A-96978, SEPTEMBER 14, 1938, 18 COMP. GEN. 227

A-96978: Sep 14, 1938

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IS. MERELY CHANGES THE REQUIREMENT TO THE EXTENT THAT WHEN SO EXCHANGED ONLY THE NET CASH PAID FOR THE NEW EQUIPMENT IS CHARGED TO THE APPROPRIATION. WHEN USED EQUIPMENT IS TO BE DISPOSED OF AT THE SAME TIME THAT NEW EQUIPMENT OF THAT KIND IS PURCHASED. OF A REQUEST FOR BOTH EXCHANGE AND CASH BIDS ON THE USED EQUIPMENT IS MANDATORY. SPECIFIC STATUTORY AUTHORITY TO EXCHANGE USED EQUIPMENT "IN WHOLE OR IN PART PAYMENT" FOR NEW EQUIPMENT DOES NOT REQUIRE ANY CHANGE IN THE APPLICATION OF THE RULE OVER WHAT IS REQUIRED WHEN THE AUTHORITY IS MERELY TO EXCHANGE IN PART PAYMENT. IS AS FOLLOWS: IN A NUMBER OF DECISIONS DATING BACK AS FAR AS NOVEMBER 13. THAT A TRADE-IN COULD NOT BE EFFECTED FOR THE NEW EQUIPMENT UNLESS CASH OFFERS WERE ALSO SOLICITED FOR THE USED EQUIPMENT.

A-96978, SEPTEMBER 14, 1938, 18 COMP. GEN. 227

EQUIPMENT - USED - DISPOSITION - ACCOUNTING FOR VALUE AND EXCHANGE V. CASH SALE THE VALUE OF OLD EQUIPMENT, WHETHER DISPOSED OF BY EXCHANGE OR SALE, IS-- - IN THE ABSENCE OF STATUTORY AUTHORITY TO DO OTHERWISE--- FOR DEPOSIT TO THE CREDIT OF MISCELLANEOUS RECEIPTS IN ACCORDANCE WITH SECTION 3618, REVISED STATUTES, THE GROSS PRICE OF THE NEW EQUIPMENT BEING CHARGED TO THE APPROPRIATION, AND STATUTORY AUTHORITY TO EXCHANGE OLD EQUIPMENT FOR NEW, WHETHER IN WHOLE OR IN PART PAYMENT, MERELY CHANGES THE REQUIREMENT TO THE EXTENT THAT WHEN SO EXCHANGED ONLY THE NET CASH PAID FOR THE NEW EQUIPMENT IS CHARGED TO THE APPROPRIATION--- NO DEPOSIT TO THE CREDIT OF MISCELLANEOUS RECEIPTS BEING REQUIRED. WHEN USED EQUIPMENT IS TO BE DISPOSED OF AT THE SAME TIME THAT NEW EQUIPMENT OF THAT KIND IS PURCHASED, THE DISPOSITION OF THE USED EQUIPMENT BECOMES AN ESSENTIAL PART OF THE PURCHASE OF THE NEW EQUIPMENT, AND HENCE, THE INCLUSION IN THE ADVERTISING FOR THE NEW EQUIPMENT REQUIRED UNDER SECTION 3709, REVISED STATUTES, OF A REQUEST FOR BOTH EXCHANGE AND CASH BIDS ON THE USED EQUIPMENT IS MANDATORY, AND SPECIFIC STATUTORY AUTHORITY TO EXCHANGE USED EQUIPMENT "IN WHOLE OR IN PART PAYMENT" FOR NEW EQUIPMENT DOES NOT REQUIRE ANY CHANGE IN THE APPLICATION OF THE RULE OVER WHAT IS REQUIRED WHEN THE AUTHORITY IS MERELY TO EXCHANGE IN PART PAYMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, SEPTEMBER 14, 1938:

