B-159245, NOV. 29, 1966

B-159245: Nov 29, 1966

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

ESQUIRE: REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF SEVERAL STEAMSHIP COMPANIES CONCERNING MILITARY SEA TRANSPORTATION SERVICE (MSTS) REQUEST FOR PROPOSALS NO. 100 (OCEAN TRANSPORTATION-COMMON CARRIAGE) (RFP NO. 100) DATED JUNE 15. THIS CONTRACT IS AN OPEN-END CONTRACT UNDER WHICH MSTS ISSUES SHIPPING ORDERS COVERING SPECIFIC LOTS OF CARGO TO BE CARRIED ON SPECIFIC SHIPS OPERATED BY THE INDIVIDUAL STEAMSHIP COMPANIES. THE ISSUANCE OF SHIPPING ORDERS IS COMMONLY KNOWN AS "BOOKING CARGO.'. THE RATES SET FORTH IN THE SHIPPING CONTRACT ARE ESTABLISHED FOR EACH TRADE ROUTE ON THE BASIS OF NEGOTIATIONS CONDUCTED BETWEEN THE MSTS CONTRACTING OFFICER AND THE INDUSTRY THROUGH ITS TWO TRADE ASSOCIATIONS.

B-159245, NOV. 29, 1966

TO MILTON C. GRACE, ESQUIRE:

REFERENCE IS MADE TO YOUR PROTEST ON BEHALF OF SEVERAL STEAMSHIP COMPANIES CONCERNING MILITARY SEA TRANSPORTATION SERVICE (MSTS) REQUEST FOR PROPOSALS NO. 100 (OCEAN TRANSPORTATION-COMMON CARRIAGE) (RFP NO. 100) DATED JUNE 15, 1966.

THE DEPARTMENT OF THE NAVY REPORTS THAT SINCE THE INCEPTION OF MSTS IN 1950, THE CARRIAGE OF MILITARY CARGOES ON AMERICAN-FLAG COMMON CARRIER SHIPS HAS BEEN MADE PURSUANT TO THE TERMS OF A STANDARD MSTS SHIPPING CONTRACT. THIS CONTRACT IS AN OPEN-END CONTRACT UNDER WHICH MSTS ISSUES SHIPPING ORDERS COVERING SPECIFIC LOTS OF CARGO TO BE CARRIED ON SPECIFIC SHIPS OPERATED BY THE INDIVIDUAL STEAMSHIP COMPANIES. THE ISSUANCE OF SHIPPING ORDERS IS COMMONLY KNOWN AS "BOOKING CARGO.' THE RATES SET FORTH IN THE SHIPPING CONTRACT ARE ESTABLISHED FOR EACH TRADE ROUTE ON THE BASIS OF NEGOTIATIONS CONDUCTED BETWEEN THE MSTS CONTRACTING OFFICER AND THE INDUSTRY THROUGH ITS TWO TRADE ASSOCIATIONS, THE ATLANTIC AND GULF AMERICAN FLAG BERTH OPERATORS REPRESENTING THE CARRIERS OPERATING FROM THE EAST AND GULF COASTS AND THE WEST COAST AMERICAN-FLAG BERTH OPERATORS REPRESENTING THE CARRIERS OPERATING FROM THE WEST COAST. UNDER THE CARGO PREFERENCE ACT OF 1904 (10 U.S.C. 2631), THE DEPARTMENT OF DEFENSE IS REQUIRED TO UTILIZE AMERICAN-FLAG SHIPPING WHERE AVAILABLE AT RATES NOT IN EXCESS OF THOSE CHARGED THE PUBLIC FOR LIKE GOODS AND SERVICES. ALSO, PURSUANT TO THE WILSON/WEEKS AGREEMENT (DEFENSE COMMERCE AGREEMENT OF 1954) AMERICAN-FLAG BERTH OPERATORS (COMMON CARRIERS) ARE ENTITLED TO FIRST PRIORITY FOR SUCH CARGOES AFTER UTILIZATION OF THE MSTS NUCLEUS FLEET. THUS, SINCE THE DEPARTMENT OF DEFENSE MUST SHIP A CERTAIN AMOUNT OF CARGO BY AMERICAN-BERTH OPERATORS AND HAS BEEN RESTRICTED TO ONE SOURCE IN THE NEGOTIATIONS OF RATES, IT HAS FELT ITSELF TO BE AT A DISADVANTAGE IN NEGOTIATING RATES.

