B-244307, Jul 1, 1991
B-244307: Jul 1, 1991
The following discussion is my legal opinion concerning the issues you raised. Is not necessarily the official position of the Office of General Counsel (OGC). It will become the official position of OGC to the extent that you incorporate anything herein into your report and OGC concurs in the report. Improper Certification Your first concern is whether a carrier is required to deliver freight on the day that a company official certifies delivery on the Government Bill of Lading (GBL). The date on which delivery is required is determined in each transportation contract by the terms and conditions that apply to that contract. The general rule for Department of Defense general commodity shipments is contained in paragraph 20-5 of the Defense Traffic Management Regulation (DTMR).
B-244307, Jul 1, 1991
Problems Identified in the Transportation of Government Property (Job Code 398079) B-244307: This memorandum responds to your memorandum dated May 24, 1991, requesting advice in the above-referenced matter.
The following discussion is my legal opinion concerning the issues you raised, but is not necessarily the official position of the Office of General Counsel (OGC). It will become the official position of OGC to the extent that you incorporate anything herein into your report and OGC concurs in the report.
Your first concern is whether a carrier is required to deliver freight on the day that a company official certifies delivery on the Government Bill of Lading (GBL). If not so delivered, you request information on the penalties that apply.
The date on which delivery is required is determined in each transportation contract by the terms and conditions that apply to that contract. The general rule for Department of Defense general commodity shipments is contained in paragraph 20-5 of the Defense Traffic Management Regulation (DTMR), contained in Army Regulation 55-355 (July 31, 1986), and some considerations include: times required in individual Guaranteed Traffic Program contracts; the required delivery date (RDD) shown on the GBL; and the priority of service.
There are negative consequences if the carrier in fact does not deliver on the date it certifies delivery, By authority of the Transportation Payment Act of 1972, the General Accounting Office and the Department of Justice first prescribed joint regulations in 1973 for the payment of charges for transportation services allowing, among other things, carrier certification of delivery in lieu of consignee certification. See 38 Fed.Reg. 30431 (Nov. 5, 1973). This remains the general rule today. See 4 C.F.R. Part 56.
Carrier certification that the shipment involved has been delivered in good order and condition is accomplished by completing Block 35 on the Government Bill of Lading (SF 1103) and the Payee's Certificate on the Public Voucher for Transportation Charges (SF 1113). Block 35a of the GBL specifically requires the carrier to certify the date of delivery. The GBL must be submitted with the Public Voucher to obtain payment, and finance offices rely on the SF 1113 and GBL carrier certificates to justify payment.
Experience indicates that some carriers bill for their services without actual verification that the shipment had in fact been delivered on the date indicated on the GBL. Some carrier billing offices do so on the assumption (which may or may not be reasonable) that their driver would have had to deliver the shipment by the date certified. Others may be primarily motivated by the need to bill as rapidly as possible to obtain fast payment without regard to whether delivery actually occurred. Whatever the reason, certification of delivery without actual knowledge that the shipment was delivered, and delivered on the date asserted in the certificate, is a possible violation of the criminal laws of the United States.
Under 18 U.S.C. Sec. 287, a person can be fined and/or imprisoned for not more than 5 years for making or presenting any claim upon or against the United States, or any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent. Also, a person is subject to a fine of as much as $10,000 and/or imprisoned up to 5 years under 18 U.S.C. Sec. 1001, if he knowingly and willfully, makes a false statement in a matter within the jurisdiction of a department or agency. Under 18 U.S.C. Sec. 1018 a person is subject to a $500 and/or 1 year imprisonment if he knowingly makes and delivers as true a certificate or writing containing a statement which he knows to be false, provided he is authorized by the law of the United States to make or give such a certificate and punishment is not elsewhere expressly provided by law. The application of 18 U.S.C. Sec. 1018 is this situation is unclear because carrier certification is established by regulation, not by statute.
Conviction of an individual or corporation under any of these statutes depends on the knowledge and intent of the person acting for the carrier; the specific facts in each case are critical.
