A-94686, JUNE 17, 1938, 17 COMP. GEN. 1085

A-94686: Jun 17, 1938

Additional Materials:

Contact:

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

 

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

THE STATEMENT "THAT STATE OR LOCAL SALES TAXES ARE NOT INCLUDED IN THE AMOUNT BILLED AND THAT TAX EXEMPTION CERTIFICATES THEREFOR HAVE BEEN RECEIVED. WAS INTENDED FOR USE BY THE VENDOR ONLY WHEN APPLICABLE AND WAS NOT INTENDED. IS NOT TO BE CONSIDERED. HOLDING THERE IS NO LEGAL AUTHORITY FOR UNDERTAKING TO REQUIRE A BIDDER TO SELL TO THE GOVERNMENT AT PRICES EXCLUSIVE OF APPLICABLE TAXES. ALTERNATE TAX PROVISION NOW ADMINISTRATIVELY SUGGESTED IS NOT OBJECTIONABLE. IS AS FOLLOWS: REFERENCE IS MADE TO YOUR DECISIONS A-91844. GEN. 617) AS A SUBSTITUTE FOR THE FIRST PARAGRAPH OF THE FORM THEN UNDER CONSIDERATION: "IF SUBMITTED PRICES ARE EXCLUSIVE OF FEDERAL. OR ARE INCLUSIVE OF SUCH TAXES AND THE BIDDER AGREES TO DEDUCTION OF THE AMOUNT THEREOF FROM THE CONTRACT PRICE AND ACCEPTANCE OF TAX EXEMPTION CERTIFICATES IN LIEU THEREOF.

A-94686, JUNE 17, 1938, 17 COMP. GEN. 1085

TAXES - FEDERAL, STATE, AND LOCAL - PRESCRIBING OF VENDORS' NONINCLUSION CERTIFICATES - EFFECT ON PRIOR DECISION REGARDING REQUIREMENTS AS TO MANNER OF BIDDING, ETC. THE STATEMENT "THAT STATE OR LOCAL SALES TAXES ARE NOT INCLUDED IN THE AMOUNT BILLED AND THAT TAX EXEMPTION CERTIFICATES THEREFOR HAVE BEEN RECEIVED," PRESCRIBED BY GENERAL ACCOUNTING OFFICE CIRCULAR LETTER A- 51607, A-49009, APRIL 2, 1938, FOR INCORPORATION IN VENDOR'S CERTIFICATE FORM ON REPRINTS OF STANDARD FORM 1034, REVISED, WAS INTENDED FOR USE BY THE VENDOR ONLY WHEN APPLICABLE AND WAS NOT INTENDED, AND IS NOT TO BE CONSIDERED, AS MODIFYING IN ANY MEASURE EITHER THE DECISION OF JANUARY 31, 1938, 17 COMP. GEN. 615, HOLDING THERE IS NO LEGAL AUTHORITY FOR UNDERTAKING TO REQUIRE A BIDDER TO SELL TO THE GOVERNMENT AT PRICES EXCLUSIVE OF APPLICABLE TAXES, WHETHER FEDERAL, STATE, OR LOCAL, OR THE SUBSTITUTE TAX PROVISION SUGGESTED BY THAT DECISION, BUT ALTERNATE TAX PROVISION NOW ADMINISTRATIVELY SUGGESTED IS NOT OBJECTIONABLE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ARCHIVIST, THE NATIONAL ARCHIVES, JUNE 17, 1938:

YOUR LETTER OF APRIL 29, 1938, IS AS FOLLOWS:

REFERENCE IS MADE TO YOUR DECISIONS A-91844, DATED JANUARY 31, 1938, TO THE SECRETARY OF AGRICULTURE AND A-51607, A-49009, DATED APRIL 2, 1938, TO THE HEADS OF DEPARTMENTS, INDEPENDENT ESTABLISHMENTS, AND OTHERS CONCERNED.

