2006-027, Accepting and Dispensing of $1 Coin(Comment #3)

FAC 2005-19; FAR Case 2006-027; Item XII; Docket 2007-0001, Sequence 5 Re: Dollar Coins on Federal Property Summary: The National Automatic Merchandising Association requests an amendment to the Interim Rule published in the Federal Register, August 17th, 2007 amending 48 CFR Part 52 (Solicitation Provisions and Contract Clauses), Section 52.237-11 (Accepting and Dispensing of $1 Coin) to exempt vending machines on federal property that do not accept currency denominations above $1 from the requirement to dispense dollar coins. The National Automatic Merchandising Association (NAMA): NAMA is the national trade association of the vending, coffee service and foodservice management industry. It is comprised of approximately 1400 operator companies that sell food and beverages through vending machines, as well as provide coffee service and contract food services in factories, offices, colleges and universities, hospitals and on federal property, including post offices, military installations, federal judicial centers and other properties owned or controlled by the federal government. NAMA also has approximately 400 member companies that manufacture and distribute food and beverage products to the operator companies. In addition, NAMA has within its membership 30 companies that manufacture and distribute vending machines or coin and currency accepting and dispensing mechanisms. NAMA was founded in 1936 and has its headquarters at 20 North Wacker Drive in Chicago, Illinois. It maintains 3 branch offices in Herndon, Virginia; Marietta, Georgia and Pasadena, California. Background: The interim rule referred to above implements the Presidential $1 Coin Act of 2005 (Pub. L. 109-145). This law provides for the minting and issuance annually of four new dollar coins bearing the likenesses of the Presidents of the United States in the order of their service. To promote circulation of the new coins, Section 104 of the Public Law requires that entities that operate any business, including vending machines, on property owned or under the control of the United States Government, be capable of accepting and dispensing dollar coins and that notices be displayed denoting this capability. On April 28th, 2004, NAMA testified before the House Subcommittee on Domestic and International Monetary Policy, Trade and Technology in support of legislation that later became the Presidential $1 Coin Act of 2005. In its testimony, NAMA endorsed a proposal to require dollar coin availability on all federal property. NAMA continues to support the Presidential $1 Coin Act and Section 104?s requirement that dollar coins be available on all federal property. Section 52.237-11 (Accepting and Dispensing of $1 Coin) of the Interim Rule requires incorporating a clause in solicitations and contracts for the provision of services that involve business operations conducted in U.S. coins and currency, including vending machines, on any premises owned by the United States or under the control of any agency or instrumentality of the United States requiring all vending machines, including machines that do not accept denominations higher than $1, to accept and dispense dollar coins; and that the federal agency or Contractor ensure that a sign denoting such capability be posted on each vending machine. Arguments in Support of Amendment to Interim Rule: 1) Congress did not intend vending machines that do not accept denominations higher than $1, and thus will not dispense dollar coins in change, be modified to dispense dollar coins. A) The paragraph that federal agencies rely on to require every machine to accept and dispense dollar coins is titled ?Acceptance By Agencies and Instrumentalities?. (Sec.104 (p) (1)) This title implies an intention to require only machine acceptance of dollar coins, not dispensing of dollar coins. If Congress intended every vending machine on federal property to both accept and dispense dollar coins, it would have titled the paragraph ?Acceptance and Dispensing By Agencies and Instrumentalities.? It did not. Within this same paragraph (Sec.104(p)(1)), Congress imposes an obligation on all federal agencies to ?take such action as may be appropriate? to ensure dollar coin capability on all federal property by January 1st, 2008. NAMA believes that requiring federal agencies or contractors conducting business on federal property to modify vending machines to dispense coins those machines will not dispense is not appropriate. B) The key paragraph within Section 104, (p) (1) is Paragraph A. It states: ?any business operations conducted by any such agency, instrumentality, system, or entity that involve coins or currency will be fully capable of accepting and dispensing $1 coins in connection with such operations;? NAMA believes it is perfectly reasonable to read this paragraph to mean that a vending operation on federal property in which every vending machine accepts dollar coins, every bill changer in the operation dispenses dollar coins, and every machine that accepts denominations above $1 dispenses dollar coins in change is in full compliance with this paragraph. C) We note that Paragraph (B) requires the display of signs and notices denoting $1 coin capability, ?including on each vending machine.? Yet Paragraph (A), the key paragraph that imposes the general coin acceptance and dispensing obligation, lacks this individual vending machine requirement. Again, if Congress truly intended to require every vending machine to dispense dollar coins in change, it could easily have stated this in the key Paragraph, Paragraph A. It did not. 2) Requiring vending machines that do not accept denominations higher than $1 to dispense dollar coins does not serve the purpose of Section 104 of the Presidential Dollar Coin Act of 2005. The purpose of Section 104 of the Act, requiring that dollar coins be available on all federal property and that signs be posted denoting such availability, is to promote wider distribution and use of dollar coins in commerce. The Preamble to Public Law 109-145, enacted January 4th, 2005, states that one of purposes of the Law is ?to improve circulation of the $1 coin.? Requiring machines that accept nothing higher than the $1 denomination to be modified to dispense dollar coins would not improve circulation of dollar coins. Instead, this requirement would involve needless expense. 3) Modifying vending machines to dispense dollar coins in change is expensive. In the case of coin mechanisms manufactured before 2000, these mechanisms will have to be replaced. The cost of a new mechanism is approximately $400. In the case of mechanisms manufactured after 2000, a new coin cassette will have to be purchased at a cost of $40. These cost estimates do not include the cost of labor to install the new cassette or new coin acceptor. NAMA cannot provide an estimate of the total cost to modify vending machines on federal property which do not accept denominations above $1 to dispense dollar coins. But the following information provided to NAMA by the Army and Air Force Exchange gives insight into the cost that the Army and Air Force Exchange, the Navy Exchange and the Marine Corps Exchange face in modifying vending machines to dispense dollar coins: ?At three pm on Friday, March 9th, a conference call was held with representatives of the US Mint and the three military resale systems in reference to the Presidential Coin Act and its impact on income/dividend if required by law to dispense coins from all vending equipment. Between the three sister exchanges, approximately 64,000 vending machines would require over a conservative estimate of $10M to update the units to meet the proposed law for dispensing $1 coins. In locations where the businesses are contracted (predominantly with AAFES) the passing on of this expense may result in fee relief and lack of interest in conducting business with federal installations since the statute is not a mandate commercially in the industry. The overall result of this change will be negative impact on the dividend for the soldiers and airmen.? NAMA understands from the American Beverage Association (ABA) that the association, representing soft drink bottling companies which operate tens of thousands of soft drink vending machines on federal property, retained an outside consultant to estimate the cost of compliance with Section 104 of Public Law 109- 145. The consultant estimates the cost of compliance at a minimum of $20 million. Conclusion The National Automatic Merchandising Association enthusiastically supports the Presidential $1 Coin Act of 2005, including Section 104?s requirement that dollar coins be available on federal property and that notices be displayed denoting such availability. It supports the requirement that all vending machines on federal property accept dollar coins; that all bill changer machines on federal property dispense dollar coins; and that all vending machines on federal property accepting denominations higher than $1 dispense dollar coins in change; and that notices denoting such capability be displayed. It respectfully requests that the Interim rule referred to above be amended only in the following manner: that machines not accepting denominations higher than $1 be exempt from the $1 coin dispensing requirement. NAMA appreciates the opportunity to comment on this interim rule. It appreciates the efforts of all federal agencies to implement the Presidential $1 Coin Act of 2005 and pledges its full support and cooperation in implementing the Act.