A-66872, NOVEMBER 4, 1935, 15 COMP. GEN. 367

A-66872: Nov 4, 1935

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

NO OFFICER OR EMPLOYEE SHOULD MAKE ANY AFFIDAVIT OR STATEMENT TO THE EFFECT THAT THE AMOUNT OF THE TAX WAS NOT INCLUDED IN THE PURCHASE PRICE. AS FOLLOWS: THERE ARE ENCLOSED COPIES OF BIDS OF ARMOUR AND CO. ARMOUR AND COMPANY HAS INSERTED IN ITS BID A CONDITION READING AS FOLLOWS: "PRICES QUOTED HEREIN ARE SUBJECT TO NO ADJUSTMENT AND IF ACCEPTED. NO CLAIM FOR REFUND OR ABATEMENT WILL BE ACCEPTED. SWIFT AND COMPANY HAS INCLUDED IN ITS BID A CONDITION READING AS FOLLOWS: "THIS CONTRACT AND/OR BID IS HEREBY MODIFIED SO THAT ALL REFERENCE. TAX WHICH WAS INCLUDED IN THE INVITATION FOR BIDS. IT WILL BE NOTED THAT EACH INVITATION FOR BIDS INCLUDED A NOTIFICATION TO BIDDERS THAT TAXES IMPOSED UNDER AUTHORITY OF THE AGRICULTURAL ADJUSTMENT ACT SHOULD NOT BE INCLUDED IN THEIR BIDS.

A-66872, NOVEMBER 4, 1935, 15 COMP. GEN. 367

ADVERTISING - SPECIFICATIONS - BIDDERS' DELETION OF AGRICULTURAL ADJUSTMENT ACT TAX PROVISIONS THE DELETION BY BIDDERS, IN CONNECTION WITH INVITATIONS FOR BIDS FOR PERIODS TO INCLUDE DECEMBER 31, 1935, OF A PROVISION TO THE EFFECT THAT THE PRICES BID SHOULD INCLUDE ANY FEDERAL TAX APPLICABLE TO THE SUPPLIES INVOLVED, SUBJECT TO ADJUSTMENT IN CASE OF SUBSEQUENT LEGISLATIVE CHANGE IN SAID TAX, DOES NOT REQUIRE REJECTION OF THE BIDS. THE DELETION BY A BIDDER OF A PROVISION IN AN INVITATION FOR BIDS TO THE EFFECT THAT THE PROCESSING TAXES IMPOSED UNDER THE AGRICULTURAL ADJUSTMENT ACT, AS AMENDED, SHOULD NOT BE INCLUDED IN THE PRICES BID, DOES NOT REQUIRE REJECTION OF THE BID, BUT NO OFFICER OR EMPLOYEE SHOULD MAKE ANY AFFIDAVIT OR STATEMENT TO THE EFFECT THAT THE AMOUNT OF THE TAX WAS NOT INCLUDED IN THE PURCHASE PRICE, SO AS TO ENABLE THE DEALER TO OBTAIN A REFUND OF THE AMOUNT OF THE TAX FROM THE BUREAU OF INTERNAL REVENUE.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, NOVEMBER 4, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER OF OCTOBER 24, 1935, WITH INCLOSURES, AS FOLLOWS:

THERE ARE ENCLOSED COPIES OF BIDS OF ARMOUR AND CO., UNION STOCK YARDS, CHICAGO, ILL., DATED OCTOBER 15, 1935, AND SWIFT AND CO., SOUTH ST. PAUL, MINN., DATED OCTOBER 17, 1935, TO FURNISH THE VETERANS' ADMINISTRATION FACILITY, MINNEAPOLIS, MINN., CERTAIN PORK PRODUCTS DURING THE MONTH OF NOVEMBER 1935, AND BID OF KINGAN AND CO., INDIANAPOLIS, IND., DATED OCTOBER 15, 1935, TO FURNISH THE VETERANS' ADMINISTRATION FACILITY, INDIANAPOLIS, IND., CERTAIN PORK PRODUCTS DURING THE PERIOD NOVEMBER 1 TO DECEMBER 31, 1935.

ARMOUR AND COMPANY HAS INSERTED IN ITS BID A CONDITION READING AS FOLLOWS:

"PRICES QUOTED HEREIN ARE SUBJECT TO NO ADJUSTMENT AND IF ACCEPTED, MUST BE PAID IN FULL TO ARMOUR AND COMPANY. NO CLAIM FOR REFUND OR ABATEMENT WILL BE ACCEPTED, AND ALL REFERENCE TO PROCESSING TAX IN THIS TENDER OR BID SHALL BE CONSIDERED AS ELIMINATED.'

SWIFT AND COMPANY HAS INCLUDED IN ITS BID A CONDITION READING AS FOLLOWS:

"THIS CONTRACT AND/OR BID IS HEREBY MODIFIED SO THAT ALL REFERENCE, EXPRESS OR IMPLIED, TO THE A.A.A. PROCESSING TAX MUST BE CONSIDERED AS STRICKEN, ANYTHING TO THE CONTRARY NOTWITHSTANDING.

