[Federal Register Volume 65, Number 227 (Friday, November 24, 2000)]
[Notices]
[Pages 70556-70557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29999]


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DEPARTMENT OF DEFENSE

Department of the Army


Mandatory Utilization of Powertrack Requirement

AGENCY: Military Traffic Management Command, DOD.

ACTION: Notice.

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SUMMARY: The Military Traffic Management Command (MTMC), as the 
Department of Defense (DOD) Traffic Manager for surface and surface 
intermodal freight traffic management, hereby announces the mandatory 
use of USBank's Powertrack system as the transportation transaction and 
payment system for all air (includes small package express), barge, 
pipeline, rail and sealift freight carriers, and Guaranteed Traffic 
carriers, participating in the transport of DOD freight traffic.

DATES: November 30, 2000, for air (includes small package express), 
barge, pipeline, rail and sealift carriers, and

[[Page 70557]]

December 31, 2000, for Guaranteed Traffic carriers.

ADDRESSES: Headquarters, Military Traffic Management Command, ATTN: 
MTOP-MRM, 200 Stovall Street, Alexandria, VA 22332-5000.

FOR FURTHER INFORMATION CONTACT: Mr. Michael C. Donohue at 703-428-
2119, E-mail [email protected]. An additional point of contact is 
Ms. Kiazan Moneypenny At 703-428-2384, E-mail 
[email protected].

SUPPLEMENTARY INFORMATION: A notice proposing mandatory use of USBank's 
Powertrack System was published in the Federal Register, vol. 65, no. 
151, page 47970 on Friday, August 4, 2000. In response to this notice 
we have received one set of comments, from the attorney representing a 
carrier association, within the 60-day comment period. A synopsis of 
these comments and responses appear below:
    Comment: Carriers must pay a mandatory commission or service charge 
in order to participate in the program. Said payments are in the form 
of deductions (of up to 2%) from the amounts paid carriers for their 
services.
    Response: Payment of the above fee is offset by the benefits of 
being paid more quickly--within 3 business days, as opposed to 30 days 
or more, and eliminating unnecessary infrastructure maintained just for 
DOD accounts. Complaints of DOD delayed payments by the industry were 
among the factors influencing implementation of PowerTrack. 
Additionally, there is an unspecified cost offset associated with 
significantly reduced paperwork through elimination of Government 
unique documentation. Carriers have the option to reflect any increased 
costs (or savings) from the use of PowerTrack in their rates just as 
they currently incorporate any other overhead cost of doing business.
    Comment: Fees currently charged by USBank to participate in 
Powertrack exceed those charged in the market place by other sources.
    Response: DOD maintains that said fees are well within industry 
norms. Further, they are appropriate and realistic in view of the 
benefits described above, particularly rapid payment, a benefit desired 
by the industry. Elimination of the onerous DOD Carrier invoice process 
(SF1113) reduces processing time and overhead for the carrier 
significantly.
    Comment: Industry's use of factoring companies is voluntary. 
Participation in Powertrack is mandatory.
    Response: Participation in DOD freight traffic is also voluntary. 
Use of Powertrack as a condition for so doing has been openly addressed 
in a variety of forums since DOD Management Reform Memorandum #15 was 
published in the Federal Register in January 1999. DOD maintains this 
allowed industry members sufficient opportunity to decide if 
participating in DOD freight traffic, under these circumstances, was to 
their benefit. Further, prior to Powertrack, use of DOD unique forms 
and procedures, as a condition for participating in DOD freight traffic 
was likewise mandatory.
    Comment: Selection of USBank/Powertrack was not competitive. Hence, 
better rates for the same, or similar, services may have been available 
elsewhere.
    Response: This selection was competitively bid by the General 
Services Administration, the Government's principal contracting 
manager, under that agency's procurement procedures.
    Comment: DOD receives a discount on transportation charges paid by 
USBank if DFAS forwards payments thereto within a specified period. 
This creates a strong appearance of conflict of interests and 
impropriety on the part of DOD. Further, USBank's willingness to do so 
suggests they are willing to do the job for less than is actually 
billed to customers. To avoid imposing an unreasonable financial burden 
on carriers, rebates should be refunded thereto or deducted from their 
service charges.
    Response: Discounts for timely payments are a common commercial and 
government practice, as are penalties for late payments. It is in the 
best interest of both the customer and service provider to leverage 
discounts to reduce the bill and reduce the service provider's account 
receivable quickly. This is accepted, open and public, and does not 
constitute collusion or ``kick-backs.'' If these discounts were 
redistributed to the industry, then considerations of equity would 
dictate the same disposition of any penalties. Further, the paperwork 
involved in such a process would burdensome and would detract from the 
system's cost benefits.
    Comment: MTMC was unequivocally committed to the use of the USBank 
payment system long before public input was solicited.
    Response: Management Reform Memorandum #15 is one of Secretary of 
Defense William Cohen's Defense Reform Initiatives. The plan to 
completely reengineer DOD's transportation documentation and financial 
processes was signed by the Deputy Secretary of Defense, Dr. Hamre on 
July 7, 1997. Numerous conferences and meeting were hosted by DOD, 
bringing together senior transportation and financial leadership from 
within DOD and the transportation industry. In addition, the internal 
demands of cutting infrastructure costs and improving efficiencies, the 
commercial transportation industry told DOD that it was not a 
``customer of choice''. DOD had to make drastic changes in its overall 
transportation documentation and related financial business processes. 
It was no longer acceptable to pay carriers between 30 and 90 days 
after delivery. MTMC, as the DOD Traffic Manager for surface and 
intermodal freight traffic, is unequivocally committed to the use of 
the USBank payment system.

Regulatory Flexibility Act

    This action is not considered rule making within the meaning of the 
Regulatory Flexibility Act, 5 USC 601-612.

Paperwork Reduction Act

    The Paperwork reduction Act, 44 USC 3051 et seq., does not apply 
because no information collection or record keeping requirements are 
imposed on contractors, offerors or members of the public.

Thomas Hicks,
Assistant Deputy Chief of Staff for Operations and Plans.
[FR Doc. 00-29999 Filed 11-22-00; 8:45 am]
BILLING CODE 3710-08-P