B-85663, JUL 14, 1949

B-85663, JUL 14, 1949

PRECIS-UNAVAILABLE

LIEUTENANT COLONEL O. R. BOWYER, FINANCE OFFICER:

THERE HAS BEEN RECEIVED BY REFERENCE FROM THE OFFICE OF THE CHIEF OF FINANCE (CSACF-EY 167/625733), YOUR REQUEST OF NOVEMBER 2, 1948, FOR ADVANCE DECISION AS TO THE PROPRIETY OF PAYMENT ON BUREAU VOUCHER NO. L 807 IN THE AMOUNT OF $515.04 STATED IN FAVOR OF THE LANE CONSTRUCTION CORPORATION AND T.W. CUNNINGHAM, INC., UNDER COST-PLUS-A-FIXED-FEE CONTRACT NO. W-19-016-ENG-2801, DATED MAY 23, 1947.

THE CONTRACT PROVIDED FOR THE CONSTRUCTION OF FACILITIES AT THE AIR BASE NEAR LIMESTONE, MAINE, INCONSIDERATION OF THE REIMBURSEMENT OF EXPENDITURES AS SET FORTH THEREIN, PLUS PAYMENT OF A STIPULATED FIXED FEE. ARTICLE II (1) (D) PROVIDED FOR REIMBURSEMENT OF EXPENDITURES AS APPROVED OR RATIFIED BY THE CONTRACTING OFFICER, AS FOLLOWS:

"UNLOADING AND ASSEMBLING AT THE SITE OF THE WORK OF CONSTRUCTION PLANT OWNED OR RENTED BY THE CONTRACTOR; TRANSPORTATION THEREOF TO THE PLACE OR PLACES WHERE IT IS TO BE USED IN CONNECTION WITH SAID WORK, DISMANTLING, UNLOADING AND RETURN TRANSPORTATION TO THE POINT OF ORIGINAL SHIPMENT OR EQUIVALENT MILEAGE, BUT IN NO EVENT WILL THE PAYMENTS MADE FOR RETURN TRANSPORTATION EXCEED THE PAYMENT MADE FOR TRANSPORTATION TO THE JOB SITE UNLESS SUCH EXCESS COST RESULTS SOLELY FROM AN INCREASE OF FREIGHT RATES, OR IS REQUIRED BY GOVERNMENT TRANSFER OF SUCH EQUIPMENT TO ANOTHER SITE MORE DISTANT FROM THE POINT OF ORIGIN THAN THE SITE OF THE WORK SET OUT ON ARTICLE I HEREOF. CHARGES FOR TRANSPORTATION OVER DISTANCES IN EXCESS OF 500 MILES MUST HAVE THE WRITTEN AUTHORIZATION OF THE CONTRACTING OFFICER IN ADVANCE. LOADING AT THE SITE OF ORIGIN AND UNLOADING WHEN RETURNED TO THE ORIGINAL SHIPPING POINT OR OTHER RETURN SHIPPING POINT WILL NOT BE PAID BY THE GOVERNMENT AND IS NOT A REIMBURSABLE ITEM."

IT IS REPORTED THAT THE CONTRACTOR OBTAINED CERTAIN CONSTRUCTION EQUIPMENT UNDER A RENTAL AGREEMENT, SUBCONTRACT NO. 56, ENTERED INTO ON JANUARY 30, 1948, WITH ETTA B. INGALLS, WHICH SUBCONTRACT CONTAINED IN ARTICLE 5(A) AND (B) THEREOF THE FOLLOWING PROVISIONS.

"THE RENTAL PERIOD SHALL BEGIN ON THE DELIVERY OF SUCH EQUIPMENT TO A COMMON CARRIER FOR SHIPMENT TO THE SITE OF THE WORK, ***.

"TRANSPORTATION WILL BE PAID BY THE LESSEE, F.O.B. CARS AT THE ORIGINAL POINT OF SHIPMENT, PROVIDED TRANSPORTATION FROM THAT POINT IS NOT OTHERWISE COMPENSATED TO THE LESSOR BY THE GOVERNMENT. RETURN TRANSPORTATION F.O.B. CARS TO ORIGINAL POINT OF SHIPMENT OR EQUIVALENT MILEAGE WILL BE PAID BY THE LESSEE. *** CHARGES FOR TRANSPORTATION OF ANY PIECE OF EQUIPMENT OVER A DISTANCE IN EXCESS OF 500 MILES MUST HAVE THE WRITTEN APPROVAL OF THE CONTRACTING OFFICER. IF TRANSPORTATION IS ACCOMPLISHED BY ANY METHOD OTHER THAN RAIL, THERE SHALL BE PAID THE ACTUAL COST OF SUCH TRANSPORTATION UPON APPROVAL BY THE CONTRACTING OFFICER. NO EVENT SHALL THE PAYMENT MADE FOR RETURN TRANSPORTATION EXCEED THE PAYMENT FOR TRANSPORTATION TO THE JOB SITE UNLESS SUCH EXCESS COST RESULTS SOLELY FROM AN INCREASE IN FREIGHT RATES OR IS REQUIRED BY GOVERNMENT TRANSFER OF EQUIPMENT TO ANOTHER SITE MORE DISTANT FROM THE POINT OF ORIGIN THAN IS THE SITE REFERRED TO HEREIN. ***"

