B-67143, JULY 28, 1947, 27 COMP. GEN. 30

B-67143, JULY 28, 1947, 27 COMP. GEN. 30

USED EQUIPMENT - SALE OR EXCHANGE OF TWO OR MORE PIECES WHEN ACQUIRING ONE NEW PIECE UNDER SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, AUTHORIZING APPLICATION OF THE PROCEEDS OF SALE OR THE EXCHANGE ALLOWANCE OF USED VEHICLES, ETC., TOWARD THE PURCHASE OF NEW SIMILAR EQUIPMENT, TWO OR MORE OLD UNITS OF EQUIPMENT MAY BE TRADED IN OR SOLD AND THE PROCEEDS THEREOF APPLIED TOWARD THE PURCHASE OF A UNIT OF NEW EQUIPMENT IF, IN FACT, THE ONE IS TO BE USED AS A REPLACEMENT FOR THE OLD; HOWEVER, IF THE OLD EQUIPMENT IS SURPLUS, THE EXCHANGE OR SALE THEREOF IN CONNECTION WITH THE PURCHASE OF NEW IS NOT AUTHORIZED--- IT BEING FOR DISPOSITION UNDER THE APPLICATION PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944.

ACTING COMPTROLLER GENERAL YATES TO THE SECRETARY OF LABOR, JULY 28, 1947:

I HAVE YOUR LETTER OF JUNE 16, 1947, AS FOLLOWS:

THE QUESTION HAS ARISEN WHETHER THIS DEPARTMENT, UNDER SECTION 8 OF THE ACT OF AUGUST 2, 1946, PUBLIC LAW 600, 79TH CONGRESS, 2D SESSION, AND OTHER STATUTES AUTHORIZING THE EXCHANGE OF USED ARTICLES IN THE PURCHASE OF NEW SIMILAR ARTICLES, MAY AT THIS TIME LEGALLY SELL OR EXCHANGE TWO OR MORE USED ARTICLES AND APPLY THE SALE PROCEEDS OR THE EXCHANGE ALLOWANCE THEREFOR TO THE PURCHASE OF ONE NEW SIMILAR ARTICLE.

SECTION 8 OF PUBLIC LAW 600 READS AS FOLLOWS:

"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 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 AUTHORITY OF THIS SECTION SHALL BE EVIDENCED IN WRITING.' YOUR DECISION B-64700, DATED APRIL 2, 1947, POINTS OUT THAT THE PURPOSE OF THIS SECTION WAS TO ABOLISH THE REQUIREMENT, WHICH FORMERLY PREVAILED IN THE ABSENCE OF SPECIAL STATUTORY AUTHORITY, THAT PROCEEDS OF SALES OF OLD EQUIPMENT TRADED IN FOR NEW EQUIPMENT SHOULD BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS RATHER THAN APPLIED AGAINST THE PURCHASE PRICE OF THE NEW EQUIPMENT PURCHASED IN ITS STEAD.

IN CONNECTION WITH THE INTERPRETATION OF SECTION 8, YOUR DECISION A 90487, DATED JANUARY 20, 1938, WOULD APPEAR TO BE RELEVANT FOR PURPOSES OF THE PRESENT INQUIRY. THIS DECISION HELD THAT WHILE STATUTORY AUTHORIZATION FOR THE EXCHANGE OF OLD EQUIPMENT FOR NEW

" APPARENTLY CONTEMPLATED THE TRADE-IN OF A SINGLE USED VEHICLE ON THE PURCHASE OF A SINGLE NEW VEHICLE, THERE WOULD APPEAR TO BE NO LEGAL OBJECTION TO THE EXCHANGE OF MORE THAN ONE USED VEHICLE IN THE PURCHASE OF A NEW ONE * * *" PROVIDED THE REQUIREMENTS OF THE LAW WERE IN ALL OTHER RESPECTS SATISFIED.

SECTION 12 (A) (11 (A) ( OF THE SURPLUS PROPERTY ACT OF 1944 (58 STAT. 770 (769) (, HOWEVER, PROVIDES THAT

" EACH OWNING AGENCY SHALL HAVE THE DUTY AND RESPONSIBILITY CONTINUOUSLY TO SURVEY THE PROPERTY IN ITS CONTROL AND TO DETERMINE WHICH OF SUCH PROPERTY IS SURPLUS TO ITS NEEDS AND SPONSIBILITY.'

SECTION 12 (B) (11 (B) ( OF THAT ACT REQUIRES OWNING AGENCIES TO REPORT TO THE SURPLUS PROPERTY BOARD AND TO THE APPROPRIATE DISPOSAL AGENCY ALL SURPLUS PROPERTY NOT DISPOSED OF UNDER SECTION 14 OF THE ACT, AND OTHER PROVISIONS OF THE ACT REGULATE THE DISPOSITION OF SURPLUS PROPERTY NOT SO DISPOSED OF.

YOUR DECISION IS RESPECTFULLY REQUESTED AS TO WHETHER SECTION 8 OF PUBLIC LAW 600 PERMITS THE TRADE-IN OF TWO OR MORE USED ARTICLES IN THE PURCHASE OF ONE NEW SIMILAR ARTICLE, OR WHETHER USED ARTICLES IN EXCESS OF THE NUMBER OF NEW ARTICLES TO BE PURCHASED IN THEIR STEAD MUST BE TREATED AS SURPLUS PROPERTY AND DISPOSED OF IN ACCORDANCE WITH THE SURPLUS PROPERTY ACT OF 1944.

