B-116961, SEP. 13, 1965, 45 COMP. GEN. 118

B-116961: Sep 13, 1965

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GRANTING A SPECIAL LOWER-THAN- TARIFF ARRANGEMENT TO INDIVIDUAL AGENCIES OF THE UNITED STATES IS AN OFFER TO FURNISH TRANSPORTATION SERVICES AT SPECIAL RATES AND CHARGES. WHICH OFFER IS ACCEPTED AND RIPENS INTO A CONTRACT AS TO A PARTICULAR SHIPMENT WHEN THE OFFEREE ELECTS TO AND DOES UTILIZE THE SERVICE DESCRIBED IN THE OFFER AND SETTLES THE CHARGES IN ACCORDANCE WITH ITS TERMS. TRANSPORTATION - RATES - SECTION 22 QUOTATIONS - AGENCIES NOT PARTY TO QUOTATIONS - REIMBURSEMENT BY USING AGENCY THE SPECIAL RATE TENDERS OFFERED PURSUANT TO SECTION 22 OF THE INTERSTATE COMMERCE ACT TO THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICES OR THE GENERAL SERVICES ADMINISTRATION ARE AVAILABLE ON TRAFFIC FOR THE ACCOUNT OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION UNDER A GOVERNMENT BILL OF LADING.

