B-41811, JUNE 6, 1944, 23 COMP. GEN. 931

B-41811: Jun 6, 1944

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THAT IS. - FOR USE ON THE SAME TYPE OF VEHICLE IS AUTHORIZED. AS FOLLOWS: REFERENCE IS MADE TO SECTION 203 OF THE INDEPENDENT OFFICES APPROPRIATION ACT. THE MAIN DIFFERENCES ARE THAT THE LANGUAGE IN SECTION 203 (1) PERMITS THE APPLICATION OF THE PROCEEDS OF SALES TO THE PAYMENT OF PURCHASED EQUIPMENT. EXCHANGE OF LABORATORY EQUIPMENT BY THIS DEPARTMENT IS AUTHORIZED BY ACT OF JUNE 30. ESPECIALLY AS TO WHETHER IT APPLIES WHEN THE ARTICLE PURCHASED IS MATERIALLY DIFFERENT FROM THAT TO BE EXCHANGED OR SOLD. THE MOST LIBERAL INTERPRETATION IS THAT SALE OR EXCHANGE OF ANY OF THE ARTICLES ENUMERATED MAY BE APPLIED TO THE PURCHASE OF ANY ARTICLE OF THE CLASSES LISTED. BETWEEN THE TWO THERE ARE VARIOUS INTERPRETATIONS SUCH AS THAT (1) A VEHICLE MAY BE APPLIED TO THE PURCHASE OF A VEHICLE OF A DIFFERENT TYPE.

B-41811, JUNE 6, 1944, 23 COMP. GEN. 931

EXCHANGE OR SALE OF USED EQUIPMENT THE AUTHORIZATION IN SECTION 203 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1944, TO EXCHANGE OR SELL "SIMILAR" USED ITEMS WHEN PURCHASING EQUIPMENT OF THE TYPES SPECIFIED THEREIN AND TO APPLY THE EXCHANGE ALLOWANCE OR SALE PROCEEDS TO THE PURCHASE PRICE DOES NOT CONSTITUTE AUTHORITY TO INTERMINGLE THE VARIOUS CATEGORIES OF SPECIFIED ITEMS; RATHER, THE EQUIPMENT TO BE EXCHANGED OR SOLD AND THAT PURCHASED MUST BE OF THE SAME OR EQUIVALENT GENERAL CHARACTER, THAT IS, ONLY A TRUCK MAY BE SOLD OR EXCHANGED IN PAYMENT FOR A TRUCK, A BOAT FOR A BOAT, ETC. UNDER THE AUTHORITY OF SECTION 203 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1944, TO EXCHANGE OR SELL "SIMILAR" USED ITEMS WHEN PURCHASING EQUIPMENT, AND PARTS AND ACCESSORIES THEREFOR, OF THE TYPES SPECIFIED THEREIN AND TO APPLY THE EXCHANGE ALLOWANCE OR SALE PROCEEDS TO THE PURCHASE PRICE, MOTOR PARTS FOR ONE TYPE OF VEHICLE MAY NOT BE EXCHANGED FOR MOTOR PARTS FOR A DIFFERENT TYPE, NOR MAY A VEHICLE BE EXCHANGED FOR PARTS FOR EITHER THE SAME OR ANY OTHER TYPE OF VEHICLE; HOWEVER, THE EXCHANGE OR SALE OF USED PARTS IN CONNECTION WITH THE PURCHASE OF PARTS--- IDENTICAL OR NOT--- FOR USE ON THE SAME TYPE OF VEHICLE IS AUTHORIZED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF AGRICULTURE, JUNE 6, 1944:

THERE HAS BEEN RECEIVED YOUR LETTER OF MAY 3, 1944, AS FOLLOWS:

REFERENCE IS MADE TO SECTION 203 OF THE INDEPENDENT OFFICES APPROPRIATION ACT, 1944, READING AS FOLLOWS:

