[Federal Register Volume 61, Number 182 (Wednesday, September 18, 1996)]
[Rules and Regulations]
[Pages 49060-49063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23874]
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DEPARTMENT OF DEFENSE
Department of the Army
32 CFR Part 619
Program for Qualifying Department of Defense (DOD), Air Freight
Forwarders
AGENCY: Military Traffic Management Command, DOD.
ACTION: Final rule.
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SUMMARY: This final rule adds qualification standards for Air Freight
Forwarders and establishes a change in the basic agreement between the
Military Traffic Management Command and Air Freight Forwarders
requirements.
EFFECTIVE DATE: September 18, 1996.
ADDRESSES: Headquarters, Military Traffic Management Command, ATTN:
MTOP-QQ, 5611 Columbia Pike, Falls Church, VA 22041-5050.
FOR FURTHER INFORMATION CONTACT:
Rick Wirtz, telephone: 703-681-6393.
SUPPLEMENTARY INFORMATION:
a. Background
Basic information on the Carrier Qualification Program was
previously published in the Federal Register, 53 FR 17970, 54 FR 27667,
55 FR 7361, 55 FR 52976 and 56 FR 45895 and 57 FR 11376.
b. Comments and Responses
Comment: Carrier objected to providing a list of carriers with who
they contract, as per paragraph 609.6 of the proposed rule.
Response: MTMC requires this information in the event the carrier
abandons or frustrates the shipment in order to maintain the control to
overrule negative decisions made by the forwarders, if the need should
arise.
Comment: MTMC should not be able to direct forwarders as to which
carriers they can and cannot use.
Response: MTMC is ultimately responsible for the safe and timely
delivery of all DOD cargo. In that capacity this organization retains
the authority to approve or disapprove all carriers hauling federal
freight.
Comment: In general, Air Freight Forwarders do not operate vehicles
and therefore do not normally carry Public Liability Insurance.
Response: Code of Federal Regulations 49 387.9 states carriers for
hire in interstate or foreign commerce (property) must maintain a
minimum limit of $750,000. Due to the volume of carriers that
forwarders do business with, MTMC requires $1,000,000 in liability
insurance. All carriers participating in the movement of DOD freight
will provide this minimum.
Comment: Rules must reflect the fact that Air Freight Forwarders
operate on a released-value basis and do not provide full-value
protection, unless additional transportation charges are paid.
Response: MTMC requires $250,000 per shipment cargo insurance.
Again, due to the high volume of carriers providing transportation
services for the forwarders.
Comment: Performance bonds are redundant since cargo losses and
damages are covered under cargo insurance, and on-time delivery is
covered by reduction in rates to service provided.
Response: The bond secures performance and fulfillment of the
[[Page 49061]]
carrier obligation to deliver DOD freight to destination. It will cover
DOD reprocurement costs as a result of carrier default, abandoned
shipments or bankruptcy. The bond will not be utilized for operational
problems such as late pickup or delivery, excessive transit time,
refusals, no shows, improper/inadequate equipment or claims for lost or
damaged cargo.
Comment: If the forwarder changes his name, the SCAC code is
nullified and the forwarder can no longer participate. All of the other
requirements for notice are really not pertinent and place a paperwork
burden on both the forwarder and the Government.
Response: The NMFTA will, in fact, allow a carrier to change their
company name and still retain the original SCAC. However, HQMTMC does
not allow this within the carrier qualification program.
Comment: Pursuit of claims under Interstate Commerce Act needs
clarification as the Air Freight Forwarders Association is not familiar
with these claims procedures.
Response: An Air Freight Forwarder, whether domestic or
international, is by statute and regulation, an indirect air carrier
and hence is liable as a common carrier.
Executive Order 12219
This rule was reviewed under Executive Order 12291 and the
Secretary of the Army has classified this action as non major. The
effect of the rule on the economy will be less than $100 million.
