B-131284, APR. 17, 1957

B-131284: Apr 17, 1957

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TO THE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO A LETTER DATED MARCH 28. SHIPMENTS OF THE MATERIALS WERE TO HAVE BEEN MADE ON GOVERNMENT BILLS OF LADING. WAS DESIGNATED AS THE CONTRACT SHIPPING POINT AND YOUR PALISADES RECLAMATION PROJECT. THE TOTAL SHIPPING WEIGHTS AND SHIPPING POINTS STATED BY THE BIDDER IN HIS BID WILL BE USED IN COMPUTING THE DELIVERED COST TO THE GOVERNMENT AND IN DETERMINING THE LOW BID. * * * IN ALL CASES WHERE SHIPMENT OF THE ABOVE-MENTIONED MATERIAL IS MADE ON GOVERNMENT BILLS OF LADING. THE GOVERNMENT WILL DEDUCT FROM ANY PAYMENT DUE THE CONTRACTOR. THE FREIGHT CLASSIFICATION DESIGNATED FOR THE CONTRACT MATERIALS WAS "STRUCTURAL STEEL.'. DS-3829 WERE BEING CONSIDERED FOR EVALUATION PURPOSES.

B-131284, APR. 17, 1957

TO THE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO A LETTER DATED MARCH 28, 1957, FROM YOUR ADMINISTRATIVE ASSISTANT, TRANSMITTING FOR ADVANCE DECISION THE CLAIM OF THE AMERICAN PIPE AND CONSTRUCTION COMPANY, PORTLAND, OREGON, FOR $5,514.89, REPRESENTING ALLEGED EXCESSIVE FREIGHT COSTS INCURRED IN CONNECTION WITH SHIPMENTS OF STEEL PENSTOCK AND OUTLET PIPE MANIFOLDS FROM PORTLAND, OREGON, TO RIRIE, IDAHO, MADE PURSUANT TO CONTRACT NO. 14 06-D- 305, DATED FEBRUARY 4, 1953.

THE CONTRACT, AS AMENDED, CALLED FOR THE DELIVERY BY THE CONTRACTOR OF APPROXIMATELY 3,415,000 POUNDS OF HEAVY PLATE STEEL PIPE MANIFOLDS VARYING IN DIAMETER FROM 26 TO 12 FEET. SHIPMENTS OF THE MATERIALS WERE TO HAVE BEEN MADE ON GOVERNMENT BILLS OF LADING. PORTLAND, OREGON, WAS DESIGNATED AS THE CONTRACT SHIPPING POINT AND YOUR PALISADES RECLAMATION PROJECT, LOCATED AT RIRIE, IDAHO, AS THE POINT OF DESTINATION. CONCERNING THE MATTER OF FREIGHT CHARGES OR COSTS, SUPPLEMENTAL NOTICE NO. 3, INVITATION NO. DS-3839, ISSUED DECEMBER 16, 1952, PROVIDES, IN PERTINENT PART:

"16A. WEIGHTS AND FREIGHT CHARGES-- METHOD OF COMPUTING DELIVERED COST TO THE GOVERNMENT. EACH BIDDER SHALL STATE, IN THE BLANKS PROVIDED THEREFOR IN THE SCHEDULE, THE SHIPPING POINTS, FREIGHT CLASSIFICATIONS, AND TOTAL SHIPPING WEIGHTS OF ALL MATERIAL TO BECOME A PART OF THE COMPLETED PENSTOCK MANIFOLD AND OUTLET PIPE MANIFOLD TO BE SHIPPED TO RIRIE, IDAHO, UNDER EACH FREIGHT CLASSIFICATION FROM EACH SHIPPING POINT INVOLVED. UNDER BIDS PROVIDING FOR SHIPMENT OF SUCH MATERIAL ON GOVERNMENT BILLS OF LADING, THE TOTAL SHIPPING WEIGHTS AND SHIPPING POINTS STATED BY THE BIDDER IN HIS BID WILL BE USED IN COMPUTING THE DELIVERED COST TO THE GOVERNMENT AND IN DETERMINING THE LOW BID. * * * IN ALL CASES WHERE SHIPMENT OF THE ABOVE-MENTIONED MATERIAL IS MADE ON GOVERNMENT BILLS OF LADING, AND THE ACTUAL TOTAL COST OF TRANSPORTATION FROM THE SHIPPING POINT OR POINTS TO RIRIE, IDAHO, AS LATER DETERMINED BY THE FREIGHT BILLS, EXCEEDS THE TOTAL COST OF SUCH TRANSPORTATION COMPUTED ON THE BASIS OF THE TOTAL SHIPPING WEIGHTS, FREIGHT CLASSIFICATIONS, AND SHIPPING POINTS STATED BY THE SUCCESSFUL BIDDER IN HIS BID, THE GOVERNMENT WILL DEDUCT FROM ANY PAYMENT DUE THE CONTRACTOR, THE EXCESS OF THE ACTUAL TOTAL COST OF TRANSPORTATION OVER AND ABOVE THE TOTAL COST OF TRANSPORTATION SO COMPUTED.'

