B-94628, MAR. 10, 1958

B-94628: Mar 10, 1958

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 5. YOUR SUGGESTED THAT A CERTAIN PACKING AND SHIPPING FIRM WAS PERFORMING A MAJORITY OF SUCH WORK IN THIS AREA ALTHOUGH ITS PRICES EXCEEDED THOSE OF ITS COMPETITORS FOR SIMILAR WORK. WITH THE REPORT THERE WAS TRANSMITTED A COPY OF INSTRUCTION NO. WHICH WAS DIRECTED TO ALL AMERICAN DIPLOMATIC AND CONSULAR POSTS. IN THE REPORT IT IS STATED THAT SEVERAL PAST ATTEMPTS OF THE DEPARTMENT OF STATE TO HANDLE THE MATTER OF PACKING AND CRATING ON A CONTRACT BASIS HAVE NOT BEEN SUCCESSFUL. IT IS STATED FURTHER THAT EXPORT PACKING IS ONLY ONE ELEMENT OF THE COST OF SHIPPING HOUSEHOLD EFFECTS. THE EFFECT OF THE INSTRUCTION IS TO REQUIRE THAT EACH SHIPMENT BE HANDLED SEPARATELY.

B-94628, MAR. 10, 1958

TO SMITH'S TRANSFER AND STORAGE COMPANY, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 5, 1957, ACKNOWLEDGED APRIL 4, 1957, RELATIVE TO THE PACKING AND CRATING OF OVERSEAS SHIPMENTS FOR THE DEPARTMENT OF STATE. IN THE LETTER YOU QUESTION THE ACTION OF THE DEPARTMENT OF STATE IN RETURNING TO ITS FORMER POLICY OF PERMITTING PERSONS BEING TRANSFERRED OVERSEAS TO MAKE THEIR OWN ARRANGEMENTS WITH PACKING AND SHIPPING FIRMS FOR PACKING AND SHIPPING SERVICES ALTHOUGH FOR THE FISCAL YEARS 1950, 1951 AND 1952, THE DEPARTMENT ENTERED INTO CONTRACTS FOR SUCH SERVICES IN CERTAIN AREAS. YOUR SUGGESTED THAT A CERTAIN PACKING AND SHIPPING FIRM WAS PERFORMING A MAJORITY OF SUCH WORK IN THIS AREA ALTHOUGH ITS PRICES EXCEEDED THOSE OF ITS COMPETITORS FOR SIMILAR WORK.

IN RESPONSE TO OUR REQUEST, THE DEPARTMENT OF STATE HAS RECENTLY FURNISHED A REPORT IN THE MATTER. WITH THE REPORT THERE WAS TRANSMITTED A COPY OF INSTRUCTION NO. CA-6281, DATED JANUARY 23, 1958, WHICH WAS DIRECTED TO ALL AMERICAN DIPLOMATIC AND CONSULAR POSTS, SETTING OUT THE DEPARTMENT'S POLICY WITH RESPECT TO OBTAINING COMPETITIVE BIDS FOR PACKING, HAULING AND TRANSPORTATION OF HOUSEHOLD GOODS AND PERSONAL EFFECTS FOR SURFACE SHIPMENT FROM POINTS ABROAD.

IN THE REPORT IT IS STATED THAT SEVERAL PAST ATTEMPTS OF THE DEPARTMENT OF STATE TO HANDLE THE MATTER OF PACKING AND CRATING ON A CONTRACT BASIS HAVE NOT BEEN SUCCESSFUL. IT IS STATED FURTHER THAT EXPORT PACKING IS ONLY ONE ELEMENT OF THE COST OF SHIPPING HOUSEHOLD EFFECTS, THE PACKING COST BEING NO MORE THAN 30 PERCENT OF THE TOTAL DOOR-TO-DOOR COSTS ON THE AVERAGE FOREIGN SERVICE SHIPMENT, BUT THAT THE QUALITY OR METHOD OF PACKING AFFECTS THE GROSS WEIGHT AND/OR VOLUME OF THE SHIPMENTS AND THEREFORE AFFECTS ALL RELATED COSTS SUCH AS FREIGHT, CARTAGE, HAULING, HEAVY-LIFT CHARGES, PORT DUES, DELIVERY AND UNPACKING. ACCORDINGLY, A LOW CONTRACT RATE FOR PACKING OFTEN PROVES TO BE UNECONOMICAL BECAUSE OF THE RESULTING INCREASE IN RELATED COSTS.

THE REFERRED-TO INSTRUCTION NO. CA-6281 HAS BEEN ISSUED AS A RESULT OF A COMPREHENSIVE SURVEY OF THE PROBLEM BY THE DEPARTMENT OF STATE. THE EFFECT OF THE INSTRUCTION IS TO REQUIRE THAT EACH SHIPMENT BE HANDLED SEPARATELY, THAT COMPETITIVE BIDS BE OBTAINED WHEREVER POSSIBLE AND THAT CONTRACTS FOR PACKING BE AWARDED ON THE BASIS OF THE LOWEST OVERALL COSTS CONSISTENT WITH EFFICIENT AND SATISFACTORY SERVICE. THE INTENTION IS STATED, IN SUBSTANCE, TO BE TO RETAIN THE ADVANTAGES OF COMPETITION WHERE POSSIBLE WHILE ALSO PROVIDING THE FLEXIBILITY NEEDED TO MEET THE UNUSUAL CONDITIONS INHERENT IN THE PERFORMANCE OF THE TYPE OF SERVICE INVOLVED. THE INSTRUCTION PROVIDES THAT AWARDS SHALL BE IN WRITING.

IN THE DEPARTMENT'S REPORT, IT IS STATED THAT A PROCEDURE SIMILAR TO THAT SET OUT IN INSTRUCTION NO. CA-6281 WILL BE ADOPTED ALSO FOR SHIPMENTS ORIGINATING IN THE WASHINGTON AREA. IT IS HOPED THAT THE REFERRED-TO PROCEDURE AND POLICY WILL PROVE SATISFACTORY TO EXPORT PACKERS AS WELL AS TO THE GOVERNMENT.