B-79631, OCTOBER 25, 1948, 28 COMP. GEN. 256

B-79631: Oct 25, 1948

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WHEN THE TRADE-IN ALLOWANCE IS GREATER THAN THE PURCHASE PRICE. FIVE USED CAMERAS ARE EXCHANGED FOR A NEW CAMERA. WHICH CAMERA ACTUALLY IS IN REPLACEMENT OF BUT ONE OF THE FIVE OLD CAMERAS. THE DIFFERENCE BETWEEN THE VALUE OF THE REPLACED CAMERA AND THE PURCHASE PRICE OF THE NEW ONE IS FOR CHARGING AGAINST THE APPLICABLE APPROPRIATION AND FOR CREDITING TO MISCELLANEOUS RECEIPTS IN ACCORDANCE WITH THE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944. 1948: REFERENCE IS MADE TO LETTER OF AUGUST 18. PROVIDED THAT FIVE RECORDAK CAMERAS DESCRIBED THEREIN WERE TO BE USED AS AN EXCHANGE ALLOWANCE ON ONE RECORDAK CAMERA ALSO DESCRIBED THEREIN. WHICH AMOUNT IS REPORTED TO HAVE BEEN RECEIVED BY THE BUREAU OF THE CENSUS AND DEPOSITED TEMPORARILY IN SPECIAL DEPOSITS.

B-79631, OCTOBER 25, 1948, 28 COMP. GEN. 256

USED EQUIPMENT - SALE OR EXCHANGE OF TWO OR MORE PIECES WHEN ACQUIRING ONE NEW PIECE - DISPOSITION OF PROCEEDS OR EXCESS EXCHANGE ALLOWANCE AN AWARD MADE PURSUANT TO A BID CONSISTING OF AN EXCHANGE ALLOWANCE ON FIVE USED GOVERNMENT CAMERAS TOWARD THE PURCHASE OF ONE NEW CAMERA UNDER AUTHORITY OF SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, CONSTITUTES A BINDING CONTRACT CONTEMPLATING NOT ONLY AN EXCHANGE OF CAMERA EQUIPMENT BUT ALSO AN EXCHANGE OF CASH FOR ANY DIFFERENCE BETWEEN THE PURCHASE PRICE AND THE TRADE-IN ALLOWANCE, THE AMOUNT OF SUCH DIFFERENCE, WHEN THE TRADE-IN ALLOWANCE IS GREATER THAN THE PURCHASE PRICE, BEING FOR CREDITING TO MISCELLANEOUS RECEIPTS UNDER THE APPLICABLE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944. WHERE, IN THE EXCHANGE OF EQUIPMENT UNDER THE PROVISIONS OF SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, FIVE USED CAMERAS ARE EXCHANGED FOR A NEW CAMERA, WHICH CAMERA ACTUALLY IS IN REPLACEMENT OF BUT ONE OF THE FIVE OLD CAMERAS, THE DIFFERENCE BETWEEN THE VALUE OF THE REPLACED CAMERA AND THE PURCHASE PRICE OF THE NEW ONE IS FOR CHARGING AGAINST THE APPLICABLE APPROPRIATION AND FOR CREDITING TO MISCELLANEOUS RECEIPTS IN ACCORDANCE WITH THE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF COMMERCE, OCTOBER 25, 1948:

REFERENCE IS MADE TO LETTER OF AUGUST 18, 1948, FROM THE ACTING SECRETARY OF COMMERCE, TRANSMITTING A MEMORANDUM DATED AUGUST 4, 1948, FROM THE ACTING DIRECTOR OF THE BUREAU OF THE CENSUS, REQUESTING DECISION AS TO THE DISPOSITION OF AN AMOUNT RECEIVED BY THE SAID BUREAU AS AN EXCHANGE ALLOWANCE FOR CAMERAS IN EXCESS OF THE COST OF THE NEW CAMERA INCLUDED IN THE EXCHANGE BID AND AWARD.

