BNUMBER:  B-260604.2
DATE:  April 18, 1996
TITLE:  Trism Specialized Carriers, Inc.

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Matter of:Trism Specialized Carriers, Inc.

File:     B-260604.2

Date:April 18, 1996

DIGEST

The Department of Defense (DOD), as a shipper, is not directly liable 
to a carrier for the charges incurred by a DOD authorized shipper 
agent where the record indicates the carrier knew prior to performing 
services that a government bill of lading relationship existed between 
DOD and the shipper agent which did not include the carrier as a party 
to that contract, and where, in addition the relationship between DOD 
and the shipper agent was one in which:  DOD paid the shipper agent in 
accordance with the shipper agent's charges and without regard to the 
charges of the underlying carrier; DOD held the shipper agent liable 
for any loss and damage and did not view the shipper agent as a mere 
conduit for recovery from the underlying carrier; the shipper agent 
had substantial authority to select the underlying carrier; and DOD 
did not organize or substantially control the shipper agent, a 
for-profit business which generally provided similar service for 
customers other than DOD.

DECISION

Trism Specialized Carriers, Inc. (Trism), requests our review of the 
General Services Administration's (GSA) settlements disallowing its 
claims against the Department of Defense (DOD) for services it 
performed in connection with several government bill of lading (GBL) 
transactions.  The issue presented is whether the government is 
directly liable to a carrier for unpaid charges incurred by an 
approved shipper agent of the DOD under item 11 of the Military 
Traffic Management Command's Freight Traffic Rules Publication No. 1A 
(MFTRP 1A).  We affirm GSA's settlement.

BACKGROUND

Our review of Trism's submissions indicate that between December 1992 
and June 1993, DOD tendered several shipments in the Province of 
Quebec to Roadair Feeder Service, an authorized shipper agent of DOD, 
for transport to various points in the United States.[1]  DOD prepared 
GBLs for each shipment, and each GBL indicated that Roadair Feeder 
Service was the transportation company to which DOD tendered the 
shipment.  Roadair Feeder Service was a for-profit business enterprise 
that, independent of DOD, selected Trism to perform the line-haul of 
the freight.  Trism's documentation indicates that it billed Roadair 
Feeder Service for the services it performed, and there is no dispute 
that Roadair Feeder Service failed to pay Trism for the services 
involved.  The government did pay Roadair Feeder Service for the 
services, when Roadair Feeder Service failed to pay Trism for the 
services it performed, Trism billed DOD.

Essentially, it is Trism's position that DOD is directly liable to 
Trism because Roadair Feeder Service was an approved shipper agent of 
DOD.  Trism points out that Roadair Feeder Service had neither common 
carrier nor broker authority, and it suggests, therefore, that the 
United States cannot empower such an agent to solicit transportation 
services from Trism or any other underlying carrier without becoming 
directly liable to the carrier for the services that the agent 
obtained.  Trism says that notwithstanding the listing of Roadair 
Feeder Service as a broker in the National Motor Freight Traffic 
Association's directory, the firm did not hold such a certificate.

GSA denied Trism's claim, relying on the standards of payment set 
forth in title 41, Code of Federal Regulations (C.F.R.), Section 
101-41.310-4, which generally states that payment can be made only to 
the last carrier or forwarder in privity with the contract of carriage 
as evidenced by the covering GBL.  In response, Trism notes that DOD 
tendered the GBLs and shipments to its drivers despite the statement 
on the GBLs that each shipment was tendered to Roadair Feeder Service, 
and Trism notes that various notations on the GBLs indicated that 
Trism was the involved underlying carrier (e.g., data on some of the 
GBLs related to the pickup specifically cite "TRISM").

