B-126562, MAR. 13, 1956

B-126562: Mar 13, 1956

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PUBLIC PRINTER: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 6. IT IS UNDERSTOOD THAT THE BILLING PROCEDURE PRESENTLY IN EFFECT AT YOUR OFFICE INVOLVES THREE DISTINCT OPERATIONS. APPARENTLY THE "ESTIMATE" IS MADE SO THAT THE DEPARTMENTS AND AGENCIES CAN OBLIGATE FUNDS FOR SERVICES ORDERED. THE RESULTS OF WHICH ARE COMPILED IN A STANDARD PRICE LIST. THE "ACCUMULATION OF STANDARD COSTS" IS THE PRODUCT OF THE COST ACCOUNTING SYSTEM OF YOUR OFFICE. THE "COMPUTATIONS" ARE THE RESULT OF A FINAL REVIEW OF THE OTHER TWO OPERATIONS AND HISTORY AND COPY OF THE FURNISHED JOB. COMPUTATION" IS THE AMOUNT BILLED. BY THIS PROCESS YOUR OFFICE IS EVIDENTLY OF THE OPINION THAT IT ARRIVES AT AND BILLS THE ACTUAL COST AND THUS IS COMPLYING WITH LAW.

B-126562, MAR. 13, 1956

TO THE HONORABLE RAYMOND BLATTENBERGER, PUBLIC PRINTER:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 6, 1956, REQUESTING A DECISION AS TO WHETHER BILLING AN ORDERING AGENCY--- FOR SERVICES OR SUPPLIES FURNISHED IT BY YOUR OFFICE--- ON THE BASIS OF AN ESTIMATED PRICE WOULD BE IN COMPLIANCE WITH LAW IN INSTANCES WHERE A JACKET COST SUMMARY SHEET PRICE AND THE ESTIMATED PRICE DO NOT VARY IN EXCESS OF FIVE PERCENT.

THE LEGISLATIVE-JUDICIARY APPROPRIATION ACT, 1954, 67 STAT. 318, CREATING THE REVOLVING FUND UNDER WHICH THE GOVERNMENT PRINTING OFFICE OPERATES PROVIDES, IN PERTINENT PART, AS FOLLOWS (67 STAT. 330):

"HEREAFTER ANY EXECUTIVE DEPARTMENT OR INDEPENDENT ESTABLISHMENT OF THE GOVERNMENT ORDERING PRINTING AND BINDING OR BLACK PAPER AND SUPPLIES FROM THE GOVERNMENT PRINTING OFFICE SHALL PAY PROMPTLY BY CHECK TO THE PUBLIC PRINTER UPON HIS WRITTEN REQUEST, EITHER IN ADVANCE OR UPON COMPLETION OF THE WORK, ALL OR PART OF THE ESTIMATED OR ACTUAL COST THEREOF, AS THE CASE MAY BE, AND BILLS RENDERED BY THE PUBLIC PRINTER IN ACCORDANCE HEREWITH SHALL NOT BE SUBJECTO TO AUDIT OR CERTIFICATION IN ADVANCE OF PAYMENT: PROVIDED, THAT PROPER ADJUSTMENTS ON THE BASIS OF THE ACTUAL COST OF DELIVERED WORK PAID FOR IN ADVANCE SHALL BE MADE MONTHLY OR QUARTERLY AND AS MAY BE AGREED UPON BY THE PUBLIC PRINTER AND THE DEPARTMENT OR ESTABLISHMENT CONCERNED.'