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

IN A NUMBER OF DECISIONS DATING BACK AS FAR AS NOVEMBER 13, 1923, YOUR OFFICE HAS CONSISTENTLY RULED, REGARDLESS OF THE WORDING OF STATUTES AUTHORIZING THE EXCHANGE OF OLD EQUIPMENT IN THE PURCHASE OF NEW, THAT A TRADE-IN COULD NOT BE EFFECTED FOR THE NEW EQUIPMENT UNLESS CASH OFFERS WERE ALSO SOLICITED FOR THE USED EQUIPMENT, AND SUCH CASH OFFERS WERE LOWER THAN THE VALUE COMPETITIVELY PLACED UPON THE EQUIPMENT FOR TRADE-IN PURPOSES. (SEE, INTER ALIA, 3 COMP. GEN. 04; 7 COMP. GEN. 230, 685; 15 COMP. GEN. 810 (811); 16 COMP. GEN. 168; 16 COMP. GEN. 351.) SEE ALSO 26 COMPTROLLER OF THE TREASURY 534.

THIS DEPARTMENT HAS ACCEPTED THE RULE IN GOOD FAITH AND HAS CONSCIENTIOUSLY APPLIED IT IN ALL OF ITS EXCHANGE TRANSACTIONS. AS A MATTER OF FACT, PARAGRAPH 4121 OF THE REGULATIONS OF THE DEPARTMENT OF AGRICULTURE INDICATES THAT "THE DEPARTMENT IS AUTHORIZED UNDER VARIOUS LAWS TO EXCHANGE SPECIFIED ARTICLES OF EQUIPMENT" AND STATES THAT "IN THE SOLICITATION OF BIDS, CASH OFFERS AS WELL AS TRADE-IN OFFERS WILL BE SOLICITED AND IF THE CASH OFFER FOR ANY ARTICLE EXCEEDS THE EXCHANGE OFFER, THE CASH OFFER IS FOR ACCEPTANCE, IN WHICH EVENT THE APPROPRIATE APPROPRIATION MUST BEAR THE FULL COST OF THE NEW EQUIPMENT AND THE PROCEEDS OF THE CASH SALE MUST BE DEPOSITED IN THE UNITED STATES TREASURY AS A RECEIPT FROM SALE OF SURPLUS PROPERTY.'

INASMUCH AS THE APPLICATION OF THE RULE, PARTICULARLY WITH RESPECT TO THE PURCHASE OF MOTOR VEHICLES, IS WORKING A HARDSHIP UPON CERTAIN APPROPRIATIONS OF THE DEPARTMENT, WE DEEM IT ADVISABLE TO INVITE YOUR ATTENTION TO CERTAIN FACTS WHICH, THIS DEPARTMENT BELIEVES, DISTINGUISH IT FROM OTHER DEPARTMENTS AND AGENCIES OF THE GOVERNMENT INSOFAR AS THE GENERAL APPLICABILITY OF THE RULE OF THE FOREGOING DECISIONS IS CONCERNED.

AN EXAMINATION OF THE LEGISLATIVE HISTORY OF EXCHANGE PROVISIONS IN STATUTES RELATING TO THE DEPARTMENT OF AGRICULTURE REVEALS THE FOLLOWING:

THE ACT OF AUGUST 10, 1912, 37 STAT. 296, AUTHORIZED THE SECRETARY OF AGRICULTURE THEREAFTER TO "EXCHANGE TYPEWRITERS AND COMPUTING, ADDRESSING, AND DUPLICATING MACHINES PURCHASED FROM ANY LUMP-FUND APPROPRIATION OF THE DEPARTMENT OF AGRICULTURE.' NOTE PARTICULARLY THE UNMODIFIED USAGE OF THE WORD "EXCHANGE" IN THIS ACT.

SIMILAR UNMODIFIED LANGUAGE WAS USED IN THE ACT OF JUNE 30, 1914, 38 STAT. 441, ALLOWING THE SECRETARY TO "EXCHANGE GENERAL SCIENTIFIC APPARATUS AND LABORATORY EQUIPMENT.'

THE ACT OF MARCH 4, 1915, 38 STAT. 1107, AUTHORIZED THE SECRETARY TO "EXCHANGE BOOKS AND PERIODICALS OF THE LIBRARY NOT NEEDED FOR PERMANENT USE FOR OTHER BOOKS AND PERIODICALS.' THE APPARENT INTENT OF CONGRESS IN THIS ACT WAS TO ENABLE THE SECRETARY TO EXCHANGE SUCH BOOKS AND PERIODICALS WITH OR WITHOUT REFERENCE TO PURCHASES.

