A-93731, APRIL 16, 1938, 17 COMP. GEN. 854

A-93731: Apr 16, 1938

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- THERE IS NO OBJECTION. IN DETERMINING WHETHER THE BIDS ARE WITHIN THE $750 STATUTORY PRICE LIMIT. WHERE DELIVERY IS F.O.B. THERE IS SUGGESTED FOR INCLUSION IN INVITATIONS FOR BIDS COVERING FUTURE PURCHASES A PARAGRAPH AS FOLLOWS: "BY STATUTORY LIMITATION THE PRICE OF THE AUTOMOBILE/S) TO BE PURCHASED UNDER THIS ADVERTISEMENT SHALL NOT EXCEED $750 (EACH) AT POINT OF ORIGIN (INCLUSIVE OR EXCLUSIVE OF TRADE-IN ALLOWANCES). EACH BID TO RECEIVE CONSIDERATION MUST BE NOT MORE THAN $750 FOR THE VEHICLE IF PRICE AT POINT OF ORIGIN IS QUOTED. IF PRICE AT DESTINATION ONLY IS QUOTED AND THAT PRICE EXCEEDS $750. IS AS FOLLOWS: ON JANUARY 13 THE PURCHASING OFFICER OF THIS DEPARTMENT ISSUED INVITATION NO. 3285 FOR THE PROPOSED PURCHASE OF NEW VEHICLES FOR USE BY THE NATIONAL PARK SERVICE AT HILO.

A-93731, APRIL 16, 1938, 17 COMP. GEN. 854

VEHICLES - MOTOR - PASSENGER CARRYING - PURCHASE PRICE LIMITATION AND TRANSPORTATION COSTS WHERE BIDDERS OFFER DELIVERY OF MOTOR-PROPELLED PASSENGER-CARRYING VEHICLES F.O.B. A POINT BETWEEN SHIPPING POINT AND DESIRED DELIVERY POINT- -- F.O.B. WHARF OR OCEAN SHIPPING POINT--- THERE IS NO OBJECTION, IN DETERMINING WHETHER THE BIDS ARE WITHIN THE $750 STATUTORY PRICE LIMIT, TO THE DEDUCTION FROM THE BID PRICES OF THE ACTUAL COST OF TRANSPORTATION FROM FACTORY TO THE OCEAN SHIPPING POINT BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT. FOR DECISIONS RELATIVE TO THE CONSIDERATION OF BIDS IN CONNECTION WITH THE $750 STATUTORY PRICE LIMITATION, WHERE DELIVERY IS F.O.B. FACTORY; F.O.B. SHIPPING POINT; AND F.O.B. DESTINATION, SEE 17 COMP. GEN. 7; 14 ID. 82 AND 16 ID. 43; AND 17 ID. 580, RESPECTIVELY. WITH A VIEW TO MINIMIZING QUESTIONS RELATIVE TO THE CONSIDERATION OF BIDS INVOLVING THE PURCHASE OF MOTOR-PROPELLED PASSENGER-CARRYING VEHICLES, AND THE $750 STATUTORY PRICE LIMITATION WITH ITS RELATED MATTER OF TRANSPORTATION COSTS, THERE IS SUGGESTED FOR INCLUSION IN INVITATIONS FOR BIDS COVERING FUTURE PURCHASES A PARAGRAPH AS FOLLOWS: "BY STATUTORY LIMITATION THE PRICE OF THE AUTOMOBILE/S) TO BE PURCHASED UNDER THIS ADVERTISEMENT SHALL NOT EXCEED $750 (EACH) AT POINT OF ORIGIN (INCLUSIVE OR EXCLUSIVE OF TRADE-IN ALLOWANCES), EXCLUSIVE OF TRANSPORTATION CHARGES. ACCORDINGLY, EACH BID TO RECEIVE CONSIDERATION MUST BE NOT MORE THAN $750 FOR THE VEHICLE IF PRICE AT POINT OF ORIGIN IS QUOTED. IF PRICE AT DESTINATION ONLY IS QUOTED AND THAT PRICE EXCEEDS $750, BIDDER SHOULD SHOW THE SHIPPING WEIGHT AND POINT OF ORIGIN.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, APRIL 16, 1938:

