B-24097, JULY 11, 1942, 22 COMP. GEN. 22

B-24097: Jul 11, 1942

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AN EMPLOYEE WHOSE HOUSEHOLD EFFECTS ARE SHIPPED UNDER AN OTHERWISE PROPER CONTRACT AWARDED A MOTOR VAN CARRIER ON THE BASIS OF ITS LOW BID AT RATES IN EXCESS OF PUBLISHED MOTOR VAN TARIFF RATES IN EFFECT FOR THE GENERAL PUBLIC IS NOT CHARGEABLE WITH THE EXCESS. ARE LET TO MOTOR VAN CARRIERS WITHOUT FIRST ASCERTAINING THE PUBLISHED MOTOR VAN CARRIER RATES. THERE SHOULD BE INSERTED IN SUCH CONTRACTS A PROVISO TO THE EFFECT THAT PAYMENTS MADE THEREUNDER WILL BE SUBJECT TO AUDIT AND CHECK AGAINST THE PUBLISHED RATES. AS FOLLOWS: REVIEW IS REQUESTED OF AUDIT ACTION TAKEN BY THE GENERAL ACCOUNTING OFFICE ON D.O. ALLOWANCE IS BASED ON THE ESTIMATED WEIGHT AND VALUE. 5. WAS NOT A PARTY TO ANY TARIFF APPLICABLE ON INTERSTATE TRAFFIC.

B-24097, JULY 11, 1942, 22 COMP. GEN. 22

TRANSPORTATION - HOUSEHOLD EFFECTS - MOTOR VAN SHIPMENTS - EXCESS OF CONTRACT RATES OVER PUBLISHED RATES WHILE UNDER THE PROVISIONS OF EXECUTIVE ORDER NO. 9122, ISSUED PURSUANT TO THE UNIFORM HOUSEHOLD EFFECTS TRANSPORTATION STATUTE OF OCTOBER 10, 1940, THAT IN DETERMINING THE MOST ECONOMICAL MODE OF TRANSPORTATION, THE LOWEST AVAILABLE MOTOR VAN CHARGES MAY BE DETERMINED FROM PUBLISHED TARIFFS OR BY ADVERTISING, AN EMPLOYEE WHOSE HOUSEHOLD EFFECTS ARE SHIPPED UNDER AN OTHERWISE PROPER CONTRACT AWARDED A MOTOR VAN CARRIER ON THE BASIS OF ITS LOW BID AT RATES IN EXCESS OF PUBLISHED MOTOR VAN TARIFF RATES IN EFFECT FOR THE GENERAL PUBLIC IS NOT CHARGEABLE WITH THE EXCESS, THE CARRIER SHOULD BE REQUIRED TO REFUND ANY AMOUNT PAID IN EXCESS OF SUCH PUBLISHED RATES. WHERE CONTRACTS FOR TRANSPORTATION OF HOUSEHOLD EFFECTS OF TRANSFERRED EMPLOYEES PURSUANT TO THE UNIFORM HOUSEHOLD EFFECTS TRANSPORTATION STATUTE OF OCTOBER 10, 1940, AND EXECUTIVE REGULATIONS THEREUNDER, ARE LET TO MOTOR VAN CARRIERS WITHOUT FIRST ASCERTAINING THE PUBLISHED MOTOR VAN CARRIER RATES, THERE SHOULD BE INSERTED IN SUCH CONTRACTS A PROVISO TO THE EFFECT THAT PAYMENTS MADE THEREUNDER WILL BE SUBJECT TO AUDIT AND CHECK AGAINST THE PUBLISHED RATES, AND THAT ANY EXCESS PAYMENTS FOR SERVICES AVAILABLE AT LOWER PUBLISHED RATES MUST BE REFUNDED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF AGRICULTURE, JULY 11, 1942:

CONSIDERATION HAS BEEN GIVEN TO THE MATTERS PRESENTED IN YOUR LETTER OF FEBRUARY 23, 1942, AS FOLLOWS:

REVIEW IS REQUESTED OF AUDIT ACTION TAKEN BY THE GENERAL ACCOUNTING OFFICE ON D.O. VOUCHER NO. 173170, ACCOUNTS OF G. F. ALLEN, AUGUST 1939, COVERING PAYMENT TO LIGHTNING MOVING AND WAREHOUSE COMPANY, PHOENIX, ARIZONA, FOR TRANSPORTATION BY MOTOR VAN OF THE HOUSEHOLD GOODS BELONGING TO MR. R. E. BECKETT, FROM SACATON, ARIZONA, TO BARD, CALIFORNIA. THE NOTICE OF EXCEPTION READS IN PERTINENT PART AS FOLLOWS:

"CHARGE FOR PACKING AND HAULING HOUSEHOLD GOODS OF R. E. BECKETT BY MOTOR VAN FROM SACATON, ARIZONA, TO BARD, CALIFORNIA, DURING JUNE 1939.

"A SHOWING OF THE ACTUAL WEIGHT OF THE SHIPMENT TOGETHER WITH AN ITEMIZATION OF THE INCIDENTAL EXPENSES OF PACKING AND A LIST OF THE MATERIALS USED, HAS NOT BEEN FURNISHED. ALLOWANCE IS BASED ON THE ESTIMATED WEIGHT AND VALUE.

5,200 POUNDS AT $1.55 CWT. FOR DISTANCE OF

203 MILES -------------------------- $80.60

PACKING AND MATERIALS FURNISHED ---------- 19.00

99.60

"REPLY DATED SEPTEMBER 19, 1940, NOTED.

"IT APPEARS THAT THE CONTRACTOR, LIGHTNING MOVING AND WAREHOUSE COMPANY, OF PHOENIX, ARIZONA, WAS NOT A PARTY TO ANY TARIFF APPLICABLE ON INTERSTATE TRAFFIC, AND THE BID WAS ACCEPTED UNDER THE PROVISIONS OF SECTION 3709, REVISED STATUTES (41 U.S.C. 5), FOR THE TRANSPORTATION OF HOUSEHOLD EFFECTS FOR WHICH, UNDER THE PROVISIONS OF SECTION 217B, MOTOR CARRIER ACT (49 STAT. 543), THE RATES QUOTED WERE NOT REQUIRED TO BE PUBLISHED. HOWEVER, THERE WAS AVAILABLE UNDER AUTHORITY OF INTERMOUNTAIN MOTOR FREIGHT TARIFF NO. 2, M.F.I.C.C. NO. 2, EQUAL SERVICE VIA VARIOUS OTHER CARRIERS.

"INASMUCH AS THE RATES CHARGED ARE IN EXCESS OF OTHERWISE PUBLISHED RATES FOR SHIPMENT OF HOUSEHOLD EFFECTS BY MOTOR VAN SERVICE FROM SACATON, ARIZONA, TO BARD, CALIFORNIA, PAYMENT OF AN AMOUNT IN EXCESS OF SUCH PUBLISHED RATES IS UNAUTHORIZED. SEE 19 COMP. GEN. 641.

"REPLY DATED MARCH 24, 1941, NOTED.

"18 COMP. GEN. 641--- REQUIRING THE SOLICITATION OF BIDS BECAUSE THE MOTOR CARRIERS IN MANY INSTANCES WILL GIVE LOWER RATES TO THE UNITED STATES FOR TRANSPORTATION SERVICES THAN TO THE PUBLIC GENERALLY--- AFFORDS NO BASIS FOR PAYMENT OF AN AMOUNT IN EXCESS OF THE APPLICABLE C.C.C. (SIC) MOTOR CARRIER RATES.

"IN THE ABSENCE OF AN ITEMIZATION SHOWING THE COST OF THE MATERIALS USED IN THE PACKING, CREDIT IN EXCESS OF THE INTERSTATE COMMERCE COMMISSION MOTOR VAN RATES AND THE ESTIMATED COST OF PACKING MAY NOT BE ALLOWED.'

