A-92456, JUNE 13, 1938, 17 COMP. GEN. 1063

A-92456: Jun 13, 1938

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CONTRACTS - FREIGHT CHARGES - DEDUCTIONS - "COMMERCIAL FREIGHT RATES" WHERE BIDS ARE REQUESTED ON AN F.O.B. THE FREIGHT COST DEDUCTIONS ARE NOT LIMITED TO REGULAR COMMERCIAL RAILROAD FREIGHT RATES TO THE EXCLUSION OF PUBLISHED RATES FOR OTHER AVAILABLE AND CHEAPER METHODS OF COMMERCIAL FREIGHT TRANSPORTATION. PARTICULARLY WHERE THE BID SHOWS THAT THE CONTRACTOR MUST HAVE CONTEMPLATED USING A CHEAPER METHOD. ARE PARTICULARLY SPECIFIED BY THE BIDDER. THE LATTER BID WAS ACCEPTED SUBJECT TO A CONTRACT STIPULATION AS FOLLOWS: * * * EACH BIDDER SHALL STATE IN THE BLANKS PROVIDED THEREFOR IN THE SCHEDULE. THE WEIGHTS STATED WILL BE USED IN COMPUTING THE DELIVERED COST TO THE GOVERNMENT AND IN DETERMINING THE LOW BID.

A-92456, JUNE 13, 1938, 17 COMP. GEN. 1063

CONTRACTS - FREIGHT CHARGES - DEDUCTIONS - "COMMERCIAL FREIGHT RATES" WHERE BIDS ARE REQUESTED ON AN F.O.B. POINT OF SHIPMENT AND F.O.B. GOVERNMENT DESTINATION BASIS, WITH SHIPMENT ON GOVERNMENT BILLS OF LADING AND DEDUCTION FROM PAYMENT DUE THE CONTRACTOR OF "THE COST OF TRANSPORTATION, FROM THE CONTRACTOR'S SHIPPING POINT TO DESTINATION, * * *, AT COMMERCIAL FREIGHT RATES" IN CONNECTION WITH BIDS F.O.B. CARS AT DESTINATION, THE FREIGHT COST DEDUCTIONS ARE NOT LIMITED TO REGULAR COMMERCIAL RAILROAD FREIGHT RATES TO THE EXCLUSION OF PUBLISHED RATES FOR OTHER AVAILABLE AND CHEAPER METHODS OF COMMERCIAL FREIGHT TRANSPORTATION, PARTICULARLY WHERE THE BID SHOWS THAT THE CONTRACTOR MUST HAVE CONTEMPLATED USING A CHEAPER METHOD, AND, IN THE INTEREST OF CLARIFICATION FOR BID EVALUATION AND FREIGHT COST DEDUCTION PURPOSES, IT WOULD APPEAR THAT FUTURE INVITATIONS FOR BIDS SHOULD DEFINE THE TERM "COMMERCIAL FREIGHT RATES" TO MEAN REGULAR COMMERCIAL RAILROAD RATES UNLESS OTHER RATES AND THE AMOUNT THEREOF, ARE PARTICULARLY SPECIFIED BY THE BIDDER, OR, THAT SOME OTHER CONTRACTUAL PROVISION OF SIMILAR IMPORT AND EFFECT BE USED. 17 COMP. GEN. 871, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE INTERIOR, JUNE 13, 1938:

BY LETTER OF DECEMBER 14, 1937, THE BUREAU OF RECLAMATION TRANSMITTED LETTER OF MAY 26, 1937, FROM THE CHIEF ENGINEER OF SAID BUREAU AT DENVER, COLO., CONCERNING SETTLEMENT NO. 0442875 DATED APRIL 24, 1937, WHICH ALLOWED THE BUCYRUS-ERIE CO. $165.64 AS EXCESS COMMERCIAL FREIGHT CHARGES ADMINISTRATIVELY DEDUCTED IN MAKING PAYMENT UNDER CONTRACT 12R-6033 DATED MAY 4, 1936, FOR A PORTABLE DRILLING MACHINE.

