[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:

----------------------------------------------------------------------
(Name of forwarder, typed or legibly printed)

comply with the terms and conditions contained herein.

----------------------------------------------------------------------
(Signature of carrier official and title)

----------------------------------------------------------------------
(Signature of agent official and title)

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

Address:---------------------------------------------------------------

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

24-Hr. Emergency Number:-----------------------------------------------
    Military Traffic Management Command Acknowledgment/Acceptance 
Signature and Title:
----------------------------------------------------------------------

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