YOUR LETTER OF MARCH 26, 1938, IS AS FOLLOWS:

ON JANUARY 13 THE PURCHASING OFFICER OF THIS DEPARTMENT ISSUED INVITATION NO. 3285 FOR THE PROPOSED PURCHASE OF NEW VEHICLES FOR USE BY THE NATIONAL PARK SERVICE AT HILO, HAWAII. BIDS COVERING THE PROPOSED PURCHASE WERE OPENED IN THE PURCHASING OFFICE FEBRUARY 14 AND THE FOLLOWING BIDS WERE RECEIVED ON ITEM 1:

BID 1. GENERAL MOTORS CORPORATION, DETROIT, MICHIGAN, OFFERING DELIVERY OF ONE CHEVROLET 4-DOOR SEDAN, F.O.B. WHARF AT SAN FRANCISCO, OR OAKLAND, CALIFORNIA, FOR $755.86, LESS 5 PERCENT DISCOUNT $37.79 FOR PAYMENT IN 20 DAYS; NET $718.07 PLUS $84.71 TRANSPORTATION CHARGE FROM WHARF TO DESTINATION, MAKING A TOTAL NET COST OF $802.78.

BID 2. STEUART MOTOR COMPANY, WASHINGTON, D.C., OFFERING DELIVERY OF ONE FORD 4-DOOR SEDAN F.O.B. DETROIT, MICHIGAN, FOR $715.33, LESS 10 PERCENT DISCOUNT $71.53 FOR PAYMENT IN 20 DAYS; NET $643.80 PLUS $211.51 TRANSPORTATION CHARGES TO DESTINATION, MAKING A TOTAL NET COST OF $855.31.

BID 3. THE NORTHWEST MOTOR COMPANY, WASHINGTON, D.C., OFFERING DELIVERY OF ONE FORD 4-DOOR SEDAN F.O.B. DETROIT, MICHIGAN, FOR $703.73, LESS 10 PERCENT DISCOUNT OF 70.37 FOR PAYMENT IN 20 DAYS; NET $633.36 PLUS $211.20 TRANSPORTATION CHARGES TO DESTINATION, MAKING A TOTAL COST OF $844.65. ALSO DELIVERY OF ONE FORD 4-DOOR SEDAN F.O.B. WHARF AT SAN FRANCISCO, CALIFORNIA, FOR $837.07, LESS 10 PERCENT DISCOUNT $83.70 FOR PAYMENT IN 20 DAYS; NET $753.37 PLUS $85.32 TRANSPORTATION CHARGES TO DESTINATION, MAKING A TOTAL COST OF $838.69.

THE LOWEST BID ON THE BASIS OF TOTAL COST TO THE DESTINATION, HILO, HAWAII, IS THAT OF THE GENERAL MOTORS CORPORATION FOR $755.86 F.O.B. WHARF AT SAN FRANCISCO, CALIFORNIA. THE NEXT LOWEST BID ON THE SAME BASIS IS THAT OF THE NORTHWEST MOTOR COMPANY FOR $837.07 F.O.B. WHARF AT SAN FRANCISCO, CALIFORNIA. THE GENERAL MOTORS CORPORATION'S BID MAKES NO SHOWING OF ANY TRANSPORTATION CHARGES INCLUDED IN THE BID PRICE, NOR DOES THE NORTHWEST MOTOR COMPANY'S BID MAKE ANY SUCH SHOWING EXCEPT BY INFERENCE FROM THE BID PRICE OF $703.73 F.O.B. DETROIT, MICHIGAN, ON THE SAME ITEM. THE DEPARTMENT BELIEVES THAT SUFFICIENT TRANSPORTATION CHARGES ARE INCLUDED IN THESE PRICES TO BRING THEM WITHIN THE STATUTORY LIMITATION OF $750, IF ASCERTAINED AND DEDUCTED.