B-116961, SEP. 13, 1965, 45 COMP. GEN. 118

TRANSPORTATION - RATES - SECTION 22 QUOTATIONS - AGENCIES NOT PARTY TO QUOTATIONS - GENERALLY. A COMMON CARRIER RATE TENDER (QUOTATION) UNDER SECTION 22 OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22, MADE APPLICABLE TO MOTOR CARRIERS BY SECTION 217 (B), 49 U.S.C. 317 (B), GRANTING A SPECIAL LOWER-THAN- TARIFF ARRANGEMENT TO INDIVIDUAL AGENCIES OF THE UNITED STATES IS AN OFFER TO FURNISH TRANSPORTATION SERVICES AT SPECIAL RATES AND CHARGES, SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED, WHICH OFFER IS ACCEPTED AND RIPENS INTO A CONTRACT AS TO A PARTICULAR SHIPMENT WHEN THE OFFEREE ELECTS TO AND DOES UTILIZE THE SERVICE DESCRIBED IN THE OFFER AND SETTLES THE CHARGES IN ACCORDANCE WITH ITS TERMS, AND THE CARRIER-OFFEROR HAVING THE RIGHT TO SELECT THE PARTY WITH WHOM TO DEAL, A SECTION 22 TENDER ISSUED AND SPECIFICALLY LIMITED TO A CERTAIN AGENCY MAY NOT BE ACCEPTED AND USED BY ANOTHER AGENCY UNLESS THE CARRIER OFFEROR, EVEN IF ONLY BY A BILL OF LADING ANNOTATION, AUTHORIZES THE USE OF THE SECTION 22 QUOTATION. TRANSPORTATION - RATES - SECTION 22 QUOTATIONS - AGENCIES NOT PARTY TO QUOTATIONS - REIMBURSEMENT BY USING AGENCY THE SPECIAL RATE TENDERS OFFERED PURSUANT TO SECTION 22 OF THE INTERSTATE COMMERCE ACT TO THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICES OR THE GENERAL SERVICES ADMINISTRATION ARE AVAILABLE ON TRAFFIC FOR THE ACCOUNT OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION UNDER A GOVERNMENT BILL OF LADING, OR A COMMERCIAL BILL OF LADING FOR CONVERSION TO A GOVERNMENT BILL OF LADING, WHERE THE CHARGES BILLED TO AND PAID BY THE AGENCY ISSUING THE BILL OF LADING, CITING A MILITARY APPROPRIATION, IS SUBJECT TO REIMBURSEMENT, NOTWITHSTANDING A RATE TENDER IS INDIVIDUAL TO THE OFFEREE, THE TENDER OF THE SPECIAL RATES HAVING BEEN ACCEPTED BY THE DESIGNATED OFFEREE WITH WHOM THE CARRIER-OFFEROR DEALS EXCLUSIVELY, WHEN THE BARGAIN BETWEEN THE PARTIES IS COMPLETED UPON PAYMENT OF THE CHARGES BY THE OFFEREE ON THE SHIPMENTS MADE FOR THE ACCOUNT OF ANOTHER PARTY, THE CARRIER-OFFEROR HAS NO INTEREST IN THE REIMBURSEMENT ARRANGEMENT BETWEEN THE OFFEREE AND THE OTHER PARTY. TRANSPORTATION - RATES - SECTION 22 QUOTATIONS - AGENCIES NOT PARTY TO QUOTATIONS - DIRECT PAYMENT TO CARRIER BY USING AGENCY THE FACT THAT A GOVERNMENT AGENCY OTHER THAN THE OFFEREE TENDERED SPECIAL RATES PURSUANT TO SECTION 22 OF THE INTERSTATE COMMERCE ACT IS BILLED AND PAYS THE CHARGES ON SHIPMENTS MADE FOR ITS ACCOUNT UNDER GOVERNMENT BILLS OF LADING ISSUED BY THE OFFEREE AND CITING THE APPROPRIATION OF THE USING AGENCY, OR ON COMMERCIAL BILLS OF LADING FOR CONVERSION TO GOVERNMENT BILLS OF LADING, DOES NOT OPERATE TO BAR APPLICABILITY OF THE SECTION 22 RATES, THE DESIGNATED OFFEREE BY ISSUING THE BILL OF LADING HAVING ACCEPTED THE OFFER OF THE CARRIER AND ENTERED INTO A CONTRACT ASSUMES THE STATUS OF A CONSIGNOR LIABLE FOR THE FREIGHT CHARGES SHOULD THE CONSIGNEE DEFAULT, ABSENT A SPECIAL CONTRACTUAL PROVISION TO THE CONTRARY; THEREFORE, THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICES OR THE GENERAL SERVICES ADMINISTRATION MAY ISSUE BILLS OF LADING ON TRAFFIC FOR THE ACCOUNT OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, NOTWITHSTANDING THE SHIPPING CHARGES ARE TO BE BILLED TO AND PAID BY THAT AGENCY; HOWEVER, A RATE TENDER WOULD NOT BE APPLICABLE IF THE BILL OF LADING WERE ISSUED BY AN AGENCY OTHER THAN THE OFFEREE, ABSENT A SHOWING OF THE OFFEROR'S INTENT TO EXTEND THE SECTION 22 RATES TO OTHER AGENCIES. TRANSPORTATION - RATES - SECTION 22 QUOTATIONS - COST-PLUS-A-FIXED-FEE CONTRACTORS SHIPMENTS BY A COST-PLUS-FIXED-FEE GOVERNMENT CONTRACTOR THAT MOVE ON COMMERCIAL BILLS OF LADING INDICATING THE TRANSPORTATION CHARGES ARE BORNE BY THE GOVERNMENT, EVEN THOUGH NOT PAID OVER TO THE CARRIER BY THE GOVERNMENT, QUALIFY FOR SECTION 22 OF THE INTERSTATE COMMERCE ACT RATE PRIVILEGES, THE GOVERNMENT RECEIVING THE ACTUAL AND TOTAL BENEFIT OF THE SPECIAL RATES.

TO THE ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, SEPTEMBER 13, 1965:

WE REFER AGAIN TO THE LETTER OF MAY 25, 1965, FROM MR. HUGH L. DRYDEN, DEPUTY ADMINISTRATOR, CONCERNING THE APPLICABILITY OF RATE TENDERS (QUOTATIONS) ISSUED PURSUANT TO SECTION 22 OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22 (MADE APPLICABLE TO MOTOR CARRIERS BY SECTION 217 (B), 49 U.S.C. 317 (B) (, TO TRAFFIC FOR THE ACCOUNT OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION.

