A-75568, JULY 31, 1936, 16 COMP. GEN. 95

A-75568: Jul 31, 1936

Additional Materials:

Contact:

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

 

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

ARE UNAUTHORIZED IF THEY EXCEED THE MAXIMUM LIMITATION PLACED BY STATUTE UPON THE AMOUNT WHICH MAY BE EXPENDED IN ANY ONE YEAR FOR MAINTENANCE. IS FOR DETERMINATION. NOTWITHSTANDING THE RENTAL BASIS IS LESS THAN THE YEARLY PERIOD. 1936: THERE IS BEFORE THIS OFFICE FOR CONSIDERATION A QUESTION AS TO THE VALIDITY OF CONTRACT ER-TPS-44-429. WAS CALLED TO THE DECISION IN 13 COMP. IT IS VERY TRUE THAT TEN (10) MONTHS RENTAL AT $70.00 PER MONTH IS THE PURCHASE PRICE OF THE AUTOMOBILE UNDER CONTRACT. THIS OFFICE FEELS THAT IT WAS AN ADVANTAGE TO THE GOVERNMENT TO HAVE THE CAR RENTED ON THIS BASIS RATHER THAN TO HAVE PURCHASED SAME. THE CONTRACT WAS TO PROVIDE THAT "GAS. IT IS PERTINENT TO NOTE THAT UNDER THE CONTRACT ENTERED INTO THE CAR WAS "TO BE GREASED * * * AT CONTRACTOR'S EXPENSE.'.

A-75568, JULY 31, 1936, 16 COMP. GEN. 95

VEHICLES - MOTOR-PROPELLED PASSENGER-CARRYING - RENTAL LIMITATIONS AGREEMENTS FOR THE RENTAL OF MOTOR-PROPELLED PASSENGER-CARRYING VEHICLES WHICH PROVIDE FOR THE MAKING OF ALL REPAIRS, ETC., BY THE CONTRACTOR, ARE UNAUTHORIZED IF THEY EXCEED THE MAXIMUM LIMITATION PLACED BY STATUTE UPON THE AMOUNT WHICH MAY BE EXPENDED IN ANY ONE YEAR FOR MAINTENANCE, UPKEEP, AND REPAIR, EXCLUSIVE OF THE ITEMS EXCLUDED BY STATUTE, AND SUCH LIMITATION, FOR THE PURPOSE OF MONTHLY RENTAL PAYMENTS, IS FOR DETERMINATION, GENERALLY, ON THE BASIS OF ONE-TWELFTH OF THE YEARLY LIMITATION, NOTWITHSTANDING THE RENTAL BASIS IS LESS THAN THE YEARLY PERIOD.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, JULY 31, 1936:

THERE IS BEFORE THIS OFFICE FOR CONSIDERATION A QUESTION AS TO THE VALIDITY OF CONTRACT ER-TPS-44-429, DATED NOVEMBER 18, 1935, ENTERED INTO WITH THE JIM REED CHEVROLET COMPANY, NASHVILLE, TENNESSEE, FOR FURNISHING UPON A RENTAL BASIS ONE CHEVROLET FIVE-PASSENGER FOUR-DOOR SEDAN, 1935 OR 1936 MODEL, FULLY EQUIPPED, FOR APPROXIMATELY 10 MONTHS AT A PRICE OF 50 CENTS PER HOUR NOT TO EXCEED 140 HOURS OR $70 PER MONTH.

UNDER THE TERMS OF THE CONTRACT THE CONTRACTOR AGREED TO CARRY $10,000 AND $20,000 LIABILITY INSURANCE AND $5,000 PROPERTY DAMAGE INSURANCE, TO GREASE AND SERVICE THE CAR, MAKE ALL REPAIRS THERETO, AND KEEP THE CAR EQUIPPED WITH GOOD TIRES FOR THE PERIOD OF THE CONTRACT, THE GOVERNMENT RESERVING THE RIGHT TO CANCEL THE CONTRACT AT ANY TIME AFTER 30 DAYS.

