Appendix_E_-_Claims_and_Liability_Rules.pdf

DRAFT

HTC711-19-R-R004

Appendix E – Claims and Liability Rules

DRAFT // ACQUISITION SENSITIVE

Claims and Liability Rules (Appendix E)

1. INTRODUCTION. The claims management methodology is such that the customer may directly settle a claim with the contractor. The contractor shall provide an electronic claims management system that will enable the customer to file a claim and will interface with “government systems” (TBD). The contractor’s electronic claims management system should allow for the upload of all associated documents.

2. LIABILITY.

2.1. The Full Replacement Value Act (US Code Title 10 §2636a) of 2003, allows the Secretary of Defense to include a clause for full replacement value (FRV). If the customer files a claim with the contractor within nine months of delivery, the contractor is responsible for Full Replacement Value (FRV) for all damaged, missing and/or destroyed items.

2.2. The contractor is liable to the customer, to the customer’s agent, or to the military service that contracted for the shipment, for loss or damage that occurs to the customer’s personal property. Liability on all shipments will be determined in accordance with the Carmack Amendment to the Interstate Commerce Act, (Title 49, United States Code, Section 14706) unless a specific provision herein establishes a different rule or procedure.

2.3. If the claim is filed directly with the contractor within nine months of delivery, the contractor is liable for FRV. The contractor’s liability will be the greater of

2.3.1. $5,000 per shipment, or

2.3.2. $6.00 times either the net weight of the HHG shipment or the gross weight of the UB shipment, in pounds, not to exceed $75,000.

2.4. If the claim is filed directly with the contractor more than nine months after delivery, the contractor is liable for depreciated value as identified in the attached Allowance List Depreciation Guide, up to a maximum of $2.50 times the net weight of the shipment in pounds.

2.5. If the contractor anticipates denying a claim under this section, they must contact the MCO for a decision on whether the 9 month or two year limit should be extended under this provision. Timeliness will be determined by the Military Claims Office (MCO based on the service’s claims regulations and instructions.

2.6. Payments by the contractor to a customer for inconvenience claims will not be deducted from the contractor’s maximum liability for loss or damage, but are a separate liability.

3. FRV LIABILITY. On these claims, the contractor’s liability is as follows:

3.1. For items that are damaged but not destroyed, the contractor will, at the customer’s option, either repair the items to the extent necessary to restore them to their original working condition, or pay the customer for the cost of such repairs. The contractor is obligated to pay FRV for items that are damaged beyond repair and/or cannot be repaired.

3.2. FRV should be based on, to the greatest extent possible, the same manufacturer and should be the same make and model as the item that was lost or destroyed. For lost or destroyed items that are parts of sets, such as a silver service, furniture, crystal glasses or china, the contractor may replace the lost item with a like item that matches the rest of the set. If the contractor is unable to match the item to the set, the contractor is obligated to replace the entire set with a set of comparable qualities and features or pay FRV for the set. Likewise, some items, such as collectable figures (e.g., Hummel and Lladro), collectable plates, collectable dolls, baseball cards, antiques, comic books, coin and stamp collections, and objects of art, cannot be properly replaced with new items because their value is based, in

Appendix E – Claims and Liability Rules

DRAFT // ACQUISITION SENSITIVE

part, on the fact that they are no longer made and are no longer available for purchase as new items. For this type of item, at the discretion of the customer, the contractor may replace the lost or destroyed item with the same or comparable item or pay the replacement cost of the item.

3.3. When FRV applies to a shipment that includes one or more motor vehicles (automobiles, motorcycles, mopeds, or motor scooters), the contractor’s maximum liability for the vehicles shall be the value stated in the current issue of the N.A.D.A.’s Official Used Car Guide (the “Guide”) for such vehicle(s), adjusted for mileage and other factors considered in the Guide. However, if either the customer or the contractor has obtained a pre-damage appraisal of the vehicle from a qualified appraiser, settlement will be based on the appraised value.