IN YOUR DECISION OF JULY 7, 1937 (A-86965), TO THE SECRETARY OF WAR, THE FOLLOWING STATEMENT APPEARS:

"THE PLAIN EFFECT OF THE STATUTE IS TO PRECLUDE CONSIDERATION OF ANY BID OFFERING A PASSENGER-CARRYING AUTOMOBILE AT A FACTORY PRICE IN EXCESS OF $750, EITHER INCLUSIVE OR EXCLUSIVE OF THE TRADE-IN ALLOWANCE ON THE USED AUTOMOBILE. THAT IS THE PLAIN, OBVIOUS, AND RATIONAL MEANING OF THE STATUTE, ETC.'

IN HIS DECISION OF JULY 28, 1934 (A-56661), TO THIS DEPARTMENT THE COMPTROLLER GENERAL SAID, IN PART:

"TRANSPORTATION COSTS OCCASIONED BY A GOVERNMENT PURCHASE OF A MOTOR- PROPELLED PASSENGER-CARRYING VEHICLE--- THAT IS, TRANSPORTATION COSTS INVOLVED IN THE DELIVERY THEREOF--- ARE NOT A PART OF THE "COSTS" REFERRED TO IN SECTION 3 (A) OF THE ACT OF MARCH 15, 1934 (48 STAT. 450), QUOTED IN THE FIRST PARAGRAPH OF YOUR SUBMISSION.'

THE COMBINED EFFECT OF THOSE DECISIONS SEEMS TO BE THAT TRANSPORTATION COSTS FROM THE FACTORY ARE DEDUCTIBLE BEFORE APPLYING THE $750 LIMITATION.

YOUR DECISION IS REQUESTED ON THE FOLLOWING POINTS:

1. IS THERE ANY PROPER METHOD BY WHICH THE LOW BID OF THE GENERAL MOTORS CORPORATION CAN BE ESTABLISHED AS BEING WITHIN THE STATUTORY LIMITATION OF $750, THEREBY EFFECTING A SAVING OF AT LEAST $35.91? IT SEEMS OBVIOUS THAT A PRICE F.O.B. WHARF AT SAN FRANCISCO, CALIFORNIA, ON AN AUTOMOBILE WOULD INCLUDE AN APPRECIABLE AMOUNT FOR TRANSPORTATION COST INVOLVED IN DELIVERY AT THAT POINT, AND THAT SUCH COST WOULD BE MUCH MORE THAN $5.86, THE AMOUNT OF WHICH THE PRICE AT BIDDER'S POINT OF DELIVERY EXCEEDS $750.

2. IF THE ANSWER TO NO. 1 IS IN THE NEGATIVE, THEN IN CONSIDERING THE BID OF THE NORTHWEST MOTOR COMPANY, MAY THE DEPARTMENT ACCEPT THE BID OF $837.07 F.O.B. WHARF AT SAN FRANCISO, CALIFORNIA, AS BEING WITHIN THE $750 LIMITATION BECAUSE OF THE ALTERNATE PRICE OF $703.73 F.O.B. DETROIT, MICHIGAN, THUS EFFECTING A SAVING OF $5.96 IN THE TOTAL DELIVERED COST AT HILO, HAWAII?

IT WILL BE APPRECIATED IF YOUR DECISION CAN BE MADE TO INCLUDE A STATEMENT OF GENERAL PRINCIPLES APPLICABLE TO CASES OF THIS KIND THAT MAY OCCUR IN THE FUTURE.

THE BID OF THE GENERAL MOTORS CORPORATION AND AN ABSTRACT OF ALL BIDS RECEIVED ON ITEM 1 ARE ENCLOSED FOR YOUR REFERENCE. PLEASE RETURN THE BID AND ABSTRACT WITH YOUR DECISION.

THE RULE STATED IN THE DECISION OF JULY 28, 1934, 14 COMP. GEN. 82, CITED IN YOUR SUBMISSION--- THAT TRANSPORTATION COSTS INVOLVED IN DELIVERY OF PASSENGER-CARRYING AUTOMOBILES FORM BIDDER'S SHIPPING POINT TO DESTINATION ARE NOT A PART OF THE COST OF VEHICLES WITHIN THE MEANING OF THE PRICE LIMITING STATUTES--- MAY BE CONSIDERED AS SETTLED. HENCE, IN EVALUATING A BID OFFERING DESTINATION DELIVERY ONLY, THERE PROPERLY IS FOR DEDUCTION THE ACTUAL COST OF TRANSPORTATION FROM SHIPPING POINT TO DESTINATION BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT, FOR THE PURPOSE OF DETERMINING WHETHER A BID PRICE OTHERWISE IN EXCESS OF THE STATUTORY AMOUNT ACTUALLY IS WITHIN THE LIMIT. 17 COMP. GEN. 580.

