B-168505, FEB. 2, 1970

B-168505, FEB. 2, 1970

BID PROTEST--PROMPT PAYMENT DISCOUNT--METHOD OF COMPUTATION DECISION DENYING PROTEST OF THE MARKHAM CO. AGAINST MANNER IN WHICH GENERAL SERVICES ADMINISTRATION COMPUTED PROMPT PAYMENT DISCOUNT UNDER CONTRACT FOR FURNISHING PAINTER'S DROPCLOTHS. PROTESTANT WHO MAINTAINS THAT DISCOUNT OF ONE PERCENT FOR PAYMENT WITHIN 20 DAYS SHOULD BE COMPUTED FROM DATE OF DELIVERY TO CARRIER RATHER THAN FROM DATE THE GOODS ARE RECEIVED AT DESTINATION MAY NOT HAVE SUCH METHOD UPHELD SINCE UNDER TERMS OF CONTRACT DELIVERY AND ACCEPTANCE IS NOT ACCOMPLISHED UNTIL RECEIPT AT GSA DEPOTS. HENCE, DISCOUNT IS CORRECTLY MEASURED FROM DATE OF DELIVERY AT DEPOTS.

TO THE MARKHAM COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 25, 1969, PROTESTING THE MANNER IN WHICH THE GENERAL SERVICES ADMINISTRATION (GSA) IS COMPUTING THE PROMPT PAYMENT DISCOUNT UNDER GSA CONTRACT NO. GS-00S-80340, FOR THE FURNISHING OF PAINTER'S DROPCLOTHS. THE CONTRACT PROVIDES A DISCOUNT OF ONE PERCENT FOR PAYMENT WITHIN 20 DAYS WHICH YOU MAINTAIN SHOULD BE COMPUTED FROM THE DATE OF DELIVERY OF THE SUPPLIES TO THE CARRIER RATHER THAN FROM THE DATE THE GOODSARE RECEIVED AT DESTINATION AS GSA CONTENDS.

SOLICITATION INSTRUCTIONS AND CONDITIONS NO. 9 (B) SET FORTH THE FOLLOWING PERTINENT PROVISION REGARDING THE APPLICATION OF THE PROMPT PAYMENT DISCOUNT:

"IN CONNECTION WITH ANY DISCOUNT OFFERED, TIME WILL BE COMPUTED FROM DATE OF DELIVERY OF THE SUPPLIES TO CARRIER WHEN DELIVERY AND ACCEPTANCE ARE AT POINT OF ORIGIN, OR FROM DATE OF DELIVERY AT DESTINATION OR PORT OF EMBARKATION WHEN DELIVERY AND ACCEPTANCE ARE AT EITHER OF THOSE POINTS, OR FROM THE DATE CORRECT INVOICE OR VOUCHER IS RECEIVED IN THE OFFICE SPECIFIED BY THE GOVERNMENT, IF THE LATTER DATE IS LATER THAN DATE OF DELIVERY. PAYMENT IS DEEMED TO BE MADE FOR THE PURPOSE OF EARNING THE DISCOUNT ON THE DATE OF MAILING OF THE GOVERNMENT CHECK." THE PROVISION CLEARLY STIPULATES THAT THE DISCOUNT PERIOD COMMENCES WHEN DELIVERY AND ACCEPTANCE ARE COMPLETED, UNLESS THE VOUCHER FOR THE ORDER IS RECEIVED LATER THAN THE DATE OF DELIVERY. ALTHOUGH THE CONTRACT PROVIDES FOR INSPECTION AT THE SOURCE OF PRODUCTION (PARAGRAPH 12 OF THE SPECIAL PROVISIONS), IT STIPULATES THAT "ACCEPTANCE SHALL BE AT THE DELIVERY POINTS SPECIFIED IN THIS CONTRACT," (PARAGRAPH 14) AND PARAGRAPH 9 OF THE SPECIAL CONDITIONS OF THE CONTRACT PROVIDES THAT "PRICES COVER DELIVERY TO THE GENERAL SERVICES ADMINISTRATION REGIONAL DEPOTS SPECIFIED IN THIS CONTRACT * * *." UNDER SUCH TERMS TITLE DOES NOT PASS TO THE GOVERNMENT UNTIL DELIVERY IS ACCOMPLISHED, AND THE GOVERNMENT'S OBLIGATION TO PAY DOES NOT ARISE UNTIL DELIVERY AND ACCEPTANCE.

SINCE DELIVERY AND ACCEPTANCE OF THE ITEMS ARE NOT ACCOMPLISHED UNTIL RECEIPT AT THE GSA RECEIVING DEPOTS, THE DISCOUNT PERIOD IS CORRECTLY MEASURED FROM THE DATE OF DELIVERY AT THE DEPOTS, RATHER THAN THE DATE OF DELIVERY TO THE CARRIER.

WHILE YOU ALLEGE THAT THE COMMERCIAL PRACTICE FOR DISCOUNTS WITH YOUR SUPPLIERS IS TO COMPUTE ANY PAYMENT DISCOUNT FROM THE DATE OF SHIPMENT, SUCH PRACTICE CANNOT BE ALLOWED TO PREVAIL OVER THE METHODOF CALCULATING DISCOUNTS SPECIFIED IN YOUR CONTRACT.