B-155094, JAN. 26, 1965

B-155094: Jan 26, 1965

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WE WERE AWARDED THE RESUPPLY OF SITES IN THE ALEUTIAN AND DEW LINE SECTORS AND HAVE BEEN ACTIVELY ENGAGED IN THIS OPERATION DURING THE PAST FEW MONTHS. NEGOTIATIONS FOR THE PROGRAM WERE HANDLED BY THE U.S. THE THIRD SECTOR COVERING THE BERING SEA AREA WAS AWARDED BY U.S. AIR FORCE THAT HIS OFFICE HENCEFORTH WAS TO BE RESPONSIBLE FOR THE OPERATION OF THE RESUPPLY PROGRAM DURING 1964. WE HAVE CARRIED ON NEGOTIATIONS WITH HIS OFFICE COVERING THE NORMAL CHANGES INVOLVED IN THIS COMPLEX OPERATION. THOUGH THE PROPOSED MOVEMENT WAS NEW TO THE MONA LISA PROGRAM. IT WAS IN THE AREA OF OPERATIONS AWARDED TO US AFTER COMPETITIVE BIDDING EARLIER IN THE YEAR. HE ADVISED OUR ANCHORAGE REPRESENTATIVE THAT OUR RATE OF $1.69 PER 100 POUNDS AND OUR PLAN OF OPERATIONS TO SERVICE THIS SITE WERE APPROVED AND THAT WE SHOULD IMMEDIATELY RESCHEDULE OUR EQUIPMENT AND ISSUE AN AMENDMENT TO OUR TENDER THEN ON FILE SETTING FORTH THE AGREED RATE.

B-155094, JAN. 26, 1965

TO THE ALASKA BARGE AND TRANSPORT, INC.:

WE REFER TO YOUR LETTER OF SEPTEMBER 14, 1964, PROTESTING AGAINST THE IRREGULAR PROCEDURES FOLLOWED BY THE UNITED STATES ARMY, ALASKA, (USARAL) AND THE ALASKA AIR COMMAND (AAC) IN AWARDING PETROLEUM PRODUCTS SHIPMENT CONTRACT TO THE FOSS LAUNCH AND TUG COMPANY. YOUR LETTER IN PERTINENT PART SETS OUT THE BASES OF YOUR PROTEST AS FOLLOWS:

"* * * IN 1964, PURSUANT TO A TENDER FILED IN THE NAME OF OUR JOINT VENTURE, ALASKA PUGET UNITED TRANSPORTATION COMPANIES, WE WERE AWARDED THE RESUPPLY OF SITES IN THE ALEUTIAN AND DEW LINE SECTORS AND HAVE BEEN ACTIVELY ENGAGED IN THIS OPERATION DURING THE PAST FEW MONTHS. NEGOTIATIONS FOR THE PROGRAM WERE HANDLED BY THE U.S. ARMY ALASKA AS THE TRAFFIC MANAGER FOR THE U.S. AIR FORCE WHICH AS IN PRIOR YEARS PROVIDES THE FUNDS FOR THE TRANSPORTATION OF THE CARGO TO THESE SITES. THE THIRD SECTOR COVERING THE BERING SEA AREA WAS AWARDED BY U.S. ARMY ALASKA TO OUR COMPETITOR, FOSS LAUNCH AND TUG COMPANY OF TACOMA, WASHINGTON.

"AT THE SCHEDULING CONFERENCE AT SEATTLE, WASHINGTON ATTENDED BY ALL CARRIERS IN FEBRUARY OF THIS YEAR, LT.COL. ROBERT MCKINNEY, DIRECTOR OF TRANSPORTATION, ALASKA AIR COMMAND, STATED IN THE PRESENCE OF REPRESENTATIVES OF BOTH THE U.S. ARMY ALASKA AND THE U.S. AIR FORCE THAT HIS OFFICE HENCEFORTH WAS TO BE RESPONSIBLE FOR THE OPERATION OF THE RESUPPLY PROGRAM DURING 1964. IN HARMONY WITH HIS STATEMENT, WE HAVE CARRIED ON NEGOTIATIONS WITH HIS OFFICE COVERING THE NORMAL CHANGES INVOLVED IN THIS COMPLEX OPERATION, PARTICULARLY IN REGARD TO CHANGES OR ADDITIONS TO THE CARGO AVAILABLE FOR TRANSPORTATION.