"NO DEDUCTIONS FROM PRICES APPEARING HEREIN SHALL BE ALLOWED ON ACCOUNT OF A.A.A. PROCESSING TAX.'

KINGAN AND COMPANY HAS DELETED THE PROVISION RELATIVE TO A.A.A. TAX WHICH WAS INCLUDED IN THE INVITATION FOR BIDS.

IT WILL BE NOTED THAT EACH INVITATION FOR BIDS INCLUDED A NOTIFICATION TO BIDDERS THAT TAXES IMPOSED UNDER AUTHORITY OF THE AGRICULTURAL ADJUSTMENT ACT SHOULD NOT BE INCLUDED IN THEIR BIDS, AS SUGGESTED IN YOUR DECISION OF AUGUST 26, 1935 (A-64839), BUT IT IS APPARENT THAT THESE BIDDERS HAVE INCLUDED PROCESSING TAX IN THE PRICES BID BY THEM AND IT IS REQUESTED THAT YOU ADVISE WHETHER THESE BIDS TO FURNISH PORK PRODUCTS, WHERE LOW, SHOULD BE REJECTED AS NOT RESPONSIVE TO THE INVITATIONS, OR ACCEPTED AS SUBMITTED.

IT WILL BE APPRECIATED IF YOU WILL RENDER A DECISION AT THE EARLIEST POSSIBLE DATE AS IT IS ESSENTIAL THAT THE CONTRACTS FOR FURNISHING MEATS BE AWARDED IN SUFFICIENT TIME TO PLACE ORDERS AND SECURE DELIVERIES BY NOVEMBER 1, 1935.

PARAGRAPH 5 OF THE PRINTED CONDITIONS APPEARING ON THE REVERSE OF GOVERNMENT STANDARD FORM NO. 33 (REVISED), INVITATION, BID AND ACCEPTANCE (SHORT FORM CONTRACT), ON WHICH THE BIDS OF ARMOUR AND CO. AND SWIFT AND CO. WERE SUBMITTED, IS TO THE EFFECT THAT THE PRICES BID INCLUDE ANY FEDERAL TAX HERETOFORE IMPOSED BY THE CONGRESS APPLICABLE TO THE MATERIAL ON THE BID, AND THAT IF ANY TAXES ARE IMPOSED OR CHANGED BY THE CONGRESS AFTER THE DATE SET FOR THE OPENING OF THE BIDS AND MADE DIRECTLY APPLICABLE UPON THE PRODUCTION, MANUFACTURE OR SALE OF THE SUPPLIES COVERED AND ARE PAID BY THE CONTRACTOR, THE PRICES NAMED IN THE BID WILL BE INCREASED OR DECREASED ACCORDINGLY. THAT PARAGRAPH, AS WELL AS PARAGRAPH 7 PERTAINING TO CODE COMPLIANCE, HAS BEEN INKED OUT BY BOTH BIDDERS.

THE CONGRESS IS NOT IN SESSION AND WILL NOT CONVENE IN REGULAR SESSION UNTIL JANUARY 1936, AND IT IS HARDLY WITHIN THE REALM OF POSSIBILITY THAT ANY FEDERAL TAX WILL BE "IMPOSED OR CHANGED BY THE CONGRESS" DURING THE LIFE OF ANY OF THE CONTRACTS HERE INVOLVED, SINCE THE EXPIRATION DATE OF TWO OF THEM IS NOVEMBER 30 (STATED IN THE INVITATION FOR BIDS AS NOVEMBER 31) 1935, AND OF THE OTHER DECEMBER 31, 1935. FOR THAT REASON THE STRIKING OUT OF THE PROVISION IS IMMATERIAL, AND THE THREE BIDS ARE FOR CONSIDERATION WITH OTHERS RECEIVED, IF OTHERWISE FREE FROM OBJECTION, SO FAR AS THE ELIMINATION OF THAT PARAGRAPH IS INVOLVED.

THE THREE INVITATIONS FOR BIDS CONTAINED A PROVISION READING, IN PERTINENT PART, AS FOLLOWS:

UNDER PUBLIC, NO. 367, 73D CONGRESS, THE BIDDER IS ENTITLED TO A REFUND OR CREDIT AGAINST ANY TAX DUE AND PAID OR DUE AND PAYABLE UNDER THE AGRICULTURAL ADJUSTMENT ACT, AS AMENDED, WITH RESPECT TO PRODUCTS DELIVERED TO A WELFARE ORGANIZATION, PROVIDING THE BIDDER ESTABLISHES, IN ACCORDANCE WITH REGULATIONS PRESCRIBED BY THE COMMISSIONER OF INTERNAL REVENUE, THAT HE HAS NOT INCLUDED THE TAX IN THE PRICE OF THE PRODUCT SO DELIVERED OR COLLECTED THE AMOUNT OF THE TAX FROM THE SAID ORGANIZATION. THEREFORE, THE VETERANS' ADMINISTRATION WILL NOT PAY THE AMOUNT OF ANY SUCH TAX DUE WITH RESPECT TO PRODUCTS COVERED BY THIS INVITATION AND BIDDERS SHOULD NOT INCLUDE THE AMOUNT OF THE TAX IN THEIR BIDS. * * *

