B-172812, JAN 13, 1972

B-172812: Jan 13, 1972

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THE GOVERNMENT'S CONTENTION THAT THE PAYMENTS MIGHT BE TAKEN BECAUSE THE INVOICES IMPROPERLY EXCLUDED THE DISCOUNT TERMS IS WITHOUT MERIT. WHERE PAYMENT WAS DELAYED FOR APPROXIMATELY FIFTY DAYS. WAS PROPERLY TAKEN. ROBINSON: REFERENCE IS MADE TO A LETTER DATED APRIL 27. THE CONTRACT WAS TO BE ADMINISTERED BY THE COMMANDER. PAYMENT WAS TO BE MADE BY THE DISBURSING OFFICER. LOUIS WAS UNAFFECTED BY EITHER OF THESE MODIFICATIONS. THE SUPPLIES DESIGNATED FOR SHIPMENT 0000001 WERE INSPECTED. WERE DATED SEPTEMBER 11. THE RECORD INDICATES THAT THEY WERE RECEIVED AT THAT OFFICE ON SEPTEMBER 15. THE ONLY REFERENCE TO TERMS IS THE "BOILER-PLATE" STIPULATION: "TERMS 7 DAYS NET.". WE ARE ADVISED THAT PAYMENT WAS MADE FOR THIS SHIPMENT ON NOVEMBER 4.

B-172812, JAN 13, 1972

CONTRACTS - PROMPT PAYMENT DISCOUNTS DECISION ON A CLAIM BY CLEAR FIELD CHEESE COMPANY, INC., FOR THE REFUND OF PROMPT PAYMENT DISCOUNTS UNDER A CONTRACT ISSUED BY THE DEFENSE SUPPLY AGENCY FOR TWO SHIPMENTS OF CHEESE. SINCE THE EVIDENCE INDICATES THAT THE PAYING OFFICE HAD FULL KNOWLEDGE OF THE DISCOUNT PROVISIONS, THE GOVERNMENT'S CONTENTION THAT THE PAYMENTS MIGHT BE TAKEN BECAUSE THE INVOICES IMPROPERLY EXCLUDED THE DISCOUNT TERMS IS WITHOUT MERIT. ACCORDINGLY, THE DISCOUNT ON THE FIRST SHIPMENT, WHERE PAYMENT WAS DELAYED FOR APPROXIMATELY FIFTY DAYS, SHOULD BE REFUNDED TO CLAIMANT. CONVERSELY, THE DISCOUNT ON THE SECOND PAYMENT, MADE SEVEN DAYS AFTER THE RECEIPT OF THE INVOICE, WAS PROPERLY TAKEN.

TO GENERAL WALLACE H. ROBINSON:

REFERENCE IS MADE TO A LETTER DATED APRIL 27, 1971, FROM YOUR CHIEF, ACCOUNTING AND FINANCE DIVISION, OFFICE OF THE COMPTROLLER, FORWARDING FOR ADVANCE DECISION THE CLAIM OF CLEAR FIELD CHEESE COMPANY, INC., CLINTON, MISSOURI, FOR REFUND OF ALLEGEDLY UNEARNED PROMPT PAYMENT DISCOUNTS TAKEN BY THE GOVERNMENT ON SHIPMENTS UNDER CONTRACT DSA13H-71 C-3007, ISSUED BY THE DEFENSE SUPPLY AGENCY, DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA, WITH AN EFFECTIVE DATE OF AUGUST 18, 1970.

ITEMS NO. 0001AA AND 0002AA OF THE SUBJECT CONTRACT REQUIRED THE CONTRACTOR TO MAKE TWO SHIPMENTS (0000001 AND 0000002Z, RESPECTIVELY) OF CHEESE TO VIETNAM FROM CONTRACTOR'S "PLANT LOCATION" AT CLINTON, MISSOURI, AT PRICES OF $122,304.00 AND $61,152.00, RESPECTIVELY. IN ADDITION TO OFFERING A 2% - 20 DAYS PROMPT PAYMENT DISCOUNT, THE CONTRACT SPECIFIED THE CLAIMANT'S CURWENSVILLE, PENNSYLVANIA PLANT AS THE CONTRACTOR, AND THE CONTRACT WAS TO BE ADMINISTERED BY THE COMMANDER, DCASR, ST. LOUIS, MISSOURI. PAYMENT WAS TO BE MADE BY THE DISBURSING OFFICER, DCASR, ST. LOUIS, MISSOURI.

MODIFICATION P001, DATED SEPTEMBER 8, 1970, SUBSTITUTED THE CONTRACTOR'S CLINTON, MISSOURI, PLANT FOR ITS CURWENSVILLE PLANT AS THE NAME AND ADDRESS OF THE CONTRACTOR.

