FINANCE DIVISION REGISTRY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81-00755R000200010001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 9, 2016
• Document Release Date: September 8, 2000
• Sequence Number: 1
• Publication Date: March 2, 1960
• Content Type: CHART

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RM No. 64 9 -
Office Memorandum ? UNITED STATES GOVERNMENT
Chief, Confidential Funds Branch
DATE: 22 April 1949
SUBJECT:Public Law 600 1 8
1. Reference is made to your memorandum of 15 March 1949, requesting
interpretation and clarification of Section 8 of the Act of August 2, 1946,
60 Stat. 808 (Public Law 600) in the light of certain Confidential Funds
Branch practices relating to the sale or exchange of various non-
expendable items of equipment.
2. You state (a) that it has been the practice of Confidential
Funds Branch, specifically with respect to automobiles, to accumulate
the proceeds from the sale of autos and charge the entire costs of pur-
chase to the fund to the extent that gross proceeds of all sales exceed
the cost of all purchases; (b) that because of administrative difficulty
and expenses in interzone transfers, specific sales and specific pur-
chases have not been tied in; (c) that it is felt that one new oar may
replace in cost and efficiency more than one old car and that it cannot
be presently detern4ned that more than one old car was disposed of for
the purpose of acquiring one new ear; and (d) that at the end of the
fiscal year, any net balance remaining in the fund indicating an excess
of proceeds from sales over cost of purchases will be covered into the
United States Treasury as a miscellaneous receipt.
3. Section 8 of Public Law 600 provides as follows:
"In purchasing motor-propelled or animal-drawn vehicles or
tractors, or road, agricultural, manufacturing, or laboratory equip-
ment, or boats, or parts, accessories, tires, or equipment thereof,
or any other article or iteni the exchange of which is authorized
by law, the head of any department or his duly authorized repre-
sentative 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 the authority of this section shall be evidenced in writing."
4. In 27 Comp. Gen. 30 it was held, quoting from the syllabus:
"Under section 8 of the administrative expense statute of August 2,
1946, authorizing application of the proceeds of sale or the exehea ge
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 auth-
orized--it being for disposition under the applicable provisions
of the Surplus Property Act of 1944."
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5. On the basis of this result, therefore, the practice referred
to in 2.a. above should be adjusted to conform with the conclusions
reached in the foregoing decision. yvhere a strong factual presentation
has been made that two units may be exchanged for one there would appear
to be no legal objection to the trade-in or sale of two or more units
of old equipment and the purchase of a single unit of new equipment if
the unit of new equipment, in fact, is to be used as a replacement for
the two or more units of old equipment. However, as a general practice?
it would definitely be opposed to the intendment of the statute and the
interpretations placed thereon by the General Accounting Office in its
decisions construing the section involved. In this connection, 28 Comp.
Gen. 256 is pertinent. Here it was held, quoting from the syllabus:
"W1here, in the exchange of equipment under the provisions of
section 8 of the administrative expense statute of August 2, 1946,
five used cameras are exchanged for a new camera, which camera
actually is in replacement of but one of the five old cameras, the
difference between the value of the replaced camera and the purchase
price of the new one is for charging against the applicable appro-
priation and for crediting to miscellaneous receipts in accordance
with the provisions of the Surplus Property Act of 1944.11
6. In this regard some of the language of this decision is interesting
and is quoted directly below.
"Ordinarily a new item of equipment is purchased to replace but
one item of old equipment. It is only in extraordinary circumstances,
when the item of new equipment is so far advanced technically and
performs the work so many times more efficiently than the old equip-
ment, that it properly may be said that the new equipment is to take
the place of more than one item of old equipment. Accordingly, on
the basis of the present record it is to be presumed that the new
Recordak camera actually is in replacement of but one of the five
old Recordak cameras."
