B-170469, OCT. 20, 1970

B-170469, OCT. 20, 1970

TRANSPORTATION CHARGES - ADDITIONAL COSTS DECISION RELEASING FROM LIABILITY BOTH BECK ENGINEERING KOMPANY AND GULF, MOBILE & OHIO RAILROAD COMPANY FOR EXCESSIVE TRANSPORTATION CHARGES INCURRED IN THE SHIPMENT OF 50 WARM-AIR, OIL-FIRED FURNACES MANUFACTURED AT BECK'S ST. LOUIS PLANT, TO KOREA. WHERE THE ABSENCE OF A PRIVATE RAILROAD SIDING AT THE KAISER EXPORT PACKING SERVICE REQUIRED THE SUBSTITUTION OF TRAILER-ON-FLAT-CAR SERVICE FOR THE ALL-RAIL SERVICE ENVISIONED IN THE ORIGINAL CONTRACT THE GOVERNMENT HAS NO CLAIM FOR THE REIMBURSEMENT FOR INCREASED CHARGES BECAUSE ITS PERSONNEL MAKING THE SHIPPING ARRANGEMENTS SHOULD HAVE KNOWN THAT IT WAS IMPOSSIBLE TO OBTAIN THE SPECIFIED SERVICE AT THE SHIPPING POINT.

TO DEFENSE SUPPLY AGENCY, DEFENSE CONTRACT ADMINISTRATION, SERVICES REGION:

WE REFER TO DOCKET NO. 15095, AN APPEAL BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS BY BECK ENGINEERING COMBUSTION KOMPANY, CONTRACT NO. DSA-700-23837, MIL-B-3180A (21 MAY 1957), YOUR FILE DCRS L. THE APPEAL CONCERNS TRANSPORTATION CHARGES INCURRED IN CONNECTION WITH CONTRACT NO. DSA-700-23837; IT WAS SET DOWN FOR HEARING ON AUGUST 13, 1970, BUT THE HEARING WAS INDEFINITELY POSTPONED AFTER OUR OFFICE REPORTED THE NEED FOR FURTHER EXAMINATION OF THE CONTRACT AND THE TRANSPORTATION CHARGES.

WE HAVE EXAMINED THE RELEVANT TARIFFS AND SECTION 22 QUOTATIONS TO DETERMINE IF IN FACT THE RAILROAD INVOLVED MIGHT BE HELD LIABLE ON THE GROUND THAT THE SUBSTITUTION OF TRAILER-ON-FLAT CAR SERVICE FOR ALL RAIL SERVICE WAS FOR THE RAILROAD'S CONVENIENCE. AFTER STUDYING THE CONTRACT, THE PAYMENT RECORDS AND THE TARIFFS AND RATE QUOTATIONS, IT IS OUR OPINION THAT NEITHER THE BECK ENGINEERING COMBUSTION KOMPANY NOR THE GULF, MOBILE & OHIO RAILROAD COMPANY IS LIABLE FOR THE EXCESSIVE TRANSPORTATION CHARGES PAID.

CONTRACT NO. DSA-700-23837 WAS AWARDED MARCH 30, 1966, TO THE BECK ENGINEERING COMBUSTION KOMPANY, FOR THE PROCUREMENT OF 50 WARM-AIR, OIL FIRED FURNACES, WHICH WERE TO BE MANUFACTURED AT BECK'S ST. LOUIS, MISSOURI, PLANT. AFTER INSPECTION AT THAT PLANT, THE FURNACES WERE TO BE PACKAGED AND PACKED FOR EXPORT BY THE KAISER EXPORT PACKING SERVICE AND SHIPPED FROM ITS PLACE OF OPERATION AT 4324 CLAYTON AVENUE, ST. LOUIS.