THE INVITATION FOR BIDS REQUESTED QUOTATIONS BOTH F.O.B. POINT OF SHIPMENT AND F.O.B. GOVERNMENT DESTINATION. THE BUCYRUS-ERIE CO. SUBMITTED A BID OF $2,040 F.O.B. SOUTH MILWAUKEE, WIS., AND $2,342.90 F.O.B. DESTINATION, YUMA, ARIZ. THE LATTER BID WAS ACCEPTED SUBJECT TO A CONTRACT STIPULATION AS FOLLOWS:

* * * EACH BIDDER SHALL STATE IN THE BLANKS PROVIDED THEREFOR IN THE SCHEDULE, THE TOTAL SHIPPING WEIGHT OF EACH ITEM THAT HE PROPOSES TO FURNISH. THE WEIGHTS STATED WILL BE USED IN COMPUTING THE DELIVERED COST TO THE GOVERNMENT AND IN DETERMINING THE LOW BID. FAILURE TO STATE THE SHIPPING AND DELIVERY POINTS AND THE TOTAL SHIPPING WEIGHT OF EACH ITEM WILL BE CONSIDERED SUFFICIENT CAUSE FOR REJECTING THE BID. ALL EQUIPMENT, MATERIALS, AND SUPPLIES FURNISHED AND DELIVERED F.O.B. CAR SAT CONTRACTOR'S SHIPPING POINT SHALL BE SHIPPED ON GOVERNMENT BILLS OF LADING. IN THE CASE OF EQUIPMENT, MATERIALS, AND SUPPLIES FURNISHED AND DELIVERED F.O.B. CARS AT DESTINATION, THE GOVERNMENT RESERVES THE RIGHT TO HAVE SHIPMENT MADE ON GOVERNMENT BILLS OF LADING AND TO DEDUCT, FROM ANY PAYMENT DUE THE CONTRACTOR, THE COST OF TRANSPORTATION, FROM THE CONTRACTOR'S SHIPPING POINT TO DESTINATION, OF THE TOTAL SHIPPING WEIGHT STATED IN THE SCHEDULE, AT COMMERCIAL FREIGHT RATES. IF THE ACTUAL SHIPPING WEIGHT, INCLUDING PACKING, AS LATER DETERMINED BY THE FREIGHT BILL, EXCEEDS THE SHIPPING WEIGHT STATED IN THE SCHEDULE, IN EITHER SHIPPING POINT OR DESTINATION BIDS, THE GOVERNMENT WILL DEDUCT, FROM ANY PAYMENT DUE THE CONTRACTOR, THE COST OF TRANSPORTATION AT COMMERCIAL FREIGHT RATES, ON ALL EXCESS WEIGHT OVER AND ABOVE THE WEIGHT STATED IN THE SCHEDULE.

THE UNITED STATES FURNISHED GOVERNMENT BILLS OF LADING AND SHIPMENT WAS MADE THEREON AT A COST OF $253.77 TO THE UNITED STATES AND THERE WAS DEDUCTED FROM VOUCHER 13-33669, MAY 1936 ACCOUNTS OF G. F. ALLEN, FROM A PAYMENT TO THE CONTRACTOR, THE SUM OF $435.54 AS "COMMERCIAL FREIGHT.' UPON RECEIPT OF THE PAYMENT THE CONTRACTOR PROTESTED IN LETTER OF JUNE 3, 1936, THAT IT HAD CONTEMPLATED MAKING SHIPMENT VIA UNIVERSAL OR NATIONAL CARLOADING AND DISTRIBUTING CORPORATION AT AN APPROXIMATE FREIGHT COST OF $238, AND THERE WAS ACCORDINGLY REFERRED, JULY 7, 1936, TO THIS OFFICE THE CLAIM OF THE CONTRACTOR FOR $197.54 AS THE DIFFERENCE BETWEEN $238 AND THE AMOUNT OF $435.54 DEDUCTED IN MAKING PAYMENT FOR THE EQUIPMENT. FROM AN EXAMINATION OF THE PUBLISHED RATES OR TARIFFS ON FILE HERE IT APPEARED THAT THE COMMERCIAL FREIGHT ON THE SHIPMENT VIA UNIVERSAL OR NATIONAL CARLOADING AND DISTRIBUTING CORPORATION WOULD HAVE BEEN $269.90, AND THE CONTRACTOR WAS ALLOWED IN THE SETTLEMENT OF APRIL 24, 1937, THE DIFFERENCE BETWEEN $435.54 DEDUCTED AND $269.90 OR A BALANCE OF $165.64.