3.4. For boats, personal watercraft, ultra-light aircraft, pianos, organs, firearms, all-terrain vehicles, and snowmobiles, the contractor shall pay the fair market value replacement cost.

3.5. The customer may reject a payment, repair, or item offered by the contractor to settle a claim. If a customer files a claim, but fails to settle the claim directly with the contractor, the customer may transfer the claim to the

MCO.

3.6. Replacement cost, whether depreciated or undepreciated, is based on the replacement cost at destination and includes shipping charges and sales tax.

4. ACTUAL VALUE (DEPRECIATED) LIABILITY.

4.1. If the customer files a claim more than nine months after delivery but within 2 years after delivery, the contractor is liable for the depreciated value of the items only up to a maximum of $2.50 times the net weight of the shipment in pounds. Liability will be as follows:

4.1.1. For items that are damaged but not destroyed, the contractor will, at the customer’s option, either repair or pay the customer for the cost of such repairs, up to the depreciated value of the items.

4.1.2. For items that are destroyed (i.e., the repair cost exceeds the depreciated value) or lost, the contractor will pay the depreciated value for the item.

4.2. Claims settled for the depreciated replacement cost of an item, will be adjudicated by the contractor using the attached Allowance List Depreciation Guide.

5. EXCLUSIONS FROM LIABILITY.

5.1. The contractor shall be liable for damaged, lost, or destroyed property that occurs while being transported or held in Non Temporary Storage EXCEPT loss or damage caused by or resulting from the following:

5.1.1. From an act or omission of the customer;

5.1.2. From manufacture defect;

5.1.3. From hostile or warlike action in time of peace or war including action in hindering, combating or defending against an actual, impending or expected attack; from weapons of war employing atomic fission or radioactive force whether in peace or war; or from insurrection, rebellion, revolution, civil war, usurped power or action taken by governmental authority in hindering, combating or defending against such occurrence;

5.1.4. From seizure or destruction under quarantine or customs regulations; confiscation by order of any government or public authority; or risks of contraband or illegal transportation or trade;

5.1.5. From delay caused by strikes, lockouts, labor disturbances, riots, civil commotions, or the acts of a person or persons taking part in any such occurrence or disorder;

5.1.6. From Acts of God (also known as Acts of Nature);

5.1.7. From pre-existing infestations by mollusks, arachnids, crustaceans, parasites or other types of pests; and for fumigation or decontamination when not the fault of the contractor;

5.1.8. The contractor shall not be liable for intangible property, securities, nor for the sentimental value of an item nor shall the contractor be liable for pre-existing damage.

5.2. The exclusions listed above will not apply if the contractor’s negligence significantly contributed to the loss.

6. DUTY TO MITIGATE LOSS. If loss or damage occurs to a shipment from one of the excluded causes listed in Exclusions from Liability, the contractor may still be liable for additional damage that results from its failure to take reasonable steps to mitigate the extent of the loss. The responsible QA/COR may direct the contractor to undertake specific mitigation work. The cost of any such mitigation efforts not paid for by the government will be deducted from the contractor’s maximum liability.

7. CLAIMS PROCESSING.

7.1. After the customer enters information about lost and/or damaged items into the system the contractor will have an opportunity to either deny the claim in its entirety or to agree to the customer demand in its entirety.

Otherwise, the contractor must respond with proposed dollar amount settlements on an item-by-item basis. The amounts will reflect costs to repair or replace items as appropriate. The system will include a notes field associated with each line item for the contractor to explain to the customer the rationale of their counter-offer or denial.

7.2. For each item claimed, the contractor may make an offer or deny any settlement. If an offer is made on an item, the customer may either accept or dispute the amount offered. The customer may provide a counter offer for each item’s settlement amount that they dispute; which the contractor can in turn, accept, refuse or counter offer. If the customer is unable to reach a mutual agreement on an amount to be reimbursed on one or more items, the customer can transfer the disputed item(s) to their MCO for settlement.