THE 50 FURNACES WERE SHIPPED TO NEW ORLEANS FOR EXPORT TO KOREA ON SIX GOVERNMENT BILLS OF LADING, C-7993544, D-0466867, D-0703013, D 0703082, D- 0703083 AND D-0703084, ISSUED THROUGH YOUR OFFICE. THE FIRST WAS ISSUED MAY 26, 1966, THE SECOND JULY 7, THE THIRD JULY 21, AND THE REMAINING THREE ON JULY 25. ALL THE BILLS OF LADING WERE ROUTED "GMO-NOPB DELY"; ALL SHOWED THE SHIPPER TO BE "KAISER EXPORT PACKING SERVICE C/O BECK ENGINEERING CO." THE FIRST FIVE SHIPMENTS EACH CONTAINED EIGHT BOXES WEIGHING 23,600 POUNDS; THE SIXTH AND FINAL SHIPMENT CONTAINED 10 BOXES AND WEIGHED 29,500 POUNDS. THE SHIPMENTS WERE DELIVERED IN NEW ORLEANS IN JUNE, JULY, AUGUST AND SEPTEMBER, 1966.

IN DUE COURSE, THE GULF, MOBILE AND OHIO RAILROAD (GM&O) BILLED AND WAS PAID CHARGES ON THESE SHIPMENTS AT ALL-RAIL TARIFF OR SECTION 22 QUOTATION RATES. LATER, HOWEVER, THE GM&O PRESENTED CLAIMS FOR ADDITIONAL CHARGES ON ALL SIX SHIPMENTS, ALLEGING THAT THEY ACTUALLY MOVED IN TRAILER-ON-FLAT CAR SERVICE RATHER THAN IN ALL-RAIL SERVICE. IN RESPONSE TO INQUIRIES FROM OUR TRANSPORTATION DIVISION, YOU ADVISED THAT THE FURNACES DID IN FACT MOVE IN RAILROAD-OWNED TRAILERS ON FLAT CARS, 2 TRAILERS EACH FOR THE FIRST FIVE SHIPMENTS, AND 3 FOR THE SIXTH. YOU ASKED TO BE INFORMED OF THE EXCESS CHARGES, FOR WHICH YOU CONSIDERED THE CONTRACTOR LIABLE, SINCE THE BILLS OF LADING CALLED FOR ALL-RAIL ROUTING. THE CARRIER'S CLAIMS WERE ALLOWED BY OUR OFFICE AND THE CHARGES PAID TO THE CARRIER WERE REPORTED TO YOU FOR USE AS A BASIS FOR A CLAIM MADE UPON THE BECK COMBUSTION ENGINEERING KOMPANY. THAT CLAIM CULMINATED IN A PROCEEDING BEFORE THE ARMED SERVICES BOARD OF CONTRACT APPEALS, DOCKET NO. 15095, NOW PENDING.

THE DELIVERY TERMS OF CONTRACT NO. DSA-700-23837, WHICH ARE SPECIFIED ON PAGE 1C, PARAGRAPH 4.201, WERE "F.O.B. ORIGIN *** F.O.B. CARRIER'S EQUIPMENT." INSERTED IN THE APPROPRIATE PLACE AFTER THAT PRINTED LEGEND IS THE HANDWRITTEN ADDRESS "4324 CLAYTON AVE. ST. LOUIS, MISSOURI," THE ADDRESS OF THE KAISER EXPORT PACKING SERVICE.

WE UNDERSTAND THAT THE KAISER EXPORT PACKING SERVICE IS NOT LOCATED ON A PRIVATE RAILROAD SIDING. THAT BEING SO, IT WAS A PHYSICAL IMPOSSIBILITY FOR THE "CARRIER'S EQUIPMENT" RECEIVING THE FURNACES AT THE F.O.B. POINT NAMED IN THE CONTRACT TO CONSIST OF RAILROAD BOXCARS. SINCE THE BILLS OF LADING WERE ISSUED TO SHOW ROUTING VIA THE GULF, MOBILE & OHIO RAILROAD, WE CANNOT SAY THAT THE SHIPPER WAS NOT JUSTIFIED IN ASKING THE RAILROAD TO SPOT THE NECESSARY TRAILERS AT THE F.O.B. POINT. FROM OUR POINT OF VIEW THE FACT THAT BECK ENGINEERING ASKED FOR TRAILER-ON-FLAT CAR SERVICE DOES NOT VIOLATE THE F.O.B. TERMS OF ITS CONTRACT NOR THE ROUTING INSTRUCTIONS ON THE BILLS OF LADING, SINCE THE RAILROADS DO PERFORM TRAILER-ON-FLAT CAR SERVICE.

