 127; 13 C. G. 132; 13 C. G. 159; C. G. 171; 13 C. G. 359) but held that the minimum price provisions of the codes were not intended to apply to Government contracts (13 C. G. 100).

In 13 Comp. Gen. 121, Executive Order No. 6646 was not involved but the Federal Emergency Administrator of Public Works, to whom the President had theretofore delegated certain of his authority under Title II of the National Industrial Recovery Act, had on September 7, 1933, issued Bulletin No. 51 relating to contracts for Federal projects under Title II of the National Industrial Recovery Act and provided that no bids should be accepted from any contractor who had not signed and complied with the applicable code of fair competition adopted under Title I, or if there was no code then with the provisions of the President's reemployment. The Comptroller was not called upon to decide the validity of the requirement since the contractor had signed the reemployment agreement and was complying with it at the time of submitting the bid, but the Comptroller took occasion to say:

"It seems unnecesary at this time to determine whether, as urged, the provisions of section 53 of Bulletin 51, Federal Emergency Administration of Public Works so go beyond and supplement the law as to be without force or effect under the rule stated in numerous cases, including United States v. 200 Barrels of Whiskey, 95 U. S. 571; United States v. Eaton, 144 U. S. 677. The evident purpose of the provision is to encourage support for the President's reemployment program and faithful observance of codes of fair competition by those subject thereto. Efforts prompted by so worthy a motive are not to be discouraged." (13 C. G. 126.)

The decisions relating to code compliance may perhaps be distinguished on the ground that they were based on a presumably valid Executive Order, but this cannot be said of the Comptroller General's holding that advertised specifications and contracts for the purchase of agricultural commodities by a governmental agency should comply with existing marketing agreements or licenses approved by the Secretary of Agriculture. There seems to be no Executive Order imposing such a requirement [13 Comp. Gen. 76; 15 Comp. Gen. 201; (Note No. 1); 15 Comp. Gen. 344; 15 Comp. Gen. 400.]*

Its

The language of the Comptroller in this connection is significant: "This paragraph (requiring the contractor to comply with all provisions of any marketing agreement or license in effect on the date of the opening of the bid) has been ink-lined out as well as the provision that Federal taxes heretofore imposed are included in bid price and the requirement for code compliance. The quoted paragraph is an undertaking on the part of a bidder for government business to comply with a marketing agreement and/or license approved and executed by the Secretary of Agriculture under the provisions of the Agricultural Adjustment Act. The Agricultural Adjustment Act is the law of the land. validity or invalidity has not been determined by the court of last resort and until the question is decided by that court, the act must be looked upon as binding upon all citizens. The Act authorizes the Secretary of Agriculture to enter into marketing and/or license agreements with the members of specified industries and when such agreements have been consummated they are binding upon members of such industries irrespective of whether or not such members undertake voluntarily to comply with the law. The requirement in the invitation for bids for compliance with such marketing and/or license agreement is no more than a requirement that the bidder shall comply with laws controlling industries and the individual members thereof. A refusal on the part of the bidder to comply with such agreement is, therefore, a refusal to undertake compliance with prevailing laws. Until the validity of the Agricultural Adjustment Act is finally determined, there is no legal objection to a requirement in the solicitation for bids that those seeking Government business will voluntarily comply with its provisions and the refusal of Kingan & Company to undertake compliance at this time justifies rejection of its bid" (15 Comp. Gen. 202, 203). The Comptroller, however, in analogy to his code decisions, has held that the price provisions of marketing agreements did not apply to the Government [13 Comp. Gen. 181], and has further held that a bidder could not be required to undertake compliance with any subsequent marketing agreements or with such agreements not then in effect [15 Comp. Gen. 114; 15 Comp. Gen. 335; 15 Comp. Gen. 344; 15 Comp. Gen. 400; A-84283, dated

There seems at first glance to be a conflict between the Comptroller General's decision in 10 Comp. Gen. 294 (Minimum Wages-Preference to Ex-Servicemen and to Citizens and to Aliens with First Papers) and the decisions permitting the insertion, in a government contract, of requirements relating to workmen's compensation and employer's liability insurance, code compliance, and compliance with marketing agreements. So far as I know, the Comptroller has neither distinguished nor expressly overruled the minimum-wage decision in the later cases. The cases, however, can be reconciled and the following principles deduced therefrom:

1. Conditions inserted in specifications in government contracts must be germane to the subject matter of the contract.

2. Unless the public exigencies demand it, a contractor may not be required, by stipulation in the specifications and contract, to comply with certain requirements not already imposed by law, such as requirements as to minimum wages, maximum hours, and so forth, especially where the Congress had entered the field by exacting such requirements as to particular classes of government contracts.3

3. Where a law or regulations thereunder, without referring to government contracts, impose certain obligations in relation to the work, service, or goods which are the subject matter of the contract, or in relation to the conditions of such goods as are purchased, produced, handled, or sold, the administrative agency letting the contract may in the specifications and contract insert a stipulation binding the contractor to comply, and to require the subcontractor to comply, with such law or regulations even though there is no statute or regulation specifically authorizing the insertion of such a stipulation in government contracts.

If these deductions are correct, it must follow that a governmental agency letting a contract may lawfully require, in the specifications and contract, that the contractor comply with the provisions of the National Labor Relations Act [29 U. S. C. A., Sec. 151 et seq.] if applicable to him since (a) the clause would be germane to the subject matter of the contract-the production, etc., of goods or the rendition of services, and (b) an existing Federal law imposes the obligations on the contractor in common with others.

II. LOWEST RESPONSIBLE BIDDER

The insertion of a clause requiring compliance with the National Labor Relations Act, especially in contracts in which the element of time is important, may be justified on still another ground. As pointed out above, Section 3709 of Revised Statutes has been construed to require that the contract be awarded to the lowest responsible bidder. It is, therefore, not suficient that the bid below, but the bidder must be "responsible." In determining whether or not a bidder is responsible, some discretion, indeed a wide discretion, must necessarily be vested in the administrative officer. It would seem to be proper to include in the advertised specifications reasonable minimum criteria of responsibility. In fact this is preferable since it would lessen the possibility of favoritism in the awarding of contracts. The meaning of the term "responsible" is not confined to the pecuniary ability of the bidder. It includes, as well, judgment, skill, integrity, and such other matters as might touch upon and influence the bidder to perform. [O Brien v. Carney, 6 Fed. Supp. 761; Willis v. Hathaway, 117 S. 89, 94, 95 Fla. 60S; Hudson v. Board of Education of Wheelersburg Rural School District, 179 N. E. 701, 703, 41 Ohio App. 402; Oaburn v. Mitten, (Ariz.) 6 Pac. 2nd 902, 906; Ellington v. Cherry Lake School District, 212 N. W. 773, 775, 55 N. D. 41; Williams v. City of Topeka, 118 Pac. 864, 866, 85 Kan. 857; Hole v. Kinkaid, 16 Nev. 217, 220].*

March 6, 1937], nor could the Government be obligated to pay the increased cost occasioned by compliance with future marketing agreements [15 Comp. Gen. 335; 15 Comp. Gen. 344; 15 Comp. Gen. 400], because to require such an undertaking would be to render indefinite and uncertain the consideration stipulated in Government contracts.

The Workmen's Compensation decision [A-83163 rendered February 9, 1937] does not run counter to this principle. The government-contract clause, insofar as it requires that the contractor carry workmen's compensation insurance for the benefit of employees covered by workmen's compensation laws, merely demands compliance with such laws as require insurance to be carried and assures, in the case of other workmen's compensation laws, if any, that compensation will be paid as required by such laws. Insofar as such a clause requires that the contractor carry general employers' liability insurance. it merely assures payment of damages to injured workmen where the employer is under the law liable for such injuries.

"See also Bright v. Ball, 103 So. 236. 237. 138 Miss. 508: Board of Commissioners of Wyandotte County v. Davis, 141 Pac. 555, 556, 92 Kan, 672: State ex rel. v. Board of Commissioners of State Institutions. 181 N. W. 530,531, 105 Nebr. 570; Sanderlin v. Lurken, 68 S. E. 225, 227, 152 N. C. 738; Kelling v. Edwards, 134 N. W. 221, 223, 116 Minn. 484.

