B-144429, DEC. 27, 1960

B-144429, DEC. 27, 1960

TO THE SECRETARY OF DEFENSE:

REFERENCE IS MADE TO LETTER OF SEPTEMBER 21, 1960, FROM THE EXECUTIVE DIRECTOR, MILITARY TRAFFIC MANAGEMENT AGENCY, SUBMITTING FOR OUR APPROVAL A PROPOSAL TO TEST A SIMPLIFIED BILLING PROCEDURE FOR THE MOVEMENT VIA THE RAILWAY EXPRESS AGENCY OF DOMESTIC SHIPMENTS UNDER 100 POUNDS. IT IS STATED THAT THIS PROPOSAL WOULD BE LIMITED TO COMMODITIES NOT EXCEEDING FIRST CLASS; THAT TRANSPORTATION CHARGES UNDER CURRENTLY AVAILABLE RATES WILL NOT IN ANY ONE INSTANCE EXCEED 19.48; AND THAT APPROXIMATELY 278,000 SUCH SHIPMENTS ARE MADE EACH YEAR BY THE DEPARTMENT OF DEFENSE. THESE SHIPMENTS WOULD MOVE UNDER A MODIFIED COMMERCIAL DOCUMENT IN LIEU OF THE GOVERNMENT BILL OF LADING AND PAYMENT WOULD BE MADE BY THE ORIGINATING INSTALLATION UPON ACCEPTANCE OF THE SHIPMENT BY THE CARRIER.

A SUMMARY ANALYSIS OF THE PROPOSAL WAS PRESENTED IN A BROCHURE "A PLAN TO REDUCE COSTS OF SHIPPING SMALL PACKAGES VIA COMMON CARRIERS," PREPARED IN JUNE 1960 BY THE MILITARY TRAFFIC MANAGEMENT AGENCY.

THIS MATTER WAS THE SUBJECT OF A MEETING ON SEPTEMBER 2, 1960, BETWEEN REPRESENTATIVES OF THE DEPARTMENT OF DEFENSE AND PERSONNEL OF OUR TRANSPORTATION DIVISION, AT WHICH TIME COPIES OF THE ABOVE MENTIONED DOCUMENT, TOGETHER WITH PRINTED COPIES OF AN ORAL PRESENTATION AND A MEMORANDUM DATED SEPTEMBER 1, 1960, FROM THE CHIEF, FREIGHT ADVISORY BRANCH, GENERAL TRAFFIC DIVISION, MILITARY TRAFFIC MANAGEMENT AGENCY, WERE FURNISHED FOR OUR CONSIDERATION.

IT IS SAID THAT APPROXIMATELY 278,000 DEPARTMENT OF DEFENSE SHIPMENTS OF LESS THAN 100 POUNDS EACH WILL BE HANDLED BY THE RAILWAY EXPRESS AGENCY DURING CALENDAR YEAR 1960. THE AVERAGE SHIPMENT IN THIS CATEGORY IS REPORTED TO WEIGH 42 POUNDS WITH TRANSPORTATION COSTS AVERAGING $6.71 PER SHIPMENT. IN THE INTEREST OF EFFECTING ECONOMIES IN THE PREPARATION OF THE SHIPPING DOCUMENTS, AND IN THE APPLICATION OF ACCOUNTING PROCEDURES TO THESE SHIPMENTS, IT IS PROPOSED, IN SUBSTANCE, TO TEST THE FEASIBILITY OF SUBSTITUTING A MODIFIED COMMERCIAL DOCUMENT FOR THE GOVERNMENT BILL OF LADING. PAYMENT FOR THE SERVICES WOULD BE MADE BY THE ORIGINATING INSTALLATION, BASED UPON CARRIER ACCEPTANCE OF THE SHIPMENT INSTEAD OF THE PRESENT PROCEDURE FOR PAYMENT BY A CENTRAL DISBURSING OFFICE UPON PROOF OF RECEIPT AT DESTINATION.

