B-233323.3, B-235571, B-235574, B-235572, Aug 16, 1989

B-233323.3, B-235571, B-235574, B-235572, Aug 16, 1989

PRECIS-UNAVAILABLE DIGEST: B-233323.3 General Accounting Office has no objection to Federal Acquisition Regulation (FAR) No. 88-56, which as revised would add paragraph (d) to the clause at FAR section 52.247-65 to specify the information required to be submitted to the General Service Administration (GSA) in connection with GSA's audit of commercial freight bills. B-235571 General Accounting Office supports Federal Acquisition Regulation (FAR) case No. 89-28, a proposal to add a cost principle (FAR Sec. 31.205-52) and revise three others (FAR Secs. 31.205-10, -11, and -16) to provide that when the purchase method of accounting is used for a business combination, allowable amortization, cost of money, and depreciation would be limited to the total amounts for these items that would have been allowed had the combination not taken place. B-235574 General Accounting Office supports Federal Acquisition Regulation (FAR) case No. 89-31, a proposal to revise paragraph (d)(1) of the proposal payment clause at FAR section 52.232-16 to make clear that when the government makes progress payments to a contractor, the government makes progress payments to a contractor, the government receives "absolute title, not a mere lien," in such property in the possession of the contractor as parts, materials, inventory, and work in process. B-235572 General Accounting Office has no objection to Federal Acquisition Regulation (FAR) case No. 89-32, a proposal to revise FAR section 13.106 to raise from $1,000 to 10 percent of the small purchase limitation the threshold above which competition and price reasonable determinations are required when small purchase procedures are used.

Margaret A. Willis FAR Secretariat General Services Administration

Ms. Willis:

This responds to your letter of May 9, 1989, requesting our comments on a proposed changes to the Federal Acquisition Regulation (FAR). These are FAR case Nos. 88-56, 89-28, 89-31, and 89-32.

FAR case 89-28 is a proposal to add a cost principle (FAR Sec. 31.205-52) and revise three others (FAR Secs. 31.205-10, -11, and -16) with respect to asset valuations resulting from business combinations.

The changes would provide that when the purchase method of accounting is used for a business combination, the allowable amortization, cost of money, and depreciation would be limited to the total amounts for these items that would have been allowed had the combination not taken place. These changes are consistent with the views we expressed in our letter to you of February 29, 1988, copy enclosed, and we therefore support them.

FAR case 89-31 is a proposed rule that would revise paragraph (d)(1) of the contract clause at FAR section 52.232-16 to clarify the nature of the interest in specified property the government receives in exchange for progress payments made to contractors. Although the current clause expressly provides that title to such property as parts, materials, inventory, and work in process vests in the government, some have viewed the clause. See Marine Midland Bank v. United States, 687 F.2d 395 (Ct.Cl 1982); but see In re American Pouch Foods, Inc., 769 F.2d 1190 (7th Cir. 1985) (rejecting Marine Midland and holding that the government's position that it takes "absolute title, note a mere lien," under the progress payments clause. We support the proposed change. FAR case 89-32 is a proposal to revise FAR section 13.106 by raising the threshold above which competition and price reasonableness determinations are required when small purchase procedures are used. The threshold would be changed from $1,000 to 10 percent of the small purchase limitation, which is currently $25,000. We have no objection to this proposal change.

Finally, FAR case 88-56 supplements an earlier proposed rule concerning tshe submission of commercial freight bills to the General Services Administration (GSA) for audit. This latest proposed revision would add paragraph (d) to the clause at FAR section 52.247-65 to specify the information required to be submitted to GSA. We have no objection to this proposed change.