A-29601, FEBRUARY 28, 1930, 9 COMP. GEN. 368

A-29601, FEBRUARY 28, 1930, 9 COMP. GEN. 368

CONTRACTS - INCREASED COSTS - TRANSPORTATION CHARGES. WHERE A CONTRACTOR IS PERMITTED TO MAKE SHIPMENT AT GOVERNMENT EXPENSE TO DESTINATION FROM SOME POINT OTHER THAN FROM THE F.O.B. POINT STATED IN THE CONTRACT, HE SHOULD BE CHARGED WITH THE EXCESS, IF ANY, OF THE NET GOVERNMENT RATES PAID FROM THE POINT OF SHIPMENT TO DESTINATION OVER THE NET GOVERNMENT RATES THAT WOULD HAVE BEEN PAYABLE IF THE SHIPMENT HAD MOVED FROM THE F.O.B. POINT STATED IN THE CONTRACT TO DESTINATION. COMP. GEN. 250, MODIFIED.

DECISION BY COMPTROLLER GENERAL MCCARL, FEBRUARY 28, 1930:

RECONSIDERATION HAS BEEN REQUESTED OF DECISION OF DECEMBER 17, 1929, 9 COMP. GEN. 250, WHEREIN IT WAS HELD THAT WHEN A CONTRACTOR FAILED TO SHIP FROM THE F.O.B. POINT NAMED IN THE CONTRACT AND MADE SHIPMENT AT GOVERNMENT EXPENSE FROM SOME OTHER POINT, THERE SHOULD BE RECOVERED FROM THE CONTRACTOR THE DIFFERENCE BETWEEN THE COMMERCIAL RATES FROM THE F.O.B. POINT AND THE SHIPPING POINT TO DESTINATION. ALSO, THERE IS FOR CONSIDERATION SETTLEMENT NO. K-51714-I, DATED OCTOBER 4, 1929, OF THE ACCOUNTS OF HARRY CADEN, SPECIAL FISCAL AGENT, BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR, INVOLVING A SIMILAR SITUATION WITH RESPECT TO PAYMENTS ON VOUCHER 5956 TO THE DAUGHERTY LUMBER COMPANY, AND A CLAIM PRESENTED BY THE CHICAGO AND NORTHWESTERN RAILROAD COMPANY, WITH RESPECT TO CERTAIN SHIPMENTS MADE BY THE MORTON LUMBER COMPANY.

UNDER THE TERMS OF THE CONTRACT DATED JANUARY 19, 1928, WITH THE THREE FORKS PORTLAND CEMENT COMPANY, IT WAS AGREED THAT THE CONTRACTOR SHOULD FURNISH 100,000 BARRELS OF CEMENT F.O.B. HANOVER, MONT., FOR SHIPMENT TO AUGUSTA, MONT. THE SHIPMENTS WERE MADE AT GOVERNMENT EXPENSE FROM TRIDENT, MONT., INSTEAD OF FROM HANOVER, AND THE COMMERCIAL RATE FROM TRIDENT TO AUGUSTA WAS LARGELY IN EXCESS OF THE COMMERCIAL RATE FROM HANOVER TO AUGUSTA, AND THE DECISION OF DECEMBER 17, 1929, WAS TO THE EFFECT THAT THE DISBURSING AGENT SHOULD HAVE DEDUCTED THE AMOUNT OF THIS DIFFERENCE IN MAKING PAYMENT TO THE THREE FORKS PORTLAND CEMENT COMPANY FOR THE CEMENT.

IN THE DAUGHERTY LUMBER COMPANY CASE THE LUMBER WAS TO BE DELIVERED F.O.B., LATHAM, OREG., FOR SHIPMENT TO FAIRVIEW, MONT. THE COMMERCIAL RATE ON SHIPMENTS FROM LATHAM, OREG., TO FAIRVIEW WAS 51 CENTS PER HUNDREDWEIGHT AND THE GOVERNMENT RATE WAS 43.803 CENTS PER HUNDREDWEIGHT. THE SHIPMENTS WERE MADE AT GOVERNMENT EXPENSE FROM PRICEBORO, OREG., TO FAIRVIEW, MONT. THE COMMERCIAL RATE FROM PRICEBORO TO FAIRVIEW WAS 51 CENTS PER HUNDREDWEIGHT AND THE GOVERNMENT RATE 46.19 CENTS PERHUNDREDWEIGHT.

IT APPEARS THAT THERE ARE SEVERAL POSSIBLE SITUATIONS WHICH MAY ARISE WHERE SHIPMENT TO DESTINATION AT GOVERNMENT EXPENSE IS MADE FROM A POINT OTHER THAN THE F.O.B. POINT NAMED IN THE CONTRACT, ILLUSTRATED BY THE FOLLOWING TABLE:

TABLE 1ST. WHERE THE COMMERCIAL RATE FROM THE F.O.B. POINT IS THE SAME AS FROM THE ACTUAL SHIPPING POINT AND THE LAND-GRANT DEDUCTION IS ALSO GREATER FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT.

