B-82777, MARCH 2, 1949, 28 COMP. GEN. 495

B-82777: Mar 2, 1949

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- AND WHERE MORE THAN ONE USED VEHICLE IS TO BE TRADED IN. 1949: THERE RECENTLY WAS RECEIVED IN THIS OFFICE A CONTRACT ENTERED INTO BY THE BUREAU OF FEDERAL SUPPLY FOR THE PURCHASE OF AN AUTOMOBILE UNDER CIRCUMSTANCES WHICH INDICATE THAT THE BUREAU HAD MISINTERPRETED APPLICABLE DECISIONS OF THIS OFFICE. I AM CALLING THE TRANSACTION TO YOUR ATTENTION IN ORDER THAT YOUR DEPARTMENT MAY TAKE NECESSARY ACTION TO INSURE THAT CORRECT PROCEDURES WILL BE FOLLOWED IN THE FUTURE. DISCRETION WILL BE ALLOWED IN ACCEPTING ANY BID FOR DELIVERY OF AN AUTOMOBILE WITHIN THE LIMITATION SO FIXED BY THE APPROPRIATION. EVEN THOUGH AN OFFER WAS ALSO MADE TO FURNISH PIERCE-ARROW AUTOMOBILE (RETAIL LIST PRICE $3.

B-82777, MARCH 2, 1949, 28 COMP. GEN. 495

VEHICLES - PURCHASES - TRADE-IN ALLOWANCE IN THE LIGHT OF SECTION 16 OF THE ACT OF AUGUST 2, 1946, PROHIBITING THE PURCHASE OF ANY PASSENGER MOTOR VEHICLE AT A COST, INCLUDING THE VALUE OF ANY VEHICLE EXCHANGED IN EXCESS OF THAT SPECIFIED IN ANY APPROPRIATION, PURCHASE CONTRACTS SHOULD BE ENTERED INTO ONLY AFTER SECURING COMPETITIVE BIDS PURSUANT TO SECTION 3709, REVISED STATUTES, AS AMENDED, WHICH BIDS SHOULD SHOW SEPARATELY THE TRADE-IN ALLOWANCE OFFERED--- THE REASONABLENESS OF WHICH SHOULD BE ESTABLISHED BY REQUESTING CASH BIDS ON PROPOSED TRADE-INS, OR BY OTHER EVIDENCE--- AND WHERE MORE THAN ONE USED VEHICLE IS TO BE TRADED IN, THE CONTRACT SHOULD BE SUPPORTED BY A DETAILED ADMINISTRATIVE STATEMENT SHOWING THE REASON THEREFOR.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE TREASURY, MARCH 2, 1949:

THERE RECENTLY WAS RECEIVED IN THIS OFFICE A CONTRACT ENTERED INTO BY THE BUREAU OF FEDERAL SUPPLY FOR THE PURCHASE OF AN AUTOMOBILE UNDER CIRCUMSTANCES WHICH INDICATE THAT THE BUREAU HAD MISINTERPRETED APPLICABLE DECISIONS OF THIS OFFICE. ACCORDINGLY, I AM CALLING THE TRANSACTION TO YOUR ATTENTION IN ORDER THAT YOUR DEPARTMENT MAY TAKE NECESSARY ACTION TO INSURE THAT CORRECT PROCEDURES WILL BE FOLLOWED IN THE FUTURE.

SECTION 16 OF THE ACT OF AUGUST 2, 1946 (60 STAT. 810), AMENDS SECTION 5 OF THE ACT OF JULY 16, 1914 (5 U.S.C. 78), TO READ, IN PART PERTINENT, AS FOLLOWS:

(C) UNLESS OTHERWISE SPECIFICALLY PROVIDED, NO APPROPRIATION AVAILABLE FOR ANY DEPARTMENT SHALL BE EXPENDED---

(1) TO PURCHASE ANY PASSENGER MOTOR VEHICLE (EXCLUSIVE OF BUSSES, AMBULANCES, AND STATION WAGONS), AT A COST, COMPLETELY EQUIPPED FOR OPERATION, AND INCLUDING THE VALUE OF ANY VEHICLE EXCHANGED, IN EXCESS OF THE MAXIMUM PRICE THEREFOR, IF ANY, ESTABLISHED PURSUANT TO LAW BY A GOVERNMENT AGENCY AND IN NO EVENT MORE THAN SUCH AMOUNT AS MAY BE SPECIFIED IN ANY APPROPRIATION OR OTHER ACT, WHICH SHALL BE IN ADDITION TO THE AMOUNT REQUIRED FOR TRANSPORTATION; ( ITALICS ADDED.)

