B-191783, JUL 28, 1978

B-191783: Jul 28, 1978

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DIGEST: WHERE CONTRACT DOES NOT CONTAIN DELIVERY TERMS SET FORTH IN FEDERAL PROCUREMENT REGULATIONS BUT WHERE RECORD SHOWS THAT PARTIES TO CONTRACT HAVE CLEAR UNDERSTANDING OF CONTRACT DELIVERY TERMS. VOUCHER FOR REIMBURSEMENT OF PREPAID TRANSPORTATION CHARGES MAY BE CERTIFIED FOR PAYMENT PROVIDED IT IS SUPPORTED BY PAID FREIGHT RECEIPTS AND THAT CHARGES FOR INSURANCE ARE DELETED. THE VOUCHER IS PRESENTED FOR PAYMENT BY PORTA HOUSE. THE SEVEN SHIPMENTS WERE TRANSPORTED FROM BURLESON. WERE INCIDENT TO THE PROCUREMENT OF A CONSTRUCTION OFFICE COMPLEX UNDER A PURCHASE ORDER. THE AUTHORIZED CERTIFYING OFFICER IS ENTITLED TO AN ADVANCE DECISION BY THE COMPTROLLER GENERAL ON THE QUESTION OF LAW WHETHER THE TRANSPORTATION CHARGES SHOULD BE CERTIFIED FOR PAYMENT. 31 U.S.C. 82D (1970).

B-191783, JUL 28, 1978

DIGEST: WHERE CONTRACT DOES NOT CONTAIN DELIVERY TERMS SET FORTH IN FEDERAL PROCUREMENT REGULATIONS BUT WHERE RECORD SHOWS THAT PARTIES TO CONTRACT HAVE CLEAR UNDERSTANDING OF CONTRACT DELIVERY TERMS, VOUCHER FOR REIMBURSEMENT OF PREPAID TRANSPORTATION CHARGES MAY BE CERTIFIED FOR PAYMENT PROVIDED IT IS SUPPORTED BY PAID FREIGHT RECEIPTS AND THAT CHARGES FOR INSURANCE ARE DELETED.

PORTA HOUSE, INC.:

AN AUTHORIZED CERTIFYING OFFICER OF THE UNITED STATES DEPARTMENT OF THE INTERIOR, BUREAU OF RECLAMATION, HAS REQUESTED AN ADVANCE DECISION ON THE PROPRIETY OF CERTIFYING FOR PAYMENT A VOUCHER FOR $12,313.40. THE VOUCHER IS PRESENTED FOR PAYMENT BY PORTA HOUSE, INC., AND COVERS THE PREPAID TRANSPORTATION CHARGES ON SEVEN SHIPMENTS OF PORTABLE HOUSING UNITS THAT MOVED ON COMMERCIAL BILLS OF LADING. THE SEVEN SHIPMENTS WERE TRANSPORTED FROM BURLESON, TEXAS, TO HENDERSON, NEVADA, AND WERE INCIDENT TO THE PROCUREMENT OF A CONSTRUCTION OFFICE COMPLEX UNDER A PURCHASE ORDER.

THE AUTHORIZED CERTIFYING OFFICER IS ENTITLED TO AN ADVANCE DECISION BY THE COMPTROLLER GENERAL ON THE QUESTION OF LAW WHETHER THE TRANSPORTATION CHARGES SHOULD BE CERTIFIED FOR PAYMENT. 31 U.S.C. 82D (1970). AND AS REQUIRED BY OUR PROCEDURES, THE CERTIFYING OFFICER HAS SUBMITTED THE ORIGINAL VOUCHER PRESENTED FOR CERTIFICATION. 52 COMP.GEN. 83 (1972).

