Resource Protection

B-266114 Apr 12, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights The service applied the 10 percent rate which it states was established based on evaluation of the unique characteristics of CDs. The carrier has not shown that the service's use of the 10 percent rate is unreasonable. The service's action is sustained. Whose goods were moved by Carlyle in October 1992 under GBL TP-522. BACKGROUND The missing items in question are 19 compact discs (CDs) which the member indicates he purchased new at various times during 1992. The CDs were valued at $300. Resource Protection does not dispute Carlyle's liability for the CDs but argues that the depreciation rate used in the claim against Carlyle should have been 50 percent rather than 10 percent. Argues that a depreciation rate set in the service's Allowance List-Depreciation Guide governing the service's settlement of claims with its members [1] is not appropriate to apply in asserting claims against the carrier since the latter are to be evaluated under common law principles. View Decision Matter of: Resource Protection File: B-266114 Date: April 12, 1996 In settling a claim against a household goods carrier for loss in transit of a service member's compact discs (CDs), the service applied a flat 10 percent depreciation rate to determine the amount of the carrier's liability. Carrier argues that the 50 percent rate applicable to phonograph records under the Joint Military Industry Depreciation Guide should be used, and that the 10 percent rate the service used, applicable in the service's settlement of claims with members, may not be applied against the carrier. In the absence of an agreed rate under the Depreciation Guide, the service applied the 10 percent rate which it states was established based on evaluation of the unique characteristics of CDs, which significantly differ from phonograph records. The carrier has not shown that the service's use of the 10 percent rate is unreasonable. Therefore, the service's action is sustained. Fogarty Van Lines, B-248982, Aug. 16, 1993, distinguished. DECISION Resource Protection, on behalf of Carlyle Van Lines, requests refund of $120 setoff by the Air Force for loss to the household goods of David W. Decembly, an Air Force member, whose goods were moved by Carlyle in October 1992 under GBL TP-522,787. BACKGROUND The missing items in question are 19 compact discs (CDs) which the member indicates he purchased new at various times during 1992, the year in which the shipment took place. The CDs were valued at $300, to which the Air Force applied a flat 10 percent depreciation rate and paid the member the resulting $270 in settlement of his claim. The Air Force applied the same 10 percent rate in asserting its claim against Carlyle, and collected $270 from Carlyle. Resource Protection does not dispute Carlyle's liability for the CDs but argues that the depreciation rate used in the claim against Carlyle should have been 50 percent rather than 10 percent, which would result in a collection from Carlyle of $150, not $270. In support of its position, Resource Protection, citing Fogarty Van Lines, B-248982, Aug. 16, 1993, argues that a depreciation rate set in the service's Allowance List-Depreciation Guide governing the service's settlement of claims with its members [1] is not appropriate to apply in asserting claims against the carrier since the latter are to be evaluated under common law principles, not based on a rate set by service regulations. Resource Protection notes that no depreciation rate for CDs has been agreed upon jointly by the carriers and the services and published in the Joint Military Industry Depreciation Guide, which is used for evaluating loss and damage claims, but the Guide does provide a 50 percent depreciation rate for phonograph records, which Resource Protection states are similar to CDs, and thus the 50 percent rate should apply to CDs also. The service states that when the Joint Military Industry Depreciation Guide was last revised in 1976, CDs were not in use and thus were not included, and as Resource Protection stated, no agreement has been reached with the carriers on a depreciation rate so as to include CDs in the Guide. The service indicates, however, that when the military services revised their Allowance List-Depreciation Guide which they use for settling members' claims, CDs were added for the first time and a depreciation rate of 10 percent was established for them. This rate, the service reports, was established in recognition of CDs' unique characteristics which make them far less subject to deterioration and give them a far longer life span than phonograph records or cassette tapes. The service states that because of the technology employed in their manufacture and use, they do not wear out and are less subject to abuse than records or cassettes.