B-150556, MAY 17, 1968

B-150556, MAY 17, 1968

TO MR. SECRETARY:

WE REFER AGAIN TO LETTER DATED JANUARY 5, 1968, FROM THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER), AND TO ITS ATTACHMENT, A COPY OF A MEMORANDUM DATED OCTOBER 27, 1967, FILE NCFS3411, ADDRESSED TO HIM BY THE DEPARTMENT OF THE NAVY. IT IS INDICATED IN THE LETTER THAT OCEAN CARRIERS OF DEPARTMENT OF DEFENSE CARGO HAVE EXPERIENCED DELAYS IN SUBMITTING BILLS DUE TO DIFFICULTIES ENCOUNTERED IN OBTAINING PROPERLY RECEIPTED OR ACCOMPLISHED BILLS OF LADING.

THE LETTER OF THE COMPTROLLER POINTS OUT THAT OUR CIRCULAR LETTER OF JUNE 16, 1967 (B-150556) AUTHORIZED CIVIL AGENCIES TO MODIFY PAYMENT PROCEDURES TO OVERCOME SIMILAR BILLING DIFFICULTIES. THE VIEW IS EXPRESSED THEREIN THAT UTILIZATION BY THE DEPARTMENT OF DEFENSE OF CIVIL AGENCY PROCEDURES WOULD BE EQUALLY BENEFICIAL TO OCEAN CARRIERS OF DEPARTMENT OF DEFENSE CARGO. THE NAVY DEPARTMENT MEMORANDUM STATES THAT "USE OF OVERPRINTED COMMERCIAL BILLS OF LADING IS NOT RECOMMENDED FOR DOD COMPONENTS.' ACCORDINGLY, THE COMPTROLLER'S LETTER REQUESTS THAT THE PROVISIONS OF 5 GAO 3000 FOR PROCUREMENT OF AND PAYMENT FOR OCEAN FREIGHT TRANSPORTATION BE MODIFIED TO PERMIT DEPARTMENT OF DEFENSE COMPONENTS TO UTILIZE THE PROCEDURES SPECIFIED IN OUR LETTER OF JUNE 16, 1967 (B-150556) FOR SHIPMENTS MOVING ON STANDARD GOVERNMENT BILL OF LADING FORMS.

YOUR PREDECESSOR WAS ADVISED BY OUR LETTER DATED JANUARY 25, 1968, B- 150556, THAT OUR TRANSPORTATION DIVISION PROPOSED TO MAKE A SURVEY OF SEVERAL CIVILIAN CERTIFYING AND DISBURSING OFFICES AND TO REVIEW THE OCTOBER AND NOVEMBER 1967 CIVIL OCEAN FREIGHT TRANSPORTATION VOUCHERS THAT ARE RECEIVED IN THE TRANSPORTATION DIVISION TO ENABLE IT TO MAKE AN EVALUATION OF THE EFFECTIVENESS OF THE NEWLY AUTHORIZED PROCEDURES FOR THE CIVIL AGENCIES. THE SURVEY NOW IS COMPLETED AND THE DIVISION MAKES THE FOLLOWING OVSERVATIONS:

1. THE OCEAN CARRIERS IN GENERAL ARE NOT WITHHOLDING THEIR BILLING UNTIL 30 DAYS AFTER THE CARGO HAS BEEN LOADED, AND THEY ARE NOT PLACING LOADING OR ARRIVAL DATES ON THE FACE OF THE BILL.

2. THE AGENCIES IN GENERAL ARE PROCESSING THE BILLS FOR PAYMENT WHEN RECEIVED, WITHOUT REGARD TO THE 30-DAY REGULATION.

3. THE AGENCIES ARE COMPLYING WITH THAT PART OF THE PRESCRIBED PROCEDURE PERMITTING THE USE OF A COMMERCIAL BILL OF LADING OVERPRINTED OR STAMPED "THIS SHIPMENT IS MADE UNDER ALL TERMS AND CONDITIONS OF THE STANDARD FORM GOVERNMENT BILL OF LADING * * *.'