SECTION 22 RATE TENDERS ARE FREQUENTLY OFFERED TO A PARTICULAR, SPECIFICALLY DESIGNATED, FEDERAL AGENCY OR AGENCIES, RATHER THAN TO THE UNITED STATES GOVERNMENT GENERALLY; THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION (NASA) IS A RELATIVELY NEW AGENCY AND OFTEN IS NOT INCLUDED IN THE LISTING OF AGENCIES TO WHICH A RATE TENDER IS EXTENDED. BECAUSE OF THE NATURE OF ITS RESPONSIBILITIES, HOWEVER, AND BECAUSE OF ITS RELATIONSHIPS WITH THE GENERAL SERVICES ADMINISTRATION AND PARTICULARLY WITH THE DEPARTMENT OF DEFENSE, ITS TRAFFIC IS SUCH THAT SECTION 22 TENDERS ISSUED TO THOSE AGENCIES, IF AVAILABLE TO NASA, WOULD RESULT IN SAVINGS IN TRANSPORTATION COSTS. WHILE SECTION 22 PRIVILEGES ARE NOW BEING OFFERED TO THE "UNITED STATES GOVERNMENT" UNDER THE TERMS OF A REVISED "UNIFORM TENDER OF RATES AND/OR CHARGES FOR TRANSPORTATION SERVICES," MANY CARRIERS CONTINUE TO DESIGNATE SPECIFIC AGENCIES AS THE OFFEREES AND MANY SUCH TENDERS ARE ALREADY IN EXISTENCE. CARRIERS ARE APPARENTLY WILLING TO AMEND THEIR TENDERS TO EXTEND THE OFFERS TO NASA, BUT THE TASK OF REVIEWING EXISTING ONES TO DETERMINE WHICH SHOULD BE SO AMENDED REPORTEDLY WOULD BE EXTREMELY DIFFICULT.

SUGGESTING THAT THIS SITUATION PERMITS, UNDER THE AUSPICES OF SECTION 22 OF THE ACT, DISCRIMINATION AMONG FEDERAL AGENCIES AND THE GRANTING OF PREFERENCES TO FAVORED SHIPPING AGENCIES, OTHERWISE PROHIBITED BY THE ACT AS TO PRIVATE SHIPPERS, MR. DRYDEN ASKS IF SECTION 22 TENDERS OFFERED TO THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICES OR TO THE GENERAL SERVICES ADMINISTRATION COULD BE CONSIDERED AVAILABLE ON TRAFFIC FOR THE ACCOUNT OF NASA IN THESE CIRCUMSTANCES:

(1) WHERE THE GOVERNMENT BILL OF LADING IS ISSUED BY A MILITARY INSTALLATION, CITING A MILITARY APPROPRIATION, AND THE CHARGES ARE BILLED TO AND PAID BY A MILITARY FINANCE OFFICE FROM A MILITARY APPROPRIATION, FOR SUBSEQUENT REIMBURSEMENT BY NASA;

(2) WHERE THE GOVERNMENT BILL OF LADING IS ISSUED BY A MILITARY INSTALLATION, CITING A NASA APPROPRIATION, AND THE CHARGES ARE BILLED TO AND PAID BY NASA; AND

(3) WHERE THE GOVERNMENT BILL OF LADING IS ISSUED BY NASA AND THE CARRIER BILLS THE CHARGES TO NASA WHICH PAYS THE BILLING.