AS A RESULT OF A CONTINUING REVIEW OF PROCUREMENT POLICIES AND INTENSIFIED EFFORTS TO SHIFT AS MUCH PROCUREMENT FROM NEGOTIATED TO COMPETITIVE PROCUREMENT AS POSSIBLE, THE SECRETARY OF DEFENSE DIRECTED THAT MSTS PLACE ITS OCEAN TRANSPORTATION REQUIREMENTS WITH AMERICAN FLAG OPERATORS ON A COMPETITIVE BASIS. PURSUANT TO THIS DIRECTIVE MSTS ISSUED RFP NO. 100 ON JUNE 15, 1966, REQUESTING PROPOSALS FOR THE FURNISHING OF OCEAN TRANSPORTATION ON A COMMON CARRIAGE BASIS (LESS THAN SHIP-LOAD LOTS) BY AMERICAN-FLAG SHIPS OPERATING IN THE NORTH ATLANTIC TRADE ROUTES.

EXCEPT FOR THE FACT THAT RATES ARE SOLICITED FROM INDIVIDUAL CARRIERS DIRECTLY RATHER THAN BEING NEGOTIATED WITH THE INDUSTRY ASSOCIATIONS AS A GROUP, THE SHIPPING AGREEMENT PROVIDED FOR BY RFP NO. 100 IS BASICALLY THE SAME AS THE EXISTING SHIPPING CONTRACT. IT PROVIDES FOR A CONTINUING TENDER OF OCEAN TRANSPORTATION SERVICES BY THE CARRIER IN ACCORDANCE WITH THE TERMS OF AND AT THE RATES ESTABLISHED IN THE SHIPPING AGREEMENT. UPON AWARD THE OFFEROR IS REQUIRED TO FILE THE RATES AND TERMS OF THE SHIPPING AGREEMENT IN ACCORDANCE WITH APPLICABLE REGULATIONS OF THE FEDERAL MARITIME COMMISSION.

IN ORDER TO PRECLUDE THE POSSIBILITY THAT ON CERTAIN TRADE ROUTES INADEQUATE COMMERCIAL SERVICE WOULD EITHER RESULT IN NO OFFERS TO CARRY DEPARTMENT OF DEFENSE CARGO OR OFFERS TO CARRY SUCH CARGO AT UNREASONABLE RATES, RFP NO. 100 ALSO SOLICITED PROPOSALS ON THE BASIS OF A GUARANTEED MINIMUM QUANTITY OF CARGO PER SAILING. IF IT HAD BEEN DETERMINED THAT SUCH A GUARANTEE WAS NECESSARY IN ORDER TO SECURE ADEQUATE SERVICES AT REASONABLE RATES, IT WAS CONTEMPLATED THAT THE GOVERNMENT AND THE CARRIER WOULD EXECUTE THE CARGO COMMITMENT FORM INCLUDED WITH RFP NO. 100 WHICH WOULD CONSTITUTE IN EFFECT A "FORWARD BOOKING" OF A MINIMUM TONNAGE OF CARGO FOR EACH SPECIFIED SAILING AND UNDER THE TERMS OF THE SHIPPING AGREEMENT. SUCH CARGO COMMITMENTS WOULD BE EXECUTED ONLY AS A MODIFICATION OF THE SHIPPING AGREEMENT. EXCEPT AS MIGHT BE SPECIFIED IN CARGO COMMITMENTS, THE TERMS OF THE SHIPPING AGREEMENT DO NOT REQUIRE THE GOVERNMENT TO GUARANTEE ANY MINIMUM AMOUNTS OF CARGO EITHER PER SAILING OR DURING THE PERIOD OF THE CONTRACT. SIMILARLY, THE CARRIER DOES NOT GUARANTEE THAT IT WILL HAVE ANY SPACE AVAILABLE FOR THE CARRIAGE OF MILITARY CARGO.