F.O.B. ------------ $1.00L.G. 50 PERCENT 50 CENTS

SHIPPING POINT ---- 1.00 35 PERCENT 65 CENTS 2D. WHERE THE COMMERCIAL RATE FROM THE F.O.B. POINT IS THE SAME AS FROM THE ACTUAL SHIPPING POINT BUT THE LAND-GRANT DEDUCTION IS LESS FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT:

F.O.B. POINT ------$1.00 L.G. 35 PERCENT 65 CENTS

SHIPPING POINT ----1.00 50 PERCENT 50 CENTS 3D. WHERE THE COMMERCIAL RATE FROM THE F.O.B. POINT IS GREATER THAN FROM THE ACTUAL SHIPPING POINT AND THE LAND-GRANT DEDUCTION IS GREATER FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT:

F.O.B. POINT ------ $1.00 L.G. 50 PERCENT 50 CENTS

SHIPPING POINT ---- .90 35 PERCENT 58.5 CENTS 4TH. WHERE THE COMMERCIAL RATE FROM THE F.O.B. POINT IS GREATER THAN FROM THE ACTUAL SHIPPING POINT BUT THE LAND-GRANT DEDUCTION IS LESS FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT:

F.O.B. ------------ $1.00 L.G. 35 PERCENT 65 CENTS

SHIPPING POINT ---- .90 50 PERCENT 45 CENTS 5TH. WHERE THE COMMERCIAL RATE IS LESS FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT AND THE LAND-GRANT DEDUCTION IS GREATER FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT:

F.O.B. POINT ------ $0.90 L.G. 50 PERCENT45 CENTS

SHIPPING POINT ---- 1.00 35 PERCENT65 CENTS 6TH. WHERE THE COMMERCIAL RATE IS LESS FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT BUT THE LAND-GRANT DEDUCTION IS LESS FROM THE F.O.B. POINT THAN FROM THE ACTUAL SHIPPING POINT:

F.O.B. POINT ------ $0.90 L.G. 35 PERCENT 58.5 CENTS

SHIPPING POINT ---- 1.00 50 PERCENT 50 CENTS 7TH. WHERE THE COMMERCIAL RATE FROM THE F.O.B. POINT IS THE SAME AS FROM THE ACTUAL SHIPPING POINT AND THE F.O.B. POINT IS ON A LAND-GRANT ROAD BUT ACTUAL SHIPPING POINT IS LOCATED ON A NON-LAND-GRANT ROAD AND CHARGES NOT SUBJECT TO LAND-GRANT DEDUCTION:

F.O.B. POINT ------ $1.00 L.G. 50 PERCENT 50 CENTS

1.00 ---------- 1.00

IN CASES SUCH AS ARE HERE UNDER CONSIDERATION, WHERE A CONTRACTOR IS PERMITTED, WITH THE CONSENT OF THE GOVERNMENT, TO MAKE SHIPMENT AT GOVERNMENT EXPENSE FROM SOME POINT OTHER THAN THE F.O.B. POINT STATED IN THE CONTRACT, IT HAD BEEN THE UNIFORM PRACTICE PRIOR TO DECEMBER 17, 1929, TO HOLD THE CONTRACTOR CHARGEABLE WITH THE EXCESS, IF ANY, OF THE FREIGHT ACTUALLY PAID BY THE GOVERNMENT AT AUTHORIZED GOVERNMENT RATES ON THE SHIPMENT AS MADE, OVER THE AMOUNT THAT WOULD HAVE BEEN PAYABLE IF THE SHIPMENT HAD MOVED FROM THE F.O.B. POINT STATED IN THE CONTRACT. IN SUCH CASES, THAT IS, WHERE THE MATERIAL IS PURCHASED F.O.B. POINT OF ORIGIN FOR SHIPMENT AT THE EXPENSE OF THE GOVERNMENT TO DESTINATION, THE COST TO THE GOVERNMENT OF SUCH SHIPMENT IS ONE OF THE FACTORS TAKEN INTO CONSIDERATION IN DETERMINING THE LOWEST BID; THAT IS TO SAY, THE BID WHICH WILL RESULT IN THE LEAST TOTAL EXPENDITURE BY THE GOVERNMENT FOR THE MATERIAL DELIVERED AT DESTINATION. THEREFORE, WHEN A CONTRACTOR, UNDER SUCH CIRCUMSTANCES MAKES DELIVERY F.O.B. A POINT FROM WHICH THE NET RATES TO THE GOVERNMENT ARE IN EXCESS OF SUCH RATES FROM THE CONTRACT DELIVERY POINT, THE CONTRACTOR SHOULD BE CHARGED WITH THE DIFFERENCE BETWEEN THE NET RATES TO THE GOVERNMENT. HENCE, THE PRACTICE OF MAKING ADJUSTMENTS ON THAT BASIS WILL BE CONTINUED AND THE DECISION IN 9 COMP. GEN. 250 IS HEREBY MODIFIED ACCORDINGLY. THIS CLASS OF CASES IS TO BE DISTINGUISHED FROM CASES SUCH AS THE ONE CONSIDERED IN THE DECISION OF DECEMBER 5, 1929, A-29421, WHERE A BREACH BY THE CONTRACTOR OF THE CONTRACT REQUIREMENT WITH RESPECT TO TIME OF DELIVERY NECESSITATED A SHIPMENT BY RAIL INSTEAD OF BY WATER AS PROVIDED FOR IN THE CONTRACT.

