B-162441, JAN. 26, 1968

B-162441, JAN. 26, 1968

TRANSPORTATION - RATE TENDERS - DAMAGES FOR FAILURE TO USE DECISION CONCERNING CLAIM OF D.J. MCNICHOL CO. FOR BREACH OF CONTRACT INCIDENT TO 11 SHIPMENTS OF FRESH PRODUCE GIVEN TO FOX TRANSPORT SYSTEM FOR TRANSPORTATION FROM PHILADELPHIA TO FT. DIX, N.J. AND MCGUIRE AIR FORCE BASE, N.J. WHERE CARRIER SUBMITTED RATE TENDERS FOR SHIPMENTS OF PERISHABLES FOR STRAIGHT SHIPMENTS FROM PHILADELPHIA TO MCGUIRE, FT. DIX, AND DOVER AIR FORCE BASES AND RECORD SHOWS THAT CHARGES FOR SHIPMENTS COMES TO $40,000 AND FACE OF CONTRACT SHOWS $41,500 AS ESTIMATED TOTAL AMOUNT OF CONTRACT, IT MUST BE CONCLUDED THAT RATE TENDER WAS FOR STRAIGHT LINE SHIPMENTS RATHER THAN FOR STOP-OFF COMBINATION SHIPMENTS. SINCE SHIPMENTS BEING QUESTIONED WERE STOP OFF COMBINATION SHIPMENTS THEY WERE NOT IN SCOPE OF CONTRACT AND COULD NOT CONSTITUTE BREACH OF CONTRACT.

TO RHODES AND SIMMS:

SUBJECT: D.J. MCNICHOL COMPANY - BREACH OF CONTRACT CLAIM FOR

$5,824, CONTRACT NO. DAHC-24-67-C-0001

IN YOUR LETTER OF AUGUST 10, 1967, YOU IDENTIFIED 11 SHIPMENTS OF FRESH PRODUCE WHICH HAD BEEN GIVEN TO FOX TRANSPORT SYSTEM IN MAY OF LAST YEAR FOR TRANSPORTATION FROM PHILADELPHIA, PENNSYLVANIA, TO FT. DIX, NEW JERSEY, AND MCGUIRE AIR FORCE BASE, NEW JERSEY. IT IS YOUR VIEW THAT THE SHIPMENTS SHOULD HAVE BEEN GIVEN TO YOUR CLIENT, D.J. MCNICHOL COMPANY UNDER ITS CONTRACT DAHC-24-67-C-0001; THAT THE DIVERSION OF THIS TRAFFIC TO FOX TRANSPORT SYSTEM CONSTITUTES A PARTIAL BREACH OF YOUR CLIENT'S CONTRACTUAL RIGHTS FOR WHICH YOUR CLIENT IS ENTITLED TO DAMAGES; AND THAT YOUR CLIENT'S LOSS OF PROFITS RESULTING FROM THE REFUSAL TO PERMIT IT TO HANDLE THIS TRAFFIC, AT THE VOLUME NOTED FOR THE MONTH OF MAY, AVERAGES $112 PER WEEK, OR $5,824 FOR THE CONTRACT PERIOD MAY 1, 1967, TO APRIL 30, 1968. YOUR CLAIM APPARENTLY IS FOR $5,824, THE ESTIMATED LOSS OF PROFITS FOR THE ENTIRE CONTRACT PERIOD.

UNDER THE CONTRACT IN QUESTION, THE CARRIER AGREES TO ALL THE TERMS AND CONDITIONS OF A PERISHABLE SUBSISTENCE CARRIER'S SERVICE AGREEMENT AND RATE TENDER WHICH ARE ATTACHED TO AND MADE A PART OF THE CONTRACT. APPENDIX II OF THE SERVICE AGREEMENT SETS FORTH THE ESTIMATED TONNAGES AND THE ESTIMATED NUMBER OF SHIPMENTS TO BE MADE IN VARIOUS MINIMUM WEIGHT CATEGORIES, FROM VARIOUS SPECIFIED ORIGINS TO VARIOUS SPECIFIED GOVERNMENT INSTALLATIONS, TOGETHER WITH THE CONTEMPLATED PICK-UP AND DELIVERY SCHEDULES TO BE OBSERVED.

FROM THE COMMERCIAL ZONE OF PHILADELPHIA, PENNSYLVANIA, TO MCGUIRE AIR FORCE BASE, NEW JERSEY, IT WAS ESTIMATED THAT 54 SHIPMENTS IN THE 10,000 POUND MINIMUM WEIGHT CATEGORY AND 17 SHIPMENTS IN THE 15,000 POUND MINIMUM WEIGHT CATEGORY WOULD BE MADE, SUBJECT TO A LOADING SCHEDULE OF 1 A.M. MONDAY, WEDNESDAY, THURSDAY AND FRIDAY, WITH DELIVERIES TO BE MADE NOT LATER THAN 11 A.M. ON THE SAME DAYS. FROM THE SAME ZONE TO FT. DIX, NEW JERSEY, THE ESTIMATE IS FOR 71 SHIPMENTS IN THE 20,000 POUND MINIMUM WEIGHT CATEGORY, 22 SHIPMENTS IN THE 30,000 POUND MINIMUM WEIGHT CATEGORY, AND 126 SHIPMENTS IN THE 40,000 POUND MINIMUM WEIGHT CATEGORY. THESE SHIPMENTS WERE TO BE SCHEDULED FOR LOADING AT 1 A.M. EVERY DAY OF THE WEEK WITH DELIVERIES TO BE MADE NOT LATER THAN 8 A.M. OF THE SAME DAY. D.J. MCNICHOL COMPANY SUBMITTED A RATE TENDER FOR EACH OF THESE CATEGORIES OF SHIPMENTS, AND THIS IS THE TRAFFIC WHICH WAS AWARDED TO THE COMPANY UNDER CONTRACT DAHC-24-67 C-0001. THE CONTRACT ALSO INCLUDED AWARD OF SHIPMENTS TO DOVER AIR FORCE BASE, DELAWARE, BUT THAT PART OF THE CONTRACT IS NOT IN DISPUTE.