Whether or not criminal intent exists, administrative sanctions may be imposed for improper certifications. In accordance with Chapter 42 of the DTMR and Military Traffic Management Regulation (MTMR) 15-1, (C1, Dec. 12, 1984) disqualification from participation in military traffic may be imposed on a carrier for a period of time, normally for a maximum not exceeding 2 years. If it appears that the carrier knowingly and willfully filed false claims or otherwise violated the criminal law, the firm may be debarred from contracting on a government wide basis in accordance with 48 C.F.R. Subpart 9.4.
Your second area of concern involves a carrier's authority to sell or otherwise dispose of undeliverable or misidentified property belonging to the Federal government. Additionally, you request our opinion concerning the rights of a person who purchases such goods from a carrier for value.
In the example you cite, a shipment (GBL C-8,036,588) which included 152 pounds of expensive military communications equipment, was tendered to PIE Nationwide on August 25, 1989, for delivery to Sharpe Army Depot in Lathrope, California. For reasons which remain unclear, the shipment was never delivered to Sharpe. In December 1989, Brian McNair purchased the communications equipment for $200 from National Product Sales (NPS), a company engaged in the disposal of frustrated freight in the possession of transportation carriers. After purchase, McNair determined that the equipment he purchased was worth about $450,000. He tracked the origin of the equipment and eventually spoke to a contracting officer responsible for the manufacturer's account; the contracting officer told McNair that the equipment that he possessed should have been delivered to Sharpe. McNair spoke to an official at Sharpe responsible for inbound freight discrepancies who told him that she was unaware of the shipment until his call. That official then initiated a Transportation Discrepancy Report and claim action against the carrier. As of July 25, 1990, the Defense Finance and Accounting Service-Indianapolis had no record of payment of the GBL.
Meanwhile, McNair, on the advice of counsel, has refused to relinquish the property to the government without payment. The Army Criminal Investigation Division's Report in this matter does not indicate how much money McNair wants for the return of the equipment, but he refused $400 (double what he paid) when that offer was made by NPS.
While the Federal Bureau of Investigation has not seized the equipment because there is no indication of criminal activity, that does not mean that McNair has title to the equipment or the right to possess it. Federal case law clearly indicates that the government has title and the right to possess the equipment.
Property once acquired by the government may not be sold, or title otherwise disposed of, except under the authority of Congress and in the manner provided by law. Kern Copters, Inc. v. Allied Helicopter Service, Inc., 277 F.2d 308, 313 (9 Cir. 1960); 22 Comp.Gen 563, 565 (1942); 34 Op. Atty. Gen. 320, 322 (1924). Furthermore, inactivity or neglect by government officers is insufficient to cause the government to lose its property by abandonment. Kern Copters, Inc. v. Allied Helicopter Service, Inc., supra; United States ex rel Tennessee Valley Authority v. Caylor, 159 F.Supp. 410, 413 (E.D. Tenn. 1958).
We are unaware of any Federal statutory or regulatory provision that authorizes disposition of astray government freight by a carrier because it appears to be abandoned. In fact, the Military Traffic Management Command (MTMC) has taken various measures to assure that astray government property is returned to military control. For example, under Item 65 of MTMC's Freight Traffic Rules Publication No. 1A (effective June 1, 1989), carriers are required to notify either MTMC or the nearest military installation when the shipper or consignee cannot be identified and freight cannot be delivered. Under DTMR para. 41-6, a carrier may give astray freight identified as government property to the local Transportation Officer to hold pending final disposition.
When individuals like Mr. McNair refuse to relinquish government property, and there is no criminal activity involved, the Department of Justice should initiate legal action to recover the property.
Electronic Data Interchange (EDI)
In our discussions on June 25, 1991, you also indicated some concern with regard to the electronic data interchange (EDI) of billing information. In this regard, please consider the ICC's position on EDI in 367 I.C.C. 699 (1983), modifying 365 I.C.C. 581 (1982), copies of which have been provided to you. Attached is a copy of 53 Fed.Reg. 20853 (June 7, 1988), which extends EDI authority to the rail mode. The ICC's bill of lading information requirements, and the use of EDI in connection with these requirements, is contained in 49 C.F.R. Part 1035 (rail) and 49 C.F.R. Part 1051 (motor), copies of which are also attached. After you have the opportunity to review these regulations and decisions, please advise me if you are still concerned about EDI.