IN A DECISION DATED JUNE 28, 1934 (A-56326), A FORMER COMPTROLLER GENERAL HELD THAT, IN VIEW OF PAST PRACTICES OF THIS OFFICE, WHEN THE CONGRESS HAS SPECIFICALLY PROVIDED AN APPROPRIATION FOR PURCHASE OF AN AUTOMOBILE FOR USE BY THE HEAD OF AN OFFICE WITH LIMITATION ONLY AS TO AMOUNT, DISCRETION WILL BE ALLOWED IN ACCEPTING ANY BID FOR DELIVERY OF AN AUTOMOBILE WITHIN THE LIMITATION SO FIXED BY THE APPROPRIATION, AND NO OBJECTION WOULD BE RAISED TO THE ACCEPTANCE--- UNDER AN APPROPRIATION LIMITATION OF $2,500 INCLUDING THE VALUE OF A VEHICLE EXCHANGED--- OF AN OFFER TO FURNISH A CADILLAC AUTOMOBILE (RETAIL LIST PRICE, $4,297) AT $2,475, LESS A CASH ALLOWANCE OF $25 FOR THE VEHICLE TO BE REPLACED THEREBY (NET $2,450), EVEN THOUGH AN OFFER WAS ALSO MADE TO FURNISH PIERCE-ARROW AUTOMOBILE (RETAIL LIST PRICE $3,400) AT $2,200, WITH A CASH ALLOWANCE FOR THE REPLACED VEHICLE OF $300 (NET $1,900).

UNDER CONTRACT NO. TS-10208 DATED OCTOBER 4, 1948, THERE WAS PURCHASED BY THE BUREAU OF FEDERAL SUPPLY FOR THE HEAD OF A GOVERNMENT AGENCY, UNDER AN APPROPRIATION LIMITATION OF $3,000, INCLUDING THE VALUE OF ANY VEHICLE EXCHANGED, A CADILLAC LIMOUSINE, MODEL 75, FOR $2,908 PLUS A 1941 PLYMOUTH SEDAN, MODEL P-11, PLUS A 1942 PACKARD LIMOUSINE, MODEL 1590. IT APPEARS THAT THE BUREAU OF FEDERAL SUPPLY RELIED ON THE DECISION OF JUNE 28, 1934 (A-56326), SUPRA, AS AUTHORITY FOR THE PURCHASE. THE CONTRACT WAS MADE WITHOUT COMPETITION AND THE EXCHANGE VALUE OF NEITHER OF THE VEHICLES TURNED IN WAS STATED IN THE CONTRACT. THE BUREAU, IN REPLY TO QUESTIONS BY THIS OFFICE, SUBMITTED AN ADMINISTRATIVE REPORT AS FOLLOWS:

AS INDICATED BY THE CONTRACT INVOLVED, THE AMOUNT ALLOWED FOR EACH TRADE- IN VEHICLE WAS NOT STATED BY THE GENERAL MOTORS CORPORATION AND IS, THEREFORE, NOT AVAILABLE. WE ARE INFORMED BY THE NATIONAL SECURITY RESOURCES BOARD THAT THE VEHICLES WERE TRANSFERRED TO THAT AGENCY FROM THE DEPARTMENT OF THE ARMY AND HAD BEEN IN CONSTANT USE THROUGHOUT THE WAR. THE VEHICLES WERE REPORTED TO BE IN VERY POOR CONDITION, BOTH MECHANICALLY AND IN OUTWARD APPEARANCE, AND ONE OR BOTH UNITS WERE IN THE REPAIR SHOP APPROXIMATELY 50 PERCENT OF THE TIME. IN THE BEST INTERESTS OF THE GOVERNMENT, THE NEW UNIT WAS PURCHASED TO AVOID CONSTANT REPAIR BILLS FOR THE TWO TRADE-IN UNITS.

THE LIST PRICE ON THE VEHICLE PURCHASED AT THE TIME OF THE PURCHASE DELIVERED IN WASHINGTON, C., WAS $5,906. THE BLUE-BOOK "AS IS" VALUE OF THE 1941 PLYMOUTH SEDAN, MODEL P-11, WAS $643. THE BLUE-BOOK VALUE OF THE 1942 PACKARD LIMOUSINE, MODEL 1590,"AS IS" WAS $1,163. OBVIOUSLY, THE LATTER CARS MUST BE REGARDED AS HAVING HAD SOME VALUE EVEN THOUGH THE BLUE -BOOK VALUE MAY NOT BE ACCEPTED AS CONCLUSIVE. HOWEVER, IF THE TRANSACTION IS NOT IN CONTRAVENTION OF THE STATUTORY LIMITATION, THEN THE ACTUAL TOTAL VALUE OF BOTH VEHICLES TURNED IN MUST NOT HAVE BEEN MORE THAN $92. LOCAL JUNK DEALERS HAVE INFORMALLY ADVISED THIS OFFICE THAT THE SCRAP VALUE OF THE METAL ALONE IN SUCH CARS WOULD RANGE FROM $50 TO $110. BUT THE CARS APPARENTLY HAD NOT BEEN WRECKED OR BURNED, NOR WERE THEY TOTALLY UNSERVICEABLE, HAVING BEEN IN ACTUAL OPERATION 50 PERCENT OF THE TIME IMMEDIATELY PRIOR TO BEING TURNED IN. HENCE, ON THE RECORD BEFORE THIS OFFICE, IT REASONABLY MAY BE CONCLUDED THAT THE 1941 PLYMOUTH SEDAN AND THE 1942 PACKARD LIMOUSINE TOGETHER HAD A GREATER COMBINED VALUE THAN $92.