THE CHARGES FOR THE ESTIMATED STRAIGHT SHIPMENTS TO MCGUIRE, FT. DIX, AND DOVER, COMPUTED AT THE RATES TENDERED BY THE COMPANY, COME TO ABOUT $40,000 AND THE FACT THAT THE FACE OF THE CONTRACT SHOWS THE SUM OF $41,500 AS THE ESTIMATED TOTAL AMOUNT OF THE CONTRACT SEEMS CORROBORATIVE OF THE CONCLUSION THAT THE SCOPE OF THE CONTRACT AWARD WAS LIMITED TO THE STRAIGHT SHIPMENTS TO MCGUIRE, FT. DIX, AND DOVER, AS ESTIMATED IN APPENDIX II OF THE SERVICE AGREEMENT AND AS DISCUSSED ABOVE. THIS SAME APPENDIX, HOWEVER, CONTAINED AN ESTIMATE, SEPARATELY TABULATED, THAT SIX STOP-OFF COMBINATION SHIPMENTS IN THE 25,000 POUND MINIMUM WEIGHT CATEGORY, 25 STOP-OFF COMBINATION SHIPMENTS IN THE 40,000 POUND MINIMUM WEIGHT CATEGORY, AND 122 STOP-OFF COMBINATION SHIPMENTS IN THE 50,000 POUND MINIMUM WEIGHT CATEGORY ALSO WOULD BE MADE FROM PHILADELPHIA TO MCGUIRE/FT. DIX. NO SCHEDULES ARE SHOWN FOR THESE SHIPMENTS; PRESUMABLY THEY WERE TO BE SCHEDULED AS NEEDED AND WERE TO CONSIST OF SUBSISTENCE STORES SUPPLEMENTING THOSE TO BE TRANSPORTED VIA THE REGULARLY SCHEDULED STRAIGHT SHIPMENTS PREVIOUSLY ESTIMATED.

D.J. MCNICHOL COMPANY DID NOT SUBMIT RATE TENDERS FOR THE ESTIMATED STOP- OFF COMBINATION SHIPMENTS. WHILE THE RATES IT DID TENDER FOR THE STRAIGHT SHIPMENTS TO MCGUIRE AND FT. DIX INCLUDED STOP-OFF PRIVILEGES, THE RATES CANNOT BE CONSIDERED AS OFFERED FOR THE TRANSPORTATION OF THE ESTIMATED STOP-OFF COMBINATION SHIPMENTS BECAUSE THE RATES PERTAIN TO DIFFERENT MINIMUM WEIGHT CATEGORIES EXCEPT FOR THOSE IN THE 40,000 POUND CLASS. SINCE THE COMPANY DID NOT SUBMIT RATES FOR THE STOP-OFF COMBINATION SHIPMENTS, IT WOULD SEEM TO FOLLOW THAT THE CONTRACT AWARD COULD NOT HAVE INCLUDED THOSE SHIPMENTS. FURTHERMORE, IF THE AWARD HAD INCLUDED THOSE SHIPMENTS, THE ESTIMATED TOTAL AMOUNT OF THE CONTRACT WOULD HAVE BEEN CONSIDERABLY MORE THAN THE SUM OF $41,500 SHOWN ON THE FACE OF THE CONTRACT.

THE FOX TRANSPORT SYSTEM SUBMITTED RATES FOR BOTH THE STRAIGHT SHIPMENTS AND THE STOP-OFF COMBINATION SHIPMENTS. ITS RATES FOR THE STRAIGHT SHIPMENTS WERE HIGHER THAN THOSE OF THE D.J. MCNICHOL COMPANY AND WERE NOT ACCEPTED BY THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE (MTMTS). HOWEVER, ITS RATES FOR THE STOP-OFF COMBINATION SHIPMENTS WERE NOT IN EXCESS OF THOSE SUBMITTED BY OTHER CARRIERS AND WERE ACCEPTED BY MTMTS AND FILED. THE 11 SHIPMENTS IDENTIFIED IN YOUR LETTER OF AUGUST 10 WERE TRANSPORTED AND PAID FOR UNDER THE AUTHORITY OF THE TENDER SO FILED.

SINCE THE SHIPMENTS TRANSPORTED BY FOX WERE STOP-OFF COMBINATION SHIPMENTS NOT WITHIN THE SCOPE OF THE CONTRACT AWARD TO THE D.J. MCNICHOL COMPANY, THE TENDER OF THE SHIPMENTS TO FOX DID NOT CONSTITUTE A BREACH OF YOUR CLIENT'S CONTRACT. ACCORDINGLY, YOUR CLAIM FOR DAMAGES IS DENIED.