WE APPRECIATE THAT THE INTERSTATE COMMERCE ACT PROHIBITS COMMON CARRIERS FROM UNJUSTLY DISCRIMINATING AMONG SHIPPERS AND FROM ACCORDING UNDUE OR UNREASONABLE PREFERENTIAL TREATMENT TO FAVORED SHIPPERS. THESE PROHIBITIONS RUN IN FAVOR OF AGENCIES AND INSTRUMENTALITIES OF THE UNITED STATES WHEN THEY CONTRACT WITH COMMON CARRIERS UNDER THE SAME TERMS AND CONDITIONS AS DO PRIVATE SHIPPERS; THAT IS, WHEN THEY CONTRACT FOR SERVICES OFFERED TO THE GENERAL PUBLIC IN DULY PUBLISHED AND FILED TARIFFS AT THE RATES AND CHARGES THEREIN PROVIDED. THE SITUATION IS OTHERWISE, HOWEVER, WHEN GOVERNMENT AGENCIES CONTRACT WITH COMMON CARRIERS UNDER THE PROVISION OF SECTION 22.

SECTION 22--- INCLUDED IN THE ORIGINAL ACT OF 1887, 24 STAT. 387, 49 U.S.C. 22 (1958 ED./--- CONFIRMED THE COMMON LAW RIGHT OF CARRIERS TO GRANT PREFERENTIAL TREATMENT TO CERTAIN CLASSES OF SHIPPERS IN CERTAIN CASES. NASHVILLE, CHATTANOOGA AND ST. LOUIS RY.CO. V. TENNESSEE, 262 U.S. 318 (1923). IT STIPULATES, IN PERTINENT PART, THAT NOTHING "SHALL PREVENT THE CARRIAGE, STORAGE, OR HANDLING OF PROPERTY FREE OR AT REDUCED RATES FOR THE UNITED STATES.' FUNDAMENTALLY, SECTION 22 OPERATES TO EXEMPT FROM THE RATE REGULATION OF THE ACT TRANSPORTATION SERVICES PERFORMED FOR THE UNITED STATES. SEE PUBLIC UTILITIES COMMISSION OF CALIFORNIA V. UNITED STATES, 355 U.S. 534, 543 (FOOTNOTE 10) (1958); UNITED STATES V. GEORGIA PUBLIC SERVICE COMMISSION, 371 U.S. 285 (1963).

IT WOULD SEEM THEREFORE THAT COMMON CARRIERS MAY CONTRACT WITH INDIVIDUAL AGENCIES OF THE UNITED STATES GOVERNMENT UNDER SECTION 22 WITHOUT REGARD FOR PROHIBITIONS IN THE ACT AGAINST UNJUST DISCRIMINATION OR UNDUE PREFERENCE. THE CARRIERS MAY EXTEND TO ONE AGENCY AN OFFER WHICH THEY MAY DENY TO ANOTHER. THUS, ALTHOUGH A COMMON CARRIER WHICH HOLDS ITSELF OUT TO THE PUBLIC IN A PUBLISHED AND FILED TARIFF AS WILLING AND ABLE TO PERFORM SPECIFIED SERVICES AT STATED PRICES MUST, GENERALLY, SERVE WHOEVER APPLIES, THE SAME CARRIER, UNDER SECTION 22, MAY IMPOSE SUCH CONDITIONS UPON ITS SPECIAL LOWER-THAN TARIFF ARRANGEMENTS AS IT CHOOSES AND MAY LIMIT ITS OFFER TO PARTICULAR GOVERNMENT ORGANIZATIONS. SEE ATTACHED COPY OF OUR LETTER B-116961, DATED AUGUST 24, 1954, TO THE GENERAL SERVICES ADMINISTRATION.

