B-153646, APRIL 7, 1964, 43 COMP. GEN. 673

B-153646: Apr 7, 1964

Additional Materials:

Contact:

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

 

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

THE CONTRACTOR IS ENTITLED TO PAYMENT OF THE PROMPT DISCOUNT TAKEN AFTER THE EXPIRATION OF THE 20-DAY DISCOUNT PERIOD ON TWO INVOICES COVERING PURCHASE ORDERS REQUESTING THE MOVEMENT OF GOVERNMENT FURNITURE AND LABOR TO ERECT STEEL SHELVING ON WHICH PAYMENT WAS WITHHELD PENDING REPAIRS TO THE GOVERNMENT PROPERTY DAMAGED UNDER BOTH ORDERS. THE CONTRACTOR IS DUE THE DISCOUNT DEDUCTED ON THE INVOICES PAID AFTER EXPIRATION OF THE DISCOUNT PERIOD. LESS THE VALUE OF THE COST OF THE REPAIRS IF THAT AMOUNT IS NOT TOO INSIGNIFICANT TO WARRANT SEPARATE COMPUTATION. 1964: WE HAVE YOUR LETTER DATED FEBRUARY 20. THIS CONTRACT WAS AWARDED TO MINNEAPOLIS TERMINAL WAREHOUSE COMPANY. THE CONTRACT WAS FOR FURNISHING DRAYAGE AND CRATING SERVICES AND LABOR INCIDENT THERETO ORDERED BY FEDERAL AGENCIES IN THE MINNEAPOLIS-ST.

B-153646, APRIL 7, 1964, 43 COMP. GEN. 673

CONTRACTS - DISCOUNTS - DELAYS - REPAIR OF PROPERTY DAMAGED UNDER A CONTRACT TO FURNISH DRAYAGE AND CRATING SERVICES AND INCIDENTAL LABOR, WHICH PROVIDED A PROMPT PAYMENT DISCOUNT OF 1 PERCENT, 20 DAYS, AND LIABILITY ON THE PART OF THE CONTRACTOR FOR PROPERTY LOST OR DAMAGED, THE CONTRACTOR IS ENTITLED TO PAYMENT OF THE PROMPT DISCOUNT TAKEN AFTER THE EXPIRATION OF THE 20-DAY DISCOUNT PERIOD ON TWO INVOICES COVERING PURCHASE ORDERS REQUESTING THE MOVEMENT OF GOVERNMENT FURNITURE AND LABOR TO ERECT STEEL SHELVING ON WHICH PAYMENT WAS WITHHELD PENDING REPAIRS TO THE GOVERNMENT PROPERTY DAMAGED UNDER BOTH ORDERS, THE GOVERNMENT BEING ENTITLED UNDER THE TERMS OF THE CONTRACT ONLY TO WITHHOLD PAYMENT TO THE EXTENT OF THE COST OF THE REPAIRS TO THE DAMAGED PROPERTY UNTIL ACCEPTANCE OF THE REPAIRS, AND, THEREFORE, THE CONTRACTOR IS DUE THE DISCOUNT DEDUCTED ON THE INVOICES PAID AFTER EXPIRATION OF THE DISCOUNT PERIOD, LESS THE VALUE OF THE COST OF THE REPAIRS IF THAT AMOUNT IS NOT TOO INSIGNIFICANT TO WARRANT SEPARATE COMPUTATION.

TO DANIEL F. O-LEAVY, UNITED STATES DEPARTMENT OF AGRICULTURE, APRIL 7, 1964: OF AGRICULTURE, APRIL 7, 1964:

WE HAVE YOUR LETTER DATED FEBRUARY 20, 1964, YOUR REFERENCE 6540, REQUESTING OUR DECISION WHETHER THE ENCLOSED VOUCHER FOR $45.01 REPRESENTING A DISCOUNT TAKEN IN CONNECTION WITH CONSOLIDATED SERVICE CONTRACT NO. GS 06 T 72, MAY PROPERLY BE CERTIFIED FOR PAYMENT.

