Board of Contract Appeals General Services Administration Washington, D.C. 20405 _____________________ October 13, 1999 _____________________ GSBCA 14606-RATE In the Matter of FLEET LINES, INC. Leo S. Fisher of Bean, Kinney & Korman, P.C., Arlington, VA, appearing for Claimant. James F. Fitzgerald, Director, Audit Division, General Services Administration, Washington, DC, appearing for General Services Administration. Col. James F. Quinn, Staff Judge Advocate, Headquarters, Military Traffic Management Command, Department of the Army, Falls Church, VA, appearing for Department of Defense. GOODMAN, Board Judge. Background The Invitation for Rate Tender and Service Offers On June 20, 1994, the Defense Personnel Support Center (DPSC), Philadelphia, Pennsylvania, issued an invitation for rate tender and service offers (RTSO) for the movement of perishable subsistence during the period January 1, 1995, through December 31, 1997, from its cold storage warehouse supply points to military installations, Veterans Administration Hospitals, Job Corps Centers, Indian Schools, and other authorized customers. Fleet Lines, Inc. (FLNI or claimant) submitted tender number 008- 94 for routes from the Defense Subsistence Office (DSO), Los Angeles, California, tender number 009-94 for routes from San Diego, California, and tender number 010-94 for routes from Alameda, California. After preliminary evaluation by DPSC, Military Traffic Management Command, Western Area (MTMCWA)[foot #] 1 awarded various routes to claimant as primary carrier under each tender. ----------- FOOTNOTE BEGINS --------- [foot #] 1 MTMCWA was redesignated as MTMC, Deployment Support Command, Oakland Army Base, Oakland, California, effective June 17, 1998. ----------- FOOTNOTE ENDS ----------- Item 3 of the tenders is titled "Detention Time." Here, the carrier agreed to arrive at the loading docks ready for loading at the time set out in the loading and delivery schedule contained in Item 29. Item 3 explained that the carrier's rates included a certain amount of time, called free time, for "placement of material" and for waiting. If the carrier was delayed at either the pick-up point or the delivery point, and if the delay was not caused by the carrier, the Department of Defense (DoD) would pay the carrier a charge, set out in Item 12c, for detention in excess of the free time set out in Item 3. Item 12 concerns accessorial charges. Item 12d states: When the Government requires and requests pickup or delivery on Saturdays, Sundays or Holidays, the following charges will apply in addition to all other charges assessed against the shipper. . . . The GBL will be annotated by the [DSO] Saturday (Sunday or Holiday) delivery (pick-up) authorized on _____________ (date(s)). Item 12d lists the days that constitute holidays. The charge set out in Item 12d is stated as a charge per truck. Item 28 of each RTSO includes rates for various destinations and shows that the carrier would pick up perishable commodities at the stated pick-up point and deliver them to listed delivery points. For each delivery point, Item 28 set out more than one truckload minimum weight. For each delivery point and for each truckload minimum weight, the carrier was supposed to insert its freight rate per hundred pounds. Item 29 contains pick up and delivery schedules. For each delivery point, the schedules set out pick up days and times, and delivery days and times. In addition to the delivery schedules, Item 29 of each RTSO includes charges for weekend, holiday, and weekday "holdover" as follows: Item 29.1 Holdover Charges (Weekend) Friday pick-ups will be held for Monday morning deliveries. Holdover charges (2 days) will be $______ (per truck) with total maximum charge of $______ per weekend. GBL [Government Bill of Lading] will be annotated, by the DSO office, "Holdover authorized Saturday _____________ (date) and Sunday _____________ (date)." Item 29.2 Holdover Charges (Overnight Holiday) Trucks held over on holidays (as specified in item 12d) in accordance with instructions from the DSO, will be charged at $_______ per truck. GBL will be annotated, by the DSO office "Holdover authorized on Holiday ___________ (date)." Item 29.3 Holdover Charges (Weekdays) Trucks heldover night (Monday Night, Tuesday Night, Wednesday Night, Thursday Night, excluding holidays, (see Item 29.2)) during the week for delivery the next day will be charged at $_______ per truck. GBL will be annotated by the DSO Office, "Holdover authorized for ___________ night ____________ (date)." In each of its tenders, claimant inserted a charge per truck for weekend holdover charges, and a charge per truck for overnight holiday holdover charges. Payment of these charges is not in dispute. In each of its tenders, claimant inserted a charge of $100 per night for weekday holdover. The issue in this case is this charge for weekday holdover. Performance Pursuant to the terms of the tenders, FLNI began providing