Program for Qualifying DOD, Air Freight Forwarders

DEPARTMENT OF DEFENSE

Department of the Army

32 CFR Part 619

Program for Qualifying DOD, Air Freight Forwarders

AGENCY: Military Traffic Management Command, DOD.

ACTION: Proposed rule.

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SUMMARY: This action adds qualifications standards for Air Freight

Forwarders and establishes a change in the basic agreement between the

Military Traffic Management Command and Air Freight Forwarders. The

proposal to amend those qualifications, where appropriate, are

submitted to be consistent with the Surface Freight Forwarders

requirements.

DATES: Comments must be received by May 6, 1996.

ADDRESSES: Headquarters, Military Traffic Management Command, ATTN:

MTOP-QQ, 5611 Columbia Pike, Falls Church, VA 22041-5050.

FOR FURTHER INFORMATION CONTACT:

Mr. Rick Wirtz, telephone: (703) 681-6393.

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SUPPLEMENTARY INFORMATION: 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.

Executive Order 12291

This proposed 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 proposed 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 record keeping 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 proposed 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 32 CFR Part 619

Shipping, Motor vehicles, Safety, Trucks, Common carriers, Freight.

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, and 2509.

2. In Sec. 619.1, the introductory text 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 qualifying 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 insurance 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 cancelled. However,

the deductible portion will be shown on the certificate. The insurance

underwriters must be rated in the 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:

MT-INFF, will be notified, in writing, 30 days in advanced 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 (o)

above, exempt surface freight forwarders, shipper agents and air

freight forwarders must furnish a listing of carriers which they have a

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 addresses,

telephone numbers, 24 hour emergency point of contact for shipment

status, and ICC 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:

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 U.S.

Department of Defense

1. The undersigned, who is duly authorized and empowered to act on

behalf of

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(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 provisions 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

which holds itself out

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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, and 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 personnel,

facilities, carriers with adequate equipment, and finances to handle

the 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. The 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. Transportation Protective Services (TPS).

a. The forwarder agrees and certifies that it will only use

carriers approved through the carrier qualification program to perform

the applicable TPS and will not use any carrier which does not meet all

requirements of this agreement.

b. Exceptions to the provisions of a. above, pertaining to use of

TPS carriers only may be approved by MTMC on a case-by-case basis.

Approval will be based on MTMC review and approval of a detailed plan

by the forwarder detailing their procedures to insure the continuing

in-transit security of TPS freight while in possession of non-TPS

carriers. Carriers used will otherwise be fully approved and

signatories to this agreement.

c. Forwarder will enter into formal, written agreements with

carriers used to transport TPS freight. Agreement will require the

carrier to notify the forwarder and MTMC operations center at (703)

681-6125 within two hours of experiencing any unscheduled landing or

other emergency involving aircraft transporting TPS freight.

4. 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, 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

forwarder not to use specific carriers in the movement of DOD freight

shipments.

c. The forwarder further agrees and certifies that it will only use

carriers that are approved through the carrier qualification program to

transport DOD freight, and will not use any carrier that has been

debarred, suspended by the Government or which has been placed on non-

use or disqualified by MTMC from doing business with the DOD for the

movement of any DOD freight shipments.

5. Operations. The 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.

6. Insurance.

a. The forwarder agrees to maintain a minimum of $1,000,000 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 the forwarder, will be in

force at all times while this Agreement is in effect or until such time

as the forwarder cancels all tenders. The forwarder cancels all

tenders. The 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, Falls Church, Virginia

22041-5050, ATTN: MTOP-QQ, will be notified in writing, 30 days in

advance of any change or cancellation. The deductible portion will be

provided 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.

7. Performance Bond.

a. Forwarder agrees to provide MTMC with a Performance Bond. The

bond secures performance and fulfillment of the forwarder's obligation.

It will cover default, abandoned shipments, bankruptcy and

reprocurement costs. The bond will not be utilized for operational

problems such as late pick up 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 canceled. MTMC

will be notified, in writing, 30 days in advance of any change or

cancellation. A letter of intent by the surety company is required with

the initial application. Upon MTMC approval forwarder will submit the

performance bond before the Tender of Service will be accepted.

8. Safety.

a. The forwarder agrees not to use any carrier that has an

``unsatisfactory'' safety rating with the Federal Highway

Administration, Department of Transportation, 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 Bills of Lading unless

consignee or consignor directs diversion of the shipment to a new or

different destination. Deliveries will be made during the shipper's

normal business hours.

c. The forwarder agrees to not divulge any information to

unauthorized persons concerning nature and movement of any shipment

tendered to it.