IN ITS ACCEPTED BID, THE CONTRACTOR GAVE PORTLAND, OREGON, AS THE F.O.B. SHIPPING POINT, AND SPECIFIED 3,400,000 POUNDS AS THE TOTAL SHIPPING WEIGHT. THE FREIGHT CLASSIFICATION DESIGNATED FOR THE CONTRACT MATERIALS WAS "STRUCTURAL STEEL.'

AT THE TIME THE BIDS UNDER THE INVITATION NO. DS-3829 WERE BEING CONSIDERED FOR EVALUATION PURPOSES, THE FOLLOWING FREIGHT RATES WERE APPLICABLE FOR "STRUCTURAL STEEL" MOVING FROM PORTLAND, OREGON, TO RIRIE, IDAHO:

(1) $1.08 PER CWT. PLUS 15 PERCENT INCREASE, BASED ON A 40,000 POUND MINIMUM CARLOAD WEIGHT FACTOR AND THE SHIPPER'S LOADING IN CARS NOT EXCEEDING 50 FEET AND 6 INCHES IN LENGTH

(2) $1.08 PER CWT. PLUS 15 PERCENT INCREASE, BASED ON A 60,000 POUND MINIMUM CARLOAD WEIGHT FACTOR AND THE SHIPPER'S LOADING IN CARS EXCEEDING 50 FEET AND 6 INCHES IN LENGTH, AND

(3) $0.70 PER CWT. PLUS 15 PERCENT INCREASE, BASED ON A MINIMUM CARLOAD WEIGHT FACTOR OF 80,000 POUNDS.

IT IS REPORTED THAT, DUE TO THE ELIMINATION OF THE 60,000-POUND FREIGHT RATE BY ITEM NO. 130 OF THE APPLICABLE UNION PACIFIC TARIFF NO. 6074-J, THERE REMAINED FOR BID EVALUATION PURPOSES EITHER ONE OF THE FOLLOWING RATES: (1) $0.70 PER CWT., PLUS 15 PERCENT, BASED UPON AN 80,000-POUND MINIMUM WEIGHT FACTOR, OR (2) $1,08 PER CWT., PLUS 15 PERCENT, BASED UPON A MINIMUM WEIGHT FACTOR OF 40,000 POUNDS, BUT FURTHER BASED UPON THE SHIPPER'S LOADING IN CARS NOT EXCEEDING 50 FEET AND 6 INCHES IN LENGTH. INASMUCH AS IT HAS BEEN THE BUREAU'S EXPERIENCE THAT STRUCTURAL STEEL ORDINARILY CAN BE LOADED TO 80,000 POUNDS PER CAR, AND SINCE IT WAS ADMINISTRATIVELY CONSIDERED THAT MOST OF THE CONTRACT MATERIALS WOULD BE LOADED IN CARS EXCEEDING 50 FEET AND 6 INCHES IN LENGTH, ONLY THE LESSER $0.70 PER CWT, RATE WAS APPLIED IN EVALUATING THE CONTRACTOR'S BID.

THE RECORD SHOWS THAT OF THE 47 SHIPMENTS MADE UNDER THE CONTRACT, 32 WERE MADE IN CARS MEASURING MORE THAN 50 FEET 6 INCHES IN LENGTH. FURTHER, THE RECORD ESTABLISHED THAT IN 40 OF THE 47 SHIPMENTS MADE, THE CARRIER CORRECTLY APPLIED THE 80,000-POUND TARIFF RATE OF $0.70 PER CWT., PLUS THE AUTHORIZED 15 PERCENT EMERGENCY CHARGE. HOWEVER, ALTHOUGH THE TOTAL SHIPPING WEIGHT OF ALL SHIPMENTS WAS 3,399,120 POUNDS, THE AGGREGATE FREIGHT COSTS INCURRED AMOUNTED TO $32,884.89, AS AGAINST AN ESTIMATE OF $27,370 ARRIVED AT IN THE PRE-AWARD EVALUATION UPON THE BASIS OF THE GUARANTEED SHIPPING WEIGHT OF 3,400,000 POUNDS, AND THE $0.70 PER CWT. RATE, PLUS 15 PERCENT, APPLICABLE TO SHIPMENTS OF 80,000 POUNDS OR MORE. THE EXCESS OF $5,514.89 WAS ADMINISTRATIVELY DEDUCTED FROM THE AMOUNT OF THE CONTRACTOR'S FINAL PAYMENT VOUCHER, ALLEGEDLY UNDER AUTHORITY OF THE PROVISIONS OF PARAGRAPH 16A, SUPPLEMENTAL NOTICE NO. 3, ABOVE QUOTED.