AS EVIDENCED BY THE DEPARTMENT'S REGULATIONS, IT HAS FOR THE LONG PAST REQUIRED THAT THE MOVEMENT OF HOUSEHOLD GOODS UPON PERMANENT CHANGE OF STATION BE MADE BY THE LEAST EXPENSIVE FORM OF TRANSPORTATION. DETERMINE THE LEAST EXPENSIVE METHOD, IN THE INSTANT CASE, COMPETITIVE BIDS WERE SOLICITED ON THE TWO MODES OF TRANSPORTATION AVAILABLE, I.E., PACKING, CRATING, AND OTHERWISE PREPARING THE GOODS FOR RAIL SHIPMENT (WATER TRANSPORTATION NOT BEING AVAILABLE), AND FOR TRANSPORTATION BY MOTOR VAN. THE FOLLOWING COMPARATIVE STATEMENT OF THE COSTS INVOLVED BY THE TWO MODES OF TRANSPORTATION INDICATED THAT MOVEMENT BY VAN AT A COST OF $180.00 WAS THE LOWEST PRICE, AND IT WAS SO ACCEPTED:

CHARGES FOR

PACKING, CRATING,

AND DRAYAGE TO

FREIGHT STATION,

AND UNCRATING AT MOTOR

DESTINATION VAN BID LIGHTNING MOVING AND WAREHOUSE

CO. (1U.S.D.A. 5028 F.) -------- $157.50 $180.00 ESTIMATED WEIGHT 5,200 POUNDS FREIGHT 57.72 UNCRATING AT DESTINATION ----------- 20.00

TOTAL --------------------------- 235.22

COMPETITIVE BIDDING HAS LONG BEEN RECOGNIZED AS A PROCEDURE WHICH DEVELOPS THE LOWEST PRICES, AND WAS SO USED IN THE CASE HERE DISCUSSED, BUT IT IS SUBMITTED THAT IT IS NOT A GUARANTEE OF THE LOWEST COST, AS ILLUSTRATED BY THE EXCEPTION, WHICH IS PREDICATED UPON A MOTOR FREIGHT TARIFF, OF WHICH THE DEPARTMENT WAS NOT AWARE AT THE TIME OF AWARD.

WHILE THIS DEPARTMENT IS IN FULL ACCORD WITH THE POLICY OF SECURING THE BEST BARGAIN FOR THE GOVERNMENT, IT DOES NOT BELIEVE THAT YOUR MANY INTERPRETATIONS OF SECTION 3709 OF THE REVISED STATUTES CONTEMPLATE CARRYING THE SEARCH FOR LOWER PRICES INTO THE REALM OF DIMINISHING RETURNS, ADMINISTRATIVE COSTS AND POTENTIAL SAVINGS CONSIDERED. ILLUSTRATE THE EFFECTIVENESS OF THE BID PROCEDURE IN DEVELOPING THE LOWEST COSTS FOR THE MOVEMENT OF HOUSEHOLD GOODS, THERE IS SET FORTH NEXT BELOW A STATEMENT OF ALL SUCH TRANSACTIONS HANDLED BY THE DEPARTMENT'S DIVISION OF PURCHASE, SALES, AND TRAFFIC DURING THE PERIOD OCTOBER 1940 TO APRIL 1941, WHEREIN THE COSTS, IF PUBLISHED TARIFFS ONLY HAD BEEN CONSIDERED, ARE COMPARED WITH RESULTS OBTAINED UNDER COMPETITIVE BIDDING.

NUMBER TOTAL COST OF

OF CASES TRANSPORTATION COSTS IF PUBLISHED TARIFFS ONLY HAD

BEEN CONSIDERED ------------------- 113 $29,316.62

----- -------------- COMPETITIVE BIDS:

AWARDED FOR MOTOR VAN MOVEMENT ---- 101 $17,901.46

RAIL FREIGHT PLUS LOWEST COST

FOR PACKING AND CRATING ---------- 10 2,473.20

MOVEMENT UNDER PUBLISHED TARIFFS

WHERE LOWER THAN BIDS RECEIVED --- 2 413.20

113 20,787.86

SAVINGS EFFECTED BY COMPETITIVE

BIDDING -------------------------- ----- 8,528.76

THE DEPARTMENT HAS DELEGATED CONTRACTING AUTHORITY WITHIN PRESCRIBED LIMITS TO MANY OF ITS FIELD OFFICERS AS A MEANS OF FACILITATING ITS WIDESPREAD OPERATIONS, BUT IT DOES NOT MAINTAIN ANY FIELD TRAFFIC FACILITIES. MOREOVER, SINCE THE ENACTMENT OF THE TRANSPORTATION ACT OF 1940, THE TRAFFIC FACILITIES OF THE CENTRAL OFFICE IN WASHINGTON, D.C., HAVE BEEN MATERIALLY CURTAILED. THE ASSEMBLY OF TARIFF FILES AND THE EMPLOYMENT OF ADDITIONAL PERSONNEL FOR THE COMPILATION OF RATES AT EACH POINT WHERE A CONTRACTING OFFICER IS STATIONED WOULD BE AN EXPENSIVE PROCESS AND THE REFERENCE OF ALL HOUSEHOLD MOVING CASES TO THE CENTRAL OFFICE IN WASHINGTON, WHILE LESS EXPENSIVE THAN THE ESTABLISHMENT OF FIELD TRAFFIC FACILITIES, IS VERY TIME CONSUMING AND CONSEQUENTLY INTERRUPTS NORMAL PROCESSES OF OPERATION.

IN THE LIGHT OF THE LOWER COSTS WHICH HAVE BEEN CONSISTENTLY DEVELOPED THROUGH FOLLOWING THE BID PROCEDURE IN CONTRADISTINCTION TO THE SINGLE CASE HERE INVOLVED WHERE THAT PROCEDURE DID NOT DEVELOP THE LOWEST COST, TOGETHER WITH THE FACT THAT ALL PARTIES CONCERNED ACTED IN GOOD FAITH IT IS REQUESTED THAT FULL CREDIT BE NOW ALLOWED FOR THE PAYMENT MADE TO THE LIGHTNING MOVING AND WAREHOUSE COMPANY.

BECAUSE OF THE RATHER UNUSUAL DISPARITY BETWEEN THE AMOUNT OF THE ENTIRE CONTRACT, $180, AND THE AMOUNT OF THE CONSTRUCTIVE COST BY MOTOR VAN COMMON CARRIER, AS DERIVED FROM THE PUBLISHED TARIFFS, $99.60, A REEXAMINATION OF THE LATTER HAS BEEN UNDERTAKEN. REFERENCE TO THE CARRIERS' ORIGINAL CERTIFICATES OF CONVENIENCE AND NECESSITY ON FILE AT THE INTERSTATE COMMERCE COMMISSION DISCLOSES CONSIDERABLE DOUBT WHETHER THE COMPARATIVE SERVICE HERE INVOLVED (THOUGH APPEARING IN THE TARIFF) ACTUALLY WAS AVAILABLE FOR THE PARTICULAR TRANSPORTATION HERE IN QUESTION FROM A POINT IN ARIZONA TO A POINT IN CALIFORNIA. SINCE A CARRIER'S ACTUAL (AS DISTINGUISHED FROM THE THEORETICAL) PARTICIPATION IN A TARIFF IS LIMITED BY THE TERMS OF THE OPERATING AUTHORITY--- SEE PRACTICES OF MOTOR COMMON CARRIERS OF HOUSEHOLD GOODS (1939) 17 I.C.C. ( M.C.C.) 467, 500--- SETTLEMENT UPON THE BASIS OF THE COMPARATIVE RATE PREVIOUSLY QUOTED IS NOT TO BE REQUIRED. INSTEAD, COMPARISON PROPERLY MAY BE MADE WITH ANOTHER TARIFF WHICH IS CLEARLY APPLICABLE, NAMELY, M.F.I.C.C. NO. 1 OF THE CHAMBERS TRANSFER AND STORAGE COMPANY, OF PHOENIX, ARIZONA, IN WHICH A RATE OF $3.50/CWT. IS PUBLISHED AS APPLICABLE HERE. THAT RATE RESULTS IN A CONSTRUCTIVE COST OF $182 FOR TRANSPORTATION ALONE, OR SLIGHTLY MORE THAN THE PAYMENT ACTUALLY MADE. ACCORDINGLY, THE AUDIT EXCEPTION WITH RESPECT TO THE PAYMENT MADE ON VOUCHER NO. 173170 WILL BE REMOVED.