8. FILING NOTICE OF LOSS/DAMAGE. The loss/damage report, Notice of Loss/Damage at Delivery, is made at the time of delivery for loss or damage discovered at that time. Prior to contractor leaving, both customer and contractor must sign the form. The form must contain contractor contact information for the customer to contact the contractor for any later discovered loss or damage. The contractor must counsel the customers that they may file multiple claims for the same shipment.

9. MOLD.

9.1. When containers show signs of possible contamination, for example water saturation or mold growth on the exterior, the contractor will contact the responsible QA/COR. The contractor will continue shipping operations to a location as determined by the contractor and responsible QA/COR. The contractor will request a QA/COR at the selected location when the containers are inspected for mold. If there is no evidence of mold, shipment will continue in-transit to destination. When mold is discovered, the contractor will notify the customer, the servicing MCO, and the responsible QA/COR. The contractor is responsible for mitigation.

9.2. Payment in lieu of remediation. Prior to undertaking any remediation work, the contractor shall procure the services of a qualified mold remediation firm and obtain a written estimate, unless otherwise directed by the QA/COR. The contractor will arrange for the contaminated items to be divided into items that are or are not suitable for remediation. The contractor will provide a copy of the estimate to QA/COR, MCO, and customer. MCO shall determine whether circumstances warrant disposal of the contaminated items without attempting remediation in conjunction with the customer. When the MCO determines that remediation is appropriate and reasonable under the circumstances, the contractor will only be liable for the lesser of the remediation cost or full replacement cost. MCO determination of disposition of property is final.

9.3. Delivery of Uncontaminated Items. The contractor will deliver any uncontaminated items in accordance with the transit agreement.

9.4. Items Suitable Remediation. The contractor will provide pictures and an inventory of each category, salvageable & non-salvageable if requested by MCO.

9.5. The contractor will offer the customer an opportunity to inspect the shipment and remove items of sentimental or special value at the owner’s discretion in coordination with the responsible QA/COR. Before removal of any items, the contractor may require the customer to release them from personal injury liability for exposure to mold.

9.6. The contractor is responsible for appropriately disposing of the un-remediated portion of the contaminated items.

9.7. Delivery of remediated items. Before delivery, contractor must notify the customer and destination QA/COR that the items have been remediated, are ready for delivery, and provide a reasonable opportunity to inspect the remediated items before delivery begins.

9.8. Customer inspects remediated items. If the customer does not accept the remediation on any item during the inspection, that item will be separated from the accepted items. If the contractor agrees with the customer that those items are unacceptable, the contractor shall deliver the accepted items and, process claims on the unacceptable items for compensation at Full Replacement Value. If the contractor disagrees with the customer on any item, the MCO will make a final determination.

9.9. Customer does not inspect remediated items. If customers refuse delivery of remediated items after delivery of those items begins, the contractor will transport those items to a storage facility at the contractor’s discretion.

9.10. Services for mold remediation will normally be at the expense of the contractor, however, service payments may be authorized when the MCO determines the mitigating contractor is not liable for the damage. Contractor will file the request for service fees with their local QA/COR.

9.11. SIT before and during remediation on all other shipments. This service is normally at the expense of the contractor unless a determination has been made that the contractor is not liable.

9.12. Disposal after payment in lieu of remediation. Destination QA/CORs will approve accessorial service payments for contractor’s disposing of mold contaminated items when the contractor has made a payment to the customer in lieu of remediation and the contractor has exceeded their maximum liability on the shipment.

9.13. Contractor may be liable for an inconvenience claim until such time as the items are available for delivery.

10. TIME LIMITATIONS ON CONTRACTOR LIABILITY.

10.1. The contractor shall enable the transfer of all or part of the claim to the MCO 30 days from date of claim submission provided that:

10.1.1. The claim has sufficient information upon which the contractor can reasonably adjudicate it. A claim is sufficient if it identifies the customer; contain facts sufficient to identify the shipment or shipments involved; asserts a demand for a specific or determinable amount; and specifies the items lost or damaged; and