THE CERTIFYING OFFICER ENCLOSED A MEMORANDUM FROM THE BUREAU'S REGIONAL SUPPLY AND SERVICES OFFICER CITING SECTION 1-19.305(A) OF THE FEDERAL PROCUREMENT REGULATIONS (FPR) (41 C.F.R. 1-19.305(A)) AS AUTHORITY TO SPECIFY THE PREPAYMENT OF TRANSPORTATION CHARGES IN A PURCHASE ORDER. THE CERTIFYING OFFICER STATES THAT THE CITED AUTHORITY IS NOT PERTINENT; HE BELIEVES THAT THE PROPOSED PAYMENT IS PRECLUDED BY 5 GAO 3017 AND THAT THE COMMERCIAL BILLS OF LADING SHOULD BE CONVERTED TO GOVERNMENT BILLS OF LADING BEFORE PAYMENT CAN BE AUTHORIZED.

THE RECORD SHOWS THAT THE PURCHASE ORDER WAS ISSUED UNDER A GENERAL SERVICES ADMINISTRATION FEDERAL SUPPLY SCHEDULE CONTRACT WITH PORTA HOUSE. THE PRICES IN THE CONTRACT ARE QUOTED F.O.B. POINTS OF PRODUCTION, ONE OF WHICH IS BURLESON, TEXAS. THE PURCHASE ORDER ISSUED BY THE BUREAU NAMES BURLESON AS THE "F.O.B. POINT" AND SPECIFIES "SHIP VIA PREPAY BILL ON INVOICE"; IT ALSO CONTAINS THIS STAMPED LEGEND:

"UPON ACCEPTANCE OF THIS ORDER, THE CONSIGNOR AGREES TO PREPAY ALL TRANSPORTATION CHARGES COVERING DELIVERY, AND TO ADD TO THE INVOICE AS A SEPARATE ITEM TRANSPORTATION CHARGES BASED ON THE LOWEST REGULARLY ESTABLISHED RATES ON FILE WITH THE INTERSTATE COMMERCE COMMISSION OR ANY STATE REGULATORY BODY, OR PUBLISHED BY THE POST OFFICE DEPARTMENT. INVOICE CHARGES SHALL BE SUPPORTED BY A PAID FREIGHT OR EXPRESS RECEIPT OR BY A STATEMENT OF PARCEL POST CHARGES, INCLUDING ZONE AND WEIGHT OF SHIPMENT. NO PAYMENT WILL BE MADE FOR INSURANCE CHARGES."

PORTA HOUSE'S INVOICE FOR THE TRANSPORTATION CHARGES IS SUPPORTED BY SEVEN "CUSTOMER'S INVOICE" SHOWING THAT MORGAN DRIVE AWAY, INC., BILLED CLIFF INDUSTRIES FOR TRANSPORTATION CHARGES ON THE SEVEN SHIPMENTS. THERE IS NO INDICATION THAT CLIFF PAID THE INVOICES. EACH INVOICE CONTAINS A CHARGE OF $24 FOR ACT OF GOD INSURANCE.

THE RECORD SHOWS CLEARLY THAT PORTA HOUSE AND THE BUREAU AGREED THAT THE OFFICE COMPLEX WAS TO BE PROCURED F.O.B. ORIGIN AND THAT THE SHIPPER WAS TO PREPAY THE TRANSPORTATION CHARGES AND ADD THEM AS A SEPARATE ITEM TO ITS INVOICE.

IT COULD BE ARGUED THAT THE CONTRACT DELIVERY TERMS IN FPR SECTION 1 19.305, TITLED "F.O.B. ORIGIN, FREIGHT PREPAID" APPLY HERE. ALTHOUGH IT PROVIDES THAT THE PREPAID TRANSPORTATION CHARGES SHOULD BE THE CONTRACTOR'S OBLIGATION, IT ALSO STATES THAT THE CONTRACTOR "SHALL PREPAY ALL FREIGHT CHARGES TO THE EXTENT SPECIFIED IN THE CONTRACT." AND HERE THE CONTRACT PROVIDES CLEARLY FOR REIMBURSEMENT OF TRANSPORTATION CHARGES SEPARATELY ITEMIZED ON THE INVOICE.

