B-162405, SEP. 15, 1967

B-162405, SEP. 15, 1967

CONTRACTS - DELIVERY COSTS DECISION TO ARMY FINANCE OFFICER CONCERNING PROPRIETY OF PAYING TRANSPORTATION CHARGES AS SEPARATE ITEM OF COST UNDER CONTRACT FOR DESK FILES AND TRAYS FOR ARMY. UNDER PURCHASE ORDER THAT PROVIDED FOR SHIPMENT F.O.B. DESTINATION BUT CONTAINED NOTATION THAT TRANSPORTATION CHARGES WERE TO BE PREPAID AND ADDED AS SEPARATE ITEM, GOVERNMENT INTENDED TO ASSUME OBLIGATION FOR TRANSPORTATION CHARGES AND TO ONLY PLACE RISK OF LOSS OR DAMAGE ON SHIPPER, THEREFORE, CONTRACTOR MAY BE REIMBURSED FOR PREPAID SHIPPING CHARGES. IN FUTURE PURCHASE ORDERS SHOULD BE WRITTEN TO CLEARLY INDICATE THAT PRICES ARE EXCLUSIVE OF TRANSPORTATION CHARGES THAT SUCH CHARGES WILL BE REIMBURSED IN ADDITION TO THE CONTRACT PRICE AND THAT THE CONTRACTOR WILL BE RESPONSIBLE FOR LOSS OR DAMAGE.

TO COLONEL CAMPBELL:

BY LETTER DATED SEPTEMBER 1, 1967, THE OFFICE, CHIEF OF FINANCE AND ACCOUNTING, FORWARDED YOUR LETTER OF FEBRUARY 24, 1967, WITH ENCLOSURES, INCLUDING A VOUCHER STATED IN FAVOR OF VISIBLE TABULATING SUPPLY CORPORATION REQUESTING AN ADVANCE DECISION AS TO THE PROPRIETY OF PAYMENT OF TRANSPORTATION CHARGES IN THE AMOUNT OF $4.60 AS A SEPARATE ITEM OF COST WHEN AN ORDER OR CONTRACT INDICATES SHIPMENT IS TO BE MADE "FOB DESTINATION.'

THE RECORD SHOWS THAT PURCHASE ORDER NO. T827 WAS ISSUED ON JUNE 3, 1966, IN THE AMOUNT OF $36.75, REFERENCE BEING MADE TO AN ORAL QUOTATION OF MAY 24, 1966, RECEIVED FROM THE VISIBLE TABULATING SUPPLY CORPORATION OFFERING TO FURNISH 7 EACH OF DESK FILES AND TRAYS. THE PURCHASE ORDER PROVIDES THAT DELIVERY IS TO BE MADE F.O.B. DESTINATION. ALSO, THE PURCHASE ORDER CONTAINS THE FOLLOWING NOTATION:

"F.O.B. DESTINATION

NOTE: TRANSPORTATION CHARGES TO BE PREPAID BY SHIPPER AND ADDED AS A SEPARATE ITEM ON VOICE.'

THE REQUIREMENT THAT THE SUPPLIES BE DELIVERED F.O.B. DESTINATION GENERALLY SIGNIFIES THAT THE SHIPPER RETAINS RESPONSIBILITY FOR AND ASSUMES THE RISK OF LOSS OR DAMAGE TO THE PROPERTY WHILE IN TRANSIT AND, IN ADDITION, THAT THE SHIPPER AGREES TO DELIVER THE MERCHANDISE TO THE POINT OF DESTINATION WITHOUT ANY ADDITIONAL CHARGE FOR SUCH DELIVERY. COMP. GEN. 120. HOWEVER, WHERE AS IN THE INSTANT CASE, THE PURCHASE ORDER OR CONTRACT, PROVIDES THAT THE TRANSPORTATION CHARGES ARE TO BE PREPAID BY THE SHIPPER AND BILLED TO THE GOVERNMENT IT IS REASONABLE TO CONCLUDE THAT THE GOVERNMENT INTENDED TO ASSUME THE OBLIGATION FOR REIMBURSEMENT OF THE TRANSPORTATION CHARGES AND TO ONLY PLACE THE RISK OF LOSS OR DAMAGE IN TRANSIT ON THE SHIPPER. THIS IS BORNE OUT BY THE MEMORANDUM OF OCTOBER 19, 1966, PREPARED BY THE CONTRACTING OFFICER AS TO WHAT HE INTENDED WHEN THE PURCHASE ORDER WAS ISSUED.

ACCORDINGLY, THE CONTRACTOR MAY BE REIMBURSED FOR THE PREPAID SHIPPING CHARGES AND A CHANGE ORDER NEED NOT BE ISSUED TO INDICATE "F.O.B. ORIGIN" OR "F.O.B. OTHER.' PAYMENT MAY ALSO BE MADE FOR TRANSPORTATION CHARGES UNDER SIMILAR PURCHASE ORDERS. THE VOUCHER FORWARDED WITH YOUR LETTER OF FEBRUARY 24, 1967, IS RETURNED HEREWITH.

IN ORDER TO AVOID ANY QUESTION OR CONFUSION IN FUTURE PURCHASES WE SUGGEST THAT THE PURCHASE ORDER OR CONTRACT BE WRITTEN TO CLEARLY INDICATE THAT THE PRICES ARE EXCLUSIVE OF TRANSPORTATION CHARGES; THAT SUCH TRANSPORTATION CHARGES WILL BE REIMBURSED BY THE GOVERNMENT IN ADDITION TO THE PAYMENT OF THE CONTRACT PRICE OF THE MERCHANDISE; AND THAT THE CONTRACTOR SHALL BE RESPONSIBLE FOR LOSS OR DAMAGE TO THE MERCHANDISE WHILE IN TRANSIT.