BNUMBER: B-277241.15
DATE: March 11, 1998
TITLE: Aalco Forwarding, Inc., et al., B-277241.15, March 11, 1998
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Matter of:Aalco Forwarding, Inc., et al.
File: B-277241.15
Date:March 11, 1998
Alan F. Wohlstetter, Esq., and Stanley I. Goldman, Esq., Denning &
Wohlstetter; James M. McHale, Esq., Seyfarth, Shaw, Fairweather &
Geraldson; Thomas M. Auchincloss, Jr., Esq., Leo C. Franey, Esq., and
Brian L. Troiano, Esq.,
Rea, Cross & Auchincloss, for the protesters.
Thomas J. Duffy, Esq., Maj. Jonathan C. Guden, and Ramon Morales,
Esq., Department of the Army, for the agency.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
1. Under a solicitation contemplating the award of multiple indefinite
delivery, indefinite quantity contracts to implement a pilot program
for moving and storage services, protests that the contract minimum of
$25,000 per contractor is only nominal consideration insufficient to
bind the parties are denied, where the nature of the acquisition
dictates the possibility that the government may order only this
quantity and the establishment of long-term commitments with
relatively few prime contractors, who will potentially be provided
greater shipping volumes than under the current program, shows an
intent to form binding contracts.
2. Under a solicitation contemplating the award of multiple
indefinite delivery, indefinite quantity contracts to implement a
pilot program for moving and storage services, protests that the
maximum quantities for the various traffic channels are unrealistic
are denied, where it cannot be determined that the maximums were not
established in good faith or based on the best information available,
or that they do not accurately represent the agency's anticipated
needs, given the contracting agency's reasonable explanation that the
varying nature and unpredictability of its requirements necessitate
the stated maximums.
3. On a solicitation for an indefinite quantity of moving and storage
services, a price evaluation scheme that evaluates offerors' prices by
applying them in a notional shipment, including all possible
accessorial services that may be ordered under the contract, is not
objectionable, even though the notional shipment is not representative
of a typical shipment that may be ordered under the contract, where
the notional shipment provides a common basis for price evaluation
under the solicitation, the agency requires a evaluation model that
encompasses all accessorial services that may be ordered under the
pilot program, the agency has no basis on which to provide estimates
for the accessorial services given the lack of historical information,
and the protesters have not established that the notional shipment
will produce a materially misleading result.
4. Protests that Service Contract Act should not apply to a
solicitation for moving and storage services are denied where the
Department of Labor, which is statutorily charged with implementation
of the Act, has determined that the Act applies and that determination
is not clearly contrary to law.
5. Protests that Service Contract Act wage determinations issued with
a solicitation for moving and storage services do not cover all
localities where the services will be performed and all classes of
service employees that may be utilized are denied, where the
Department of Labor's determination that wage rates need only be
established for the states from which shipments originate is not so
unreasonable as to be contrary to law and where the protesters can
avail themselves of established procedures for adding classes of
employees to the wage determinations.
DECISION
Aalco Forwarding, Inc. and 121 other firms protest the terms of
request for proposals (RFP) No. DAMT01-97-R-3001, issued by the
Military Traffic Management Command (MTMC), Department of the Army,
for all personnel, equipment, materials, supervision, and other items
necessary to provide transportation and transportation-related
services for 50 percent of the eligible Department of Defense (DOD)
and U.S. Coast Guard sponsored personal property shipments from North
Carolina, South Carolina, and Florida, to any or all of 13 destination
regions in the continental United States (CONUS) and/or any or all of
5 destination regions in Europe.[1] The solicitation implements a
pilot program to reengineer DOD's personal property shipping and
storage program. In these protests, the protesters primarily contend
that the RFP does not properly specify contract minimum and maximum
quantities of services to be ordered, that the RFP's price evaluation
scheme is defective, and that the Service Contract Act of 1965 (SCA),
41 U.S.C. sec. 351-358 (1994), was improperly applied to this RFP.[2]
The protests are denied.
BACKGROUND
This procurement was the subject of prior decisions in Aalco
Forwarding, Inc.,
et al., B-277241.8, B-277241.9, Oct. 21, 1997, 97-2 CPD para. 110, which
denied various protests primarily against the acquisition of these
services under the Federal Acquisition Regulation (FAR) part 12
commercial item procedures, and in Aalco Forwarding, Inc.,et al.,
B-277241.12, B-277241.13, Dec. 29, 1997, 97-2 CPD
para. 175, which denied protests that the RFP unnecessarily bundled
certain contract requirements to the detriment of small business
concerns.