IN CLAIMING REIMBURSEMENT OF THE ALLEGED EXCESSIVE FREIGHT COSTS OF $5,514,89, THE CONTRACTOR CONTENDS, IN EFFECT, THAT IT WAS NOT NOTIFIED OF ANY REQUIREMENT THAT THE CARS BE LOADED TO A 80,000-POUND MINIMUM, AND FURTHER, THAT THE BULKY SIZES AND SHAPES OF THE CONTRACT MATERIALS WOULD NOT PERMIT THE LOADING OF ALL OF THE CARS TO THEIR DETERMINED MINIMUM CAPACITIES. IN THIS CONNECTION, THE RECORD CONTAINS A FORMAL STATEMENT, EXECUTED BY THE GOVERNMENT'S STORAGE OFFICER, WHO RECEIVED THE CHECKED AND MATERIALS AT DESTINATION, WHICH READS:

"IN MY OPINION CONSIDERING THE SIZE AND SHAPE OF THE MATERIALS SHIPPED THAT THE CARS WERE LOADED AS HEAVILY AS POSSIBLE AND THAT UNDER THE CIRCUMSTANCES THE GOVERNMENT COULD NOT SUPPORT A POSITION THAT THE CARS WERE NOT LOADED TO MAXIMUM EXTENT.'

PHOTOGRAPHS FURNISHED US BY THE CONTRACTOR, SHOWING THE SIZES AND SHAPES OF CERTAIN OF THE ITEMS, TEND TO CONFIRM THE IMPRACTICABILITY IN ALL INSTANCES OF LOADING THE CARS TO THEIR NORMAL MINIMUM CAPACITIES.

IN THE INTERPRETATION OF THE CONTRACT PROVISION REQUIRING THE SHIPPER TO STATE THE CONTRACT SHIPPING POINTS, THE FREIGHT CLASSIFICATIONS, AND THE TOTAL SHIPPING WEIGHT OF THE CONTRACT ARTICLES, AND ALSO, AUTHORIZING THE GOVERNMENT TO DEDUCT FROM THE STIPULATED CONTRACT PRICE THE DIFFERENCE BETWEEN THE ESTIMATED AND ACTUAL SHIPPING COSTS INVOLVED, IT SEEMS ONLY REASONABLE TO ASSUME THAT SUCH ELEMENTS AS THE SIZE, SHAPE OR BULKINESS OF SUCH MATERIALS ARE PROPERLY FOR CONSIDERATION IN DETERMINING THE CORRECT AMOUNT OF THE EXCESSIVE FREIGHT COSTS, IF ANY, FOUND CHARGEABLE TO THE CONTRACTOR'S ACCOUNT. IN FAILING TO CONSIDER THE POSSIBILITY OR PRACTICABILITY OF LOADING SUCH MATERIALS TO THE STANDARD MINIMUM CAPACITIES OF FREIGHT CARS AVAILABLE, AND IN APPLYING A MINIMUM FREIGHT TARIFF TO A CONTRACTOR'S GUARANTEED SHIPPING WEIGHT, AS APPARENTLY WAS DONE HERE, IRRESPECTIVE OF WHETHER THE CARS COULD OR COULD NOT BE LOADED IN SUCH A MANNER AS WOULD PERMIT USE OF THE MINIMUM RATE APPLICABLE TO THE PARTICULAR FREIGHT CLASSIFICATION INVOLVED, THE CONTRACTING OFFICER APPARENTLY REACHED AN ERRONEOUS EVALUATION FIGURE, AND IT APPEARS THAT THE ,EXCESS" HERE INVOLVED IS THE RESULT OF THIS ERROR RATHER THAN OF ANY FAULT OR DEVIATION OF THE CONTRACTOR.

FURTHERMORE, ALTHOUGH THE INSTANT CONTRACT REQUIRED THE CONTRACTOR TO LIST THE GUARANTEED WEIGHTS OF THE SHIPMENTS AND THE FREIGHT CLASSIFICATION APPLICABLE THERETO, IT CONTAINS NO REQUIREMENT THAT CARS OF ANY PARTICULAR DIMENSION BE REQUISITIONED, NOR DOES IT PROVIDE FOR THE APPLICATION OF ONLY THE MINIMUM FREIGHT TARIFF TO ALL SHIPMENTS BASED UPON THE REQUISITION AND USE OF CARS OVER 50 FEET 6 INCHES IN LENGTH, AND HAVING MINIMUM CAPACITIES OF AT LEAST 80,000 POUNDS EACH. SINCE THE CONTRACT PROVISION MUST, AS TO ANY AMBIGUITY, BE CONSTRUED MOST STRICTLY AGAINST THE GOVERNMENT, WE CONCLUDE THAT ON THE FACTS STATED THE DEDUCTION FOR EXCESS FREIGHT CANNOT BE SUPPORTED.

THE PAPERS ARE RETURNED HEREWITH, AND YOU ARE ADVISED THAT PAYMENT OF THE INSTANT CLAIM IS AUTHORIZED, IF OTHERWISE CORRECT.