THE ACT OF MARCH 4, 1915, SUPRA, ALSO AUTHORIZED THE SECRETARY THEREAFTER TO "SELL IN THE OPEN MARKET OR TO EXCHANGE FOR OTHER LIVESTOCK SUCH ANIMALS OR ANIMAL PRODUCTS AS CEASE TO BE NEEDED IN THE WORK OF THE DEPARTMENT.' NOTE IN THIS ITEM THE SPECIFIED ALTERNATIVE OF "SELLING" OR ,EXCHANGING.'

BY 1917 THE USE OF MOTOR VEHICLES HAD BECOME AN ESTABLISHED FACTOR IN THE WORK OF THE DEPARTMENT, AND CONGRESS, THEREFORE, IN THE ACT OF MARCH 4, 1917, 39 STAT. 1167, AUTHORIZED THE SECRETARY THEREAFTER TO "EXCHANGE MOTOR-PROPELLED OR HORSE-DRAWN PASSENGER-CARRYING VEHICLES IN PART PAYMENT FOR NEW MOTOR-PROPELLED OR HORSE-DRAWN PASSENGER CARRYING VEHICLES AUTHORIZED TO BE PURCHASED BY HIM, TO BE USED FOR THE SAME PURPOSES AS THOSE PROPOSED TO BE EXCHANGE * * *.' HERE, FOR THE FIRST TIME, THE ELEMENT OF "PART PAYMENT" WAS INJECTED INTO THE EXCHANGE PROVISION, AND IT IS TO BE NOTED THAT THIS ACT, IN CONTRADISTINCTION TO THE ACT OF MARCH 4, 1915, SUPRA, WAS SILENT IN THE MATTER OF SELLING THE EQUIPMENT AS AN ALTERNATIVE OF TRADING IT IN.

THE ACT OF MARCH 31, 1920, 41 STAT. 728, SIMILARLY AUTHORIZED THE SECRETARY THEREAFTER TO ,EXCHANGE USED PARTS, ACCESSORIES, TIRES, OR EQUIPMENT OF MOTOR-PROPELLED AND HORSE-DRAWN VEHICLES IN PART PAYMENT FOR NEW PARTS, ACCESSORIES, TIRES, OR EQUIPMENT OF SUCH VEHICLES AUTHORIZED TO BE PURCHASED BY HIM * * *.'

BEGINNING IN 1925, THE LAST TWO OF THE FOREGOING LEGISLATIVE PROVISIONS WERE AMALGAMATED AND INCLUDED AS A PROVISION IN THE APPROPRIATION ACT OF THE DEPARTMENT FOR THAT YEAR. SINCE THAT TIME, THE ITEM HAS BEEN ANNUALLY INCLUDED IN DEPARTMENTAL APPROPRIATION ACTS. THE ADDITION OF THE WORD "WHOLE" HAS BEEN THE ONLY CHANGE; SO THAT THE PROVISION APPEARS IN THE DEPARTMENT OF AGRICULTURE APPROPRIATION ACT, 1939, IN THE FOLLOWING LANGUAGE:

"PROVIDED FURTHER, THAT THE SECRETARY OF AGRICULTURE MAY EXCHANGE MOTOR- PROPELLED AND HORSE-DRAWN VEHICLES, TRACTORS, ROAD EQUIPMENT, AND BOATS, AND PARTS, ACCESSORIES, TIRES, OR EQUIPMENT THEREOF, IN WHOLE OR IN PART PAYMENT FOR VEHICLES, TRACTORS, ROAD EQUIPMENT OR BOATS, OR PARTS, ACCESSORIES, TIRES OR EQUIPMENT OF SUCH VEHICLES, TRACTORS, ROAD EQUIPMENT, OR BOATS PURCHASED BY HIM.'