IN OFFICE DECISION OF MAY 5, 1938 (17 COMP. GEN. 911), IT WAS HELD, QUOTING THE SYLLABUS IN ART:

A BID TO FURNISH NEW AUTOMOBILES CONDITIONED UPON ACCEPTANCE, ALSO, OF BIDDER'S OFFER ON USED VEHICLES TO BE EXCHANGED, SHOULD NOT BE CONSIDERED WHERE IT IS APPARENT THE GROSSLY INADEQUATE TRADE-IN ALLOWANCE OFFERED IS FOR THE EXPRESS PURPOSE OF CIRCUMVENTING THE STATUTORY LIMITATION ON THE PURCHASE PRICE,"INCLUDING THE VALUE OF ANY VEHICLE EXCHANGED," OF NEW VEHICLES UNDER THE APPROPRIATION INVOLVED * * *.

MOREOVER, NUMEROUS DECISIONS OF THIS OFFICE HAVE AFFIRMED THE PRINCIPLE THAT ADVERTISEMENTS FOR PROCUREMENT OF NEW EQUIPMENT FOR THE GOVERNMENT, INVOLVING ALSO THE DISPOSITION OF USED EQUIPMENT, SHOULD REQUIRE CASH BIDS AS WELL AS TRADE-IN ALLOWANCES. SEE 15 COMP. GEN. 1030; 16 ID. 168; 18 ID. 227; 19 ID. 313; ID. 930. IN SUCH CONNECTION, OFFICE DECISION OF FEBRUARY 16, 1948, (B-73179/--- AUTHORIZING THE BUREAU OF FEDERAL SUPPLY TO NEGOTIATE FOR THE TIME BEING WITH ALL KNOWN SOURCES OF SUPPLY WITH RESPECT TO THE PROCUREMENT OF PASSENGER CARS, WITHOUT COMPLIANCE WITH SECTION 3709, REVISED STATUTES--- WAS NOT INTENDED TO PERMIT THE NEGOTIATION OF CONTRACTS FOR INDIVIDUAL PURCHASES AND EXCHANGES. AND THIS IS ESPECIALLY TRUE WHERE A LIMITATION IN THE APPROPRIATION TO BE CHARGED MAKES IT NECESSARY TO DETERMINE FIRST THAT ANY CONTRACT TO BE MADE WILL BE A VALID ONE COMING WITHIN THE TERMS OF THE LIMITATION, READ IN THE LIGHT OF SECTION 16 OF THE ACT OF AUGUST 2, 1946, SUPRA.

ACCORDINGLY, IN ORDER THAT THERE MAY BE NO FURTHER MISUNDERSTANDING OF THE MATTER, FUTURE CONTRACTS OF THE NATURE HERE INVOLVED SHOULD BE ENTERED INTO ONLY AFTER COMPETITIVE BIDS HAVE BEEN SECURED PURSUANT TO FORMAL ADVERTISING AS REQUIRED BY SECTION 3709 OF THE REVISED STATUTES, AS AMENDED, WHICH BIDS SHOULD BE REQUIRED TO SHOW SEPARATELY THE TRADE IN ALLOWANCE OFFERED BY BIDDERS. ALSO, THE REASONABLENESS OF THE TRADE IN ALLOWANCE OFFERED BY BIDDERS SHOULD BE ESTABLISHED BY REQUESTING CASH BIDS ON CARS PROPOSED TO BE TRADED IN, OR BY OTHER PROPER EVIDENCE. FURTHERMORE, WHERE, IN CONNECTION WITH THE PURCHASE OF A NEW CAR, MORE THAN ONE USED CAR IS PROPOSED TO BE TRADED IN, THE CONTRACT OF PURCHASE SHOULD BE SUPPORTED BY A STATEMENT FROM THE ADMINISTRATIVE AGENCY INVOLVED SHOWING IN DETAIL THE REASON FOR TRADING IN MORE THAN ONE CAR.