THE TEST OF THE MODIFIED PROCEDURE WOULD BE LIMITED TO SHIPMENTS FROM THREE QUARTERMASTER GENERAL DEPOTS DURING A SIX-MONTH PERIOD. FOR COMPARISON AND CONTROL PURPOSES, ONE HALF OF THE ESTIMATED 7,000 SHIPMENTS FROM THE SELECTED INSTALLATIONS WOULD MOVE UNDER PRESENT PROCEDURE, USING THE GOVERNMENT BILL OF LADING, THE BALANCE ON A MODIFIED RAILWAY EXPRESS WAYBILL, WHICH WOULD INCORPORATE SEVERAL FEATURES OF THE GOVERNMENT BILL OF LADING BUT MAKE THE SHIPMENT SUBJECT TO THE TERMS AND CONDITIONS OF THE UNIFORM EXPRESS RECEIPT BY INCORPORATION OF ITS TERMS.

DURING THE TEST, IT IS PROPOSED TO EVALUATE THE EFFICIENCY AND ECONOMIES OF THE AMENDED PROCEDURE BY CONDUCTING THE FOLLOWING STUDIES AND COMPARISONS OF THE TWO SEGMENTS:

"/1) TRANSPORTATION:

"/A) ORIGIN INSTALLATION SHOULD:

"1. CONDUCT A TIME STUDY, COMPARING THE TWO SEGMENTS OF THE TEST.

"2. REPORT THE NUMBER OF SHIPMENTS, WEIGHT, TRANSPORTATION CHARGES, ETC., TO EACH DESTINATION. INCLUDE ALSO, COMPARABLE PROCESSING COSTS, SPECIFIC INFORMATION ON LOSS, DAMAGE AND CLAIMS ACTIONS, ADVANTAGES, DISADVANTAGES, AND COMMENTS OF INSTALLATION WITH RESPECT TO DESIRABILITY OF PROPOSED PROCEDURE.

"/B) DESTINATION INSTALLATION SHOULD:

"1. CONDUCT A TIME STUDY, COMPARING THE TWO SEGMENTS OF THE TEST.

"2. REPORT THE NUMBER OF SHIPMENTS, WEIGHT, TRANSPORTATION CHARGES, ETC., FROM EACH ORIGIN. INCLUDE ALSO, COMPARABLE PROCESSING COSTS, SPECIFIC INFORMATION ON LOSS, DAMAGE AND CLAIMS ACTIONS, ADVANTAGES, AND COMMENTS OF INSTALLATION WITH RESPECT TO DESIRABILITY OF PROPOSED PROCEDURE.

"/2) FINANCE AND ACCOUNTING:

"THIS PHASE OF ACTION WILL BE DEVELOPED BY THE OFFICE, CHIEF OF FINANCE, D/A IN COLLABORATION WITH THE DOD AND ARMY COMPTROLLER. NO THOUGHTS CAN BE EXPRESSED HERE UNTIL AFTER THE FOREGOING AGENCIES, ON THE BASIS OF GAO DIRECTION, DETERMINE APPROPRIATE TEST DISBURSING PROCEDURES.

"/3) AUDIT:

"ALL AUDIT PROCEDURES WILL BE AS DESIGNATED BY THE GAO.'

SPECIFIC DETAILS OF THE PROPOSAL ARE AS FOLLOWS:

1. THE PROCEDURE WILL BE LIMITED TO SHIPMENTS UNDER 100 POUNDS IN THE CONTINENTAL UNITED STATES MOVING VIA RAILWAY EXPRESS, EXCLUDING SHIPMENTS OF CLASSIFIED MATERIAL, EXPLOSIVES, THOSE REQUIRING SPECIAL SERVICES OR THOSE EXCEEDING THE FIRST-CLASS RATING. CHARGES ON ANY GIVEN SHIPMENT WOULD NOT EXCEED THE PUBLISHED HIGHEST CHARGE PER 100 POUNDS IN RAILWAY EXPRESS AGENCY QUOTATION NO. 11-A. AT PRESENT RATES SUCH AMOUNT WOULD NOT EXCEED $19.84.

2. IN LIEU OF THE GOVERNMENT BILL OF LADING THE SHIPMENTS WILL MOVE UNDER A RAILWAY EXPRESS WAYBILL WHICH IS A MODIFICATION OF THE STANDARD UNIFORM EXPRESS RECEIPT. A COPY OF THE PROPOSED WAYBILL IS INCLUDED WITH THE MTMA PRESENTATION.