Regulatory Flexibility Act
This rule has been reviewed with regard to the requirements of the
Regulatory Flexibility Act of 1980 and the Secretary of the Army has
certified that this action does not have a significant impact on a
substantial number of small entities. The objective of the program is
to ensure that DOD obtains safe, dependable, and reliable
transportation services. The requirements are not designed to preclude
participation by small businesses. Rather, they are part of a mechanism
designed to ensure that traffic offered to small businesses does not
exceed their capabilities. The program's reporting and recordkeeping
requirements are essentially administrative in nature and do not demand
significant expenditures of resources such as personnel, computer
equipment, or software. No professional or technical training is
necessary to comply with these requirements. Alternatives to facilitate
entry of small businesses have been identified and implemented.
Paperwork Reduction Act
This rule is approved by the Office of Management and Budget as
required under the requirements of the Paperwork Reduction Act of 1980
(44 U.S.C. 3507).
List of Subjects in CFR Part 619
Common carriers, Freight, Motor vehicle, Safety, Shipping, Trucks.
Accordingly, part 619 of title 32 of the Code of Federal
Regulations is amended by the following changes:
1. The authority citation for part 619 continues to read as
follows:
Authority: 49 U.S.C. 1801-1813, 2503, 2505, 2509.
2. Section 619.1 is amended by revising the first sentence to read
as follows:
Sec. 619.1 Introduction.
Carriers, surface freight forwarders, shipper agents, and air
freight forwarders interested in or remaining qualified will submit
data described in Secs. 619.2 through 619.6 to the appropriate area
command (Bayonne, NJ or Oakland, CA) based on the location of the
carrier's headquarters. * * *
* * * * *
3. Section 619.4 is amended by revising paragraphs (a), (b),
introductory text, and (b)(5) to read as follows:
Sec. 619.4 Insurance-public liability and cargo.
(a) Public liability. Motor carriers, surface freight forwarders,
shipper agents and air freight forwarders will submit proof of public
liability to MTMC on a certificate of insurance form issued by the
insurance company. Expiration dates will not be reflected on the
certificate, the policy must be continuous until canceled. However, the
deductible portion will be shown on the certificate. The insurance
underwriters must be rated in Best's Insurance Guide, or listed in the
Fiscal Service Treasury Department Circular 570, Listing of Surety
Companies. The certificate holder block of the form will indicate that
HQMTMC, 5611 Columbia Pike, Falls Church, Virginia 22041-5050, ATTN:
MTOP-QQ, will be notified, in writing, 30 days in advance of any change
or cancellation. The public liability requirements are specified in 49
CFR 387.9. Surface freight forwarders and shipper agents will submit
proof of $1 million public liability (death and bodily injury, property
damage, and environment restoration).
(b) Cargo. Motor common carriers, surface freight forwarders,
shipper agents and air freight forwarders must have their insurance
company provide a certificate of insurance form. The deductible portion
will be shown on the certificate. The insurance underwriter must have a
policyholder's rating in the Best's Insurance Guide, listed in the
Fiscal Service Treasury Department Circular 570, Listing of Surety
Companies or specifically approved by HQMTMC. DOD's minimum cargo
insurance requirements are listed below.
* * * * *
(5) Surface freight forwarders, shipper agents and air freight
forwarders--$250,000 per shipment.
4. Section 619.6 is amended by revising the introductory text and
paragraph (k) as follows:
Sec. 619.6 Information.
Motor carriers, surface freight forwarders and shipper agents will
provide HQMTMC the following information.
* * * * *
(k) In addition to information contained in (a) through (h) and (j)
above, exempt surface freight forwarders, shipper agents and air
freight forwarders must furnish a listing of the carriers which they
have contract with and intend to use in the movement of government
shipments. Information must include the complete company name, company
officials to include their position and title, home office address,
telephone number, 24-hour emergency point of contact for shipment
status, and FHWA operating authority number of each carrier.
