Rear Admiral Samuel McGowan, Paymaster General, Intra-Bureau Order Number 166
Intra-Bureau Order No. 166
(Bureau of Supplies and Accounts)
Washington, D. C.
17 April 1917
1. During the last few days there have come to the Paymaster General’s attention, several cases where purchasing officers requested that competition be waived because careful inquiry in the market had developed the fact that articles urgently needed to meet emergency needs could not possibly be obtained except from some one particular firm.
2. It was pointed out in each such instance that nothing could be more inappropriate than approving a “competition waived” requisition under conditions thus described – the reason being that, assuming that the facts were as stated, there was surely the keenest kind of competition imaginable, namely competition among purchasers anxious to obtain the articles (which is necessarily more keen than any competition possibly could be between different firms seeking to supply the same).
3. Whenever any such cases arise – and they unquestionably will from time to time – it is to be distinctly borne in mind that the requisition to cover emergency purchase will contain on its face a plain statement of the exact facts – the use of such words as “competition waived” or other more or less meaningless terms to be scrupulously avoided.
4. When, for good and sufficient reasons established in advance, it does (as it seldom will) become necessary to waive competition, the words “in favor of . . . . . . . .”will not under any circumstances be employed. When competition needs to be waived, it is not in fact waived “in favor of” any firm or person, but because the exigencies of the service make it necessary – competition being waived, if at all, “in favor of” the United States!
5. It can not be too clearly borne in mind, therefore, that the statement on any requisition or other paper that competition has been or is to be waived “in favor of” any outside establishment is misleading and highly objectionable.
6. In this connection, attentionis particularly invited to the following extract from the Paymaster General’s second endorsement 75-2, 402-21, of 20 March 1917, inregard to the undesirability of waiving competition:
“Indeed it is even doubtful whether quicker deliveries are obtained in this way – the reason being that, once it becomes known that competitive bidding is departed from, almost any firm that gets an urgent inquiry is apt to figure less carefully on quoting a low price and at the same time allow itself plenty of latitude in the matter of when the goods shall be delivered.
“In very urgent cases,it is customary of course to make purchase by telephone. When the need for such purchase is known,it takes a very few minutes more to call up two or three or four firms that it takes to call up only one; because nearly any quotation requires some little consideration before it is made.
“The result will in most cases be found to be that, while the first firm queried is working on its quotation and the time of delivery, it is very easy to call up two or three others – setting the time for decision, say, one hour from the time the original telephone call is made and notifying each of the firms queried that competition is being obtained not only as to price but with respect to time of delivery. The result, under such circumstances, is that each of such firms figures as closely as possible and also cuts down the time limit to the lowest minimum- which, as already point out, is not very apt to be the case if such firm has reason to think that there is no competition.
“In view of all of these facts, the Paymaster General is convinced that nothing much more demoralizing and more completely destructive of the integrity of the Navy’s entire supply system could possibly occur that for this Department to once start in conferring on anybody blanket authority to waive competition.”
Source Note: TD, DLC-MSS, Samuel McGowan Papers, Box 4.