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B-200023 1 (1981-02-13)

handle is hein.gao/gaobadjcm0001 and id is 1 raw text is: DECiSION B THE COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON. D. C. 20548 FILE: B-200023 OATE: February 13, 1981 MATTER OF: Method for computation of prompt payment discountj DIGEST: Absent contract provisions to the contrary, prompt payment discounts offered by vendors to the Government where trade-ins are involved should be computed on the basis of the net con- tract price, that is, the actual cash balance due, since such method is consistent with gen- erally accepted accounting principles and cur- rent trade practice. 17 Comp. Gen. 580 (1938) and 18 Comp. Gen. 60 (1938) overruled to the extent inconsistent with this decision. _An authorized certifying officer of the Department of Agriculture asks- pursuant to 31 U.S.C. S 82d,Cwhether, in instances where trade-ins are involved, prompt payment dis- counts offered to the United States on its contracts with vendors should be computed on the gross contract price or on the net price'',that is, the balance due after the trade-in value is deducted . For the reasons given below, we conclude that such discounts should be based on the net balance due, absent specific contract provisions to the contrary. The certifying officer explains that theLDepartment of Agriculture:;National Finance Center, which is responsible for payment of purchase orders issued by all agencies within Agriculture, has recently been questioned by vendors about its method of computing prompt payment discounts when a trade-in is included on a purchase order. The current for- mulaused by the Finance Center for computing prompt payment discounts is based on the total invoice amount less freight (gross contract price).'\ Thus, even when trade-ins are in- volved, the prompt payment discount is computed on the basis of the gross contract price. \ Vendors have complained, however, that the discount should be based on the net contract price, that is, the actual cash balance due (gross amount minus the value given on the trade-in)-7 This method necessarily would result in a smaller discount. : For example, assuming a 2 percent prompt payment discount and a S500 trade-in, if the gross contract price were $1000, and the discount were computed on the basis of the gross price, the discount would be $20; ;11,453,.1Ij!) / 70 / -2-

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