CONSIDERATION OF THE PROVISIONS OF SECTION 8 OF PUBLIC LAW 600, APPROVED AUGUST 2, 1946, 60 STAT. 808, QUOTED IN YOUR LETTER, DISCLOSES NOTHING THEREIN INDICATING DEFINITELY WHETHER, IN THE PURCHASE OF AN ITEM THE EXCHANGE OF WHICH IS AUTHORIZED BY LAW, THERE MAY BE APPLIED IN WHOLE OR PART PAYMENT THEREFOR THE ALLOWANCE OR PROCEEDS RECEIVED ON ACCOUNT OF THE EXCHANGE OR SALE OF TWO OR MORE ITEMS SIMILAR TO THE ONE BEING PURCHASED. THE PURPOSE OF SAID SECTION IS SET FORTH ON PAGE 6 OF HOUSE REPORT 2186 AND SENATE REPORT 1636, 79TH CONGRESS, 2ND SESSION, AS FOLLOWS:

SECTION 8. TRADE-IN ALLOWANCE.--- NUMEROUS STATUTES NOW PERMIT THE TRADE -IN OF OLD EQUIPMENT SUCH AS BOATS, VEHICLES, OFFICE EQUIPMENT, ETC., WHEN REPLACEMENTS ARE BEING ACQUIRED. HOWEVER, THE LAWS ARE IN CONFLICT AS TO THE FINANCIAL PROVISIONS APPLICABLE. IN SOME CASES THE TRADE-IN ALLOWANCE IS CREDITED DIRECTLY TO THE PURCHASE PRICE AND THE DEPARTMENT PAYS OUT FROM ITS APPROPRIATION ONLY THE NET DIFFERENCE. IN OTHER CASES THE DEPARTMENT IS REQUIRED TO ACCEPT THE TRADE-IN ALLOWANCE AS A RECEIPT FROM SALE OF GOVERNMENT PROPERTY, DEPOSIT THAT CREDIT AND PAY OUT FROM ITS APPROPRIATION THE ENTIRE GROSS SELLING PRICE OF THE ARTICLE BEING PURCHASED. SECTION 8 IS COPIED FROM THE CURRENT INDEPENDENT OFFICES APPROPRIATION ACT, WITH A SLIGHT CHANGE, AND IT WILL MAKE PERMANENT THE AUTHORIZATION FOR THE EXCHANGE OR SALE OF CERTAIN TYPES OF EQUIPMENT AT THE TIME REPLACEMENTS ARE PURCHASED, CREDITING THE SALE OR TRADE-IN VALUE AGAINST THE PURCHASE PRICE.

THUS, IT IS SEEN THAT THE AUTHORITY GRANTED BY SECTION 8 OF PUBLIC LAW 600 IS INTENDED FOR USE BY DEPARTMENTS IN THE PURCHASE OF ITEMS WHICH ARE TO BE USED AS REPLACEMENTS OF OLD EQUIPMENT. AS INDICATED IN OFFICE DECISION OF JANUARY 20, 1938, A-90487 (17 COMP. GEN. 580), REFERRED TO IN YOUR LETTER, STATUTORY AUTHORITY FOR THE TRADE-IN OR SALE OF OLD EQUIPMENT AND THE APPLICATION OF THE PROCEEDS OF THE TRADE IN OR SALE TOWARD THE PURCHASE PRICE OF NEW EQUIPMENT ORDINARILY CONTEMPLATES THE TRADE-IN OR SALE OF A SINGLE UNIT OF USED EQUIPMENT AND APPLICATION OF THE PROCEEDS ON THE PURCHASE PRICE OF A SINGLE UNIT OF NEW EQUIPMENT. HOWEVER, AS INDICATED FURTHER IN SAID DECISION, THERE APPEARS TO BE NO LEGAL OBJECTION TO THE TRADE-IN OR SALE OF TWO OR MORE UNITS OF OLD EQUIPMENT, IN FACT, IS TO BE USED AS A REPLACEMENT FOR THE TWO OR MORE UNITS OF OLD EQUIPMENT. FOR EXAMPLE, IF YOUR DEPARTMENT IS HOLDING TWO OR MORE UNITS OF OLD EQUIPMENT WHICH, BY REASON OF THEIR AGE OR CONDITION, NECESSARILY MUST BE KEPT AVAILABLE IN ORDER TO INSURE THE PERFORMANCE OF WORK--- WHICH SITUATION WOULD NOT BE NECESSARY IF A NEW UNIT IS PURCHASED--- THE TRADE- IN OR SALE OF THE TWO OR MORE OLD UNITS AND THE APPLICATION OF THE SUM RECEIVED FROM THE TRADE-IN OR SALE TOWARD THE PURCHASE OF THE NEW EQUIPMENT WOULD BE PROPER. ON THE OTHER HAND, IF EQUIPMENT ACTUALLY IS SURPLUS TO THE NEEDS OF YOUR DEPARTMENT, SO THAT IT MAY NOT BE SAID THAT THE PURCHASE OF NEW EQUIPMENT IS INTENDED AS A REPLACEMENT THEREFOR, THE EXCHANGE OR SALE OF SUCH SURPLUS EQUIPMENT IN CONNECTION WITH THE PURCHASE OF A NEW ITEM OF SIMILAR EQUIPMENT WOULD NOT BE AUTHORIZED--- SUCH SURPLUS EQUIPMENT BEING FOR DISPOSITION IN ACCORDANCE WITH THE PROVISIONS OF THE SURPLUS PROPERTY ACT OF 1944, REFERRED TO IN YOUR LETTER.