B-78179, SEPTEMBER 9, 1948, 28 COMP. GEN. 155

B-78179: Sep 9, 1948

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THERE IS NO AUTHORITY FOR THE DEPARTMENT OF THE ARMY TO APPLY THE PROCEEDS OF SALE OR EXCHANGE OF OBSOLETE. OF THE ASSISTANT SECRETARY OF THE ARMY WHEREIN IT IS STATED THAT A PRESENT REQUIREMENT EXISTS FOR THE PROCUREMENT OF TANK TRACKS AND OTHER SPARE PARTS FOR COMBAT MILITARY VEHICLES. THE LETTER FURTHER STATES THAT THE ORDNANCE DEPARTMENT MANUFACTURING ARSENALS ARE ENGAGED. EITHER FOR WHICH NO PEACETIME CIVILIAN COUNTERPART EXISTS OR WHERE IT IS MORE ECONOMICAL TO MANUFACTURE AS OPPOSED TO PROCUREMENT FROM COMMERCIAL CONCERNS. IT HAS BEEN THE RECENT EXPERIENCE OF THE ORDNANCE DEPARTMENT THAT MANY SUCH ITEMS ARE NOT NOW PROCURABLE ECONOMICALLY COMMERCIALLY OR THAT THE SOLE SOURCE IS MANUFACTURE AT AN ORDNANCE ARSENAL.

B-78179, SEPTEMBER 9, 1948, 28 COMP. GEN. 155

EXCHANGE OR SALE OF USED VEHICLES, ETC. - APPLICATION OF PROCEEDS TO SIMILAR ITEMS MANUFACTURED BY GOVERNMENT UNDER SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, AUTHORIZING THE APPLICATION OF THE PROCEEDS OF SALE OF USED VEHICLES, EQUIPMENT, ETC., IN CONNECTION WITH THE PURCHASE OF NEW SIMILAR ITEMS, THERE IS NO AUTHORITY FOR THE DEPARTMENT OF THE ARMY TO APPLY THE PROCEEDS OF SALE OR EXCHANGE OF OBSOLETE, UNSERVICEABLE, OR UNSUITABLE TANK TRACKS AND OTHER SPARE PARTS FOR COMBAT MILITARY VEHICLES TOWARD THE PROCUREMENT OF NEW SIMILAR EQUIPMENT MANUFACTURED BY ARMY ORDINANCE ARSENALS.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE ARMY, SEPTEMBER 9, 1948:

CONSIDERATION HAS BEEN GIVEN TO LETTER DATED JUNE 25, 1948, OF THE ASSISTANT SECRETARY OF THE ARMY WHEREIN IT IS STATED THAT A PRESENT REQUIREMENT EXISTS FOR THE PROCUREMENT OF TANK TRACKS AND OTHER SPARE PARTS FOR COMBAT MILITARY VEHICLES, AND THAT YOUR DEPARTMENT PROPOSES TO USE THE PROCEEDS OF SALE OF OBSOLETE, UNSERVICEABLE, OR UNSUITABLE EXCHANGE OR TRADE-IN ITEMS AND COMPONENTS OF THE TYPE AND CATEGORY MENTIONED FOR REPLACEMENT PURPOSES PURSUANT TO SECTION 8 OF THE ACT OF AUGUST 2, 1946, 60 STAT. 808, AND CHAPTER 1, ACT OF JULY 9, 1918, 40 STAT. 849.

