B-169682(2), FEB 2, 1971

B-169682(2): Feb 2, 1971

Additional Materials:

Contact:

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

 

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

THAT IS. THEN THE DISCOUNT PERIOD DOES NOT BEGIN TO RUN UNTIL SUCH TIME AS THE INVOICE IS PROPERLY SUPPORTED BY EVIDENCE OF ACCEPTANCE. UNDER THESE CIRCUMSTANCES THE TAKING OF THE PROMPT PAYMENT DISCOUNT WOULD BE PROPER - THE DISCOUNT PERIOD COMMENCED RUNNING FROM THE DATE ON WHICH INVOICES APPROVED BY THE FACILITIES MANAGEMENT OFFICE WERE RECEIVED IN THE PROPER OFFICE. TO MISS RUDDY: THIS IS IN REPLY TO YOUR LETTER OF APRIL 29. IN WHICH A DECISION IS REQUESTED AS TO WHETHER PROMPT PAYMENT DISCOUNTS WERE PROPERLY TAKEN BY INTERNAL REVENUE SERVICE (IRS) UNDER GENERAL SERVICES ADMINISTRATION (GSA) REQUIREMENTS TYPE CONTRACTS FOR RUG AND CARPET CLEANING. ENCLOSED WITH YOUR LETTER IS A CHRONOLOGY OF THE PERTINENT ACTIONS TAKEN BY THE PARTIES IN 13 CASES IN WHICH SUCH SERVICES WERE ORDERED.

B-169682(2), FEB 2, 1971

PROMPT PAYMENT DISCOUNT DECISION CONCERNING THE PROPRIETY OF THE PROMPT PAYMENT DISCOUNT TAKEN BY INTERNAL REVENUE SERVICE ON A CONTRACT WITH PROFESSIONAL CARPET SERVICE FOR RUG AND CARPET CLEANING, REPAIRING AND INSTALLATION SERVICES. IF THE PURCHASE ORDER REQUIRED THE SUBMISSION OF A "WORK TICKET" FOR EACH SERVICE CALL MADE, AND THE CONTRACTOR FAILED TO SUPPLY A CORRECT INVOICE, THAT IS, ONE SUPPORTED BY A "WORK TICKET" AS EVIDENCE OF ACCEPTANCE BY THE IRS AND THEREBY REQUIRING IRS TO FORWARD INVOICES TO THE COGNIZANT OFFICE FOR APPROVAL AND ACCEPTANCE, THEN THE DISCOUNT PERIOD DOES NOT BEGIN TO RUN UNTIL SUCH TIME AS THE INVOICE IS PROPERLY SUPPORTED BY EVIDENCE OF ACCEPTANCE. UNDER THESE CIRCUMSTANCES THE TAKING OF THE PROMPT PAYMENT DISCOUNT WOULD BE PROPER - THE DISCOUNT PERIOD COMMENCED RUNNING FROM THE DATE ON WHICH INVOICES APPROVED BY THE FACILITIES MANAGEMENT OFFICE WERE RECEIVED IN THE PROPER OFFICE.

TO MISS RUDDY:

THIS IS IN REPLY TO YOUR LETTER OF APRIL 29, 1970, REFERENCE A:F:AF, IN WHICH A DECISION IS REQUESTED AS TO WHETHER PROMPT PAYMENT DISCOUNTS WERE PROPERLY TAKEN BY INTERNAL REVENUE SERVICE (IRS) UNDER GENERAL SERVICES ADMINISTRATION (GSA) REQUIREMENTS TYPE CONTRACTS FOR RUG AND CARPET CLEANING, REPAIRING, AND INSTALLATION SERVICES WITH THE PROFESSIONAL CARPET SERVICE. ENCLOSED WITH YOUR LETTER IS A CHRONOLOGY OF THE PERTINENT ACTIONS TAKEN BY THE PARTIES IN 13 CASES IN WHICH SUCH SERVICES WERE ORDERED, PERFORMED, AND PAYMENTS WERE MADE AFTER DEDUCTING THE DISCOUNTS.