THE CHIEF ENGINEER STATES IN HIS LETTER OF MAY 26, 1937, THAT:

6. THE RECORD SHOWS THAT THE BUCYRUS-ERIE COMPANY SUBMITTED TWO PROPOSITIONS, AS FOLLOWS:

F.O.B. SOUTH MILWAUKEE, $2,040.00.

F.O.B. DESTINATION, $2,342.90.

7. THE ABOVE FIGURES SHOW THAT THE AMOUNT OF $302.90 WAS INCLUDED AS TRANSPORTATION COSTS ON THE DESTINATION BID.

8. DUE TO THE FACT THAT DISCOUNT OF THREE PERCENT WAS INVOLVED FOR PAYMENT WITHIN 15 DAYS, DEDUCTION OF FREIGHT IN THE AMOUNT OF $435.54 WAS MADE WITHOUT COPY OF FREIGHT BILL, BASED UPON THE FIRST-CLASS RATE OF $5.07 PER CWT. ON THE ENTIRE WEIGHT OF THE SHIPMENT OF 8,408 POUNDS, PLUS 11 CENTS PER CWT. EMERGENCY CHARGES. HOWEVER, BY REFERENCE TO BILL OF LADING NO. I-571,049, DATED MAY 12, 1936, SOUTH MILWAUKEE, WISCONSIN, TO YUMA, ARIZONA, WAYBILL NO. 649, IT WILL BE NOTED THAT THE FREIGHT TOTALS $415.89 BASED UPON THE FOLLOWING:

TABLE 7,354 POUNDS AT $5.07---------------- $372.85 233 POUNDS AT

3.65---------------- 8.50 821 POUNDS AT

3.08---------------- 25.29

8,408 POUNDS AT .11---------------- 9.25

TOTAL------------------------------ 415.89

9. IN VIEW OF THE FACT THAT CAR FORWARDING COMPANIES ARE NOT COMMON CARRIERS AND AT PRESENT ARE NOT SUBJECT TO THE INTERSTATE COMMERCE ACT AND THE FURTHER FACT THAT FROM INFORMATION AVAILABLE, THEY ARE NOT PARTIES TO THE GOVERNMENT EQUALIZATION AGREEMENT AND REFUSE TO FURNISH PUBLISHED TARIFFS, IT IS BELIEVED THAT CONSIDERATION SHOULD NOT BE GIVEN TO CLAIMS MADE BY CONTRACTORS BASED UPON RATES QUOTED BY THESE COMPANIES.

10. THIS OFFICE IS ALWAYS INTERESTED IN OBTAINING SERVICES OF RECOGNIZED COMMON CARRIERS PUBLISHING RATES WITH A VIEW OF OBTAINING TRANSPORTATION SERVICES AT THE LOWEST POSSIBLE COSTS, AND THE BIDDERS KNOW THAT BIDS ARE COMPUTED AND DELIVERED COSTS ARRIVED AT BY THE USE OF RATES PUBLISHED OR ALLOWED TO THE GOVERNMENT BY RECOGNIZED COMMON CARRIERS.

11. IF THIS DECISION IS ALLOWED TO STAND THERE IS NOTHING TO PREVENT CONTRACTORS FROM OBTAINING RATE QUOTATIONS FROM CONTRACT CARRIERS, TRAMP TRUCKERS, OR OTHER MODES OF TRANSPORTATION IN ORDER TO OBTAIN REFUNDS IN FREIGHT AND SUCH RATES WOULD BE IMPOSSIBLE TO CHECK.

12. IN THIS CASE THE BUCYRUS-ERIE COMPANY ACCEPTED ALL THE TERMS OF THE CONTRACT, WHICH INCLUDED SHIPMENT ON GOVERNMENT BILLS OF LADING, AND THE SHIPMENT WAS MADE ACCORDINGLY. IF THERE WERE ANY OBJECTIONS TO THE TERMS OF THE CONTRACT THE COMPLAINT SHOULD HAVE BEEN ENTERED BEFORE SHIPMENT WAS MADE OR THEIR BID SHOULD HAVE SPECIFIED "DELIVERED COSTS BASED UPON SHIPMENT VIA UNIVERSAL CARLOADING AND DISTRIBUTING COMPANY.'

