B-215864, OCT 19, 1984, 84-2 CPD 423

B-215864: Oct 19, 1984

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PROTEST FILED WITH PROCURING ACTIVITY WITHIN 10 WORKING DAYS OF PROTESTER'S DISCOVERY OF INFORMATION WHICH FORMED ITS BASIS OF PROTEST IS TIMELY UNDER GAO BID PROTEST PROCEDURES. PROTEST WHICH IS ALSO THE SUBJECT OF COURT ACTION. CONSTITUTES CHALLENGE TO PROCURING ACTIVITY'S AFFIRMATIVE RESPONSIBILITY DETERMINATION WHICH NEITHER GAO NOR THE COURTS WILL REVIEW EXCEPT UNDER CIRCUMSTANCES NOT PRESENT HERE. A PROTEST CHALLENGING AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY THAT IS BASED ON ALLEGATION THAT AWARD OF THE CONTRACT TO OFFEROR WILL RESULT IN OFFEROR VIOLATING A SUBSIDY CONTRACT WHICH OFFEROR HOLDS WITH THE MARITIME ADMINISTRATION AND MARITIME REGULATIONS GOVERNING THE PAYMENT OF SUBSIDIES IS NOT A BASIS OF PROTEST THAT GAO WILL REVIEW.

B-215864, OCT 19, 1984, 84-2 CPD 423

CONTRACTS - PROTESTS - GENERAL ACCOUNTING OFFICE PROCEDURES - TIMELINESS OF PROTEST - DATE BASIS OF PROTEST MADE KNOWN TO PROTESTER DIGEST: 1. PROTEST FILED WITH PROCURING ACTIVITY WITHIN 10 WORKING DAYS OF PROTESTER'S DISCOVERY OF INFORMATION WHICH FORMED ITS BASIS OF PROTEST IS TIMELY UNDER GAO BID PROTEST PROCEDURES. CONTRACTORS - RESPONSIBILITY - DETERMINATION - REVIEW BY GAO - AFFIRMATIVE FINDING ACCEPTED 2. PROTEST WHICH IS ALSO THE SUBJECT OF COURT ACTION, GENERALLY QUESTIONING AWARDEE'S ABILITY TO COMPLY WITH CONTRACT REQUIREMENT THAT SUCCESSFUL OFFEROR OPERATE GOVERNMENT VESSELS IN WORLDWIDE TRADE, CONSTITUTES CHALLENGE TO PROCURING ACTIVITY'S AFFIRMATIVE RESPONSIBILITY DETERMINATION WHICH NEITHER GAO NOR THE COURTS WILL REVIEW EXCEPT UNDER CIRCUMSTANCES NOT PRESENT HERE. SIMILARLY, A PROTEST CHALLENGING AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY THAT IS BASED ON ALLEGATION THAT AWARD OF THE CONTRACT TO OFFEROR WILL RESULT IN OFFEROR VIOLATING A SUBSIDY CONTRACT WHICH OFFEROR HOLDS WITH THE MARITIME ADMINISTRATION AND MARITIME REGULATIONS GOVERNING THE PAYMENT OF SUBSIDIES IS NOT A BASIS OF PROTEST THAT GAO WILL REVIEW. CONTRACTS - NEGOTIATION - REQUESTS FOR PROPOSALS - SPECIFICATIONS - MINIMUM NEEDS - ADMINISTRATIVE DETERMINATION ALLEGATION THAT VESSEL OPERATOR RECEIVING GOVERNMENT SUBSIDIES TO OPERATE UNITED STATES COMMERCIAL VESSELS IN FOREIGN COMMERCE IS PRECLUDED, WITHOUT PRIOR APPROVAL FROM THE MARITIME ADMINISTRATION, FROM SUBMITTING AN OFFER UNDER SOLICITATION WHICH REQUIRES OPERATION OF GOVERNMENT-OWNED VESSELS IN UNITED STATES DOMESTIC COASTAL TRADE IS DENIED WHERE SOLICITATION DOES NOT REQUIRE THAT SUBSIDIZED VESSEL OPERATORS HAVE SUCH APPROVAL AS PREREQUISITE TO AWARD. CONTRACTS - PROTESTS - GENERAL ACCOUNTING OFFICE PROCEDURES - TIMELINESS OF PROTEST - SOLICITATION IMPROPRIETIES - APPARENT PRIOR TO BID OPENING/CLOSING DATE FOR PROPOSALS. 4. WHERE RFP CLEARLY DID NOT PROVIDE FOR EVALUATION OF SUBSIDY PAID BY GOVERNMENT TO OFFEROR, PROTEST FILED AFTER THE CLOSING DATE THAT SUBSIDY SHOULD HAVE BEEN A FACTOR UNDER SOLICITATION EVALUATION SCHEME IS UNTIMELY. 4 C.F.R. SEC. 21.2(B) (1984). HOWEVER, COURT IS ADVISED THAT AGENCY PROPERLY DID NOT PROVIDE FOR SUBSIDY EVALUATION.