3. DISTRIBUTION OF WAYBILL COPIES WILL BE AS FOLLOWS: ORIGINAL TO CARRIER; COPY TO BE ATTACHED TO AND MOVE WITH SHIPMENT; A COPY TO THE CARRIER; COPY TO THE CONSIGNEE AS NOTIFICATION OF SHIPMENT; COPY RETAINED AT ORIGIN AS A PROPERTY SHIPPED RECORD; AND A COPY TO THE FISCAL OFFICE FOR OBLIGATION OF FUNDS.

4. PAYMENT WILL BE MADE BY THE ORIGINATING INSTALLATION ON EITHER A SEMIMONTHLY OR MONTHLY CARRIER VOUCHER SUPPORTED BY THE ORIGINAL RAILWAY EXPRESS WAYBILL.

5. RECEIPT FOR THE SHIPMENT WILL BE OBTAINED AT DESTINATION BY THE CARRIER AND RETAINED IN ITS FILES. REQUIREMENT THAT THE SIGNATURE RECEIPT BE A PREREQUISITE TO PAYMENT OF CHARGES WILL BE WAIVED BUT SUCH RECEIPT WILL BE AVAILABLE UPON DEMAND.

IN ORDER TO EFFECTIVELY CONDUCT THE TEST, WE ARE REQUESTED TO APPROVE THE FOLLOWING ELEMENTS:

"/1) USE OF THE PROPOSED EXPRESS WAYBILL, INCLUDING THE USUAL CONDITIONS OF THE UNIFORM EXPRESS RECEIPT IN LIEU OF THE GOVERNMENT BILL OF LADING.

"/2) EFFECTING PAYMENT ON THE BASIS OF THE CARRIER'S ACCEPTANCE OF THE SHIPMENT, WAIVING THE REQUIREMENT FOR ACCOMPLISHMENT OF THE ORIGINAL (PAYMENT) DOCUMENT AT DESTINATION.'

OUR COMMENTS ON SPECIFIC SEGMENTS OF THE PROPOSED WAYBILL ARE SET FORTH BELOW. IN OUR COMMENTS WE HAVE CONSIDERED CERTAIN WELL ESTABLISHED ADVANTAGES WHICH ACCRUE TO THE UNITED STATES WHEN ITS PROPERTY IS SHIPPED ON A GOVERNMENT BILL OF LADING THAT ARE NOT AVAILABLE UNDER THE TERMS AND CONDITIONS OF THE UNIFORM EXPRESS RECEIPT AS INCORPORATED INTO THE PROPOSED WAYBILL. WE BELIEVE THOSE ADVANTAGES SHOULD BE RETAINED.

CONDITION 7.

CONDITION 7 OF THE UNIFORM EXPRESS RECEIPT COULD BE INTERPRETED AS A CONTRACTUAL PROVISION LIMITING THE GOVERNMENT GENERALLY TO NINE MONTHS FOR FILING CLAIMS AND TWO YEARS FOR FILING SUIT. THE GOVERNMENT BILL OF LADING IS DESIGNED TO PROTECT THE UNITED STATES FROM THE OPERATION OF SUCH LIMITATIONS. CONDITION 7 OF THE UNIFORM EXPRESS RECEIPT, THEREFORE, SHOULD BE DELETED AND THE FOLLOWING CONDITION, TAKEN FROM THE GOVERNMENT BILL OF LADING, SHOULD BE INSERTED IN LIEU THEREOF;

"IN CASE OF LOSS, DAMAGE, OR SHRINKAGE IN TRANSIT, THE RULES AND CONDITIONS GOVERNING COMMERCIAL SHIPMENTS SHALL NOT APPLY AS TO PERIOD WITHIN WHICH NOTICE THEREOF SHALL BE GIVEN THE CARRIERS OR TO PERIOD WITHIN WHICH CLAIM THEREFOR SHALL BE MADE OR SUIT INSTITUTED.'

CONDITIONS 10, 11 AND 12 (AS NOW STATED).

SINCE THIS PLAN ONLY APPLIES TO DOMESTIC SHIPMENTS, THE SPECIAL ADDITIONAL CONDITIONS (10, 11 AND 12) RELATING TO SHIPMENTS TO FOREIGN COUNTRIES AS NOW STATED SHOULD BE DELETED.

CONDITION 10 (NEW).