IT IS STATED THAT THE EQUIPMENT INVOLVED WHICH WAS PROCURED UNDER THE SUBCONTRACT WAS SHIPPED ON JANUARY 30, 1948, FROM PORTLAND, MAINE, TO THE SITE OF THE CONTRACT WORK AT LIMESTONE, MAINE, VIA CHASE TRANSFER COMPANY ON A LOW BED TRAILER; THAT TRANSPORTATION CHARGES ESTABLISHED BY THE NEW ENGLAND MOTOR RATE BUREAU, AND FOR WHICH THE CONTRACTOR HAS BEEN REIMBURSED; AND THAT HAD THE SHIPMENT BEEN MADE BY RAIL THE FREIGHT COST WOULD HAVE BEEN $468.22, OR $43.22 IN EXCESS OF THE AMOUNT ACTUALLY PAID FOR TRANSPORTATION. IT IS STATED FURTHER THAT WHEN THE EQUIPMENT WAS READY FOR RETURN TO THE SUBCONTRACTOR ON AUGUST 25, 1948, IT WAS NOT FEASIBLE TO MOVE IT AT ONCE BY TRAILER AS ALL THE AVAILABLE TRAILERS WERE THEN IN USE RETURNING OTHER EQUIPMENT; THAT A PERIOD OF TEN DAYS WOULD HAVE ELAPSED BEFORE A TRAILER WOULD HAVE BEEN AVAILABLE, DURING WHICH TIME A RENTAL CHARGE OF $10 A DAY, TOTAL $300, WOULD HAVE ACCRUED ON THE EQUIPMENT; THAT THEREUPON THE EQUIPMENT WAS RETURNED TO PORTLAND, MAINE, BY RAIL AT A FREIGHT COST OF $515.04, FOR THE CONTRACTOR NOW CLAIMS REIMBURSEMENT. SAID AMOUNT OF $515.04 FOR OUTGOING FREIGHT CHARGES IS $90.04 ($515.04 MINUS $425) IN EXCESS OF THE INCOMING FREIGHT CHARGES, WHICH EXCESS IS COMPOSED OF THE FOLLOWING AMOUNTS: (1) $43.22, THE EXCESS AMOUNT THAT WOULD HAVE BEEN ALLOWED IF RAIL FREIGHT INSTEAD OF TRAILER FREIGHT HAD BEEN USED ON THE INCOMING SHIPMENT, AND (2) $46.82 WHICH REPRESENTS THE 10 PERCENT RAIL FREIGHT INCREASE EFFECTIVE MAY 6, 1948.

THE QUESTION PRESENTED FOR DETERMINATION IS WHETHER THE CONTRACTOR IS ENTITLED TO REIMBURSEMENT IN FULL FOR THE RAIL FREIGHT CHARGES OF $515.04 FOR RETURN OF THE EQUIPMENT TO THE ORIGINAL POINT OF SHIPMENT, OR WHETHER HE IS ENTITLED ONLY TO THE SUM OF $425 WHICH WAS THE FREIGHT COST OF THE INCOMING SHIPMENT BY TRAILER.

IT IS STATED BY THE CONTRACTING OFFICER-- AND IT SO APPEARS-- THAT THE PRIME CONTRACT AND THE RENTAL AGREEMENT WITH THE SUBCONTRACTOR CONTEMPLATED THAT THE EQUIPMENT WOULD BE TRANSPORTED BY COMMON CARRIER TO AND FROM THE JOB SITE, AND THE MAXIMUM AMOUNT TO BE PAID WOULD BE THE RATE CHARGED BY THE COMMON CARRIER PROVIDING THE MOST FEASIBLE AND ECONOMICAL METHOD OF TRANSPORTATION, IN THE OPINION OF THE PRIME CONTRACTOR AND THE CONTRACTING OFFICER, WHICH COULD BE ACCOMPLISHED EITHER BY RAIL OR MOTOR CARRIER. THE PRIME CONTRACT AND SUBCONTRACT BOTH PROVIDE THAT MILEAGE IN EXCESS OF THAT ORIGINALLY REQUIRED FOR TRANSPORTATION TO THE JOB SITE WOULD NOT BE EXCEEDED ON THE RETURN TRIP, WITH A PROVISO THAT PAYMENT FOR RETURN TRANSPORTATION WOULD NOT EXCEED THE PAYMENT FOR TRANSPORTATION TO THE JOB SITE. THE SAID PROVISIONS OBVIOUSLY WERE INTENDED TO COVER CASES WHERE THE PRIME CONTRACTOR OR SUBCONTRACTOR MIGHT HAVE DESIRED FOR THEIR OWN CONVENIENCE TO RETURN THE EQUIPMENT TO A POINT OTHER THAN THE ORIGINAL SHIPPING POINT, IN WHICH EVENT THE GOVERNMENT WOULD HAVE REIMBURSED THE CONTRACTOR ON AN EQUIVALENT MILEAGE BASIS IF THE FREIGHT RATE WERE THE SAME OR LESS AS ON THE INCOMING SHIPMENT OR IN THE AMOUNT OF THE INCOMING FREIGHT CHARGES IF THE FREIGHT RATE WERE IN EXCESS OF THAT ON THE INCOMING SHIPMENT.

IN VIEW OF THE FOREGOING AND SINCE IT APPEARS THAT THE RETURN TRANSPORTATION OF THE EQUIPMENT BY RAIL TO THE POINT OF SHIPMENT WAS THE MOST ECONOMICAL METHOD OF SHIPMENT BY COMMON CARRIER, RENTAL CHARGES CONSIDERED, THE CONTRACTOR IS ENTITLED TO REIMBURSEMENT FOR THE FREIGHT CHARGES THEREFORE.

ACCORDINGLY, PAYMENT ON THE VOUCHER, RETURNED HEREWITH, IS AUTHORIZED, IF OTHERWISE CORRECT.