A-80298, FEBRUARY 20, 1937, 16 COMP. GEN. 782

A-80298, FEBRUARY 20, 1937, 16 COMP. GEN. 782

CONTRACTS - GENERAL SUPPLY SCHEDULE - RECONDITIONED MOTORS - VALUE OF USED MOTORS TRADED IN IT NOW APPEARING THAT THE TRADE-IN VALUES OF USED MOTORS EXCHANGED IN PART PAYMENT FOR RECONDITIONED ONES IS READILY ASCERTAINABLE UNDER THE APPLICABLE PROCUREMENT DIVISION, TREASURY DEPARTMENT, CONTRACT WHICH WAS MADE AFTER ADVERTISING, FURTHER ADVERTISING TO DETERMINE TRADE-IN VALUES IS UNNECESSARY. 16 COMP. GEN. 351, MODIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, FEBRUARY 20, 1937:

THERE HAS BEEN RECEIVED YOUR LETTER OF JANUARY 30, 1937, AS FOLLOWS:

REFERENCE IS MADE TO YOUR DECISION A-80298 OF OCTOBER 7, REGARDING THE PROPER PROCEDURE TO BE FOLLOWED UNDER PROCUREMENT DIVISION CONTRACT TPS- 12672 WITH THE FORD MOTOR COMPANY IN CASES WHERE THE EXCHANGE OF A USED MOTOR IN PART PAYMENT FOR A RECONDITIONED MOTOR IS INDICATED AS BEING IN THE INTEREST OF THE UNITED STATES.

THIS DECISION REQUIRED THAT NECESSARY FORD AUTOMOBILE PARTS BE PURCHASED FROM THE SAID CONTRACTOR UNDER CONTRACT TPS-12672. IT ALSO REQUIRED THAT WHEN AN EXCHANGE IS INDICATED, THE VALUE OF THE EXCHANGED ITEM MUST BE ESTABLISHED (FOR COVERING INTO THE TREASURY AS MISCELLANEOUS RECEIPTS) BY REQUESTING BIDS THEREON THAT IS, TRADE-IN BID FROM THE CONTRACTOR AND CASH BIDS FROM OTHERS.

IN THIS DEPARTMENT'S LETTER OF AUGUST 26 REQUESTING YOUR DECISION ON THIS MATTER IT WAS STATED THAT THERE WAS NO PROVISION IN CONTRACT TPS 12672 FOR REVEALING THE TRADE-IN ALLOWANCE. YOUR ATTENTION SHOULD HAVE BEEN CALLED TO THE FACT THAT WHILE THE TRADE-IN ALLOWANCE WAS NOT SPECIFICALLY MENTIONED OR COVERED IN THE CONTRACT INSOFAR AS THIS DEPARTMENT COULD ASCERTAIN, THE VALUE OF THE TRADE-IN MOTOR IS ESTABLISHED BY INFERENCE IN THE FOLLOWING MANNER:

CONTRACT PRICE OF A FORD RECONDITIONED MOTOR EXCLUSIVE OF ANY TRADE IN, $120, DISCOUNT $12, NET $108, F.O.B. FORD FACTORY BRANCH OR FORD DEALER. CONTRACT PRICE OF A FORD RECONDITIONED MOTOR, INCLUDING TRADE IN OF USED FORD MOTOR, $43 F.O.B. FORD FACTORY BRANCH OR DEALER, PLUS FREIGHT ON RECONDITIONED MOTOR AND USED MOTOR BETWEEN FORD FACTORY BRANCH AND DEALER. NET DIFFERENCE REPRESENTING IN EFFECT THE TRADE-IN ALLOWANCE ON THE USED MOTOR, $65 LESS FREIGHT MENTIONED ABOVE.

THESE FIGURES SHOULD BE INCREASED BY $13 FOR INSTALLATION CHARGES AND BY $5.50 IF SHIPMENTS ARE MADE FROM FORD BRANCHES AT SEATTLE, WASHINGTON, RICHMOND, CALIFORNIA, AND LONG BEACH, CALIFORNIA.