YOU ALLEGE THAT THE CONTRACTURAL SCHEME OF RFP NO. 100 IS IN CONFLICT WITH THE ASPR PROVISIONS REGARDING BASIC AGREEMENTS, AND THEREFORE THE CONTRACTING OFFICER IS WITHOUT AUTHORITY TO ENTER INTO SUCH A CONTRACT. THE BASIS FOR THIS CONTENTION IS THAT ASPR PROVIDES THAT A BASIC AGREEMENT AUTHORIZED BY ASPR 3-410.1 SHALL PROVIDE FOR DISCONTINUANCE OF ITS FUTURE APPLICATION UPON 30 DAYS WRITTEN NOTICE BY EITHER PARTY, WHEREAS RFP 100 PROVIDES THAT THE RATES SHALL REMAIN IN EFFECT FOR A PERIOD OF AT LEAST ONE YEAR.

ASPR 3-410.1 STATES,"A BASIC AGREEMENT IS NOT A CONTRACT.' THE TERM "BASIC AGREEMENT" CONTEMPLATES THE EXECUTION BY THE GOVERNMENT AND A CONTRACTOR OF A WRITTEN UNDERSTANDING AS TO SPECIFIC NEGOTIATED CONTRACT CLAUSES (BUT NOT PRICES) TO BE APPLICABLE TO FUTURE PROCUREMENTS. SINCE THE CARGO COMMITMENT CLEARLY IS A FIRM AND BINDING CONTRACT, IT MUST BE ASSUMED THAT YOUR PROTEST IN THIS REGARD APPLIES ONLY TO THE SHIPPING AGREEMENT ITSELF AND NOT TO THE CARGO COMMITMENT. AS PREVIOUSLY STATED THE PROPOSED SHIPPING AGREEMENT IS BASICALLY THE SAME AS THE EXISTING SHIPPING CONTRACT WHICH HAS BEEN JUDICIALLY DETERMINED TO BE "IN EFFECT AN OPEN END, NO MINIMUM, MASTER TYPE CONTRACT, WITH A 60 DAY FORWARD RATE QUOTATION * * *.' UNITED STATES LINES COMPANY V. UNITED STATES, 223 F.SUPP. 838, 844, AFF-D 324 F.2D 97 (1963). THIS NATURE OF THE SHIPPING AGREEMENT IS STATED ON PAGE B THEREOF IN THE WORDS: "THIS AGREEMENT IS A CONTINUING TENDER OF OCEAN TRANSPORTATION SERVICE.' IT CONTAINS RATES THAT ARE BINDING UPON THE PARTIES BOTH BY ITS TERMS AND STATUTES APPLICABLE TO OCEAN COMMON CARRIAGE. IN VIEW THEREOF MSTS DOES NOT BELIEVE THAT THE SHIPPING AGREEMENT IS A "BASIC AGREEMENT.' HOWEVER, RATHER THAN ATTEMPTING TO UNDERTAKE TO FIT THE SHIPPING AGREEMENT INTO ANY EXISTING PATTERN OF CONTRACT FORM, AND TO ELIMINATE ANY QUESTION AS TO THE APPLICABILITY OF A PARTICULAR ASPR PROVISION, THE PROPOSED SHIPPING AGREEMENT TOGETHER WITH RELATED FORMS, INCLUDING THE REQUEST FOR PROPOSALS, WAS SUBMITTED BY MSTS TO THE ASPR COMMITTEE IN ACCORDANCE WITH ASPR 3-401 (B), AS A TYPE OF AGREEMENT OTHER THAN BASIC AGREEMENT AND ONE WHICH MIGHT BE OF A TYPE NOT OTHERWISE PROVIDED FOR IN ASPR. ON AUGUST 19, 1966, THE ASPR COMMITTEE AGREED THAT THE SHIPPING AGREEMENT IS NOT A BASIC AGREEMENT AS DESCRIBED IN ASPR 3-410.1 AND APPROVED ITS USE TO THE EXTENT SUCH APPROVAL WAS REQUIRED UNDER ASPR 3 401 (B) AND ASPR 1-109.