THE ITALICIZED LANGUAGE DISTINGUISHES THIS ANNUAL PROVISION IN THE DEPARTMENT OF AGRICULTURE APPROPRIATION ACT FROM PROVISIONS COVERING THE SAME SUBJECT MATTER IN THE APPROPRIATION ACTS OF OTHER DEPARTMENTS AND AGENCIES. THE APPARENT MEANING OF THIS LANGUAGE, IT IS BELIEVED, IS ANTAGONISTIC TO THE RULE REQUIRING THE SOLICITATION AND RECEIPT OF CASH OFFERS IN THE PURCHASES OF SUCH EQUIPMENT. WE HAVE SEARCHED IN VAIN FOR ANY INDICATION THAT CONGRESS, IN ENACTING THE FOREGOING LEGISLATION, INTENDED TO PLACE ANY SUCH QUALIFICATION ON ITS APPLICATION AS THE FOREGOING DECISIONS REQUIRE. THE ONLY LEGISLATIVE REFERENCES DISCOVERABLE IN POINT ARE CONTAINED IN THE REPORTS OF THE COMMITTEE ON AGRICULTURE OF THE HOUSE OF REPRESENTATIVES. IN THE REPORT ACCOMPANYING THE AGRICULTURE APPROPRIATION BILL FOR 1921 (REPORT NO. 596, 66TH CONGRESS,2ND SESSION, PAGE 35), THE COMMITTEE MAKES THE SIMPLE STATEMENT THAT "THIS LEGISLATION IS RECOMMENDED IN ORDER TO PROVIDE AUTHORITY FOR THE EXCHANGE OF PARTS OF AUTOMOBILES IN PART PAYMENT FOR SIMILAR NEW PARTS FOR THEIR REPLACEMENTS, WITH A VIEW TO PLACING THE OPERATION OF AUTOMOBILES BY THE DEPARTMENT ON AN ECONOMICAL AND BUSINESS-LIKE BASIS.' A SIMILAR UNQUALIFIED STATEMENT IS MADE IN HOUSE REPORT NO. 223, 68TH CONGRESS, 1ST SESSION, ACCOMPANYING THE AGRICULTURAL APPROPRIATION BILL FOR 1925, DECLARING THAT "ANOTHER NEW PROVISION RECOMMENDED BY THE COMMITTEE IS ONE AUTHORIZING THE SECRETARY OF AGRICULTURE TO EXCHANGE PAYMENT FOR VEHICLES, BOATS, ETC., PURCHASED BY HIM.'

IF CONGRESS HAD INTENDED TO REQUIRE THE DEPARTMENT OF AGRICULTURE TO SECURE CASH OFFERS WHENEVER SUCH EQUIPMENT AS IS CONTEMPLATED BY THE FOREGOING LEGISLATION IS AVAILABLE FOR EXCHANGE PURPOSES, IT WOULD SEEM THAT SUCH INTENT ON THE PART OF CONGRESS WOULD HAVE BEEN DISCLOSED EITHER IN THE STATUTES THEMSELVES OR IN THE UNDERLYING LEGISLATIVE HISTORY. THE OPPOSITE INFERENCE IS TO BE DRAWN FROM THE WORDING OF THE LEGISLATION AND THE FOREGOING QUOTATIONS.

THAT THE INTENT OF CONGRESS IN ENACTING THE FOREGOING LEGISLATION IS CONTRARY TO THE RULE OF THE DECISIONS CITED IS FURTHER ILLUSTRATED BY CERTAIN DATA SUBMITTED BY THE DEPARTMENT OF AGRICULTURE TO THE BUREAU OF THE BUDGET AND, IN TURN, BY THAT BUREAU TO CONGRESS IN THE BUDGET THAT GOVERNS DEPARTMENTAL APPROPRIATIONS FOR EACH FISCAL YEAR. THE ACT OF JULY 16, 1914, SECTION 5, 38 STAT. 508, REQUIRES THAT IN THE ESTIMATES FOR THE FISCAL YEAR 1916, AND SUBSEQUENT FISCAL YEARS,"THERE SHALL BE SUBMITTED IN DETAIL ESTIMATES FOR SUCH NECESSARY APPROPRIATIONS AS ARE INTENDED TO BE USED FOR PURCHASE, MAINTENANCE, REPAIR, OR OPERATION OF ALL MOTOR- PROPELLED OR HORSE-DRAWN PASSENGER CARRYING VEHICLES, SPECIFYING THE SUMS REQUIRED, THE PUBLIC PURPOSE FOR WHICH SAID VEHICLES ARE INTENDED, AND THE OFFICERS OR EMPLOYEES BY WHOM THE SAME ARE TO BE USED.' THESE DATA ARE SUBMITTED TO THE BUREAU OF THE BUDGET AND ARE UTILIZED IN FORMULATING THE BUDGETARY ESTIMATES, OF WHICH THE FOLLOWING EXCERPT FROM THE BUDGET OF THE UNITED STATES GOVERNMENT FOR THE FISCAL YEAR ENDING JUNE 30, 1939, IS TAKEN:

TABLE.

NEW VEHICLES OLD VEHICLES TO BE NEW COST OF APPROPRIATION

EXCHANGED NEW CAR

NUMBER GROSS COST NUMBER ALLOWANCE

ESTIMATED FOOD HABITS OF BIRDS AND ANIMALS ------ 1

$750 1 $100 $650

IT IS TO BE NOTED FROM THE BUDGET EXCERPT ABOVE THAT AUTHORIZATIONS FOR THE PURCHASE OF PASSENGER-CARRYING VEHICLES ARE BASED ON THE TOTAL OF THE NET COST FIGURES, AND NOT THE GROSS COST FIGURES. IN THE INSTANCE HERE CITED, ASSUMING THAT THE APPROPRIATION WHICH THE SCHEDULE GOVERNS WAS IN FACT BASED ON THE SCHEDULE, IT IS CLEAR THAT CONGRESS PROVIDED ONLY $650 FOR A PASSENGER-CARRYING VEHICLE, WHICH WOULD COST $750 EXCEPT FOR THE TRADE-IN VALUE OF $100, AND FROM THIS THE LOGICAL INFERENCE MIGHT BE DRAWN THAT THE PURPOSE AND INTENT OF THIS AUTHORITY WOULD BE DEFEATED IF A CASH OFFER WERE REQUIRED AND THE PROCEEDS DEPOSITED TO THE CREDIT OF MISCELLANEOUS RECEIPTS, THE END RESULT OF WHICH WOULD MEAN THAT THE PURCHASE PRICE FOR THE NEW VEHICLE WOULD BE IN EXCESS OF THE AMOUNT OF $650 PROVIDED.

RECENT CONTRACTS AWARDED BY THIS DEPARTMENT INDICATE, FROM A DEPARTMENTAL STANDPOINT, THE DISADVANTAGE OF SOLICITING CASH SALE OFFERS AND THE HARDSHIP THAT IS WORKED ON THE APPROPRIATION INVOLVED:

TABLE.

CONTRACT EXCHANGE CASH OFFER

ALLOWANCE U.S.D.A. NO. 9183 --------------------------- $140 $150 U.S.D.A. NO. 7051 --------------------------- 195200 U.S.D.A. NO. 7051 --- --------- -------------- 180 185

THESE TRANSACTIONS PRODUCED A MONETARY GAIN OF $20 TO THE GOVERNMENT AND A LOSS OF $515 IN THE APPROPRIATION INVOLVED. THE SMALL MONETARY GAIN OF $20, IT IS SUBMITTED, WAS ENTIRELY OFFSET BY THE ADMINISTRATIVE EXPENSE OCCASIONED IN THE NECESSITY OF SECURING CASH OFFERS. WHERE SUCH RESULTS ARE INEVITABLE, IT WOULD SEEM TO BE A MATTER PRIMARILY FOR DETERMINATION BY THE HEAD OF THE DEPARTMENT OR ESTABLISHMENT CONCERNED AS TO WHETHER CASH OFFERS SHOULD BE SOLICITED.