THE TERMS OF THE CONTRACT WERE DRAFTED BY THE UNITED STATES AND AS SHOWN BY THE ABOVE QUOTATION THEREFROM THE CONTRACT DID NOT DEFINE THE "COMMERCIAL FREIGHT RATES" WHICH WERE TO BE DEDUCTED IN EVENT THE BID WAS ACCEPTED F.O.B. GOVERNMENT DESTINATION AND DELIVERY WAS MADE ON A GOVERNMENT BILL OF LADING. I AM ADVISED THAT THE UNIVERSAL AND NATIONAL CARLOADING COMPANIES FOR SEVERAL YEARS PAST HAVE PUBLISHED AND FILED SCHEDULES OF RATES OR TARIFFS AVAILABLE GENERALLY TO COMMERCIAL SHIPPERS, AND THERE IS APPARENT NO SOUND BASIS FOR HOLDING THAT SUCH PUBLISHED RATES MIGHT NOT REASONABLY BE VIEWED BY THE CONTRACTOR AS WITHIN THE TERM "COMMERCIAL FREIGHT RATES" AS USED IN THE BID CONDITIONS. IT WAS ENTIRELY POSSIBLE FOR THE CONTRACTOR TO HAVE MADE SHIPMENT IN THIS CASE VIA THE UNIVERSAL OR THE NATIONAL CARLOADING AND DISTRIBUTING CORPORATION AND IT WOULD SEEM TO BE OBVIOUS THAT THE CONTRACTOR WOULD HAVE SO MADE SHIPMENT IN VIEW OF THE DIFFERENCE WHICH COULD HAVE BEEN SO SAVED BY THE CONTRACTOR IN THE TRANSPORTATION COST.

IT IS NOTED IN THIS CONNECTION THAT THE DIFFERENCE BETWEEN THE CONTRACTOR'S BIDS FOR DELIVERY F.O.B. ITS SHIPPING POINT AND F.O.B. DESTINATION WAS SUBSTANTIALLY LESS THAN THE AMOUNT OF FREIGHT AT REGULAR RAIL RATE.

IT WAS HELD IN DECISION OF APRIL 25, 1938, 17 COMP. GEN. 871, THAT THE TERM "COMMERCIAL FREIGHT RATES" AS USED IN AN IDENTICAL BUREAU OF RECLAMATION CONTRACT PROVISION, COULD NOT BE TAKEN AS INCLUDING AN "IN TRANSIT" RATE ALLEGED BY THE CONTRACTOR TO HAVE BEEN AVAILABLE BY REASON OF THE FACTS PERTAINING TO A PARTICULAR SHIPMENT, OF WHICH THE GOVERNMENT HAD NO PRIOR NOTICE, BUT THERE APPEARS NO REASON FOR ASSUMING THAT THE TERM IS LIMITED TO REGULAR COMMERCIAL RAILROAD FREIGHT RATES TO THE EXCLUSION OF PUBLISHED RATES FOR OTHER AVAILABLE AND CHEAPER METHODS OF COMMERCIAL FREIGHT TRANSPORTATION, PARTICULARLY WHERE THE BID SHOWS THAT THE CONTRACTOR MUST HAVE CONTEMPLATED USING A CHEAPER METHOD.

THIS OFFICE APPRECIATES THAT FOR THE PURPOSE OF EVALUATING BIDS AND DEDUCTING FREIGHT CHARGES IN SUCH CASES, THE COMMERCIAL FREIGHT RATES RELIED UPON BY BIDDERS SHOULD BE KNOWN IN ADVANCE, BUT WHERE THESE MATTERS ARE NOT MADE CLEAR IN THE INVITATION FOR BIDS, OR IN THE CONTRACT, THE CONTRACTOR MAY NOT BE HELD NECESSARILY TO HAVE AGREED TO A DEDUCTION BASED ON REGULAR COMMERCIAL RAILROAD RATES. IT WOULD SEEM THAT THE MATTER MIGHT READILY BE CLARIFIED BY A PROVISION IN THE BID CONDITIONS EXPRESSLY DEFINING THE TERM "COMMERCIAL FREIGHT RATES" TO MEAN REGULAR COMMERCIAL RAILROAD RATES UNLESS OTHER RATES, AND THE AMOUNT THEREOF, ARE PARTICULARLY SPECIFIED BY THE BIDDER IN HIS BID, OR BY SOME OTHER CONTRACTUAL PROVISION OF SIMILAR IMPORT AND EFFECT, OR, AS IS DONE BY CERTAIN DEPARTMENTS, BY REQUIRING BIDDERS TO STATE THE APPLICABLE FREIGHT RATES IN THEIR BIDS.