10.1.2. A contractor shall enable the transfer of all or part of the claim to an MCO before 30 days, and the contractor will remain liable for FRV if the following occur:

10.1.3. The customer has considered and responded to any offer of settlement made by the contractor, and;

10.1.4. The claim has not been fully satisfied or settled.

10.1.5. The contractor fails to comply with the catastrophic loss provisions as verified by the MCO.

10.1.6. The contractor fails to comply with essential items provisions below, as verified by the MCO.

10.2. The contractor will not be liable for loss or damage unless the customer either files a claim directly against the contractor within two years of the final delivery of the shipment that included the lost or damaged items, or files a timely claim against the United States and submits it to a MCO under the Military Personnel and Civilian Employees Claims Act (PCA).

10.3. For the purposes of either the 9 month time limit for filing against the contractor or the two-year limit for filing against the contractor or the United States, if a claim accrues during war or an armed conflict in which an armed force of the United States is involved, or has accrued within 2 years before war or an armed conflict begins, and for cause shown, the claim must be presented within 2 years after the cause no longer exists or after the war or armed conflict ends, whichever is earlier. An armed conflict begins and ends as stated in a concurrent resolution of Congress or a decision of the President. If the contractor anticipates denying a claim under this section, they must contact the MCO for a decision on whether the 9 month or two year limit should be extended under this provision.

Timeliness will be determined by the MCO based on the service’s claims regulations and instructions.

10.4. The contractor must send a reminder to the customer 30 days prior to the 9 month time limit that their claim filing window for FRV is closing

10.5. If the customer files a claim with an MCO, the contractor will not be liable to the government on a recovery claim if the government does not dispatch a written demand to the contractor within four years of delivery. This four-year period will be extended by any period granted as above. If the government does dispatch a written demand to the contractor within four years of delivery, the government will have the normal six years specified in Title 28, United States Code, Section 2415, to resolve the claim or take administrative remedies.

11. LIABILITY FOR GOODS IN STORAGE.

11.1. The contractor’s responsibility for a shipment and its liability for a shipment in NTS or SIT shall terminate, and the warehouse shall become the final destination of the shipment, on midnight of the day specified in the notice which the storage contractor receives from the QA/COR advising that the government nature of the shipment will terminate. This notice of termination can be rescinded not later than sixty business days after to the effective date of the termination.

11.2. In the event that NTS or SIT converts to the customer’s expense, the contractor shall offer the customer an opportunity to conduct a Joint Inspection. The contractor shall provide a copy of the Joint Inspection Form upon request.

12. HIGH VALUE ITEMS AND HIGH RISK INVENTORIES.

12.1. High value/high risk items may include but is not limited to currency, coins, jewelry, silverware and silver service sets, crystal, figurines, furs, objects of art, computer software programs, manuscripts, comic books, baseball cards, stamps, and other collectable items or rare documents that have a value in excess of $100 per pound. For the purposes of determining the contractor’s liability, all such items shall be deemed to weigh at least one pound. A collection of compact disks (CDs) and digital video disks (DVDs to include computer or video games) will not be considered high value/high risk items. However, individual CDs or DVDs with a value in excess of $50 will be considered a high value item.

12.2. A high risk/high value inventory form, even if it is signed by the customer upon delivery and fails to note shortages at delivery, will normally be treated as other inventories for purposes of determining whether there was loss or damage in transit. Filing within nine months in order to receive FRV, or two years to receive depreciated valuation, would overcome the presumption of correct delivery, even of high value items listed on a special inventory unless all of the following conditions are met:

12.3. If the high risk/high value inventory form has a block to denote delivery, the customer must initial each block for each item. A check mark or an “x” is not sufficient.

12.4. The high risk/high value inventory form must contain a warning, in bold font larger than other fonts on the form, that if the customer notes on this inventory that an item was delivered, he or she may never claim that the item was missing with either the contractor or with an MCO.

12.5. The delivering contractor must attest in writing that, just prior to departure from the residence, the contractor and the customer opened all containers in which the high risk/high value items were packed; that they removed the items from the containers; that they physically inspected each item; and that the contractor advised the customer of the consequences of signing the high risk/high value inventory form.