The fact that the low bidder for a public contract required to be let to the lowest and best, or the lowest responsible, bidder tenders a faithful performance bond does not require the letting of the contract to him, but it is still the duty of the government authorities to consider matters bearing on the likelihood that the contract will be promptly and efficiently performed [Wilmott v. State Purchasing Commission, 246 Ky. 115, 54 S. W. 2nd 634; People ex rel. Assyrian Asphalt v. Kent, 160 Ill. 655; 43 N. E. 760; State ex rel. Eaves v. Richards, 16 Mont. 145, 40 Pac. 210; People ex rel. Morton v. Dorscheimer, 55 Howard Practice Reports (N. Y.) 118; Hibbs v. Arensberg, 276 Penn. 24, 119 At. 727; St. Landry Lumber Co. v. Bunkie, 115 La. 892, 99 S. 687]. Damages, whether liquidated or not, are often, as in the case of the present contract, an inadequate remedy for delay or nonperformance, especially so where time of performance is of the essence and the subject matter of the contract is of great importance. Damages for breach of contract would be small comfort under such circumstances; hence, the importance of determining the responsibility of the bidder in all relevant respects.

There is a further consideration in determining the concrete question before us. It is customary in government contracts to include a clause that the contractor shall not be charged with liquidated damages or excess costs when delay in delivery is due to unforeseeable causes beyond the control and without the fault and negligence of the contractor, including strikes. In practice this probably means that a contractor will not be charged with delay caused by a strike for it will generally be difficult to establish fault. Thus, where delay is caused by a strike, a performance bond is not likely to aid the government. Other safeguards must be devised. In this day of nationwide strikes, one of which has recently paralyzed a very substantial part of a great and vital industry, the importance of considering the likelihood of a strike as bearing on the bidder's "responsibility" is very evident.

The Congress has found in Sec. 1 of the National Labor Relations Act [29 U. S. C. A., Sec. 151] that "the denial by employers of the right of employees to organize and the refusal by employers to accept the procedure of collective bargaining lead to strikes and other forms of industrial strife and unrest, which have the intent or necessary effect of burdening or obstructing (interstate) commerce." This legislative finding should be considered as binding on the General Accounting Office, which is a legislative agency. At any rate, the facts so found are a matter of common knowledge and have become the subject of judicial notice. National Labor Relations Board v. Jones & Laughlin Steel Corporation, U. S. Sup. Ct. No. 419, Oct. Term 1936, decided April 12, 1937. In the same section the national legislature states that "Experience has proved that protection by the law of the right of employees to organize and bargain collectively safeguards (interstate) commerce from injury, impairment or interruption, and promotes the flow of commerce by removing certain recognized sources of strikes and unrest by encouraging practices fundamental to the free adjustment of industrial disputes arising out of differences as to wages, hours, or other working conditions, and by restoring equality of bargaining power between employers and employees." Hence, Congress enacted the National Labor Relations Act to effectuate "the declared policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce, and to mitigate and eliminate those obstructions when they have occurred, by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of freedom of association, se f-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment and other mutual aid or protection." While the Act does not take away the right to strike [Sec. 5 (29 U. S. C. A., Sec. 163)], there can be little doubt that the Act will substantially diminish the number and extent of strikes by removing their causes. The success of the Railway Labor Act Act May 20, 1926, Ch. 347, 44 Stat. 577, as amended, 45 U. S. C. A., Sec. 151 et seq.], which is based on the same theory as the National Labor Relations Act, in bringing about peace and order in the railroad industry, is well known. Virginian Railway v. System Federation, U. S. Sup. Ct., decided March 20, 1937.

A consideration of these facts compels the conclusion that a bidder's compliance with the National Labor Relations Act may properly be considered as an essential element of responsibility since it renders unlikely the occurrence of one of the principal causes of inability to perform, or delay in performance the strike. If this is sound reasoning, it follows that a certificate of present compliance, coupled with a promise of future compliance, may be exacted from the bidder.