NEITHER THE BID OF ARMOUR AND CO. NOR THAT OF SWIFT AND CO. HAS ELIMINATED THE ABOVE PROVISION. ON THE BID OF KINGAN AND CO. THE PARAGRAPH IS INKED OUT. YOU STATE, HOWEVER, IT IS APPARENT THAT ALL THREE OF THE BIDDERS HAVE INCLUDED THE PROCESSING TAX IN THE PRICES BID. PRESUMABLY YOUR CONCLUSION IS BASED UPON THE AMOUNT OF THE BID PRICE FOR THERE IS NOTHING UPON THE FACE OF THE BIDS OTHERWISE TO INDICATE THE INCLUSION OF THE AMOUNT OF THE TAX.

THE BUREAU OF INTERNAL REVENUE OF THE TREASURY DEPARTMENT HAS HELD THAT DELIVERIES TO A UNITED STATES VETERANS' HOSPITAL ARE CONSIDERED TO BE DELIVERIES TO A FEDERAL WELFARE ORGANIZATION WITHIN THE MEANING OF SECTION 15 (C) OF THE AGRICULTURAL ADJUSTMENT ACT, AS AMENDED, ACT OF JUNE 16, 1934, 48 STAT. 973 (PUBLIC, NO. 367, 73D CONG.). FOLLOWING THAT RULING OF THE TREASURY DEPARTMENT THE INCLUSION OF THE PARAGRAPH QUOTED ABOVE IN THE INVITATIONS FOR PROPOSALS BY THE VETERANS' ADMINISTRATION WAS AUTHORIZED BY THIS OFFICE UNDER DATE OF AUGUST 26, 1935, A-64839, CITED IN YOUR LETTER.

HOWEVER, IT IS TO BE OBSERVED THAT PUBLIC, NO. 367, SEVENTY-THIRD CONGRESS, JUNE 16, 1934, IS PERMISSIVE RATHER THAN MANDATORY OR PROHIBITORY IN ITS PROVISIONS. THAT IS TO SAY, IT DOES NOT REQUIRE SALES TO BE MADE TO THE ORGANIZATIONS DESIGNATED IN THE ACT EXCLUSIVE OF A TAX PAID OR PAYABLE UNDER THE AGRICULTURAL ADJUSTMENT ACT NOR PROHIBIT THE INCLUSION OF THE AMOUNT OF SUCH TAXES IN PRICES CHARGED TO WELFARE ORGANIZATIONS. IT AUTHORIZES A REBATE OR REFUND OF SUCH TAXES UPON A PROPER SHOWING THAT THEY HAVE NOT BEEN INCLUDED IN PRICES CHARGED TO THE ORGANIZATIONS INVOLVED, BUT THOSE SELLING TO THE WELFARE UNITS ARE LEFT FREE TO INCLUDE OR EXCLUDE THE AMOUNT OF SUCH TAXES, AS THEY SEE FIT. ORDINARILY, BIDDERS SUBMITTING PRICES EXCLUSIVE OF THE AMOUNT OF SUCH TAXES WOULD BE ABLE TO UNDERBID THOSE INCLUDING THE TAXES AND WOULD BE SUCCESSFUL AS AGAINST THEM. ON THE OTHER HAND, IF, AS YOU SUGGEST, A PRICE SUBMITTED INCLUSIVE OF THE TAX SHOULD PERCHANCE BE LOWER THAN OTHER BIDS SUBMITTED WHICH EXCLUDE SUCH TAX, THERE WOULD APPEAR NO LOGICAL REASON AND NO LEGAL AUTHORITY FOR THE REJECTION OF THE LOW BID FOR THAT REASON ALONE.

YOU ARE INFORMED THAT THE BIDS INVOLVED, IF LOW, MAY NOT LEGALLY BE REJECTED MERELY FOR THE REASON THAT THE AMOUNT OF TAXES HERETOFORE IMPOSED UNDER THE AGRICULTURAL ADJUSTMENT ACT IS INCLUDED IN PRICES BID, AND SUCH LOW BID WILL BE FOR ACCEPTANCE AS SUBMITTED, IF OTHERWISE PROPER. BUT IN THIS CONNECTION, NO OFFICER OR EMPLOYEE OF YOUR ADMINISTRATION SHOULD MAKE ANY AFFIDAVIT OR STATEMENT TO THE EFFECT THAT THE AMOUNT OF THE TAX WAS NOT INCLUDED IN THE PURCHASE PRICE, SO AS TO ENABLE THE DEALER TO OBTAIN A REFUND OF THE AMOUNT OF THE TAX FROM THE BUREAU OF INTERNAL REVENUE--- IT BEING UNDERSTOOD THAT THE BUREAU OF INTERNAL REVENUE WILL NOT ALLOW A CLAIM FOR REFUND IN SUCH CASES WITHOUT SUCH AN AFFIDAVIT OR STATEMENT FROM THE PURCHASER.