IN SEVERAL OF THE DECISIONS REGARDING CASH OFFERS, IT IS INDICATED THAT THE NONSOLICITATION OF CASH OFFERS IS CONTRARY TO THE RULE OF COMPETITION CONTEMPLATED BY SECTION 3709, REVISED STATUTES, AND IS ANTAGONISTIC TO THE INTERESTS OF THE UNITED STATES. IT IS DIFFICULT TO DETERMINE WHETHER THESE DECISIONS REST THE RULE SOLELY ON SECTION 3709 OR UPON THE INTERESTS OF THE UNITED STATES JOINTLY OR SEVERALLY. AS WE READ SECTION 3709, IT HAS NO REFERENCE TO THE SALE OR EXCHANGE BY THE GOVERNMENT OF USED EQUIPMENT, BUT RELATES SOLELY TO THE PURCHASE OF SUPPLIES OR SERVICES. THERE WOULD SEEM TO BE COMPLETE COMPLIANCE WITH SECTION 3709 IN PROCEDURE WHEREBY INVITATIONS FOR BIDS ON NEW AUTOMOBILE EQUIPMENT, WHICH INVOLVE REPLACEMENT, ARE SOLICITED ON THE BASIS OF THE PURCHASE PRICE OF NEW EQUIPMENT, WITH TRADE-IN OR EXCHANGE ALLOWANCE FOR OLD EQUIPMENT, AND ARE NATIONALLY CIRCULARIZED TO ALL MANUFACTURERS AND NEW-PART DEALERS IN SUCH EQUIPMENT. IN A DECISION OF SEPTEMBER 15, 1936, TO THE SECRETARY OF AGRICULTURE, 16 COMP. GEN. 241, YOU STATE "THE EXCHANGE OF OLD PROPERTY IN PARTIAL PAYMENT FOR NEW PROPERTY IS IN EFFECT THE SALE OF THE OLD PROPERTY * * *.' IF THIS IS SO, THEN CLEARLY SECTION 3709, ON THE BASIS OF YOUR OWN REASONING, IS NOT APPLICABLE.

IN THIS CONNECTION, OUR ATTENTION HAS BEEN INVITED TO A PERTINENT STATEMENT IN THE ANNUAL REPORT OF THE ACTING COMPTROLLER GENERAL OF THE UNITED STATES FOR THE FISCAL YEAR 1937, PAGE 67:

"IT SEEMS AS ESSENTIAL THAT THERE BE ADVERTISING IN THE SALE OF GOVERNMENT PROPERTY AS WHEN PURCHASES ARE BEING MADE FOR THE GOVERNMENT. THE REQUIREMENT THAT THERE BE COMPETITION IN SUCH MATTERS HAS ONLY BEEN DEFINITELY APPLIED TO PURCHASES--- SECTION 3709, REVISED STATUTES. WHILE IT HAS BEEN THE PRACTICE OF THIS OFFICE TO SUGGEST THAT, AS A MATTER OF GOOD BUSINESS, BIDS SHOULD BE SOLICITED IN THE SALE OF GOVERNMENT PROPERTY, THERE IS NO LAW DEFINITELY REQUIRING SUCH ACTION.

"IT IS BELIEVED THAT IT WOULD BE IN THE INTEREST OF THE UNITED STATES TO ENACT LEGISLATION SPECIFICALLY COVERING THE MATTER OF COMPETITION IN MAKING SALES. SUCH A LAW SHOULD SPECIFY THE METHODS OF ADVERTISING CONSIDERED ADEQUATE, AS, (1) AUCTION SALES, ADVERTISED IN A CERTAIN NUMBER OF LOCAL PAPERS A CERTAIN NUMBER OF TIMES, AND CIRCULARS SENT TO ALL LOCAL DEALERS; (2) ADVERTISING FOR BIDS UNDER SIMILAR REQUIREMENTS.'

