B-200953, DEC 12, 1980

B-200953, DEC 12, 1980

DIGEST: WHERE CONTRACTOR ERRONEOUSLY OFFERS PROMPT PAYMENT DISCOUNT IN ITS INVOICES UNDER CONTRACT PROVIDING FOR NET PRICES, CONTRACTOR MAY BE REFUNDED AMOUNTS DEDUCTED AS RECORD SHOWS AGENCY DID NOT EXPEDITE PAYMENTS TO TAKE ADVANTAGE OF DISCOUNTS OFFERED AND CONTRACTOR DID NOT ACQUIESCE IN DEDUCTION OF DISCOUNT.

VETERANS ADMINISTRATION - REQUEST FOR ADVANCE DECISION:

THE VETERANS ADMINISTRATION (VA) HAS REQUESTED AN ADVANCE DECISION REGARDING THE PROPRIETY OF REFUNDING $127,376.89 TO AYERST LABORATORIES, REPRESENTING DISCOUNTS ALLEGED TO HAVE BEEN ERRONEOUSLY DEDUCTED IN MAKING PAYMENTS UNDER CONTRACT NO. V797-5982E.

THE CONTRACT CONTAINED NO PROVISION FOR A PROMPT PAYMENT DISCOUNT AND DELIVERY ORDERS ISSUED TO AYERST BY THE VA SPECIFIED PAYMENT TERMS OF "NET 30" DAYS. AYERST MADE SHIPMENTS UNDER THE CONTRACT FROM THREE DIFFERENT LOCATIONS AND, IN JUNE 1977, INSTITUTED A DECENTRALIZED BILLING OPERATION AT EACH LOCATION. AS A RESULT, AND BECAUSE OF PERSONNEL CHANGES, INVOICES AT ONE LOCATION WERE ERRONEOUSLY RENDERED FROM JUNE 1977 THROUGH MAY 1980 WITH AYERST'S NORMAL COMMERCIAL DISCOUNT TERMS OF "2 PERCENT 30 DAYS, NET 31," RATHER THAN THE NET PRICES CONTAINED IN ITS CONTRACT. THE GOVERNMENT MADE ALL PAYMENTS IN QUESTION WITHIN THE 30 DAY PERIOD AND DEDUCTED THE 2 PERCENT DISCOUNT APPEARING ON THE INVOICES.

IN FILING ITS REQUEST FOR REFUND WITH THE VA, AYERST NOTED THAT THE OFFER OF DISCOUNT APPEARING ON ITS INVOICES WAS A "CLERICAL OVERSIGHT" WHICH SHOULD HAVE BEEN OBVIOUS TO VA'S DISBURSING OFFICE SINCE INVOICES UNDER THE SAME CONTRACT WERE SIMULTANEOUSLY BEING RECEIVED FROM THREE LOCATIONS WITH ONLY ONE LOCATION OFFERING DISCOUNTS CONTRARY TO THE NET PRICE TERMS OF THE CONTRACT. IN THIS REGARD, THE VA HAS ADMINISTRATIVELY RECOMMENDED THAT THE REFUND BE MADE IN THE APPROPRIATE AMOUNT SINCE "THE GOVERNMENT DID NOT ACCELERATE ITS PAYMENTS TO TAKE ADVANTAGE OF THE DISCOUNT AS PAYMENT WOULD HAVE BEEN MADE IN ANY EVENT WITHIN 30 DAYS UNDER THE CORRECT CONTRACT TERMS."

THE GENERAL RULE IS THAT A PRINTED OFFER ON A CONTRACTOR'S REGULAR BILLHEAD DOES NOT CONSTITUTE AN EXPRESS OFFER OF DISCOUNT AMENDING THE CONTRACT. 2 COMP.GEN. 83 (1922). THE RULE WAS EXTENDED TO DISCOUNTS SPECIFICALLY TYPED ON THE INVOICE WHERE IT WAS SHOWN TO HAVE BEEN IN ERROR AND NO EXPRESS OFFER OR DISCOUNT WAS INTENDED. 5 COMP.GEN. 739 (1926). ON THE OTHER HAND, IF THE ERRONEOUS DISCOUNT IS SPECIFICALLY TYPED AND THE CONTRACTOR ACCEPTS THE REDUCED PAYMENTS OVER A LONG PERIOD OF TIME WITHOUT COMPLAINT, AND THERE HAS BEEN SOME CONDUCT ON THE PART OF THE CONTRACTOR TANTAMOUNT TO ABANDONMENT, WAIVER OR ESTOPPEL, HE IS SAID TO HAVE ACQUIESCED IN SUCH DISCOUNTS. 25 COMP.GEN. 890 (1946). HOWEVER, SOMETHING MORE THAN THE ACCEPTANCE OF A SMALLER AMOUNT DUE WITHOUT PROTEST MUST BE SHOWN TO CONSTITUTE ACQUIESCENCE. CONSOLIDATED DIESEL ELECTRIC COMPANY, 54 COMP.GEN. 1004 (1975), 75-1 CPD 334. AS WE STATED IN 25 COMP.GEN. 890, SUPRA, IN FINDING THE CONTRACTOR ESTOPPED FROM CLAIMING ERROR:

"THE PRESUMPTION IS THAT THE GOVERNMENT EXPEDITED THE PAYMENTS IN QUESTION IN ORDER TO TAKE ADVANTAGE OF THE DISCOUNT WHICH WAS OFFERED AND THAT, IN DOING SO, IT WAS INCONVENIENCED IN A MANNER THAT IT WOULD NOT HAVE BEEN HAD SUCH PAYMENTS BEEN MADE IN THE REGULAR COURSE OF BUSINESS. HENCE, IF THE GOVERNMENT NOW WERE REQUIRED TO REFUND THE DISCOUNT, IT WOULD BE PLACED IN THE POSITION OF HAVING PERFORMED SPECIAL SERVICES WITHOUT RECEIVING ANY CONSIDERATION THEREFOR, WHICH WOULD BE CLEARLY INEQUITABLE."

ACCORD, UNITED STATES GOVERNMENT PRINTING OFFICE, B-186189, SEPTEMBER 16, 1976, 76-2 CPD 248. HERE, HOWEVER, THE AGENCY STATES THAT IT WAS NOT INDUCED OR ENCOURAGED TO MAKE PAYMENT WITHIN THE DISCOUNT PERIOD BUT WOULD HAVE MADE PAYMENT IN ANY EVENT WITHIN 30 DAYS IN THE REGULAR COURSE OF BUSINESS. ACCORDINGLY, THE RULE OF ACQUIESCENCE IS NOT APPLICABLE TO THIS CASE, AND THE GOVERNMENT SHOULD NOT REAP THE BENEFITS OF THE CONTRACTOR'S ERROR BY RETAINING THE MONEY DEDUCTED ON THE BASIS OF THE ERRONEOUS DISCOUNT TERMS APPEARING ON THE INVOICES.

IN VIEW OF THE FOREGOING, REFUND IN THE AMOUNT OF $127,376.89 SHOULD BE MADE, IF OTHERWISE CORRECT.