YOUR FURTHER SUGGESTION THAT, IN THE PROCUREMENT OF TRANSPORTATION OF HOUSEHOLD EFFECTS OF EMPLOYEES UPON CHANGE OF STATION, THE REQUIREMENTS OF LAW ARE MET BY ADVERTISING FOR COMPETITIVE BIDS AND AWARD THEREUNDER WITHOUT REFERENCE TO WHETHER THE BIDS ARE OVER OR UNDER THE PUBLISHED MOTOR VAN COMMON CARRIER RATES IS AFFECTED BY A RECENT EXECUTIVE REGULATION. THE ACT OF OCTOBER 10, 1940, 54 STAT. 1105, AUTHORIZED REGULATIONS TO MAKE UNIFORM THE ALLOWANCES FOR TRANSPORTATION OF HOUSEHOLD GOODS OF TRANSFERRED CIVILIAN EMPLOYEES. EXECUTIVE ORDER NO. 9122 OF APRIL 6, 1942, AMENDED SECTION 5 OF THE PREVIOUS REGULATIONS UNDER THAT STATUTE, SO AS TO READ AS FOLLOWS:

SECTION 5. MEANS OF SHIPMENT.--- SHIPMENT SHALL BE BY THE MOST ECONOMICAL MEANS, TAKING INTO CONSIDERATION THE COSTS OF PACKING, CRATING, DRAYAGE, UNPACKING, AND UNCRATING: PROVIDED, HOWEVER, THAT THE EMPLOYEE MAY HAVE HIS EFFECTS MOVED BY SOME MEANS OTHER THAN THAT DETERMINED TO BE MOST ECONOMICAL BY PAYING THE DIFFERENCE BETWEEN THE LOWEST AVAILABLE CHARGES AND THE CHARGES BY THE PREFERRED MEANS: AND PROVIDED FURTHER, THAT, WHEN THE HEAD OF THE DEPARTMENT OR AGENCY DETERMINES IT TO BE IN THE INTEREST OF THE GOVERNMENT, HE MAY SPECIFICALLY AUTHORIZE THE SHIPMENT BY EXPRESS OF ARTICLES REQUIRED FOR IMMEDIATE USE AT THE NEW OFFICIAL STATION (SUCH AS PROFESSIONAL BOOKS, WEARING APPAREL, BEDDING OR KITCHEN UTENSILS BUT NOT FURNITURE OR JEWELRY), WHICH SHALL IN NO CASE EXCEED A WEIGHT OF 500 POUNDS FOR EMPLOYEES HAVING DEPENDENTS LIVING WITH THEM OR 250 POUNDS FOR EMPLOYEES HAVING NO DEPENDENTS LIVING WITH THEM. IN CONSIDERING COMPARATIVE TRANSPORTATION COSTS AS REQUIRED BY THIS SECTION, THE LOWEST AVAILABLE MOTOR VAN CHARGES MAY BE DETERMINED BY CONSULTING PUBLISHED TARIFFS OR BY SECURING COMPETITIVE BIDS, THE USE OF EITHER METHOD TO BE CONSTRUED AS BEING DETERMINATIVE OF THE LOWEST AVAILABLE RATE FOR MOTOR TRANSPORTATION.

SO FAR AS THE RIGHTS OF THE EMPLOYEE ARE CONCERNED, THE APPLICABLE MOTOR VAN RATE, PURSUANT TO THE FINAL SENTENCE OF SECTION 5, MAY BE THAT DETERMINED EITHER FROM THE PUBLISHED TARIFFS OR BY ADVERTISING, AND COMPARISON WILL BE REQUIRED ONLY WITH THE COSTS CHARGEABLE FOR OTHER FORMS OF TRANSPORTATION. OF COURSE, IT NEVERTHELESS IS PERMISSIBLE IN ANY OR ALL CASES TO UTILIZE BOTH CRITERIA IN DETERMINING THE MOTOR VAN RATE, THAT IS, TO CHECK THE BIDS AGAINST THE PUBLISHED MOTOR VAN RATES AT THE SAME TIME THE RAIL FREIGHT COSTS ARE ASCERTAINED. IN THE PRESENT CASE IT IS SHOWN THAT THE BID WAS COMPARED WITH THE RAIL RATES AS FURNISHED BY THE PROCUREMENT DIVISION, TREASURY DEPARTMENT. WHETHER THE MOTOR RATES COULD LIKEWISE HAVE BEEN VERIFIED DOES NOT APPEAR; HOWEVER, THE PROCUREMENT DIVISION NOW, AT LEAST, HAS MADE THAT SERVICE AVAILABLE TO SOME OTHER DEPARTMENTS AND IT IS POSSIBLE LIKE PROVISION MIGHT BE MADE FOR THE DEPARTMENT OF AGRICULTURE. SEE BUDGET CIRCULAR NO. 387 OF FEBRUARY 12, 1942, AND TREASURY PROCUREMENT CIRCULAR LETTERS NO. 557 OF FEBRUARY 10, AND NO. 575 OF MARCH 23, 1942.