services from each origin point on January 2, 1995. The Government routinely paid the weekend and holiday holdover charges as required by Items 29.1 (Weekends) and 29.2 (Holiday). Claimant states: The Government was also fully aware of the applicability of Item 29.3, and the requirement that it pay weekday holdover charges whenever the Government required delivery the next day following pick-up. In this regard, we have attached Exhibits . . . relating to a shipment that FLNI picked up on January 3, 1995 . . . at DSO Los Angeles, 375 South Cypress Street, La Habra . . . to be delivered on January 4, 1995 . . . at Commissary Store, Building 521, Los Angeles AFS. . . . This shipment involved a movement of approximately 35 miles, that FLNI was able to deliver the same day as the pick up. Nonetheless, as required by the Delivery Schedule, FLNI delivered the shipment the next day. The Government initially failed to annotate GBL No. G-2,629,933 . . . for the holdover. On January 5, 1995, the Government issued a Corrective Notice . . . that states in Item 14 that "DSO failed to include service charge (weekday Holdover)" on the GBL. On January 7, 1995, FLNI issued its freight bill for the shipment and included a $100.00 weekday holdover charge . . . . The Government paid the holdover charge. We have also included GBL No. G-2,629,991 . . . . This GBL involved a shipment picked-up on January 9, 1995 and delivered the next day pursuant to the Delivery Schedule. The GBL reflected the weekday holdover charge. FLNI's invoice included the weekday holdover charge . . . which the Government paid. For reasons unknown to FLNI, the Government thereafter only paid FLNI weekday holdover charges on a sporadic basis. Consequently, the Government failed to pay weekday holdover charges on more than 3,000 shipments transported by FLNI. These shipments are identified by Government Bill of Lading ("GBL") numbers on Exhibit 20. The shipments identified in Exhibit 20 are those shipments which FLNI delivered the next day following pick-up at the Government's request, but on which the Government failed to pay the applicable holdover charge pursuant to Item 29.3. Claims The Claim Relating to Shipments in 1995 and 1996 On or about February 24, 1997, FLNI filed a claim for weekday holdover charges for the period January 1, 1995, through December 31, 1996, with the Defense Logistics Agency (DLA), DPSC, in Philadelphia, Pennsylvania (the 1995/96 Claim). Dwight Magness, the President of FLNI, certified the 1995/96 Claim pursuant to 41 U.S.C. 605.[foot #] 2 The 1995/96 Claim involved 1,026 shipments in 1995 and 1,064 shipments in 1996. DPSC referred the 1995/96 Claim to the Headquarters of the ----------- FOOTNOTE BEGINS --------- [foot #] 2 This Board does not have jurisdiction over this matter pursuant to the Contract Disputes Act, but rather pursuant to our review function set forth in 41 CFR 101-41.701 (1997) and 48 CFR pt. 6103. Although this former regulation refers to the Comptroller General, the review function was transferred to the Board pursuant to the General Accounting Office Act of 1996, Pub. L. No. 104-316, 202(o), 110 Stat. 3826, 3844 (1996) and Delegation by Acting GSA Administrator (July 17, 1996). ----------- FOOTNOTE ENDS ----------- Military Traffic Management Command - Western Area (MTMC) on or about February 26, 1997. FLNI provided MTMC copies of every GBL involved in the 1995/96 Claim. On May 14, 1997, MTMC informed FLNI that it intended to interpret Item 29.3 in accordance with a 1996 opinion letter of the General Services Administration s Office of Transportation Audits (OTA)[foot #] 3 regarding holdover charges. The OTA's opinion letter stated that weekday holdover charges were due when shipments were heldover for delivery outside the scope of "Delivery Schedules." By letters dated June 25, and July 14, 1997, MTMC advised FLNI that it was entitled to weekday holdover charges of $25,900 for 1995 and $29,100 for 1996. MTMC identified the 259 (of 1026) shipments in 1995 and the 291 (of 1064) shipments in 1996 on which it determined holdover charges should have been paid. By letter dated August 12, 1997, FLNI asked MTMC to forward the 1995/96 Claim to the General Services Administration (GSA) for determination. MTMC informed FLNI that it was forwarding the 1995/96 Claim to the GSA on August 26, 1997. By letter dated August 26, 1997, MTMC informed FLNI that it was withdrawing its offer to pay $25,900 for 1995 holdover charges and $29,100 for 1996 holdover charges. On March 16, 1998, OTA issued a decision with which this case is concerned (the OTA's Decision). The OTA's Decision states, in part "[W]e agree with the position of the Military Traffic Management Command, Western Area, outlined to Mr. and Mrs. Magness, Fleet Lines, Inc., last year. On the vast majority of the shipments involved, the shipping activity did not request or authorize holdover charges and the carrier did not deliver outside its regular