FROM THE RECORD BEFORE US IT APPEARS THAT IRS WAS OPERATING UNDER THE CONTRACTUAL PROVISION FOR ISSUANCE OF A BLANKET PURCHASE ORDER COVERING ITS ESTIMATED REQUIREMENTS, AND PLACED ORDERS WITH PROFESSIONAL CARPET SERVICE FROM TIME TO TIME AS SERVICES WERE REQUIRED. WE NOTE THAT THE SAMPLE BLANKET PURCHASE ORDER SUBMITTED HERE APPLIES ONLY TO A PORTION OF THE CASES SUBMITTED FOR OUR CONSIDERATION (FOR SERVICES RENDERED FROM JULY 1, 1968 THROUGH FEBRUARY 28, 1969). THIS PURCHASE ORDER REQUIRES THE CONTRACTOR TO FURNISH THE IRS FISCAL MANAGEMENT BRANCH A "WORK TICKET" FOR EACH SERVICE CALL MADE THEREUNDER. YOUR LETTER OF AUGUST 25, 1970, STATES THAT THE FUNCTION OF A "WORK TICKET" IS TO PROVIDE EVIDENCE THAT A SERVICE WAS PERFORMED, AND, APPARENTLY, IT IS A SIGNED RECEIPT BY A GOVERNMENT REPRESENTATIVE INDICATING ACCEPTANCE OF THE SERVICES RENDERED.

YOUR LETTER OF DECEMBER 15, 1970, ADVISES THAT THE CONTRACTOR FAILED TO FOLLOW THE BILLING INSTRUCTIONS FOR SUBMISSION OF "WORK TICKETS" AND THEREFORE ITS INVOICES COULD NOT BE CERTIFIED FOR PAYMENT AT THE TIME THEY WERE RECEIVED IN THE FISCAL MANAGEMENT BRANCH WITHOUT "WORK TICKETS". ACCORDINGLY, IT BECAME NECESSARY FOR YOU TO FORWARD INVOICES TO THE COGNIZANT OFFICE, THE FACILITIES MANAGEMENT OFFICE, FOR APPROVAL AND ACCEPTANCE, DURING WHICH PERIOD PAYMENT COULD NOT HAVE BEEN MADE. THESE CIRCUMSTANCES THE DISCOUNT PERIOD WAS DEEMED BY YOU TO COMMENCE RUNNING FROM THE DATE ON WHICH INVOICES APPROVED BY THE FACILITIES MANAGEMENT OFFICE WERE RECEIVED IN THE FISCAL MANAGEMENT BRANCH SINCE AT THAT TIME THE CONTRACTOR'S FAILURE TO FOLLOW THE BILLING INSTRUCTIONS HAD BEEN CURED AND NO LONGER PREVENTED THE CERTIFICATION FOR PAYMENT.

IN CONNECTION WITH THE TAKING OF DISCOUNTS, SECTION 9(B) OF THE SOLICITATION INSTRUCTIONS AND CONDITIONS, STANDARD FORM 33A, JULY 1966, WHICH WAS INCORPORATED INTO THE CONTRACT REFERENCED IN YOUR SUBMISSION, PROVIDES IN PERTINENT PART THAT TIME WILL BE COMPUTED FROM THE DATE A CORRECT INVOICE OR VOUCHER IS RECEIVED IN THE OFFICE SPECIFIED BY THE GOVERNMENT. SECTION 12 OF THE GSA CONTRACT FURTHER PROVIDES THAT INVOICES SHALL BE SUBMITTED IN ACCORDANCE WITH BILLING INSTRUCTIONS FURNISHED ON THE ORDERING AGENCY'S PURCHASE ORDER. SINCE THIS SECTION DOES NOT DEFINE THE SCOPE OF THE BILLING INSTRUCTIONS WHICH THE ORDERING AGENCIES MAY FURNISH, THE CONTRACTOR IS OBLIGATED TO COMPLY WITH WHATEVER BILLING THE VARIOUS ORDERING AGENCIES MAY INCLUDE ON THEIR PURCHASE ORDER, SO LONG AS SUCH INSTRUCTIONS ARE NOT UNREASONABLE. THE REQUIREMENT FOR FURNISHING A WORK TICKET, AS SET OUT ON THE IRS PURCHASE ORDER SUBMITTED HERE, DOES NOT APPEAR TO BE UNREASONABLE, AND THEREFORE OBLIGATES THE CONTRACTOR TO BILL IRS IN THAT MANNER.

WE HAVE HELD THAT WHERE A CONTRACT SPECIFICALLY REQUIRES THAT A CORRECT INVOICE MUST BE RECEIVED BY THE DESIGNATED GOVERNMENT ACTIVITY AND IT ALSO REQUIRES SUBMISSION BY THE CONTRACTOR OF EVIDENCE OF ACCEPTANCE, PAYMENT IS NOT AUTHORIZED TO BE MADE AND THE DISCOUNT PERIOD DOES NOT BEGIN TO RUN FOR SUPPLIES DELIVERED UNTIL SUCH TIME AS THE INVOICE IS PROPERLY SUPPORTED BY EVIDENCE OF ACCEPTANCE. 47 COMP. GEN. 765, 768 (1968). ALSO, THE COURT OF CLAIMS HAS HELD THAT WHERE A CORRECT BILL IS NOT SUBMITTED THE GOVERNMENT IS ENTITLED TO THE DISCOUNT AT THE TIME SETTLEMENT IS MADE. THOS. SOMERVILLE COMPANY V THE UNITED STATES, 99 CT. CL. 329 (1943).