5. Section 619.7 is amended by revising paragraph (d) as follows:
Sec. 619.7 Performance bond.
* * * * *
(d) Surface Freight Forwarders, Shipper Agents and Air Freight
Forwarders. Due to the volume of traffic handled by these modes and the
area normally serviced, the bond amount is set at $100,000.
* * * * *
6. Section 619.8 is revised to read as follows:
Sec. 619.8 Basic Agreement.
Motor carriers, surface freight forwarders, shipper agents and air
freight forwarders meeting the qualification requirements of
Secs. 619.1 through 619.7 will be required to sign the appropriate
Basic Agreement in the appendices to this part.
7. A new Appendix G is added to part 619 of the appendices as
follows:
[[Page 49062]]
Appendix G to Part 619--Agreement Between the Military Traffic
Management Command and Air Freight Forwarders Governing the
Transportation of General Commodities for and on Behalf of the U.S.
Department of Defense
1. The undersigned, who is duly authorized and empowered to act
on behalf of:
I,---------------------------------------------------------------------
(Name of forwarder, typed or legibly printed)
hereinafter referred to as the Forwarder, as a prerequisite for
consideration for participation in the transport of general
commodities as an exempt Air Freight Forwarder, for the U.S.
Department of Defense (DOD), agree to comply with all requirements,
terms and conditions as set forth in this Agreement. Noncompliance
with any provision of this Agreement will be sufficient grounds for
immediate revocation of the forwarder's privilege to participate in
the movement of DOD freight. For the purpose of this Agreement, an
Air Freight Forwarder is defined as a person or company who acts as
a common carrier. That is, a carrier who holds itself out to the
general public to provide transportation of property for
compensation, assembles and consolidates less-than-truckload
freight, as defined in the Instruction for Preparation of Department
of Defense Standard Tender of Freight Services, MT form 364-4 (and
revisions thereto), Part II, uses for the whole or any part of the
line-haul transportation the services of regulated motor or air
carriers, break bulk and delivers the less-than-truckload freight
holding out in its own name and under its own responsibility a
through transportation service from point of receipt to destination.
2. Approval and Revocation.
a. Forwarder understands that its initial approval and retention
of approval are contingent upon establishing and maintaining to
MTMC's satisfaction, sufficient resources to support its proposed
scope of operations and services. Sufficient resources include
equipment, personnel, facilities, and finances to handle traffic
anticipated by DOD/MTMC under the Forwarder's proposed scope of
operations in accordance with the service requirements of the
shipper.
b. The Forwarder understands that MTMC may revoke approval at
any time upon discovery of grounds for ineligibility or
disqualification.
c. In addition to the initial evaluation, the forwarder agrees
that it will cooperate with MTMC follow-up evaluations at any time
subsequent to signing this Agreement to confirm continued
eligibility.
d. Forwarder agrees and certifies that neither the owners,
company, corporate officials, nor any affiliation or subsidiary
thereof are currently debarred or suspended, disqualified by a MTMC
Carrier Review Board (CRB), or placed in non-use by MTMC from doing
business with DOD.
3. Lawful Performance.
a. Forwarder agrees to comply with all applicable Federal,
State, municipal, and other local laws and regulations. No fines,
charges, or assessments for overloaded vehicles or other violations
of applicable laws and regulations will be passed to or be paid by
any agency of the Federal Government.
b. The Forwarder agrees to keep current and on file a list of
all carriers to be used in the transport of DOD freight shipments.
This list will contain, as a minimum, the company's name, president/
vice president's name(s), operating authority number, corporate
office address, telephone number and a designated 24-hour on call
point of contact in the event of an accident or emergency situation.
MTMC can direct the Forwarder not to use specific carriers in the
movement of DOD freight shipments.
c. Forwarder further agrees and certifies that it will only use
carriers that are approved through the Carrier Qualification Program
(CQP) to transport DOD freight, and will not use any carrier that
had been debarred, suspended by the Government or which has been
placed in nonuse or disqualified any MTMC from doing business with
the DOD for the movement of any DOD freight shipments.