delivery schedule. We have started to process all of the involved claims and in those instances where holdovers was [sic] requested, those charges will be allowed. The OTA's Decision also noted that FLNI could appeal to the GSA Board of Contract Appeals or take appropriate legal action. The Claim Relating to Shipments in 1997 and Issuance of Six Settlement Certificates On April 23, 1998, FLNI filed an additional claim with the OTA for weekday holdover charges for the period January 1, 1997, to December 31, 1997, in the amount of $109,000 (the 1997 Claim). Mr. Magness, the President of FLNI, certified the 1997 Claim pursuant to 41 U.S.C. 605. The 1997 Claim involves 1090 ----------- FOOTNOTE BEGINS --------- [foot #] 3 Although we refer to OTA in this decision, following an internal reorganization GSA now performs its transportation audit functions through its Transportation Audits Division, which is a part of the Office of Transportation and Property Management. ----------- FOOTNOTE ENDS ----------- shipments, and FLNI provided the OTA a copy of the GBL relevant to each shipment. Like the 1995/96 Claim, the 1997 Claim also turns on the interpretation of Item 29.3. By letter dated May 28, 1998, the OTA acknowledged receipt of the 1997 Claim, and, in reliance on the OTA's Decision, denied the 1997 Claim. The OTA also stated that its auditors had been instructed "to issue denials on two claims from each of" 1995, 1996 and 1997 "and can be used as the basis of your claims with the GSA Board of Contract Appeals." The OTA attached six settlement certificates to its May 28, 1998, letter. The settlement certificates for 1995 concern OTA claim number G5750987, GBL number 5750987, and FLNI bill number 7120OTA; and claim number G5759217, GBL number 5759217, and FLNI bill number 7883. The settlement certificates for 1996 concern OTA claim number G5809424, GBL number 5809424, and FLNI bill number 11743; and OTA claim number G5801136, GBL number 5801136, and FLNI bill number 10871. The settlement certificates for 1997 concern OTA claim number G5834218, GBL number 5834218, and FLNI bill number 1339, and OTA claim number G5820287, GBL number 5820287, and FLNI bill number 12416. OTA states two reasons for denying weekday holdover charges in each settlement certificate. First, OTA states that there is "no indication that holdover was requested by the shipping installation." This reflects part of the rationale set forth in the OTA's Decision. The settlement certificates are not based on the other rationale expressed in that decision -- delivery outside the delivery schedules. Second, the OTA states that "Holdover is not allowed when the carrier delivers one shipment prior to the requested date for his convenience and delivers the remaining shipment the next day." OTA has refused to authorize payment of the $55,000 in weekday holdover charges previously approved by MTMC for shipments made in 1995 and 1996. Discussion FLNI asks us to review OTA's decision. We have the authority to review only OTA's decision concerning the six specific claims that OTA denied. According to the regulations governing claims for transportation services, claimants may ask us to review final administrative actions taken by OTA. 41 CFR 101-41.701 (1997). Because OTA has not taken any final action upon the remainder of claimant's claims, we must dismiss them as having been prematurely filed. Tri-State Motor Transit Co., GSBCA 13896-RATE, 97-1 BCA 28,873. At issue is the interpretation of Item 29.3 of the tender: Item 29.3 Holdover Charges (Weekdays) Trucks heldover night (Monday Night, Tuesday Night, Wednesday Night, Thursday Night, excluding holidays, (see Item 29.2)) during the week for delivery the next day will be charged at $_______ per truck. GBL will be annotated by the DSO Office, "Holdover authorized for _____________ night _____________ (date)." FLNI asserts that when it calculated its freight rates, it thought that DoD would pay holdover charges in addition to freight rates, and so did not include in its rates any amounts for holdover charges. FLNI contends that the plain meaning of Item 29.3 is that the carrier is entitled to charge for a holdover whenever its truck is held overnight for delivery the next day following pick up. OTA contends that a carrier must satisfy three conditions to charge weekday holdover charges, even though those conditions are not contained in Item 29.3 or any other part of the tenders. For example, OTA contends that the carrier may only charge for a holdover when delivery was made outside the delivery schedules. However, FLNI asserts that Item 29.3 does not define a holdover as requiring a delivery made outside the delivery schedules, and in fact makes no reference whatsoever to the delivery schedules. Plain Language According to claimant, either the plain language of the tender clearly provides that it is entitled to be paid holdover charges whenever one of its trucks was in use overnight, or else the