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B-195786 1 (1980-02-12)

handle is hein.gao/gaobadhzr0001 and id is 1 raw text is: V. A t THE COMPTROLLER GENERAL DECISION OF THE UNITED STATES WASHINGTON, o..C. 20548 B- 195786 DATE: February 12, 1980 MATTER OF: Fermont Division of the Dynamics Corp. of America DIGEST: Prompt payment discount may be applied to increase in contract price granted under price escalation clause where price is adjusted to reflect change in wholesale price indexes. Contrary holding by ASBCA applying discount only to original contract price is distin- guishable as escalation in that decision was granted only to adjust an increase in direct labor costs and unlike instant case application of discount to such price increase would have been inconsistent with purpose of escalation clause. V The Chief, Accounting and Finance Division, Office of the Comptroller, Defense Logistics A ency (DLA), requests an advance decision as to thetpropriety of making payment to the Fermont Division of the Dynamics v Corporation o America (Fermont) for $452.58. Fermont requests DLA reimburse it this amount on the grounds that DLA improperly computed prompt payment discounts under contract number DAAG53-76-C-0225 on the adjusted invoice price instead of on the lower original bid price. For the reasons stated below, we find Fermont is not entitled to payment of the discount. The record discloses that under the terms of the contract Fermont offered a one-tenth of one percent discount for prompt payments by DLA and that DLA, in computing the amount of the discount, applied the dis- count against not only the original contract price but also against $452,584.39 representing an amount by which the original contract price was increased under the a contract's Price Escalation clause. ta A FILE: ( I

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