"IN PURCHASING MOTOR-PROPELLED OR ANIMAL-DRAWN VEHICLES OR TRACTORS OR ROAD, AGRICULTURAL, MANUFACTURING, OR LABORATORY EQUIPMENT, OR BOATS, OR PARTS, ACCESSORIES, TIRES, OR EQUIPMENT THEREOF, THE HEAD OF ANY EXECUTIVE DEPARTMENT OR INDEPENDENT ESTABLISHMENT OR HIS DULY AUTHORIZED REPRESENTATIVE MAY EXCHANGE OR SELL SIMILAR ITEMS AND APPLY THE EXCHANGE ALLOWANCES OR PROCEEDS OF SALES IN SUCH CASES IN WHOLE OR IN PART PAYMENT THEREFOR.'

PRIOR TO THE FISCAL YEAR 1944 THE APPROPRIATION ACTS FOR THIS DEPARTMENT CONTAINED EXCHANGE LANGUAGE VARYING SOMEWHAT FROM THE ABOVE, AS INDICATED BY THE FOLLOWING, QUOTED FROM THE APPROPRIATION ACT FOR THE FISCAL YEAR 1943:

"* * * PROVIDED FURTHER, THAT THE SECRETARY OF AGRICULTURE MAY EXCHANGE MOTOR-PROPELLED AND HORSE-DRAWN VEHICLES, TRACTORS, ROAD EQUIPMENT, AND BOATS, AND PARTS, ACCESSORIES, TIRES, OR EQUIPMENT THEREOF, IN WHOLE OR IN PART PAYMENT FOR VEHICLES, TRACTORS, ROAD EQUIPMENT, OR BOATS, OR PARTS, ACCESSORIES, TIRES, OR EQUIPMENT OF SUCH VEHICLES, TRACTORS, ROAD EQUIPMENT, OR BOATS PURCHASED BY HIM * * *.'

THE MAIN DIFFERENCES ARE THAT THE LANGUAGE IN SECTION 203 (1) PERMITS THE APPLICATION OF THE PROCEEDS OF SALES TO THE PAYMENT OF PURCHASED EQUIPMENT, (2) INCLUDES AGRICULTURAL, MANUFACTURING AND LABORATORY EQUIPMENT, (3) STATES THAT A HEAD OF A DEPARTMENT IN PURCHASING MAY EXCHANGE OR SELL "SIMILAR ITEMS," AND (4) IN ENUMERATING THE ITEMS USES THE CONJUNCTIVE "OR" THROUGHOUT. EXCHANGE OF LABORATORY EQUIPMENT BY THIS DEPARTMENT IS AUTHORIZED BY ACT OF JUNE 30, 1914 (5 U.S.C. 546).