tender language is latently ambiguous and should be construed against DoD as the drafter of the tender. These same arguments were made with regard to identical language in other tenders by another claimant in the case of Inter-Coastal Xpress, Inc., GSBCA 14576-RATE, 99-1 BCA 30,370. In that decision, after detailed analysis, this Board found the language to be ambiguous. In Inter-Coastal Xpress and the instant case, the record is clear that there was no industry accepted definition of "holdover." Claimant's attorney's submission in the instant case states that claimant: is not aware of the term holdover being used in the context of commercial transportation. Moreover, a review of the case law has not turned up any cases specifically dealing with holdovers. It does not seem to be a term of art. Instead, its meaning and application would seem to depend on the specific context of its use in the contract in which it appears. Claimant in the instant case asserts that it has seen the term "holdover" used before in the context of perishable subsistence tenders drafted by the Government. FLNI has not located any previous tenders that covered weekday, as distinct from weekend and holiday, holdovers. Claimant states further: [T]he plain meaning of Item 29.3 is that the carrier is entitled to charge for a holdover whenever its truck is heldover [sic] night for delivery the next day following pick-up. OTA contends that a carrier must satisfy three conditions to charge weekday holdover charges, even though those conditions are not contained in Item 29.3 or any other part of the Tenders. For example, the OTA contends that the carrier may only charge for a holdover when delivery was made outside the Delivery Schedules. However, Item 29.3 does not define a holdover as requiring a delivery made outside the Delivery Schedules. In fact, Item 29.3 makes no reference whatsoever to the Delivery Schedules. The Board considered this same argument in Inter-Coastal, and found that it could not conclude that the plain language of the tender provides that the claimant was entitled to be paid holdover charges whenever one of its trucks was in use overnight. 99-1 BCA at 150,144. Ambiguous Language If the use of the word "holdover" in the tender is susceptible of two different interpretations, both of which are reasonable and consistent with the remainder of the tender, then the language is ambiguous. DoD reads the tender as meaning that a holdover occurred only if one of claimant's trucks was in use for a night in addition to a night that was built into the delivery schedule. Claimant reads the tender as meaning that a holdover occurred any time that its truck was in use overnight, including a night that was built into the delivery schedule. Again, in Inter-Coastal, we found both of these readings to be reasonable. Id. FLNI also makes an identical argument made by the claimant in Inter-Coastal with regard to a subsequent clarification by DoD in a rate publication in 1995. We also found in Inter-Coastal that this argument lacked merit. 99-1 BCA at 150,144-45. In finding that the language of the tender was ambiguous and subject to two reasonable interpretations, we stated in Inter- Coastal: We also agree with [claimant] that the tender can reasonably be read to say that "holdover" means any overnight use, including a night that was built into the delivery schedule. First, Item 3 of the tender makes it clear that a carrier was supposed to include an amount to compensate for free time in its freight rates. Although DoD could have stated just as clearly that the carrier was also supposed to include in its rates an amount to compensate for the use of a truck overnight, the tender does not say this. Because the tender states that rates were supposed to include an amount for free time, and does not state that the rates were supposed to include an amount for the use of a truck overnight, a carrier could reasonably conclude that DoD would pay for the use of a truck overnight in addition to paying the freight rates. Second, holdover charges are stated as a charge per truck. This makes holdover charges appear to be similar to accessorial charges, which are also stated as a charge per truck, and detention charges, which are stated as a charge per hour per truck, with a maximum charge per truck. Accessorial charges and detention charges were paid in addition to the freight rates, and so a carrier could reasonably conclude that holdover charges would also be paid in addition to the freight rates. Third, Item 29.3 of the tender says that DoD will pay a holdover charge for trucks "heldover [sic] night . . . during the week for delivery the next day." This could reasonably be read to mean that DoD would pay the charge, even if the tender's schedule contemplated the use of a truck overnight. 