B-114365(7), DEC 27, 1961

B-114365(7): Dec 27, 1961

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PRECIS-UNAVAILABLE SECRETARY OF DEFENSE: WE HAVE RECEIVED A LETTER DATED NOVEMBER 3. REQUESTING A DEVIATION FROM THE REQUIREMENTS OF 7 GAO 5015.10 WHERE CASH DISCOUNTS OFFERED ARE $1 OR LESS. WE ARE ADDRESSING OUR REPLY TO YOU. THE LETTER FROM THE ARMY INDICATES THAT THE COST OF SPECIAL HANDLING OF INVOICES ON WHICH THE AVAILABLE DISCOUNTS ARE SMALL IS UNECONOMICAL. PROPOSES TO DISCONTINUE SPECIAL HANDLING OF INVOICES ON WHICH DISCOUNTS ARE $1 OR LESS. TO HANDLE SUCH INVOICES IN THE SAME WAY AS INVOICES ON WHICH NO DISCOUNTS ARE OFFERED. TO TAKE THE DISCOUNTS IF THE INVOICES ARE PAID WITHIN THE DISCOUNT PERIOD. THE PROVISION QUOTED ABOVE WAS PLACED IN THE GAO MANUAL ON THE PREMISE THAT THE TAKING OF CASH DISCOUNTS WAS AN ECONOMICAL PRACTICE THAT SHOULD BE FOLLOWED BY ALL AGENCIES.

B-114365(7), DEC 27, 1961

PRECIS-UNAVAILABLE

SECRETARY OF DEFENSE:

WE HAVE RECEIVED A LETTER DATED NOVEMBER 3, 1961, FROM THE OFFICE OF THE CHIEF OF FINANCE, DEPARTMENT OF THE ARMY, REQUESTING A DEVIATION FROM THE REQUIREMENTS OF 7 GAO 5015.10 WHERE CASH DISCOUNTS OFFERED ARE $1 OR LESS. THE GAO REQUIREMENT PROVIDES THAT "WHEN CASH DISCOUNT HAS BEEN OFFERED FOR PROMPT PAYMENT, EVERY EFFORT SHOULD BE MADE TO PROCESS THE INVOICE WITHIN THE DISCOUNT PERIOD AND IN ACCORDANCE WITH THE SPECIFIC TERMS UPON WHICH THE DISCOUNT HAS BEEN OFFERED ***." AS THE MATTER WOULD APPEAR TO BE OF CONCERN THROUGHOUT THE DEPARTMENT OF DEFENSE, WE ARE ADDRESSING OUR REPLY TO YOU.

THE LETTER FROM THE ARMY INDICATES THAT THE COST OF SPECIAL HANDLING OF INVOICES ON WHICH THE AVAILABLE DISCOUNTS ARE SMALL IS UNECONOMICAL. THE ARMY, THEREFORE, PROPOSES TO DISCONTINUE SPECIAL HANDLING OF INVOICES ON WHICH DISCOUNTS ARE $1 OR LESS; AND TO HANDLE SUCH INVOICES IN THE SAME WAY AS INVOICES ON WHICH NO DISCOUNTS ARE OFFERED, BUT TO TAKE THE DISCOUNTS IF THE INVOICES ARE PAID WITHIN THE DISCOUNT PERIOD.

THE PROVISION QUOTED ABOVE WAS PLACED IN THE GAO MANUAL ON THE PREMISE THAT THE TAKING OF CASH DISCOUNTS WAS AN ECONOMICAL PRACTICE THAT SHOULD BE FOLLOWED BY ALL AGENCIES. HOWEVER, IF SPECIAL HANDLING IS NECESSARY TO ASSURE THE TAKING OF DISCOUNTS AND THE COST OF THIS SPECIAL HANDLING IS IN EXCESS OF THE AMOUNT OF THE DISCOUNT EARNED, OBVIOUSLY THE PRIMARY OBJECTIVE OF 7 GAO 5015.10 WOULD BE DEFEATED.

ACCORDINGLY, WE AGREE WITH THE PRINCIPLE EXPRESSED IN THE ARMY'S PROPOSAL, BUT WE REGARD IT AS THE RESPONSIBILITY OF THE ARMY AND THE OTHER MILITARY DEPARTMENTS TO ESTABLISH PROCEDURES UNDER WHICH THE GOVERNMENT WILL OBTAIN THE BENEFIT OF DISCOUNTS IN THE MOST ECONOMICAL MANNER. THE PROCEDURES SHOULD INCLUDE APPROPRIATE LIMITATIONS FOR THOSE INSTANCES WHERE IT IS EXPECTED THAT THE COST OF APPLICATION OF THE PROCEDURES WILL EXCEED THE AVAILABLE DISCOUNTS.

A COPY OF THIS LETTER IS BEING SENT TO THE OFFICE OF THE CHIEF OF FINANCE, DEPARTMENT OF THE ARMY.