THERE EXISTS WITHIN THE DEPARTMENT A WIDE DIFFERENCE OF OPINION AS TO THE INTERPRETATION OF THE LANGUAGE IN SECTION 203, ESPECIALLY AS TO WHETHER IT APPLIES WHEN THE ARTICLE PURCHASED IS MATERIALLY DIFFERENT FROM THAT TO BE EXCHANGED OR SOLD. THE MOST LIBERAL INTERPRETATION IS THAT SALE OR EXCHANGE OF ANY OF THE ARTICLES ENUMERATED MAY BE APPLIED TO THE PURCHASE OF ANY ARTICLE OF THE CLASSES LISTED. THE MOST RESTRICTIVE WOULD BE THAT THE SALE OR EXCHANGE OF A TRACTOR COULD BE APPLIED ONLY TO PURCHASE OF A TRACTOR, A ROAD GRADER TO A ROAD GRADER, A BOAT TO A BOAT, A CARBURETOR TO A CARBURETOR, ETC. BETWEEN THE TWO THERE ARE VARIOUS INTERPRETATIONS SUCH AS THAT (1) A VEHICLE MAY BE APPLIED TO THE PURCHASE OF A VEHICLE OF A DIFFERENT TYPE; (2) ANY AUTOMOTIVE EQUIPMENT FOR USE ON LAND MAY BE APPLIED TO ANY AUTOMOTIVE EQUIPMENT USED ON LAND, SUCH AS APPLYING A TRACTOR TO THE PURCHASE OF A TRUCK OR PASSENGER CAR OR VICE VERSA; (3) SINCE BOATS IN ALASKA ARE USED COMMONLY TO TRANSPORT MEN, EQUIPMENT, AND SUPPLIES ON DEPARTMENT WORK, A PURPOSE SERVED BY PASSENGER CARS AND TRUCKS ON LAND, TRUCKS OR AUTOMOBILES MAY BE APPLIED TO THE PURCHASE OF A BOAT; (4) ANY PART OF ANY CLASS OF ITEMS MAY BE APPLIED TO PURCHASE OF ANY OTHER PART OF SUCH CLASS, AS MISCELLANEOUS PARTS OF AUTOMOBILE EQUIPMENT FOR MISCELLANEOUS OTHER PARTS OF SUCH EQUIPMENT; (5) PARTS OF ONE CLASS MAY BE APPLIED TO PURCHASE OF PARTS OF ANOTHER CLASS ( E.G., OLD PARTS OF A TRACTOR TO PURCHASE OF NEW PARTS OF AN AUTOMOBILE); (6) EQUIPMENT OR PARTS MAY BE APPLIED TO PURCHASE OF DIFFERENT EQUIPMENT OR PARTS SERVING THE SAME ACTIVITY ( E.G., A ROAD GRADER TO PURCHASE OF A TRUCK FOR USE IN ROAD BUILDING); (7) A PICKUP FOR LIGHT DELIVERY APPLIED TO PURCHASE OF A HEAVY TRUCK, ETC.

IN VIEW OF THE DIFFERENCES OF OPINION WITHIN THE DEPARTMENT, A DECISION WOULD BE APPRECIATED AS TO THE EXTENT TO WHICH THE EXCHANGE OR SALE PROCEEDS OF ARTICLES COVERED BY SECTION 203 MAY BE APPLIED TO THE PURCHASE PRICE OF AN ARTICLE OR ARTICLES OF A DIFFERENT KIND WITHIN THE THE ENUMERATED CLASSES. TO ASSIST IN REACHING A DECISION OF GENERAL APPLICATION, THERE ARE LISTED BELOW SEVERAL TYPES OF EXCHANGES (OR USE OF PROCEEDS OF SALES) SOME BEING MORE COMMONLY DESIRED THAN OTHERS, AND IT WOULD BE APPRECIATED IF YOUR DECISION WOULD STATE SPECIFICALLY WHETHER ALL OR IF NOT WHICH, OF THESE EXCHANGES OR SALE PROCEEDS MAY BE APPLIED TO PAYMENT FOR THE NEW ARTICLES:

1. EXCHANGE OF A TRACTOR FOR A TRUCK, (A) WHEN BOTH ARE USED FOR ROAD CONSTRUCTION AND MAINTENANCE, (B) WHEN TRACTOR IS FOR ROAD PURPOSES AND TRUCK FOR GENERAL PURPOSES.