13. TRANSFER OF CUSTODY OF SHIPMENTS.

13.1. When custody of a shipment is transferred from one contractor to another, the delivering contractor will furnish the receiving contractor two legible duplicate copies of the shipment inventory.

13.2. The receiving contractor will have the option, at no cost to the government, to conduct a joint inspection.

The receiving contractor will prepare an exception sheet noting any difference in the condition of the containers or to specific cartons within the containers. If no new loss or damage is discovered, an exception sheet will be prepared stating, “No differences noted.” In the event the opinion of the delivering contractor’s driver and the receiving contractor differ, both opinions will be listed on the exception sheet and separately identified.

13.3. During the transition period, shipments may involve more than one contractor handling a single shipment.

This situation may result in shared liability between the two or more contractors. If a claim is denied by a contractor by placing liability on a previous handler, the contractor will advise the customer to contact their Military Claims Office (MCO) for further claims guidance

13.4. The delivering contractor will determine the specific claim line items for which they are responsible. The delivering contractor can accept or deny responsibility for a line and will use riders that were completed during shipment to determine responsibility. If no rider exists to establish responsibility, the line item becomes the responsibility of the delivering contractor

13.5. Filing a claim with the contractor will satisfy the requirement for all contractors and warehouses in the chain of custody.

14. CLAIMS FILING.

14.1. The contractor will, along with the customer, record loss or damage at delivery. The contractor must advise customer in writing the claims process requirements. Loss or damage discovered after delivery shall be presumed to have been caused by the contractor if claim is submitted within 9 months from delivery.

14.2. The contractor shall transmit any requested documents to the requesting MCO within 2 business days.

14.3. If the contractor believes that some of the loss or damage occurred while the goods were in the custody of a prior contractor, the contractor must notify the claimant in writing that they are settling for the items for which they are legally liable and denying the other items because prior contractor is liable. The customer shall be advised by the contractor to contact their MCO for further claims guidance.

14.4. Contractor must provide an avenue to file claims manually, by exception (e.g., Customer has no access to a computer or the internet or a Blue-bark shipment).

14.5. For claims filed directly with the contractor, the customer may file a claim without a repair estimate. The contractor is responsible for obtaining repair estimates or replacement cost estimates required to settle the claim.

The contractor will contact the customer within 15 days of the claim receipt to schedule a time for mutually convenient inspection.

14.6. If the contractor has not already obtained estimates for transferred claims, the MCO may give the contractor an opportunity to obtain an estimate.

14.7. The contractor shall provide a mechanism for the customer to monitor the status of Loss/Damage Claim

15. INSPECTION BY THE CONTRACTOR.

15.1. The contractor may not deny a claim if the customer has repaired an item before the contractor’s inspection, if the customer provides the repair bill or some other evidence of the damage and repair cost. The contractor may not deny a claim if the customer has disposed of a damaged item, where the customer has given the contractor evidence that the item was damaged beyond economical repair or was a potential health hazard to the claimant or the claimant’s family.

16. REPAIR ESTIMATES.

16.1. The contractor will be responsible for obtaining and paying for repair estimates required to process claims that are filed with the contractor by the customer. Contractor must provide the customer copies of any estimate used to support an offer of settlement at the time the offer is made. The contractor is responsible for paying all estimates and associated fees presented by a MCO as a result of claims that were transferred to the MCO by the customer unless:

16.1.1. The contractor previously provided a reasonable estimate; or

16.1.2. The contractor previously offered to pay the customer a value that matches or exceeds the repair or replacement cost for all items on the estimate.

16.2. All estimates provided by the contractor must identify a qualified repair firm that is willing and able to make the repair within a reasonable time for the amount stated. The repair firm must be reputable and provide timely and satisfactory performance. All such estimates must be itemized.

17. SETTLEMENT OF LOSS AND DAMAGE CLAIMS.

17.1. The contractor must provide an acknowledgement of receipt of a claim to the customer within 15 calendar days of receipt of a claim.