CONDITION 9 OF THE CURRENT GOVERNMENT BILL OF LADING FORM--- THE NON- DISCRIMINATION CLAUSE--- SHOULD BE INCLUDED IN THE PROPOSED EXPRESS WAYBILL TO CONFORM WITH EXECUTIVE ORDER NO. 10557, SEPTEMBER 3, 1954, 19 F.R. 5655. ACCORDINGLY, THE FOLLOWING IS TO BE INSERTED ON THE PROPOSED WAYBILL AS "CONDITION 10: "

"IN CONNECTION WITH THE PERFORMANCE OF WORK UNDER THIS CONTRACT, THE CONTRACTOR AGREES NOT TO DISCRIMINATE AGAINST ANY EMPLOYEE OR APPLICANT FOR EMPLOYMENT BECAUSE OF RACE, RELIGION, COLOR, OR NATIONAL ORIGIN. THE AFORESAID PROVISION SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING: EMPLOYMENT, UP-GRADING, DEMOTION, OR TRANSFER; RECRUITMENT OR RECRUITMENT ADVERTISING; LAYOFF OR TERMINATION; RATES OF PAY OR OTHER FORMS OF COMPENSATION; AND SELECTION FOR TRAINING, INCLUDING APPRENTICESHIP. THE CONTRACTOR AGREES TO POST HEREAFTER IN CONSPICUOUS PLACES, AVAILABLE FOR EMPLOYEES AND APPLICANTS FOR EMPLOYMENT, NOTICES TO BE PROVIDED BY THE CONTRACTING OFFICER SETTING FORTH THE PROVISIONS OF THE NONDISCRIMINATION CLAUSE.

"THE CONTRACTOR FURTHER AGREES TO INSERT THE FOREGOING PROVISION IN ALL SUBCONTRACTS HEREUNDER, EXCEPT SUBCONTRACTS FOR STANDARD COMMERCIAL SUPPLIES OR RAW MATERIALS. (EXECUTIVE ORDER 10557, 19 F.R. 5655.)"

CONDITION 11 (NEW).

RAILWAY EXPRESS AGENCY SECTION 22 QUOTATION NO. 11-A APPLIES ONLY TO SHIPMENTS MADE ON GOVERNMENT BILLS OF LADING. SO AS NOT TO PRECLUDE THE GOVERNMENT FROM USE OF THE RATES OFFERED THEREIN OR FROM ANY OTHER ADVANTAGES WHICH OTHERWISE WOULD ACCRUE IF THE SHIPMENTS WERE MADE ON A GOVERNMENT BILL OF LADING, THE FOLLOWING IS TO BE INSERTED ON THE PROPOSED WAYBILL FORM AS ,CONDITION 11: "

"A SHIPMENT MADE UPON THIS WAYBILL SHALL TAKE NO HIGHER RATE THAN WOULD BE CHARGED HAD THE SHIPMENT BEEN MADE UPON A GOVERNMENT BILL OF LADING.'

AS AN ADDITIONAL SAFEGUARD FOR THE PROTECTION OF THE GOVERNMENT'S INTEREST, THE RAILWAY EXPRESS AGENCY SHOULD BE REQUESTED TO AMEND SECTION 22 QUOTATION NO. 11-A TO INCLUDE SHIPMENTS MADE ON THE PROPOSED EXPRESS WAYBILL.

NOTE.

THE NOTE RELATING TO LOSS WHICH APPEARS IMMEDIATELY BENEATH THE WORDS "UNITED STATES GOVERNMENT SHIPMENT" NEAR THE BOTTOM OF THE REVISED WAYBILL FORM APPARENTLY WAS A PART OF THE "SHIPPER'S PREPAID RECEIPT" ON THE ORIGINAL RAILWAY EXPRESS AGENCY DOCUMENT. SINCE IT IS IN ESSENCE A RESTATEMENT OF THE TERMS OF CONDITION 2 OF THE PROPOSED WAYBILL, IT COULD BE DELETED.

CARRIER'S RECEIPT.