WHERE THE ADMINISTRATIVE EXPENSES INVOLVED OFFSET THE MONETARY GAINS, IT IS OBVIOUSLY NOT IN THE INTERESTS OF THE GOVERNMENT TO REQUIRE THE SECURING OF CASH OFFERS, AND IN VIEW OF THE SPECIFIC AUTHORITY GIVEN BY CONGRESS TO THIS DEPARTMENT TO "EXCHANGE * * * IN WHOLE OR IN PART PAYMENT," WE ARE OF THE OPINION THAT CONGRESS HAS DETERMINED THAT THE INTERESTS OF THE GOVERNMENT WOULD BE SUFFICIENTLY PROTECTED BY ALLOWING THE DEPARTMENT OF AGRICULTURE TO MAKE SUCH EXCHANGES WITHOUT THE NECESSITY OF SECURING CASH OFFERS. IN SHORT, WE BELIEVE THAT THERE IS A FUNDAMENTAL DIFFERENCE BETWEEN TRANSACTIONS THAT INVOLVE THE EXCHANGE OF USED MATERIAL OR EQUIPMENT IN WHOLE OR IN PART PAYMENT FOR NEW EQUIPMENT, WHERE THERE EXISTS NO AUTHORITY OF LAW FOR SUCH EXCHANGE, AND TRANSACTIONS WHERE SUCH EXCHANGE IS SPECIFICALLY AUTHORIZED BY LAW. WE DO NOT DOUBT THAT IN THE FIRST INSTANCE THE TRADE-IN VALUE OR THE INDEPENDENT CASH OFFER VALUE OF THE USED EQUIPMENT IS PROPERLY FOR DEPOSIT TO THE CREDIT OF MISCELLANEOUS RECEIPTS AND THAT INDEPENDENT CASH OFFERS MUST BE SECURED, BUT IT SEEMS EQUALLY APPARENT THAT WHERE CONGRESS HAS GRANTED SUCH SPECIFIC AUTHORITY, THE INTENT OF THE LAWMAKERS WAS THAT THE APPROPRIATION CHARGEABLE WITH THE NEW EQUIPMENT SHOULD ENJOY THE BENEFIT OF THE TRADE-IN ALLOWANCE, AND THAT THE AMOUNT OF THE APPROPRIATION WAS DEFINITELY FIXED BY CONGRESS IN THE LIGHT OF SUCH INTENT. THIS SEEMS PARTICULARLY TRUE WITH RESPECT TO AUTOMOBILE EQUIPMENT IN VIEW OF THE REQUIREMENTS OF THE ACT OF JULY 16, 1914, REQUIRING DETAILED BUDGET ESTIMATES FOR MOTOR-PROPELLED PASSENGER- CARRYING VEHICLES.

TO SUMMARIZE, WE BELIEVE THAT THE LANGUAGE OF THE LEGISLATION RELIED UPON, PLUS THE CIRCUMSTANCES WE HAVE CITED, WILL WARRANT THE ABROGATION OF THE RULE RELATING TO THE NECESSITY OF SECURING CASH OFFERS OR THAT YOU MIGHT FIND, AT LEAST, THAT THE LEGISLATION IS SUSCEPTIBLE OF A CONSTRUCTION THAT WOULD ALLOW THE DEPARTMENT TO UTILIZE THE RECEIPTS OF SUCH CASH SALES IN THE PURCHASING OF THE MATERIALS IN QUESTION INSTEAD OF DEPOSITING SUCH MONIES TO THE CREDIT OF MISCELLANEOUS RECEIPTS.

WE INVITE YOUR ATTENTION TO THIS SITUATION, NOT IN THE SPIRIT OF OPPOSING THE BEST INTERESTS OF THE GOVERNMENT, BUT AS A PROTECTION BY THIS DEPARTMENT OF THE MAXIMUM RIGHTS GRANTED TO IT BY CONGRESS. A CAREFUL CONSIDERATION ON YOUR PART OF THIS MATTER AND A REPLY BASED THEREON WILL BE APPRECIATED.