III. POLICY OF CONGRESS

Another consideration which may be advanced in support of the compliance clause is that it tends to carry out a progressively developing policy of the Congress to provide for the security and protection of workmen in the execution of government contracts or public works. This policy has found expression in a series of enactments.

a public

In 1890 the Attorney General by way of dictum said that "* officer who should let a contract for a larger sum than would otherwise be necessary by reason of a condition that a contractor's employees should work only eight hours a day would directly violate the law." (19 Op. Atty. Gen. 655). Not long thereafter Congress passed the Eight Hour Law of August 1, 1892, ch. 352, 27 Stat. 340 (See 40 U. S. C. A. Sec. 321 et seq.), which established an eight-hour day for all laborers and mechanics employed by the government of the United States or of the District of Columbia, or by any contractor or subcontractor upon a public work of the United States or of the District of Columbia, etc. By the Act of June 19, 1912, ch. 174, 37 Stat. 137 (40 U. S. C. A. Secs. 324, 325) it was required that every contract by or on behalf of the United States which might require or involve the employment of laborers or mechanics should provide for the eight-hour day except contracts for articles usually bought in the open market, etc. In the Bacon-Davis (or Davis-Bacon) Act of March 3, 1931, ch. 411, 46 Stat. 494, as amended by the act of August 30, 1935, ch. 825, 49 Stat. 711 (40 U. S. C. A. 276 et seq.) Congress took another forward step by requiring that the specifications for contracts in excess of $2,000 and such contracts, for the construction, alteration, or repair of public buildings or public works of the United States or the District of Columbia, which require or involve the employment of laborers or mechanics, must contain a minimum wage clause.

The act of June 13, 1934, ch. 482, 48 Stat. 948 (40 U. S. C. A. 276b, 276c), sometimes referred to as the Kick-back Racket Act, makes it a crime to induce any person employed in the construction, prosecution or completion of any public building, public work, or building or work fiananced in whole or in part by loans or grants from the United States, to give up any part of the compensation to which he is entitled, by force, intimidation, threat of dismissal, or any other

means.

Section 3 of the Tennessee Valley Authority Act of 1933 (Act May 18, 1933, ch. 32, 48 Stat. 58, 59, 16 U. S. C. A. Sec. 831b) requires that all contracts to which the Authority is a party and which provides for the employment of laborers and mechanics in the construction, operation, maintenance, or repair of buildings or other projects, shall contain a provision for payment of the prevailing rate of wages to laborers or mechanics.

Section 204 of Title II of the National Industrial Recovery Act (Act June 16, 1933, 48 Stat. 203, 40 U. S. C. A. Sec. 404c) provides that all contracts involving the expenditure of grants for emergency construction of public highways and related projects under Title II shall contain provisions establishing minimum rates of wages and such minimum rates shall be stated in the invitation for bids and be included in the proposals for bids. Section 206 of Title II (40 U. S. C. A. Sec. 406) provides that all contracts let for construction projects and/or loans and grants pursuant to the Title shall contain provisions to assure: (1) the exclusion of convict labor; (2) a thirty-hour week so far as practicable and feasible; (3) just and reasonable wages sufficient to provide a standard of living in decency and comfort; (4) preference to (a) ex-servicemen with dependents and (b) citizens and aliens with first papers; and (5) the use of the maximum of human labor in lieu of machinery wherever practicable and consistent with sound economy and public advantage.

Section 7 of the Emergency Relief Appropriation Act of 1935 (Joint Resolution April 8, 1935, ch. 148, 49 Stat., 15 U. S. C. A. Sec. 728, note), popularly known as the Work Relief Resolution, provides that the President shall require to be paid such rates of pay for all persons engaged upon any project financed in whole or in part, through loans or otherwise, by funds appropriated by the Joint Resolution as would accomplish the purposes of the Joint Resolution and not affect adversely the going rates of wages paid for work of a similar nature. (Under this Resolution the President directed the payment of "security wages" rather than prevailing wages since the projects were undertaken as an alternative for direct relief to the needy unemployed.)

The Emergency Relief Appropriation Act of 1936 (Act June 22, 1936, ch. 689, Title II, 49 Stat. 1608, 15 U. S. C. A. Sec. 728 note) provides that the rates of