COVE SHIPPING, INC.:

COVE SHIPPING, INC. (COVE), PROTESTS THE AWARD BY THE MILITARY SEALIFT COMMAND (MSC) OF A CONTRACT TO AMERICAN PRESIDENT LINES LTD. (APL) FOR THE OPERATION OF TWO GOVERNMENT TANKER VESSELS UNDER REQUEST FOR PROPOSALS (RFP) NO. N00033-84-R-4004.

WHILE THIS PROTEST WAS PENDING WITH THIS OFFICE, COVE FILED SUIT AGAINST THE GOVERNMENT IN UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA (CIVIL ACTION NO. 84-2709). THE BASES FOR THE SUIT ARE SUBSTANTIALLY THE SAME AS THOSE RAISED IN COVE'S PROTEST. BY ORDER OF SEPTEMBER 5, 1984, THE COURT REQUESTED AN EXPEDITED OPINION FROM OUR OFFICE. 4 C.F.R. SEC. 21.10 (1984).

THE PROTEST IS DISMISSED IN PART AND DENIED IN PART.

COVE PROTESTS THAT APL IS NOT A RESPONSIBLE OFFEROR BECAUSE THE FIRM CANNOT LAWFULLY MEET CERTAIN RFP PROVISIONS REQUIRING THAT THE SUCCESSFUL OFFEROR OPERATE THE VESSELS IN DOMESTIC COAST WIDE TRADE. COVE EXPLAINS THAT APL RECEIVES AN OPERATING DIFFERENTIAL SUBSIDY (ODS) FROM THE GOVERNMENT FOR OPERATION OF UNITED STATES COMMERCIAL VESSELS IN FOREIGN COMMERCE. UNDER TITLE VI OF THE MERCHANT ACT OF 1936, 46 U.S.C. SEC. 1171, ET SEQ. (1982), THE MARITIME ADMINISTRATION (MARAD) IS AUTHORIZED TO PAY SUBSIDIES TO UNITED STATES COMMERCIAL VESSEL OPERATORS ENGAGED IN FOREIGN COMMERCE TO PLACE THE UNITED STATES OPERATORS ON PARITY WITH FOREIGN COMPETITORS. SECTION 805(A) OF THE ACT, HOWEVER, PROVIDES THAT IT IS UNLAWFUL TO PAY ANY SUBSIDY TO ANY CONTRACTOR WHICH DIRECTLY OR INDIRECTLY OWNS, OPERATES OR CHARTERS ANY VESSEL ENGAGED IN DOMESTIC INTERCOASTAL OR COAST WIDE SERVICE WITHOUT WRITTEN PERMISSION OF MARAD. MARAD HAS ENFORCEMENT RESPONSIBILITIES UNDER THE ACT. SPECIFICALLY, SECTION 805(F) PROVIDES FOR CIVIL (RESCISSION OF THE ODS CONTRACT) AND CRIMINAL PENALTIES FOR WILLFUL VIOLATION OF SECTION 805(A).

COVE POINTS OUT THAT APL, IN THE COVER LETTER TO ITS OFFER, ADVISED MSC THAT IT COULD NOT WARRANT UNDER THE TERMS OF ITS ODS CONTRACT THAT IT COULD ENGAGE IN DOMESTIC TRADE. IN THAT LETTER, APL EXPLAINED THAT IT HAD LIMITED DOMESTIC TRADING PRIVILEGES, BUT WOULD APPLY FOR ADDITIONAL PRIVILEGES AT THE DIRECTION OF MSC UNDER SECTION 805(A). BECAUSE APL NEITHER APPLIED FOR NOR RECEIVED THE 805(A) PERMISSION FOR EXTENDED DOMESTIC TRADING PRIVILEGES, COVE MAINTAINS THAT MSC ARBITRARILY WAIVED RFP RESPONSIBILITY CRITERIA.

