B-145455, JUL. 7, 1978, 57 COMP.GEN. 584

B-145455: Jul 7, 1978

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IS IN SUBSTANTIAL COMPLIANCE WITH THE REQUIREMENT OF 4 C.F.R. 53.3 AND 53.4 (1977) FOR ESTABLISHING A CARRIER'S RIGHT TO THE COMPTROLLER GENERAL'S REVIEW OF A GSA SETTLEMENT. GSA REPORTS THAT ITS ACTION WAS TAKEN ON A NUMBER OF CONTAINERIZED SHIPMENTS OF VARIOUS COMMODITIES TRANSPORTED BETWEEN OCTOBER 1. THE PARTIES TO THIS CONTRACT WERE THE MILITARY SEALIFT COMMAND (MSC) AND PRMSA WHO NEGOTIATED THE AGREEMENT PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304(A)(17) (1970) AND 49 U.S.C. 65 (1970). THIS OBJECTIVE IS ACHIEVED ON EACH SHIPMENT BY APPLYING THE THREE RATE CATEGORIES TO CONTAINERS IN THE APPROPRIATE COMMODITY GROUP RATHER THAN BY APPLYING THE APPROPRIATE TARIFF RATE TO EACH SPECIFIC CONTAINER.

B-145455, JUL. 7, 1978, 57 COMP.GEN. 584

TRANSPORTATION - RATES - SPECIAL AGREEMENTS - SPECIAL V. TARIFF RATES GOVERNMENT UNDER CONTAINER AGREEMENT CANNOT APPLY CONTRACT RATES TO SOME CONTAINERS IN A SHIPMENT AND TARIFF RATES TO OTHERS TO OBTAIN LOWEST TRANSPORTATION COSTS; UNDER TERMS OF THAT AGREEMENT GOVERNMENT MUST APPLY EITHER CONTRACT OR TARIFF RATES TO ALL CONTAINERS IN SHIPMENT TO OBTAIN LOWEST AVAILABLE TRANSPORTATION COST. SEE 10 U.S.C. 2631 (1976) AND CASE CITED.

IN THE MATTER OF PUERTO RICO MARINE MANAGEMENT, INC., JULY 7, 1978:

PUERTO RICO MARINE MANAGEMENT, INC. (PRMMI), IN ITS LETTERS OF JANUARY 10 AND 11, 1978, REQUESTS THAT THE COMPTROLLER GENERAL OF THE UNITED STATES REVIEW THE GENERAL SERVICE ADMINISTRATION'S (GSA) ACTION IN DEDUCTING $12,580.43 FOR ALLEGED TRANSPORTATION OVERCHARGES FROM MONIES OTHERWISE DUE ITS PRINCIPAL, THE PUERTO RICO MARITIME SHIPPING AUTHORITY (PRMSA).

GSA HAS THE AUTHORITY TO MAKE SUCH DEDUCTIONS UNDER THE PROVISIONS OF SECTION 201(1) OF THE GENERAL ACCOUNTING OFFICE ACT OF 1974, PUBLIC LAW NO. 93-604, 88 STAT. 1959, APPROVED JANUARY 2, 1975, 49 U.S.C. 66(A) (SUPP. V, 1975), AND ITS DERIVATIVE REGULATIONS, 42 FED.REG. 36689 (1977). A DEDUCTION ACTION CONSTITUTES A SETTLEMENT WITHIN THE MEANING OF SECTION 201(3) OF THE ACT, 49 U.S.C. 66(B) (SUPP. V, 1975), AND 4 C.F.R. 53.1(B)(1) AND 53.2 (1977). THEREFORE, PRMMI'S CORRESPONDENCE OF JANUARY 10 AND 11, 1978, IS IN SUBSTANTIAL COMPLIANCE WITH THE REQUIREMENT OF 4 C.F.R. 53.3 AND 53.4 (1977) FOR ESTABLISHING A CARRIER'S RIGHT TO THE COMPTROLLER GENERAL'S REVIEW OF A GSA SETTLEMENT.

