B-244562, May 19, 1992

B-244562, May 19, 1992

PROCUREMENT - Payment/Discharge - Shipment costs - Rate schedules - Interpretation DIGEST: For traffic transported by an ocean carrier, General Services Administration may not assess lower charges through alternation of higher general military rates with lower specific commodity commercial rates unless the shipper met all requirements applicable to a commercial shipper shipping like goods, including the provision to the carrier of a full and complete description of the item(s) to be transported no later than the time that the goods are tendered to the carrier for transportation.

Crowley Caribbean Transport, Inc.:

Crowley Caribbean Transport, Inc. (CCT), an American flag ocean carrier, requests review of the General Services Administration's (GSA) audit actions regarding more than 100 Government Bill of Lading (GBL) transactions in which GSA identified $770,029.50 in overcharges. CCT contests GSA's application of rates lower than those on which CCT based its invoices. We reverse GSA's audit actions, with one exception.

BACKGROUND

The transactions in issue involved shipments of containerized and individual items of military goods between late 1986 and March 1989 to ports in Central America for the Department of Defense (DOD), particularly the Military Traffic Management Command (MTMC) and the Military Sealift Command (MSC). The rates and charges applicable are found in CCT's Tariff FMC 2, the U.S./Central America Liner Association Agreement No. 202- 010987.

FMC 2 included (1) what CCT calls a "military section," which set out rates/charges applicable to DOD traffic involving broad commodity descriptions (e.g., Dry Cargo, Not Otherwise Specified (N.O.S.)] Refrigerated Cargo, N.O.S.; vehicles, etc.), and (2) sections applicable to commercial traffic involving either general (e.g., Cargo, N.O.S.) or specific (e.g., sub-compact automobiles, carpets) commodity descriptions. Generally, the more specifically an item was described, the lower the rate, and the more generally it was described, the higher the rate.

CCT's primary objection is to GSA's alternation from the military container rates CCT billed to commercial specific commodity rates in transactions where the commodity was not identified until sometime after CCT accepted the shipment. As a general matter, a non-DOD shipper desiring to use the commercial specific rates would have to describe the commodity fully no later than tender to the carrier] otherwise the commercial general rates would apply. GSA also alternated from specially- equipped vehicle rates to utility truck rates, and from container Cargo, N.O.S. rates (or Vehicle, N.O.S. rates when available) to rates for specific vehicles even though containerized service was provided.

CCT says that it established the military section in its tariff with MTMC to address "MTMC's unusual shipping needs" at the lowest overall cost to the government. MTMC's primary need, according to CCT, was to effect shipment without furnishing to the carrier a full description of the goods. Otherwise (i.e., absent a military section), goods shipped without a full description would incur the most expensive commercial rate (e.g., Cargo, N.O.S.) and would be delayed at foreign ports until a full description arrived. The broad classification system in the military section contained rates that CCT says were considerably lower than the commercial rates for unspecified commodities. In this respect, CCT has introduced a statement from a former MTMC official asserting that he encouraged carriers to offer military sections in their ocean tariffs to avoid problems like DOD's inability to identify the commodities shipped, or to timely prepare a bill of lading.

CCT argues that the military rates/charges therefore are the only ones applicable to shipments for which DOD did not prepare documentation or specify the contents before shipment.

GSA's position is, essentially, that what was actually shipped controls, so that the government can alternate to specific commodity rates when the exact contents of a shipment are later determined.

ANALYSIS

Both the courts and this Office have generally permitted alternation to lower rates/charges where applicable. E.g., United States Lines Co. v. U.S., 324 F.2d 97, 99 (2d Cir. 1963); Yellow Freight System, Inc., 58 Comp.Gen. 213, 214 (1979); Puerto Rico Marine Management, Inc., 57 Comp.Gen. 584, 586 (1978). In fact, GSA's view that alternation from general to specific rates is proper no matter when the shipment's contents are described is consistent with our Office's decisions involving motor general freight. See Yellow Freight System, Inc., B-192872, May 7, 1979. Moreover, the Cargo Preference Act, 10 U.S.C. Sec. 2631, precludes charges by U.S. flag vessels for transporting military supplies from being higher than charges for transporting like goods for private individuals.

