B-121220, FEBRUARY 13, 1964, 43 COMP. GEN. 557

B-121220, FEBRUARY 13, 1964, 43 COMP. GEN. 557

CONTRACTS - FREIGHT CHARGES - DOCUMENTATION THE AUTHORITY TO WAIVE THE REQUIREMENT THAT GOVERNMENT SUPPLIERS FURNISH RECEIPTED FREIGHT BILLS TO SUPPORT REIMBURSEMENT CLAIMS FOR FREIGHT CHARGES PREPAID IN AMOUNTS LESS THAN $25 AND INCLUDED IN BILLINGS TO THE GOVERNMENT (B-121220, AUGUST 2, 1957) MAY NOT BE EXTENDED TO COVER INVOICES CONTAINING CHARGES FOR PREPAID FREIGHT IN AMOUNTS OVER $25, THE RECEIPTED FREIGHT BILLS SERVING AS DOCUMENTARY EVIDENCE TO ESTABLISH THAT THE GOVERNMENT BORE THE TRANSPORTATION CHARGES AND IS THE REAL PARTY IN INTEREST IN THE RECOVERY OF OVERCHARGES OR REPARATIONS, AND UNEARNED FREIGHT IN LOSS AND DAMAGE CLAIMS, HOWEVER, IF UNAVAILABLE, THERE MAY BE ACCEPTED THE UNRECEIPTED FREIGHT BILL REQUIRED BY 49 C.F.R. 142.8 AND 188.3, CERTIFIED CARRIER'S INVOICE EVIDENCING PAYMENT, AND A COPY OF THE VOUCHER REIMBURSING THE CONTRACTOR, BUT WHEN THE DOCUMENTS ARE RETAINED UNDER A CONTRACT RECORDS PROVISION, THE UNRECEIPTED FREIGHT BILL WILL BE ACCEPTABLE PROVIDED THE CONTRACTOR CERTIFIES THAT FREIGHT CHARGES WERE PAID AND THAT EVIDENCE OF PAYMENT WILL BE FURNISHED UPON REQUEST. (B- 121220, AUGUST 2, 1957, MODIFIED)

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, FEBRUARY 13, 1964:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 5, 1962, SUBMITTING FOR OUR CONSIDERATION THE QUESTION OF THE DOCUMENTATION THAT WOULD BE REQUIRED IN OUR AUDIT TO SUPPORT REIMBURSEMENT TO GOVERNMENT SUPPLIERS OF PREPAID FREIGHT CHARGES PAID BY THEM AND INCLUDED IN THEIR BILLINGS TO THE GOVERNMENT, WHICH MATTER WAS THE SUBJECT OF OUR DECISION, B 121220, DATED AUGUST 2, 1957.

AS WE OBSERVED IN OUR LETTER TO YOU OF JANUARY 11, 1963, YOU HAD STATED IN YOUR LETTER OF JUNE 5, 1962, THAT IN ACCORDANCE WITH THE DECISION OF AUGUST 2, 1957, THE GENERAL SERVICES ADMINISTRATION REQUIRES SUPPLIERS "TO FURNISH RECEIPTED FREIGHT BILLS IN SUPPORT OF THEIR INVOICES WHICH INCLUDE PREPAID FREIGHT CHARGES EXCEEDING $25.00.' YOU FURTHER STATE THAT IT HAS BECOME INCREASINGLY DIFFICULT TO OBTAIN THIS TYPE OF DOCUMENTATION BECAUSE CARRIERS ARE PROGRESSIVELY CONVERTING THEIR BILLING PROCEDURES TO MACHINE OPERATIONS.

TO OVERCOME THE DIFFICULTY, IT IS PROPOSED IN YOUR LETTER THAT INVOICES CONTAINING CHARGES IN AMOUNTS OVER $25 FOR PREPAID FREIGHT BE PROCESSED FOR PAYMENT IF THE CHARGES APPEAR TO BE REASONABLE, STATING THAT THE BASIS FOR DETERMINING THE REASONABLENESS OF THE CHARGES WOULD VARY WITH THE AMOUNT OF THE CHARGES AND WOULD INCLUDE, OR BE FOUNDED ON, ONE OF THE FOLLOWING:

1. PAST EXPERIENCE.

2. COPIES OF FREIGHT BILLS SUBMITTED BY CONTRACTOR.

3. RATE CHECKS.

4. OTHER INFORMATION SUBMITTED BY CONTRACTOR TO SUBSTANTIATE AMOUNT CLAIMED.

IN OUR LETTER OF JANUARY 11, 1963, WE POINTED OUT THAT THE LARGE AMOUNT OF PREPAID FREIGHT CHARGES REIMBURSED SUGGESTS A FAILURE TO USE TO THE MAXIMUM EXTENT PRACTICABLE THE PRESCRIBED GOVERNMENT BILL OF LADING AND TO CONVERT COMMERCIAL BILLS OF LADING TO UNITED STATES GOVERNMENT BILLS OF LADING AS CONTEMPLATED BY 38 COMP. GEN. 462 AND SECTION 3050.10 OF TITLE 5, GENERAL ACCOUNTING OFFICE POLICY AND PROCEDURES MANUAL FOR GUIDANCE OF FEDERAL AGENCIES. ALSO, WE POINTED OUT THAT THE AUTHORITY GRANTED IN THE DECISION OF AUGUST 2, 1957, WAS APPLICABLE ONLY TO FREIGHT CHARGES LESS THAN $25 AND THEN ONLY TO THE LIMITED EXTENT SET OUT THEREIN.

YOUR PROPOSAL APPEARS TO BE PREMISED UPON THE THEORY THAT OUR REQUIREMENT THAT RECEIPTED FREIGHT BILLS BE FURNISHED AS A SUPPORTING DOCUMENT FOR ALL PREPAID SHIPMENTS--- WITH THE LIMITED EXCEPTION AUTHORIZED IN B-121220, DATED AUGUST 2, 1957, FOR FREIGHT CHARGES LESS THAN $25--- IS PRIMARILY FOR AUDITING AND ACCOUNTING PURPOSES. THAT IS NOT THE SOLE NOR PRIMARY BASIS FOR SUCH REQUIREMENT. THE MERE FACT THAT RECEIPTED FREIGHT BILLS ARE FURNISHED AS A SUPPORTING DOCUMENT DOES NOT, OF COURSE, ESTABLISH THAT THE FREIGHT CHARGES APPEARING ON SUCH BILLS ARE CORRECT.

AS A GENERAL RULE, THE PERSON WHO HAS BORNE THE EXPENSE OF TRANSPORTATION IS A PROPER PARTY TO BRING AN ACTION TO RECOVER OVERCHARGES THEREON AND, IN THIS RESPECT, THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT HELD IN GABBERT V. ATCHISON, T. AND S.F.RY.CO., 93 F.2D 562, THAT ONE WHO HAS BORNE THE TRANSPORTATION CHARGES MAY SUE FOR RECOVERY OF THE EXCESS CHARGES REGARDLESS OF WHO INITIALLY PAYS THE CHARGES TO THE CARRIER. SEE, ALSO, SOUTHERN PACIFIC CO. V. DARNELL-TAENZER LUMBER CO., 245 U.S. 531; LOUISVILLE AND NASHVILLE R.CO. V. SLOSS-SHEFFIELD STEEL AND IRON CO., 295 F. 53, AFFIRMED 269 U.S. 217; UNITED STATES V. MASONAND DIXON LINES, INC., 222 F.2D 646; JONSON V. ATCHISON, T. AND S.F.RY. CO., 17 F.SUPP. 720; JENNISON BROS. AND CO. V. CHICAGO AND N.W.RY.CO., 158 N.W. 398; SCHREIBER MILLING AND GRAIN CO. V. CHICAGO GREAT WESTERN R.CO., 213 I.C.C. 731; PERRINE-ARMSTRONG CO. V. ERIE R.CO., 169 I.C.C. 219; AMERICAN SMELTING AND REFINING CO. V. DIRECTOR GENERAL, 144 I.C.C. 570; OGDEN PACKING AND PROVISION CO. V. ATCHISON, T. AND S.F.RY.CO., 147 I.C.C. 341, 355; AYRES, BRIDGES AND CO. V. DIRECTOR GENERAL, 61 I.C.C. 339, AND LAMB, MCGREGOR AND CO. V. CHICAGO AND N.W.RY.CO., 22 I.C.C. 346.