THE LETTER FURTHER STATES THAT THE ORDNANCE DEPARTMENT MANUFACTURING ARSENALS ARE ENGAGED, AMONG OTHER THINGS, IN THE MANUFACTURE OF MILITARY- TYPE ITEMS, EITHER FOR WHICH NO PEACETIME CIVILIAN COUNTERPART EXISTS OR WHERE IT IS MORE ECONOMICAL TO MANUFACTURE AS OPPOSED TO PROCUREMENT FROM COMMERCIAL CONCERNS; THAT IN ATTEMPTING TO PURCHASE SUCH ORDNANCE ITEMS, E. G., SPARE PARTS FOR COMBAT VEHICLES, IT HAS BEEN THE RECENT EXPERIENCE OF THE ORDNANCE DEPARTMENT THAT MANY SUCH ITEMS ARE NOT NOW PROCURABLE ECONOMICALLY COMMERCIALLY OR THAT THE SOLE SOURCE IS MANUFACTURE AT AN ORDNANCE ARSENAL. IN THAT CONNECTION IT IS POINTED OUT THAT APPROVED PROJECTS ARE CONSIDERED AS ,OBLIGATIONS IN THE SAME MANNER AS PROVIDED FOR SIMILAR ORDERS PLACED WITH COMMERCIAL UFACTURERS.' ACTS OF JUNE 5, 1920, 41 STAT. 975; JULY 1, 1922, 42 STAT. 812; JUNE 2, 1937, 50 STAT. 245.

THE BASIC QUESTION PRESENTED FOR DECISION IS WHETHER IT IS LEGALLY PROPER TO FINANCE THE PROCUREMENT THROUGH MANUFACTURE OF CERTAIN OF THESE ITEMS AT AN ORDNANCE ARSENAL FROM THE PROCEEDS OF SALES HELD UNDER SECTION 8 OF THE ACT OF AUGUST 2, 1946, WHERE SUCH ACTION IS DEEMED TO BE IN THE BEST INTEREST OF THE GOVERNMENT.

THE CITED ACT OF JULY 9, 1918, 40 STAT. 849, AUTHORIZES THE DEPARTMENT OF THE ARMY TO "EXCHANGE" MOTOR-PROPELLED VEHICLES, AEROPLANES, ENGINES, AND ARTS THEREOF, BALLOONS, AND APPURTENANCES IN PART PAYMENT FOR NEW EQUIPMENT OF THE SAME OR SIMILAR CHARACTER. LIKE AUTHORITY WITH RESPECT TO SIMILAR CLASSES OF EQUIPMENT IS CONTAINED IN THE ACT OF AUGUST 29, 1916, 39 STAT. 635, AND THE ACT OF MAY 11, 1939, 53 STAT. 739. BY REASON OF THIS EXCHANGE AUTHORITY THE DEPARTMENT OF THE ARMY IS AUTHORIZED, UNDER THE ACT OF AUGUST 2, 1946, TO APPLY THE PROCEEDS FROM THE EXCHANGE OR SALE OF OBSOLETE, UNSERVICEABLE, OR UNSUITABLE TANK TRACKS AND OTHER SPARE PARTS FOR COMBAT MILITARY VEHICLES TOWARD THE PURCHASE PRICE OF SIMILAR NEW EQUIPMENT, PROVIDED THE PURCHASE AND SALE TRANSACTION IS OTHERWISE WITHIN THE PURVIEW OF THE REQUIREMENTS OF SECTION 8 THEREOF. 26 COMP. GEN. 729.

SECTION 8 OF THE ACT OF AUGUST 2, 1946, PROVIDES AS FOLLOWS:

IN PURCHASING MOTOR-PROPELLED OR ANIMAL-DRAWN VEHICLES OR TRACTORS, OR ROAD, AGRICULTURAL, MANUFACTURING, OR LABORATORY EQUIPMENT, OR BOATS, OR PATS, ACCESSORIES, TIRES, OR EQUIPMENT THEREOF, OR ANY OTHER ARTICLE OR ITEM THE EXCHANGE OF WHICH IS AUTHORIZED BY LAW, THE HEAD OF ANY DEPARTMENT 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: PROVIDED, THAT ANY TRANSACTION CARRIED OUT UNDER THE AUTHORITY OF THIS SECTION SHALL BE EVIDENCED IN WRITING.

IT IS TO BE OBSERVED THAT APPLICATION OF THE PROCEEDS OF SALES OF USED VEHICLES, EQUIPMENT, TC., IS AUTHORIZED BY THE FOREGOING STATUTORY PROVISION ONLY IN CONNECTION WITH THE PURCHASE OF NEW EQUIPMENT OF A SIMILAR CHARACTER. THEREFORE, THE PERTINENT INQUIRY IS WHETHER THE AUTHORITY TO UTILIZE THE PROCEEDS OF THE SALE OF OLD EQUIPMENT "IN PURCHASING" NEW EQUIPMENT PROPERLY CAN BE EXTENDED TO THE USE OF SUCH PROCEEDS IN CONJUNCTION WITH THE MANUFACTURE OF NEW EQUIPMENT BY A GOVERNMENT DEPARTMENT.

