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###### Department of Defense

###### Department of the Army 

# AGENCY:

Military Traffic Management Command, DOD. 

# ACTION:

Notice. 

# 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                               ( print 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                         *donohuem@mtmc.army.mil.*                         An additional point of contact is Ms. Kiazan Moneypenny At 703-428-2384, E-mail                         *moneypennyk@mtmc.army.mil*.                     

# 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