THIS CONTRACT WAS AWARDED TO MINNEAPOLIS TERMINAL WAREHOUSE COMPANY, 3310 NORTH SECOND STREET, MINNEAPOLIS 12, MINNESOTA, BY THE GENERAL SERVICES ADMINISTRATION, TRANSPORTATION AND PUBLIC UTILITIES SERVICE, KANSAS CITY 31, MISSOURI. THE CONTRACT WAS FOR FURNISHING DRAYAGE AND CRATING SERVICES AND LABOR INCIDENT THERETO ORDERED BY FEDERAL AGENCIES IN THE MINNEAPOLIS-ST. PAUL, NEW BRIGHTON, FARMINGTON, AND FORT SNELLING, MINNESOTA AREA, AND WITHIN A FIFTEEN MILE RADIUS THEREOF. THE TERM OF THE CONTRACT WAS FOR THE PERIOD NOVEMBER 1, 1962, THROUGH JANUARY 31, 1964, AND THE CONTRACT PROVIDED FOR A PROMPT PAYMENT DISCOUNT OF 1 PERCENT, 20 DAYS.

PURSUANT TO THIS CONTRACT, THE LAKE STATES FOREST EXPERIMENT STATION, UNITED STATES DEPARTMENT OF AGRICULTURE, 2267 COMO AVENUE, WEST, ST. PAUL 8, MINNESOTA, ISSUED PURCHASE ORDER NO. 379-LS-64, ON NOVEMBER 7, 1963, TO MINNEAPOLIS TERMINAL FOR MOVING GOVERNMENT FURNITURE FROM VARIOUS LOCATIONS TO THE NEW ST. PAUL OFFICE-LABORATORY LOCATED ON THE CAMPUS OF THE UNIVERSITY OF MINNESOTA. PURCHASE ORDER NO. 381-LS-64, WAS ALSO ISSUED PURSUANT TO THIS CONTRACT BY THE LAKE STATES EXPERIMENT STATION ON NOVEMBER 7, 1963, FOR THE ERECTION OF STEEL SHELVING IN THE SAME ST. PAUL OFFICE-LABORATORY.

SERVICE UNDER PURCHASE ORDER NO. 379-LS-64 WAS COMPLETED ON NOVEMBER 24, 1963, AND SERVICE UNDER PURCHASE ORDER NO. 381-LS-64 WAS COMPLETED ON NOVEMBER 30, 1963. ON DECEMBER 5, 1963, THE LAKE STATES FOREST EXPERIMENT STATION RECEIVED TWO INVOICES FROM MINNEAPOLIS TERMINAL FOR THE SERVICES RENDERED, IN THE AMOUNTS OF $875.80 UNDER PURCHASE ORDER NO. 381-LS-64, AND $3,625.02 UNDER PURCHASE ORDER NO. 379-LS-64. EACH INVOICE PROVIDED FOR A PROMPT PAYMENT DISCOUNT OF 1 PERCENT, 20 DAYS. HOWEVER, IT WAS FOUND THAT IN PROVIDING THE SERVICES UNDER EACH OF THE PURCHASE ORDERS THE CONTRACTOR DAMAGED GOVERNMENT-OWNED PROPERTY. CONSEQUENTLY, WHILE DELIVERY RECEIPTS WERE ISSUED BY THE GOVERNMENT ON NOVEMBER 24, 1963, FOR PURCHASE ORDER NO. 379-LS-64 AND ON NOVEMBER 30, 1963, FOR PURCHASE ORDER NO. 381-LS-64, PAYMENT WAS WITHHELD PENDING THE REPAIR OF THE DAMAGE TO THE GOVERNMENT PROPERTY BY THE CONTRACTOR. ON JANUARY 6, 1964, THE REPAIRS BY THE CONTRACTOR WERE ACCEPTED BY THE GOVERNMENT, AND ON JANUARY 22, 1964, THE GOVERNMENT PAID THE CONTRACTOR $4,455.81 DEDUCTING $45.01 FROM THE TOTAL AMOUNT PAYABLE AS A PROMPT PAYMENT DISCOUNT. ON JANUARY 27, 1964, MINNEAPOLIS TERMINAL SUBMITTED AN INVOICE FOR $45.01, REPRESENTING THE DISCOUNT TAKEN BY THE GOVERNMENT.