SINCE THE ASPR COMMITTEE HAS APPROVED THE CONTRACTUAL SCHEME OF RFP NO. 100, INCLUDING THE SHIPPING AGREEMENT, THERE IS NO BASIS UPON WHICH THIS OFFICE COULD QUESTION THE CONTRACTING OFFICER'S AUTHORITY TO ENTER INTO SUCH A CONTRACT AS NOT BEING, OR AS BEING IN CONFLICT WITH, A TYPE OF CONTRACT PERMITTED FOR USE IN THE ASPR.

SUBSEQUENTLY, YOU ALLEGED THAT THE AUTHORITY OBTAINED BY MSTS FROM THE ASPR COMMITTEE TO DEVIATE IS OF QUESTIONABLE VALIDITY SINCE THE REQUEST DID NOT CONFORM WITH THE REQUIREMENTS OF ASPR 1-109.5 WHICH IS STATED TO PROVIDE THAT THE REQUEST TO DEVIATE MUST INCLUDE, INTER ALIA, THE CONTRACTOR'S REQUEST, IF ANY. THIS IS BASED ON THE FACT THAT YOU REQUESTED THE COMMANDER, MSTS, TO BE ADVISED IF MSTS INTENDED TO REQUEST AUTHORITY TO DEVIATE AS YOU DESIRED TO OPPOSE THE GRANTING OF SUCH AUTHORITY. ASPR 1-109.5 PROVIDES THAT REQUESTS FOR AUTHORITY TO DEVIATE SHALL CONTAIN A FULL DESCRIPTION OF THE PROPOSED DEVIATION, CIRCUMSTANCES IN WHICH IT WILL BE USED, PURPOSE AND EFFECT OF THE DEVIATION, PERIOD OF TIME THE DEVIATION WILL BE NEEDED AND INCLUDING ,/IV) A COPY OF ANY PERTINENT DOCUMENT, INCLUDING FORMS OR CLAUSES AND THE PROPOSED CONTRACTOR'S REQUEST, IF ANY.' WE THINK THE PHRASE "CONTRACTOR'S REQUEST" WAS INTENDED TO APPLY ONLY TO SITUATIONS WHERE A PROPOSED CONTRACTOR HAS HIMSELF REQUESTED A DEVIATION, AND WE DO NOT THINK THE PROVISION IMPOSES ANY DUTY TO OBTAIN INDUSTRY COMMENTS IN CONNECTION WITH A DEVIATION REQUEST MADE SOLELY BY A CONTRACTING AGENCY.

YOU CONTEND THAT RFP NO. 100 IS INVALID BECAUSE IT DOES NOT SET FORTH A BASIS FOR EVALUATION OF THE PROPOSALS, PARTICULARLY WITH RESPECT TO THE CARGO COMMITMENT OFFERS. IN THIS CONNECTION YOU REFER TO ASPR 1-300.1 WHICH PROVIDES:

"COMPETITION. ALL PROCUREMENTS, WHETHER BY FORMAL ADVERTISING OR BY NEGOTIATION, SHALL BE MADE ON A COMPETITIVE BASIS TO THE MAXIMUM PRACTICABLE EXTENT.'

REFERENCE IS ALSO MADE TO ASPR 1-322.3 (WHICH IS NOT, IN OUR OPINION, APPLICABLE TO RFP NO. 100), AND TO ASPR 3-501, WHICH PROVIDE THAT REQUESTS FOR PROPOSALS SHALL CONTAIN THE INFORMATION NECESSARY TO ENABLE PROSPECTIVE OFFERORS TO PREPARE A PROPOSAL PROPERLY AND IDENTIFICATION OF SPECIAL FACTORS AND FACTORS OTHER THAN PRICE TO BE CONSIDERED IN THE EVALUATION OF THE PROPOSALS RECEIVED.

