B-159313, DEC. 8, 1966

B-159313: Dec 8, 1966

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TO THE PACIFIC AMERICAN STEAMSHIP ASSOCIATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 27. THE WORK WAS DESIGNATED BY THE AIR FORCE AS AN EMERGENCY PROJECT OF THE HIGHEST PRIORITY IN SUPPORT OF THE AIR FORCE MISSION IN SOUTHEAST ASIA. THE LETTER DIRECTED THE CONTRACTOR TO PROCEED IMMEDIATELY AND THE WORK WAS TO BE COMPLETED BY JUNE 30. AMONG THE CLAUSES INCORPORATED INTO THE CONTRACT WAS A CLAUSE TAKEN FROM ASPR 1-1409. MATERIALS OR EQUIPMENT UNLESS THEY WERE NOT AVAILABLE AT FAIR AND REASONABLE RATES. IT WAS SUBSEQUENTLY DETERMINED THAT A LARGER CAPACITY PLANT OF ABOUT 2. THE CONTRACTOR REPORTS THAT AT THE TIME OF THE LETTER CONTRACT DISCUSSION WAS HAD AND THE CONTRACTING OFFICER STATED THAT THE USE OF MSTS IN CONNECTION WITH THE CONTRACT WAS NOT MANDATORY BUT COULD BE MADE AVAILABLE IF NEEDED AND THAT SHIPMENT ON A COMMERCIAL BASIS UNDER VINNELL'S OWN ARRANGEMENT SHOULD BE MADE IF SUCH REPRESENTED THE MOST EXPEDITIOUS MEANS.

B-159313, DEC. 8, 1966

TO THE PACIFIC AMERICAN STEAMSHIP ASSOCIATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 27, 1966, CONCERNING AN APPARENT VIOLATION OF THE U.S.-FLAG VESSEL SHIPPING REQUIREMENT (10 U.S.C. 2631) IN CONNECTION WITH THE SHIPMENT OF A CONTRACTOR'S MATERIALS AND EQUIPMENT FOR USE IN PERFORMING A CONTRACT FOR THE REPAVING OF A RUNWAY AT KADENA AIR BASE ON OKINAWA.

THE OKINAWA DISTRICT, UNITED STATES ARMY CORPS OF ENGINEERS, ON APRIL 7, 1966, AWARDED THE VINNELL CORPORATION LETTER CONTRACT NO. DA 92328-ENG- 1120. THE CONTRACT COVERED THE CONSTRUCTION OF ASPHALTIC CONCRETE OVERLAY FOR APPROXIMATELY 6,500 LF OF RUNWAY "A" AT KADENA AIR BASE ON OKINAWA. THE WORK WAS DESIGNATED BY THE AIR FORCE AS AN EMERGENCY PROJECT OF THE HIGHEST PRIORITY IN SUPPORT OF THE AIR FORCE MISSION IN SOUTHEAST ASIA. THE LETTER DIRECTED THE CONTRACTOR TO PROCEED IMMEDIATELY AND THE WORK WAS TO BE COMPLETED BY JUNE 30, 1966.

AMONG THE CLAUSES INCORPORATED INTO THE CONTRACT WAS A CLAUSE TAKEN FROM ASPR 1-1409, ENTITLED ,EMPLOYMENT OF OCEAN-GOING VESSELS BY CONSTRUCTION CONTRACTORS.' THIS CLAUSE REQUIRED THE EMPLOYMENT OF U.S.-FLAG VESSELS FOR THE SHIPMENT OF SUPPLIES, MATERIALS OR EQUIPMENT UNLESS THEY WERE NOT AVAILABLE AT FAIR AND REASONABLE RATES. THE CLAUSE FURTHER ENJOINED THE CONTRACTOR FROM USING OTHER THAN U.S.-FLAG VESSELS UNLESS HE NOTIFIED THE CONTRACTING OFFICER OF THE UNAVAILABILITY OF U.S.-FLAG VESSELS AND SECURED THE PERMISSION OF THE CONTRACTING OFFICER TO USE OTHER VESSELS.