"ON OR ABOUT 20 JULY 1964, A REPRESENTATIVE OF THE DIRECTOR OF TRANSPORTATION, ALASKA AIR COMMAND, ENTERED INTO NEGOTIATIONS WITH OUR ANCHORAGE REPRESENTATIVE FOR THE MOVEMENT OF APPROXIMATELY 500,000 GALLONS OF DIESEL FUEL FROM EITHER KODIAK OR ANCHORAGE, ALASKA TO CHINIAK AIR FORCE STATION, ALASKA. THOUGH THE PROPOSED MOVEMENT WAS NEW TO THE MONA LISA PROGRAM, IT WAS IN THE AREA OF OPERATIONS AWARDED TO US AFTER COMPETITIVE BIDDING EARLIER IN THE YEAR.

"AS A RESULT OF THESE NEGOTIATIONS WITH A REPRESENTATIVE OF THE ALASKA AIR COMMAND, WE QUOTED A RATE FOR THE MOVEMENT OF $1.69 PER 100 POUNDS WHICH THEY ACCEPTED. SINCE THE FLOATING EQUIPMENT TO HANDLE THIS DELIVERY HAD TO BE RESCHEDULED THE TIME BECAME CRITICAL, WE PRESSED LT.COL. MCKINNEY OF THE ALASKA AIR COMMAND FOR CONFIRMATION OF THE AWARD OF THIS BUSINESS. ON 27 JULY 1964, HE ADVISED OUR ANCHORAGE REPRESENTATIVE THAT OUR RATE OF $1.69 PER 100 POUNDS AND OUR PLAN OF OPERATIONS TO SERVICE THIS SITE WERE APPROVED AND THAT WE SHOULD IMMEDIATELY RESCHEDULE OUR EQUIPMENT AND ISSUE AN AMENDMENT TO OUR TENDER THEN ON FILE SETTING FORTH THE AGREED RATE. ACCORDINGLY, WE RESCHEDULED OUR EQUIPMENT TO HANDLE THIS DELIVERY AND ON 28 JULY 1964, WE OFFICIALLY AND PUBLICLY ISSUED AN AMENDMENT TO OUR TENDER NO. 4 THEN ON FILE INN THE FORM OF PAGE 12B WHICH SET FORTH THE RATE OF $1.69 PER 100 POUNDS.

"ON 30 JULY 1964, WE WERE REQUESTED BY HEADQUARTERS, U.S. ARMY ALASKA, TO SUBMIT A BID FOR THE SAME JOB WE HAD JUST BEEN AWARDED BY THE ALASKA AIR COMMAND. UPON QUESTIONING LT.COL. MCKINNEY, WE WERE ADVISED THAT THERE HAD BEEN A CHANGE AND THAT FOR REASONS NOT DIVULGED TO US THE U.S. ARMY ALASKA WAS ASSUMING RESPONSIBILITY FOR THIS PARTICULAR RESUPPLY OPERATION. AS OUR RATE WAS NOW A MATTER OF PUBLIC RECORD, WE HAD NO CHOICE OTHER THAN TO RESUBMIT IT TO THE U.S. ARMY ALASKA IN ACCORDANCE WITH THEIR REQUEST FOR BIDS. WE WERE THEN ADVISED BY THE U.S. ARMY ALASKA THAT OUR BID WAS NOT LOW BY A SMALL AMOUNT AND SUBSEQUENTLY WE HAVE LEARNED THAT THE AWARD OF THIS BUSINESS WAS BEING MADE TO OUR COMPETITOR, FOSS LAUNCH AND TUG COMPANY.'

