A-60543, MARCH 22, 1935, 14 COMP. GEN. 721

A-60543: Mar 22, 1935

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PURCHASE OF SUPPLIES - DISCOUNT PAYMENT SHOULD NOT BE MADE FOR SUPPLIES DELIVERED TO THE GOVERNMENT UNTIL SUCH SUPPLIES HAVE BEEN INSPECTED AND ACCEPTED AS CONFORMING TO THE TERMS OF THE CONTRACT. DISCOUNT IS PROPERLY FOR TAKING ON THE BASIS THAT THE DISCOUNT PERIOD BEGINS TO RUN FROM DATE THE PURCHASED ARTICLES ARE DELIVERED TO THE GOVERNMENT. UNLESS IT IS SPECIFICALLY STATED OTHERWISE. BID NO. 8079 WAS AWARDED TO THE CLAY EQUIPMENT CORPORATION OF CEDAR FALLS. " 2 PERCENT FOR TEN CALENDAR DAYS IS INDICATED. AN ORDER WAS PLACED FOR THE GATES TO BE SUPPLIED IN ACCORDANCE WITH THE BID AND THE MEMORANDUM COPY OF THE GOVERNMENT BILL OF LADING THAT WAS SENT WITH THE ORDER WAS RETURNED TO THE BUREAU.

A-60543, MARCH 22, 1935, 14 COMP. GEN. 721

PURCHASE OF SUPPLIES - DISCOUNT PAYMENT SHOULD NOT BE MADE FOR SUPPLIES DELIVERED TO THE GOVERNMENT UNTIL SUCH SUPPLIES HAVE BEEN INSPECTED AND ACCEPTED AS CONFORMING TO THE TERMS OF THE CONTRACT. DISCOUNT IS PROPERLY FOR TAKING ON THE BASIS THAT THE DISCOUNT PERIOD BEGINS TO RUN FROM DATE THE PURCHASED ARTICLES ARE DELIVERED TO THE GOVERNMENT, AS DISTINGUISHED FROM DELIVERY TO THE CARRIER, UNLESS IT IS SPECIFICALLY STATED OTHERWISE.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, MARCH 22, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF FEBRUARY 23, 1935, AS FOLLOWS:

UNDER DATE OF DECEMBER 12, 1934, U.S.D.A. BID NO. 8079 WAS AWARDED TO THE CLAY EQUIPMENT CORPORATION OF CEDAR FALLS, IOWA, FOR FURNISHING TWELVE GATES, AT A TOTAL COST OF $86.64 F.O.B. CEDAR FALLS, FOR SHIPMENT ON GOVERNMENT BILL OF LADING TO THE DELTA BRANCH STATION AT STONEVILLE, MISSISSIPPI. IN THE SPACE PROVIDED ON THE BACK OF BIDS FOR INDICATION OF DISCOUNT TO BE "ALLOWED FOR PROMPT PAYMENT," 2 PERCENT FOR TEN CALENDAR DAYS IS INDICATED. AN ORDER WAS PLACED FOR THE GATES TO BE SUPPLIED IN ACCORDANCE WITH THE BID AND THE MEMORANDUM COPY OF THE GOVERNMENT BILL OF LADING THAT WAS SENT WITH THE ORDER WAS RETURNED TO THE BUREAU, SHOWING THAT THE SHIPMENT WAS TURNED OVER TO THE TRANSPORTATION COMPANY ON JANUARY 24, 1935.

THERE HAS ALSO BEEN RECEIVED A VOUCHER FROM THE FIRM THAT GIVES THE DELIVERY DATE AS JANUARY 24, 1935. THE SHIPMENT, THEREFORE, COULD NOT REACH STONEVILLE IN TIME FOR US TO HAVE OBTAINED ACKNOWLEDGMENT OF RECEIPT FROM OUR REPRESENTATIVE AT STONEVILLE AND HAD PAYMENT MADE IN TEN DAYS.

THE VOUCHER RENDERED, STANDARD FORM NO. 1034, PROVIDES FOR A CERTIFICATION BY THE GOVERNMENT APPROVING OFFICER BEFORE PAYMENT IS MADE THAT THE "ARTICLES WERE RECEIVED IN GOOD CONDITION, AFTER DUE INSPECTION, ACCEPTANCE, AND DELIVERY PRIOR TO PAYMENT AS REQUIRED BY LAW.'