17.2. The contractor will issue payment to the customer or initiate repair of items within 30 days of receipt of notice that the customer has accepted a full or partial settlement.

17.3. The contractor will stop negotiations on line items that have been transferred to the MCO. Denial of a claim by the contractor does not extinguish contractor liability.

18. QUICK CLAIM SETTLEMENT. Contractor shall establish a quick claim settlement procedure to quickly resolve and pay claims for minor loss or damage discovered at the time of delivery. However, a quick claim settlement agreement can contain only a limited release of liability and must specifically list the items and the damage for which payment is being made. Customers must be advised that they may still file claims for loss or damage discovered after delivery.

19. PARTIAL SETTLEMENTS.

19.1. The claimant or the contractor may also propose a settlement in which a lump sum is paid to settle the entire claim, without a separate amount offered for each separate item. The proposal shall state in BOLD FACE type that entering into the agreement will preclude transferring the claim to the MCO. If the customer does not accept the proposal, the contractor is required to make an initial offer or denial to the customer/claimant for each separate item claimed. The contractor is not permitted to condition its offer for any item on the claimant’s acceptance of its offer or denial on any other item or items.

19.2. The contractor may not assert a final settlement agreement has been reached unless the claimant and the contractor have settled every separate item in the claim, or the customer/claimant and the contractor have entered into a lump sum settlement. This will not preclude a claim under the PCA nor will the government be bound to this agreement.

20. SALVAGE.

20.1. To the extent not prohibited by law or agreement, the contractor is entitled to salvage a damaged item on which the contractor has paid the customer either the depreciated or full replacement cost. If the customer wishes to retain an item, the contractor may request the customer waive up to 25% of the depreciated or full cost. The contractor is prohibited from pre-emptively deducting salvage from an award without communicating with the customer first.

20.2. If the contractor pays a customer the depreciated or the full replacement cost of a lost item, and the item is subsequently located, the contractor must notify the MCO and the customer. If the customer elects to receive a found item, the contractor must deliver the item or items to the customer’s residence and the customer will refund any payment made.

20.3. If the contractor locates an item within 30 days of notice of the loss at delivery, and a claim on that item has not been paid, the customer will be obligated to accept delivery. In addition, if the contractor locates a lost item more than 30 days after receipt of notice of the loss, but the item has not been replaced, the customer will be obligated to accept delivery of the item. Notwithstanding the above, essential item(s), that a reasonable person would and has replaced promptly may be declined by the customer before the 30 day period has run.

20.4. The contractor must take possession of salvage items, at the customer’s residence, or other location acceptable to the customer, not later than 30 days after settlement of the customer’s claim unless an agreement has been made with the customer to mutually agreeable later date.

20.5. The contractor will not exercise its salvage rights if the depreciated replacement value of all salvageable items totals less than $200.00.

20.6. If the contractor is unable to exercise its salvage rights due to the disposal of an item by the customer, the contractor may reduce its liability by 25% on that item if it has a depreciated replacement value of $50.00 or more.

20.7. The right of the contractor to salvage terminates upon the transfer by the claimant of the claim for the specific item or items to MCO.

21. DISPUTE RESOLUTION.

21.1. If a customer does not accept a settlement offered by the TSP, the customer may transfer a claim to the appropriate MCO. If the customer transfers a claim, the MCO will resolve the customer’s claim in accordance with its Service’s claims regulations and procedures

21.2. The MCO will then assert a recovery claim against the contractor under these business rules. The contractor must pay, deny or make an offer on the recovery claim within 60 days of receipt of the claim, unless an extension is granted by the MCO.

21.3. If the contractor and the MCO cannot reach a mutual settlement on the recovery claim, the government may collect the amount of its recovery claim by administrative offset from money that is owed to the contractor.