IF THE PARTY WHO HAS BORNE THE FREIGHT CHARGES MAY BRING ACTION IN THE COURTS OR BEFORE THE INTERSTATE COMMERCE COMMISSION FOR RECOVERY OF OVERCHARGES OR REPARATIONS, THEN IT FOLLOWS THAT THE SAME PARTY HAS THE PRIVILEGE OF FILING SUCH A CLAIM WITH THE CARRIERS WITHOUT RESORTING TO LITIGATION. COLORADO PORTLAND CEMENT CO. V. UNION PACIFIC R.CO., 262 I.C.C. 357; BRABSTON V. ATLANTIC C.L.R.CO., 268 I.C.C. 268; GALVESTON COTTON EXCHANGE AND BOARD OF TRADE V. ALABAMA AND VICKSBURG TY. CO., 206 I.C.C. 401, 404; EGYPTIAN TIE AND TIMBER CO. V. MO.-ILL. R.CO., 176 I.C.C. 354, 357. HOWEVER, TO SUPPORT SUCH A CLAIM THE PARTY IN INTEREST WOULD HAVE THE BURDEN OF ESTABLISHING THAT HE IN FACT BORE THE EXPENSE OF TRANSPORTATION BY ACCEPTABLE DOCUMENTARY EVIDENCE. J. HAMBURGER CO., INC. V. ATLANTIC C.L.R.CO., 222 I.C.C. 274, 276; BISBEE LINSEED CO. V. BALTIMORE AND OHIO R.CO., 215 I.C.C. 250, 255. THUS, WHERE THE SHIPMENT MOVED ON PREPAID COMMERCIAL BILLS OF LADING AND THE GOVERNMENT WAS THE PARTY WHICH HAD ACTUALLY BORNE THE TRANSPORTATION CHARGES AND WAS THE REAL PARTY IN INTEREST, IT WOULD BE NECESSARY FOR THE GOVERNMENT TO PRODUCE SUCH DOCUMENTARY EVIDENCE TO ESTABLISH THAT IT BORE THE TRANSPORTATION CHARGES IN ORDER TO RECOVER FROM THE CARRIER OR TO INSTITUTE LITIGATION. SUCH EVIDENCE WOULD ALSO BE NECESSARY TO RECOVER UNEARNED FREIGHT IN LOSS AND DAMAGE CLAIMS INVOLVING PREPAID SHIPMENTS IN INSTANCES WHERE THE GOVERNMENT WAS THE REAL PARTY IN INTEREST.

THE INTERSTATE COMMERCE COMMISSION HAS APPROVED THE FORM OF THE FREIGHT BILL, PRESCRIBING THE INFORMATION TO BE SHOWN THEREON WHICH IT FELT "WILL ENABLE THE CONSIGNOR OR CONSIGNEE WITH THE AID OF THE PUBLISHED TARIFF TO VERIFY THE CORRECTNESS OF THE CHARGES WHICH HE IS CALLED UPON TO PAY.' THE MATTER OF FREIGHT BILLS, 29 I.C.C. 496, 497. THE COMMISSION HAS ACCEPTED PAID FREIGHT BILLS AS PRIMA FACIE EVIDENCE OF THE FACTS SHOWN ON THEIR FACE IN REPARATIONS CASES. SHELBINA MILLING CO. V. CHICAGO, B. AND Q.R. CO., 208 I.C.C. 95; BOREN STEWARD CO. V. ATCHISON, T. AND S.F.RY. CO., 216 I.C.C. 255, 258; A. B. COLE AND SONS V. MISSOURI PACIFIC R.CO., ET AL., 206 I.C.C. 313. SINCE THE PAID FREIGHT BILL THUS GENERALLY ENABLED VERIFICATION TO BE MADE OF THE CORRECTNESS OF THE CHARGES BILLED AND ESTABLISHED PRIMA FACIE PAYMENT TO THE CARRIER OF ITS CHARGES, CONTRACTORS CLAIMING REIMBURSEMENT OF SUCH CHARGES WERE GENERALLY REQUIRED TO FURNISH SAID PAID FREIGHT BILLS. THESE BILLS, TOGETHER WITH THE VOUCHER AND CHECK EVIDENCING THE GOVERNMENT'SPAYMENT TO THE CONTRACTOR, GENERALLY SUFFICE TO ESTABLISH THAT THE GOVERNMENT BORE THE TRANSPORTATION CHARGE AND WAS THE REAL PARTY IN INTEREST ENTITLED TO RECOVER OVERCHARGES OR MAKE CLAIM FOR UNEARNED FREIGHT IN LOSS AND DAMAGE CASES. THE RECEIPTED FREIGHT BILL MIGHT ALSO BE NECESSARY TO SUPPORT LOSS AND DAMAGE CLAIMS BY THE GOVERNMENT AS THE REAL PARTY IN INTEREST.

IN ORDER TO EVALUATE THE PROBLEM WHICH YOU STATE IS ARISING, INQUIRIES WERE ADDRESSED TO YOUR REGIONAL OFFICES AND UPON RECEIPT OF THE RESPONSES AN INVESTIGATION WAS CONDUCTED AT THE REGIONAL OFFICES AT DENVER AND DALLAS BECAUSE THE VOLUME OF THE TRANSACTIONS IN QUESTION APPEARED SUBSTANTIALLY GREATER AT THOSE POINTS THAN AT OTHER OFFICES. IT WAS OBSERVED IN THE COURSE OF SUCH INVESTIGATION THAT WHEN A NOTATION WAS PLACED ON THE PURCHASE ORDERS THAT THE RECEIPTED FREIGHT BILL MUST BE FURNISHED IN SUPPORT OF THE VENDOR'S BILL, WHICH PRACTICE WAS FOLLOWED AT YOUR DALLAS OFFICE, THAT THE NECESSITY OF WRITING FOR FREIGHT BILLS WAS REDUCED. WE BELIEVE THAT IF THIS PROCEDURE IS FOLLOWED IN ALL REGIONAL OFFICES IT WILL HELP IN SECURING THE FREIGHT BILLS AND ALLEVIATE THE NECESSITY OF SUBSEQUENTLY REQUESTING SUCH SUPPORTING DOCUMENTS.