WITH REFERENCE TO THE SHIPMENT OF CEMENT BY THE THREE FORKS PORTLAND CEMENT COMPANY, IT APPEARS FROM THE FREIGHT TARIFFS ON FILE IN THIS OFFICE THAT THE NET FREIGHT RATE TO THE GOVERNMENT IN AUGUST, 1928, ON CARLOAD SHIPMENTS OF CEMENT MOVING FROM HANOVER, THE CONTRACT SHIPPING POINT, TO AUGUSTA, MONT., WAS $0.205 PER HUNDREDWEIGHT, AND ON CARLOAD SHIPMENTS OF CEMENT MOVING FROM TRIDENT TO AUGUSTA, VIA HELENA, MONT., THE NET RATE TO THE GOVERNMENT ON SHIPMENTS MADE PRIOR TO AUGUST 13, 1928, ON WHICH DATE THE NEW RATE BECAME EFFECTIVE, WAS $0.265 PER HUNDREDWEIGHT. (TRIDENT TO HELENA, $0.11, LESS 50 PERCENT LAND GRANT, OR $0.55 PER HUNDREDWEIGHT, AND HELENA TO AUGUSTA $0.21 PER HUNDREDWEIGHT, AND ON SHIPMENTS MADE ON AND AFTER AUGUST 13, 1928, THE NET RATE TO THE GOVERNMENT BETWEEN SAID PLACES WAS $0.244 PER HUNDREDWEIGHT. TRIDENT TO HELENA, $0.092, LESS 50 PERCENT LAND GRANT, OR $0.046 PER HUNDREDWEIGHT AND HELENA TO AUGUSTA $0.198 PER HUNDREDWEIGHT.) A JOINT THROUGH RATE ON CEMENT BETWEEN TRIDENT AND AUGUSTA, MONT., WAS NOT ESTABLISHED BY THE NORTHERN PACIFIC AND GREAT NORTHERN RAILROAD COMPANIES UNTIL AUGUST 13, 1928, AND PRIOR TO THAT DATE IT WAS NECESSARY TO MAKE A JOINT RATE BY COMBINATION OF LOCAL RATES BETWEEN TRIDENT AND HELENA AND BETWEEN HELENA AND AUGUSTA. IN THE MAKING OF SUCH A RATE THE TARIFFS PROVIDED FOR A DEDUCTION OF 15 PERCENT FOR THE LOCAL RATE OF $0.245 PER HUNDREDWEIGHT BETWEEN HELENA AND AUGUSTA, WHICH, TOGETHER WITH A DEDUCTION OF 50 PERCENT LAND GRANT FROM THE $0.11 LOCAL RATE BETWEEN TRIDENT AND HELENA, MADE A NET RATE OF $0.26325 PER HUNDREDWEIGHT. HOWEVER, THE TARIFFS PROVIDED, ALSO, THAT IN APPLYING THE JOINT RATE AS THUS MADE, FRACTIONS LESS THAN ONE FOURTH, OR 0.25, WOULD BE OMITTED; THAT FRACTIONS OF ONE-FOURTH, OR 0.25, OR GREATER BUT LESS THAN THREE-FOURTHS, OR 0.75, WOULD BE TREATED AS ONE-HALF, OR 0.50, AND THAT FRACTIONS OF THREE-FOURTHS, OR 0.75, OR GREATER WOULD BE INCREASED TO THE NEXT WHOLE FIGURE. THE BASIS FOR THE $0.265 RATE PER HUNDREDWEIGHT AS DETERMINED BY THIS OFFICE FROM APPLICABLE TARIFFS IS THUS MADE APPARENT. THE AMOUNT OF THE OVERPAYMENT BY CADEN TO THE THREE FORKS PORTLAND CEMENT COMPANY IS $233.38, INSTEAD OF $3,385.02 AS STATED IN THE DECISION OF DECEMBER 17, 1929.