22. CATASTROPHIC LOSS PAYMENTS.

22.1. Catastrophic loss occurs when over 60% of the inventory line items in a given shipment are lost, damaged or destroyed. Contractor is required to contact the MCO, customer and responsible QA/COR within 2 business days, when catastrophic losses occur. The contractor is responsible for identifying and making partial, advance payments of no less than 10% of their total maximum liability, to customers within 2 business days of contacting the customer. The customer will still be required to file a claim for their loss. Any advance payment made will be deducted from the customer’s eventual award. Advance payments made do not relieve the contractor of its responsibility to process inconvenience claims.

22.2. The contractor will notify QA/COR of catastrophic loss on shipments in non-temp storage within 2 business days. The contractor will notify the customer within 10 business days. The contractor shall provide an inventory of lost, destroyed or damaged items within a timeframe determined by the QA/COR.

22.3. In the event that a contractor identifies or is informed of a catastrophic loss for which it believes it is not liable under Exclusions from Liability, above, the contractor shall inform the customer’s MCO within 24 hours. In such cases, the MCO shall handle the advance payment and claim. If it is later determined that the contractor was, in fact, liable for the loss, the MCO will assert a recovery claim against the contractor. The contractor shall be liable as if the customer had filed a claim with the contractor within nine months of their loss.

23. ESSENTIAL ITEMS.

23.1. Essential items are only those items necessary for everyday living, which would reasonably need to be replaced promptly. Items used solely for entertainment purposes are not considered essential. Fungible items that are regularly used up or worn out and must be routinely replaced are not considered essential. Essential items include, but are not limited to:

23.1.1. Refrigerators or other appliances necessary for the safe storage and preparation of food

23.1.2. Necessary medical equipment; and

23.1.3. Mattresses

23.2. The contractor shall either pay for essential items, provide temporary or permanent replacements for them, or repair them within 7 days of notification. If it is later determined that the contractor was not liable for the loss, the contractor will contact the MCO. Customers are responsible for notifying the contractor of such a loss within 7 days of the date their goods were delivered. Any item not identified in this way by the customer shall not be considered “essential.”

24. RESPONDING TO A CONTRACTOR’S PROPOSED SETTLEMENT. The contractor shall enable customers to negotiate settlements directly with contractors whenever possible by facilitating the necessary correspondence between them and the contractor.

25. UNEARNED TRANSPORTATION. Unearned transportation is defined as payment for transportation of items, the value of which was not delivered. For items that are destroyed, lost or missing at delivery, contractor’s shall not be responsible for unearned transportation costs if the full replacement value of all lost or missing items has been paid to the owner or customer.

26. MISSING OR DAMAGED ORGANIZATIONAL CLOTHING AND INDIVIDUAL EQUIPMENT

(OCIE)

26.1. OCIE is clothing and equipment issued to the customer for use in the performance of duty. It is common for customer to personally purchase items for use in their duties that appear to be OCIE items, but are not. These items are commonly referred to as “personal kit”. The contractor shall request the customer to identify these items which shall be separated from OCIE for inventory and claims purposes. The contractor shall conduct an inventory of OCIE at pack-out and delivery. Such inventory shall be recorded on standard inventory forms, but shall be marked “M-PRO”. The failure of the contractor to conduct the inventory may not be used by the contractor as grounds for asserting a lack of tender of items in rebutting a recovery action for OCIE claims.

26.2. If the contractor receives a claim from a customer that contains OCIE, the contractor will deny that portion of the claim relating to OCIE. If the contractor receives notice that OCIE has been lost or damaged, either through submission of notice by the customer, inspection, or any other means, it must notify the MCO of such loss and damage, within 30 days of receiving notice. The contractor will furnish the MCO a list of the OCIE missing or damaged along with shipment information and customer name.

26.3. The Army shall pursue recovery for OCIE loss or damage from the contractor as a separate action from any associated HHG recovery action. The contractor shall remit payment for OCIE no later than 60 days from receipt of a demand for recovery concerning OCIE. Failure to remit payment no later than 60 days from receipt of a demand for recovery concerning OCIE shall result in offset actions by the MCO against the contractor.