SECTION 3017 OF TITLE 5 OF THE GAO MANUAL IS NO LONGER IN EFFECT. REGULATIONS RELATING TO THE PRESCRIBING OF STANDARD FORMS AND PROCEDURES PERTAINING TO PAYMENTS FOR TRANSPORTATION SERVICES FURNISHED FOR THE ACCOUNT OF THE UNITED STATES NOW ARE ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA). SEE THE GENERAL ACCOUNTING OFFICE ACT OF 1974, PUB. L. NO. 93-604, 88 STAT. 1959, APPROVED JANUARY 2, 1975; 4 C.F.R. 51.2 (1977).

SECTION 3017 OF TITLE 5 IS PUBLISHED BY GSA AT 41 C.F.R. 101-41.304 2 (1977) AND CONCERNS THE USE OF COMMERCIAL DOCUMENTS FOR SMALL SHIPMENTS. OTHERWISE, THE GSA REGULATIONS SPECIFY THAT WHEN A COMMERCIAL BILL OF LADING IS USED UNDER CIRCUMSTANCES NOT AUTHORIZED IN THE REGULATIONS (I.E. 41 C.F.R. 101-41.304-2), THE WORDS "TO BE CONVERTED TO A U.S. GOVERNMENT BILL OF LADING" MUST BE PLACED ON THE COMMERCIAL BILLS OF LADING. SEE 41 C.F.R. 101-41.303-1.

THE CONTRACT DELIVERY TERMS IN FPR SECTION 1-19.302 (41 C.F.R. 1 19.302), TITLED "F.O.B. ORIGIN," IN MOST RESPECTS COMPLEMENT 41 C.F.R. 101-41.3 AND ALLOW THE USE OF COMMERCIAL BILLS OF LADING "WHEN GOVERNMENT BILL OF LADING IS NOT SUPPLIED," AND REQUIRE THE PLACEMENT ON THE COMMERCIAL BILL OF LADING OF THE GBL CONVERSION LANGUAGE SHOWN ABOVE WHEN "REQUESTED BY THE ORDERING AGENCY." THERE SEEMS TO BE A CLEAR UNDERSTANDING BETWEEN THE PARTIES TO THE CONTRACT AS TO HOW THE TRANSPORTATION CHARGES ON THE CONSTRUCTION OFFICE COMPLEX WERE TO BE PAID. AND ALTHOUGH THE CONTRACT DELIVERY TERMS IN EITHER FPR SECTION 1 19.304 OR 1-19.302 ARGUABLY APPLY, THE RECORD DOES NOT SHOW WHETHER EITHER SECTION ACTUALLY WAS IN THE CONTRACT. IN THESE CIRCUMSTANCES, AND PREFERRING THE SUBSTANCE OF THE TRANSACTION OVER ITS FORM, THE ORIGINAL VOUCHER AND SUPPORTING PAPERS WILL BE RETURNED TO THE CERTIFYING OFFICER AND MAY BE CERTIFIED FOR PAYMENT IF THESE CONDITIONS ARE MET:

1. PORTA HOUSE'S INVOICE FOR THE TRANSPORTATION CHARGES MUST BE SUPPORTED BY PAID FREIGHT RECEIPTS FROM MORGAN DRIVE AWAY, INC. SEE THE STAMPED LEGEND ON THE PURCHASE ORDER.

2. THE $24 CHARGE FOR ACT OF GOD INSURANCE ON EACH OF THE SEVEN SHIPMENTS MUST BE DELETED FROM THE AMOUNT CERTIFIED FOR PAYMENT. ORDINARILY, THE GOVERNMENT INSURES ITS OWN RISKS. THE RECORD IN THIS CASE SHOWS THAT THE GOVERNMENT BORE THE RISK OF LOSS OR DAMAGE IN TRANSIT BECAUSE THE CONSTRUCTION OFFICE COMPLEX WAS PROCURED F.O.B. ORIGIN. FURTHER, THE STAMPED LEGEND ON THE PURCHASE ORDER INCLUDES THE PHRASE: "NO PAYMENT WILL BE MADE FOR INSURANCE CHARGES."