4. Operations. Forwarder agrees and certifies that it is
operating as a forwarder as defined herein. If incorporated,
evidence of incorporation, bearing the official seal of the state in
which filed, Articles of Incorporation, listing all the officers of
the corporation is attached and certified to be true, correct and
current.
5. Insurance.
a. The Forwarder agrees to maintain a minimum of $1 million
public liability insurance and $250,000 cargo insurance for loss and
damage of Government freight. A copy of the certificate of insurance
must be on file with MTMC, ATTN: MTOP-QQ prior to any performance of
service by the forwarder.
b. The insurance, carried in the name of Forwarder, will be in
force at all times while this Agreement is in effect or until such
time as the Forwarder cancels all tenders. Forwarder agrees to
ensure that the policies include a provision requiring the insurer
to notify MTMC prior to any performance of service by the carrier.
The certificate holder block of the form will indicate that MTMC,
5611 Columbia Pike, ATTN: MTOP-QQ, Falls Church, VA 22041-5050, will
be notified in writing, 30 days in advance of any change or
cancellation. The deductible portion will be shown on the
certificate.
c. The insurance underwriter must have a policy holder's rating
in the Best's Insurance Guide, listed in the Fiscal Service Treasury
Department Circular 570, Listing of Surety companies. Self-Insurance
will not be accepted.
6. Performance Bond.
a. Forwarder agrees to provide MTMC with a Performance Bond. The
bond secures performance and fulfillment of the Forwarder's
obligation to deliver DOD freight to destination. It will cover
default, abandoned shipments, bankruptcy and reprocurement costs.
The bond will not be utilized for operational problems such as late
pickup or delivery, excessive transit time, refusals, no shows,
improper or inadequate equipment or claims for lost or damaged
cargo. The bond must be issued by a surety company listed in the
Fiscal Service Treasury Department Circular No. 570. The sum of the
bond shall be no less than $100,000. The bond must be completed on
the form provided by MTMC and will be continuous until cancelled.
MTMC will be notified, in writing, 30 days in advance of any change
or cancellation. A letter of intent (LOI), by the surety company, is
required with the initial application. Upon MTMC approval, the
Forwarder will submit the performance bond before the Tender of
Service will be accepted.
7. Safety.
a. Forwarder agrees not to use any carrier that has an
``unsatisfactory'' safety rating with the Federal Highway
Administration (FHWA), Department of Transportation (DOT), and if it
is an intrastate motor carrier, with the appropriate state agency.
b. Shipments will be delivered in direct service without delay
to the destination shown on the Government Bill of Lading (GBL)
unless consignor or consignee directs diversion of the shipment to a
new or different destination. Deliveries will be made during the
shipper's normal business hours.
c. Forwarder agrees to not divulge any information to
unauthorized persons concerning the nature and movement of any
movement of shipment tendered to it.
d. The Forwarder agrees to notify, within 24-hours, the
consignor and consignee named by GBL or Commercial Bill of Lading
(CBL) of cargo loss, damage, or unusual delay. Information reported
will include origin/destination, GBL/CBL number, shipping paper
information, time and place of occurrence, and other pertinent
details. Upon request, the Forwarder agrees to furnish MTMC a copy
of accident reports submitted to the DOT on Form MCS 50-T
(property).
e. Forwarder agrees to have in place a company-wide safety
management program. Forwarder safety program will comply with
applicable Federal, State and local statutes or requirements. Safety
programs at the company-wide or terminal level may be subject to
evaluation by DOD representatives. The Forwarder further agrees to
permit unannounced safety inspections of its facilities, terminals,
equipment, employees, and procedures by DOD civilian, military
personnel, or DOD contract employees.
8. [Reserved.]