IN LETTER OF THIS OFFICE DATED APRIL 20, 1936, THE ATTENTION OF THE STATE PROCUREMENT OFFICER, NASHVILLE, TENNESSEE, WAS CALLED TO THE DECISION IN 13 COMP. GEN. 458, WITH THE REQUEST THAT INFORMATION BE SUPPLIED AS TO THE VALUE OF THE "AUTHORIZED EXCEPTED SERVICES" WITHIN THE MEANING OF THE APPLICABLE DECISION AND STATUTE. UNDER DATE OF APRIL 23, 1936, THE STATE PROCUREMENT OFFICER REPLIED AS FOLLOWS:

ON NOVEMBER THE 10, 1935, WE RECEIVED REQUISITION NO. 4-10-248 FROM THE WORKS PROGRESS ADMINISTRATION ASKING THAT WE ENTER INTO A CONTRACT FOR ONE (1) FIVE (5) PASSENGER, FOUR (4) DOOR SEDAN AUTOMOBILE ON A MONTHLY RENTAL BASIS; CAR TO BE COVERED BY $10,000 TO $20,000 LIABILITY INSURANCE, $5,000 PROPERTY DAMAGE; GAS, OIL, AND GREASE TO BE FURNISHED BY THE GOVERNMENT AND ALL OTHER MAINTENANCE OF EVERY DESCRIPTION TO BE FURNISHED BY THE CONTRACTOR; CAR TO BE IN SERVICE FOR APPROXIMATELY TEN (10) MONTHS.

IT IS VERY TRUE THAT TEN (10) MONTHS RENTAL AT $70.00 PER MONTH IS THE PURCHASE PRICE OF THE AUTOMOBILE UNDER CONTRACT. BUT, AS THIS CONTRACT HAS A THIRTY DAY CANCELLATION CLAUSE AND THE CAR MAY NOT BE USED FOR THE ENTIRE PERIOD OF TEN MONTHS, DUE TO THE MAINTENANCE COST, THIS OFFICE FEELS THAT IT WAS AN ADVANTAGE TO THE GOVERNMENT TO HAVE THE CAR RENTED ON THIS BASIS RATHER THAN TO HAVE PURCHASED SAME, DUE TO THE UNCERTAINTY OF THE LENGTH OF TIME THE CAR MIGHT BE RENTED.

WHILE FROM THE LETTER, SUPRA, THE CONTRACT WAS TO PROVIDE THAT "GAS, OIL, AND GREASE" BE FURNISHED BY THE GOVERNMENT, IT IS PERTINENT TO NOTE THAT UNDER THE CONTRACT ENTERED INTO THE CAR WAS "TO BE GREASED * * * AT CONTRACTOR'S EXPENSE.'

SECTION 3 OF THE ACT MAKING APPROPRIATION FOR THE TREASURY AND POST OFFICE DEPARTMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 1936, AND OTHER PURPOSES, APPROVED MAY 14, 1935, 49 STAT. 243-44, PROVIDES IN PART AS FOLLOWS:

NO APPROPRIATION AVAILABLE FOR THE EXECUTIVE DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS OF THE GOVERNMENT FOR THE FISCAL YEAR ENDING JUNE 30, 1936, WHETHER CONTAINED IN THIS ACT OR ANY OTHER ACT, SHALL BE EXPENDED---

(A) TO PURCHASE ANY MOTOR-PROPELLED PASSENGER-CARRYING VEHICLE (EXCLUSIVE OF BUSSES, AMBULANCES, AND STATION WAGONS), AT A COST, COMPLETELY EQUIPPED FOR OPERATION, AND INCLUDING THE VALUE OF ANY VEHICLE EXCHANGED, IN EXCESS OF $750, UNLESS OTHERWISE SPECIFICALLY PROVIDED FOR IN THE APPROPRIATION.

(C) FOR THE MAINTENANCE, UPKEEP, AND REPAIR (EXCLUSIVE OF GARAGE RENT, PAY OF OPERATORS, TIRES, FUEL, AND LUBRICANTS) ON ANY ONE MOTOR PROPELLED PASSENGER-CARRYING VEHICLE, EXCEPT BUSSES AND AMBULANCES, IN EXCESS OF ONE -THIRD OF THE MARKET PRICE OF A NEW VEHICLE OF THE SAME MAKE AND CLASS AND IN NO CASE IN EXCESS OF $400.