IT APPEARS FROM THE RECORD THAT THE VINNELL CORPORATION ORIGINALLY PROPOSED TO SHIP A HOT ASPHALT PLANT OF APPROXIMATELY 700 MEASUREMENT TONS TO PERFORM THE WORK. HOWEVER, IT WAS SUBSEQUENTLY DETERMINED THAT A LARGER CAPACITY PLANT OF ABOUT 2,000 MEASUREMENT TONS WOULD BE NEEDED TO COMPLETE THE WORK BY JUNE 30, 1966. THE CONTRACTOR REPORTS THAT AT THE TIME OF THE LETTER CONTRACT DISCUSSION WAS HAD AND THE CONTRACTING OFFICER STATED THAT THE USE OF MSTS IN CONNECTION WITH THE CONTRACT WAS NOT MANDATORY BUT COULD BE MADE AVAILABLE IF NEEDED AND THAT SHIPMENT ON A COMMERCIAL BASIS UNDER VINNELL'S OWN ARRANGEMENT SHOULD BE MADE IF SUCH REPRESENTED THE MOST EXPEDITIOUS MEANS. THE MILITARY TERMINAL IN LONG BEACH, CALIFORNIA, WAS CONTACTED WITH REFERENCE TO MSTS SHIPPING TO OKINAWA. THE MILITARY TERMINAL ADVISED THAT THEY WERE LOADING SOME FREIGHT FOR OKINAWA TO LEAVE LONG BEACH APRIL 13, 1966, WITH DIRECT CALL TO OKINAWA AND ABOUT 15 DAYS SAILING TIME; THAT OTHER SHIPMENTS FOR OKINAWA WERE SCHEDULED WITH PORTS OF CALL AT MANILA AND JAPAN PRIOR TO OKINAWA, WITH SAILING TO OKINAWA OF APPROXIMATELY THIRTY DAYS; AND THAT THEY HAD REQUESTED ANOTHER SHIP WITH AN ANTICIPATED SAILING TIME OF MAY 1, 1966, BUT THAT OTHER PORTS OF CALL MIGHT MAKE DELIVERY TO OKINAWA LATER THAN JUNE 1, 1966.

IN THE MEANWHILE VINNALL CORPORATION OBTAINED THE SERVICES OF OVERSEAS CONTRACTOR'S SUPPLIES, AN EXPORT SHIPPING FIRM, TO ASSIST IN ARRANGING FOR THE SHIPMENT OF THE MATERIAL AND EQUIPMENT TO OKINAWA. MR. HUTCHESON OF THAT FIRM REPORTS THAT BETWEEN APRIL 5 AND 10, 1966, HE CONTACTED BY TELEPHONE, STATES LINES, AMERICAN PRESIDENT LINES, PACIFIC FAR EAST LINES, AND STATES MARINE LINES, AND INQUIRED AS TO THEIR ABILITY TO LIFT APPROXIMATELY 750 TO 1,500 MEASUREMENT TONS OF CONSTRUCTION EQUIPMENT. IS STATED THAT AT THAT TIME HE DID NOT HAVE AN ACCURATE ESTIMATE OF THE TONNAGE TO BE SHIPPED AND COULD ONLY OFFER ESTIMATES. MR. HUTCHESON ALSO STATES THAT HE INFORMED THE CARRIERS THAT THE CONTRACTOR WAS ON A DEADLINE FOR COMPLETION OF THE PROJECT FOR WHICH THE EQUIPMENT WAS NEEDED; THAT THE VESSEL OFFERED WOULD BE COMPLETELY DECK LOADED, AND THAT CONDITIONS MADE IT PRACTICALLY MANDATORY FOR THE VESSEL TO MAKE A DIRECT SAILING FROM LOS ANGELES TO OKINAWA WITHOUT ANY INTERMEDIATE PORTS OF CALL DUE TO DELAYS THAT MIGHT POSSIBLY BE ENCOUNTERED WHICH WOULD RESULT IN THE ULTIMATE ARRIVAL OF THE VESSEL IN OKINAWA BEYOND THE DEADLINE OF ABOUT MAY 15, 1966. NONE OF THE SHIPPING COMPANIES CONTACTED WERE ABLE TO ACCOMMODATE THE SHIPMENT. HOWEVER, STATES MARINE LINES OFFERED, AS A SUBSTITUTE FOR THE SS DORIAN, WHICH THEY ORIGINALLY THOUGHT MIGHT BE ABLE TO TAKE THE SHIPMENT, THE NORWEGIAN VESSEL SS SEFRA WHICH WAS THEN IN THE CENTRAL AMERICAN GULF AREA DISCHARGING CARGO AND WHICH COULD BE IN LONG BEACH READY FOR LOADING ABOUT APRIL 29, 1966, AND THEY WOULD MAKE A DIRECT SAILING TO OKINAWA ARRIVING ABOUT MAY 15 OR 16, 1966. APPARENTLY A COMMITMENT WAS MADE ON OR ABOUT APRIL 12, 1966, TO SHIP THE EQUIPMENT ABOARD THE SS SEFRA.

ON APRIL 25, 1966, A REPRESENTATIVE OF VINNELL IN CALIFORNIA WIRED THEIR REPRESENTATIVE IN OKINAWA DIRECTING HIM TO SEEK AUTHORITY FROM THE CONTRACTING OFFICER FOR SHIPPING ON "STATES MARINE CHARTERED VESSEL SS SEFRA, NORWEGIAN FLG., " BASED ON THE UNAVAILABILITY OF OTHER VESSELS. MESSAGE (RCA D-34) DATED APRIL 27, 1966, THE CONTRACTING OFFICER REPLIED "AUTHORITY GRANTED TO SHIP ON CHARTERED VESSEL.' IT IS REPORTED THAT THE CONTRACTING OFFICER BECAME APPRISED AS EARLY AS APRIL 12, 1966 (ALTHOUGH NOT SPECIFICALLY THAT THE PROPOSED VESSEL WAS OF FOREIGN FLAG), THAT THERE APPEARED TO BE ONLY ONE VESSEL AVAILABLE AT THE TIME THAT SHIPPING COULD COMMENCE. THE EQUIPMENT WAS LOADED ABOARD THE SS SEFRA ON OR ABOUT APRIL 27 AND 28, 1966.

