B-236618, Mar 14, 1991, 91-1 CPD 287

B-236618: Mar 14, 1991

Additional Materials:

Contact:

Shirley Jones
(202) 512-8156
jonessa@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Is not proper where it is not provided for in terms of the parties' agreement. There is no legal basis to read it into the agreement. Background The rate publication applicable to the traffic in issue is Consolidated's Air Freight Tender 262 for "second day freight all kinds" service. The solicitation was intended to obtain competitive offers to satisfy recurring traffic requirements from three origins. Item 42d is structured similarly but involves categories of weights at 100 pounds and higher: 100-199 pounds. The shipments involved here weighed a total of 70 pounds and were rated by GSA as one shipment. /2/ Although the rate offered by Consolidated in the 51-70 pound category was $47.

B-236618, Mar 14, 1991, 91-1 CPD 287

PROCUREMENT - Payment/Discharge - Shipment costs - Rate schedules - Applicability DIGEST Alternation of rates, where the shipper treats a shipment as if it weighs more than it actually does in order to take advantage of a lower charge for the higher weight, is not proper where it is not provided for in terms of the parties' agreement, and there is no legal basis to read it into the agreement.

Consolidated Freightways - Air Freight Tender:

Consolidated Freightways, Inc., requests our review of a setoff made by the General Services Administration (GSA) to recover $16 in alleged overcharges assessed in connection with payment on a Government Bill of Lading (GBL). /1/ We find GSA's setoff to be improper.

Background

The rate publication applicable to the traffic in issue is Consolidated's Air Freight Tender 262 for "second day freight all kinds" service. Consolidated offered Tender 262 in response to a solicitation issued April 6, 1987, by the Military Traffic Management Command. The solicitation was intended to obtain competitive offers to satisfy recurring traffic requirements from three origins, including the Naval Supply Center in Norfolk, Virginia, to designated points in the continental United States and Canada.

The solicitation, in Item 42, required competing carriers to submit rates and charges in (a) for weights from 1 to 99 pounds, and (b) per hundred pounds for weights between 100 and 2,000 pounds. Item 42b further divided the 1 to 99 pound range into a series of weight categories: 1-5 pounds, 6- 10 pounds, 11-25 pounds, 26-50 pounds, 51-70 pounds and 71-99 pounds. Item 42d is structured similarly but involves categories of weights at 100 pounds and higher: 100-199 pounds, 200-299 pounds, etc.

The shipments involved here weighed a total of 70 pounds and were rated by GSA as one shipment. /2/ Although the rate offered by Consolidated in the 51-70 pound category was $47, GSA noted that Consolidated's offered rate for shipments in the 100-199 pound category was only $31 per hundred pounds. Relying on a standard practice generally allowed and provided for in the rate publications of various types of carriers in the motor transportation industry, GSA calculated the overall charge by treating the shipment as if it weighed 100 pounds in order to take advantage of the $31 rate.

Consolidated professes to be unaware of the practice on which GSA relied, and complains that GSA's action conflicts with the clear language and structure of the solicitation. GSA responds that the practice, called "alternation," permits treating a shipment as if it weighed more than it actually did to take advantage of a lower rate corresponding to the selected higher weight.

GSA admits that, unlike the usual tariff or tender, neither the solicitation nor Consolidated's tender included such an alternation provision. (The solicitation prescribed the form and terms of any responses.) GSA nevertheless defends its action because an alternation provision was not purposefully omitted; as a general rule contracts are construed so as to give the shipper the benefit of the lowest applicable rate; and to the extent carrier's tender is ambiguous, the ambiguity should be resolved against the carrier.

Analysis and Conclusion

Tender 262 is described in Item 18 as being self-contained, and except for a circular that is not involved in this discussion, no other tenders or tariffs apply. Further, under Item 38, alternation with rates and charges in other rate publications is not permitted.

As stated above, there was no explicit provision in the solicitation, and there consequently is no explicit provision in Tender 262, allowing a shipper to make use of a higher weight if lower overall charges would result.

We have recognized alternation even when not expressly provided for in a tender if there at least is some reference in the tender to another publication that incorporates the practice. See, for example, Milne Truck Lines, Inc., 62 Comp.Gen. 29 (1982). Here, we note that Consolidated's own service guide describes the practice in a list of "General Rules" contained in tariffs -- notwithstanding the firm's profession that it is unaware of it. The service guide, however, cautions that a particular shipment is subject to the applicable tariff's rules, and the guide is not referenced at all in Tender 262 /3/

Further, when the various provisions of the parties' agreement are construed together so as to give effect to all of them, it appears that there is no option to pay for shipments of 1-99 pounds falling within a particular weight category at other than the rate expressly associated with that weight. Item 34 of the solicitation (and thus of the tender), Instructions to Complete Rate Items, states that rates and charges for shipments weighing between 1 and 99 pounds "will be submitted on a per shipment basis," and those 100 pounds and more are to be submitted on a per hundred-pound basis. Selection of the primary carrier would be based on the lowest cost, responsive tender for shipments weighing 1-99 pounds and shipments of 100-2,000 (and more) pounds. We think the exclusivity of the two categories is apparent.

Also, under Item 37 of the solicitation (and tender), shipments that fall between rate categories (for example, a shipment of 70.5 pounds, which falls between the 51-70 category and the 71-99 category) "will be charges at the next highest weight category" (in the example, 71-99 pounds). This language is both mandatory and exclusive, suggesting that no other rate will apply.

While the omission of an alternation provision from the solicitation and Tender 262 may have been inadvertent on the government's part, we see no legal basis to read such a provision into the tender. Moreover, the only reasonable reading of the actual language of the parties' agreement supports Consolidated's charges. Accordingly, GSA's setoff action is overruled.

/1/ GBL S-8,070,135 and associated airbills 262-369682 and 262 372073. The record provided by GSA indicates that additional air bills are involved and that the total amount of overcharges is $218.

/2/ Item 40a of Tender 262 provided that the aggregate weight of all shipments to the same consignee tendered on the same day would be billed at the applicable rate for the total weight of such shipments.

/3/ Item 140(2) of MTMC Freight Traffic Rules Publication No. * is another example of a publication containing an alternation provision.

Nov 25, 2020

Nov 24, 2020

Nov 20, 2020

Nov 19, 2020

Looking for more? Browse all our products here