We nevertheless agree with CCT on the facts of this case. The Federal Maritime Commission, in decisions rendered as a result of DOD's inability to fully describe commodities being shipped, has recognized that there may well be strict and proper limitations on alternation between government rates and commercial rates. Sea-Land Service, Inc., 21 F.M.C. 905 (1979); Puerto Rico Maritime Shipping Authority, 21 F.M.C. 188 (1978). /1/ The Commission, which has authority over ocean transportation, viewed government cargo as essentially noncommercial in nature with a different value of service than the shipment of specified commodities. Therefore, according to the Commission, shippers cannot alternate between a broad government rate and a specific commodity rate for the same transportation service, and all shipments of qualifying items tendered by government agencies included in a military rate section had to be rated as such. /2/

Further, the services reflected in the military rates generally are not the same as those in the commercial ones. In our decision in Puerto Rico Marine Management, Inc., 57 Comp.Gen., supra, we recognized the value of agreements, where advantageous for the shipper, for overall use of special general commodity rates that may also restrict alternation to lower specific commodity rates. The return to the government is a lessened administrative burden (for example, in specifically describing the contents of a shipment) and lower overall transportation costs. See also B-154967, Dec. 21, 1964.

Here, while the record does not include any agreement specifically restricting rate alternation, it does indicate that MTMC and/or DLA officials encouraged CCT and other carriers to offer military rates within their tariffs. The reason appears largely to be that asserted by CCT: DOD transportation officials did not want to pay the high general commercial cargo rates when DOD could not or did not wish to describe the contents of its shipments, or did not otherwise meet requirements for commercial service. To this extent, we think the record establishes that neither the government nor CCT intended alternation from military general to commercial specific rates where at tender the government qualified only for the former.

In sum, whenever the contents of a shipment were not specified before tender to CCT, so that the shipment was booked at a military general rate, it would be improper to alternate to a commercial specific rate based on subsequent identification. Of course, if DOD had specified the commodity before shipment, the lowest rate would have applied, pursuant to the Cargo Preference Act; similarly, where the commercial general rate was lower than the military rate, the lower one applied.

GSA suggests that CCT nonetheless could have determined the contents of a shipment by looking at the commodity code listings on the GBLs, so that DOD's failure to specify the commodity to be shipped should be irrelevant to the billing basis. These codes are specified at DOD 4500.32-R, the Military Standard Transportation and Movement Procedures (MILSTAMP); vol. 1 (Mar. 15, 1987) contains about 400 of them.

We do not agree, however, that this possibility is meaningful in terms of rates and charges under FMC 2. Even when MILSTAMP codes were available at booking or at the time the shipment was given to CCT, it is not clear that those codes were equivalent to the more specific and numerous commodity descriptions contained in FMC 2. Thus, an exact correlation between the MILSTAMP and FMC 2 commodity classifications is uncertain. Further, as both CCT and MTMC have stated, failure to identify goods by the time of booking, with GBL preparation after CCT received the cargo, was a common problem, so that even to the extent that a correlation between FMC 2 descriptions and MILSTAMP codes exists, it appears that the latter were not available at time of booking or shipment.

Finally, CCT raises two discrete issues that warrant comment. First, CCT is concerned about GSA's alternation from container vehicle rates to individual vehicle rates even though container service was provided. do not understand how GSA can alternate to individual rates when such service is not involved. If GSA does not dispute CCT's description of the problem, it should reaudit and apply an applicable container rate.

Second, CCT questions GSA's right to alternate from "specially equipped" commercial vehicle rates to "utility truck" commercial vehicle rates. Little or no analysis of the application of such rates is provided by either party. (In fact, GSA did not comment at all on vehicle issues.) However, as a general matter, we think that when CCT received an individual vehicle for shipment, and documentation associated with it was unclear concerning which of the two possibly applicable commercial classification ratings should have been used, CCT had the burden of applying the correct rating. In such circumstances, our decisions have held that the carrier is under a duty to inspect or inquire concerning the nature of the commodity shipped. Yellow Freight System, Inc., B-197298, Sept. 12, 1980, 80-2 C.P.D. Para. 193. We are unaware of any attempt by CCT to inspect for that purpose, and unless CCT can demonstrate that a particular vehicle could not have been a "utility vehicle," we see no basis to object to GSA's audit action. We therefore sustain such action with respect to this issue.

CONCLUSION

Although GSA may alternate from a higher military general cargo rate to a lower commercial one (e.g., from military Dry Cargo, N.O.S. to commercial cargo, N.O.S.), GSA cannot alternate to a lower commercial specific commodity rate. The only exception would be where the shipper actually met all requirements that a commercial shipper must meet for obtaining service under such a rate. (This includes the provision of a full and complete commodity description at a time no later than the tender of the shipment to the carrier.)

GSA's audit actions are reversed, with the exception discussed above.

/1/ These decisions actually involved domestic traffic where the Commission focused on the reasonableness of commodity description schemes, while the CCT shipments are international shipments subject to the Shipping Act of 1984.

/2/ The Commission also directed the use of shipping documents that fully identify the items tendered for transportation so that they can be accurately classified and rated.