THE BID, AS QUOTED IN THE SAID MEMORANDUM, PROVIDED THAT FIVE RECORDAK CAMERAS DESCRIBED THEREIN WERE TO BE USED AS AN EXCHANGE ALLOWANCE ON ONE RECORDAK CAMERA ALSO DESCRIBED THEREIN. THE BID FURTHER SPECIFIED $2,400 AS THE AMOUNT OF SUCH EXCHANGE ALLOWANCE AND APPARENTLY FIXED $1,550 AS THE PRICE OF THE NEW CAMERA, THUS RESULTING IN AN EXCESS EXCHANGE ALLOWANCE OF $850, WHICH AMOUNT IS REPORTED TO HAVE BEEN RECEIVED BY THE BUREAU OF THE CENSUS AND DEPOSITED TEMPORARILY IN SPECIAL DEPOSITS. DECISION IS REQUESTED, IN SUBSTANCE, AS TO WHETHER THE SAID BID AND THE AWARD PURSUANT THERETO CONSTITUTE A BINDING CONTRACT "CONTEMPLATING AN EXCHANGE OF CAMERA EQUIPMENT ONLY AND NOT AN EXCHANGE OF CASH FOR ANY DIFFERENCE THAT MAY ARISE BETWEEN PURCHASE PRICE AND TRADE-IN LLOWANCE; " ALSO WHETHER, IF SUCH PAYMENT OF CASH IS PERMISSIBLE, THE AMOUNT OF SUCH PAYMENT MAY ,BE DEPOSITED INTO THE SPECIAL FUND RECEIPT ACCOUNT 6690, PROCEEDS OF SALES, MOTOR PROPELLED VEHICLES, ETC., AND BE MADE AVAILABLE TO PURCHASE ADDITIONAL MICROFILM EQUIPMENT FROM RECORDAK CORPORATION, NAMELY MICROFILM READERS, WITHOUT WHICH A MICROFILM CAMERA IS OF NO VALUE.'

WITH RESPECT TO THE BID AND AWARD THERE COULD BE LITTLE DOUBT THAT UNDER THE TERMS THEREOF THE UNITED STATES WOULD BE BOUND TO PAY THE DIFFERENCE BETWEEN THE EXCHANGE ALLOWANCE AND THE PRICE OF THE NEW CAMERA, IF THE LATTER WERE HIGHER. CONVERSELY, THE CONTRACTOR WOULD APPEAR EQUALLY BOUND TO PAY THE DIFFERENCE BETWEEN THE EXCHANGE ALLOWANCE AND THE PURCHASE PRICE OF THE NEW CAMERA, IF THE LATTER BE LOWER. HENCE, THE PAYMENT OF $850 BY THE CONTRACTOR WAS PROPER.

SECTION 8 OF THE ACT OF AUGUST 2, 1946, 60 STAT. 808 ( PUBLIC LAW 600, REFERRED TO IN THE SAID MEMORANDUM OF AUGUST 4, 1948), PROVIDES:

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 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.

IN 27 COMP. GEN. 30, IT WAS HELD THAT TWO OR MORE OLD UNITS OF EQUIPMENT MAY BE TRADED IN OR SOLD AND THE PROCEEDS OF THE SALE APPLIED TOWARD THE PURCHASE OF A UNIT OF NEW EQUIPMENT IF, IN FACT, THE NEW IS TO BE USED AS A REPLACEMENT FOR THE OLD, BUT IF THE OLD EQUIPMENT IS SURPLUS, THE EXCHANGE OR SALE THEREOF IN CONNECTION WITH THE PURCHASE OF NEW EQUIPMENT IS NOT AUTHORIZED, IT BEING FOR DISPOSITION UNDER THE APPLICABLE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944, 58 STAT. 765, 772.

ORDINARILY A NEW ITEM OF EQUIPMENT IS PURCHASED TO REPLACE BUT ONE ITEM OF OLD EQUIPMENT. IT IS ONLY IN EXTRAORDINARY CIRCUMSTANCES, WHEN THE ITEM OF NEW EQUIPMENT IS SO FAR ADVANCED TECHNICALLY AND PERFORMS THE WORK SO MANY TIMES MORE EFFICIENTLY THAN THE OLD EQUIPMENT, THAT IT PROPERLY MAY BE SAID THAT THE NEW EQUIPMENT IS TO TAKE THE PLACE OF MORE THAN ONE ITEM OF OLD EQUIPMENT. ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD IT IS TO BE PRESUMED THAT THE NEW RECORDAK CAMERA ACTUALLY IS IN REPLACEMENT OF BUT ONE OF THE FIVE OLD RECORDAK CAMERAS.

BASED UPON THAT PRESUMPTION, NOT ONLY WOULD IT BE REQUIRED THAT THE $850 RECEIVED FROM THE CONTRACTOR BE DEPOSITED AND COVERED INTO THE TREASURY OF THE UNITED STATES AS MISCELLANEOUS RECEIPTS BUT THERE ALSO WOULD BE REQUIRED TO BE DEPOSITED, AS SUCH, THE DIFFERENCE BETWEEN THE VALUE OF THE REPLACED RECORDAK CAMERA AND THE BALANCE OF $1,550 ALLOWED BY THE CONTRACTOR TOWARD THE PURCHASE PRICE OF THE NEW CAMERA. THE DIFFERENCE INVOLVED WOULD BE FOR CHARGING AGAINST THE APPLICABLE APPROPRIATION.