GSA REPORTS THAT ITS ACTION WAS TAKEN ON A NUMBER OF CONTAINERIZED SHIPMENTS OF VARIOUS COMMODITIES TRANSPORTED BETWEEN OCTOBER 1, 1974, AND JUNE 8, 1975, UNDER "CONTRACT NO. CA1870," A CONTRACT FOR THE COMMON CARRIAGE OF CONTAINERIZED DEPARTMENT OF DEFENSE CARGO FROM THE ATLANTIC AND GULF COASTS TO PUERTO RICO AT AGREED UPON RATES. THE PARTIES TO THIS CONTRACT WERE THE MILITARY SEALIFT COMMAND (MSC) AND PRMSA WHO NEGOTIATED THE AGREEMENT PURSUANT TO THE AUTHORITY OF 10 U.S.C. 2304(A)(17) (1970) AND 49 U.S.C. 65 (1970).

CONTRACT NO. CA1870 ESTABLISHES THREE RATE CATEGORIES ON COMMODITIES - GENERAL CARGO, NOS; REFRIGERATED CARGO, NOS; AND VEHICLES-- WHICH, WHEN CONTRASTED WITH THE CARRIER'S PUBLISHED TARIFF RATES ON COMMODITIES IN THE THREE RATE CATEGORIES, SHOULD PROVIDE BOTH LOWER ADMINISTRATIVE COSTS AND LOWER OVERALL TRANSPORTATION COSTS FOR THE GOVERNMENT. THIS OBJECTIVE IS ACHIEVED ON EACH SHIPMENT BY APPLYING THE THREE RATE CATEGORIES TO CONTAINERS IN THE APPROPRIATE COMMODITY GROUP RATHER THAN BY APPLYING THE APPROPRIATE TARIFF RATE TO EACH SPECIFIC CONTAINER. AND ALTHOUGH IT IS RECOGNIZED THAT IN CERTAIN INSTANCES THERE MAY BE TARIFF RATES FOR SOME CONTAINERS IN A SHIPMENT WHICH ARE LOWER THAN THE ONE IN THE APPROPRIATE RATE CATEGORY, IT IS ALSO RECOGNIZED THAT THE TARIFF RATES ON OTHER CONTAINERS IN THAT SHIPMENT MAY BE HIGHER THAN THE RATE IN THE APPROPRIATE RATE CATEGORY. THE THREE RATE CATEGORIES, THEREFORE, ARE INTENDED TO TAKE THIS INTO CONSIDERATION WITH THE RESULT THAT THE COST OF TRANSPORTING THE ENTIRE SHIPMENT UNDER THE CONTRACT RATES SHOULD BE LESS THAN THE TOTAL COST OF TRANSPORTING EACH CONTAINER IN THE SHIPMENT UNDER ITS APPROPRIATE TARIFF RATE.

IN THE INSTANT CASE, GSA HAS APPLIED ON SPECIFIC CONTAINERS THE RATES FOUND IN CONTRACT NO. CA1870 WHEN ADVANTAGEOUS TO THE GOVERNMENT, BUT HAS THEN APPLIED ON OTHER CONTAINERS PRMSA'S TARIFF RATES-- PUBLISHED IN PRMSA TARIFF NO. 1-- WHEN THOSE RATES PROVED MORE FAVORABLE TO THE GOVERNMENT THAN THE CONTRACT RATES. THUS, BY EXAMINING EACH SHIPMENT CONTAINER BY CONTAINER AND APPLYING THE LOWER OF THE TWO RATES, GSA DETERMINED THAT THERE HAD BEEN OVERCHARGES AND IN THE ABSENCE OF VOLUNTARY REFUND INITIATED THE DEDUCTION ACTION.