ON JULY 20, 1964, THE DIRECTORATE OF TRANSPORTATION, AAC, RECEIVED AN URGENT REQUIREMENT TO ARRANGE FOR THE TRANSPORTATION OF 500,000 GALLONS OF DIESEL FUEL (ARCTIC) FROM KODIAK OR ANCHORAGE, ALASKA, TO CHINIAK AIR FORCE BASE, ALASKA. ON HALF OF THE TOTAL REQUIREMENT WAS REQUIRED AT CHINIAK PRIOR TO SEPTEMBER 1, 1964. WE ARE INFORMED THAT IT WAS NECESSARY TO MOVE THIS SHIPMENT BY BARGE AND TANK TRUCK SINCE THE ROAD FROM KODIAK TO CHINIAK WAS UNUSABLE DUE TO THE MARCH 1964 EARTHQUAKE AND TIDAL WAVE. SINCE MONA LISA CARRIERS HAD THE CAPABILITY TO MOVE SUCH A SHIPMENT AND SINCE KODIAK, ANCHORAGE, AND CHINIAK ARE LOCATED GEOGRAPHICALLY WITHIN THE AREA OF THE GULF ALEUTIAN-SHEYMA SECTOR OF MONA LISA, ALASKA PUGET UNITED TRANSPORTATION CO. (APUTCO) APUTCO REPLIED AND QUOTED A RATE OF $1.69 PER CWT. AAC HAS ADVISED US THAT APUTCO WAS INFORMED THAT NO FIRM COMMITMENT COULD BE GIVEN BECAUSE THE DIESEL OIL PROCUREMENT HAD NOT BEEN COMPLETED, POINT OF ORIGIN HAD NOT BEEN ESTABLISHED, AND A FIRM COMMITMENT THEREFOR HAD TO BE MADE BY USARAL. THE ANCHORAGE REPRESENTATIVE OF APUTCO WAS ADVISED THAT AAC COULD NOT COMMIT THE GOVERNMENT TO ANY CARRIER TO MAKE THE SHIPMENT AND THAT ONLY USARAL COULD MADE THE AWARD. USARAL WHICH HAD BEEN ASSIGNED THE SOLE RESPONSIBILITY FOR NEGOTIATION OF TRANSPORTATION RATES WITHIN THE ALASKA AREA WAS ADVISED ON OR ABOUT JULY 29, 1964, OF THIS URGENT REQUIREMENT, AND THEREAFTER USARAL HANDLED THE NEGOTIATIONS AND COMMITMENT FOR THIS MOVEMENT. AAC HAS ADVISED US IN THIS REGARD AS FOLLOWS:

"4. THIS BUSINESS WAS NEVER COMMITTED TO APUTCO BY ANYONE IN AAC DIRECTORATE OF TRANSPORTATION, SINCE ALCOM REGULATIONS ALR 75-1 AND MONA LISA PROCEDURES DELEGATE THIS JURISDICTION TO USARAL. MR. PEABODY WAS INFORMED OF THIS DIVISION OF RESPONSIBILITY IN TELEPHONE CONVERSATIONS BETWEEN 20 JULY AND 4 AUGUST 1964.