MSTS REPORTS THAT THE CONTENTION THAT THERE IS AN IMPROPER OR NO BASIS FOR EVALUATING OFFERS IS GROUNDED UPON THE FAILURE TO DISTINGUISH BETWEEN THE SHIPPING AGREEMENT WITHOUT COMMITMENT AND ONE WHICH CONTAINS A COMMITMENT AND THE FAILURE IN TURN TO CONSIDER THE WELL ESTABLISHED MECHANICS OF "BOOKING CARGO" UNDER EITHER TYPE. MSTS CONSIDERS YOUR PROTEST IS NOT AGAINST THE SHIPPING AGREEMENT ITSELF BUT RATHER THE SHIPPING AGREEMENT AS MODIFIED BY A CARGO COMMITMENT. THIS CONCLUSION WAS REACHED BECAUSE THERE COULD BE NO AMBIGUITY AS TO THE BASIS ON WHICH THE OPEN-END SHIPPING AGREEMENTS WOULD BE AWARDED. THE BASIC OFFER REQUESTED BY RFP NO. 100 IS A CONTINUING TENDER OF A SPECIAL COMMON CARRIAGE SERVICE FOR MILITARY CARGOES AT RATES, WHICH, WHEN ACCEPTED BY THE GOVERNMENT, WILL BE FILED WITH THE FEDERAL MARITIME COMMISSION. EVALUATION OF THE BASIC OFFER IS ONLY A MATTER OF DETERMINING WHETHER THE OFFER IS RESPONSIVE AND THE OFFEROR RESPONSIBLE. A SO-CALLED AWARD WILL BE MADE TO ALL RESPONSIBLE CARRIERS WHO MADE RESPONSIVE OFFERS. WHEN THE RATES AND TERMS ARE FILED WITH THE FMC AS REQUIRED BY RFP NO. 100, THEY WILL BE UTILIZED BY MSTS AS FILED TARIFFS.

IT IS REPORTED THAT IN THE UTILIZATION OF THESE TARIFFS THE BOOKING AGENCY NECESSARILY WILL BE REQUIRED TO "EVALUATE" THE TARIFFS IN TERMS OF THE OPERATING REQUIREMENTS FOR MOVING THE PARTICULAR CARGO TO BE BOOKED. SUCH FACTORS AS AVAILABILITY AND ACCEPTABILITY OF SPACE AND TIMELINESS OF DELIVERY WILL THEN BE KNOWN AND MUST BE CONSIDERED IN CONJUNCTION WITH THE RATE STRUCTURES ON FILE. THESE ARE PRECISELY THE SAME STANDARDS WHICH HAVE BEEN IN CONTINUAL APPLICATION FOR MANY YEARS. THEY ARE THE SAME STANDARDS CURRENTLY APPLIED TO TENDERS OF INLAND TRANSPORTATION AND IN THE PROCUREMENT OF OCEAN TRANSPORTATION UNDER FILED TARIFFS BY MEANS OF GOVERNMENT BILLS OF LADING. THE STANDARDS ARE WELL KNOWN BOTH TO THE GOVERNMENT AND TO THE CARRIERS.