IT IS UNDERSTOOD THAT THE BILLING PROCEDURE PRESENTLY IN EFFECT AT YOUR OFFICE INVOLVES THREE DISTINCT OPERATIONS, NAMELY (1) AN ESTIMATE OF THE COST OF THE JOB (PRIOR TO PERFORMANCE), (2) ACCUMULATION OF STANDARD COSTS ON JACKET COST SUMMARY SHEET (DURING PERFORMANCE AND (3) COMPUTATION (A POST-PERFORMANCE OPERATION). APPARENTLY THE "ESTIMATE" IS MADE SO THAT THE DEPARTMENTS AND AGENCIES CAN OBLIGATE FUNDS FOR SERVICES ORDERED, AND BASED ON PAST EXPERIENCES, THE RESULTS OF WHICH ARE COMPILED IN A STANDARD PRICE LIST. THE "ACCUMULATION OF STANDARD COSTS" IS THE PRODUCT OF THE COST ACCOUNTING SYSTEM OF YOUR OFFICE. THE "COMPUTATIONS" ARE THE RESULT OF A FINAL REVIEW OF THE OTHER TWO OPERATIONS AND HISTORY AND COPY OF THE FURNISHED JOB. IT APPEARS THAT THE "COMPUTATIONS" INCLUDE A JUDGMENT FACTOR WHICH, WE UNDERSTAND, TAKES COGNIZANCE OF MANUFACTURING CONDITIONS RELATING TO A SPECIFIC JOB THAT PROPERLY SHOULD INCREASE OR DECREASE THE "ACCUMULATION OF STANDARD COSTS" ACCORDING TO THE CIRCUMSTANCES. THE AMOUNT ARRIVED AT BY ,COMPUTATION" IS THE AMOUNT BILLED. BY THIS PROCESS YOUR OFFICE IS EVIDENTLY OF THE OPINION THAT IT ARRIVES AT AND BILLS THE ACTUAL COST AND THUS IS COMPLYING WITH LAW.

THE STATUTORY PROVISION CITED ABOVE CONTEMPLATES THE GOVERNMENT PRINTING OFFICE BEING REIMBURSED ON THE BASIS OF ACTUAL COST FOR SERVICES PERFORMED FOR OTHER GOVERNMENT AGENCIES. WE HAVE HELD, IN CONSTRUING LANGUAGE IN SECTION 601 OF THE ECONOMY ACT OF JUNE 30, 1932, 47 STAT. 417, AS AMENDED, 31 U.S.C. 686, ALMOST IDENTICAL TO THE LANGUAGE USED IN THE ABOVE-QUOTED PROVISION OF LAW, THAT ASCERTAINMENT OF THE AMOUNT TO BE PAID FOR SERVICES BETWEEN GOVERNMENT AGENCIES IS PRIMARILY A MATTER FOR ADMINISTRATIVE CONSIDERATION TO BE DETERMINED BY AGREEMENT BETWEEN THE AGENCIES CONCERNED, SUBJECT TO THE ACTUAL COST REQUIREMENT OF THE STATUTE. SEE 22 COMP. GEN. 74; 32 ID. 479. IT IS OUR OPINION THAT IN AN OPERATION THE SIZE OF THAT PERFORMED BY THE GOVERNMENT PRINTING OFFICE IT IS IMPOSSIBLE, AS A PRACTICAL MATTER, TO ARRIVE AT THE ACTUAL COST OF EACH JOB AND THAT, IN REALITY,THE USE OF THE BILLING PROCEDURES DESCRIBED ABOVE DOES NOT RESULT IN A DETERMINATION OF THE PRECISE ACTUAL COST. MOREOVER, AS INDICATED ABOVE, UNDER THE LANGUAGE OF THE CITED APPROPRIATION PROVISION, METHODS OF DETERMINING THE AMOUNT OF THE "ACTUAL COST" ARE PRIMARILY FOR DETERMINATION BY THE AGENCIES CONCERNED. AS LONG AS THE AMOUNT ARRIVED AT RESULTS FROM A BONA FIDE ATTEMPT TO DETERMINE THE ACTUAL COST, AND, IN FACT, REASONABLY APPROXIMATES THE ACTUAL COST, NO QUESTION WILL BE RAISED BY US. HENCE, YOU ARE ADVISED THAT WE WOULD HAVE NO OBJECTION TO AN ORDERING AGENCY BEING BILLED ON THE BASIS OF AN ESTIMATED PRICE WITHOUT SUBSEQUENT ADJUSTMENT, PROVIDED (1) THAT THE ESTIMATED PRICE IS BASED ON AND CHECKED BY A SOUND SYSTEM OF STANDARD COSTS AND (2) IT IS ADMINISTRATIVELY DETERMINED THAT SUCH ESTIMATED PRICE REPRESENTS THE APPROXIMATE ACTUAL COST OF THE SERVICES RENDERED. IT IS OUR VIEW THAT SUCH AN ESTIMATE WOULD SATISFY THE ACTUAL COST REQUIREMENTS OF THE LAW. ALSO, IT ISOUR OPINION THAT THE ADOPTION OF THIS METHOD OF BILLING WOULD GREATLY SIMPLIFY THE BILLING PROCEDURES OF YOUR OFFICE AND RESULT IN WORTHWHILE ECONOMIES.