A COMMON CARRIER RATE TENDER UNDER SECTION 22 IS AN OFFER TO FURNISH TRANSPORTATION SERVICES AT SPECIAL RATES AND CHARGES AND SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED. THE OFFER IS ACCEPTED AND RIPENS INTO A CONTRACT, AS TO A PARTICULAR SHIPMENT, WHEN THE OFFEREE ELECTS TO AND DOES UTILIZE THE SERVICE DESCRIBED IN THE OFFER AND SETTLES THE CHARGES IN ACCORDANCE WITH ITS TERMS. IT IS ELEMENTARY CONTRACT LAW THAT AN OFFER CAN BE ACCEPTED ONLY BY THE OFFEREE, SINCE THE OFFEROR HAS THE RIGHT TO SELECT THE PARTY WITH WHOM HE WISHES TO DEAL. 1 CORBIN ON CONTRACTS, SECTION 56; OTT V. HOME SAVINGS AND LOAN ASS-N., 265 F.2D 643 (1958); MERRILL V. FIDELITY AND CASUALTY CO. OF N.Y., 304 F.2D 27 (1962). FOLLOWING THIS RULE, IT SEEMS CLEAR THAT A SECTION 22 TENDER ISSUED AND SPECIFICALLY LIMITED TO A CERTAIN GOVERNMENT AGENCY CANNOT BE ACCEPTED AND USED BY ANOTHER AGENCY, UNLESS THE CARRIER OFFEROR EXPRESSLY, EVEN IF ONLY BY CLEAR ANNOTATION ON THE BILL OF LADING INVOLVED, AUTHORIZES SUCH USE.

AS TO THE GENERAL QUESTIONS ASKED, IT SHOULD BE UNDERSTOOD THAT CONSIDERATION OF PARTICULAR TENDERS AND OF ANY GIVEN SET OF FACTS AND CIRCUMSTANCES MAY REQUIRE QUALIFYING THE BROAD ANSWERS. OBVIOUSLY, THE APPLICABILITY OF SPECIFIC SECTION 22 TENDERS TO SPECIFIC SHIPMENTS IS DEPENDENT UPON THE FACTS OF THE SHIPMENT AND THE PRECISE TERMS OF THE PERTINENT TENDER AND COVERING BILL OF LADING.

CONCERNING QUESTION (1), WHERE THE GOVERNMENT BILL OF LADING IS ISSUED BY A MILITARY INSTALLATION, CITING A MILITARY APPROPRIATION, AND THE CHARGES ARE BILLED TO AND PAID BY A MILITARY FINANCE OFFICE FROM A MILITARY APPROPRIATION, FOR SUBSEQUENT REIMBURSEMENT BY NASA, A SECTION 22 TENDER OFFERED TO THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICES (OR TO OTHER RESPONSIBLE ORGANIZATIONS IN THE DEPARTMENT OF DEFENSE), IF OTHERWISE APPLICABLE, WOULD BE AVAILABLE IN DETERMINING THE CHARGES PROPERLY PAYABLE. THE SAME WOULD BE TRUE IF A TENDER WERE SUBMITTED TO THE GENERAL SERVICES ADMINISTRATION AND THE BILL OF LADING WERE ISSUED BY THE ADMINISTRATION, WITH THE CHARGES TO BE BILLED TO AND PAID BY THAT AGENCY, SUBJECT TO LATER REIMBURSEMENT. IN THIS SITUATION, THE OFFER MADE IN THE TENDER TO THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICES (OR TO THE GENERAL SERVICES ADMINISTRATION) IS ACCEPTED BY THE DESIGNATED OFFEREE; THE CARRIER OFFEROR DEALS THROUGHOUT WITH THE AGENCY OF ITS CHOICE. WHEN THE BARGAIN HAS BEEN COMPLETED AS BETWEEN THESE PARTIES, THE CARRIER ORDINARILY WOULD HAVE NO INTEREST IN ANY FURTHER TRANSACTION (I.E., REIMBURSEMENT) OVER THAT SHIPMENT BETWEEN THE OFFEREE AND ANOTHER PARTY.

