B-36121, AUGUST 16, 1943, 23 COMP. GEN. 106

B-36121, AUGUST 16, 1943, 23 COMP. GEN. 106

EQUIPMENT - EFFECT OF GOVERNMENT ORDER REQUIRING TRADE-IN OF OLD IN EXCHANGE FOR NEW - CASH BID SOLICITATION REQUIREMENT IN VIEW OF ORDERS ISSUED BY THE WAR PRODUCTION BOARD PROHIBITING THE TRANSFER OF CERTAIN TYPES OF EQUIPMENT UNLESS SIMILAR OLD EQUIPMENT IS DELIVERED IN EXCHANGE THEREFOR, USED EQUIPMENT OF THE TYPES COVERED BY THE ORDERS MAY BE DISPOSED OF ON THE BASIS OF TRADE-IN VALUES ONLY, WHEN EXCHANGED FOR NEW EQUIPMENT; AND THE ORDERS MAY BE CONSIDERED AS PREVAILING OVER THE ESTABLISHED RULE REQUIRING THE SOLICITATION OF CASH BIDS, ETC., TO THE EXTENT SAID RULE IS IN CONFLICT WITH SUCH ORDERS.

COMPTROLLER GENERAL WARREN TO THE FEDERAL WORKS ADMINISTRATOR, AUGUST 16, 1943:

I HAVE YOUR LETTER OF JULY 31, 1943, AS FOLLOWS:

THIS AGENCY HAS OCCASION FROM TIME TO TIME TO ISSUE INVITATIONS FOR THE PURCHASE OF NEW EQUIPMENT, REPLACEMENT PARTS, AND THE DISPOSAL OF OLD EQUIPMENT.

IN ACCORDANCE WITH THE MANY DECISIONS OF YOUR OFFICE IN EVERY INSTANCE WHERE NEW EQUIPMENT HAS BEEN PURCHASED AND OLD EQUIPMENT DISPOSED OF, THE OLD EQUIPMENT HAS ALWAYS BEEN ADVERTISED FOR DISPOSAL ON THE BASIS OF CASH PRICES AS WELL AS TRADE-IN ALLOWANCES, AND WHERE THE CASH BID EXCEEDED THE TRADE-IN ALLOWANCE THE EQUIPMENT WAS SOLD TO THE HIGHEST BIDDER AND THE PROCEEDS THEREOF DEPOSITED TO " MISCELLANEOUS RECEIPTS" IN THE TREASURY.

THE WAR PRODUCTION BOARD, UNDER DATE OF APRIL 6, 1943, ISSUED AN ORDER NO. L-176, PERTAINING TO ELECTRIC FANS, WHICH PROVIDES IN PART AS FOLLOWS:

" (4) EXCEPT IN FULFILLMENT OF PREFERRED ORDERS, ON AND AFTER APRIL 6, 1943, NO MANUFACTURER OR DISTRIBUTOR SHALL TRANSFER ANY REPAIR OR REPLACEMENT PART UNLESS A SIMILAR USED PART HAS BEEN DELIVERED TO HIM IN EXCHANGE THEREFOR, OR UNLESS HE HAS BEEN INFORMED THAT A SIMILAR USED PART IS BEING HELD BY THE DEALER OR DISTRIBUTOR TO WHOM THE NEW PART IS BEING TRANSFERRED OR HAS BEEN DISPOSED OF IN ACCORDANCE WITH THIS PARAGRAPH.

IT IS UNDERSTOOD THAT THE WAR PRODUCTION BOARD HAS ISSUED OTHER ORDERS PROHIBITING DEALERS FROM PURCHASING CERTAIN TYPES OF EQUIPMENT WITHOUT TURNING IN OLD EQUIPMENT. IT IS CONCEIVABLE THAT AT SOME FUTURE TIME THIS AGENCY MAY ISSUE INVITATIONS ON THE PURCHASE OF NEW EQUIPMENT AND THE DISPOSAL OF OLD EQUIPMENT AS HERETOFORE, NAMELY ON A CASH AS WELL AS A TRADE-IN BASIS AND SOME DEALER MAY BE THE HIGHEST BIDDER ON A CASH PRICE ALONE. IN SUCH EVENT THIS AGENCY WOULD BE PRECLUDED FROM OBTAINING OTHER EQUIPMENT BECAUSE THE DEALERS COULD NOT BID IN VIEW OF THE AFOREMENTIONED AND SIMILAR ORDERS OF THE WAR PRODUCTION BOARD.

IN CONSIDERATION OF THE ABOVE, YOUR DECISION IS RESPECTIVELY REQUESTED AS TO WHETHER THIS AGENCY CAN, DURING THE EFFECTIVENESS OF THE WAR PRODUCTION BOARD ORDER REFERRED TO HERETOFORE, AND SIMILAR ORDERS, DISPOSE OF USED EQUIPMENT OF THE TYPE AFFECTED BY SUCH ORDERS ON THE BASIS OF TRADE-IN VALUE ONLY WHEN NEW EQUIPMENT IS DESIRED TO BE PURCHASED.

AS SEEMS TO BE RECOGNIZED BY THE SUBMISSION, THE ESTABLISHED RULE FOR YEARS HAS BEEN THAT IN EXCHANGING OLD MATERIAL OR EQUIPMENT FOR NEW, CASH BIDS, ALSO, MUST BE SOLICITED FOR THE OLD EQUIPMENT AND AWARD MADE ON THE BASIS OF THE LOWEST NET COST TO THE GOVERNMENT. 26 COMP. DEC. 534; 3 COMP. GEN. 304; 5 ID. 798; 7 ID. 230; 15 ID. 811; 18 ID. 227; 19 ID. 313; 21 ID. 294; ID. 316.

HOWEVER, IT IS UNDERSTOOD THAT ORDERS OF THE WAR PRODUCTION BOARD, SUCH AS QUOTED IN YOUR SUBMISSION ARE ISSUED IN THE EXERCISE OF ITS POWERS TO ASSIGN PRIORITIES TO DELIVERIES OF MATERIAL; TO REQUIRE ACCEPTANCE AND PERFORMANCE OF CONTRACTS AND ORDERS DEEMED NECESSARY TO THE DEFENSE OF THE UNITED STATES; AND TO ALLOCATE MATERIALS AND FACILITIES THE SUPPLY OF WHICH IS LESS THAN THE DEMAND THEREFOR, WHICH POWERS WERE VESTED IN THE PRESIDENT OF THE UNITED STATES BY TITLE III OF THE SECOND WAR POWERS ACT, 56 STAT. 177, AND WERE IN TURN DELEGATED BY THE PRESIDENT TO THE CHAIRMAN, WAR PRODUCTION BOARD. UNDER SUCH CIRCUMSTANCES, THE RULES GOVERNING THE EXCHANGE OF OLD MATERIAL OR EQUIPMENT FOR NEW WHICH WOULD BE APPLICABLE IN TIMES OF PEACE NECESSARILY MUST YIELD TO THE NECESSITIES OF NATIONAL DEFENSE. ACCORDINGLY, WHILE PROPERLY AUTHORIZED ORDERS OF THE WAR PRODUCTION BOARD ARE IN EFFECT SUCH ORDERS MAY BE CONSIDERED AS PREVAILING OVER THE OTHERWISE APPLICABLE RULE TO THE EXTENT SUCH RULES IS IN CONFLICT WITH SAID ORDERS. COMPARE 21 COMP. GEN. 1019. THEREFORE, THE QUESTION YOU SUBMIT IS ANSWERED IN THE AFFIRMATIVE.