THE RFP RESPONSIBILITY CRITERIA TO WHICH COVE REFERS CONSIST OF THE FOLLOWING:

"US CITIZENSHIP: OFFEROR MUST WARRANT THAT IT IS QUALIFIED TO ENGAGE IN US COAST WIDE TRADE WITHIN THE MEANING OF SECTION 2 OF THE SHIPPING ACT OF 1916, AS AMENDED."

SECTION II OF THE SHIPPING ACT OF 1916, SET FORTH IN 46 U.S.C. SEC. 802(A) (1982), ESSENTIALLY PROVIDES THAT NO CORPORATION, PARTNERSHIP OR ASSOCIATION OPERATING ANY VESSELS IN THE UNITED STATES COAST WIDE TRADE SHALL BE DEEMED A CITIZEN UNLESS 75 PERCENT OF ITS INTEREST IS OWNED BY UNITED STATES CITIZENS. COVE ALSO STATES THAT WITHOUT EXTENDED DOMESTIC TRADING PRIVILEGES, APL CANNOT COMPLY WITH THE RFP PROVISION WHICH ESTABLISHES "WORLDWIDE TRADING LIMITS" (WHICH INCLUDES DOMESTIC COAST WIDE TRADE) FOR OPERATION OF THE VESSELS.

INITIALLY, MSC CONTENDS THAT COVE'S PROTEST IS UNTIMELY UNDER OUR BID PROTEST PROCEDURES, 4 C.F.R. PART 21 (1984), AND SHOULD NOT BE CONSIDERED ON THE MERITS. ASSUMING MSC IS CORRECT, WE WILL STILL CONSIDER THESE GROUNDS BECAUSE OF THE COURT'S REQUEST FOR OUR DECISION. HOWEVER, WE ALSO INCLUDE A DISCUSSION OF TIMELINESS FOR THE COURT'S BENEFIT. MSC ASSERTS THAT COVE DID NOT FILE ITS PROTEST WITH EITHER THE CONTRACTING AGENCY OR GAO WITHIN 10 WORKING DAYS OF WHEN COVE KNEW OR SHOULD HAVE KNOWN ITS BASIS OF PROTEST THAT APL HAD NOT RECEIVED SECTION 805(A) PERMISSION FOR EXTENDED DOMESTIC TRADING PRIVILEGES. 4 C.F.R. SEC. 21.2(B)(2) (1984). MSC POINTS OUT THAT NOTICES OF APPLICATIONS FILED BY SUBSIDIZED VESSEL OPERATORS FOR DOMESTIC TRADING PRIVILEGES ARE PUBLISHED IN THE FEDERAL REGISTER. MSC THUS MAINTAINS THAT UPON BEING NOTIFIED OF THE AWARD TO APL BY LETTER OF MAY 25, 1984, COVE SHOULD HAVE ASCERTAINED BY REFERENCE TO THE FEDERAL REGISTER THAT APL HAD NOT APPLIED FOR EXTENDED DOMESTIC TRADING PRIVILEGES AND THAT COVE'S PROTEST TO MSC OF JUNE 27, 1984, FILED MORE THAN 20 WORKING DAYS AFTER MSC SENT COVE NOTICE OF THE AWARD, THEREFORE, IS UNTIMELY.

PROTESTERS MUST DILIGENTLY PURSUE INFORMATION THAT FORMS THE BASIS OF A PROTEST AND, IF THEY DO NOT DO SO WITHIN A REASONABLE TIME, OUR OFFICE WILL DISMISS AN ULTIMATELY FILED PROTEST AS UNTIMELY. MITEK SYSTEMS, INC. - REQUEST FOR RECONSIDERATION, B-208786.3, MAY 10, 1983, 83-1 CPD PARA. 494.

HERE, MSC CONCEDES THAT UPON BEING NOTIFIED OF THE AWARD TO APL, COVE IMMEDIATELY FILED A FREEDOM OF INFORMATION ACT REQUEST CONCERNING THE AWARD TO APL. COVE ALSO REPORTS THAT ITS INQUIRIES WITHIN THE MARITIME INDUSTRY, INITIATED PROMPTLY AFTER NOTICE OF AWARD, RESULTED IN ITS LEARNING ON JUNE 21, 1984 (LESS THAN A MONTH AFTER RECEIVING MSC'S MAY 25 NOTICE OF AWARD LETTER), THAT APL HAD NOT APPLIED FOR OR RECEIVED EXTENDED DOMESTIC-TRADING PRIVILEGES. UNDER THESE CIRCUMSTANCES, WE BELIEVE THAT COVE DILIGENTLY SOUGHT THE INFORMATION WHICH ULTIMATELY FORMED THE BASIS OF ITS PROTEST AND, THEREFORE, FIND THAT COVE'S JUNE 27 PROTEST TO MSC, FILED WITHIN 6 DAYS OF COVE'S LEARNING THE BASIS OF ITS PROTEST, IS TIMELY. 4 C.F.R. SEC. 21.2(B)(2) (1984), SUPRA. WE FIND THAT IT WOULD PLACE AN ONEROUS BURDEN ON THE PROTESTER TO ESTABLISH A FIRM'S TRADING PRIVILEGES UNDER A CONTRACT WITH ANOTHER AGENCY WITHIN 10 WORKING DAYS OF BEING NOTIFIED OF AWARD TO THAT FIRM.