"5. THE ALASKA BARGE AND TRANSPORT, INC. LETTER DATED SEPTEMBER 14, 1964 CONTAINS SOME INCORRECT AND INACCURATE STATEMENTS. PARAGRAPH 3 OF THIS LETTER ALLEGES CERTAIN STATEMENTS WERE MADE BY LT COL ROBERT MCKINNEY, DIRECTOR OF TRANSPORTATION, ALASKAN AIR COMMAND AT THE SCHEDULING CONFERENCE AT SEATTLE, WASHINGTON IN FEBRUARY 1964. LTCOLMCKINNEY DID NOT ATTEND THE SCHEDULING CONFERENCE IN FEBRUARY. COL GEORGE C. GRUBER AND MR. R. C. BARNETT WERE THE ONLY ALASKAN AIR COMMAND REPRESENTATIVES AT THIS CONFERENCE. THE TELEPHONE DISCUSSIONS WITH MR. PEABODY AS ANCHORAGE REPRESENTATIVE FOR APUTCO ON AND AFTER 20 JULY 1964 WERE EXPLORATORY TO DETERMINE CARRIER CAPABILITY TO HANDLE SUCH A MOVEMENT IN ADDITION TO OTHER, ALREADY COMMITTED, WORK. FURTHERMORE, THERE IS NO "BREACH OF CONTRACT" SINCE THE ARRANGEMENTS FOR THE MONA LISA PROJECT IS A TENDER OF SERVICE AND RATES. THESE TENDERS BY THEMSELVES OR COMBINED WITH THE LETTER OF SOLICITATION DO NOT CONSTITUTE A CONTRACT. IT IS OUR CONSIDERED OPINION THAT A CONTRACTUAL RELATIONSHIP DOES NOT EXIST UNTIL CARGO IS OFFERED TO THE CARRIER AND BILL OF LADING IS PREPARED.'

WE ARE FURTHER ADVISED THAT APUTCO WAS AWARDED A PORTION OF THE ANNUAL RESUPPLY PROGRAM, MONA LISA, TO TRANSPORT BULK POL TO REMOTE AIR FORCE SITES IN ALASKA AND THE ALEUTIANS. ANOTHER PORTION OF THE MONA LISA PROGRAM WAS AWARDED TO FOSS. THESE AWARDS WERE MADE ON THE BASIS OF RATE TENDERS SUBMITTED USARAL IN JANUARY/FEBRUARY OF EACH YEAR, THE AWARDS BEING MADE TO THE LOWEST COST BIDDER FOR EACH SECTOR OF THE MONA LISA PROGRAM.

THE SITES TO BE SERVED UNDER THE MONA LISA PROGRAM ARE SPECIFICALLY DESIGNATED IN ALL DOCUMENTS BY THE AIR FORCE AND ARMY AND ADVERTISED TO CARRIERS. THE SOLICITATION FOR BIDS ISSUED BY USARAL RESERVES TO THE GOVERNMENT THE RIGHT TO INCREASE OR DECREASE THE PROJECTED QUANTITIES OF SHIPMENTS TO STATIONS WITHIN A SECTOR, EVEN AFTER THE SECTOR BUSINESS HAS BEEN AWARDED. ON MAJOR INCREASES OF TONNAGE, THE GOVERNMENT ALSO RESERVES THE RIGHT TO SOLICIT RATES FOR THAT ADDED TONNAGE FROM ANY CARRIER.

THE CHINIAK AIR FORCE BASE HAS NEVER BEEN A MONA LISA SITE, AND IT WAS ONLY WHEN HIGHWAY TANK TRUCK DELIVERY BECAME IMPOSSIBLE THAT IT WAS NECESSARY TO PROVIDE FOR DELIVERY VIA BARGE AND TRUCK. SPECIFICALLY COMMENTING ON THE CHINIAK MOVEMENT, THE DEPARTMENT OF THE ARMY STATED:

"8. DURING JULY 1964, MR. PEABODY, DEALING FREQUENTLY, AS AGENT OF APUTCO, ON OPERATIONAL MATTERS WITH HEADQUARTERS, ALASKA AIR COMMAND, OBTAINED FROM THE AIR FORCE INFORMATION ON A PROBABLE MOVE TO CHINIAK AND APPARENTLY PREPARED A RATE QUOTATION. ON 27 JULY 1964, HEADQUARTERS, ALASKA AIR COMMAND REQUESTED USARAL TO OBTAIN A RATE FOR THE MOVEMENT, BY BARGE/TANK TRUCK, OF 500,000 GALLONS POL FROM KODIAK TO CHINIAK. HEADQUARTERS, USARAL, EXERCISES CERTAIN SURFACE TRAFFIC MANAGEMENT FUNCTIONS IN ALASKA UNDER PROVISIONS OF ALASKAN COMMAND REGULATION 75-1, IN PARTICULAR THE NEGOTIATION OF ALL TARIFF AND TENDER RATES TO INCLUDE MONA LISA. CARRIERS ARE AWARE OF THIS AND RATES ARE SUBMITTED TO USARAL, AS PER SOLICITATION LETTERS. EVERY RATE TENDER FOR SURFACE MOVES INALASKA BEARS THE ACCEPTANCE STAMP OF USARAL.