IT IS UNDERSTOOD THAT WHEN A SHIPMENT IS MADE ON A GOVERNMENT BILL OF LADING THE TRANSPORTATION COMPANY IS RESPONSIBLE TO THE GOVERNMENT FOR THE SHIPMENT DURING TRANSIT. THE TRANSPORTATION COMPANY, HOWEVER, IS NOT IN A POSITION TO INSPECT OR PASS ON THE QUESTION AS TO WHETHER THE SHOWING OF THE TRANSPORTATION COMPANY'S RECEIPT ON THE MEMORANDUM COPY OF THE GOVERNMENT BILL OF LADING WOULD NOT AUTHORIZE THE CERTIFICATION OF THE VOUCHER FOR PAYMENT.

THE QUESTION, THEREFORE, ARISES AS TO WHEN VOUCHERS RENDERED FOR ARTICLES SOLD TO THE GOVERNMENT UNDER TERMS PROVIDING DISCOUNTS FOR PAYMENT WITHIN A STATED PERIOD, BUT WHICH DISCOUNT PERIOD IS NOT SUFFICIENT TIME FOR THE ARTICLES TO BE RECEIVED AT DESTINATIONS, BE DULY INSPECTED AND CERTIFIED FOR PAYMENT, SHOULD BE CERTIFIED FOR PAYMENT. ARE SUCH VOUCHERS TO BE CERTIFIED ONLY ON RECEIPT AND ACCEPTANCE AFTER INSPECTION AS INDICATED ON FORM 1034? IF YOUR ANSWER IS IN THE AFFIRMATIVE, AND THE CODE UNDER WHICH THE VENDOR OPERATES CALLS FOR PAYMENT WITHIN THE DISCOUNT PERIOD BEGINNING WITH THE DATE OF THE INVOICES, WE WOULD NOT BE ABLE TO TAKE ADVANTAGE OF THE DISCOUNT ALLOWED FOR PROMPT PAYMENT. THIS WOULD RESULT IN A LOSS TO THE GOVERNMENT. IF THE GOODS ARE TO BE CERTIFIED FOR PAYMENT PROMPTLY AFTER RECEIPT OF THE VOUCHER AND MEMORANDUM COPY OF THE GOVERNMENT BILL OF LADING RECEIVED BY THE TRANSPORTATION COMPANY, HOW SHOULD THE CERTIFICATION BE WORDED?

INSPECTION AND ACCEPTANCE AT GOVERNMENT DESTINATION ARE NOT ONLY FOR THE PURPOSE OF DETERMINING WHETHER THE CARRIER LOST OR DAMAGED THE SUPPLIES IN TRANSIT WHEN SHIPPED ON A GOVERNMENT BILL OF LADING BUT FOR THE PURPOSE OF DETERMINING WHETHER THE SUPPLIES ARE IN ACCORDANCE WITH THE TERMS OF THE CONTRACT WHEN INSPECTION IS NOT MADE AT THE POINT OF SHIPMENT. GENERALLY AND IN THE ABSENCE OF SPECIFIC STIPULATIONS OTHERWISE, A DISCOUNT PERIOD IS TO BE CONSIDERED AS BEGINNING TO RUN FROM DATE THE PURCHASED ARTICLES ARE IN FACT DELIVERED TO THE PURCHASER AS DISTINGUISHED FROM CONSTRUCTIVE DELIVERY BY DELIVERY TO A CARRIER, OTHERWISE A PURCHASER WOULD BE PLACED IN THE POSITION OF BEING REQUIRED IN ORDER TO OBTAIN THE DISCOUNT TO PAY FOR THE ARTICLES WITHOUT KNOWING IN FACT WHETHER THE ARTICLES SHIPPED ARE THE ARTICLES PURCHASED. TIME MUST BE ALLOWED TO RECEIVE THE ARTICLES AND EXAMINE THEM. WHEN PAYMENT IS MADE AND THE SUPPLIES ARE NOT IN ACCORDANCE WITH THE TERMS OF THE CONTRACT IT MAY NOT ALWAYS BE POSSIBLE FOR THE GOVERNMENT TO EITHER RECOVER THE PAYMENTS BY DIRECT SUIT AGAINST THE CONTRACTOR OR TO SUSTAIN A COUNTERCLAIM THEREFOR. SEE DEWEY BROS. CO. V. UNITED STATES, 62 CT.CLS. 301; WABASH VALLEY PACKING CO. V. UNITED STATES, 63 CT.CLS. 344; AND SCRIVEN V. HECHT, 287 FED. 853. CONSEQUENTLY, PAYMENT SHOULD NOT BE MADE FOR SUPPLIES DELIVERED TO THE GOVERNMENT UNTIL SUCH SUPPLIES HAVE BEEN INSPECTED AND ACCEPTED AS CONFORMING TO THE TERMS OF THE CONTRACT AND DISCOUNT IS THEREUPON PROPERLY FOR TAKING IN THE ABSENCE OF SPECIFIC STIPULATION AS STATED.