CONCERNING QUESTION (2), WHERE THE GOVERNMENT BILL OF LADING IS ISSUED BY A MILITARY INSTALLATION (OR BY THE GENERAL SERVICES ADMINISTRATION), AND THE CHARGES ARE BILLED TO AND PAID BY NASA, A SECTION 22 TENDER OFFERED TO THE GOVERNMENT AGENCY ISSUING THE BILL OF LADING GENERALLY WOULD BE AVAILABLE FOR APPLICATION TO THE SHIPMENT. HERE TOO THE OFFER WOULD BE ACCEPTED AND THE TRANSPORTATION CONTRACT ENTERED INTO BY THE DESIGNATED OFFEREE, THE ISSUING AGENCY. THAT AGENCY WOULD HAVE THE STATUS OF AN ORDINARY CONSIGNOR WHO, IN AN ORDINARY COMMERCIAL TRANSACTION AND ABSENT A SPECIAL CONTRACTUAL PROVISION TO THE CONTRARY, WOULD BE LIABLE FOR THE FREIGHT IF THE CONSIGNEE DEFAULTED. PORTLAND FLOURING MILLS CO. V. BRITISH AND F.M.INS.CO., 130 FED. 860 (1904), CERT.DEN. 195 U.S. 629; ILLINOIS STEEL CO. V. BALTIMORE AND OHIO R.CO., 320 U.S. 508 (1944). THUS, AS A GENERAL RULE, THE FACT OF ACTUAL PAYMENT OF THE CHARGES BY AN AGENCY OTHER THAN THE OFFEREE (TO WHOM THE CARRIER WAS INITIALLY AND PRIMARILY RESPONSIBLE FOR THE PERFORMANCE OF ITS OBLIGATIONS UNDER THE TRANSPORTATION CONTRACT) WOULD NOT OPERATE TO BAR APPLICABILITY OF THE SECTION 22 TENDER.

AS TO QUESTION (3), WHERE THE GOVERNMENT BILL OF LADING IS ISSUED BY NASA AND THE CARRIER BILLS CHARGES TO NASA, WHICH PAYS THE BILLING, A SECTION 22 TENDER OFFERED TO THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICES OR TO THE GENERAL SERVICES ADMINISTRATION ORDINARILY WOULD NOT BE APPLICABLE. THE OFFER CAN BE ACCEPTED ONLY BY THE AGENCY TO WHICH IT IS MADE. HOWEVER, IT IS POSSIBLE FOR A SECTION 22 OFFER MADE, FOR EXAMPLE, TO THE GENERAL SERVICES ADMINISTRATION, TO BE COUCHED IN SUCH TERMS AS TO SHOW THE OFFEROR'S INTENT TO EXTEND ITS OFFER TO OTHER CIVIL AGENCIES. AND THERE MAY BE OCCASIONS WHEN THE ONLY AGREEMENT AS TO THE APPLICABILITY OF CERTAIN SECTION 22 ARRANGEMENTS IS EVIDENCED BY CLEAR REFERENCE TO THAT FACT ON THE GOVERNMENT BILL OF LADING IN TERMS WHICH THE CARRIER OR ITS AGENT CANNOT MISUNDERSTAND.

WHAT WE HAVE SAID ALSO APPLIES WHERE TRAFFIC MOVES ON COMMERCIAL BILLS OF LADING MARKED FOR LATER CONVERSION TO GOVERNMENT BILLS OF LADING. ADDITIONALLY, IT APPLIES ON SHIPMENTS MOVING ON COMMERCIAL BILLS OF LADING WHERE IT IS INDICATED THAT THE CHARGES ARE BORNE BY THE GOVERNMENT EVEN THOUGH NOT PAID OVER TO THE CARRIER BY A GOVERNMENT AGENCY, AS IN THE CASE OF SHIPMENTS TO A COST-PLUS-FIXED FEE GOVERNMENT CONTRACTOR. SUCH SHIPMENTS QUALIFY FOR SECTION 22 PRIVILEGES BECAUSE THE GOVERNMENT RECEIVES THE ACTUAL AND TOTAL BENEFIT OF THE SECTION 22 RATES. INTERPRETATION OF GOVERNMENT RATE TARIFF FOR EASTERN CENTRAL MOTOR CARRIERS ASSOCIATION, 323 I.C.C. 347 (1964).