B-73937, MARCH 31, 1948, 27 COMP. GEN. 563

B-73937: Mar 31, 1948

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EQUIPMENT IS SOLD. WHICH SITUATION IS NOT CONTEMPLATED BY SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2. FUNDS DERIVED FROM SUCH SALES HAVE NO LONGER PERIOD OF AVAILABILITY THAN FUNDS APPROPRIATED FOR THE PURCHASE OF NEW EQUIPMENT. SALE PROCEEDS RECEIVED IN A PRIOR FISCAL YEAR ARE NOT AVAILABLE FOR APPLICATION AGAINST THE COST OF NEW EQUIPMENT PURCHASED IN A SUBSEQUENT FISCAL YEAR AND CHARGEABLE TO THE APPROPRIATION OF THAT FISCAL YEAR. ARE FOR DEPOSITING INTO MISCELLANEOUS RECEIPTS. 26 COMP. WHERE THE APPROPRIATION FOR A PARTICULAR FISCAL YEAR LEGALLY IS OBLIGATED FOR THE PURCHASE OF NEW VEHICLES. - THE PROCEEDS OF THE SALE OF THE REPLACED EQUIPMENT ARE AVAILABLE. MAY BE DEPOSITED TO THE ACCOUNT CURRENT FOR THE FISCAL YEAR DURING WHICH THE OBLIGATION FOR PURCHASING NEW EQUIPMENT WAS INCURRED.

B-73937, MARCH 31, 1948, 27 COMP. GEN. 563

EXCHANGE OR SALE OF USED VEHICLES, ETC. - APPLICATION OF PROCEEDS TO PURCHASE PRICE WHERE, PRIOR TO THE PURCHASE OF NEW EQUIPMENT, OLD OR USED, EQUIPMENT IS SOLD, WHICH SITUATION IS NOT CONTEMPLATED BY SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, AUTHORIZING THE APPLICATION OF THE PROCEEDS OF SALE OF USED VEHICLES, ETC., TOWARD THE PURCHASE OF NEW SIMILAR ITEMS, FUNDS DERIVED FROM SUCH SALES HAVE NO LONGER PERIOD OF AVAILABILITY THAN FUNDS APPROPRIATED FOR THE PURCHASE OF NEW EQUIPMENT, AND, THEREFORE, SALE PROCEEDS RECEIVED IN A PRIOR FISCAL YEAR ARE NOT AVAILABLE FOR APPLICATION AGAINST THE COST OF NEW EQUIPMENT PURCHASED IN A SUBSEQUENT FISCAL YEAR AND CHARGEABLE TO THE APPROPRIATION OF THAT FISCAL YEAR, BUT ARE FOR DEPOSITING INTO MISCELLANEOUS RECEIPTS. 26 COMP. GEN. 729, AMPLIFIED. WHERE THE APPROPRIATION FOR A PARTICULAR FISCAL YEAR LEGALLY IS OBLIGATED FOR THE PURCHASE OF NEW VEHICLES, ETC.--- AS DISTINGUISHED FROM AN ADMINISTRATIVE OBLIGATION--- THE PROCEEDS OF THE SALE OF THE REPLACED EQUIPMENT ARE AVAILABLE, UNDER SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, FOR APPLICATION AGAINST THE PURCHASE EVEN THOUGH THE FUNDS ACTUALLY MAY NOT BE RECEIVED UNTIL THE SUCCEEDING FISCAL YEAR, AND MAY BE DEPOSITED TO THE ACCOUNT CURRENT FOR THE FISCAL YEAR DURING WHICH THE OBLIGATION FOR PURCHASING NEW EQUIPMENT WAS INCURRED. COMP. GEN. 729, AMPLIFIED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF AGRICULTURE, MARCH 31, 1948:

REFERENCE IS MADE TO LETTER DATED FEBRUARY 24, 1948, FROM THE ASSISTANT SECRETARY OF AGRICULTURE REQUESTING DECISION ON SEVERAL MATTERS ARISING UNDER THE PROVISIONS OF SECTION 8 OF PUBLIC LAW 600, APPROVED AUGUST 2, 1946, 60 STAT. 808.

