B-163623, MAR. 22, 1968

B-163623, MAR. 22, 1968

TO MR. PAUL J. EULE:

REFERENCE IS MADE TO YOUR LETTER, 689-134, DATED FEBRUARY 16, 1968, REQUESTING OUR DECISION AS TO THE PROPER BASIS OF PAYMENT FOR A REQUIREMENT OF ANTHRACITE COAL WHICH WAS SHIPPED TO THE VETERANS ADMINISTRATION HOSPITAL, WEST HAVEN, CONNECTICUT, ON A DELIVERED INTO BINS BASIS UNDER GENERAL SERVICES ADMINISTRATION (GSA) CONTRACT NO. GS 03S- 28737. YOU STATE THAT THE COAL IS MOVED BY RAIL FROM THE MINE TO NEW HAVEN WHERE IT IS THEN TRANSPORTED BY A DRAYAGE CONTRACTOR (UNDER CONTRACT WITH THE COAL CONTRACTOR) TO THE HOSPITAL, AND THERE STORED FOR USE. THE CONTRACTOR PROVIDES YOU WITH COPIES OF THE RAILROAD WAYBILLS SHOWING THE TONNAGE SHIPPED AT POINT OF ORIGIN AND CERTIFIED WEIGHMASTERS' CERTIFICATES SHOWING THE NET WEIGHT OF COAL DELIVERED BY THE DRAYAGE CONTRACTOR. YOU STATE THAT RECENTLY THE WEIGHMASTERS' CERTIFICATES HAVE EXCEEDED THE WEIGHTS INDICATED ON THE RAILROAD WAYBILLS AND THAT THE CONTRACTOR HAS DEMANDED PAYMENT ON THE BASIS OF THE FORMER RECEIPTS IN ACCORD WITH PROVISION 4/C) OF THE CONTRACT'S SPECIAL PROVISIONS, QUOTED WITH THE OTHER PAYMENT PROVISIONS AS FOLLOWS:

"4. WEIGHTS AND UNIT OF PURCHASE.-- THE UNIT OF PURCHASE SHALL BE THE NET TON OF 2,000 POUNDS, UNLESS OTHERWISE STATED IN THE SCHEDULE. PAYMENT HEREUNDER SHALL BE ON THE BASIS OF WEIGHTS DETERMINED AS HEREIN PROVIDED.

(A) RAILROAD SCALE WEIGHTS AT USUAL POINT OF WEIGHING WILL GOVERN SETTLEMENT IN CASE OF ALL-RAIL DELIVERY, EXCEPT WHEN STATUTES OR REGULATIONS REQUIRE THAT SHIPMENTS BE REWEIGHED AT DESTINATION, IN WHICH EVENT THE WEIGHT SO DETERMINED SHALL GOVERN.

(B) WHEN COAL IS PURCHASED F.O.B. DESTINATION AND DELIVERED BY VESSEL, THE WEIGHTS FURNISHED BY THE RAILROAD AT THE LOADING PIER WILL BE ACCEPTED AS THE BASIS ON WHICH SETTLEMENT SHALL BE MADE.

(C) WHERE PURCHASE IS MADE F.O.B. DESTINATION AND DELIVERY IS EFFECTED BY TRUCK, A CERTIFIED LICENSED WEIGHMASTER'S CERTIFICATE OF WEIGHT FURNISHED BY THE CONTRACTOR FOR EACH TRUCKLOAD WILL BE USED AS THE BASIS OF SETTLEMENT. WEIGHT CERTIFICATE SHOULD BE ACCOMPANIED BY STATEMENT SETTING FORTH THE NAME OF THE MINE FROM WHICH THE COAL WAS SHIPPED.

(D) WEIGHTS OF COAL PURCHASED UNDER CONDITIONS NOT COVERED BY THE FOREGOING SHALL BE DETERMINED BY PREVAILING COMMERCIAL PRACTICE.' YOU FURTHER STATE THAT IT MUST BE ASSUMED THAT THE COAL HAS INCREASED IN WEIGHT BECAUSE OF ADDED MOISTURE AND THEREFORE REQUEST AUTHORITY TO PAY ON THE BASIS OF THE WEIGHTS INDICATED IN THE RAILROAD WAYBILLS.

THE TYPE OF DELIVERY REQUIRED HERE IS IDENTIFIED IN THE CONTRACT AS A METHOD OF SHIPMENT DISTINCT FROM THAT INVOLVED IN EITHER F.O.B. MINE OF F.O.B. DESTINATION PURCHASES. IT WOULD THEREFORE APPEAR THAT PROVISION 4 (D) WOULD GOVERN PAYMENT, SINCE SALE ON A DELIVERED INTO BINS BASIS IS NOT EXPRESSLY COVERED BY PROVISIONS 4 (A/-4 (C). YOU HAVE INFORMED US, HOWEVER, THAT THERE IS NO COMMERCIAL SHIPMENT METHOD ANALOGOUS TO THE FACTS OF DELIVERY DESCRIBED HERE WHICH WOULD ENABLE PAYMENT TO BE MADE ON THE BASIS STIPULATED IN PROVISION 4 (D). UNDER THESE CIRCUMSTANCES WE ARE CONSTRAINED TO HOLD THAT PAYMENT SHOULD BE MADE ON THE BASIS OF THE DRAYAGE WEIGHTS AS STIPULATED IN PROVISION 4 (C), SINCE THE PURCHASE EFFECTED HERE IS FUNDAMENTALLY AN F.O.B. DESTINATION SALE.

WE ARE FORWARDING A COPY OF YOUR SUBMISSION TO THE ADMINISTRATOR OF GSA WITH THE RECOMMENDATION THAT CONSIDERATION BE GIVEN TO AMENDING THE PAYMENT SECTIONS OF THE SPECIAL PROVISIONS IN FUTURE COAL CONTRACTS TO PROVIDE THAT PAYMENT FOR COAL DELIVERED FROM MINE TO DESTINATION IN THE MANNER ADOPTED IN THE INSTANT CASE SHALL NOT BE MADE ON THE BASIS OF A WEIGHT GREATER THAN THAT INDICATED AT THE POINT OF ORIGIN OF THE SHIPMENT.