99-1 BCA at 150,145. In Inter-Coastal, as in the instant case, the claimant's interpretation of the tender was shared by one of the DSOs, which paid holdover charges for any overnight use, including a night that was built into the delivery schedule, until it was directed not to do so. We found that this was additional evidence to support the argument that the language was ambiguous. Claimant's Reliance on its Interpretation There is no ambiguity that is apparent on the face of the tender, and so we will construe the ambiguous language against DoD as the drafter of the tender, provided that claimant can establish that it actually relied upon its interpretation of the tender's language when it constructed and submitted its freight rates. Fruin-Colnon Corp. v. United States, 912 F.2d 1426, 1430 (Fed. Cir. 1990). The Board requested claimant to provide evidence to establish that at the time it constructed its freight rates and submitted its tenders, it interpreted the tender language to mean that DoD would pay holdover charges in addition to freight rates for shipments that were listed on the delivery schedules as being picked up one day and delivered the next day. In response to our question, FLNI has supplied a narrative from its attorney with a verification from its president. Claimant has submitted sufficient information to us to establish that it relied upon what it now advances as a reasonable interpretation of the tender. We asked claimant to provide whatever evidence establishes that, at the time it constructed its freight rates and submitted its tenders, it interpreted the tender language to say that DoD would pay holdover charges in addition to freight rates for shipments that were listed on the delivery schedules as being picked up one day and delivered the next day. Claimant described its construction of its rates as a process in which its president reviewed the contract terms and requirements when he first received the tender forms. By analyzing the schedules provided by the Government, he determined that the Government was requiring substantial waiting time before the carrier could make delivery. He also recognized that the Government had added Item 29.3 for weekday holdover charges -- an item that had not existed in the previous contract period. Based on the requirement of Item 29.3, he provided a linehaul rate based on mileage in Item 28 and the weekday holdover charge in Item 29.3 to cover the time factor involved in next day delivery on weekdays. GBL Annotation Claimant has the burden of establishing that it is entitled to be paid holdover charges. Rule 301(b). While it has submitted sufficient information to show that it relied upon its interpretation at the time it constructed its rates, there is an additional issue concerning the requirement in Item 29.3 that the GBL be annotated with language authorizing payment of holdover charges. DoD and GSA contend that we should deny claimant's claims because Item 29.3 of the tender provided that the GBLs would be annotated by the DSO when a holdover was authorized, and the GBLs at issue here do not contain any such annotation. We addressed this same issue in Inter-Coastal. We held in that case that even if the claimant had proved that it relied on its understanding of the ambiguous tender language when it submitted its rates, the claim would fail for a separate reason: the GBLs were not annotated to state that a holdover charge would be paid, and notwithstanding the carrier s knowledge of the agency s interpretation of the language, the carrier agreed to transport goods under those GBLs. 99-1 BCA at 150,146. In the instant case, at first some holdover charges were paid and in June and July 1997 the carrier was advised that additional holdover charges which it claimed were due would be paid. It was not until the carrier received MTMC s letter dated August 26, 1997, retracting the prior advice that holdover charges would be paid that the carrier could have been aware that the agency had reached a definitive position interpreting the tender language to mean the holdover charges would not be paid even though the GBLs required the use of the trucks overnight. Until that date in August 1997, when FLNI became aware of DoD s position, under the carrier s reasonable interpretation of the tender language, a GBL s requirement that shipment involve the use of a truck overnight constituted a demand for holdover and subjected the agency to a charge for that service. The fact that a GBL did not include a specific annotation for holdover was immaterial, since holdover was not an optional service for which the Government would pay only if it was both requested and performed. After FLNI became aware of DoD s position, by accepting shipments even though the GBLs were not annotated to state that a holdover was requested and would be paid, the rule expressed in Inter-Coastal would bar recovery. Decision FLNI s claims are granted as to any shipments transported prior to August 26, 1997 which were the subject of the six specific claims denied by OTA. _________________________ ALLAN H. GOODMAN Board Judge