SAID SECTION 8 PROVIDES AS FOLLOWS:

SEC. 8 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, OR ANY OTHER ARTICLE OR ITEM THE EXCHANGE OF WHICH IS AUTHORIZED BY LAW, THE HEAD OF ANY DEPARTMENT OF HIS DULY AUTHORIZED REPRESENTATIVE MAY EXCHANGE OR SELL SIMILAR ITEMS AND APPLY THE PAYMENT THEREFOR: PROVIDED, THAT ANY TRANSACTION CARRIED OUT UNDER THE AUTHORITY OF THIS SECTION SHALL BE EVIDENCED IN WRITING.

THE LETTER STATES THAT CAREFUL CONSIDERATION HAS BEEN GIVEN TO DECISIONS OF THIS OFFICE PERTAINING TO THE FOREGOING PROVISION OF LAW, PARTICULARLY TO THE DECISION, 26 COMP. GEN. 729, WHICH HELD (QUOTING FROM THE SYLLABUS) AS FOLLOWS:

SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, AUTHORIZING APPLICATION OF THE PROCEEDS OF SALE OF USED VEHICLES, ETC., TOWARD THE PURCHASE OF NEW SIMILAR ITEMS DOES NOT REQUIRE THAT THE OLD ITEMS BE ACTUALLY SOLD WHEN THE NEW ARE ORDERED, AND, THEREFORE, THE PROCEEDS OF SALE MAY BE APPLIED TOWARD THE PURCHASE PRICE EVEN THOUGH THE SALE AND PURCHASE ARE NOT SIMULTANEOUS, PROVIDED THE TRANSACTIONS ARE SO IDENTIFIED WITH EACH OTHER AS TO PERMIT A DETERMINATION THAT THE ITEMS ARE SUFFICIENTLY SIMILAR TO FALL WITHIN THE PURVIEW OF THE STATUTE.

IT IS STATED FURTHER THAT NO DIFFICULTY IS ENCOUNTERED IN IDENTIFYING PROCEEDS OF THE SALE OF OLD EQUIPMENT WITH THE PURCHASE OF REPLACEMENT EQUIPMENT, WHEN THE PURCHASE PRECEDES THE SALE OR IS SIMULTANEOUS THEREWITH. HOWEVER, FREQUENTLY THE SALE PRECEDES THE PURCHASE, IN VIEW OF WHICH SEVERAL QUESTIONS ARE POSED, RELATIVE TO PROCEDURES, AS FOLLOWS:

1. WOULD A REQUISITION FOR REPLACEMENT EQUIPMENT, CONTAINING SUFFICIENT DESCRIPTION TO DISCLOSE THAT IT AND THE EQUIPMENT SOLD ARE OF THE SAME OR SUBSTANTIALLY THE SAME CHARACTER, AND CONTAINING DESCRIPTION OF THE EQUIPMENT SOLD, BE SUFFICIENT FOR IDENTIFICATION AND OBLIGATION OF THE SALES PROCEEDS DEPOSITED IN THE "6690" APPROPRIATION? IN THIS INSTANCE, THE REQUISITION IS THE DOCUMENT TO BE CITED ON THE APPLICABLE SCHEDULE OF COLLECTIONS. WHILE A REQUISITION MAY NOT CONSTITUTE A "LEGAL" OBLIGATION, AS THAT TERM IS DEFINED IN DECISION B-28088 (22 COMP. GEN. 156) AND BUDGET -TREASURY REGULATION NO. 1, REVISED, IT IS AN "ADMINISTRATIVE OBLIGATION" AND A DEFINITE EXPRESSION OF INTENT TO PURCHASE.

2. IF YOUR ANSWER TO QUESTION 1 IS AFFIRMATIVE, WOULD SUCH A REQUISITION BE CONSIDERED AS OBLIGATING FUNDS OF THE "6690" APPROPRIATION WHEN THE SALE OF THE OLD EQUIPMENT IS IN ONE FISCAL YEAR AND THE FINAL CONTRACT OR PURCHASE ORDER FOR THE REPLACEMENT EQUIPMENT, BECAUSE OF VARIOUS REASONS INCLUDING ERRORS IN BIDS, UNUSUAL SUPPLY CONDITIONS, ETC., IS CONSUMMATED IN THE ENSUING FISCAL YEAR, WHERE NORMAL PROCUREMENT PROCEDURES HAVE BEEN IN PROCESS SINCE THE SALE OF THE OLD EQUIPMENT?

