B-756, JANUARY 26, 1939, 18 COMP. GEN. 627

B-756: Jan 26, 1939

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IN VIEW OF THE PROVISION IN THE SCHEDULE OF PRODUCTS OF THESE INDUSTRIES THAT "NO CLEARANCE IS REQUIRED FOR THE PURCHASE OF SECOND -HAND OR STERILIZED WIPING RAGS * * *.' 18 COMP. VOUCHER IN FAVOR OF SAM FRUMIN IN THE AMOUNT OF $51.45 FOR THE PURCHASE OF SECOND-HAND WIPING RAGS IS INCLOSED. ARE INCLOSED. 2. INSTRUCTIONS ARE REQUESTED AS TO WHETHER OR NOT THE ACCOUNT IS PROPERLY PAYABLE. OTHER VOUCHERS COVERING PURCHASE OF SECOND-HAND WIPING RAGS HAVE BEEN RECEIVED AND PAYMENT IS WITHHELD PENDING INFORMATION ON THIS SUBJECT. SUSPENSIONS HAVE BEEN MADE BY THE GENERAL ACCOUNTING OFFICE ON PREVIOUS VOUCHERS PAID BY THIS OFFICE CITING THE ABOVE DECISIONS. THE ATTORNEY GENERAL WAS AUTHORIZED AND DIRECTED TO PROVIDE EMPLOYMENT FOR ALL PHYSICALLY FIT INMATES IN THE UNITED STATES PENAL AND CORRECTIONAL INSTITUTIONS IN SUCH DIVERSIFIED FORMS AS WOULD REDUCE TO A MINIMUM COMPETITION WITH PRIVATE INDUSTRY OR FREE LABOR.

B-756, JANUARY 26, 1939, 18 COMP. GEN. 627

FEDERAL PRISON-MADE GOODS - PURCHASES OF SIMILAR ITEMS COMMERCIALLY - SECOND-HAND WIPING RAGS AS DISTINGUISHED FROM NEW WIPING CLOTHS PURCHASES OF SECOND-HAND WIPING RAGS, AS DISTINGUISHED FROM NEW WIPING CLOTHS, MAY BE MADE COMMERCIALLY WITHOUT CLEARANCE FROM THE FEDERAL PRISON INDUSTRIES, INC., IN VIEW OF THE PROVISION IN THE SCHEDULE OF PRODUCTS OF THESE INDUSTRIES THAT "NO CLEARANCE IS REQUIRED FOR THE PURCHASE OF SECOND -HAND OR STERILIZED WIPING RAGS * * *.' 18 COMP. GEN. 80, AMPLIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO MAJ. F. RICHARDS, UNITED STATES ARMY, JANUARY 26, 1939:

BY SECOND INDORSEMENT OF JANUARY 12, 1939, THE CHIEF OF FINANCE FORWARDED YOUR LETTER OF JANUARY 6, 1939, AS FOLLOWS:

1. VOUCHER IN FAVOR OF SAM FRUMIN IN THE AMOUNT OF $51.45 FOR THE PURCHASE OF SECOND-HAND WIPING RAGS IS INCLOSED. LETTER FROM THE REGIONAL FORESTER, ATLANTA, GEORGIA, DECEMBER 28/38 WITH COPIES OF LETTERS FROM THE FEDERAL PRISON INDUSTRIES, INCORPORATED, SEPTEMBER 28/38, AND THE DEPARTMENT OF AGRICULTURE, OCTOBER 5/38, IN CONNECTION WITH DECISION COMPTROLLER GENERAL, 18 COMP. GEN. 80, ARE INCLOSED.

2. IN VIEW OF THESE LETTERS, INSTRUCTIONS ARE REQUESTED AS TO WHETHER OR NOT THE ACCOUNT IS PROPERLY PAYABLE. OTHER VOUCHERS COVERING PURCHASE OF SECOND-HAND WIPING RAGS HAVE BEEN RECEIVED AND PAYMENT IS WITHHELD PENDING INFORMATION ON THIS SUBJECT. SUSPENSIONS HAVE BEEN MADE BY THE GENERAL ACCOUNTING OFFICE ON PREVIOUS VOUCHERS PAID BY THIS OFFICE CITING THE ABOVE DECISIONS.

UNDER THE ACT OF MAY 27, 1930, 46 STAT. 391, THE ATTORNEY GENERAL WAS AUTHORIZED AND DIRECTED TO PROVIDE EMPLOYMENT FOR ALL PHYSICALLY FIT INMATES IN THE UNITED STATES PENAL AND CORRECTIONAL INSTITUTIONS IN SUCH DIVERSIFIED FORMS AS WOULD REDUCE TO A MINIMUM COMPETITION WITH PRIVATE INDUSTRY OR FREE LABOR. SECTION 3 OF SAID ACT PROVIDES THAT THE ATTORNEY GENERAL SHALL ESTABLISH SUCH INDUSTRIES AS WILL PRODUCE ARTICLES AND COMMODITIES FOR CONSUMPTION IN UNITED STATES PENAL AND CORRECTIONAL INSTITUTIONS OR FOR SALE TO THE DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS OF THE FEDERAL GOVERNMENT. SECTIONS 4 TO 6 HAVE TO DO WITH THE WORKING CAPITAL FUNDS AT ATLANTA PENITENTIARY AND LEAVENWORTH PENITENTIARY, THERE BEING CREATED A CONSOLIDATED PRISON INDUSTRIES WORKING CAPITAL FUND TO BE AVAILABLE FOR CARRYING ON INDUSTRIAL ENTERPRISES AT ANY OF THE SEVERAL FEDERAL PENAL AND CORRECTIONAL INSTITUTIONS HERETOFORE OR HEREAFTER ESTABLISHED, AND SECTION 7 OF THE SAID ACT PROVIDES:

THE SEVERAL FEDERAL DEPARTMENTS AND INDEPENDENT ESTABLISHMENTS AND ALL OTHER GOVERNMENT INSTITUTIONS OF THE UNITED STATES SHALL PURCHASE AT NOT TO EXCEED CURRENT MARKET PRICES, SUCH PRODUCTS OF THE INDUSTRIES HEREIN AUTHORIZED TO BE CARRIED ON AS MEET THEIR REQUIREMENTS AND AS MAY BE AVAILABLE AND ARE AUTHORIZED BY THE APPROPRIATIONS FROM WHICH SUCH PURCHASES ARE MADE. * * *

SECTION 9 PROVIDES THAT "ALL ACTS AND PARTS OF ACTS IN CONFLICT HEREWITH ARE HEREBY REPEALED.'

INSOFAR AS CONCERNS THE MATTER OF REQUESTING COMPETITIVE BIDS AS CONTEMPLATED BY THE PROVISIONS OF SECTION 3709, REVISED STATUTES, ATTENTION IS INVITED TO AN OPINION OF THE ATTORNEY GENERAL OF THE UNITED STATES, 33 OP.ATTY.GEN. 327, QUOTING FROM PAGES 329, 330, WHEREIN IT WAS STATED:

* * * HAD IT BEEN THE INTENTION THAT THE DEPARTMENTS IN QUESTION SHOULD UTILIZE THE PRODUCTS OF THE MILL ONLY WHEN OFFERED AT PRICES LOWER THAN THOSE QUOTED BY PRIVATE MANUFACTURERS, AS WOULD BE THE CASE UNDER THE COMPETITIVE SYSTEM PRESCRIBED BY SECTION 3709, R.S., IT IS FAIR TO ASSUME THAT CONGRESS WOULD HAVE USED LANGUAGE APPROPRIATE TO THAT END; * * * BOTH THE LANGUAGE AND PURPOSE OF THE ACT, THEREFORE, ARE INCONSISTENT WITH THE IDEA THAT THE MILL, ITSELF A PART OF THE GOVERNMENT, THE BUSINESS OF OTHER GOVERNMENT ESTABLISHMENTS.

* * * WHAT IS CONTEMPLATED BY THE STATUTE, THEREFORE, IS NOT A SALE, BUT A TRANSFER OF PROPERTY FROM ONE GOVERNMENT ESTABLISHMENT TO ANOTHER. THIS WAS FULLY RECOGNIZED AND UNDERSTOOD BY THE HOUSE OF REPRESENTATIVES WHEN THE BILL WAS UNDER CONSIDERATION BY THAT BODY. THE SPONSORS FOR THE BILL EXPLAINED THAT, FOR THE REASON NOTED, THERE COULD BE NO SALE OF GOODS BY THE TEXTILE MILL TO OTHER GOVERNMENT DEPARTMENTS; AND THAT THE PROVISION FOR THE FURNISHING OF GOODS AT CURRENT MARKET PRICES AS DETERMINED BY THE ATTORNEY GENERAL WAS A MERE BOOKKEEPING ARRANGEMENT TO ENABLE THE CONGRESS FROM TIME TO TIME TO DETERMINE WHETHER THE MILL, RECEIVING APPROXIMATELY THE SAME PRICES AS OTHER MANUFACTURERS, IS A PAYING PROPOSITION (56 CONG.REC., PART 7, PP. 6374-6376). SINCE, THEN, NO "SALE" IS INVOLVED IN THE FURNISHING BY THE TEXTILE MILL OF ITS PRODUCTS AS CONTEMPLATED BY THE ACT, IT FOLLOWS THAT THERE IS NO "PURCHASE" OF SUCH PROPERTY WITHIN THE MEANING OF SECTION 3709, R.S., AND SIMILAR STATUTES, ALL OF WHICH ARE CLEARLY INTENDED TO APPLY TO PURCHASES BY THE GOVERNMENT INVOLVING THE ACQUIREMENT OF TITLE AND NOT TO THE MERE INTERDEPARTMENT TRANSFER OF PROPERTY TITLE TO WHICH IS ALREADY IN THE UNITED STATES.

THE VOUCHER HERE INVOLVED COVERS A PURCHASE OF SECOND-HAND WIPING RAGS AND IN THIS CONNECTION ATTENTION IS INVITED TO THE FOLLOWING PROVISION IN THE SCHEDULE OF PRODUCTS ISSUED BY THE FEDERAL PRISON INDUSTRIES, INC., ITEM NO. 27-C-2386:

OWING TO THE LIMITED CAPACITY OF OUR MILL IT IS IMPOSSIBLE FOR US TO SUPPLY ALL WIPING RAGS REQUIRED BY GOVERNMENT AGENCIES. ACCORDINGLY, NO CLEARANCE IS REQUIRED FOR THE PURCHASE OF SECOND HAND OR STERILIZED WIPING RAGS AS COVERED BY FEDERAL SPECIFICATIONS DDD-C-503.

SINCE THE PURCHASE HERE INVOLVED IS OF SECOND-HAND WIPING RAGS AS DISTINGUISHED FROM NEW WIPING CLOTHS AND SINCE, AS ABOVE NOTED, NO CLEARANCE IS REQUIRED FROM THE FEDERAL PRISON INDUSTRIES, C., IN THE PURCHASE OF SECOND-HAND WIPING RAGS, PAYMENT ON THE VOUCHER, WHICH IS RETURNED HEREWITH, IS AUTHORIZED IF OTHERWISE CORRECT AND PROPER. SEE 18 COMP. GEN. 391.