2. EXCHANGE OF A TRUCK OR PASSENGER CAR OR SEVERAL OF THESE IN PURCHASE OF A BOAT. IN THIS CONNECTION, THE FOREST SERVICE WORK IN ALASKA MAY BE USED AS AN ILLUSTRATION. TRUCKS AND PASSENGER-CARRYING CARS ON LAND WHERE ROADS ARE AVAILABLE AND BOATS ON THE CHANNELS SERVE THE SAME PURPOSES. FACT, OFTEN THEY ARE USED INTERCHANGEABLY WHERE THE TERMINAL POINTS MAY BE REACHED EITHER BY LAND OR WATER, OR BOTH MAY BE USED ON THE SAME JOB, PART OF THE TRANSPORTATION BEING OVER LAND AND THE REMAINDER BY WATER. BECAUSE OF LARGE AREAS NOT SERVED BY ROADS, MUCH OF THE TRAVEL OF RANGERS AND OTHER FOREST OFFICERS IN ALASKA IS BY BOAT. MOST OF THESE BOATS, IN ADDITION TO TRANSPORTING MEN, EQUIPMENT, AND SUPPLIES, HAVE SLEEPING AND DINING ACCOMMODATIONS FOR SEVERAL MEN (A MAXIMUM OF EIGHT). SOMETIMES SMALL, OPEN BOATS, POWERED BY OUTBOARD MOTORS ARE USED BY ONE OR TWO MEN FOR SHORT TRIPS.

3. EXCHANGE OF A PASSENGER CAR FOR A TRUCK OR VICE VERSA.

4. EXCHANGE OF A TRUCK OR GROUP OF TRUCKS OR OTHER ENUMERATED EQUIPMENT IN PURCHASE OF A TESTING MACHINE FOR A LABORATORY.

5. EXCHANGE OF A PART OR GROUP OF PARTS FOR DIFFERENT TYPES OF PARTS TO BE USED ON THE SAME CLASS OF EQUIPMENT ( E.G., A TRUCK MOTOR FOR PISTON RINGS, VALVES, BRAKE SHOES, WINDSHIELD GLASS, SPRINGS, ETC.).

6. EXCHANGE OF MOTOR PARTS FOR MOTOR PARTS OF A DIFFERENT CLASS OF EQUIPMENT, AS TRACTOR MOTOR PARTS FOR AUTOMOBILE, TRUCK, OR BOAT MOTOR PARTS.

7. EXCHANGE OF A TRUCK FOR A GROUP OF PARTS, ACCESSORIES, TIRES, OR EQUIPMENT (A) FOR TRUCKS, OR (B) FOR ANY MOTOR VEHICLE, OR (C) FOR BOTH VEHICLES AND TRACTORS.

8. EXCHANGE OF A TRUCK FOR A WAGON OR VICE VERSA.

9. EXCHANGE OF LABORATORY EQUIPMENT FOR AGRICULTURAL EQUIPMENT.

AN EARLY REPLY WOULD BE APPRECIATED.

THE PURPOSE OF THE QUOTED PROVISION IN THE INDEPENDENT OFFICES APPROPRIATION ACT, 1944, 57 STAT. 195, IS CLEARLY SET FORTH IN A LETTER DATED JANUARY 6, 1943, FROM THE DIRECTOR, BUREAU OF THE BUDGET, TO THE CHAIRMAN, COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES (QUOTED ON PAGES 1177, ET SEQ., OF THE HOUSE HEARINGS ON INDEPENDENT OFFICES APPROPRIATION BILL, 1944), READING, IN PERTINENT PART, AS FOLLOWS:

SECTION 7 (SECTION 203 OF THE ACT) IS A NEW GENERAL PROVISION TO AUTHORIZE THE EXCHANGE OR SALE OF MOTOR-PROPELLED VEHICLES AND CERTAIN OTHER SPECIFIED ARTICLES AND THE APPLICATION OF SUCH EXCHANGE ALLOWANCES OR SALES PROCEEDS IN WHOLE OR PART PAYMENT FOR SIMILAR ARTICLES. SIMILAR AUTHORITY IS CONTAINED IN EACH OF A NUMBER OF APPROPRIATIONS AND IT IS BELIEVED THAT THE EXTENSION OF THE PRIVILEGE TO ALL AGENCIES WILL AVOID DISLOCATION OF THEIR BUDGETARY PROGRAMS. THE NEED FOR THIS GENERAL PROVISION IS DUE TO THE COMPTROLLER GENERAL'S RULING THAT UNDER AUTHORITY TO EXCHANGE USED EQUIPMENT IN THE PURCHASE OF NEW, BOTH CASH BIDS AND TRADE-IN OFFERS MUST BE SOLICITED FOR THE USED EQUIPMENT, AND, IF A CASH BID EXCEEDS THE EXCHANGE ALLOWANCE OFFERED IT MUST BE ACCEPTED AND THE PROCEEDS OF SALE DEPOSITED IN THE TREASURY AS MISCELLANEOUS RECEIPTS AND THE PROPER APPROPRIATION CHARGED WITH THE FULL PRICE OF THE EQUIPMENT. SINCE THE AMOUNT ALLOWED IN THE APPROPRIATIONS FOR SUCH ARTICLES IS BASED ON THE ESTIMATED NET COST THEREOF, THE AGENCY IS UNABLE TO PURCHASE THE NUMBER CONTEMPLATED WHERE CASH BIDS FOR USED EQUIPMENT EXCEED EXCHANGE ALLOWANCES. THE COMPTROLLER GENERAL RECOGNIZED THIS PROBLEM WITH RESPECT TO THE AUTHORITY OF THE SECRETARY OF AGRICULTURE AND IN HIS LETTER TO THAT OFFICIAL DATED OCTOBER 6, 1941 (B-20182), SUGGESTED FOR CONSIDERATION A PROVISION WHICH IS SUBSTANTIALLY THE SAME AS NOW PROPOSED FOR ALL AGENCIES.

IN OTHER WORDS, SAID PROVISION MAY BE VIEWED AS AMENDING, IN EFFECT, SECTION 3618, REVISED STATUTES, 31 U.S.C. 487, TO THE EXTENT THAT IF IN THE PURCHASE OF NEW EQUIPMENT OF THE TYPES SPECIFIED SIMILAR USED EQUIPMENT IS OFFERED FOR SALE OR EXCHANGE AND THE CASH BID FOR SUCH USED EQUIPMENT EXCEEDS THE TRADE-IN ALLOWANCE THEREFOR SUCH CASH BID MAY BE ACCEPTED AND THE PROCEEDS OF THE SALE APPLIED TO THE PURCHASE PRICE OF THE NEW EQUIPMENT RATHER THAN DEPOSITED AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. THE RESULT IS THAT THE APPROPRIATION FROM WHICH PAYMENT FOR THE NEW EQUIPMENT IS MADE IS DEPLETED ONLY BY THE AMOUNT, IF ANY, BY WHICH THE PRICE OF THE NEW EQUIPMENT EXCEEDS THE AMOUNT RECEIVED FOR THE USED EQUIPMENT--- REGARDLESS OF WHETHER THE AMOUNT RECEIVED FOR THE USED EQUIPMENT IS IN THE FORM OF CASH OR AN EXCHANGE ALLOWANCE. AND SINCE IT HAS BEEN THE PRACTICE TO BASE APPROPRIATION ESTIMATES UPON THE NET--- RATHER THAN THE GROSS--- AMOUNT NECESSARY TO PURCHASE NEW EQUIPMENT FOR THE ENSUING FISCAL YEAR THE SAID PROVISION TENDS TO OBVIATE ANY UNTOWARD DISRUPTION IN THE BUDGETARY PROGRAMS OF THE VARIOUS AGENCIES IN THIS CLASS OF CASES.