9. Equipment.
a. Forwarder agrees to ensure equipment is spotted for loading
at the time and place requested. Civil Reserve Air Fleet (CRAF)
carriers will be utilized to the maximum extent possible for the
movement of DOD freight. The Government reserves the right to reject
the utilization of any equipment placed for loading by the Forwarder
if it does not, upon inspection meet the specifications and
requirements for the particular shipment involved (sizes, cube,
cleanliness, mechanical condition, etc.).
10. Shipment.
a. Further, the Forwarder agrees to not indulge any information
to unauthorized persons concerning the nature and movement of any
DOD shipment.
11. Documentation.
a. Forwarder agrees to accept GBLs and CBLs on which freight
charges will be paid
[[Page 49063]]
by the Government, and be bound by all terms stated thereon.
b. Forwarder agrees to comply with documentation prelodging
procedures in effect at military terminals in which cargo is
consigned for further movement overseas. (Prelodging is the
submission of advance shipment documents that identify the shipments
to the military terminals prior to arrival of the cargo at the
terminal to permit preparation of the terminal documentation.)
Instructions will be provided by the consignors to furnish certain
data at least 24-hours in advance of cargo arrival at the terminal.
12. Loss and Damage.
a. The Forwarder agrees to be fully liable for delivery of all
cargo in the same condition as received at origin, except loss or
damage caused by an Act of God, public enemy act, omission of
shipper, inherent vice or detrimental changes due to nature of
commodity, or natural shrinkage. Forwarder agrees to settle
promptly, claims for loss or damage. Forwarder also agrees to
provide the status of any shipment tendered to them within 24-hours
after an inquiry is made.
13. Standard Tender of Service.
a. The Forwarder agrees to comply with the preparation and
filing instructions in applicable freight traffic rules publications
issued by MTMC. Forwarder understands that MTMC will reject tenders
not in compliance with these instructions.
b. The Forwarder agrees to publish a street address where the
company office is located in lieu of post office box number. MTMC
must be advised of any change in address. Failure to do so is
grounds to discontinue use of the Forwarders.
c. Forwarder understands that tenders inadvertently accepted and
distributed for use and not in compliance with this Agreement, the
provisions continued in the Standard Tender of Freight Services MT
Form 364-R, or the application MTMC Freight Rules Publication, and
supplements thereof, will be advised when tenders are removed under
these circumstances.
14. Rates.
a. Forwarder agrees to transport Government shipments at the
lowest effective charge named in the tender applicable on the
commodity transported, whether or not the rate tender is referenced
on the GBL.
b. The Forwarder agrees to publish through rates guaranteed for
at least 30 days. These rates must be filed with USTRANSCOM. The
rates for movement of DOD cargo by air will be filed with the Air
Mobility Command (AMC). The Forwarder must publish all rates,
changes, and accessorial services on a DOD Standard Tender of
Freight Services, MT Form 364-R and must comply with the tender
preparation instructions. (Only services annotated with a charge in
the tender will be paid by the shipper.)
c. The Forwarder agrees to promptly refund all uncontested
overcharges to the Government and authorizes the Government to
deduct the amount of overcharges from any amount subsequently found
to be due the Forwarder.
d. The Government reserves the right to pursue administrative
claims directly with Forwarders under the Interstate Commerce Act
(ICC) or other authorities.