CLAUSE (E) (1) ON PAGE 6 OF THE CONTRACT ENTITLED "PROTECTION OF PROPERTY" PROVIDES:

IF, DUE TO THE FAULT, NEGLECT OR DISHONESTY OF THE CONTRACTOR, HIS AGENTS OR EMPLOYEES, AND GOVERNMENT OWNED OR CONTROLLED PROPERTY IS LOST, OR DAMAGED DURING THE PERFORMANCE OF THESE REQUIREMENTS THE CONTRACTOR SHALL BE RESPONSIBLE TO THE GOVERNMENT FOR SUCH LOSS OR DAMAGE, AND THE GOVERNMENT, AT ITS OPTION, MAY IN LIEU OF PAYMENT THEREFORE, REQUIRE THE CONTRACTOR TO REPLACE AT HIS OWN EXPENSE ALL PROPERTY LOST OR DAMAGED.

CLAUSE 7 (B) OF THE "TERMS AND CONDITIONS OF THE INVITATION FOR BIDS" ENTITLED "DISCOUNTS" PROVIDES:

(B) IN CONNECTION WITH ANY DISCOUNT OFFERED, TIME WILL BE COMPUTED FROM DATE DELIVERY OF THE SUPPLIES TO CARRIER WHEN DELIVERY AND ACCEPTANCE ARE AT POINT OF ORIGIN, OR FROM DATE OF DELIVERY AT DESTINATION OR PORT OF EMBARKATION WHEN DELIVERY AND ACCEPTANCE ARE AT EITHER OF THOSE POINTS, OR FROM DATE CORRECT INVOICE OR VOUCHER IS RECEIVED IN THE OFFICE SPECIFIED BY THE GOVERNMENT IF THE LATTER DATE IS LATER THAN THE DATE OF DELIVERY. PAYMENT IS DEEMED TO BE MADE, FOR THE PURPOSE OF EARNING THE DISCOUNT, ON THE DATE OF MAILING OF THE GOVERNMENT CHECK.

THE CONTRACT CONTAINS NO OTHER PROVISION RELATING TO THE COMMENCEMENT OF THE DISCOUNT PERIOD. THE RECORD DOES NOT INDICATE THE VALUE OF THE COST OF REPAIRS TO THE DAMAGED GOVERNMENT PROPERTY.

IN THESE CIRCUMSTANCES IT WOULD BE CONSISTENT WITH CLAUSE (E) (1), QUOTED ABOVE, TO WITHHOLD PAYMENT TO THE EXTENT OF THE VALUE OF THE COST OF REPAIRS TO THE DAMAGED GOVERNMENT PROPERTY UNTIL THE GOVERNMENT ACCEPTED THE REPAIRS; THEREFORE, ON THIS AMOUNT THE GOVERNMENT COULD PROPERLY TAKE THE DISCOUNT SINCE PAYMENT WAS MADE WITHIN 20 DAYS AFTER THE REPAIRS WERE ACCEPTED. HOWEVER, WE FIND NO BASIS FOR CONSTRUING CLAUSE (E) (1) AS AUTHORIZING THE GOVERNMENT TO WITHHOLD THE ENTIRE PAYMENT FOR THE CONTRACTOR'S SERVICES PENDING THE ACCEPTANCE OF THE REPAIRS TO THE DAMAGED GOVERNMENT PROPERTY AS THE LAKE STATES FOREST EXPERIMENT STATION CONTENDS. THEREFORE, ON THE AMOUNT DUE THE CONTRACTOR AFTER DEDUCTING THE VALUE OF THE COST OF THE REPAIRS TO THE DAMAGED GOVERNMENT PROPERTY, THE GOVERNMENT WOULD NOT BE ENTITLED TO THE DISCOUNT SINCE THE DISCOUNT PERIOD FOR THIS AMOUNT BEGAN ON DECEMBER 5, 1963, THE DATE THE GOVERNMENT RECEIVED THE CONTRACTOR'S INVOICES, AND PAYMENT WAS NOT MADE WITHIN 20 DAYS OF THIS DATE. IF THE AMOUNT OF THE DISCOUNT TO WHICH THE GOVERNMENT WOULD BE ENTITLED APPEARS TO BE RELATIVELY INSIGNIFICANT, IT WOULD NOT APPEAR WORTHWHILE TO SEPARATELY COMPUTE THIS AMOUNT, AND IN SUCH CASE THE VOUCHER FOR $45.01 MAY PROPERLY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.