CONCERNING THE MERITS OF THE PROTEST, MSC AGREES WITH COVE THAT THE SHIPS WILL BE USED IN DOMESTIC TRADE. MSC, HOWEVER, ASSERTS THAT THE PROVISIONS OF 805(A) DO NOT ESTABLISH ELIGIBILITY CRITERIA WITH WHICH A SUBSIDIZED OPERATOR MUST FIRST COMPLY PRIOR TO ENGAGING IN DOMESTIC TRADE. MSC ARGUES THAT THE STATUTORY PROVISIONS MERELY PRECLUDE MARAD FROM PAYING ODS TO CARRIERS WHICH OPERATE COMMERCIAL VESSELS IN DOMESTIC TRADE. FURTHERMORE, MSC AND APL ARGUE THAT THE PROVISIONS OF 805(A) DO NOT APPLY TO THE OPERATION OF GOVERNMENT VESSELS WHICH ARE NOT SUBSIDIZED COMMERCIAL VESSELS. FINALLY, MSC POINTS OUT THAT THE RFP CONTAINS NO PROVISIONS WHICH PRECLUDED SUBSIDIZED OPERATORS FROM COMPETING FOR THE CONTRACT. WITH RESPECT TO THE RFP EVALUATION AND AWARD CRITERIA THAT AN OFFEROR WARRANT THAT IT IS QUALIFIED TO ENGAGE IN COASTAL TRADE WITHIN THE MEANING OF SECTION II OF THE SHIPPING ACT OF 1916, 46 U.S.C. SEC. 802, SUPRA, MSC STATES THAT APL CLEARLY MEETS THE CITIZENSHIP REQUIREMENTS SET FORTH IN THAT SECTION OF THE SHIPPING ACT.

TO THE EXTENT COVE IS GENERALLY CHALLENGING APL'S ABILITY TO COMPLY WITH THE SOLICITATION REQUIREMENT THAT OFFERORS BE CAPABLE OF OPERATING THE VESSELS ON A WORLDWIDE BASIS, AN OFFEROR'S ABILITY TO FULFILL A CONTRACT REQUIREMENT CONSTITUTES A MATTER OF RESPONSIBILITY. WESTERN GRAPHIC, INC., B-212971, MAY 14, 1984, 84-1 CPD PARA. 517, AND ACE VAN AND STORAGE COMPANY, B-210083, DEC. 28, 1982, 82-2 CPD PARA. 586. AS A PREREQUISITE TO AWARD, A CONTRACTING OFFICER MUST MAKE AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY. HOOPER GOODE, INC., B-209830, MAR. 30, 1983, 83-1 CPD PARA. 329. SUCH A DETERMINATION WAS MADE HERE AND OUR OFFICE DOES NOT REVIEW AN AFFIRMATIVE DETERMINATION OF RESPONSIBILITY UNLESS FRAUD IS ALLEGED OR THE SOLICITATION CONTAINS DEFINITIVE RESPONSIBILITY CRITERIA WHICH ALLEGEDLY HAVE NOT BEEN MET. ACE VAN AND STORAGE COMPANY, B-210083, SUPRA; HOOPER GOODE, INC., B-209830, SUPRA. OUR STANDARD IS MUCH THE SAME AS THAT FOLLOWED BY THE COURTS. THEY HAVE TAKEN THE VIEW THAT RESPONSIBILITY IS A MATTER OF DISCRETION NOT SUBJECT TO JUDICIAL REVIEW ABSENT FRAUD OR BAD FAITH. BELL HELICOPTER TEXTRON, 59 COMP.GEN. 158 (1979), 79-2 CPD PARA. 431.

