B-183628, MAY 8, 1975

B-183628, MAY 8, 1975

1. SUPPLIER, WHO EFFECTED COMPLETE DELIVERY OF ITEMS UNDER PURCHASE ORDER WITHOUT ADVISING GOVERNMENT OF LATE PAYMENT CHARGE FOR ACCOUNTS OVER 60 DAYS PAST DUE UNTIL INVOICE WAS SUBMITTED 2 WEEKS AFTER DELIVERY, MAY NOT BE PAID SUCH CHARGE AS CONTRACT WAS CONSUMMATED UPON DELIVERY AND ADDITIONAL TERMS MAY NOT BE ADDED THEREAFTER. 2. FOR GOVERNMENT TO BE BOUND BY LATE PAYMENT INTEREST CHARGE UNDER PURCHASE ORDER, VENDOR MUST GIVE NOTICE OF SUCH CHARGE BEFORE OR AT DELIVERY AND AUTHORIZED OFFICIAL MUST ACCEPT CHARGE WHEN GOODS ARE DELIVERED.

MORRIS TILE DISTRIBUTORS, INC.:

ON JUNE 26, 1974, THE UNITED STATES FOREST SERVICE ISSUED A PURCHASE ORDER TO MORRIS TILE DISTRIBUTORS, INC. (MORRIS), FOR A QUANTITY OF TILE TO BE DELIVERED TO WISE, VIRGINIA, AND SUGAR GROVE, VIRGINIA.

THE GOODS WERE DELIVERED AUGUST 20, 1974, TO BOTH DESTINATIONS AND THE PURCHASE ORDER FOR SUGAR GROVE BEARS THE NOTATION OF RECEIPT AND ACCEPTANCE OF AUGUST 28, 1974, AND THE ORDER AT WISE IS NOTED AS BEING ACCEPTED ON NOVEMBER 19, 1974. THE FOREST SERVICE STATES THAT THE DELAY IN ACCEPTANCE AT WISE WAS OCCASIONED BY THE GOVERNMENT.

THE INVOICE OF MORRIS, RECEIVED ON SEPTEMBER 4, 1974, WAS PAID IN FULL ON NOVEMBER 20, 1974, WITH THE EXCEPTION OF A 1-PERCENT FINANCE CHARGE PER MONTH WHICH WAS BILLED TO THE FOREST SERVICE BECAUSE THE ACCOUNT WAS OVERDUE MORE THAN 60 DAYS.

THE FOREST SERVICE HAS REQUESTED OUR DECISION AS TO WHETHER THIS SERVICE CHARGE MAY BE PAID BECAUSE THE ONLY NOTATION OF SUCH A CHARGE WAS ON MORRIS' INVOICE WITH THE PURCHASE ORDER AND OTHER DOCUMENTS RELATING TO THE TRANSACTION BEING SILENT ON THE MATTER. THE NOTATION OF THE INVOICE UNDER THE HEADING "SERVICE CHARGE" STATED:

"ALL ACCOUNTS WITH MONIES 60 DAYS OR MORE PAST DUE AT THE FIRST DAY OF EACH CALENDAR MONTH WILL BE ASSESSED A FINANCE CHARGE OF 1% ON THE TOTAL PAST DUE ACCOUNTS. THIS IS AN EFFECTIVE ANNUAL INTEREST RATE OF 12%."

IT IS WELL SETTLED THAT THE PAYMENT OF INTEREST BY THE GOVERNMENT ON ITS UNPAID ACCOUNTS MAY NOT BE MADE EXCEPT WHERE INTEREST IS STIPULATED BY CONTRACT OR IS PROVIDED BY THE LAWS OF THE UNITED STATES. 45 COMP. GEN. 169 (1965) AND 51 COMP. GEN. 251 (1971).

AS THERE IS NO LAW WHICH PROVIDES FOR THE PAYMENT OF INTEREST, IN CIRCUMSTANCES SUCH AS THESE, IT MUST BE FOUND TO HAVE BEEN STIPULATED IN THE CONTRACT IN ORDER FOR THE INTEREST TO BE PAYABLE.

AS STATED PREVIOUSLY, THE FIRST NOTICE WHICH THE GOVERNMENT HAD OF THE SERVICE CHARGE WAS ON THE INVOICE SUBMITTED BY MORRIS ON SEPTEMBER 4, 1974, 15 DAYS AFTER THE GOODS WERE DELIVERED.

A PURCHASE ORDER ISSUED BY THE GOVERNMENT CONSTITUTES AN OFFER WHICH IS ACCEPTED BY THE CONTRACTOR BY THE DELIVERY OF THE ITEMS REQUESTED AND SUCH DELIVERY CONSTITUTES A CONSUMMATION OF A VALID AND BINDING CONTRACT. COMP. GEN. 191 (1956) AND B-155488, JANUARY 26, 1965.

THEREFORE, AS THERE WAS NOTHING ON THE DELIVERY RECEIPT PRESENTED TO THE GOVERNMENT UPON DELIVERY OF THE ITEMS, REGARDING THE INTEREST CHARGE, SUCH CHARGE DID NOT BECOME A PART OF THE CONTRACT AND MAY NOT BE PAID.

THE FOREST SERVICE HAS FURTHER INQUIRED THAT IF THE INTEREST CHARGE IS NOT PAYABLE UNDER THE INSTANT FACTS, WHEN, IN A PROCUREMENT TRANSACTION, MUST A VENDOR DISCLOSE SUCH A CHARGE IN ORDER TO RECEIVE PAYMENT? STATED ABOVE, THE GOVERNMENT TO BE BOUND BY AN INTEREST CHARGE MUST HAVE NOTICE OF THE CHARGE AT LEAST BEFORE OR AT DELIVERY AND THE CHARGE IS ACCEPTED BY AN AUTHORIZED OFFICIAL WHEN THE GOODS ARE DELIVERED. THIS USUALLY WOULD BE ACCOMPLISHED BY A NOTATION ON THE DELIVERY RECEIPT FURNISHED TO AND ACCEPTED BY THE GOVERNMENT. MATTER OF DENTON WELDING SUPPLY COMPANY, B-183047, FEBRUARY 27, 1975, 75-1 CPD 119.