PURSUANT TO THE FORMER, THE NATIONAL ARCHIVES PLANNED TO INCLUDE WITH FUTURE INVITATIONS FOR BIDS A SUPPLEMENTARY NOTICE TO BIDDERS, SIMILAR TO THE FORM PROPOSED BY THE SECRETARY OF AGRICULTURE, MODIFIED IN ACCORDANCE WITH YOUR SUGGESTIONS IN THAT DECISION. THIS NOTICE INCLUDED THE FOLLOWING PARAGRAPH WHICH YOU SUGGESTED (17 COMP. GEN. 617) AS A SUBSTITUTE FOR THE FIRST PARAGRAPH OF THE FORM THEN UNDER CONSIDERATION:

"IF SUBMITTED PRICES ARE EXCLUSIVE OF FEDERAL, STATE, OR LOCAL TAXES ON ANY ITEM IN THIS SCHEDULE SUBJECT TO SUCH TAX OR TAXES, OR ARE INCLUSIVE OF SUCH TAXES AND THE BIDDER AGREES TO DEDUCTION OF THE AMOUNT THEREOF FROM THE CONTRACT PRICE AND ACCEPTANCE OF TAX EXEMPTION CERTIFICATES IN LIEU THEREOF, THE BIDDER MUST SHOW UPON THE FACE OF HIS BID THE AMOUNT OF EACH SUCH TAX SO EXCLUDED OR INCLUDED AS TO EACH ITEM. IF THE BID AS SUBMITTED DOES NOT CLEARLY SHOW EITHER THAT THE TAXES ARE EXCLUDED OR THAT IT CONSENTS TO THE DEDUCTION OF A STATED AMOUNT OF TAXES INCLUDED, IT WILL BE PRESUMED THAT THE AMOUNT OF ALL APPLICABLE TAXES IS INCLUDED IN THE BID PRICE, THE BID WILL BE EVALUATED ACCORDINGLY, AND, IF THE BID BE ACCEPTED, NO EXEMPTION CERTIFICATE WILL BE ISSUED.'

UPON RECEIPT OF THE LATER DECISION, IT APPEARED THAT THE CONCLUDING SENTENCE OF THE PARAGRAPH QUOTED ABOVE, IN SO FAR AS IT APPLIES TO STATE AND LOCAL TAXES, IS IN CONFLICT WITH THE EVIDENT INTENT OF THE REQUIREMENT SET FORTH IN THE NOTE WHICH APPEARS ON PAGE TWO OF THE MANUSCRIPT COPY OF THE DECISION OF APRIL 2, 1938.

WE CANNOT RECONCILE THE POSITION TAKEN IN THE FORMER DECISION THAT "THERE APPEARS NO LEGAL AUTHORITY TO "REQUIRE" BIDDERS TO LIST ITEMS IN THEIR BIDS, BY ITEM NUMBER OR OTHERWISE, WHICH ARE SUBJECT TO FEDERAL, STATE, OR LOCAL TAX, OR TO SHOW THE AMOUNT OF TAX THEREON * * * WITH THE NEW PROVISION THAT THE SUCCESSFUL BIDDER SHALL BE REQUIRED TO CERTIFY "THAT STATE AND LOCAL TAXES ARE NOT INCLUDED IN THE AMOUNT BILLED, AND THAT TAX EXEMPTION CERTIFICATES THEREFOR HAVE BEEN RECEIVED.' OBVIOUSLY, THE VENDOR MUST RECEIVE THE EXEMPTION CERTIFICATES THROUGH THE PURCHASING OFFICE, AND UNLESS THE PURCHASING AGENT "REQUIRES" THE SUBMISSION OF THE NECESSARY DATA WITH THE BID, CONFUSION AND MISUNDERSTANDING WILL BE INEVITABLE. WE FIND, BY INFORMAL INQUIRY, THAT OTHER DEPARTMENTS SHARE OUR UNCERTAINTY AS TO THE PROPER INTERPRETATION OF THE TWO DECISIONS.

ON THE ASSUMPTION THAT THE LATER DECISION IS CONTROLLING, THE NATIONAL ARCHIVES NOW PROPOSES TO ISSUE WITH FUTURE INVITATIONS FOR BIDS THE ENCLOSED FORM ENTITLED "NOTICE TO BIDDERS--- TAXES.'

