B-73347, FEBRUARY 2, 1949, 28 COMP. GEN. 443

B-73347, FEBRUARY 2, 1949, 28 COMP. GEN. 443

EXCHANGE OR SALE OF USED EQUIPMENT UNDER THE PROVISIONS OF SECTION 8 OF THE ADMINISTRATIVE EXPENSE STATUTE OF AUGUST 2, 1946, AUTHORIZING APPLICATION OF THE PROCEEDS OF SALE OF USED VEHICLES, ETC., TOWARD THE PURCHASE OF NEW SIMILAR ITEMS, OLD EQUIPMENT OF THE PUBLIC ROADS ADMINISTRATION WHICH IS USED SEASONALLY MAY BE SOLD AT THE END OF THE SEASON AND THE PROCEEDS THEREOF APPLIED TOWARD THE PURCHASE OF NEW SIMILAR ITEMS LATER IN THE FISCAL YEAR IN REPLACEMENT OF THE OLD EQUIPMENT, PROVIDED AN ADMINISTRATIVE DETERMINATION TO THAT EFFECT BE MADE AT THE TIME OF SALE AND THAT ACCOUNTING DOCUMENTS FULLY DESCRIBE EACH TRANSACTION. 27 COMP. GEN. 540, MODIFIED.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, FEDERAL WORKS AGENCY, FEBRUARY 2, 1949:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF DECEMBER 29, 1948, REFERRING TO THE FINAL PARAGRAPH OF DECISION OF THIS OFFICE DATED MARCH 22, 1948, B-73347, 27 COMP. GEN. 540, IN WHICH IT WAS POINTED OUT THAT, UNDER SECTION 8 OF THE ACT OF AUGUST 2, 1946, 60 STAT. 808, 809, IT IS ONLY IN CONNECTION WITH THE PURCHASE OF MOTOR PROPELLED VEHICLES, ETC., THAT THERE IS PERMITTED THE APPLICATION OF THE PROCEEDS OF OLD OR USED SIMILAR EQUIPMENT AND THAT THERE MUST BE SOME ACTION TOWARD THE PURCHASE, BY THE ISSUANCE OF AN ORDER OR REQUISITION, IF NOT THE ACTUAL CONSUMMATION OF THE PURCHASE BEFORE THE PROCEEDS OF THE SALE MAY BE APPLIED.

IT IS STATED IN YOUR LETTER THAT MUCH OF THE WORK OF THE PUBLIC ROADS ADMINISTRATION IS OF A SEASONAL CHARACTER INVOLVING THE CONSTRUCTION OF FOREST HIGHWAYS AND PARK ROADS IN MOUNTAINOUS AREAS; THAT THE WORKING SEASON VARIES GREATLY WITH GEOGRAPHICAL LOCATION, WEATHER CONDITIONS AND TYPE OF WORK, IN SOME SECTIONS, SUCH SEASON ONLY LASTING FIVE MONTHS; AND THAT, AT THE END OF THE WORKING SEASON, WHEN THE EQUIPMENT IS RETURNED TO YOUR EQUIPMENT DEPOTS, IT IS THE PRACTICE TO INSPECT IT AND DETERMINE WHETHER IT SHOULD BE REPAIRED OR REPLACED. IT IS FURTHER STATED THAT, WHEN REPLACEMENTS ARE THEN DECIDED ON, IT IS IN THE INTEREST OF THE GOVERNMENT TO SELL THE EQUIPMENT IN THE FALL AND NOT TO PURCHASE THE NEW EQUIPMENT UNTIL THE NEXT SPRING WHEN IT WILL BE NEEDED; THAT THIS PROCEDURE ELIMINATES STORAGE COSTS DURING THE OFF SEASON MONTHS OR, WHERE STORAGE SPACE IS NOT AVAILABLE, THE DEPRECIATION--- AT GOVERNMENT EXPENSE- -- OF THE USED EQUIPMENT DUE TO EXPOSURE TO THE ELEMENTS. ALSO, IT IS STATED THAT, BY SELLING THE EQUIPMENT AT THE END OF THE WORKING SEASON, ITS DEPRECIATION AT GOVERNMENT EXPENSE--- DUE TO THE ADDITIONAL AGE OF THE EQUIPMENT IF HELD UNTIL THE BEGINNING OF THE NEXT CONSTRUCTION SEASON--- IS AVOIDED AND THAT, BY PURCHASING THE NEW EQUIPMENT AT THE COMMENCEMENT OF THE NEW SEASON, IMPROVED MODELS OF THE VARIOUS TYPES OF EQUIPMENT MAY BE PROCURED. IT IS POINTED OUT FURTHER THAT THE SALE OF THE USED EQUIPMENT PRIOR TO ISSUANCE OF ORDERS FOR REPLACEMENT UNDER SUCH CONDITIONS IS TO THE ADVANTAGE OF THE GOVERNMENT AND WOULD NOT INDICATE THAT THE OLD EQUIPMENT IS SURPLUS AND THE PROCEEDS OF SALE FOR COVERING INTO MISCELLANEOUS RECEIPTS. YOU REQUEST THAT, WHERE OLD EQUIPMENT OF THE PUBLIC ROADS ADMINISTRATION, USED SEASONALLY, IS DISPOSED OF PRIOR TO THE ISSUANCE OF PURCHASE ORDERS FOR REPLACEMENT, THE PROCEEDS OF SALE BE CREDITED TO THE RECEIPT ACCOUNT "806690 DEPOSITS, PROCEEDS OF SALE, MOTOR- PROPELLED VEHICLES, ETC., 19--- FEDERAL WORKS AGENCY, PUBLIC ROADS ADMINISTRATION; " THAT THE SCHEDULES OF COLLECTIONS IN SUCH INSTANCES INDICATE THAT THE MONEYS COVER PROCEEDS OF SALE OF EQUIPMENT AT END OF THE CONSTRUCTION SEASON AND THAT ADMINISTRATIVE DETERMINATION HAS BEEN MADE TO PURCHASE SIMILAR EQUIPMENT IN THE FISCAL YEAR AND THAT SUBSEQUENT ACCOUNTING DOCUMENTS PROVIDE PROPER CROSS IDENTIFICATION.

