Shipping Firm Overcharged, Pentagon Says

The Defense Department organization overseeing the return of military cargo from the Persian Gulf has contended to the Federal Maritime Commission that it was overcharged by a shipping company.

The Navy’s Military Sealift Command also said Thursday that it is weighing alternatives, including a possible lawsuit, to attempt to recover what might be tens of millions of dollars in overcharges by Sea-Land Service Inc.

Sea-Land, with offices in Edison, N.J., is a subsidiary of CSX Corp., based in Richmond, Va.

Glenn Flood, a Defense Department spokesman, said this is the first Defense Department complaint of overcharging to come to light so far in connection with the Persian Gulf War.

In a petition filed Friday with the Federal Maritime Commission, the Military Sealift Command said that in negotiations last month it learned that Sea-Land offered commercial shipping rates from the Middle East to the United States that were well below those being charged to the military.

When a sealift representative brought those rates to the attention of Sea-Land and said the government wanted to begin shipping at those rates, Sea-Land responded by canceling them with tariff amendments filed with the commission on Aug. 20, the petition said.

Three days later, the Military Sealift Command asked the commission to reject the tariff amendments on the grounds that Sea-Land had failed to provide 30 days’ notice of new or increased rates, as required under federal shipping laws. The commission’s staff turned down the request.

In its petition, the government has appealed that staff ruling.

Marge Holtz, a spokeswoman for the Military Sealift Command, said it is understandable that the lower rates went undetected until recently. Tariffs are contained in “enormous volumes of paper . . . an arcane method in this age of computers,” she said.

Jesse R. Mohorovic, a Sea-Land spokesman, said the Military Sealift Command was using an “apple-to-orange” rate comparison. The tariffs at issue, he said, were for commercial shipments from a Middle East port to a U.S. port.

“All the moves we have conducted (for the Military Sealift Command) have been to a variety of inland points.”