THE LANGUAGE USED IN THIS FORM IS INTENDED TO AVOID ANY SUGGESTION OF COERCION OF BIDDERS WITH RESPECT TO THE INCLUSION, OR THE EXCLUSION, OF FEDERAL EXCISE TAXES, IN ACCORDANCE WITH THE DECISION OF JANUARY 31, 1938. HOWEVER, IT DIFFERS FROM THE FORM THEN UNDER CONSIDERATION IN THAT IT ANTICIPATES THE NEW LANGUAGE OF THE VENDOR'S CERTIFICATE, AS PROVIDED BY THE DECISION OF APRIL 2, 1938, AND REQUIRES THE BIDDER TO INDICATE THAT STATE AND LOCAL TAXES, IF APPLICABLE, ARE EXCLUDED. IF IT BE PROPER TO "REQUIRE" THE BIDDER TO INDICATE THE AMOUNTS OF STATE AND LOCAL TAXES, MAY HE NOT BE REQUIRED TO PRESENT THESE DATA IN A SPECIFIED MANNER? LIKEWISE, IF HE IS GIVEN THE OPTION OF INCLUDING THE FEDERAL TAX, WITHOUT EXPECTATION OF RECEIVING A TAX EXEMPTION CERTIFICATE WILL BE FURNISHED, IS IT NECESSARY TO OFFER THE ADDITIONAL PRIVILEGE OF INCLUDING THE TAX WITH THE EXPECTATION THAT AN EXEMPTION CERTIFICATE WILL BE FURNISHED AND A CORRESPONDING AMOUNT WILL BE DEDUCTED FROM THE BID PRICE? THIS OFFICE CAN SEE NO ADVANTAGE, COMMENSURATE WITH THE POSSIBLE DISADVANTAGES, IN USING A FORM WHICH PROVIDES AN UNNECESSARILY LARGE NUMBER OF CHOICES. ON THE CONTRARY THERE IS A DISTINCT ADVANTAGE IN USING A FORM WHICH REDUCES TO A MINIMUM THE POSSIBILITY OF ERROR IN ITS PREPARATION AND EVALUATION.

THE NATIONAL ARCHIVES IS NOW PREPARING SEVERAL INVITATIONS FOR BIDS AND THESE WILL BE ISSUED WITH THE ENCLOSED FORM. IT IS REQUESTED THAT YOU GIVE YOUR APPROVAL TO THIS PROCEDURE, OR ADVISE US WHEREIN IT IS OBJECTIONABLE, WITH SPECIFIC INSTRUCTIONS AS TO HOW THE REQUIREMENTS OF YOUR OFFICE MAY BE MET.

IT WILL BE APPRECIATED IF YOUR DECISION CAN BE EXPEDITED SO THAT, IF NECESSARY, AN ADDENDUM TO PENDING INVITATIONS FOR BIDS MAY BE ISSUED PRIOR TO THEIR OPENING MAY 17, 1938.

THE "DECISION" (A-51607, A-49009, APRIL 2, 1938, WAS, IN FACT, A CIRCULAR LETTER TO THE HEADS OF DEPARTMENTS, INDEPENDENT ESTABLISHMENTS, AND OTHERS CONCERNED, RELATIVE TO THE "TYPES OF CERTIFICATIONS BY CONTRACTORS AND VENDORS IN SUPPORT OF INVOICES OR PUBLIC VOUCHERS FOR PURCHASES AND SERVICES OTHER THAN PERSONAL; STANDARD FORM 1034 REVISED (GENERAL REGULATIONS NO. 51, SUPPLEMENT NO. 7, JUNE 8, 1937).'

IN SAID LETTER IT WAS STATED THAT:

BY REASON OF THE NUMEROUS AND VARIED TYPES OF SUPPLIES AND SERVICES, AND THE DIFFERENT STATUTORY AND CONTRACT REQUIREMENTS IMPOSED ON CERTAIN CLASSES OF EXPENDITURES, THE GENERAL CERTIFICATE NOW APPEARING ON STANDARD FORM 1034 REVISED, VOUCHER FOR PURCHASES AND SERVICES OTHER THAN PERSONAL, IS INSUFFICIENT TO PROPERLY COVER ALL TRANSACTIONS, AND ADDITIONAL CERTIFICATIONS MUST BE REQUIRED OF VENDORS AND CONTRACTORS TO COVER CERTAIN SPECIAL CLASSES OF PURCHASES, AND THE FORMS OF CERTIFICATIONS TO COVER SUCH SPECIAL CLASSES ARE HEREBY PRESCRIBED AS FOLLOWS: AND THERE FOLLOWED CERTAIN NUMBERED PARAGRAPHS PRESCRIBING CERTIFICATE FORMS WHICH WOULD BE ACCEPTABLE FOR USE IN CONNECTION WITH INVOICES AND PUBLIC VOUCHERS COVERING PURCHASES TO WHICH VARIOUS STATUTORY AND CONTRACT PROVISIONS ARE APPLICABLE. THE FIRST OF THOSE NUMBERED PARAGRAPHS WAS AS FOLLOWS:

1. GENERAL CERTIFICATE FOR PROCUREMENTS UNDER GENERAL CONTRACTS OR AGREEMENTS (NOW APPEARING ON STANDARD FORM 1034 REVISED) WHEN THE NATURE OF THE CONTRACT OR AGREEMENT DOES NOT REQUIRE ADDITIONAL CERTIFICATE/S):