ON THE BASIS OF THE PROPOSALS RECEIVED THE CONTRACTING OFFICER DETERMINED THERE WOULD BE ADEQUATE SERVICE AVAILABLE AT REASONABLE RATES ON ALL ROUTES UNDER THE OPEN-END SHIPPING AGREEMENTS AND, THEREFORE, NO COMMITMENT CONTRACTS WOULD BE AWARDED. NEVERTHELESS, MSTS REPORTS THAT THERE WAS NO AMBIGUITY AS TO THE BASIS OF EVALUATING SUCH OFFERS. IF IT HAD BEEN DETERMINED EITHER THAT THE RATE STRUCTURE OFFERED UNDER THE OPEN- END SHIPPING AGREEMENTS WAS UNSATISFACTORY OR THAT A DEFICIENCY IN SERVICE AS DETERMINED FROM THE DATA FILED BY THE CARRIERS HAD EXISTED, THE CONTRACTING OFFICER WOULD HAVE ISSUED COMMITMENTS EVALUATED SOLELY AS TO PRICE TO THOSE CARRIERS WHICH COULD HAVE WHOLLY OR PARTIALLY ELIMINATED THE DEFICIENCY IN SERVICE AT THE LOWEST RATE LEVEL. IN OTHER WORDS, THERE WOULD HAVE BEEN NO EVALUATION EXCEPT A DETERMINATION OF WHICH CARRIER COULD PROVIDE ADEQUATE SERVICE AT THE LOWEST RATE. ANY OTHER FACTORS WOULD HAVE BEEN RELEGATED TO A DETERMINATION BY THE CONTRACTING OFFICER AS TO HOW MANY SHIPS OF WHAT TYPE AND FREQUENCY OF SAILINGS WERE NECESSARY TO MEET A DEFICIENCY IN SERVICE, OR AT WHAT TONNAGE LEVEL A COMMITMENT WOULD HAVE BEEN FEASIBLE FROM AN OPERATING VIEW, OR WHAT MINIMUM TONNAGE LEVEL COULD HAVE BEEN EXPECTED TO BE MOST EFFECTIVE IN PRODUCING RATES NOT OTHERWISE AVAILABLE. IN THE EVENT THAT THE OFFERS FOR A COMMITMENT COULD NOT HAVE BEEN EVALUATED MERELY ON THE BASIS OF PRICE AND SERVICE OFFERED, THE CONTRACTING OFFICER WOULD HAVE, AS AN ESSENTIAL PART OF THE NEGOTIATION PROCESS, IDENTIFIED THE DIMENSIONS OF THE DEFICIENCIES AND SOLICITED MODIFIED PROPOSALS TO MEET STATED REQUIREMENTS FROM ALL CARRIERS WHO HAD INDICATED AN INTEREST IN COMMITMENT TYPE CONTRACTS. THESE DEFICIENCIES COULD NOT HAVE BEEN KNOWN PRIOR TO THE SUBMISSION AND EVALUATION OF BASIC OFFERS SINCE NOT UNTIL THEN WOULD THE CONTRACTING OFFICER KNOW BOTH THE AVAILABILITY OF SERVICE AND THE INTEREST OF THE CARRIERS IN NEGOTIATING COMMITMENT TYPE CONTRACTS.

IN THESE CIRCUMSTANCES, MSTS REPORTS THAT THERE WAS NO NEED ON THE PART OF THE CARRIER AT THE TIME IT RESPONDED INITIALLY TO RFP NO. 100 TO HAVE A PRECISE WEIGHING OF FACTORS TO BE CONSIDERED BY THE CONTRACTING OFFICER IN DETERMINING WHETHER THERE WAS DEFICIENCY IN SERVICE AT PARTICULAR PORTS OR AT WHAT TONNAGE LEVEL THE OFFERORS WOULD BE REQUESTED TO NEGOTIATE CARGO COMMITMENTS. WHATEVER THE DETERMINATION WAS, IT WOULD HAVE BEEN THE SAME FOR ALL OFFERORS WHO COULD QUALIFY AND PRICE WOULD HAVE BEEN THE DETERMINING FACTOR. YOU ALLEGE THAT THE ABOVE EXPLANATION BY MSTS DOES NOT ANSWER YOUR CONTENTION THAT MSTS WAS LEGALLY OBLIGATED TO CONDUCT THE PROCUREMENT CONTEMPLATED BY RFP NO. 100 ON A COMPETITIVE BASIS TO THE MAXIMUM EXTENT PRACTICABLE (ASPR 1-300.1) AND THAT PURSUANT TO SUCH LEGAL OBLIGATION MSTS WAS REQUIRED TO SET FORTH IN THE RFP THE BASIS UPON WHICH THE TWO TYPES OF OFFERS WERE TO BE EVALUATED, EVEN THOUGH NO CARGO COMMITMENT AWARDS WERE MADE.