IN VIEW OF THIS INFERENCE IN THE CONTRACT IT APPEARS ADVISABLE TO REQUEST YOUR CONSIDERATION OF THIS MATTER. THE FORD MOTOR COMPANY APPARENTLY HAS ESTABLISHED, AT LEAST FOR THE PURPOSE OF THIS CONTRACT, A DEFINITE VALUE FOR THE TRADE-IN MOTOR, AND THE AMOUNT THEREOF WOULD VARY ONLY IN ACCORDANCE WITH THE FREIGHT CHARGES INVOLVED. ACCORDINGLY IT APPEARS POSSIBLE THAT YOU WOULD CONSIDER MODIFYING YOUR DECISION TO THE EXTENT OF PERMITTING THIS VALUE TO BE ESTABLISHED ARBITRARILY BY SUBTRACTING THE FREIGHT CHARGES FROM THE BASIC AMOUNT OF $65, THUS AVOIDING THE NECESSITY FOR ASKING BIDS FROM THE FORD MOTOR COMPANY IN EACH INDIVIDUAL PURCHASE INVOLVING THE TRADE-IN OF A USED MOTOR. IT DOES NOT APPEAR LIKELY THAT THE FORD MOTOR COMPANY WOULD OFFER ANY OTHER FIGURE AS A TRADE-IN ALLOWANCE IN VIEW OF THIS VALUE ESTABLISHED IN THE CONTRACT. YOUR FAVORABLE DECISION ON THIS POINT IS RESPECTFULLY REQUESTED IN THE SINCERE BELIEF THAT MUCH UNNECESSARY WORK BY PROCUREMENT OFFICERS WILL THUS BE ELIMINATED.

IF YOUR DECISION A-80298 IS MODIFIED ON THAT POINT TO PERMIT THE TRADE-IN VALUE OF THE USED MOTOR TO BE ESTABLISHED IN THE MANNER OUTLINED ABOVE, IT IS RECOMMENDED THAT YOU DECISION BE MODIFIED ALSO TO THE EXTENT OF NOT REQUIRING CASH BIDS ON USED MOTORS IN COMPARISON WITH THE TRADE-IN ALLOWANCE OF THE CONTRACTOR THUS ESTABLISHED. THE BASIS FOR THIS REQUEST IS THAT THE TRADE-IN ALLOWANCE ESTABLISHED BY THE FORD MOTOR COMPANY IS NOT LIKELY TO BE EQUALED OR EXCEEDED BY ANY CASH BIDDER BECAUSE THE REPAIRS NECESSARY TO RECONDITION A USED MOTOR CAN BE ACCOMPLISHED AT THE FORD FACTORY WITH MUCH LESS EXPENSES THAN BY A LOCAL DEALER IN HIS OWN SHOP. IT SEEMS TO THIS DEPARTMENT THAT THE PRIMARY OBJECTIVE WILL BE REACHED IF A FAIR VALUE IS ESTABLISHED FOR THE USED MOTOR IN THE MANNER DESCRIBED ABOVE AND THE AMOUNT THEREOF COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS IN ACCORDANCE WITH SECTION 3618, REVISED STATUTES.

THIS REQUEST FOR MODIFICATION OF YOUR DECISION IS MADE IN THE INTEREST OF EFFICIENCY IN PROCUREMENT WORK AND NOT WITH ANY DESIRE TO AVOID ANY PROCEDURE WHICH IS ACTUALLY REQUIRED IN ACCORDANCE WITH EXISTING STATUTES. IF YOUR DECISION IS CONTRARY TO THE RECOMMENDATIONS CONTAINED IN THIS LETTER, THE DEPARTMENT WILL BE GOVERNED ACCORDINGLY AND WILL ENDEAVOR TO ADHERE STRICTLY TO THE PROCEDURE OUTLINED IN YOUR DECISION OF OCTOBER 7. YOUR PROMPT CONSIDERATION AND DECISION WILL BE APPRECIATED IN ORDER THAT NECESSARY INSTRUCTIONS FOR HANDLING PURCHASES OF THIS NATURE MAY BE ISSUED TO ALL CONCERNED IN THE DEPARTMENT.

IT APPEARS THAT THE PRICES TO BE PAID TO THE CONTRACTOR FOR SUPPLIES FURNISHED UNDER THE PROCUREMENT DIVISION CONTRACT IN QUESTION, NO. TPS.- 12672, DATED JUNE 18, 1936, WITH THE FORD MOTOR CO., ARE THE PRICES STIPULATED IN THE CONTRACTOR'S SUBMITTED PRICE LISTS BY REFERENCE MADE A PART OF THE CONTRACT, LESS CERTAIN DISCOUNTS FROM SUCH LIST PRICES AS STIPULATED IN THE CONTRACT.