HOWEVER, APART FROM THE EXTENT OF THE RIGHTS OF THE TRANSFERRED EMPLOYEES --- WHICH ARE GOVERNED BY THE ABOVE STATUTE AND EXECUTIVE ORDERS, AND BY THE APPROPRIATION ACTS--- IT IS NOT TO BE UNDERSTOOD THAT SECTION 5 OF THE EXECUTIVE ORDER, SUPRA, CONTEMPLATES THAT ANY MOTOR VAN CARRIERS SHOULD COLLECT AND RETAIN PAYMENTS UNDER ADVERTISED CONTRACTS, FOR SERVICES AVAILABLE BY MOTOR VAN COMMON CARRIERS, IN EXCESS OF THE PUBLISHED RATES LAWFULLY IN EFFECT FOR THE GENERAL PUBLIC. THE RULE IS WELL SETTLED AND OF LONG STANDING THAT GOVERNMENT OFFICERS ARE WITHOUT AUTHORITY TO CONTRACT FOR TRANSPORTATION SERVICE ON THE BASIS OF HIGHER CHARGES THAN THOSE AVAILABLE TO THE PUBLIC UNDER PUBLISHED AND FILED TARIFFS FOR LIKE SERVICES UNDER LIKE CONDITIONS. MISSOURI PACIFIC RAILROAD CO. V. UNITED STATES, 71 C.1CLS. 650, 661; 19 COMP. DEC. 208; 15 COMP. GEN. 303; 18 ID. 354, 360; 20 ID. 870, 876; B-25583, MAY 4 AND 23, 1942, 21 COMP. GEN. 979, 1039; B-7092, NOVEMBER 30, 1939. ALSO SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940, 54 STAT. 954, CONTAINS "AN AFFIRMATIVE INDICATION OF AN INTENTION ON THE PART OF THE CONGRESS THAT THE UNITED STATES SHALL HAVE THE BENEFIT OF THE LOWEST PRICES FOR WHICH SATISFACTORY TRANSPORTATION SERVICES CAN BE PROCURED WITHOUT ADVERTISING" (QUOTING FROM 20 COMP. GEN. 793, 795). ACCORDINGLY WHILE THERE MAY BE NO BASIS FOR COLLECTION FROM TRANSFERRED EMPLOYEES FOR ANY EXCESS OF OTHERWISE PROPER CONTRACT PAYMENTS OVER THE MOTOR VAN TARIFF RATES, NEVERTHELESS, COLLECTION BACK FROM THE CONTRACTORS WILL BE UNDERTAKEN AND EXPECTED. ORDER TO AVOID MISUNDERSTANDING, WHERE CONTRACTS ARE LEFT IN THE FIELD OR WHERE FOR SOME OTHER REASON THE TARIFF RATES ARE NOT PREVIOUSLY ASCERTAINED, IT WOULD SEEM BOTH PROPER AND DESIRABLE TO INSERT IN THE BID INVITATIONS AND IN THE CONTRACTS A PROVISO TO THE EFFECT THAT PAYMENTS MADE ON THE CONTRACT WILL BE SUBJECT TO AUDIT AND CHECK AGAINST THE PUBLISHED TARIFF RATES FOR MOTOR VAN COMMON CARRIERS, AND THAT ANY EXCESS PAYMENTS WHICH ARE MADE FOR ANY SERVICES WHICH WERE AVAILABLE AT TARIFF RATES WILL BE REQUIRED TO BE REFUNDED BY THE CONTRACTOR.