B-232562.3, B-232562.4, Jun 12, 1989

B-232562.3, B-232562.4, Jun 12, 1989

PROCUREMENT - Bid Protests - GAO decisions - Recommendation - Withdrawal DIGEST: 1. Recommendation to conduct additional discussions, with a view to terminating a contract for vessel charter services depending on the results of those discussions, is withdrawn where agency advises that there is no longer a requirement for the charter services beyond the end of the fiscal year. PROCUREMENT - Bid Protests - Preparation costs PROCUREMENT - Bid Protests - GAO procedures - Preparation costs - Attorney fees 2. Where protester clearly established that agency employed defective evaluation scheme in selecting lowest cost contractor, protester is entitled to its costs of filing and pursuing the protest, including attorneys' fees.

Military Sealift Command; Texaco Refining and Marketing, Inc.-- Requests for Reconsideration:

Military Sealift Command (MSC) and Texaco Refining and Marketing, Inc., request reconsideration of our decision in Falcon Carriers, Inc., B-232562.2, Jan. 30, 1989, 68 Comp.Gen. ***, 89-1 CPD Para. 96 In that decision, we sustained the protest of Falcon under request for proposals RFP No. N00033-88-R-1703, since we found that the agency improperly relaxed mandatory delivery terms after best and final offers (BAFOs) were received, and performed a faulty cost evaluation. We therefore recommended that the agency conduct an additional round of BAFOs between Falcon and Texaco.

We grant the agency's request for reconsideration in part and dismiss it in part. We dismiss the request by Texaco.

On June 24, 1988, the agency issued the RFP for the charter of one or more vessels for worldwide trading, transportation and storage of Department of Defense petroleum cargoes in bulk. The RFP permitted multiple awards. The solicitation required delivery of vessels between August 1 and November 30 and provided for award of a contract with firm fixed daily charter rates for a basic period of 17 months, with two 17 month option periods. The RFP essentially provided for award to the technically acceptable offeror or offerors with the lowest evaluated price over the 51-month anticipated contract period.

Offerors submitted initial proposals on July 25, 1988, and BAFOs on August 30. The Falcon proposal offered the Falcon Leader, which was available to meet the RFP delivery dates; in addition, Falcon offered a special lower rate based upon award of a contract for both the Falcon Leader and the Falcon Champion. Since the Falcon Champion was under charter to MSC until January 1989, this latter offer essentially would have committed Falcon to waive its entitlement to a higher charter rate for the Falcon Champion in the November to January time period, in exchange for the agency's commitment to charter both ships for the 51 month period contemplated in the RFP.

The agency evaluated vessels in two modes: a storage mode, that is, stationed at sea and on call for contingencies, and a point-to-point transportation mode, using one hypothetical 30-day trip from Bahrain to Subic Bay. The agency evaluated the storage mode costs on the basis of a cost per ton for an 8-1/2 month period and evaluated the transportation mode on a cost per ton basis for a 1-month trip. The agency added the cost per ton for the 8-1/2 month storage period to the evaluated cost for the transportation mode, which represented only 1 month of transportation service, and averaged the two in an attempt to determine which vessels would offer the lowest cost overall. Thus, the agency only evaluated performance for 9-1/2 months of the 17-month basic contract period, and the evaluation weighted the storage mode 8 1/2 times more importantly than the transportation mode.