COVE'S PROTEST THAT APL ALLEGEDLY WOULD AND IS VIOLATING SECTION 805(A) PROVISIONS OR ITS ODS CONTRACT WITH MARAD BY PERFORMING THE MSC CONTRACT IS A MATTER OF RESPONSIBILITY. SEE MARS SIGNAL LIGHT COMPANY, B-204823, OCT. 5, 1981, 81-2 CPD PARA. 278; ACE VAN AND STORAGE COMPANY, B-210083, SUPRA. MOREOVER, ENFORCEMENT OF APL'S ODS CONTRACT AND THE 805(A) SUBSIDY PROVISIONS OF THE MERCHANT MARINE ACT OF 1936, 46 U.S.C. SEC. 1171, ET SEQ., SUPRA, IS VESTED WITH MARAD. SINCE NO FRAUD HAS BEEN ALLEGED, THIS ISSUE WILL NOT BE CONSIDERED. IN ANY EVENT, WE NOTE THAT TO DATE, MARAD HAS NOT OBJECTED TO THE EXECUTION AND PERFORMANCE OF THIS CONTRACT.

COVE ALSO REFERS TO THE SOLICITATION AND EVALUATION AWARD CRITERIA WHICH REQUIRE AN OFFEROR TO WARRANT THAT IT IS QUALIFIED TO ENGAGE IN DOMESTIC TRADES WITHIN THE MEANING OF SECTION II OF THE SHIPPING ACT OF 1916, 42 U.S.C. SEC. 802, SUPRA. COVE ASSERTS THAT THIS "DEFINITIVE RESPONSIBILITY CRITERION" IMPROPERLY WAS WAIVED BY THE CONTRACTING OFFICER IN ORDER TO FIND APL ELIGIBLE FOR AWARD. THE PROVISIONS OF SECTION II MERELY ESTABLISH CITIZENSHIP REQUIREMENTS FOR UNITED STATES COASTAL-TRADING PRIVILEGES. THE RFP WARRANTY LANGUAGE MAKES NOT MENTION OF SECTION 805(A) REQUIREMENTS OR OF THE ELIGIBILITY OF SUBSIDIZED OPERATORS TO PARTICIPATE IN THIS PROCUREMENT. THUS, THE CONTRACTING OFFICER WAS REQUIRED UNDER THE WARRANTY PROVISION TO ASCERTAIN THE OPERATOR'S CITIZENSHIP, NOT ITS STATUS AS A SUBSIDIZED OFFEROR. CHIPMAN VAN AND STORAGE, INC., B-188917, OCT. 18, 1977, 77-2 CPD PARA. 299; SEE ALSO MARINE INDUSTRIAL INSULATORS, B-209283, NOV. 1, 1982, 82-2 CPD PARA. 397. SINCE THE CONTRACTING OFFICER DETERMINED THAT APL MET THE CITIZENSHIP REQUIREMENT - NEITHER THE PROTESTER NOR THE RECORD INDICATES TO THE CONTRARY - THE WARRANTY CLAUSE PROVIDES NO BASIS TO REJECT APL'S OFFER. CHIPMAN VAN AND STORAGE, INC., B-188917, SUPRA. THE FACT THAT THE APL COVER LETTER TO ITS OFFER INDICATED THAT THE WARRANTY PROVISION ALSO REQUIRED THAT THE FIRM HAVE OR OBTAIN EXTENDED DOMESTIC TRADING PRIVILEGES DOES NOT INVALIDATE THE CONTRACTING OFFICER'S SUBSEQUENT DETERMINATION CONCERNING APL'S CONFORMANCE WITH THE WARRANTY CITIZENSHIP REQUIREMENT.

IN ITS INITIAL PROTEST TO OUR OFFICE, COVE ALSO ARGUED THAT MSC WAS REQUIRED TO EVALUATE A SUBSIDIZED FIRM'S OFFER BY CONSIDERING A PORTION OF THE ODS AS A COST TO THE GOVERNMENT AND ADJUSTING THE OFFEROR'S PRICE ACCORDINGLY. THUS, ACCORDING TO COVE, WHEN THE SUBSIDY IS CONSIDERED, APL'S EVALUATED "SUBSIDIZED OFFER" MAY NOT HAVE BEEN THE LOWEST COST OFFER.

INITIALLY, WE NOTE THAT THIS CONTENTION APPEARS TO HAVE BEEN ABANDONED BY THE PROTESTER SINCE COVE DOES NOT DISCUSS THIS ALLEGATION IN ITS FINAL COMMENTS TO MSC'S PROTEST REPORT AND THE ALLEGATION DOES NOT APPEAR IN COVE'S COURT PLEADING. HOWEVER, WE WILL DISCUSS THIS MATTER FOR THE COURT.