THE ACT OF AUGUST 2, 1946, SUPRA, PERMITS THE USE OF PROCEEDS OF SALE OF USED EQUIPMENT IN CONNECTION WITH THE PURCHASE OF SIMILAR ITEMS AND THE PURPOSE OF SUCH SECTION, AS SHOWN ON PAGE 6 OF HOUSE REPORT NO. 2186 AND SENATE REPORT NO. 1636, 79TH CONGRESS, 2D SESSION, WAS TO MAKE PERMANENT THE PROVISION IN THE THEN CURRENT INDEPENDENT OFFICES APPROPRIATION ACT WHEREBY THERE WAS AUTHORIZED THE EXCHANGE OR SALE OF EQUIPMENT AT THE TIME REPLACEMENTS ARE PURCHASED, CREDITING THE SALE OR TRADE-IN VALUE AGAINST THE PURCHASE PRICE. ACCORDINGLY, THE PROCEEDS OF SALE OF THE OLD EQUIPMENT MAY BE USED ONLY WHERE THE EQUIPMENT PURCHASED IS SIMILAR TO AND IN REPLACEMENT OF THE OLD EQUIPMENT. THERE APPEARS NO STATUTORY REQUIREMENT THAT THE SALE OR EXCHANGE OF THE OLD EQUIPMENT BE SIMULTANEOUS WITH THE PURCHASE OF THE REPLACEMENT EQUIPMENT AND THE SALE OR EXCHANGE MAY PRECEDE IN POINT OF TIME OR BE SUBSEQUENT TO THE PURCHASE. 26 COMP. GEN. 729. HOWEVER, IT APPEARS CLEAR THAT THE EQUIPMENT PURCHASED MUST BE A REPLACEMENT FOR THE OLD EQUIPMENT AND BE A SIMILAR ITEM (23 COMP. GEN. 931) AND THAT, UNLESS A SHOWING TO THAT EFFECT IS MADE, THE PROCEEDS OF SALE OF THE OLD EQUIPMENT MAY NOT BE APPLIED AGAINST THE PURCHASE PRICE OF THE REPLACEMENT. ALSO, IT WOULD APPEAR THAT THE PROCEEDS OF SALE SHOULD HAVE NO GREATER PERIOD OF AVAILABILITY FOR OBLIGATION THAN THE APPROPRIATION USED TO DEFRAY THE BALANCE OF THE PURCHASE PRICE. APPLYING THESE STANDARDS TO THE PROPOSALS ADVANCED BY YOU, I PERCEIVE NO LEGAL OBJECTION THERETO. ACCORDINGLY, IF IT BE SHOWN ON THE SCHEDULE OF COLLECTIONS THAT THE MONEYS COVER THE SALE OF EQUIPMENT, AND THAT ADMINISTRATIVE DETERMINATION HAS BEEN MADE TO PURCHASE SIMILAR EQUIPMENT LATER IN THE FISCAL YEAR, NO OBJECTION WILL BE INTERPOSED BY THIS OFFICE TO DEPOSIT OF THE AMOUNT INTO THE RECEIPT ACCOUNT INVOLVED. ALSO, IF SUCH PURCHASE IS ACTUALLY CONSUMMATED OR THE FUND LEGALLY OBLIGATED BY CONTRACT OBLIGATION DURING THE PERIOD OF AVAILABILITY OF THE APPROPRIATION USED TO DEFRAY THE BALANCE OF THE PURCHASE PRICE, NO OBJECTION WILL BE MADE TO USE OF THE PROCEEDS OF SALE TOWARD PURCHASE OF THE REPLACEMENT PROVIDED THAT A SUFFICIENT SHOWING IS MADE TO THAT EFFECT AND TO ENABLE A DETERMINATION TO BE MADE THAT THE ITEMS ARE SIMILAR. THE DECISION PUBLISHED IN 27 COMP. GEN. 540 IS MODIFIED ACCORDINGLY.