B-151098, JUL. 23, 1963

B-151098, JUL. 23, 1963

TO WARNER DOG FOOD COMPANY, INC.:

IN YOUR LETTER OF MARCH 11, 1963, YOU REQUEST RECONSIDERATION OF OUR CLAIMS DIVISION SETTLEMENT DATED MARCH 6, 1963, WHICH DENIED YOUR CLAIM FOR $150.77, FOR DRAYAGE COSTS, INCURRED UNDER YOUR CONTRACT O.I. 442-63Q WITH THE DEPARTMENT OF THE ARMY, FOR DELIVERING FROM YOUR PLANT TO A NEAR- BY RAIL TERMINAL 65,500 POUNDS OF DOG FOOD, PACKED FOR SHIPMENT OVERSEAS.

THE INVITATION FOR BIDS (IFB) REQUIRED YOU TO BID "F.O.B. ORIGIN.' THE FUNDAMENTAL MEANING OF F.O.B., FREE ON BOARD, IS THAT THE GOODS ARE TO BE PUT INTO THE HANDS OF A CARRIER FREE OF EXPENSE TO THE BUYER, WILLISTON ON SALES, SEC. 280. THE QUESTION IN THIS CASE, AS YOU PUT IT, IS F.O.B. WHAT AND WHERE; THAT IS DOES "ORIGIN, IN THIS CONTEXT EXCLUSIVELY DENOTE A TRUCK AT YOUR PLANT, OR MAY IT ALSO BE TAKEN TO MEAN ANOTHER TYPE OF CARRIER NEAR YOUR PLANT?

YOU POINT OUT THAT IN ACCORDANCE WITH INSTRUCTIONS IN THE IFB, YOU ADVISED THE GOVERNMENT THAT YOUR BID PRICES WERE BASED UPON SHIPMENT FROM YOUR PLANT. YOU CONCLUDE THAT SINCE YOUR BID WAS SUBMITTED F.O.B. PLANT, AND SINCE YOUR COMPANY HAS NO RAIL SIDING, YOUR BID WAS NECESSARILY SUBMITTED AND ACCEPTED ON THE BASIS THAT YOU WOULD BE REQUIRED TO ABSORB ONLY THE COST OF LOADING A MOTOR CARRIER AT YOUR PLANT. IN THIS REGARD, WE HAVE HELD THAT WHERE THE CONTRACT PROVIDES FOR DELIVERY F.O.B. PLANT, THE GOVERNMENT MAY ASSUME THE DRAYAGE COST BY MEANS OF AN EQUITABLE ADJUSTMENT UNDER THE "CHANGES" ARTICLE OF STANDARD FORM 32. 32 C.G. 466.

HOWEVER, THE ABOVE DECISION CITED AS AUTHORITY FOR PERMITTING THE GOVERNMENT TO PAY DRAYAGE UNDER F.O.B. PLANT CONTRACTS, CORRECTLY IMPLIED THAT WE WOULD HAVE NO OBJECTION TO AN F.O.B. ORIGIN CONTRACT PROVIDING THE GOVERNMENT WITH AN OPTION TO REQUIRE DELIVERY OF THE GOODS TO A NEAR-BY RAIL TERMINAL WHERE THE METHOD OF TRANSPORTATION HAD NOT BEEN DETERMINED. IT IS OUR BELIEF THAT SINCE DRAYAGE COST IS ORDINARILY SUCH A SMALL FRACTION OF THE TOTAL VALUE OF ANY PROCUREMENT, SPECIFICATIONS WHICH PLACE THE RESPONSIBILITY FOR DRAYAGE EXPENSE ON THE CONTRACTOR ARE NOT SO INDEFINITE AS TO WARRANT CANCELLATION. CF. 36 C.G. 311. WE SUBSEQUENTLY REACHED THIS CONCLUSION IN OUR DECISION, B-144682, DATED FEBRUARY 15, 1961, WHEREIN WE HELD THAT A BIDDER WHO RESTRICTED DELIVERY UNDER AN F.O.B. ORIGIN CONTRACT TO F.O.B. TRUCK AT HIS PLANT, THEREBY ATTEMPTING TO AVOID DRAYAGE COSTS, HAD SUBMITTED A NONRESPONSIVE BID.

IN ORDER TO EVALUATE YOUR BID ON A COMMON BASIS WITH OTHERS, INCLUDING THOSE SUBMITTED BY BIDDERS HAVING A RAIL SIDING AT THEIR PLANTS, YOU WERE REQUIRED TO GIVE THE SHIPPING POINT FROM WHICH YOUR PRICES WERE BASED. HOWEVER, CLAUSE 35 OF THE GENERAL PROVISIONS, WHICH WAS MADE A PART OF THE IFB BY PARAGRAPH F. OF THE TERMS AND CONDITIONS ON PAGE 12 OF THE IFB, DEFINED F.O.B. ORIGIN TO MEAN THAT "SUPPLIES ARE LOCATED AT OR NEAR THE CONTRACTOR'S PLANT AT THE CITY OR SHIPPING POINT SPECIFIED BY THE BIDDER.' WHILE THE GOVERNMENT'S INTENT WOULD HAVE BEEN MORE CLEARLY EXPRESSED IF THE IFB HAD INCORPORATED THE APPROPRIATE LANGUAGE IN ASPR 1- 1302.2 (B) AND 1 1305.4, WE THINK CLAUSE 35 ADEQUATELY ADVISED BIDDERS THAT THEY WERE TO PROVIDE FOR DELIVERY, F.O.B. CARRIER'S EQUIPMENT, WHARF, OR FREIGHT STATION, AT THE GOVERNMENT'S OPTION, AT A CITY OR SHIPPING POINT SPECIFIED BY THE BIDDER WHICH WAS AT OR NEAR HIS PLANT.

FROM THE FOREGOING, WE MUST CONCLUDE THAT THE GOVERNMENT HAS THE CONTRACTUAL AUTHORITY TO MAKE AN AGREEMENT WHEREBY EITHER IT OR THE CONTRACTOR IS OBLIGATED TO ASSUME RESPONSIBILITY FOR DRAYAGE COSTS, AND THAT UNDER CLAUSE 35 OF THE IFB, IT IS CLEAR THAT THE AGREEMENT OF THE PARTIES PLACES THIS RESPONSIBILITY ON THE CONTRACTOR. ACCORDINGLY, THE SETTLEMENT OF OUR CLAIMS DIVISION IS SUSTAINED.