THE RFP EVALUATION SCHEME DOES NOT PROVIDE FOR THE EVALUATION OF OPERATING SUBSIDIES. INSOFAR AS COVE'S PROTEST INVOLVES THE ABSENCE OF SUCH AN EVALUATION SCHEME, THE PROTEST IS UNTIMELY UNDER 4 C.F.R. SEC. 21.2(B)(1) (1984), WHICH REQUIRES THE FILING OF PROTESTS BASED UPON ALLEGED SOLICITATION DEFECTS BEFORE THE CLOSING DATE FOR RECEIPT OF PROPOSALS. WHILE COVE CLAIMS THAT IT DID NOT REALIZE THAT SUBSIDIZED VESSEL OPERATORS COULD SUBMIT OFFERS AND, THEREFORE, HAD NO BASIS OF PROTEST PRIOR TO AWARD, WE AGAIN POINT OUT THAT THE RFP CONTAINS NO RESTRICTION AGAINST THIS CLASS OF OFFERORS AND FIND COVE'S RELIANCE ON A NONEXISTENT RESTRICTION TO BE UNREASONABLE. CADILLAC GAGE COMPANY, B-209102, JULY 15, 1983, 83-2 CPD PARA. 96.

IT IS A FUNDAMENTAL PRINCIPLE OF FEDERAL PROCUREMENT LAW THAT THE SOLICITATION MUST INFORM ALL OFFERORS OF ALL EVALUATION FACTORS TO BE CONSIDERED IN DETERMINING AWARD SO THAT ALL OFFERORS ARE TREATED EQUALLY AND PROVIDED A COMMON BASIS TO SUBMIT PROPOSALS. DATA 100 CORPORATION, B-194924, DEC. 19, 1979, 79-2 CPD PARA. 416. THUS, IT WOULD HAVE BEEN IMPROPER FOR MSC TO HAVE CONSIDERED THE ODS APL RECEIVED IN EVALUATING THE FIRM'S OFFER SINCE THE RFP DID NOT PROVIDE FOR SUCH EVALUATION. CADILLAC GAGE COMPANY, B-209102, SUPRA.

COVE REFERS TO A MARAD REGULATION AT 49 FED.REG. 2987 (JAN. 24, 1984) ISSUED PRIOR TO THE ISSUANCE OF THE SUBJECT RFP AND ASSERTS THAT THE REGULATION REQUIRES MSC TO EVALUATE THE OFFERS SUBMITTED BY SUBSIDIZED FIRMS BY CONSIDERING A PORTION OF THE ODS AS A COST TO THE GOVERNMENT. HOWEVER, WE AGREE WITH MSC'S READING OF THE REGULATION WHICH MAKES IT INAPPLICABLE TO THE SUBJECT RFP. THE MARAD REGULATION ESSENTIALLY PROVIDES THAT WHERE A VESSEL OPERATOR WHO RECEIVES ODS FROM THE GOVERNMENT FOR OPERATION OF A DRY-CARGO CONTAINER VESSEL OFFERS TO CHARTER THAT SAME VESSEL TO THE GOVERNMENT, ODS PAID WILL BE TAKEN INTO ACCOUNT IN DETERMINING THE ACTUAL COST TO THE GOVERNMENT FOR CHARTERING THE VESSEL. HERE, MSC ADVISES THAT APL RECEIVES NO SUBSIDY FOR OPERATING THE TWO NAVAL VESSELS UNDER THIS RFP. FURTHERMORE, MSC POINTS OUT THAT THE REGULATION APPLIES TO DRY-CARGO LINERS ONLY, NOT OIL TANKERS WHICH ARE INVOLVED UNDER THIS CONTRACT. ALSO, MSC NOTES THAT NEITHER THE REGULATION NOR COVE INDICATES HOW ODS PAID TO OFFSET HIGHER FOREIGN CREW WAGES, INSURANCE AND MAINTENANCE AND REPAIR FOR DRY CARGO SHIPS COULD BE TRANSLATED LOGICALLY INTO A FIGURE TO ADD TO APL'S OFFER TO OPERATE NAVY OIL TANKERS. UNDER THESE CIRCUMSTANCES, WE AGREE WITH MSC'S CONTENTION THAT THE REGULATION DOES NOT APPLY TO THIS PROCUREMENT. WE DENY THIS PORTION OF THE PROTEST. THE PROTEST IS DISMISSED IN PART AND DENIED IN PART.