3. IF QUESTION 2 IS ANSWERED IN THE AFFIRMATIVE WOULD THE EXPENDITURE DOCUMENT BE SPLIT--- THAT IS, A PORTION CHARGED AGAINST THE CURRENT APPROPRIATION AND THE BALANCE AGAINST THE PRIOR YEAR'S "6690" APPROPRIATION, OR WOULD THE FUNDS IN THE PRIOR YEAR'S "6690" APPROPRIATION BE TRANSFERRED TO THE CURRENT "6690" APPROPRIATION?

THE REFERRED-TO APPROPRIATION ACCOUNT--- "1286690 PAYMENTS FROM PROCEEDS OF SALES, MOTOR-PROPELLED VEHICLES, ETC., DEPARTMENT OF AGRICULTURE, 1948" --- AND THE CORRESPONDING RECEIPT ACCOUNT "126690 DEPOSITS, PROCEEDS OF SALES, MOTOR-PROPELLED VEHICLES, DEPARTMENT OF AGRICULTURE, 1948," WERE ESTABLISHED BY GENERAL ACCOUNTING OFFICE ACCOUNTS AND PROCEDURES LETTER NO. 12058, DATED SEPTEMBER 15, 1947, TO ACCOUNT FOR THE PROCEEDS OF SALES OF OLD EQUIPMENT OF THE DEPARTMENT USED IN THE PURCHASE OF NEW EQUIPMENT.

IT MAY BE STATED AT THE OUTSET THAT IT IS IN CONNECTION WITH THE PURCHASE OF MOTOR-PROPELLED VEHICLES, ETC., THAT THERE IS PERMITTED THE APPLICATION OF THE PROCEEDS OF SALES OF OLD OR USED VEHICLES, ETC.

THE ABOVE-QUOTED QUESTIONS ARISE FROM SITUATIONS WHERE THE SALE OF OLD OR USED EQUIPMENT PRECEDES THE PURCHASE OF NEW EQUIPMENT, WHICH IS NOT CONTEMPLATED UNDER THE STATUTE UNDER CONSIDERATION. MOREOVER, FUNDS RECEIVED FROM THE SALE OF USED EQUIPMENT SHOULD HAVE NO LONGER PERIOD OF AVAILABILITY THAN FUNDS APPROPRIATED FOR THE PURCHASE OF NEW EQUIPMENT. HOWEVER, IF AN APPROPRIATION FOR A PARTICULAR FISCAL YEAR IS PROPERLY OBLIGATED FOR THE PURCHASE OF NEW EQUIPMENT--- AS DISTINGUISHED FROM AN ADMINISTRATIVE OBLIGATION--- THE PROCEEDS DERIVED FROM THE SALE OF THE USED EQUIPMENT SHOULD BE AVAILABLE FOR APPLICATION AGAINST SUCH PURCHASE EVEN THOUGH THE FUNDS ACTUALLY MAY NOT BE RECEIVED UNTIL THE SUCCEEDING FISCAL YEAR. IN SUCH A CASE, THE PROCEEDS FROM THE SALE OF THE USED EQUIPMENT SHOULD BE PERMITTED TO BE DEPOSITED TO THE ACCOUNT CURRENT FOR THE FISCAL YEAR CURRENT AT THE TIME THE OBLIGATION FOR THE NEW EQUIPMENT IS INCURRED. PROCEEDS FROM THE SALE OF USED EQUIPMENT RECEIVED IN A PRIOR FISCAL YEAR ARE NOT AVAILABLE FOR APPLICATION AGAINST THE COST OF NEW EQUIPMENT PURCHASED IN A SUBSEQUENT FISCAL YEAR AND CHARGEABLE TO THAT FISCAL YEAR APPROPRIATION--- THE UNOBLIGATED BALANCE OF SUCH PROCEEDS BEING FOR DEPOSITING AND COVERING INTO THE TREASURY OF THE UNITED STATES AS MISCELLANEOUS RECEIPTS.