THE VALUE OF OLD EQUIPMENT, WHETHER DISPOSED OF BY EXCHANGE OR SALE, IS-- - IN THE ABSENCE OF STATUTORY AUTHORITY TO DO OTHERWISE--- FOR DEPOSIT TO THE CREDIT OF MISCELLANEOUS RECEIPTS IN ACCORDANCE WITH SECTION 3618, REVISED STATUTES, THE GROSS PRICE OF THE NEW EQUIPMENT BEING CHARGED TO THE APPROPRIATION. FOR AN EXAMPLE OF SUCH STATUTORY AUTHORITY, SEE THE DISTRICT OF COLUMBIA APPROPRIATION ACT OF MAY 18, 190, 36 STAT. 382, RELATIVE TO EXCHANGE OF TYPEWRITERS, ADDING MACHINES AND PIANOS, BY THE COMMISSIONERS OF THE DISTRICT OF COLUMBIA. THE PUBLISHED DECISIONS OF FORMER COMPTROLLERS OF THE TREASURY SHOW THE REQUIREMENT TO HAVE BEEN ESTABLISHED AT LEAST SINCE 1899 OF DEPOSITING TO CREDIT OF MISCELLANEOUS RECEIPTS THE VALUE IN THE EXCHANGE OF OLD ARTICLES FOR NEW. STATUTORY AUTHORITY TO EXCHANGE OLD EQUIPMENT FOR NEW, WHETHER IN WHOLE OR IN PART PAYMENT, MERELY CHANGES THE STATED RULE TO THE EXTENT THAT WHEN SO EXCHANGED ONLY THE NET CASH PAID FOR THE NEW EQUIPMENT IS CHARGED TO THE APPROPRIATION--- NO DEPOSIT TO CREDIT OF MISCELLANEOUS RECEIPTS BEING REQUIRED. SUCH STATUTORY AUTHORITY, HOWEVER, DOES NOT MAKE IT ANY THE LESS THE DUTY OF THE ADMINISTRATIVE OFFICE TO EXPEND ITS APPROPRIATIONS TO THE BEST INTERESTS OF THE UNITED STATES, AS A WHOLE, AND PARTICULARLY SO WHERE CONGRESS HAS FIXED A PRICE LIMITATION UPON AN ARTICLE--- SUCH AS AUTOMOBILES AND TYPEWRITERS. IT HAS BEEN THE EXPERIENCE OF THIS OFFICE IN THE PAST THAT IN A LARGE NUMBER OF CASES A BETTER CASH OFFER CAN BE SECURED FOR USED EQUIPMENT THAN THE VALUE OFFERED IN EXCHANGE.

IT IS TRUE, AS STATED IN MY ANNUAL REPORT FOR 1937, THAT HERE IS NO STATUTORY AUTHORITY REQUIRING THE ADVERTISING OF USED EQUIPMENT FOR SALE, ALTHOUGH IT IS CUSTOMARY FOR THE RESPECTIVE GOVERNMENT AGENCIES TO DO SO WHENEVER ANY SUBSTANTIAL QUANTITY OF USED EQUIPMENT IS OFFERED FOR SALE TO THE PUBLIC. HOWEVER, WHEN USED EQUIPMENT IS TO BE DISPOSED OF AT THE SAME TIME THAT NEW EQUIPMENT OF THAT KIND IS PURCHASED, THE DISPOSITION OF THE USED EQUIPMENT BECOMES AN ESSENTIAL PART OF THE PURCHASE OF THE NEW EQUIPMENT AND, THEREFORE, THE INCLUSION IN THE ADVERTISING FOR THE NEW EQUIPMENT REQUIRED UNDER SECTION 3709, REVISED STATUTES, OF A REQUEST FOR BOTH EXCHANGE AND CASH BIDS ON THE USED EQUIPMENT IS MANDATORY. YOUR SUBMISSION SHOWS THAT YOUR OFFICE HAS RECOGNIZED AND FOLLOWED THIS RULE FOR YEARS AND, ACCORDINGLY, ANY ADMINISTRATIVE HARDSHIP RESULTING FROM ITS PRESENT APPLICATION TO THE DEPARTMENT'S CURRENT APPROPRIATIONS IS A MATTER FOR PRESENTATION TO THE CONGRESS RATHER THAN TO THIS OFFICE. THE INCLUSION OF SPECIFIC AUTHORITY TO EXCHANGE USED EQUIPMENT "IN WHOLE OR IN PART PAYMENT" FOR NEW EQUIPMENT DOES NOT REQUIRE ANY CHANGE IN THE APPLICATION OF THE RULE OVER WHAT IS REQUIRED WHEN THE AUTHORITY IS MERELY TO EXCHANGE IN PART PAYMENT.