T. The practices referred to in paragraph 2.b. above do not appear
to present any real difficulty. In decision B-73347, dated 2 February
1949, the Public Roads Administration requested. approval of a procedure,
"where old equipment of the Public Roads Administration, used seasonally,
is disposed of prior to the issuance of purchase orders for replacements,
that the proceeds of sale be credited to the Receipt Account, 9806690
Deposits, Proceeds of Sale, Motor Propelled Vehicles, etc ,.9 1949 Federal
lNorks Agency, Public Roads Administration': that the Cchedules of Col-
lections in such instances indicate that the monies cover proceeds of sale
of equipment at the 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 iden-
tification." The Comptroller General ruled that the proceeds of sale of
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the old equipment may be used only where the equipment purchased is
similar to and in replacement of the old equipment. It was pointed
out there was no statutory requirement that (1) the sale or exchange
of the old equipment be simultaneous with the purchase of the replaced
equipment or (2) the sale of each must precede in point of time or be
subsequent to the purchase (26 Comp. Gen. 729). The Comptroller Gen-
eral stressed, however, that the equipment purchased must be a re-
placement for the old equipment and be a similar item (26 Comp. Gen. 931)
and that unless a finding to that effect is made, the proceeds of sale
of the old equipment may not be applied against the purchase price of
the replacement. The Comptroller concluded that there was no legal
objection to the proposed action by the Public Roads Administration if
it was shown on the Schedule of Collections that the monies cover the
sale of equipment and that an administrative determination had been
made to purchase new similar equipment later in the fiscal year. How-
ever, this decision is not authority for the general placement for the
proceeds of sale of equipment into a limitation account (Sale of Equip-
ment) and the withdrawal therefrom so long as subsequent purchase
documents provide similar information, thereby enabling a tie-in between
the sale of old equipment and the purchase of new similar equipment.
8. In this connection, in a case involving a similar device, it
was held in 27 Comp. Gen. 478 that although,a document as proposed
above would show that funds used to make payment on account of a general
class of new equipment were derived from the proceeds of sale of old
equipment of the same general class, the supporting papers would not
show that the funds used to make payment on account of a particular
vehicle or unit were derived from the sale of an old vehicle or unit
which it would replace. The Comptroller General concluded that since
the proposed action would not permit the identification of particular
purchases with related sales, the accounting for transactions thereunder
would not comply with provisions of Section 8 of Public Law 600. He
observed that identification would be limited to a reference of a class
of sales to a similar class of purchases.
-9. The practice referred to in paragraph 2.o. above presents some
difficulty and should be amended in the light of statements previously
made-. In this regard, it can only be emphasized that the Comptroller
Gene'ral has ruled that while the proceeds of sale of one old unit may
be applied against the purchase of a new one in replacement thereof, it
is the plain intent of the statute to permit the proceeds of the sale
of particular items of old or used equipment to be applied only against
the purchase price of a psr titular item of new equipment with which the
old is to be replaced (27 Comp. Gen. 477).
10. As was pointed out in decision B-73347, supra, there is no
legal objection to crediting the proceeds of sale to a separate receipt
account so long as it is shown on the Schedule of Collections that the
money covered the sale of equipment and that an administrative determination
had been made reflecting a dedication of funds to the purchase of simi-
lar new equipment later in the fiscal year.
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1.1. The practice contemplated in paragraph 2.d. above should be
harmonized with the statements of paragraph 5 hereof. Basically, these
rulings hold against the deposit of cash received in excess of a tangible
allowance into a special receipt account, said cash excess to be made
available to purchase additional equipment at a later date. In this con-
nection the conclusions of 27 Comp. Gen. 477-478 and the ultimate find-
ings of 28 Comp. Gen. 256 should be reviewed. The later mentioned decision
involved a situation providing that five Recordak cameras were to be used
as an exchange allowance on one Recordak camera. The bid received from
the contractor specified $2,400. as the amount of such exchange allowance
and apparently fixed $1,550. as the price of the new camera, thus resulting
in an excess exchange allowance of 6850.., which amount was received by 1h e
Bureau of Census and deposited temporarily in Special Deposits. The agency
then inquired whether, if such payment of cash was permissible, the amount
of such payment might be deposited into the Special Fund Receipt Account
6690, Proceeds of Sales, Motor Propelled Vehicles, etc., and be made
available to purchase additional micro-film equipment from Recordak Corpor-
ation, namely micro-film readers, without which a micro-film camera was
of no value. The Comptroller General held that not only would it be re-
quired that the excess receipt from the proceeds of the sale be deposited
and covered intothe Treasury of the United States as a miscellaneous
receipt but there also would be required to be deposited the difference
between the value of the replaced unit and the balance allowed by the
contractor toward the purchase price of the new unit.
12. You have also requested that this office furnish you with a
clarification of the extent to which Section 8 of Public Law 600 applies
to non-expendable equipment. It is apparent that Section 8 not only
applies to those items which are specifically mentioned but to those which
may logically be related. It should be noted that Section 8 also applies
to any other article or item, the exchange of which is authorized by law.
Usually this authority would be found in specific Agency appropriation
acts or in some act of general application to the various Government depart-
ments and agencies. In the event that you are confronted with a doubtful
case the matter should be referred to this office.
LAWRENCE R. HOUSTON
General Counsel
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