THE PACIFIC AMERICAN STEAMSHIP ASSOCIATION CONTENDS THAT THE AMERICAN PRESIDENT LINES AND OTHER ASSOCIATION MEMBER COMPANIES SERVING OKINAWA WERE NOT MADE AN OFFERING AS ALLEGED BY MR. HUTCHESON OF OVERSEAS CONTRACTOR'S SUPPLIES. IT IS FURTHER CONTENDED THAT DURING THE PERIOD OF INQUIRY AND ACCEPTANCE (APRIL 4 TO APRIL 12) THE SS PRESIDENT HARRISON, OWNED BY AMERICAN PRESIDENT LINES, WAS SCHEDULED FOR LOADING IN LOS ANGELES HARBOR ON APRIL 27-28, 1966, AND HAD SPACE AVAILABLE TO CARRY THE 2,000 MEASUREMENT TONS OF CONTRACTOR'S SUPPLIES. THE ASSOCIATION ALSO ADVISED THAT THE AMERICAN PRESIDENT LINE'S TRAFFIC VICE PRESIDENT STATES THAT HAD SUCH AN OFFERING BEEN MADE HE WOULD HAVE BEEN ABLE AND WILLING TO DIVERT THE SS PRESIDENT HARRISON TO OKINAWA FOR DISCHARGE ON MAY 19, 1966 (IN LIEU OF ADVERTISED DATE OF MAY 27).

IN THE CIRCUMSTANCES THERE APPEARS NO WAY AT THIS TIME TO WEIGH THE TRUTH OR VERACITY OF THE CONTENTION OF THE PACIFIC AMERICAN STEAMSHIP ASSOCIATION AS OPPOSED TO THE REPORT OF THE AGENT OF THE CONTRACTOR WITH RESPECT TO WHETHER OR NOT THERE WAS AN AMERICAN-FLAG VESSEL AVAILABLE THAT COULD HAVE MET THE PERFORMANCE REQUIRED OF THE FOREIGN VESSEL EMPLOYED. IT IS NOTED HOWEVER, THAT THE ONLY VESSEL THAT THE ASSOCIATION SUGGESTS AS AVAILABLE TO PERFORM COMPETITIVELY WITH THE VESSEL EMPLOYED WAS THE SS PRESIDENT HARRISON AND THEN ONLY IF SUCH VESSEL VARIED ITS ANNOUNCED AND ADVERTISED SCHEDULE. FURTHERMORE, ALTHOUGH THE ASSOCIATION CONTENDS THAT THE VICE PRESIDENT IN CHARGE OF TRAFFIC FOR AMERICAN PRESIDENT LINES NOW STATES THAT HE WOULD HAVE MADE A DIRECT SHIPMENT TO OKINAWA IF HE HAD BEEN OFFERED THE CARGO (2,000 MEASUREMENT TONS), THERE IS NOTHING TO INDICATE THAT HE WOULD HAVE BEEN WILLING TO DO LIKEWISE FOR 750 TO 1,500 MEASUREMENT TONS WHICH WAS ALL THE CONTRACTOR'S AGENT WAS SURE OF AT THE TIME (APRIL 5 10) THE OFFERING IS ALLEGED TO HAVE BEEN MADE.

IN VIEW OF THE FACTS OF RECORD AND PARTICULARLY CONSIDERING THE SHORT TIME THE CONTRACTOR HAD TO ASSEMBLE THE EQUIPMENT AND ARRANGE FOR ITS SHIPMENT, WE FIND NO BASIS TO QUESTION THE CONTRACTOR'S (OR ITS AGENT-S) REPRESENTATIONS TO THE CONTRACTING OFFICER AS TO THE UNAVAILABILITY OF U.S.-FLAG VESSELS. HOWEVER, WE BELIEVE, AND THE SECRETARY OF THE ARMY IS BEING SO ADVISED, COPY HEREWITH, THAT A CONTRACTOR'S REQUEST TO USE FOREIGN-FLAG VESSELS SHOULD BE TIMELY MADE AND SHOULD BE SUPPORTED BY EVIDENCE THAT HE HAS OFFERED THE SHIPMENT TO U.S.-FLAG LINES OR THAT THE CONTRACTING OFFICER HAS CHECKED WITH MSTS TO CONFIRM THE ALLEGED UNAVAILABILITY OF U.S.-FLAG VESSELS BEFORE AUTHORIZING THE USE OF A FOREIGN-FLAG VESSEL.