THERE ARE SET FORTH IN YOUR LETTER VARIOUS POSSIBLE INTERPRETATIONS OF THE PROVISION IN REGARD TO THE TYPE OF EQUIPMENT WHICH MAY BE EXCHANGED OR SOLD IN CONNECTION WITH THE PURCHASE OF NEW EQUIPMENT. SEVERAL OF SUCH INTERPRETATIONS APPARENTLY ARE BASED ON THE VIEW THAT ITEMS USED FOR THE SAME PURPOSE MIGHT BE FOR CONSIDERATION AS "SIMILAR ITEMS" WITHIN THE MEANING OF SAID PROVISION. IN THAT CONNECTION, VARIOUS ENACTMENTS ON THIS GENERAL SUBJECT HAVE PROVIDED THAT THE PURPOSE TO BE SERVED BY THE NEW EQUIPMENT MUST BE THE SAME AS THAT SERVED BY THE EQUIPMENT EXCHANGED. SEE, FOR EXAMPLE, ACT OF MARCH 2, 1917, 39 STAT. 973; ACT OF MAY 12, 1917, 40 STAT. 43; SECTION 5 OF THE ACT OF MARCH 4, 1915, 38 STAT. 1161; ACT OF APRIL 15, 1937, 50 STAT. 64. WHEREAS, IN OTHER LEGISLATION THE SOLE REQUIREMENT IS THAT THE EQUIPMENT TO BE PURCHASED AND THE EQUIPMENT TO BE EXCHANGED BE OF THE SAME OR EQUIVALENT GENERAL CHARACTER. SEE ACT OF MAY 11, 1939, 53 STAT. 739; ACT OF JUNE 6, 1941, 55 STAT. 247. IT IS TO THE LATTER, RATHER THAN THE FORMER, GROUP OF ACTS THAT THE INSTANT PROVISION WOULD APPEAR TO BE ANALOGOUS IN THE RESPECT UNDER CONSIDERATION.

MOREOVER, AS INDICATED IN THE ABOVE-QUOTED PORTION OF LETTER FROM THE DIRECTOR, BUREAU OF THE BUDGET, THE SAID PROVISION CONTAINS SUBSTANTIALLY THE LANGUAGE SUGGESTED BY THIS OFFICE IN DECISION DATED OCTOBER 6, 1941 (B -20182), 21 COMP. GEN. 294, TO YOU, FOR INCLUSION IN THE APPROPRIATION FOR THE DEPARTMENT OF AGRICULTURE FOR THE FISCAL YEAR 1943. IN SUGGESTING SUCH PROVISION THE TERM ,SIMILAR ITEMS" WAS EMPLOYED MERELY TO AVOID THE NECESSITY OF REPEATING THE CATEGORIES OF ITEMS TO BE PURCHASED; AND THERE HAS BEEN FOUND NO INDICATION THAT THE CONGRESS USED THE TERM IN ANY OTHER SENSE. ACCORDINGLY, IT MUST BE CONCLUDED THAT THERE WAS NO INTENTION TO AUTHORIZE AN INTERMINGLING OF THE VARIOUS CATEGORIES OF ITEMS LISTED IN THE PROVISION IN THE EXCHANGE OR SALE OF USED EQUIPMENT AND THE PURCHASE OF NEW EQUIPMENT.

IT IS REQUESTED IN YOUR LETTER THAT SPECIFIC ATTENTION BE GIVEN THE SEVERAL TYPES OF EXCHANGES LISTED AND DECISION RENDERED AS TO THE AUTHORITY FOR EACH. IN CONNECTION THEREWITH I HAVE TO ADVISE THAT THERE WOULD APPEAR TO BE NO AUTHORITY FOR ANY OF THE VARIOUS TYPES SET FORTH, WITH THE EXCEPTION OF NO. 5. IN OTHER WORDS, IN THE PURCHASE OF A TRUCK ONLY A TRUCK MAY BE SOLD OR EXCHANGED, A TRACTOR FOR A TRACTOR, A BOAT FOR A BOAT, ETC. HOWEVER, WHERE THERE IS TO BE PURCHASED A TRUCK PART OR A TRACTOR PART, IT IS NOT NECESSARY THAT AN IDENTICAL PART BE SOLD OR EXCHANGED; IT IS SUFFICIENT THAT THE PART SOLD OR EXCHANGED AND THE PART PURCHASED BE FOR USE ON THE SAME CLASS OF EQUIPMENT.