SIMILARLY, IN THE PRESENT CASE THE CONTRACTOR WAS OBLIGED, AND FAILED, TO FURNISH A CORRECT INVOICE, THAT IS, ONE SUPPORTED BY EVIDENCE OF ACCEPTANCE, AND IT WOULD APPEAR FROM THE PRESENT RECORD THAT HIS FAILURE TO DO SO PREVENTED YOUR OFFICE FROM CERTIFYING THE CONTRACTOR'S INVOICES FOR PAYMENT AT THE TIME THEY WERE ORIGINALLY SUBMITTED.

SINCE YOU HAVE NOT PROVIDED US WITH THE SPECIFIC DISCOUNT TERMS AND PURCHASE ORDER APPLICABLE TO EACH CASE LISTED IN YOUR SUBMISSION, WE CAN ONLY ADVISE YOU GENERALLY THAT DISCOUNTS WERE PROPERLY TAKEN IF IN EACH CASE "WORK TICKETS" WERE REQUIRED AND PAYMENT WAS MADE WITHIN THE APPLICABLE DISCOUNT PERIOD COMPUTED AS COMMENCING FROM THE DATE AN INVOICE, SUPPORTED BY A "WORK TICKET" OR EQUIVALENT EVIDENCE OF ACCEPTANCE, WAS RECEIVED BY THE OFFICE SPECIFIED BY THE GOVERNMENT FOR SUBMISSION OF INVOICES. IF IN ANY CASE THE PURCHASE ORDER DID NOT PROVIDE BILLING INSTRUCTIONS WHICH REQUIRED THE SUBMISSION OF A "WORK TICKET" OR EQUIVALENT EVIDENCE OF DELIVERY AND ACCEPTANCE, THE DISCOUNT PERIOD SHOULD BE COMPUTED AS RUNNING FROM THE DATE A CORRECT INVOICE WAS FIRST RECEIVED IN THE OFFICE SPECIFIED, AND IN SUCH CIRCUMSTANCES THE CONTRACTOR IS NOT RESPONSIBLE FOR THE TIME REQUIRED TO OBTAIN ANY NECESSARY EVIDENCE OF DELIVERY AND ACCEPTANCE PRIOR TO CERTIFICATION FOR PAYMENT.

YOU HAVE ALSO REQUESTED US TO ADVISE WHETHER YOU PROPERLY CONSIDERED THE DATE OF THE GOVERNMENT CHECK AS THE DATE ON WHICH PAYMENT WAS EFFECTED EVEN THOUGH THE BASIC CONTRACTS PROVIDED THAT PAYMENT WAS DEEMED TO OCCUR ON THE DATE THE CHECK WAS MAILED. IN THE ABSENCE OF AN OBJECTION BY THE CONTRACTOR AT THE TIME A PARTICULAR DISCOUNT WAS TAKEN OR WITHIN A REASONABLE TIME THEREAFTER, AND SINCE THERE APPARENTLY IS NO OTHER INFORMATION TO ESTABLISH THE ACTUAL DATE PAYMENT WAS MAILED, WE HAVE NO LEGAL OBJECTION TO YOUR USE OF THE DATES ON THE CHECKS AS THE MAILING DATES.

SUBSEQUENT TO YOUR REQUEST FOR A DECISION IN THIS MATTER PROFESSIONAL CARPET SERVICE FILED A CLAIM WITH THIS OFFICE FOR REFUND OF PROMPT PAYMENT DISCOUNTS TAKEN BY IRS. COPIES OF THE INVOICES WERE TRANSMITTED TO YOU BY OUR CLAIMS DIVISION WITH A REQUEST FOR ADMINISTRATIVE EXAMINATION AND REPORT IN THE MATTER. IT IS THEREFORE REQUESTED THAT A DETERMINATION REGARDING THESE INVOICES BE MADE IN ACCORDANCE WITH THIS DECISION AND THAT A REPORT IN THE MATTER BE SUBMITTED TO OUR CLAIMS DIVISION.