[[Page 15013]]

d. The forwarder agrees to notify within 24-hours, the consignor

and consignee named by the Government Bill of Lading (GBL) or

Commercial Bill or 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 ensure

MTMC is furnished a coy of accident reports submitted to Department of

Transportation on Form MCS 50-T (Property).

e. The 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.

9. Reserved.

10. Equipment.

a. The forwarder agrees to ensure, equipment is spotted for loading

at the time and place requested. Civil Reserve Air Fleet (CRAF)

carriers will be used whenever 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 it does not, upon

inspection, meet specifications and requirements for the particular

shipment involved (sizes, cube, cleanliness, mechanical condition,

etc.).

11. Shipment.

a. Further, the forwarder agrees to not divulge any information to

unauthorized persons concerning the nature and movement of any DOD

shipment.

12. Documentation.

a. Forwarder agrees to accept Government Bills of Lading on which

freight charges will be paid by the Government, and will be bound by

the terms and conditions stated thereon.

b. The forwarder agrees to comply with the provisions of

documentation prelodging in effect at Military Terminals which cargo is

consigned for further movement overseas. (Prelodging is the submission

of advance shipment documents that identifies the shipment 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 consignees to furnish certain data at least 24 hours in

advance of cargo arrival at the terminal.

13. Loss & 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 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. The forwarder also agrees to provide the status of any

shipment tendered to them within 24-hours after an inquiry is made.

14. Standard Tender of Service.

a. The forwarder agrees to comply with the preparation and filing

instructions and applicable freight traffic rules publications issued

by MTMC. Forwarder understands that MTMC will reject tenders not in

compliance with these instructions.

b. Forwarder agrees to publish a street address where the company

office is located in lieu of a post office box number. Military Traffic

Management Command must be advised of any change in address. Failure to

do so is grounds to discontinue the use of the forwarder.

c. Forwarder understands that tenders inadvertently accepted and

distributed for use and not in compliance with this agreement, the

provisions contained in the Standard Tender of Freight Services (MT

Form 364-R), or the applicable, MTMC Freight Traffic Rules Publication,

and supplements thereof, will be subject to immediate removal or non-

use until corrections are made. The issuing forwarder will be advised

when tenders are removed under these circumstances.

15. Rates

a. Forwarder agrees to transport Government shipments at its 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 TRANSCOM

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The forwarder must publish all rates, changes, and accessorial services

on a ``Department of Defense 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 or

other authorities.

16. Carrier Performance.

a. Forwarder agrees that its 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 Management Regulation (DTMR) 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 declare ineligible, non-use, or disqualify the carrier 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, 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 are found in MTMC Regulation 15-1, and

Army Regualtion5 5-355, DTMR. If a forwarder is removed or disqualified

for 6 months or more, it will have to re-qualify.

b. Failure or nonperformance by the forwarder with any of the terms

or conditions of service will constitute a breach of this Agreement.

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 deficiency(s) has

been corrected.

17. 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.

18. Terms of the Agreement.

a. The terms of this Agreement will be applicable to each shipment.

b. This Agreement shall be effective the date of acknowledgement by

the Military Traffic Management Command,

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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 particular volume of 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 the movement of DOD freight.

19. 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.

20. Inquiries. Inquiries may be referred to Commander, Military

Traffic Management Command, Attention: MTOP-QQ, 5611 Columbia Pike,

Falls Church, Virginia 22041-5050.

21. 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 condition 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

forwarder, the affiliated companies, division and entities.

Forwarder's Acknowledgment/Acceptance:

I, ____________________________________,

(Typed name and title of forwarder 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 year's 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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(Typed name of forwarder)

comply with the terms and conditions contained herein.

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Signature of Forwarder Official and Title

Date:------------------------------------------------------------------

Forwarder Address:

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Telephone Number:------------------------------------------------------

24-hr Emergency Number:------------------------------------------------

Military Traffic Management Command Acknowledgment/Acceptance

Signature:-------------------------------------------------------------

Title:-----------------------------------------------------------------

Date Approved:---------------------------------------------------------

Gregory D. Showalter,

Army Federal Register Liaison Officer.

[FR Doc. 96-8094 Filed 4-3-96; 8:45 am]

BILLING CODE 3710-08-M