THE INSTRUCTION TO OFFERORS ADVISED THAT IT WAS THE GOAL OF THE CONTRACTING OFFICER TO OBTAIN REASONABLE RATES AND AMPLE SERVICE CAPABILITY WITHOUT MAKING AWARDS BY WHICH THE GOVERNMENT WAS COMMITTED TO SHIP A FIXED VOLUME OF CARGO ON EACH SAILING AND THAT THE TOTAL CARGO COMMITMENTS WOULD BE KEPT AT THE LOWEST LEVEL AT WHICH THE DESIRED SERVICE COULD BE OBTAINED, CONSIDERING RATES AND SUCH FEATURES AS FREQUENCY OF SAILING AND TYPES OF SHIPS. THE SAID INSTRUCTIONS FURTHER ADVISED THAT OFFERS WHICH DID NOT REQUIRE THE GOVERNMENT TO BE COMMITTED TO SHIP A MINIMUM AMOUNT OF CARGO WOULD BE CONSIDERED FIRST. THUS, WHILE IT MAY BE AS CONTENDED BY YOU THAT THE RFP DID NOT INFORM PROSPECTIVE OFFERORS HOW THE TWO TYPES OF OFFERS WOULD BE COMPARED IN THE EVALUATION IN RELATIONSHIP TO EACH OTHER, THE RFP DID ADVISE OFFERORS THAT OPEN-END OFFERS WOULD BE CONSIDERED FIRST. UNTIL IT WAS KNOWN WHAT DEFICIENCIES IN SERVICE EXISTED, AS DISCLOSED BY THE OPEN-END OFFERS RECEIVED, THERE WAS NO BASIS UPON WHICH OFFERORS COULD BE ADVISED WHAT, IF ANY, CARGO COMMITMENT OFFERS WOULD BE CONSIDERED. IF IT HAD BEEN DETERMINED THAT A DEFICIENCY IN SERVICE EXISTED, ALL OFFERORS WHO HAD EXPRESSED AN INTEREST IN CARGO COMMITMENT WOULD HAVE BEEN GIVEN THE OPPORTUNITY TO SUBMIT OFFERS TO MEET SUCH DEFICIENCY. THIS WOULD HAVE AFFORDED AN EQUAL OPPORTUNITY TO ALL INTERESTED OFFERORS. SINCE RFP NO. 100 WAS A NEGOTIATED PROCUREMENT THERE WAS NO REQUIREMENT THAT ALL POSSIBLE EVALUATION FACTORS BE SET FORTH IN THE REQUEST FOR PROPOSALS. IT IS ONLY REQUIRED THAT IF MATERIAL REQUIREMENTS OR EVALUATION FACTORS, OTHER THAN THOSE SPECIFIED IN THE RFP, ARE TO BE CONSIDERED, ALL OFFERORS SHOULD BE GIVEN AN OPPORTUNITY TO QUOTE THEREON. THEREFORE AND ASIDE FROM THE FACT THAT NO CARGO COMMITMENT AWARDS WERE MADE, WE SEE NO BASIS TO QUESTION RFP NO. 100 ON THE BASIS THAT IT DID NOT AFFORD FULL AND FREE COMPETITION. B 150103, APRIL 23, 1963.

IT IS CONTENDED THAT RFP NO. 100 IS INVALID BECAUSE WITHOUT A CONTRACT, MSTS HAS UNDERTAKEN TO ESTABLISH THE CONDITIONS WHICH OCEAN COMMON CARRIERS MUST MEET BEFORE THEY ARE ELIGIBLE TO CARRY DEFENSE CARGO. THIS IS BASED ON THE REQUIREMENT THAT THE CARRIER MUST MAINTAIN ITS TARIFF RATES (THE FILED SHIPPING AGREEMENT) FOR A PERIOD OF TWELVE MONTHS AFTER THE TARIFF BECOMES EFFECTIVE WHICH IS ALLEGED TO BE IN CONFLICT WITH THE STATUTORY RIGHT OF OCEAN COMMON CARRIERS TO CHANGE TARIFF RATES THIRTY DAYS AFTER PROPER PUBLICATION AND FILING WITH THE FEDERAL MARITIME COMMISSION (46 U.S.C. 817).