IT IS EQUALLY TRUE, AS STATED IN THE DECISION OF JULY 7, 1937, 17 COMP. GEN. 7, THAT A BID OFFERING A PASSENGER-CARRYING AUTOMOBILE AT A FACTORY PRICE IN EXCESS OF $750, EITHER INCLUSIVE OR EXCLUSIVE OF TRADE-IN ALLOWANCE ON A USED VEHICLE OR VEHICLES IS NOT PROPERLY FOR CONSIDERATION IN ANY EVENT.

BUT THE SITUATION PRESENTED IN YOUR INSTANT SUBMISSION IS NOT WITHIN EITHER RULE, SINCE THE BID OF THE GENERAL MOTORS CORPORATION IN THE AMOUNT OF $755.86--- SLIGHTLY IN EXCESS OF THE STATUTORY PRICE LIMIT--- DOES NOT PROPOSE DELIVERY EITHER AT FACTORY OR DESTINATION, BUT AT AN INTERMEDIATE POINT, THAT IS,"F.O.B. WHARF AT SAN FRANCISO OR OAKLAND, CALIF., " ONLY. THE ABSTRACT OF BIDS SHOWS THAT BOTH THE STEUART MOTOR CO. AND THE NORTHWEST MOTOR CO. ALSO PROPOSE TO LIMIT THEIR RESPONSIBILITY TO DELIVERY F.O.B. OR F.A.S. SAN FRANCISCO. THE ABSTRACT OF BIDS BEARS NOTATIONS INDICATING THAT TRANSPORTATION COSTS ON THE VEHICLES OFFERED BY THE STEUART MOTOR CO. AND THE NORTHWEST MOTOR CO. FROM DETROIT, MICH., TO SAN FRANCISCO, ARE $126.19 AND $125.97, RESPECTIVELY, AND THAT TRANSPORTATION COSTS "BYD" (BEYOND/--- OCEAN TRANSPORTATION COSTS--- ARE $85.32.

PARENT PLANTS OF BOTH THE GENERAL MOTORS CORPORATION, CHEVROLET DIVISION, AND THE FORD MOTOR CO. ARE LOCATED IN MICHIGAN AND IT IS REASONABLE TO ASSUME THAT TRANSPORTATION COSTS FROM THOSE PLANTS TO SAN FRANCISCO ON ALL THE VEHICLES OFFERED WOULD BE APPROXIMATELY THE SAME, OR COMPARABLE.

ACCORDINGLY, FOR THE PURPOSE OF DETERMINING WHETHER BIDS ARE WITHIN THE STATUTORY PRICE LIMIT, THERE WOULD APPEAR NO LEGAL OR OTHER OBJECTION TO CONSIDERATION OF THE ACTUAL COST OF TRANSPORTATION FROM FACTORY TO OCEAN SHIPPING POINT BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT ON VEHICLES OFFERED AT F.O.B. OCEAN SHIPPING POINT PRICES. IN THE PRESENT CASE IT MAY BE ASSUMED THAT SUCH ACTUAL COSTS OF TRANSPORTATION WOULD EXCEED THE DIFFERENCE BETWEEN THE BID PRICES F.O.B. SAN FRANCISCO AND THE STATUTORY MAXIMUM OF $750.

AS TO YOUR SUGGESTION THAT REPLY TO YOUR SUBMISSION "BE MADE TO INCLUDE A STATEMENT OF GENERAL PRINCIPLES APPLICABLE TO CASES OF THIS KIND THAT MAY OCCUR IN THE FUTURE," IT IS BELIEVED THAT THE CONCLUSION HEREIN REACHED AND OTHER DECISIONS OF THIS OFFICE SUFFICIENTLY ESTABLISH THAT---

(1) NO BID OFFERING A PASSENGER-CARRYING VEHICLE AT A FACTORY PRICE IN EXCESS OF $750 EITHER INCLUSIVE OR EXCLUSIVE OF TRADE-IN VALUE OF ANY VEHICLE TO BE EXCHANGED, IS LEGALLY FOR CONSIDERATION UNDER THE $750 STATUTORY PRICE LIMITATION. 17 COMP. GEN. 7.