THE PURPOSE OF SECTION 8 IS SET FORTH ON PAGE 6 OF THE HOUSE REPORT NO. 2186 AND SENATE REPORT NO. 1636, SEVENTY-NINTH CONGRESS, SECOND SESSION, IN PART, AS FOLLOWS:

* * * SECTION 8 IS COPIED FROM THE CURRENT INDEPENDENT OFFICES APPROPRIATION ACT WITH A SLIGHT CHANGE, AND IT WILL MAKE PERMANENT THE AUTHORIZATION FOR THE EXCHANGE OR SALE OF CERTAIN TYPES OF EQUIPMENT AT THE TIME REPLACEMENTS ARE PURCHASED, CREDITING THE SALE OR TRADE IN VALUE AGAINST THE PURCHASE PRICE. ( ITALICS SUPPLIED.)

IT IS A WELL-ESTABLISHED RULE OF STATUTORY CONSTRUCTION THAT SINGLE WORDS USED IN A STATUTE MUST BE TAKEN WITH THE CONTEXT AND GENERAL SCOPE AND OBJECT OF THE PROVISION IN ORDER TO ASCERTAIN THE INTENTION OF THE LEGISLATURE. THERE IS NOTHING IN THE TERMS OF SAID SECTION 8 OR IN ITS LEGISLATIVE HISTORY TO INDICATE THAT THE WORD "PURCHASING" WAS USED OTHER THAN IN ITS USUAL AND POPULAR SENSE, NAMELY, THE ACT OF TRANSFERRING PROPERTY FROM ONE PERSON TO ANOTHER BY THEIR VOLUNTARY ACT AND AGREEMENT FOUNDED ON VALUABLE CONSIDERATION. SEE 18 COMP. GEN. 471, 473, AND DECISIONS CITED THEREIN. IT IS ONLY REASONABLE TO PRESUME THAT HAD THE CONGRESS INTENDED THE PROCEDURE CONTEMPLATED BY THE STATUTORY PROVISION TO INCLUDE THE VARIOUS OTHER MODES OF SECURING PROPERTY, IT WOULD HAVE USED A BROADER TERM SUCH AS "ACQUISITION" OR "PRODUCTION.'

THEREFORE, I AM CONSTRAINED TO HOLD THAT THE AUTHORITY CONTAINED IN SECTION 8 OF THE ACT OF AUGUST 2, 1946, MAY NOT BE APPLIED IN CONNECTION WITH THE MANUFACTURE BY YOUR DEPARTMENT OF THE EQUIPMENT REFERRED TO IN THE LETTER OF JUNE 25, 1948. WITH REGARD TO THE STATEMENT IN SAID LETTER TO THE EFFECT THAT ORDERS OR CONTRACTS FOR WORK OR MATERIAL UNDER AUTHORITY OF LAW, PLACED WITH GOVERNMENT-OWNED ESTABLISHMENTS, ARE REQUIRED TO BE CONSIDERED AS OBLIGATIONS IN THE SAME MANNER AS PROVIDED FOR SIMILAR ORDERS OR CONTRACTS PLACED WITH PRIVATE CONTRACTORS, IT APPEARS THAT THE STATUTES CITED AS AUTHORITY FOR SUCH STATEMENT RELATE MERELY TO THE MATTER OF AVAILABILITY OF FUNDS FOR OBLIGATING PURPOSES WITH RESPECT TO TIME, AS DISTINGUISHED FROM AVAILABILITY AS TO THE USE OF FUNDS AND, THEREFORE, WOULD NOT APPEAR TO HAVE ANY MATERIAL BEARING UPON THE MATTER. SEE 16 COMP. GEN. 575; ID. 752.