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By authority of the United States, be it enacted by the Philippine Commission, that:

SECTION  1. The  Secretary of  Commerce and  Police is hereby authorized and directed to publish proposals in the United States and in the Philippine Islands, asking for bids for the carriage of mails. Government freight and passengers in the Philippine coast-wise trade by vessels, and subject to the approval of the Commission, to enter into contract or contracts therefor, under the following general conditions:

1. Instructions to bidders, specifications, and forms of contracts shall be placed on file for distribution at the Bureau of Insular Affairs, War Department, Washington, and the office of the Secretary of Commerce and Police, Manila.
   
   
2. The contract or contracts shall be for a period of five years, except as hereinafter provided.
   
   
3. Bidders shall agree to extend to the public the same rates at which they contract to carry Government freight and passengers, and to give the Government as good rates as the lowest offered to the public: Provided, That in case the contracting parties shall desire to lower the rates to the public and not to the Government such action may be taken with the previous consent of the Secretary of Commerce and Police: Provided always, That the rates offered to the public be uniform and nondiscriminating.
   
   
4.  The successful bidders shall lake immediate steps to provide such alterations and repairs as will bring their vessels up to the standards of safety, sanitation, and comfort prescribed by the contract or contracts. Blank forms of such proposed contracts shall be kept on file for the examination of proposed bidders.
   
   
5. All contracting vessels shall continue to be subject to the general coast-wise, navigation, sanitary and quarantine laws of the Philippine Islands.
   
   
6. Bidders are invited, in making their bids, to quote rates for transportation from wharf to wharf or from warehouse to warehouse, and such rates shall be considered in determining which is the most advantageous bid.
   
   
7. Bidders shall be notified that they may submit alternate bids, one complying with the instructions and specifications prescribed by the Government, and another, or others, offering such modifications as may to bidders seem advantageous in regard to term of contract or contracts, routes, schedules, size and speed of vessels, but making no modifications as to the standards of safety, sanitary arrangements, and quality of passenger service. The Government shall retain the right to accept such bid or bids as may seem to it most advantageous, or to reject all bids.
   
   
8. In case bidders offer better terms than can be otherwise obtained upon condition that the contract be made for a period exceeding five years, the Secretary of Commerce and Police, with the approval of the Commission, is authorized to accept said offer or offers, with a proviso in the contract or contracts that the Government may, at any time after live years. upon giving due notice to the contracting parties, terminate the contract or contracts by submitting to arbitration the question of any indemnity to the contracting parties for loss sustained by reason of preparations made for compliance with the terms of the contract but such arbitration shall be limited to fixing the proportionate amount of money lost by reason of the termination of the contract or contracts before the expiration of the period exceeding five years contracted for, and shall not include any "profits lost" or potential earnings.
   
   
9. The Government shall take precedence in the matter of securing accommodations for both passengers and freight by giving to the contracting party or his authorized agent a reasonable notice of not less than forty-eight hours in advance of the sailing time of the vessels, but in cases of public emergency such notice shall not be necessary.
   
   
10. For the sake of prompt service, vessels belonging to the Insular Government shall be allowed to transport mails, passengers, and freight between points covered by vessels under contract when the element of time is important, but provision may be made in the contract that in such cases an equitable portion of the net proceeds arising therefrom shall be turned over to the contracting parties affected by such carriage: Provided, That no payment shall be made to the contracting parties in the case of tours for the purpose of inspection or for official duty made by Insular Government officials upon Government vessels.
    
    
11. Officers charged with the inspection of vessels under contract shall be furnished free transportation, subsistence, and the ordinary accommodations for first-class passengers whenever said officers arc engaged in duly authorized inspections on said contracting vessels.
    
    
12. Civil and military officers and employees traveling on leave, and their immediate families under all circumstances, shall be granted half-rates by contracting vessels.

SEC. 2. Whenever it is provided by this or any other Act of the Philippine Commission or any other law or regulation in the Philippine Islands that vessels belonging to the Insular Government may charge for mails. Government passengers or freight or for public passengers or  freight, the proposed rates to be charged by such; Government vessels shall be submitted to the Secretary of Commerce and Police, who is hereby authorized and directed to certify, as nearly as may be practicable, what rates would be charged for the same service, by vessels under contract with the Government, as herein before authorized, and the rates so certified shall prevail.

SEC. 3. The office of Superintendent of Inter-island Transportation is hereby created at an authorized salary of six thousand pesos per annum. The office shall be appointed by the Governor-General, by and with the consent of the Philippine Commission, and shall be under the supervision and control of the Chief of Coast Guard and Transportation.

The Superintendent of Inter-island Transportation shall keep advised of the movements of all vessels of the Government and of the contracting parties, publishing from time to time notices of the same, He shall record and tabulate data as to rates, schedules, accommodations, and so forth, receive all complaints in regard to service, inequality of rates, or other failure to comply with the terms of the contract, and shall see generally to the enforcement of all provisions of the contract or contracts entered into under section one hereof. He shall issue either personally or by authorized agent all orders for transportation of official passengers and freight on Government and contracting vessels, and shall perform such other duties as the Chief of Coast Guard and Transportation may direct.

SEC. 4.  All Bureaus or Offices of the insular Government maintaining vessels shall keep an accurate account of the passengers and freight carried on such vessels for other branches of the Insular Government, and settlements for the same shall be made with the Bureau or Office performing the service at regular intervals of not less than once in six months.

SEC. 5. All vessels belonging to the Insular Government making trips on other than regular schedules, shall carry the mails free of charge, and all Government vessels required to carry the mails shall he subject to such rules and regulations as may be prescribed by the Secretary of Commerce and Police.

SEC. 6. Vessels belonging to the Bureau of Coast Guard and Transportation, running on regular schedules, shall be paid by the Bureau of Posts for mail service furnished by said vessels at a rate based upon the rate charged by commercial vessels under contract, the exact amount of the compensation to be determined by the Secretary of Commerce and Police; but the Bureau of Posts may, in part or full payment thereof, maintain on board the Coast Guard vessel or vessels a postal clerk or clerks for the joint service of the two Bureaus.

SEC. 7. The Chiefs of all Bureaus or Offices of the Insular Government maintaining or operating vessels are hereby directed to keep the Superintendent of Inter-island Transportation duly informed of the location, general duties, intended movements, and so forth, of their respective vessels, in order that such vessels may be fully utilized.

SEC. 8. All vessels belonging to the insular Government and assigned to Bureaus which have no special inspection officers shall be regularly inspected by the official hull and boiler inspectors of the Philippine Islands, and shall not be permitted to operate without the regular certificates of such inspecting officers.

SEC. 9. For the purposes of maintenance, inspection, and furnishing officers and crew, all launches belonging to the Insular Government which are assigned temporarily to the provinces or Bureaus and Offices of the Insular Government shall be under the control of the Bureau of Coast Guard and Transportation, and a charge sufficient to cover all operating expenses, repairs, wear and tear, and so forth, shall he made by the Bureau of Coast Guard and Transportation, subject to the approval of the Secretary of Commerce and Police.

SEC. 10. As soon as the Superintendent of Inter-island Transportation shall have been appointed, so much of Act Numbered One hundred and ninety-eight of the Philippine Commission as authorizes and directs the Insular Purchasing Agent to make contracts with inter-island vessels For transportation of Government employees shall stand repealed, and all other Acts or parts of Acts, in so far as the same are inconsistent with this Act, are hereby repealed.

SEC. 11. This Act shall take effect April first, nineteen hundred and five.

Enacted, March 23, 1905.