(2) THE COST OF TRANSPORTATION FROM SHIPPING POINT BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT IS NOT TO BE REGARDED AS INCLUDED IN THE "COST" OF THE VEHICLE IN DETERMINING WHETHER SUCH COST EXCEEDS THE STATUTORY MAXIMUM OF $750. 14 COMP. GEN. 82; 16 COMP. GEN. 43.

(3) WHERE DESTINATION PRICES, ONLY, ARE QUOTED AND ARE IN EXCESS OF $750 FOR PURPOSES OF EVALUATION AND DETERMINATION IF THE ACTUAL PRICE OF THE AUTOMOBILE IS WITHIN THE STATUTORY LIMIT, THERE PROPERLY MAY BE DEDUCTED FROM THE AMOUNT OF THE BID THE ACTUAL COST OF TRANSPORTATION FROM FACTORY TO DESTINATION BY THE ROUTE AND METHOD MOST ADVANTAGEOUS TO THE GOVERNMENT. 17 COMP. GEN. 580.

(4) WHERE PRICES ARE QUOTED FOR DELIVERY AT AN INTERMEDIATE POINT, AND OTHERWISE ARE ACCEPTABLE, THERE MAY BE DEDUCTED FROM SUCH PRICES, FOR THE PURPOSES STATED IN THE PRECEDING PARAGRAPH, THE COST OF TRANSPORTATION FROM FACTORY TO SUCH INTERMEDIATE POINT.

HOWEVER, IT SHOULD BE EMPHASIZED THAT IN DETERMINING WHETHER A DESTINATION OR INTERMEDIATE DELIVERY BID IN EXCESS OF $750 PER AUTOMOBILE IS ACTUALLY WITHIN THE STATUTORY LIMIT AS TO VEHICLE COST, THE MAXIMUM AMOUNT DEDUCTIBLE AS TRANSPORTATION COST IS THE AMOUNT IT WOULD COST THE GOVERNMENT--- "HAVING REGARD FOR LAND GRANT OR OTHER ADVANTAGES AVAILABLE IN SUCH CONNECTION" (14 COMP. GEN. 82/--- FOR THE TRANSPORTATION, AND WHERE SUCH ADVANTAGES WOULD EFFECT A LOWER COST THAN THE PREVAILING COMMERCIAL RATE, THE COMMERCIAL RATE IS NOT FOR APPLICATION.

WITH A VIEW TO MINIMIZING SIMILAR QUESTIONS IN THE PREMISES, THERE MAY BE SUGGESTED FOR INCLUSION IN ALL INVITATIONS FOR BIDS COVERING FUTURE PURCHASES OF PASSENGER-CARRYING VEHICLES THE FOLLOWING PARAGRAPH:

BY STATUTORY LIMITATION THE PRICE OF THE AUTOMOBILE/S) TO BE PURCHASED UNDER THIS ADVERTISEMENT SHALL NOT EXCEED $750 (EACH) AT POINT OF ORIGIN (INCLUSIVE OR EXCLUSIVE OF TRADE-IN ALLOWANCES), EXCLUSIVE OF TRANSPORTATION CHARGES. ACCORDINGLY, EACH BID TO RECEIVE CONSIDERATION MUST BE NOT MORE THAN $750 FOR THE VEHICLE IF PRICE AT POINT OF ORIGIN IS QUOTED. IF PRICE AT DESTINATION ONLY IS QUOTED AND THAT PRICE EXCEEDS $750, BIDDER SHOULD SHOW THE SHIPPING WEIGHT AND POINT OF ORIGIN.

IT IS BELIEVED THAT THIS PROVISION WILL BE OF ASSISTANCE TO THE PURCHASING AGENCIES IN MOST INSTANCES.