THE CARRIER'S RECEIPT FOR THE SHIPMENT AS SHOWN AT THE BOTTOM OF THE WAYBILL FORM PROVIDES FOR THE INSERTION OF THE DECLARED VALUE ON THE PROPOSED WAYBILL AND REFERS ONLY TO CLASSIFICATIONS AND TARIFFS FOR THE RATES TO BE CHARGED. SINCE THE TEST SHIPMENTS ARE TO BE MADE SUBJECT TO THE LIMITATIONS ON VALUE IN CONDITION 2, AND THE RATES TO BE APPLIED ARE NAMED IN A SECTION 22 QUOTATION, THE RECEIPT SHOULD BE CHANGED TO READ AS FOLLOWS:

"RECEIVED SHIPMENT DESCRIBED HEREON, SUBJECT TO THE CLASSIFICATION, TARIFFS AND RATE TENDERS IN EFFECT ON THE DATE HEREOF, WHICH THE COMPANY AGREES TO CARRY UPON THE TERMS AND CONDITIONS PRINTED HEREON, TO WHICH THE SHIPPER AGREES AND AS EVIDENCE THEREOF ACCEPTS THIS RECEIPT.'

CONSIGNEE'S CERTIFICATE OF DELIVERY.

THE CONSIGNEE'S CERTIFICATE OF DELIVERY ON THE GOVERNMENT BILL OF LADING MAKES PROVISION FOR ANNOTATION ON THE REVERSE THEREOF OF ANY EXCEPTIONS TO DELIVERY OF THE PROPERTY IN APPARENT GOOD ORDER AND CONDITION. PROVISION SHOULD BE MADE FOR A SIMILAR REPORT ON THE REVERSE OF THE EXPRESS WAYBILL, ONE NOTATION TO BE MADE ON THE COPY OF THE WAYBILL WHICH IS ATTACHED TO THE SHIPMENT AND RETAINED BY THE CARRIER AND A LIKE NOTATION ON THE REVERSE OF THE SHIPPING COPY RECEIVED BY THE CONSIGNEE. THIS LATTER COPY WILL BE FORWARDED TO THE ORIGINATING INSTALLATION WITHIN 15 DAYS OF RECEIPT OF THE SHIPMENT OR DISCOVERY OF THE DAMAGE, FOR ASSOCIATION WITH THE ORIGINAL WAYBILL WHICH WILL BE PRESENTED BY THE CARRIER FOR PAYMENT. IN CASES OF NONDELIVERY, A REPORT WILL BE FILED WITH THE ORIGINATING INSTALLATION WITHIN 20 DAYS AFTER THE SHIPMENT IS MADE AND THIS REPORT, ALSO, WILL BE ASSOCIATED WITH THE ORIGINAL WAYBILL AS ABOVE. SITUATIONS INVOLVING FAILURE TO DELIVER OR REJECTION OF THE SHIPMENT TO THE CARRIER, PAYMENT OF TRANSPORTATION CHARGES WILL NOT BE MADE TO THE CARRIER UNTIL DELIVERY IS ESTABLISHED OR ADJUSTMENT MADE FOR THE VALUE OF THE REJECTED PROPERTY.

GENERAL.

ANY PROVISION FOR PAYMENT OF PUBLIC MONEYS IN ADVANCE OF THE RENDERING OF SERVICE OR DELIVERY OF PROPERTY IS PROHIBITED BY R.S. 3648, 31 U.S.C. 529, WHICH HAS BEEN HELD IN 30 COMP. GEN. 348 TO APPLY TO TRANSPORTATION CHARGES. WE BELIEVE, HOWEVER, THAT THE STATUTE WILL BE COMPLIED WITH IF THE PROCEDURES OUTLINED ABOVE RELATING TO NON DELIVERY OR REJECTION OF THE PROPERTY TO THE CARRIER ARE OBSERVED AND THE RAILWAY EXPRESS AGENCY WILL PRESENT ITS BILLS FOR TRANSPORTATION CHARGES NOT SOONER THAN 30 DAYS FROM THE DATE OF SHIPMENT. IN VIEW OF THE NATURE OF THE SERVICE TO BE PERFORMED, IT SEEMS CERTAIN THAT UNDER NORMAL CONDITIONS THE SHIPMENTS WILL HAVE BEEN DELIVERED PRIOR TO THAT TIME. THE DELAY IN PAYMENT OF THE CARRIER'S BILLS TOGETHER WITH THE PROCEDURES FOR NOTICE TO THE SHIPPING OFFICER OF ANY FAILURE BY THE CARRIER TO PERFORM THE SERVICE IN A SATISFACTORY MANNER SHOULD ADEQUATELY PROTECT THE GOVERNMENT'S INTEREST. IT IS UNDERSTOOD THAT STANDARD FORM 1113, PUBLIC VOUCHER FOR TRANSPORTATION CHARGES, WILL BE USED BY THE RAILWAY EXPRESS AGENCY IN BILLING FOR TRANSPORTATION CHARGES.