WHILE NEITHER THE CONTRACT NOR THE PRICE LISTS APPEAR EXPRESSLY TO PROVIDE FOR THE EXCHANGE OF USED MOTORS IN PART PAYMENT FOR NEW OR RECONDITIONED MOTORS THE CONTRACT DOES NOT PROVIDE GENERALLY FOR DISCOUNTS FROM LIST PRICES ON "EXCHANGE ITEMS" AS FOLLOWS:

EXCHANGE ITEMS:

(A) WHOLESALE TRADE NET PRICES F.O.B. ANY FORD FACTORY BRANCH IN THE

UNITED STATES ONLY, REGARDLESS OF THE NET AMOUNT OF THE ORDER.

(B) WHOLESALE TRADE NET PRICES F.O.B. ANY AUTHORIZED FOR DEALER

IN THE UNITED STATES ONLY, REGARDLESS OF THE NET AMOUNT OF

ORDER (EXCEPT CYLINDER ASSEMBLIES ON WHICH THERE WILL BE THE

REGULAR CHARGE TO COVER FREIGHT FROM FORD BRANCH TO DEALER ON

RECONDITIONED ASSEMBLY AND FREIGHT ON RETURN OF OLD ASSEMBLY

FROM DEALER TO FORD BRANCH).

THE SAID PRICE LISTS SUBMITTED AS A PART OF THE CONTRACT, QUOTE NET PRICES FOR RECONDITIONED MOTORS OR "CYLINDER ASSEMBLIES" ON SUCH EXCHANGES AS CONTRASTED TO PRICES WHERE THERE IS NO EXCHANGE, AS FOLLOWS:

CHART

NET TO

LIST NET TO WHOLESALE

PART NO. ITEM PRICE (1) OWNER (2) TRADE (3) A 6012-RC ---- CYLINDER ASSEMBLY,

RECONDITIONED ---------- $85 $46.50 $34 B 6012 ------- SAME ------------- -------- 85 46.50 34 18 6012-ARC -- SAME, EXCEPT WITH CAST IRON

HEADS FOR 7/8-INCH SPARK

PLUGS. ----------------- 120 56.00 43 18-6012 BRC -- SAME, EXCEPT WITH ALUMINUM

HEADS ------------------ 120 56.00 43 18-6012-DRC -- SAME, EXCEPT WITH CAST-IRON

HEADS ------------------ 120 56.00 43 48-6012-RC --- SAME, EXCEPT WITH ALUMINUM

HEADS ------------------ 120 56.00 43 51-6012-RC --- SAME, EXCEPT WITH CAST-IRON

HEADS ------------------ 120 56.00 43

(1) NOT SUBJECT TO REGULAR DISCOUNTS.

(2) $5.50 ADDITIONAL ON SHIPMENTS FROM SEATTLE, RICHMOND, OR LONG BEACH BRANCHES. PRICE INCLUDES INSTALLATION.

(3) $5.50 ADDITIONAL ON SHIPMENTS FROM SEATTLE, RICHMOND, OR LONG BEACH BRANCHES. PRICE DOES NOT INCLUDE INSTALLATION. WHEN INSTALLATION IS HANDLED BY DEALER, THE OWNER'S NET PRICE APPLIES.

THESE QUOTATIONS IN THE CONTRACT PRICE LISTS OF THE NET PRICES FOR WHICH RECONDITIONED MOTORS WILL BE FURNISHED WHERE UNSERVICEABLE MOTORS ARE TRADED IN, AS CONTRASTED WITH THE PRICE OF THE MOTORS WITH NO TRADE IN, CONSTITUTES, IN EFFECT, A CONTRACTUAL OBLIGATION TO ALLOW THE DIFFERENCE BETWEEN SUCH PRICES AS A TRADE-IN ALLOWANCE, AND AS THE SAID CONTRACT, INCLUDING THIS OBLIGATION, WAS MADE AFTER ADVERTISING, AND AS THE TRADE-IN ALLOWANCE THUS AVAILABLE FOR UNSERVICEABLE FORD MOTORS, FOR THE REASONS STATED BY YOU, MAY BE ACCEPTED AS BEING SUBSTANTIALLY LARGER THAN WOULD OTHERWISE BE BID FOR THE OLD MOTORS, THIS OFFICE IS NOT REQUIRED TO OBJECT TO THE PROCEDURE PROPOSED IN YOUR LETTER OF TRADING IN USED FORD MOTORS ON THE BASIS OF THESE TERMS OF THE SAID CONTRACT WITHOUT FURTHER ADVERTISING TO DETERMINE THE TRADE-IN VALUE OF THE OLD MOTORS.