MODIFICATION P002, SIGNED OCTOBER 19, 1970, SUBSTITUTED THE CHIEF, DCASO, KANSAS CITY, FOR THE COMMANDER, DCASR, ST. LOUIS, AS THE ACTIVITY BY WHICH THE CONTRACT WOULD BE ADMINISTERED. THE ADDRESS OF THE PAYING OFFICE IN ST. LOUIS WAS UNAFFECTED BY EITHER OF THESE MODIFICATIONS.

THE SUPPLIES DESIGNATED FOR SHIPMENT 0000001 WERE INSPECTED, ACCEPTED AND SHIPPED ON SEPTEMBER 11, 1970. THE COMMERCIAL INVOICES FOR THIS SHIPMENT, AT A TOTAL PRICE OF $122,304.00, WERE DATED SEPTEMBER 11, 1970, AND ADDRESSED TO THE PAYING OFFICE SPECIFIED BY THE CONTRACT. THE RECORD INDICATES THAT THEY WERE RECEIVED AT THAT OFFICE ON SEPTEMBER 15, 1970. THE COMMERCIAL INVOICE COPIES INCLUDED WITH THE RECORD FAIL TO CITE THE DISCOUNT TERMS OF THE CONTRACT (2% - 20 DAYS). THE ONLY REFERENCE TO TERMS IS THE "BOILER-PLATE" STIPULATION: "TERMS 7 DAYS NET." WE ARE ADVISED THAT PAYMENT WAS MADE FOR THIS SHIPMENT ON NOVEMBER 4, 1970, APPROXIMATELY 50 DAYS AFTER INVOICE RECEIPT, AND THAT THE 2% DISCOUNT OF $2,446.08 WAS TAKEN.

THE SUPPLIES DESIGNATED FOR SHIPMENT 0000002Z WERE INSPECTED AND ACCEPTED ON OCTOBER 14, 1970, AND SHIPPED ON OCTOBER 15, 1970. THE COMMERCIAL INVOICE FOR THIS SHIPMENT, AT A PRICE OF $61,152.00, WAS DATED OCTOBER 14, 1970, AND WE ARE ADVISED THAT IT WAS RECEIVED BY THE PAYING OFFICE ON OCTOBER 27, 1970. LIKE THE INVOICE FOR THE PREVIOUS SHIPMENT, THIS INVOICE FAILED TO INCLUDE THE DISCOUNT TERMS, WHILE STIPULATING THAT NET PAYMENT WAS TO BE MADE IN 7 DAYS. WE ARE ADVISED THAT PAYMENT FOR THIS SHIPMENT ALSO WAS MADE ON NOVEMBER 4, 1970, SEVEN DAYS AFTER RECEIPT OF THE INVOICE, AND A 2% DISCOUNT OF 1223.04 WAS TAKEN THEREON.

INCLUDED IN THE FILE IS A COPY OF THE CLAIMANT'S COMMERCIAL INVOICE FORM, ADDRESSED TO THE PAYING OFFICE AND DATED NOVEMBER 12, 1970, IN WHICH THE 2% DEDUCTIONS TAKEN UNDER THE TWO SHIPMENTS, TOTALLING $3,669.12, ARE CHARGED WITH THE NOTATION:

"CHARGING FOR 2% DEDUCTION ON INVOICE NUMBERS L6071, L6080, L7991, NOT ALLOWABLE DUE TO TIME LAPSE OF MORE THAN 20 DAYS."

NOTICE OF INTENT TO PURCHASE, NO. DSA 13H-71-N-0206 DATED JULY 2, 1970, PURSUANT TO WHICH THE SUBJECT CONTRACT WAS AWARDED, INDICATES ON PAGES 5 AND 6 THAT STANDARD FORM 32, JUNE 1964, WAS TO BE FULLY INCORPORATED INTO THE PROSPECTIVE CONTRACT. CLAUSE 7 OF STANDARD FORM 32, ENTITLED "PAYMENTS", SETS FORTH THE CONDITIONS UNDER WHICH THE CONTRACTOR SHALL BE ENTITLED TO PAYMENT. MOST SIGNIFICANTLY, AND IN PERTINENT PART, THAT CLAUSE STIPULATES:

"7. PAYMENTS

THE CONTRACTOR SHALL BE PAID, UPON THE SUBMISSION OF PROPER INVOICES OR VOUCHERS, THE PRICES STIPULATED HEREIN FOR SUPPLIES DELIVERED AND ACCEPTED OR SERVICES RENDERED AND ACCEPTED, LESS DEDUCTIONS, IF ANY, AS HEREIN PROVIDED. *** "

THEREFORE, BY THE TERMS OF THE CONTRACT, THE TWENTY DAY PERIOD IN WHICH THE GOVERNMENT WAS ENTITLED TO TAKE A DISCOUNT COULD NOT COMMENCE TO RUN UNTIL THE CONTRACTOR WAS ENTITLED TO PAYMENT, AND HE WAS NOT ENTITLED TO PAYMENT UNTIL THE SUPPLIES WERE BOTH DELIVERED AND ACCEPTED AND PROPER INVOICES SUBMITTED.

