[Federal Register Volume 61, Number 66 (Thursday, April 4, 1996)]
[Proposed Rules]
[Pages 15010-15014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8094]



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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.


[[Page 15011]]


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

[[Page 15012]]
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,

[[Page 15014]]
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