GSA SUPPORTS THIS PROCEDURE ON THE GROUNDS THAT THE GOVERNMENT IS ENTITLED TO THE LOWEST PUBLISHED TARIFF RATE APPLICABLE TO ITS SHIPMENTS AND THAT THE GOVERNMENT'S AGENTS ARE NOT AUTHORIZED TO CONTRACT FOR HIGHER RATES FOR SIMILAR SERVICES. MOREOVER, GSA NOTES THAT UNDER ARTICLE I:2(E) OF CONTRACT NO. CA1870 THE GOVERNMENT HAS THE OPTION TO OBTAIN TRANSPORTATION UNDER THE CARRIER'S PUBLISHED TARIFFS PROVIDED THAT THE GOODS TO BE CARRIED ARE TENDERED IN ACCORDANCE WITH THE TARIFF'S TERMS AND CONDITIONS AND UNDER A GOVERNMENT BILL OF LADING (GBL). GSA MAINTAINS, THEREFORE, THAT DESPITE THE FACT THAT MSC NEVER PREPARED GBL'S FOR THE SHIPMENTS ON QUESTION, THE GOVERNMENT HAS SATISFIED THE ARTICLE I:2(E) BILL OF LADING REQUIREMENT SINCE SUFFICIENT INFORMATION IS SUPPLIED THROUGH THE VARIOUS SHIPPING RECORDS AND SINCE IT IS THE CARRIER WHO IS CHARGED BY LAW TO ISSUE BILLS OF LADING AND NOT THE SHIPPER. CONSEQUENTLY, GSA CONTENDS THAT MSC HAS COMPLIED WITH ARTICLE I:2(E) SO THAT THE APPROPRIATE TARIFF RATES MAY BE APPLIED TO THE SHIPMENTS IN QUESTION.

IN REPLY, PRMMI REJECTS GSA'S POSITION AND MAINTAINS THAT THE CONTRACT RATES WERE NEGOTIATED WITH THE CLEAR RECOGNITION THAT LOWER TARIFF RATES EXISTED ON CERTAIN COMMODITIES, BUT THAT IN LIGHT OF THE OVERALL MIX OF CARGO THE MILITARY SHIPS TO PUERTO RICO, THE CONTRACT RATES WOULD PROVIDE LOWER TRANSPORTATION COSTS OVERALL. AS A RESULT, PRMMI CONTENDS THAT THE GOVERNMENT MAY NOT APPLY THE CONTRACT RATES ONLY WHEN THEY FAVOR THE GOVERNMENT AND THE TARIFF RATES AT ALL OTHER TIMES, BUT MUST APPLY THE CONTRACT IN ITS ENTIRETY OR NOT AT ALL.

THE QUESTION PRESENTED THEN IS WHETHER THESE CONTAINERIZED SHIPMENTS OF MIXED COMMODITIES ARE BEING TRANSPORTED IN CIRCUMSTANCES UNDER WHICH THE GOVERNMENT IS FREE TO APPLY EITHER THE CONTRACT OR TARIFF RATES TO EACH CONTAINER, DEPENDING ON WHICH IS LOWER FOR THE SPECIFIC CONTAINER, OR WHETHER EACH SHIPMENT MUST BE RATED AS A WHOLE EITHER UNDER THE CONTRACT OR UNDER THE COMMERCIAL TARIFFS BUT NOT PARTIALLY UNDER BOTH.