IT IS CONTENDED BY DCASR, ST. LOUIS, THAT THE FAILURE OF THE INVOICES TO INCLUDE THE DISCOUNT TERMS PREVENTED THE GOVERNMENT FROM EXPEDITING PAYMENT, SINCE THE CONTRACT MODIFICATION CHANGING THE CONTRACTOR LOCATION NECESSITATED TRANSFER OF THE CONTRACT FROM PHILADELPHIA TO THE ST. LOUIS REGION WHICH MADE IT IMPOSSIBLE TO PROPERLY IDENTIFY THE INVOICES UNTIL RECEIPT OF THE CONTRACT BY THE DCASR, ST. LOUIS, ON NOVEMBER 3, 1970.

WITH REGARD TO THE INVOICES, WE NOTE THAT THEY APPEAR ACCURATE AND COMPLETE EXCEPT FOR OMISSION OF THE DISCOUNT TERMS. HOWEVER, WE ARE UNABLE TO ACCEPT THE IMPLICATION THAT THIS OMISSION PRECLUDED SCIENTER BY THE PAYING OFFICE OF THE EXISTENCE OF THE DISCOUNT TERMS, SINCE A LETTER DATED NOVEMBER 29, 1971, FROM THE CHIEF, OFFICE OF SYSTEMS AND FINANCIAL MANAGEMENT, DCASR, ST. LOUIS, ADMITS THAT THE DD FORMS 250, WHICH WERE EXECUTED BY THE CONTRACTOR AND INDICATED INSPECTION AND ACCEPTANCE OF THE RESPECTIVE SHIPMENTS, WERE RECEIVED BY THAT OFFICE ON SEPTEMBER 15 AND OCTOBER 16, 1971, RESPECTIVELY. OUR PERUSAL OF THE SAME REVEALS THAT THE DISCOUNT TERMS WERE ACCURATELY STATED IN BLOCK 5 OF EACH DD FORM 250. VIEW THEREOF, AND OF THE FACT THAT THE PAYING OFFICE POSSESSED THESE DD FORMS 250 AT THE TIME OF RECEIPT OF THE REFERENCED INVOICES FROM THE CONTRACTOR, IT IS OUR OPINION THAT KNOWLEDGE OF THE DISCOUNT PROVISIONS MUST BE IMPUTED TO THE PAYING OFFICE NOTWITHSTANDING THEIR OMISSION ON THE INVOICES.

LIKEWISE, THE CONTENTION THAT THE DELAY INCIDENT TO THE TRANSFER OF THE CONTRACT FROM PHILADELPHIA TO ST. LOUIS PREVENTED TIMELY PAYMENT, SINCE THE INVOICES COULD NOT BE PROPERLY IDENTIFIED UNTIL THE PAYING OFFICE RECEIVED THE CONTRACT, IS WITHOUT LEGAL MERIT. IT IS WELL ESTABLISHED THAT WHERE A DELAY IN MAKING PAYMENT APPEARS TO HAVE BEEN CAUSED BY GOVERNMENT OFFICIALS, AND IS NOT ATTRIBUTABLE TO ANY NEGLIGENCE ON THE PART OF THE CONTRACTOR, THE TAKING OF A DISCOUNT AFTER EXPIRATION OF THE DISCOUNT PERIOD IS UNAUTHORIZED. 6 COMP. GEN. 545 (1927). IN THE INSTANT CASE, WE CAN DISCERN NO EVIDENCE FROM THE RECORD INDICATING THAT THE CLAIMANT WAS RESPONSIBLE FOR EITHER THE CONTRACT MODIFICATION CHANGING THE LOCATION OF THE CONTRACTOR, OR THE DELAY THAT ENSUED IN TRANSFERRING THE CONTRACT TO THE PAYING OFFICE.

IN VIEW OF THE FOREGOING, IT IS OUR OPINION THAT THE DISCOUNT OF $2,446.08, TAKEN PURSUANT TO PAYMENT ON THE INVOICES FOR SHIPMENT 0000001, WAS UNEARNED, SINCE PAYMENT WAS MADE ON NOVEMBER 4, 1970, WHICH WAS APPROXIMATELY 50 DAYS AFTER RECEIPT OF THE INVOICE. THEREFORE, THAT SUM SHOULD BE REFUNDED TO THE CLAIMANT. CONVERSELY, IT WOULD APPEAR THAT THE DISCOUNT OF $1223.04 ON THE INVOICE FOR SHIPMENT 0000002Z WAS PROPERLY TAKEN, SINCE THE DISCOUNT PERIOD DID NOT BEGIN TO RUN UNTIL RECEIPT OF THE INVOICE AND PAYMENT WAS MADE SEVEN DAYS FOLLOWING INVOICE RECEIPT.

THE FILE TRANSMITTED WITH THE LETTER OF APRIL 27, 1971, IS RETURNED.