WE CAN APPRECIATE THAT IN CERTAIN INSTANCES A RECEIPTED FREIGHT BILL CANNOT BE FURNISHED, EVEN THOUGH A REQUEST IS MADE FOR ONE. THE PRODUCTION OF THE PAID FREIGHT BILLS IS NOT THE ONLY METHOD OF PROVING THE PAYMENT OF FREIGHT CHARGES "BUT LIKE OTHER FACTS SOUGHT TO BE ESTABLISHED, PROOF OF PAYMENT IS ALLOWABLE BY OTHER METHODS.' SEE A. B. COLE AND SONS V. MISSOURI PACIFIC R.CO., CITED ABOVE, AT PAGE 323. HOWEVER, FREIGHT BILLS NOT RECEIPTED DO NOT ESTABLISH A PRIMA FACIE SHOWING OF PAYMENT. SHELBINA MILLING CO. V. CHICAGO, B. AND Q.R.CO., CITED ABOVE, AT PAGE 99. UNDER THE EXTENSION OF CREDIT ARRANGEMENTS TO SHIPPERS, IT IS UNDERSTOOD THAT NO RECEIPTED FREIGHT BILLS ARE FURNISHED SHIPPERS, BUT THE CARRIERS STILL ARE REQUIRED TO FURNISH FREIGHT BILLS (UNRECEIPTED). 49 C.F.R. 142.8 AND 188.3. UNDER SUCH CIRCUMSTANCES, WE COULD NOT PROPERLY REQUIRE A RECEIPTED FREIGHT BILL (WHICH THE CONTRACTOR DOES NOT HAVE) TO SUBSTANTIATE THE CONTRACTOR'S CLAIM FOR REIMBURSEMENT OF THE FREIGHT CHARGES PAID BY HIM, BUT THE FREIGHT BILL (UNRECEIPTED), SOME EVIDENCE THAT SUCH FREIGHT BILL HAS BEEN PAID BY THE CONTRACTOR, TOGETHER WITH A COPY OF THE VOUCHER REIMBURSING THE CONTRACTOR SHOULD SUFFICE TO ENABLE THE UNITED STATES TO ESTABLISH THAT THE GOVERNMENT IS THE PARTY IN INTEREST TO RECOVER OVERCHARGES AND RECEIVE PAYMENT ON LOSS AND DAMAGE ITEMS.

ACCORDINGLY, YOU ARE ADVISED THAT IN CASES WHERE THE CONTRACTOR IS UNABLE TO FURNISH A RECEIPTED FREIGHT BILL IN SUPPORT OF HIS VOUCHER FOR REIMBURSEMENT OF FREIGHT CHARGES PAID, WE WILL ACCEPT IN LIEU THEREOF THE UNRECEIPTED FREIGHT BILL OF THE CARRIER, TOGETHER WITH A COPY OF THE CARRIER'S INVOICE TO HIM COVERING SUCH BILL AMONG OTHERS, AND A CERTIFICATION THAT SUCH BILL HAS BEEN PAID. ALSO, WHERE REIMBURSEMENT IS MADE PURSUANT TO A CONTRACT REQUIRING THE CONTRACTOR'S RETENTION OF RECORDS FOR A PERIOD NOT LESS THAN THREE YEARS, THE UNRECEIPTED FREIGHT BILL WILL BE ACCEPTABLE, PROVIDED THE CONTRACTOR CERTIFIES THAT THE FREIGHT CHARGES HAVE BEEN PAID, AND THAT EVIDENCE IN SUPPORT OF SUCH CERTIFICATION OF PAYMENT WILL BE FURNISHED UPON THE REQUEST OF THE GOVERNMENT.

IN THE CIRCUMSTANCES, SINCE WE FEEL THAT THE RECEIPTED FREIGHT BILL IS A NECESSARY SUPPORTING DOCUMENT TO BEST PROTECT THE INTERESTS OF THE UNITED STATES AS THE REAL PARTY IN INTEREST, THE PROPOSAL SUGGESTED BY YOU IS NOT APPROVED AND THE PROCEDURE SET FORTH IN B-121220 OF AUGUST 2, 1957, EXCEPT AS SPECIFICALLY MODIFIED HEREIN WHERE A CONTRACTOR CANNOT FURNISH A RECEIPTED FREIGHT BILL, SHOULD BE CONTINUED. WE SUGGEST MODIFICATION OF YOUR REGULATIONS TO ACCORD WITH THE HOLDING HEREIN.