15. Carrier Performance.
a. The Forwarder agrees that it's equipment, performance, and
standards of service will conform with its obligations under
Federal, State and local law and regulation as well as with the
guidelines found in the Defense Traffic Regulation (DTR) and this
Agreement. The Forwarder fully understands its obligation to remain
current in its knowledge of service standards. The Forwarder accepts
the Government's right to revoke approval, declare ineligible, non-
use, or disqualify the Forwarder for unsatisfactory service for any
operating deficiency, noncompliance with terms of this Agreement or
terms of any negotiated agreements, tariffs, tenders, bills of
lading or similar arrangements determining the relationship of the
parties, or for the publication or assessment of unreasonable rates,
charges, rules, descriptions, classifications, practices, or other
unreasonable provisions of tariffs and tenders. Rules governing the
Carrier Performance Program (CPP) are found in MTMC Regulation 15-1,
and Army Regulations 55-355 DTMR. If a Forwarder is removed or
disqualified for 6 months or more, it will have to be requalify.
b. Failure or nonperformance by the Forwarder with any of the
terms or conditions of service will constitute a breach of this
Agreement. The Government reserves the right to disqualify the
Forwarder for unsatisfactory service until such time as the
Forwarder establishes, to the satisfaction of DOD that the operating
or other deficienc(ies) have been corrected.
16. General Provisions. That the Forwarder must have a valid
Standard Carrier Alpha Code (SCAC) and use it on all DOD billing
documents to identify the Forwarder. When a company holding the
appropriate authority has operating divisions each with its own
unique SCAC, each such division is required to execute a separate
agreement with MTMC governing the transportation of protected
commodities.
17. Terms of the Agreement.
a. The terms of this Agreement will be applicable to each
shipment.
b. This Agreement shall be effective from the date of
acknowledgment by the MTMC, until terminated upon receipt of written
notice by either party.
c. Nothing in this Agreement will be construed as a guarantee,
by the Government, of any volume traffic.
d. The Forwarder agrees to immediately notify MTMC of any
changes in ownership, in affiliations, executive officers, and/or
board members, and forwarder name. Forwarder understands that
failure to notify MTMC shall be grounds for immediate revocation of
the Forwarder's approval and their participation in the movement of
DOD freight.
18. Additional Specialized Requirements. The terms of this
Agreement will not prevent different or additional requirements with
respect to negotiated agreements or added requirements for other
types of service and/or commodities.
19. Inquiries. Inquiries may be referred to Commander, MTMC,
5611 Columbia Pike, Falls Church, Virginia 22041-5050, ATTN: MTOP-
QQ.
20. Forwarder Acknowledgment and Acceptance.
a. The undersigned forwarder official, by affixing signature
hereto, states that he has read and understands the general and
specific terms and conditions of service outlined and agrees to
provide service in accordance with such terms or conditions. Any
information found to be falsely represented in the Qualification
Form, the attachments or during the qualification procedures, to
include additional requirements of this Agreement, shall be grounds
for automatic revocation of this Agreement and immediate non-use of
the carrier, the affiliated companies, division and entities.
Forwarder's Acknowledge/Acceptance
I,---------------------------------------------------------------------
(Typed name and title of carrier official)
verify under penalty of perjury, under the laws of the United States
of America, that the information contained in the forwarder
qualification application packet and this Agreement is true, correct
and complete. If representing a company or organization, I certify
that I am qualified and authorized to offer this information. I know
that willful misstatements or omissions of material facts constitute
Federal criminal violations punishable under 18 U.S.C. 1001 by up to
5 years imprisonment and fines up to $10,000 for each offense, or
punishable as perjury under 18 U.S.C. 1621 by fines up to $2,000 or
imprisonment up to 5 years for each offense. Further, I understand
the requirements of this Agreement and on behalf of:
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(Name of forwarder, typed or legibly printed)
comply with the terms and conditions contained herein.
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(Signature of carrier official and title)
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(Signature of agent official and title)
Date:------------------------------------------------------------------
Address:---------------------------------------------------------------
Telephone Number:------------------------------------------------------
24-Hr. Emergency Number:-----------------------------------------------
Military Traffic Management Command Acknowledgment/Acceptance
Signature and Title:
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Date Approved:---------------------------------------------------------
Frederick G. Wirtz,
Traffic Management Specialist, Qualification Division.
[FR Doc. 96-23874 Filed 9-17-96; 8:45 am]
BILLING CODE 3710-08-M