MSTS REPORTS THAT THE STABILITY OF RATES IS IMPORTANT TO THE GOVERNMENT, BOTH FOR FISCAL PLANNING AND BECAUSE THERE IS A DIRECT RELATION BETWEEN STABILITY OF RATES AND STABILITY OF THE LEVEL OF AVAILABLE SERVICE AND THAT FOR SOME TIME THE COMMANDER, MILITARY SEA TRANSPORTATION SERVICE, HAS URGED THAT OCEAN TRANSPORTATION RATES SHOULD BE FIRM FOR AT LEAST SIX MONTHS AND PREFERABLY ONE YEAR. IT WAS DETERMINED THAT STABILITY FOR ONE YEAR WAS IN THE BEST INTEREST OF THE GOVERNMENT. IT WAS BELIEVED THAT THIS REQUIREMENT WAS REASONABLE SINCE THE SHIPPER'S LABOR CONTRACTS TRADITIONALLY ARE NEGOTIATED FOR PERIODS IN EXCESS OF ONE YEAR, SO THAT AS A PRACTICAL MATTER, THERE IS A HIGH DEGREE OF STABILITY IN AN OPERATOR'S COST OVER A TWELVE-MONTH PERIOD.

WHILE IT MAY BE THAT AN OCEAN COMMON CARRIER HAS THE LEGAL RIGHT TO CHANGE ITS TARIFF RATES THIRTY DAYS AFTER PROPER PUBLICATION AND FILING WITH THE FEDERAL MARITIME COMMISSION, WE CANNOT AGREE THAT A CARRIER CANNOT WAIVE SUCH RIGHT. IN FACT UNDER THE FORMER SHIPPING CONTRACT THE CARRIERS AGREED TO FIRM RATES FOR A PERIOD OF SIXTY DAYS. THAT ONE YEAR IS NOT AN UNREASONABLE PERIOD FOR OCEAN RATES TO REMAIN FIRM WAS INDICATED BY THE SUPREME COURT IN FEDERAL MARITIME BOARD V. ISBRANDTSEN CO., 356 U.S. 481 (1958). IN ANY EVENT THE QUESTION AS TO WHAT WOULD CONSTITUTE AN UNREASONABLE TIME FOR OCEAN RATES TO REMAIN FIRM, IS A MATTER FOR CONSIDERATION BY THE FEDERAL MARITIME COMMISSION WITH WHOM THE RATES ARE REQUIRED TO BE FILED, AND NOT THIS OFFICE.

YOU FURTHER CONTEND THAT VARIOUS PROVISIONS OF THE NEW SHIPPING AGREEMENT EXCEED THE MINIMUM NEEDS OF THE GOVERNMENT AND THAT IN OTHER SITUATIONS THE GOVERNMENT HAS NOT IMPOSED SUCH CONDITIONS.

PERHAPS IT MAY BE FOUND THAT SOME OF THE PROVISIONS OF THE NEW SHIPPING AGREEMENT ARE UNDESIRABLE AND NOT IN THE BEST INTEREST OF THE GOVERNMENT. IN SUCH EVENT IT CAN ONLY BE ASSUMED THAT THEY WILL BE CHANGED. IT MUST BE RECOGNIZED, HOWEVER, THAT THE CONTRACTUAL SCHEME OF RFP NO. 100 IS A DEPARTURE FROM THE METHOD EMPLOYED FOR A LONG PERIOD IN CONTRACTING FOR OCEAN COMMON CARRIAGE OF DOD CARGO. IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT THE NEW METHOD OF CONTRACTING, TOGETHER WITH THE CHANGES IN THE TERMS AND CONDITIONS FOR THE CARRIAGE OF CARGO UNDER THE NEW SHIPPING AGREEMENT, ARE IN THE BEST INTEREST OF THE GOVERNMENT. FOLLOWING THE LONG-STANDING RULE OF THIS OFFICE THAT IT IS PRIMARILY THE PROVINCE OF ADMINISTRATIVE OFFICERS TO DETERMINE THE NEEDS OF THE GOVERNMENT AND THE TERMS AND CONDITIONS BY WHICH THOSE NEEDS ARE TO BE MET, WE FIND NO LEGAL BASIS TO QUESTION THE ADMINISTRATIVE DETERMINATION HERE INVOLVED. THE SAME TERMS AND CONDITIONS ARE AVAILABLE TO ALL U.S.-FLAG OCEAN COMMON CARRIERS ALIKE. ACCORDINGLY, YOUR PROTEST MUST BE DENIED.