THE GENERAL RULE IS THAT THE GOVERNMENT, AS OTHER SHIPPERS, IS ENTITLED TO THE LOWEST PUBLISHED TARIFF RATE APPLICABLE TO ITS SHIPMENTS, AND THE GOVERNMENT'S AGENTS ARE NOT AUTHORIZED TO CONTRACT FOR HIGHER RATES FOR SIMILAR SERVICES. GREAT NORTHERN RY. V. UNITED STATES, 170 CT.CL. 188, 194 (1965); U.S. LINES OPERATIONS, INC. V. UNITED STATES, 99 CT.CL. 744 (1943), CERT. DENIED, 321 U.S. 774 (1944); MISSOURI PACIFIC R.R. V. UNITED STATES, 71 CT.CL. 650 (1931); ILLINOIS CENTRAL R.R. V. UNITED STATES, 58 CT.CL. 182 (1923); 35 COMP.GEN. 681 (1956). HOWEVER, WE HAVE ALSO RECOGNIZED THE VALUE OF AGREEMENTS SUCH AS CONTRACT NO. CA1870 WHICH HELPS RELIEVE THE GOVERNMENT'S OVERALL ADMINISTRATIVE BURDEN AND TRANSPORTATION COSTS BY PROVIDING RATES FOR SHIPMENTS OF MIXED FREIGHT THAT ARE LOWER THAN THE TARIFF RATES WHEN APPLIED TO THE SHIPMENT AS A WHOLE. B-154967, DECEMBER 21, 1964. THEREFORE, EVEN THOUGH ON A PARTICULAR SHIPMENT THE USE OF CONTRACT RATES SUCH AS THOSE PROVIDED IN CONTRACT NO. CA1870 SOMETIMES RESULTS IN OCCASIONAL INSTANCES OF CONTAINERIZED COMMODITIES BEING RATED AT RATES HIGHER THAN THOSE AVAILABLE UNDER THE COMMERCIAL TARIFFS, IF A BROAD VIEW OF THE EFFECT THE CONTRACT RATES HAVE ON THE GOVERNMENT'S TOTAL COSTS IS TAKEN THEN IT BECOMES CLEAR THAT A PROPERLY NEGOTIATED AGREEMENT, FAIRLY APPLIED TO THE TYPE OF MIXED SHIPMENT CONTEMPLATED BY THE NEGOTIATORS, WILL RESULT OVERALL IN LOWER TRANSPORTATION COSTS TO THE GOVERNMENT.

FROM THE RECORD PRESENTED, IT APPEARS THAT GSA HAS NOT TAKEN A BROAD VIEW OF CONTRACT NO. CA1870'S FULL IMPACT ON THE GOVERNMENT'S TRANSPORTATION COSTS. RATHER, GSA HAS FOCUSED ON THOSE INSTANCES WHEN THE CONTRACT RATES ARE TO THE GOVERNMENT'S DISADVANTAGE, BUT HAS FAILED TO APPRECIATE THE OVERALL ADVANTAGE TO THE GOVERNMENT WHEN THE CONTRACT RATES ARE APPLIED TO THE SHIPMENT AS A WHOLE.

GSA IS CORRECT IN STATING THAT THE CARRIER AND NOT THE SHIPPER IS RESPONSIBLE FOR ISSUING AN APPROPRIATE BILL OF LADING. SEE 46 U.S.C. 193 (1970). HOWEVER, IT SEEMS THAT THE CONFUSION HERE IS OVER WHAT ACTUALLY IS THE BILL OF LADING AND WHAT DOES IT ENCOMPASS.

GSA APPARENTLY HAS DETERMINED THAT IN LIGHT OF THE CARRIER'S RESPONSIBILITY TO ISSUE AN APPROPRIATE BILL OF LADING, THE CARGO MANIFESTS AND OTHER SHIPPING DOCUMENTS CONSTITUTE THE BILLS OF LADING FOR THE SHIPMENTS IN QUESTION AND THAT AS A RESULT EACH CONTAINER MOVED UNDER A SEPARATE BILL OF LADING. THIS POSITION ALLOWED GSA TO APPLY EITHER THE CONTRACT RATES OR THE TARIFF RATES, DEPENDING ON WHICH WAS LOWER, TO EACH CONTAINER IN A SHIPMENT. AS MENTIONED ABOVE, GSA SUPPORTS SUCH ACTION UNDER BOTH THE GENERAL RULE THAT THE GOVERNMENT IS ENTITLED TO THE LOWEST PUBLISHED TARIFF RATE AVAILABLE AND BECAUSE ARTICLE I:2(E) OF THE CONTRACT ALSO PROVIDES A BASIS FOR THE GOVERNMENT TO APPLY THE TARIFF RATHER THAN THE CONTRACT RATES.