"9. AS REQUESTED BY HEADQUARTERS, ALASKAN AIR COMMAND, C-4 SERVICES DIVISION, USARAL, TOOK ACTION TO OBTAIN RATES FOR THE CHINIAK MOVE ON 29 JULY 1964, AND INVITED THE TWO CARRIERS DEEMED CAPABLE OF PERFORMING THE SERVICE TO SUBMIT RATES BY 1200, 3 AUGUST 1964.

"10. ON 3 AUGUST, RATE SHEETS WERE DELIVERED TO THIS HEADQUARTERS BY APUTCO AND FOSS. G-4 SERVICES DIVISION ANALYZED THE RATES AND FOUND THAT FOSS WAS LOWER BY $6,632.30. THE RESULT WAS TRANSMITTED TO HEADQUARTERS, ALASKAN AIR COMMAND, WHICH DECIDED, IN LETTER INDORSEMENT DATED 18 AUGUST, TO USE FOSS. CARRIERS WERE SO NOTIFIED.'

THE RECORD BEFORE US SHOWS THAT ESTABLISHED PROCEDURES--- KNOWN TO MONA LISA CARRIERS--- WERE FOLLOWED IN OBTAINING TENDER QUOTATIONS FOR THE SPECIAL PROJECTS CARGO TO CHINIAK. WHILE YOUR COMPLAINT IS BASED UPON THE FACT THAT NEGOTIATIONS WERE CONDUCTED WITH YOU BY AAC UP TO A POINT WHICH INDICATED A MEETING OF THE MINDS ON THE TRANSPORTATION SERVICES DESIRED, AAC HAD NO PROCUREMENT AUTHORITY OR RESPONSIBILITY AND, HENCE, ANY ACTION THAT MAY HAVE BEEN TAKEN BY AAC COULD NOT BE REGARDED AS LEGALLY BINDING THE GOVERNMENT TO CONTRACT WITH YOU FOR THE CHINIAK MOVEMENT. SEE UNITED STATES V. WILLIS, 164, F.2D 453; KELLY V. UNITED STATES, 116 CT.CL. 811. IN THIS REGARD, SEE 42 COMP. GEN. 124, 134. MOREOVER, THE APUTCO TENDER OF RATES AND CHARGES PROVIDED IN PARAGRAPH 8 THAT:

"THIS TENDER, WHEN ACCEPTED BY THE DEPARTMENT OF DEFENSE BY MAKING ANY SHIPMENT UNDER THE TERMS HEREOF, OR OTHERWISE, SHALL CONSTITUTE AN AGREEMENT BETWEEN THE PARTIES HERETO AS TO THE TRANSPORTATION SERVICES HEREIN DESCRIBED. THIS TENDER IS MADE WITH THE UNDERSTANDING THAT ITS ACCEPTANCE WILL NOT CONSTITUTE A GUARANTEE BY THE DEPARTMENT OF DEFENSE OF ANY PARTICULAR VOLUME OF TRAFFIC, HEREIN DESCRIBED.'

UNDER THE CIRCUMSTANCES, WE SEE NO LEGAL BASIS FOR CONSIDERATION BY THIS OFFICE OF ANY CLAIM FOR LOSSES ALLEGED TO HAVE BEEN SUSTAINED BY YOU.