IN CONSTRUING IDENTICAL PROVISIONS IN FORMER STATUTES IT WAS HELD IN 14 COMP. GEN. 325, AT PAGE 326, THAT:

* * * THESE STATUTORY RESTRICTIONS HAVE FOR THEIR PURPOSE NOT ONLY THE RESTRICTION OF THE AMOUNTS TO BE SPENT FOR MAINTENANCE, UPKEEP, AND REPAIR, BUT ALSO RESTRICTIONS UPON THE PURCHASE PRICE TO BE PAID FOR AUTOMOBILES. IT IS NOT CONTEMPLATED THAT THE RESTRICTIONS UPON THE PURCHASE OF AUTOMOBILES MAY BE AVOIDED BY THE RENTAL OF AUTOMOBILES INSTEAD OF THEIR PURCHASE (4 COMP. GEN. 836.) ACCORDINGLY, NO ITEMS MAY BE ALLOWED AS RENTAL WHICH WOULD NOT COME UNDER THE HEAD OF ,MAINTENANCE, UPKEEP, AND REPAIR," WITH THE EXCEPTION PROVIDED IN SECTION 3 (C) OF THE STATUTE, AS TO DO SO WOULD BE EXPENDING MONEYS FOR ITEMS WHICH WOULD OTHERWISE BE ABSORBED IN THE PURCHASE PRICE OF THE AUTOMOBILES WHEN GOVERNMENT OWNED, AND WOULD THUS AVOID THE RESTRICTION ON THE PRICE WHICH COULD BE PAID THEREFOR.

ACCORDINGLY, NO RENTAL AGREEMENT MAY EXCEED THE MAXIMUM LIMITATION PLACED BY THE STATUTE UPON THE AMOUNT WHICH MAY BE EXPENDED IN ANY ONE YEAR FOR THE MAINTENANCE, UPKEEP, AND REPAIR, EXCLUSIVE OF GARAGE RENT, PAY OF OPERATORS, TIRES, FUEL, AND LUBRICANTS. PROPOSALS AND/OR RENTAL AGREEMENTS INCLUDED IN THE CONSIDERATION PAYMENT FOR FURNISHING ANY OF THE AUTHORIZED EXCEPTED SERVICES SHOULD SPECIFY THE AMOUNTS ALLOTTED TO SUCH SERVICES.

IT IS STATED IN THE STATE PROCUREMENT OFFICER'S LETTER, SUPRA, THAT $700 IS THE PURCHASE PRICE OF THE CAR. IF SUCH BE THE FACT IT WOULD APPEAR THAT UNDER THE LIMITATIONS OF THE ABOVE-QUOTED STATUTE ONLY ONE THIRD OF THAT AMOUNT MIGHT LAWFULLY BE EXPENDED FOR RENTAL THEREOF DURING THE PERIOD OF A FISCAL YEAR, OR ONE-TWELFTH OF ONE-THIRD OF THE AMOUNT FOR ANY ONE MONTH DURING THE FISCAL YEAR WHEN THE CONTRACTOR WAS TO FURNISH ALL REPAIRS, ETC., NOT EXCLUDED BY THE STATUTE. IT IS IMMATERIAL WHETHER THE CAR BE USED FOR A PERIOD LESS THAN THAT COVERED BY THE CONTRACT--- THE RATE PER MONTH COMPUTED ON AN ANNUAL BASIS BEING, GENERALLY, THE CONTROLLING FACTOR.

IT IS NOTED IN THE INSTANT CASE THAT THE CONTRACTOR HAS AGREED TO FURNISH ONLY ONE OF THE ITEMS EXCLUDED FROM THE STATUTORY LIMITATION, NAMELY, GREASE. THE COST OF THIS ITEM IS NOT SHOWN, BUT IT WOULD NOT APPEAR THAT THE COST THEREOF WOULD EQUAL OR APPROXIMATE THE DIFFERENCE BETWEEN THE AMOUNT PROPERLY ALLOWABLE FOR RENTAL OF THE AUTOMOBILE UNDER THE STATUTE AND THE AMOUNT CALLED FOR BY THE CONTRACT ON A YEARLY BASIS.

ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD THE CONTRACT DOES NOT APPEAR TO BE IN ACCORD WITH THE ABOVE QUOTED STATUTE AND DECISION, AND THE VOUCHERS SUBMITTED THEREUNDER FOR PREAUDIT BY THIS OFFICE WILL BE RETURNED WITHOUT CERTIFICATION FOR PAYMENT.