RULE 15 (A) OF RAILWAY EXPRESS AGENCY OFFICIAL EXPRESS CLASSIFICATION NO. 36 PROVIDES THAT A CHARGE OF 30 CENTS WILL BE ASSESSED BY THE THE RAILWAY EXPRESS AGENCY FOR THE RETURN OF A DELIVERY RECEIPT TO THE SHIPPER. UNDER THE PROPOSED PROCEDURE THE GOVERNMENT WOULD BE FURNISHED SUCH DELIVERY RECEIPTS UPON REQUEST AND COULD BE REQUIRED TO PAY THE 30-CENT CHARGE NAMED IN RULE 15 (A). IN THE LIGHT OF THE MUTUAL ADVANTAGES WHICH PRESUMABLY WILL ACCRUE TO THE CARRIER AND THE GOVERNMENT UNDER THE NEW PROCEDURES, THE RAILWAY EXPRESS AGENCY WOULD PROBABLY AGREE TO SUPPLEMENT ITS SECTION 22 QUOTATION NO. 11-A TO PROVIDE FOR THE FREE RETURN OF DELIVERY RECEIPTS TO THE GOVERNMENT WHEN USING THE EXPRESS WAYBILL FORM.

IN ORDER TO ELIMINATE ANY POSSIBILITY OF CONFUSION BETWEEN THE STANDARD COMMERCIAL DOCUMENT NOW IN USE BY THE RAILWAY EXPRESS AGENCY AND THE PROPOSED WAYBILL, THE NEW FORM SHOULD BE CLEARLY IDENTIFIED AS BEING FOR USE ON GOVERNMENT SHIPMENTS BY A DESIGNATION SUCH AS "EXPRESS WAYBILL FOR U.S. GOVERNMENT SHIPMENT," OR A DESIGNATION OF SIMILAR IMPORT.

SUBJECT TO OBSERVANCE OF THE FOREGOING CONDITIONS, THE USE OF THE RAILWAY EXPRESS WAYBILL AND THE PAYMENT PROCEDURE SUGGESTED IN YOUR PLAN IS APPROVED FOR THE SIX-MONTHS' TRIAL PERIOD. ALL VOUCHERS PAID BY THE ORIGINATING INSTALLATION PURSUANT TO THE TEST PROCEDURE SHOULD BE SEGREGATED AND FORWARDED AS PROMPTLY AS POSSIBLE TO THE TRANSPORTATION DIVISION OF THE GAO FOR AUDIT. UPON CONCLUSION OF THE TEST, THE RESULTS WITH AN APPRAISAL OF ITS EFFECTIVENESS SHOULD BE SUBMITTED TO THIS OFFICE ALONG WITH SUCH RECOMMENDATIONS AS MAY BE WARRANTED WITH RESPECT TO ITS EXTENSION.

IT IS SUGGESTED IN THE MTMA LETTER THAT A GAO MEMBER SERVE ON A COMMITTEE WITH FINANCE, TECHNICAL SERVICE, AND MTMA PERSONNEL TO DEVELOP, CONTROL AND EVALUATE THE TEST. SUCH PARTICIPATION, WE BELIEVE, WOULD NOT BE CONSISTENT WITH THE AUDIT RESPONSIBILITIES OF THE GENERAL ACCOUNTING OFFICE. HOWEVER, IN THE INTEREST OF FURTHERING THE OBJECTIVES OF THE PROPOSAL FOR ECONOMY AND EFFICIENCY IN THE SHIPMENT OF SMALL PACKAGES VIA RAILWAY EXPRESS, WE ARE GLAD TO COOPERATE IN ITS DEVELOPMENT, AND FOR THAT PURPOSE REPRESENTATIVES OF THIS OFFICE WILL BE AVAILABLE FOR CONSULTATION ON ANY MATTERS RELATING TO THE TEST.