"I CERTIFY THAT THE ABOVE BILL IS CORRECT AND JUST; THAT PAYMENT THEREFOR HAS NOT BEEN ECEIVED; AND THAT EXCEPT AS OTHERWISE NOTED ALL OF THE ARTICLES, MATERIALS, AND SUPPLIES FURNISHED UNDER PURCHASE ORDER NO. ----- -, IF UNMANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES, HAVE BEEN MINED OR PRODUCED IN THE UNITED STATES, AND IF MANUFACTURED ARTICLES, MATERIALS, AND SUPPLIES, THEY HAVE BEEN MANUFACTURED IN THE UNITED STATES SUBSTANTIALLY ALL FROM ARTICLES, MATERIALS, OR SUPPLIES MINED, PRODUCED, OR MANUFACTURED, AS THE CASE MAY BE, IN THE UNITED STATES.'

NOTE.--- ON FUTURE REPRINTS OF STANDARD FORM 1034 REVISED, THE WORDS "THAT STATE OR LOCAL SALES TAXES ARE NOT INCLUDED IN THE AMOUNT BILLED AND THAT TAX-EXEMPTION CERTIFICATES THEREFOR HAVE BEEN RECEIVED" WILL BE INCORPORATED IN THE VENDOR'S CERTIFICATE.

THE STATEMENT EMBODIED IN THE "NOTE," SUPRA, WAS NOT INTENDED, AND IS NOT TO BE CONSIDERED, AS MODIFYING OR ABROGATING IN ANY MEASURE THE DECISION OF JANUARY 31, 1938, 17 COMP. GEN. 615, TO THE SECRETARY OF AGRICULTURE, CITED IN THE FIRST PARAGRAPH OF YOUR LETTER, IN WHICH IT WAS POINTED OUT THAT THERE IS NO LEGAL AUTHORITY FOR UNDERTAKING TO REQUIRE A BIDDER TO SELL TO THE GOVERNMENT AT PRICES EXCLUSIVE OF APPLICABLE TAXES, WHETHER FEDERAL, STATE, OR LOCAL. THE CERTIFICATE "THAT STATE AND LOCAL TAXES ARE NOT INCLUDED IN THE AMOUNT BILLED, AND THAT TAX EXEMPTION CERTIFICATES THEREFOR HAVE BEEN RECEIVED," PRESCRIBED FOR INCORPORATION IN THE VENDOR'S CERTIFICATE FORM ON REPRINTS OF STANDARD FORM 1034, REVISED, WAS INTENDED FOR USE BY THE VENDOR ONLY WHEN APPLICABLE. THAT IS TO SAY, IF THE SALES TO THE GOVERNMENT COVERED BY INVOICES OF PUBLIC VOUCHERS SUBMITTED ACTUALLY WERE OR HAVE BEEN MADE EXCLUSIVE OF STATE OR LOCAL TAXES WHICH ARE APPLICABLE TO SUCH SALES GENERALLY BUT WITH RESPECT TO WHICH THERE IS AN EXEMPTION ON SALES TO THE FEDERAL GOVERNMENT, THE CERTIFICATE TO THAT EFFECT SHOULD BE COMPLETED BY THE CONTRACTOR, OTHERWISE THE STATEMENT TO SUCH EFFECT INCLUDED IN THE CERTIFICATE WOULD BE FOR DELETION BY THE CONTRACTOR IN SUBMITTING INVOICES OR VOUCHERS.

ACCORDINGLY, YOU ARE INFORMED THAT THE FORM PROVISION SET OUT AS PARAGRAPH 3, PAGE 1 OF YOUR SUBMISSION IS FREE FROM OBJECTION AND PROPER FOR USE IN INVITATIONS FOR BIDS, IT BEING UNDERSTOOD, OF COURSE, THAT WITH RESPECT TO STATE AND LOCAL TAXES THE BID WILL BE EVALUATED AS MADE EXCEPT WEHN THE BIDDER CONSENTS TO DEDUCTION OF THE STATED AMOUNT OF SUCH TAXES FROM THE BID PRICE. HOWEVER, THIS OFFICE IS NOT REQUIRED TO OBJECT TO THE "NOTICE TO BIDDERS--- TAXES" INCLOSED WITH YOUR SUBMISSION.

THERE IS INCLOSED A COPY OF MY DECISION A-93797, MAY 26, 1938, TO THE SECRETARY OF THE INTERIOR, WHICH APPEARS TO ANSWER ADEQUATELY AND FULLY THE OTHER POINTS RAISED IN YOUR SUBMISSION.