IN OUR OPINION, HOWEVER, GSA CANNOT APPLY THE TARIFF RATES IN THE MANNER THAT IT HAS. CONTRARY TO THE GSA POSITION, IT IS OUR BELIEF THAT THE CARGO MANIFESTS AND OTHER SHIPPING DOCUMENTS RELEVANT TO A PARTICULAR SHIPMENT CANNOT BE BROKEN DOWN INTO SEPARATE BILLS OF LADING FOR EACH CONTAINER. IT IS OUR VIEW THAT THESE SHIPPING DOCUMENTS COVER ONE COMPLETE TRANSACTION-- A CONTRACT OF CARRIAGE-- AND THUS CONSTITUTE ONLY ONE BILL OF LADING. THE TERMS OF THE CONTRACT OF CARRIAGE ARE EITHER ESTABLISHED BY CONTRACT NO. CA1870 TOGETHER WITH THE SHIPPING ORDER AND OTHER PERTINENT SHIPPING DOCUMENTS (SEE ARTICLE I:2(A) OF THE CONTRACT) OR ESTABLISHED BY THOSE SAME SHIPPING DOCUMENTS ACTING AS THE BILL OF LADING ALONG WITH THE APPLICABLE PUBLISHED TARIFFS. SEE 55 COMP.GEN. 958, 960 (1976). THEREFORE, THE GOVERNMENT IS REQUIRED TO APPLY EITHER THE CONTRACT RATES OR THE TARIFF RATES TO ALL THE CONTAINERS IN A SPECIFIC SHIPMENT AS DETERMINED BY THE CONTRACT OF CARRIAGE. IT CANNOT BLEND THESE TWO SETS OF RATES SELECTIVELY TO THE DETRIMENT OF THE CARRIER'S INTERESTS AS HAS BEEN THE CASE HERE. TO DO SO WOULD BE A BREACH OF THE CONTRACT OF CARRIAGE.

IN SUPPORT OF OUR POSITION, WE RELY UPON THE DEFINITION OF SHIPMENT FOUND IN RULE NO. 270 OF PRMSA TARIFF NO. 1, WHICH PROVIDES:

DEFINITION OF SHIPMENT

EXCEPT AS OTHERWISE PROVIDED, A SHIPMENT IS DEFINED AS THAT QUANTITY OF FREIGHT RECEIVED FROM ONE SHIPPER AT ONE POINT OF ORIGIN, AT ONE PLACE AT ONE TIME ON ONE BILL OF LADING OR SHIPPING DOCUMENT FOR DELIVERY TO ONE CONSIGNEE AT ONE POINT OF DESTINATION.

DESPITE THE FACT THAT A NUMBER OF CONTAINERS ARE INVOLVED IN EACH OF THE SHIPMENTS OR CONTRACTS OF CARRIAGE IN QUESTION, IT IS CLEAR THAT IN EACH CASE THERE IS A QUANTITY OF FREIGHT RECEIVED IN THE CONTINENTAL UNITED STATES FROM THE GOVERNMENT AS SHIPPER TO BE TRANSPORTED TO ONE POINT OF DESTINATION, PUERTO RICO. (UNDER BOTH CONTRACT AND TARIFF ADDITIONAL CONTAINERS MAY BE LOADED ON BOARD AT OTHER PORTS EN ROUTE TO THE DESTINATION.) ALTHOUGH NO GBL'S WERE ISSUED, THE VARIOUS SHIPPING DOCUMENTS CONTAIN SUFFICIENT INFORMATION AS TO SHIPPER, CONSIGNEE, NAME OF VESSEL, DATE OF SAILING, AND SO ON, TO COMPLY WITH RULE NO. 170 OF PRMSA TARIFF NO. 1, SETTING OUT THE REQUIREMENTS FOR BILLS OF LADING. SEE CANADIAN GENERAL ELECTRIC V. LES AMATEURS, 1976 AMC 915, 921. THEREFORE, EACH QUANTITY OF FREIGHT COVERED BY THE SHIPPING DOCUMENTS REQUIRED BY CONTRACT CA1870 WAS IN EFFECT TRANSPORTED FROM THE UNITED STATES TO PUERTO RICO UNDER ONE BILL OF LADING AND WAS THEREFORE ONE SHIPMENT AS DEFINED BY RULE NO. 270 OF PRMSA TARIFF NO. 1.