PARAGRAPH 2 OF THE CIVIL AGENCY PROCEDURES STATES THAT:

"THE OCEAN CARRIERS WILL NOT SUBMIT THEIR BILLS FOR PAYMENT * * * UNTIL THE VESSEL HAS ARRIVED AT THE DESTINATION PORT OR 30 DAYS AFTER THE CARGO HAS BEEN LOADED * * * WHICHEVER IS EARLIER.'

A STUDY OF 94 OF THE CARRIERS' BILLS, MADE DURING THE SURVEY, INDICATED THAT ONLY TWO CARRIERS ON ONE BILL EACH WITHHELD BILLING UNTIL 30 DAYS AFTER THE LOADING DATE.

PARAGRAPH 3 OF THE CIVIL AGENCY PROCEDURES STATES IN PART THAT:

"THE OCEAN CARRIERS' BILLINGS WILL BE PRESENTED ON STANDARD FORM 1113 * * *, AND THE CARRIERS WILL INDICATE ON THE FACT THEREOF THE DATE THE SHIPMENT ARRIVED AT DESTINATION PORT OR THE DING.'

OF 92 OF THE 94 BILLS SUBMITTED FOR PAYMENT LESS THAN 30 DAYS AFTER LOADING DATE, ONLY SIX HAD AN ARRIVAL DATE SHOWN ON THE FACE OF THE STANDARD FORM 1113.

THERE WAS MUTUAL AGREEMENT BETWEEN THIS OFFICE AND THE CARRIER ASSOCIATIONS THAT THE LOADING DATE WOULD BE SHOWN ON THE STANDARD FORM 1113 AND THAT THE ARRIVAL DATE WOULD BE SHOWN IF THE CARRIER PRESENTED THE BILL PRIOR TO 30 DAYS AFTER THE LOADING DATE. OUR TRANSPORTATION DIVISION'S SURVEY INDICATES THAT THE OCEAN CARRIERS APPARENTLY DO NOT UNDERSTAND THIS REQUIREMENT OR HAVE DISREGARDED IT.

WE ARE ADVISING THE OCEAN CARRIER ASSOCIATIONS OF THE RESULTS OF THE SURVEY AND ARE POINTING OUT THAT THEIR MEMBER CARRIERS IN GENERAL ARE NOT COMPLYING WITH THE AGREED PROCEDURES SET FORTH IN B-150556, JUNE 16, 1967; WE ARE TELLING THEM THAT UNLESS WE RECEIVE ASSURANCES WITHIN A REASONABLE TIME THAT THEY HAVE CONTACTED THEIR MEMBER CARRIERS AND HAVE SECURED AGREEMENTS FROM THEM FOR SUBSTANTIAL COMPLIANCE WITH THE NEWLY AGREED PROCEDURES, OUR OFFICE WILL HAVE TO RECONSIDER THE DESIRABILITY OF SUCH PROCEDURES.

MEANTIME, WE HEREBY GRANT THE REQUEST OF YOUR COMPTROLLER FOR MODIFICATION OF THE PROVISIONS OF 5 GAO 3000 TO PERMIT DEPARTMENT OF DEFENSE COMPONENTS TO UTILIZE THE PROCEDURES SPECIFIED IN OUR LETTER OF JUNE 16, 1967, B-150556, BUT ONLY FOR SHIPMENTS MOVING ON STANDARD GOVERNMENT BILL OF LADING FORMS, AND ONLY WHERE THE FREIGHT CHARGES OF THE OCEAN CARRIERS ARE FOR SHIPMENTS MOVING FOR THE ACCOUNT OF THE UNITED STATES, AS DISTINGUISHED FROM SHIPMENTS MOVING FOR THE ACCOUNT OF FREIGHT FORWARDERS OR PERSONS OTHER THAN THE UNITED STATES. THIS AUTHORITY IS GRANTED WITH THE FURTHER UNDERSTANDING THAT YOUR DEPARTMENT WILL TAKE ADEQUATE PRECAUTIONS NOT TO MAKE PAYMENT UNTIL (1) 30 DAYS AFTER LOADING OR (2) THE DATE OF ARRIVAL AT THE PORT OF DESTINATION, WHICHEVER IS EARLIER.