[Federal Register Volume 63, Number 107 (Thursday, June 4, 1998)]
[Notices]
[Pages 30479-30480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14854]
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DEPARTMENT OF DEFENSE
Department of the Army
Program for Qualifying Department of Defense (DOD) Brokers
AGENCY: Military Traffic Management Command, DOD.
ACTION: Notice.
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SUMMARY: In previous Federal Register notice (Vol. 62, No. 27, pages
5962-5963) Monday, February 10, 1997, the Headquarters, Military
Traffic Management Command (HQMTMC) announced a request for comments on
the Program for Qualifying Department of Defense (DOD) Brokers.
Comments received were about equally divided in favor and in opposition
to the proposal. By notice published in the Federal Register (Vol. 63,
No. 57, page 14431) Wednesday, March 25, 1998, HQMTMC announced its
decision to test the broker program for a period of one year, beginning
June 1, 1998. The Carrier Qualification Program is being amended to add
qualification standards for brokers and to expand the Basic Agreement
to include brokers. The effect is that brokers will be eligible to
qualify to compete in DOD transportation procurements on the same or
similar terms as other carriers, except shipments requiring
Transportation Protective Service (TPS). Under MTMC's new policy,
brokers, interested in competing for DOD traffic (except TPS shipments)
can apply for qualification by executing the Basic Agreement, and by
complying with the requirements for submission of evidence of insurance
(cargo and public liability), a list of underlying carriers which the
broker intends to use in the movement of DOD shipments, a performance
bond, and other standard requirements. A copy of the Agreement between
MTMC and brokers is available upon request. An analysis of the comments
in opposition to the proposal is set forth below.
FOR FURTHER INFORMATION CONTACT:
Rick Wirtz, MTOP-QQ, Telephone 703-681-6393; Headquarters, Military
Traffic Management Command, ATTN: MTOP-QQ, 5611 Columbia Pike, Falls
Church, Virginia 22041-5050.
SUPPLEMENTARY INFORMATION: The following comments in opposition to the
broker proposal were received from industry:
Comment 1. Several comments object that MTMC's treatment of brokers
in the Basic agreement is inconsistent with the definition of brokers
contained in the ICC Termination Act. Thus, the National Motor Freight
Traffic Association,
[[Page 30480]]
Incorporated (NMFTA) contends that brokers, as defined at 49 U.S.C.
13102(2), legally may not conduct carrier operations or perform
transportation unless independently authorized to do so as a motor
carrier or freight forwarder. Similarly, Monheim & Guilbert object that
MTMC's Basic Agreement (``undertakes to carry and deliver. * * *'')
converts a broker into a carrier, imposes loss and damage liability,
and imposes a public liability insurance requirement. MCD
Transportation, Incorporated, objects to the requirement for cargo
insurance. Green Valley Transportation, Incorporated objects that MTMC
is attempting to redefine a broker as a carrier, in conflict with DOT
regulations. Munitions Carriers Conference contends that cargo
liability and insurance are requirements for carriers, not brokers.
Response 1. These objections reflect concerns about the Department
of Transportation's (DOT) enforcement of the Interstate Commerce Act,
as amended by the ICC Termination Act. The Interstate Commerce Act is a
statute providing for the economic regulation of certain carriers and
brokers by the DOT and the Surface Transportation Board. That statute
established a registration requirement for regulated carriers and
brokers. However, that regulatory statute is not a procurement statute,
and it does not restrict MTMC's transportation procurement authority.
The DOD has the right to make its own arrangements and to contract for
transportation on its own terms. The DOD has the same right in this
regard as any commercial shipper. In exercising its procurement
authority, MTMC has determined that brokers should be eligible to
compete for DOD traffic on the same terms as other carriers. For
example, MTMC has the right to contract with brokers for standards of
cargo liability, without regard to whether any cargo liability is
imposed on brokers by the Interstate Commerce Act. Compliance with
DOT's registration requirements remains, as always, a separate
obligation of regulated carriers and brokers. We will not speculate
whether brokers will violate statues and regulations enforced by other
agencies. Under the Basic Agreement, the broker agrees to comply with
all applicable Federal, State, municipal, and other local laws and
regulations.
Comment 2. The American Movers Conference contends that brokers
might violate the Anti-Kickback Act by collecting commissions from
motor carriers for government business, and that the brokers and motor
carriers might discuss each other's rates in violation of the
Certification of Independent Pricing.
Response 2. We cannot assume that brokers and motor carriers are
going to violate the law when they participate in procurements for DOD
traffic. The potential for illegal kickbacks and price fixing always
exists in every government procurement, without regard to the
participation of brokers. The possibility of illegal activities by
bidders is insufficient basis to exclude brokers from competition.
Comment 3. TRISM Specialized Carriers contends that MTMC's proposal
runs the risk that carriers with an unsatisfactory DOT safety rating
may be employed by brokers to transport DOD shipments, presenting the
possibility of a claim of negligence on the part of MTMC in the event
of an injury or accident.
Response 3. MTMC must defer to the DOT in the enforcement of DOT's
safety ratings and regulations. As a general rule, shippers are not
legally liable for the accidents of carriers hired to transport their
goods. In any case, MTMC's Basic Agreement will require brokers to
purchase a minimum of $1 million public liability insurance.
Comment 4. NMFTA and American Road Line contend that the
qualification requirements for brokers are less onerous than the
requirements for motor carriers, thereby giving brokers an unwarranted
competitive advantage. NMFTA contends this violates the mandate for
full and open competition in the Armed Services Procurement Act.
Response 4. The purpose of the proposed Basic Agreement with
brokers is to enable brokers to compete for DOD traffic. There is no
reason to believe that continued exclusion of brokers form competition
for DOD traffic will somehow contribute to full and open competition.
The qualification requirements set forth in the Basic Agreement for
brokers are identical to those contained in the Basic Agreement for
freight forwarders and shipper agents. It would serve no useful purpose
to impose on brokers our requirements governing vehicles and drivers of
motor carriers, because brokers, unlike motor carriers, generally do
not have vehicles and drivers.
George R. McDonald,
Chief, Qualification Division, ADCSOPS-Quality.
[FR Doc. 98-14854 Filed 6-3-98; 8:45 am]
BILLING CODE 3710-08-M
