B-298588, Sealift, Inc., October 13, 2006
DOCUMENT FOR PUBLIC RELEASE
The decision issued on the date below was subject to a GAO Protective Order. This redacted version has been approved for public release.
Protest that awardee’s warranted fuel consumption rate is understated does not provide a basis for questioning award where fixed-price contract is to be awarded and contract provides mechanism for government to recover any increased costs due to failure of contractor to perform at warranted rate.
Sealift, Inc. protests the award of a contract to TransAtlantic Lines, LLC (TAL) under request for proposals (RFP) No. N00033-06-R-5409, issued by the Department of the Navy, Military Sealift Command (MSC), for charter of a tank vessel. Sealift principally complains that TAL understated its vessel’s fuel consumption rate.
The RFP provided for award of a fixed-price contract to the offeror who submitted the lowest-priced, technically acceptable proposal. With respect to price, offerors were required to propose a charter hire rate and a warranted fuel consumption rate (at specified speeds). The total evaluated price was to take into consideration both the charter rate and the cost of fuel, based on the warranted fuel consumption and speed information. Following receipt and evaluation of proposals, TAL was selected for award as the low-priced, technically acceptable offeror.
Sealift maintains that the award is improper because TAL warranted a fuel consumption rate that is lower than the actual rate for its offered vessel, which resulted in TAL’s price being evaluated as lower than Sealift’s.
MSC responds that, whether or not TAL’s warranted rate is accurate, since the solicitation contemplated the award of a fixed-price contract, TAL will only be paid at its warranted rate. In this regard, the Navy points out that the solicitation specifically addressed the government’s redress should the offeror’s ship fail to perform at the warranted fuel consumption rate; under the heading “Contract Terms and Conditions,” the solicitation provides that, if the contractor breaches its fuel or speed warranties, “… the hire [payment] may be equitably decreased, the Charter may be terminated, or the Vessel may be placed off-hire, at Charterer’s option so as to indemnify the Charterer to the extent of such failure.” RFP at II-7. MSC concludes that TAL’s stated fuel consumption rate was the proper basis for evaluating its price.
We agree with MSC. As
the agency asserts, the contract is fixed-price in that--in light of the
provisions that enable the agency to recover from the contractor any increased
operation costs due to breaches of the warranted fuel and speed warranties--the
contractor will only be entitled to payment based on its warranted fuel
consumption rate. Thus, the accuracy of
TAL’s warranties is irrelevant. This
conclusion is consistent with our decision in United States Lines, Inc.,
B-197894, Oct. 20, 1980, 80‑2 CPD para. 299 at 2 (ability of
awardee to perform at warranted rate of consumption is irrelevant, since
contract provisions protect the government if the warranty is breached). The foundation for this analysis is our
long-standing view that a below‑cost bid or offer is permissible in a
fixed-price environment, since contract payment will be based on the offered
price, which is not subject to adjustment during performance barring unforeseen
circumstances. See GTSI Corp.,
Sealift also asserts that TAL misrepresented that it would
provide a crew in the manner required by the solicitation. In this regard, the solicitation provided
that “[t}he Master, Officers and crew of this Vessel shall be appointed or
hired by the Owner . . . .” RFP at
III-3. According to Sealift, TAL will
use a vessel manager or crewing agent to hire the crew, in violation of the
solicitation requirement that the owner do so. However, this solicitation provision concerns
a performance requirement--that is, a requirement that the contractor must
adhere to during contract performance--rather than a proposal requirement. In this regard, the solicitation does not
require the offeror to provide the names of crew members or otherwise address
how it will meet the need for a crew in its proposal. Rather, the RFP requires the owner to provide
the crew list no later than 96 hours prior to the time the ship is to be
delivered to the load or delivery port.
RFP at I-9. As such, whether TAL
complies with it is a matter of contract administration for consideration by
MSC, not by our Office. Fritz Cos.,
Inc., B-246736 et al.,
The protest is denied.
Gary L. Kepplinger
filed its protest in our Office on