DISCUSSION

The cited regulations and established judicial precedent support GSA's 
position.  The label of "shipper agent," "shipper association," 
"forwarder," or "broker," is not as significant for the purpose of 
shipper liability to the underlying carrier as the type of control 
over the agent that the shipper was authorized to exercise.  When the 
agent is a not-for-profit organization in which the shipper, either 
individually or in association with others, has the ability to control 
the agent's daily operations, the shipper is liable for the unpaid 
transportation services rendered by the carrier which benefited the 
shipper.  See Central States Trucking Co. v. J.R. Simplot Co., 965 
F.2d 431 (7th Cir. 1992), citing Southern Pacific Transp. Co. v. 
Continental Shippers Ass'n, 642 F.2d 236 (8th Cir. 1981).  In these 
cases, the shipper's liability depended on whether there was, in fact, 
a principal-agent relationship.  In comparing the by-laws of the agent 
in Southern Pacific with those in the case before it, the decision in 
Central States noted five factors that it thought were significant in 
holding the shipper directly liable for the association's obligations:  
(1) the agent was not responsible for the shipper's freight charges; 
(2) the agent acted as an agent in processing claims for loss and 
damage against the carrier; (3) the agent processed shipments only 
upon the shipper's instructions; (4) the agent was controlled and 
supervised by a board of directors made up of shippers' employees; and 
(5) the agent was organized as an authorized agent of each member.

Here, the relationship between the shipper and the agent does not meet 
the test described in Central States.  At the time of this shipment, 
there was no record of any specific written agreement between the 
Military Traffic Management Command (MTMC) and Roadair Feeder Service 
other than the GBL.  But, the record indicates the following:  DOD 
paid Roadair Feeder Service and similar firms in accordance with the 
agent's published rates, not those of the underlying carrier; Roadair 
Feeder Service generally was free to select the underlying carrier; 
and DOD held Roadair Feeder Service, not the underlying carrier, 
liable for any loss or damage.  There is no indication that DOD 
intended to pursue any loss and damage claims against the underlying 
carrier, and it is evident that DOD had no interest in the rates and 
charges of the underlying carrier(s).[2]  Roadair Feeder Service had 
to follow the instructions on the GBL which DOD prepared, as would a 
carrier had a carrier been named as a party on the GBL.  Roadair 
Feeder Service otherwise was not controlled by DOD and was free to 
pursue other business to the extent allowed under the laws of the 
Dominion of Canada or of the United States (when applicable).  No 
specific amount of business was ever guaranteed by DOD.  Thus, the 
relationship between Roadair Feeder Service and DOD was substantially 
different from those relationships between shipper and agent in which 
the courts found the shipper to be liable to the carrier for the 
obligations of the agent.  The label "shipper agent," even in 
conjunction with DOD approval, does not necessarily make the shipper a 
guarantor of the underlying carrier's charges, and the shipper is not 
necessarily liable for all of the actions of its shipper agent.

Additionally, the record indicates that Trism knew prior to performing 
services that DOD had prepared the GBL without showing Trism as a 
party in interest to this contract.  Trism chose to deal directly with 
Roadair Feeder Service, and it is charged with knowledge of GSA's 
published regulations.  If the notation on the GBL which stated that 
the shipment was tendered to Roadair Feeder Service was not correct, 
and if Trism wanted a direct relationship with the government before 
performing service, it had the duty to ensure that the bill of lading 
was corrected to show the proper relationship between it and the 
government.  See 52 Comp. Gen. 211 (1972).  It is well settled that 
since privity of contract generally does not exist between the 
government and subcontractors, such firms have no legally permissible 
way to bring claims directly against the government.  Compare General 
Services Administration, 62 Comp. Gen. 633, 634 (1983).

We affirm GSA's settlements.

/s/Seymour Efros
for Robert P. Murphy
General Counsel

1. Typical commodities included semitrailer tank refueler vehicles and 
fire trucks.

2. A specific written agreement for shipper agents now exists and is 
set forth in 32 C.F.R. Part 619, Appendix F.  It states, among other 
things, that MTMC can direct an agent not to use specific carriers, 
including those which are debarred, suspended or placed in non-use.  
It also provides that the agent must file its own through rates in a 
rate tender with MTMC and that the agent is generally liable for loss 
and damage.