On September 6, the agency orally notified Texaco of its selection for award, confirming this notification on the next day by telex. Further, the agency decided to award a second contract to OMI Bulk Transport, Inc., to replace the Falcon Champion, whose charter was due to expire in mid- January 1989. The agency engaged in oral discussions with OMI during which the two parties agreed to a relaxed delivery schedule for the OMI vessel. On September 7, the agency "confirmed" its acceptance of OMI's charter based on these discussions. While the original RFP required delivery of the vessel between August 1 and November 30, the agency awarded this second contract to OMI on a basis that postponed the required delivery to January 15 through February 15, 1989, a 4-month unilateral extension of the RFP's delivery schedule. /1/

In our decision, we held that the agency's action in awarding a contract to OMI based on a relaxed delivery schedule was improper, since Falcon had not been given the opportunity to submit a proposal based on the relaxed delivery schedule provided to OMI. Further, because the record showed that ships were as likely to be used for point-to-point transportation as for storage at sea, we found that the agency improperly used an evaluation scheme that gave exaggerated weight to the storage mode and thus bore no reasonable relationship to its minimum needs. We also found that under a proper evaluation scheme giving equal weight to the transportation and storage modes, OMI would have been the low offeror, by a substantial margin, for one of the contracts under the original delivery schedule, and that Falcon reasonably could have been in line for award of the second contract.

Consequently, we recommended that the agency not disturb the award to OMI, which was the low offeror under any evaluation scheme, but that it reopen the competition for the second award based on the revised delivery schedule. We further recommended that the contracting officer reevaluate the new proposed costs based on equal weighting of storage and transportation modes and that, if Texaco was not the low evaluated offeror after this evaluation, its contract be terminated for the convenience of the government. Falcon Carriers, Inc., B-232562.2, supra.

In its request for reconsideration, the agency has asked our Office to withdraw the recommendation for an additional round of BAFOs. The agency explains that on January 31, 1989, the day it received our decision, the Joint Chiefs of Staff advised the agency that fiscal constraints will necessitate a reduction of two tankers in the Afloat Prepositioned Force storage mode by September 30, 1989, the end of fiscal year 1989. The agency believes that since the OMI and Texaco charters are at higher rates than all other charters that might be canceled, it is "only rational" to cancel these charters on September 30, leaving only a few months of performance remaining under the protested solicitation. Thus, another round of BAFOs would be impracticable because, instead of the 51-month period contemplated by the solicitation, only a few months remain for BAFOs and for performance.

Based on these representations, which we accept, we withdraw our original recommendation for another round of BAFOs. We reaffirm our recommendation that any new solicitation issued in the future employ an evaluation scheme that gives appropriate weight to the agency's anticipated requirement for transportation and storage.

The agency also argues that, in light of these changed circumstances, we should also reverse our award of protest costs and attorneys' fees to the protester. We disagree. We believe that Falcon's protest, by identifying significant flaws in the agency's method of evaluating proposals, will result in improvements in the agency's procurement procedures, so that greater competition can be achieved consistent with the overall mandate of the Competition in Contracting Act of 1984, 10 U.S.C. Sec. 2301 et seq. See generally Rotair Industries, Inc., B-224332.2 et al., Mar. 3, 1987, 87-1 CPD Para. 238; Meridian Corp.-- Award of Costs, B-228468.2, June 14, 1988, 88-1 CPD Para. 566.

Texaco and the agency have identified several other points in our original decision that they believe to be in error, justifying a withdrawal of our recommendation for another round of BAFOs, that primarily relate to their discovery that the agency erroneously evaluated and overstated Texaco's fuel consumption costs. Texaco argues that, considering this error, and in view of the true prices offered, Falcon had no reasonable chance of receiving award under any rational evaluation scheme. In view of the change in the agency's requirements and our modified recommendation, we dismiss these issues as well as the other issues presented by Texaco and the agency as academic. See Union Natural Gas Co.-- Reconsideration, B-224607.2, Apr. 9, 1987, 87-1 CPD Para. 390.

Accordingly, by separate letter of today, we are advising the Commander, Military Sealift Command, of our modification of the recommendation. Falcon should submit its claim for the costs of pursuing the protest, including attorneys' fees, directly to MSC. 4 C.F.R. Sec. 21.6(e) (1988).

Our prior decision is modified accordingly.

/1/ In response to the protest, the agency made a written determination that it was in the best interest of the government to permit performance of Texaco's charter. The agency did suspend performance of OMI's charter.