B-128096, APR 14, 1960

B-128096, APR 14, 1960

PRECIS-UNAVAILABLE

HONORABLE FRANKLIN FLOETE, ADMINISTRATOR:

GENERAL SERVICES ADMINISTRATION

WE HAVE YOUR LETTER OF MARCH 25, 1960, CONCERNING THE HANDLING AND DISPOSITION OF TRADING STAMPS RECEIVED IN CONNECTION WITH GOVERNMENT PURCHASES.

CONSIDERABLE PUBLICITY APPEARS TO HAVE BEEN GIVEN TO YOUR CIRCULAR NO. 190, AS A RESULT OF WHICH WE HAVE RECEIVED A NUMBER OF COMMUNICATIONS FROM INDIVIDUALS OFFERING SUGGESTIONS FOR SOLUTION OF THE REPORTED PROBLEM. AMONG THESE WERE PROPOSALS THAT SUCH STAMPS BE GIVEN TO THE NEEDY, OR TO THE SALVATION ARMY, OR TURNED OVER TO VETERANS ADMINISTRATION HOSPITALS. TO THESE COMMUNICATIONS WE HAVE REPLIED THAT WE WERE NOT AWARE THAT THERE WAS ANY SERIOUS PROBLEM OF GOVERNMENTAL ACCOUNTING FOR OR UTILIZATION OF SUCH STAMPS, AND THAT IT WAS OUR UNDERSTANDING THAT THE SEVERAL DEPARTMENTS AND AGENCIES OF THE GOVERNMENT WOULD ISSUE APPROPRIATE INSTRUCTIONS FOR UTILIZATION OR DISPOSITION OF THE STAMPS BY THEIR RESPECTIVE LOCAL OR REGIONAL OFFICES, EITHER BY CASH REDEMPTION OR BY ACQUISITION OF SUCH ITEMS OF PROPERTY AS MIGHT BE APPROPRIATE FOR GOVERNMENT USE. THIS WAS BASED UPON OUR UNDERSTANDING OF THE MOST RECENT INFORMAL DISCUSSIONS BETWEEN MEMBERS OF OUR RESPECTIVE STAFFS.

IN YOUR LETTER YOU STATE THAT THE PROBLEM PRESENTED IS THE DEVELOPMENT OF PROCEDURES UNDER WHICH THE ADMINISTRATIVE COSTS OF REDEMPTION WOULD NOT EXCEED THE VALUE RECEIVED. YOU RECOMMEND THE ADOPTION OF A POLICY "WHICH WILL NOT REQUIRE COLLECTION OF TRADING STAMPS UNLESS SUCH STAMPS ARE A CONDITION OF THE CONTRACTUAL PURCHASE TRANSACTION," AND STATE THAT THE SAME POLICY SHOULD APPLY TO REDEEMABLE COUPONS ATTACHED TO SPECIFIC PRODUCTS RECEIVED BY GOVERNMENT AGENCIES.

WE ARE NOT SURE OF THE MEANING OF THE QUOTED LANGUAGE. AS WE UNDERSTAND THE PRACTICE, TRADING STAMPS GENERALLY ARE ISSUED ONLY IN CONNECTION WITH CASH PURCHASES, AND THE COURTS HAVE CONSIDERED THE GIVING OF SUCH STAMPS AS A MEANS OF GRANTING A DISCOUNT FOR CASH PAYMENT OF SMALL PURCHASES. SEE SAFEWAY STORES V. OKLAHOMA RETAIL GROCERS ASSOCIATION, 322 P.2D 179 (OKLAHOMA), AFFIRMED 360 U.S. 334. ON THIS BASIS WE DO NOT FEEL THAT A GENERAL INSTRUCTION TO GOVERNMENT EMPLOYEES TO REFUSE TO ACCEPT STAMPS COULD BE JUSTIFIED.

ON THE OTHER HAND, IT IS RECOGNIZED THAT THERE MAY BE VALID ADMINISTRATIVE GROUNDS FOR REFUSAL OF DISCOUNTS, AS EXEMPLIFIED IN THE FREQUENT USE IN FORMAL BID INVITATIONS OF PROVISIONS TO THE EFFECT THAT DISCOUNTS OFFERED FOR PAYMENT IN LESS THAN A NUMBER OF DAYS WILL NOT BE CONSIDERED. IF, THEREFORE, THE ULTIMATE REALIZATION OF THE POTENTIAL DISCOUNT REPRESENTED BY TRADING STAMPS WOULD INVOLVE ADMINISTRATIVE COSTS OUT OF PROPORTION TO THE VALUE TO BE REALIZED, IT WOULD OBVIOUSLY BE IMPRACTICAL AND ECONOMICALLY UNSOUND TO ATTEMPT TO REQUIRE REDEMPTION OF ALL SUCH STAMPS RECEIVED.

OF COURSE, ON ANY PURCHASE TRANSACTION MADE ON OTHER THAN AN OVER THE- COUNTER CASH BASIS, EVERY EFFORT SHOULD BE MADE TO OBTAIN PRICES NOT INVOLVING STAMPS OR COUPONS OF ANY KIND.

IN THE ABSENCE OF ANY STATISTICAL INFORMATION ON THE SUBJECT WE ARE NOT IN A POSITION TO EVALUATE OR APPRAISE THE FINANCIAL ASPECTS INVOLVED. IS OUR GENERAL VIEW, HOWEVER, THAT THE LEAST ADMINISTRATIVE BURDEN WILL BE INCURRED BY HANDLING THE MATTER AT THE LOWEST POSSIBLE ORGANIZATION LEVEL, AND THAT ANY EFFORT TO PROMULGATE GENERAL UNIFORM REGULATIONS FOR APPLICATION IN ALL AGENCIES WILL TEND TO INCREASE THE ADMINISTRATIVE COST BURDEN. ON THE BASIS OF OUR PRESENT KNOWLEDGE WE WOULD FAVOR NOTIFYING EACH DEPARTMENT AND AGENCY TO DEAL WITH THE TRADING STAMP PROBLEM IN SUCH MANNER AS IT MAY DEEM BEST FITTED TO ITS PARTICULAR SITUATION, AT EITHER DEPARTMENTAL OR LOWER LEVELS.

IF IT IS YOUR VIEW THAT SUCH INDIVIDUAL AGENCY HANDLING WOULD NOT BE IN THE BEST INTEREST OF THE GOVERNMENT, WE WOULD BE GLAD TO GIVE FURTHER CONSIDERATION TO ANY ALTERNATIVE SUGGESTIONS YOU MAY CARE TO PRESENT.