A-52394, DECEMBER 19, 1933, 13 COMP. GEN. 172

A-52394: Dec 19, 1933

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TAXES - PROCESSING - CONTRACTS WHERE NO MENTION IS MADE OF ANY TAXES IN THE SPECIFICATIONS OR THE BID SUBMITTED BY A CONTRACTOR FOR FURNISHING SUPPLIES TO THE UNITED STATES. THERE IS NO LEGAL LIABILITY ON THE UNITED STATES FOR THE PROCESSING TAXES. THERE WOULD BE NO OBJECTION TO THE ACCEPTANCE OF A BID CONTAINING A PROVISION THAT THE BID PRICE IS TO BE INCREASED BY ANY PROCESSING OR OTHER FEDERAL TAXES WHICH THE DEALER MIGHT BE REQUIRED TO PAY TO THE GOVERNMENT PROVIDED ALL BIDDERS HAVE BEEN AFFORDED THE SAME OPPORTUNITY TO INCLUDE SUCH A PROVISION IN THEIR BIDS. 1933: THIS OFFICE IS IN RECEIPT OF A LETTER DATED NOVEMBER 24. AWARD WAS MADE TO ARMOUR AND CO. THE MEAT WAS TO BE USED FOR EMERGENCY CONSERVATION WORK.

A-52394, DECEMBER 19, 1933, 13 COMP. GEN. 172

TAXES - PROCESSING - CONTRACTS WHERE NO MENTION IS MADE OF ANY TAXES IN THE SPECIFICATIONS OR THE BID SUBMITTED BY A CONTRACTOR FOR FURNISHING SUPPLIES TO THE UNITED STATES, THERE IS NO LEGAL LIABILITY ON THE UNITED STATES FOR THE PROCESSING TAXES, THE GOVERNMENT BEING LIABLE ONLY FOR THE CONTRACT PRICE. THERE WOULD BE NO OBJECTION TO THE ACCEPTANCE OF A BID CONTAINING A PROVISION THAT THE BID PRICE IS TO BE INCREASED BY ANY PROCESSING OR OTHER FEDERAL TAXES WHICH THE DEALER MIGHT BE REQUIRED TO PAY TO THE GOVERNMENT PROVIDED ALL BIDDERS HAVE BEEN AFFORDED THE SAME OPPORTUNITY TO INCLUDE SUCH A PROVISION IN THEIR BIDS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, DECEMBER 19, 1933:

THIS OFFICE IS IN RECEIPT OF A LETTER DATED NOVEMBER 24, 1933, FROM THE SUPERINTENDENT OF THE FORT APACHE INDIAN AGENCY, AS FOLLOWS:

WE KINDLY REQUEST RULING ON THE FOLLOWING IN CONNECTION WITH THE PAYMENT OF CONTRACTS WHICH DID NOT CONTAIN ANY CLAUSE FOR THE ADDITION OF ANY AMOUNTS TO BE PAID THE CONTRACTOR BECAUSE OF FEDERAL OR PROCESSING TAXES IMPOSED UPON THE CONTRACTOR AFTER THE ISSUANCE OF CONTRACT.

ON SEPTEMBER 28TH, 1933, THIS AGENCY ADVERTISED FOR A QUANTITY OF HAMS AND BACON TO BE DELIVERED OVER A PERIOD OF 10 WEEKS AT THE RATE OF 400 LBS. PER WEEK. AWARD WAS MADE TO ARMOUR AND CO. OF DENVER, COLORADO, AT THE RATE OF .1425 PER LB. FOR THE BACON AND .1375 PER LB. FOR THE HAM. THE MEAT WAS TO BE USED FOR EMERGENCY CONSERVATION WORK.

WE HAVE NOW RECEIVED THE INVOICES COVERING THESE PURCHASES TO WHICH THE CONTRACTOR HAS ADDED AN AMOUNT FOR FEDERAL TAX AT THE RATE OF $1.03 PER CWT. FOR HAM AND .96 PER CWT. FOR BACON. AT THE TIME BID WAS RECEIVED NO MENTION WAS MADE BY THE COMPANY THAT ANY TAX IMPOSED BY THE GOVERNMENT WOULD BE ADDED TO THE AMOUNT OF THE CONTRACT PRICE AND NO STIPULATION OF THIS KIND WAS CONTAINED IN THE CONTRACT. WILL YOU THEREFORE KINDLY ADVISE WHETHER THE GOVERNMENT IS LIABLE FOR THE PAYMENT OF THIS TAX?

ALSO WILL YOU ADVISE WHETHER OR NOT A COMPANY HAS A RIGHT TO INCLUDE IN THEIR BID THE FACT THAT THEY WILL CHARGE IN ADDITION TO THE CONTRACT PRICE STIPULATED ANY ADDITIONAL AMOUNT THAT MAY BE IMPOSED ON THE CONTRACTOR BECAUSE OF FEDERAL TAXES. SHOULD THIS CLAUSE BE CONTAINED IN THE CONTRACT IF THE BIDDER SO STIPULATED?

IF, AS STATED IN THE SUBMISSION, NO MENTION WAS MADE IN THE SPECIFICATIONS OR THE BID SUBMITTED BY THE CONTRACTOR OF ANY TAXES, THERE IS NO LEGAL LIABILITY ON THE UNITED STATES FOR THE PROCESSING TAX, THE GOVERNMENT BEING LIABLE ONLY FOR THE CONTRACT PRICE.

THERE IS NO OBJECTION TO THE ACCEPTANCE OF A BID CONTAINING A PROVISION THAT THE BID PRICE IS TO BE INCREASED BY ANY PROCESSING OR OTHER FEDERAL TAXES WHICH THE DEALER MAY BE REQUIRED TO PAY TO THE GOVERNMENT IN CONNECTION WITH THE PERFORMANCE OF THE CONTRACT, PROVIDED ALL BIDDERS HAVE BEEN AFFORDED THE SAME OPPORTUNITY TO INCLUDE SUCH A PROVISION IN THEIR BIDS.