B-121220, OCT. 30, 1959

B-121220, OCT. 30, 1959

TO INTERNATIONAL BUSINESS MACHINES CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 18, 1959, WITH ENCLOSURES, REGARDING OUR AUDIT REQUIREMENT THAT CONTRACTORS DOING BUSINESS WITH THE GOVERNMENT FURNISH FREIGHT RECEIPTS IN SUPPORT OF INVOICES WHICH INCLUDE CHARGES FOR PREPAID FREIGHT.

IN OUR DECISION OF DECEMBER 30, 1954, B-121220, TO WHICH YOU REFER,IT WAS STATED, IN PART, THAT---

"THE REQUIREMENT IN QUESTION (THAT CHARGES FOR PREPAID FREIGHT INCLUDED IN DEALERS' INVOICES BE SUPPORTED BY A FREIGHT RECEIPT) APPEARS ESSENTIAL TO ESTABLISH THAT THE FREIGHT WAS PREPAID AND THE CORRECTNESS OF THE AMOUNT CLAIMED AS REIMBURSEMENT. THE FURNISHING OF THE PAID FREIGHT BILL WOULD NOT APPEAR TO IMPOSE AN UNDUE BURDEN ON THE DEALERS AFFECTED THEREBY.'

YOU STATE THAT DIFFICULTY IS BEING EXPERIENCED IN COMPLYING WITH THIS DIRECTIVE, BECAUSE IN RECENT YEARS THERE HAVE BEEN VARIOUS INNOVATIONS AND IMPROVEMENTS IN THE METHODS OF SHIPMENT AND THAT GREATER UTILIZATION HAS BEEN MADE OF PADDED VANS, CONSOLIDATIONS AND AIR FREIGHT. THESE CHANGES, IT IS STATED, MAKE THE PROBLEM OF SUPPLYING THE ORIGINAL FREIGHT RECEIPTS MORE COMPLEX, AND IN MANY CASES IMPOSSIBLE.

THE RESUME AND EXHIBITS ATTACHED TO YOUR LETTER SET FORTH THE VARIOUS TYPES OF TRANSACTIONS THAT OCCUR IN THE DAY TO DAY OPERATION OF TRANSPORTING YOUR EQUIPMENT AROUND THE COUNTRY. IT IS STATED THAT IN PRACTICALLY ALL CASES YOU RETAIN TITLE TO THE EQUIPMENT IN QUESTION AND IT DOES NOT PASS TO THE GOVERNMENT. THREE SITUATIONS ARE DISCUSSED IN THE RESUME OF YOUR PROBLEMS, NAMELY: (1) INSTANCES WHERE SEVERAL MACHINES ARE SHIPPED FROM YOUR PLANT TO A PARTICULAR CITY CONSIGNED TO MORE THAN ONE GOVERNMENT AGENCY ON ONE BILL OF LADING; (2) INSTANCES IN WHICH PREMIUM TRANSPORTATION IS USED, SUCH AS WHERE SHIPMENTS ARE MADE UNPACKED IN PADDED VANS FOR YOUR CONVENIENCE AND YOUR CLAIM FOR REIMBURSEMENT IS LIMITED TO THE CRATED RATE FOR REGULAR SURFACE TRANSPORTATION; AND (3) INSTANCES WHERE SHIPMENTS ARE MADE BY AIR FREIGHT FOR YOUR CONVENIENCE AND REIMBURSEMENT IS CLAIMED ON THE BASIS OF THE CRATED RATE FOR REGULAR SURFACE TRANSPORTATION.

IN YOUR RESUME OF PROPOSED SOLUTIONS TO THE EXISTING PROBLEM YOU SUGGEST THAT A RULING BE MADE TO THE EFFECT THAT A CONTRACTOR WILL NO LONGER BE REQUIRED TO FURNISH A COPY OF A PAID FREIGHT RECEIPT SUPPORTING HIS TRANSPORTATION INVOICES, PROVIDED HIS INVOICE IS CERTIFIED TO THE EFFECT THAT THE TRANSPORTATION CHARGES AS BILLED ARE JUST AND CORRECT, AND THAT THE CARRIER HAS BEEN PAID FOR THE MOVEMENT OF THE PARTICULAR MACHINE, IN ACCORDANCE WITH THE CONDITIONS OF THE GENERAL SERVICES ADMINISTRATION CONTRACT. YOU ALSO SUGGEST THAT IT COULD FURTHER BE REQUIRED THAT YOU INDICATE ON YOUR INVOICE THE NAME OF THE CARRIER, THE BILL OF LADING NUMBER, THE DATE OF THE SHIPMENT, THE WEIGHT OF THE SHIPMENT, AND THE RATE PER 100 POUNDS.

WE DO NOT FEEL THAT A CERTIFICATE ON AN INVOICE BY THE CONTRACTOR THAT THE TRANSPORTATION CHARGES ARE CORRECT AND JUST WOULD BE PARTICULARLY HELPFUL IN OUR AUDIT OR SATISFY OUR AUDIT RESPONSIBILITIES AS TO THESE INVOICES. HOWEVER, WITH RESPECT TO THE CONDITIONS MENTIONED BY YOU, IT WOULD APPEAR THAT, AS TO THE FIRST CATEGORY COVERING A CONSOLIDATION OF SHIPMENTS FOR ORE THAN ONE GOVERNMENT AGENCY, A PHOTOSTATIC OR OTHER MECHANICALLY PRODUCED EQUIVALENT COPY OF THE PAID FREIGHT BILL WOULD SERVE TO SUPPORT THE PRORATA PORTION OF THE TOTAL CHARGES PREPAID ON ANY SINGLE UNIT SHIPPED. WITH RESPECT TO THE SECOND AND THIRD CATEGORIES MENTIONED ABOVE, OUR REQUIREMENTS FOR AUDIT PURPOSES WOULD BE SATISFIED IF, IN ADDITION TO THE PHOTOSTATIC OR OTHER MECHANICALLY PRODUCED EQUIVALENT COPY OF THE PAID FREIGHT BILL BY THE METHOD ACTUALLY USED FOR SHIPMENT, THE INVOICE CLAIMING REIMBURSEMENT PURSUANT TO THE GENERAL SERVICES ADMINISTRATION CONTRACT CONTAINED A FULL EXPLANATION AS TO HOW THE CHARGES TO THE GOVERNMENT AGENCIES WERE COMPUTED, INCLUDING THE NAME OF THE CARRIER/S) THAT WOULD HAVE BEEN USED HAD THE SHIPMENT MOVED BY REGULAR SURFACE TRANSPORTATION, THE CRATED WEIGHT OF THE SHIPMENT AND THE RATE PER 100 POUNDS TO ENABLE US TO COMPUTE THE CHARGES THAT WOULD HAVE BEEN INCURRED HAD THE SHIPMENT MOVED BY REGULAR SURFACE TRANSPORTATION.

AS YOU POINT OUT, WE, OR ANY GOVERNMENT AGENCY, WOULD, OF COURSE, STILL HAVE THE PREROGATIVE AND WE, OF COURSE, RESERVE THE RIGHT OF TAKING EXCEPTION TO ANY CHARGE WHICH IS NOT FELT TO BE JUSTIFIED.