AS GSA NOTES, THE GOVERNMENT DOES HAVE THE OPTION UNDER ARTICLE I:2(E) OF THE CONTRACT OF OBTAINING TRANSPORTATION UNDER THE PUBLISHED TARIFF RATES IF CERTAIN REQUIREMENTS ARE MET. SPECIFICALLY, ARTICLE I:2(E) PROVIDES:

NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS RESTRICTING COMPETITION IN ANY MANNER OR AS PRECLUDING THE GOVERNMENT FROM OBTAINING TRANSPORTATION FROM THE CARRIER ON THE ROUTES COVERED HEREIN UNDER THE PUBLISHED TARIFFS OF THE CARRIER THAT ARE AVAILABLE TO THE PUBLIC, PROVIDED GOODS TO BE SO CARRIED SHALL BE TENDERED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THOSE TARIFFS AND FOR CARRIAGE UNDER A STANDARD FORM OF GOVERNMENT BILL OF LADING. THE CARRIER SHALL UPON REQUEST AND PAYMENT OF A REASONABLE CHARGE PROVIDE THE CONTRACTING OFFICER WITH A COPY OF EACH OF HIS PUBLISHED TARIFFS AND ANY REVISION THEREOF FOR THE ROUTES COVERED HEREIN.

SINCE WE HAVE CONCLUDED THAT THE VARIOUS SHIPPING DOCUMENTS COMPLY WITH PRMSA TARIFF NO. 1'S BILL OF LADING REQUIREMENTS, WE ALSO CONCLUDE THAT GSA IS CORRECT IN MAINTAINING THAT THE ARTICLE I:2(E) REQUIREMENTS HAVE BEEN MET SO THAT THE GOVERNMENT MAY APPLY THE APPROPRIATE TARIFF RATES IF DETERMINED TO BE LOWER THAN THE CONTRACT RATES. HOWEVER, IF THE TARIFF RATES ARE APPLIED, THEY MUST BE USED FOR EACH CONTAINER IN THE SHIPMENT OR CONTRACT OF CARRIAGE AND NOT SELECTIVELY AS GSA HAS DONE.

WE EMPHASIZE THAT GSA MUST USE THE TARIFF RATES IF IT DETERMINES THAT THOSE RATES RATHER THAN THE CONTRACT RATES RESULT IN THE LOWER TRANSPORTATION COST. SEE THE 1904 CARGO PREFERENCE ACT, AS AMENDED, 10 U.S.C. 2631 (1976); UNITED STATES LINES COMPANY V. UNITED STATES, 223 F.SUPP. 838 (S.D.N.Y. 1963), AFFIRMED, 324 F.2D 97 (2ND CIR. 1963). HOWEVER, IN DETERMINING THE LOWER TRANSPORTATION COST, GSA MUST USE THE APPLICABLE CONTRACT OR TARIFF RATES ON ALL CONTAINERS IN THE SHIPMENT.

BECAUSE OF THE REPEAL OF SECTION 6 OF THE INTERCOASTAL SHIPPING ACT, 1933, 46 U.S.C. 846 (1970), WHICH HAD PERMITTED THE USE OF PREFERENTIAL RATES FOR THE GOVERNMENT, THE HOLDING IN THIS DECISION IS CONFINED TO THE FACTS PRESENTED. ACTION SHOULD BE TAKEN BY GSA CONSISTENT WITH THIS DECISION.

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