THE THEORY THAT THE RAILROAD PROVIDED A SUBSTITUED SERVICE FOR ITS OWN CONVENIENCE DEPENDS UPON A TARIFF PROVISION IN ITEM 170-B, SUPPLEMENT 42 TO SOUTHERN PORTS FOREIGN FREIGHT COMMITTEE, AGENT, FREIGHT TARIFF 1030-D, I.C.C. 149. THE THEORY FAILS, HOWEVER, BECAUSE THE PROVISION REQUIRES THAT THE SHIPPER LOAD AND THE CONSIGNEE UNLOAD TRAILERS SPOTTED ON PRIVATE OR ASSIGNED SIDINGS OR ON TEAM TRACKS EXACTLY AS THEY WOULD BOXCARS SIMILARLY SPOTTED. IN THE CIRCUMSTANCES, WE DO NOT BELIEVE THAT THERE IS LEGAL JUSTIFICATION FOR CHARGING LIABILITY AGAINST EITHER THE CONTRACTOR OR THE RAILROAD.

FROM OUR EXAMINATION OF THE RECORDS IN THIS MATTER, IT SEEMS CLEAR THAT GOVERNMENT PERSONNEL MAKING THE SHIPPING ARRANGEMENTS SHOULD HAVE KNOWN THAT ALL-RAIL BOXCAR SERVICE WAS IMPOSSIBLE TO OBTAIN AT THE KAISER SHIPPING POINT LOCATION NAMED IN THE CONTRACT. ALSO, IT WOULD APPEAR THAT THE SERVICE USED BY THE CONTRACTOR WAS THE LOWEST COST SERVICE AVAILABLE FROM THE F.O.B. POINT NAMED IN THE CONTRACT, IN VIEW OF THE FACT BECK ENGINEERING INDICATED IT WOULD HAVE BID A HIGHER PRICE FOR LOADING RAILROAD CARS ON A RAILROAD TEAM TRACK.

WE NOTICED, IN OUR STUDY OF THE PAYMENT RECORDS, THAT ALL OF THE BILLS OF LADING WERE ISSUED SHOWING A TARIFF OR SPECIAL RATE AUTHORITY. TWO BILLS OF LADING SHOWED SECTION 22 QUOTATION SFA 3784; THREE SHOWED SECTION 22 QUOTATION SP 161; ONE SHOWED AN EXPORT CLASS TARIFF, NO. 1016-N. HAD THESE SHIPMENTS IN FACT MOVED IN ALL-RAIL BOXCAR SERVICE, THE CHEAPEST CHARGE BASIS FOR THE FIVE SHIPMENTS WEIGHING 23,600 POUNDS EACH WOULD HAVE BEEN THAT PROVIDED IN QUOTATION SFA 3784-A. BUT THAT QUOTATION REQUIRES, IN NOTE 2, THAT IT IS APPLICABLE ONLY WHEN REFERRED TO ON THE COVERING BILL OF LADING. IT WOULD, THEREFORE, HAVE BEEN INAPPLICABLE TO THE SHIPMENTS COVERED BY BILLS OF LADING REFERRING TO OTHER RATE AUTHORITY. WE BRING THIS TO YOUR ATTENTION SINCE THE QUOTATION IS ONE WHICH APPLIES TO "FREIGHT, ALL KINDS"; THIS TYPE OF QUOTATION MAY BE ADVANTAGEOUS TO THE GOVERNMENT BUT IT CAN BE USED ONLY IF ITS CONDITIONS ARE COMPLIED WITH.