As previously noted, the RFP was issued pursuant to the commercial
item procedures of FAR part 12, and implements a pilot program for 50
percent of the eligible outgoing personal property shipments from the
three origin states in the test area.[3] The RFP contemplates the
award of firm, fixed-price, indefinite delivery/indefinite quantity
(IDIQ) contracts for a period of performance of a base year with 2
option years. RFP at 2.
The RFP provides that the government will award contracts to the
responsible offerors whose offers represent the best overall value,
and allows the government to award a single task order contract or to
award multiple task order contracts for the same or similar services
to two or more sources; MTMC anticipates making multiple awards. RFP
at 37-38. The non-price evaluation factors listed in descending order
of importance are past performance/experience and subcontracting plan
(which is not applicable to small business offerors); these factors,
when combined, are significantly more important than price. RFP at
38. The RFP provides for separate methodologies for evaluating price
reasonableness for domestic channels and for international channels.
To evaluate price reasonableness for international channels, a
"notional shipment" encompassing all the possible services will be
used. RFP at 39.
For all domestic shipments, pricing is requested from origin to
destination for the base year and each option year for a basic
transportation contract line item number (CLIN) and a
storage-in-transit (SIT) and SIT-related services CLIN. RFP section
B. The pricing is to be based upon the Professional Movers Nationwide
Household Goods Commercial Relocation Tariff, STB HGB 400-L in effect
as of May 5, 1996, and the MTMC Domestic Personal Property Rate
Solicitation Exception Appendix to the tariff dated January 16,
1997.[4] RFP attachment 7. For international shipments (including
household goods and unaccompanied baggage), single factor rates per
net hundredweight are solicited for transportation from origin to
destination for the base year and each option year for surface
shipments and for air shipments; unit prices are also requested for
various specified accessorial services CLINs, such as special crating,
stopoffs, extra labor, vehicle waiting time, reweigh, and SIT, which
are not included in the transportation single factor rates. RFP
section B and attachment 7.
The RFP requires offerors to list in their proposals the daily
capacity (in pounds) that they are committing to this contract for the
base year and each option year per traffic lane (shipments from an
origin shipping office to a destination region) for each traffic
channel (shipments from an origin state to a destination region) for
which offers are submitted.[5] RFP attachment 3 and Performance Work
Statement (PWS) at 19. Each offeror's committed daily capacity will
be used by the agency in determining the number of contracts to be
awarded for each traffic channel, RFP at 37, and to obligate the
contractors to provide requested services up to their committed daily
capacities, PWS at 19. Although a minimum committed daily capacity is
not specified, the RFP states that committed daily capacities must be
reasonable, based on the historical tonnage projections. Id. The
RFP, as amended, also provides historical monthly/yearly tonnage data
and numbers of shipments for each traffic lane for fiscal years 1994,
1995, and 1996. RFP attachment 4.
As amended, the RFP recognizes that the SCA is applicable to this
procurement by incorporating the standard clause, FAR sec. 52.222-41, and
including wage determinations specifying the minimum wages to be paid
for certain covered labor categories.[6] RFP at 31 and attachment 8.
Once the contracts are awarded, personal property shipments will be
ordered by the government through task orders; the orders will be
placed on a rotational basis until the contract minimum ($25,000) for
each awardee is reached, and then issued based upon the contractor's
proven value to the government. RFP at 29 and PWS
at 19.
ANALYSIS
Contract Minimums and Maximums
The protesters argue that the RFP is defective because it contains a
minimum dollar amount of orders that is only nominal as to each
contractor and because the stated maximum quantities are not
realistic.
An IDIQ contract may be used when the government cannot predetermine,
above a specified minimum, the precise quantities of supplies or
services that will be required during the contract period, and where
it is inadvisable for the government to commit itself for more than a
minimum quantity. FAR sec. 16.504(b). An IDIQ contract shall require
the government to order and the contractor to furnish at least a
stated minimum quantity of supplies or services and, if and as
ordered, the contractor to furnish any additional quantities, not to
exceed a stated maximum. FAR sec. 16.504(a)(1). To ensure the contract
is binding, the minimum quantity must be more than a nominal quantity
but should not exceed the amount the government is fairly certain to
order. FAR sec. 16.504(a)(2). Estimated maximum quantities should be
realistic and based on the most current information available. FAR sec.
16.504(a)(1). These estimates need not be precise; rather, such
estimates are unobjectionable so long as they were established in good
faith or based on the best information available, and accurately
represent the agency's anticipated needs. Sea-Land Serv., Inc.,
B-278404.2, Feb. 9, 1998, 98-1 CPD para. at 11.
The RFP sets forth contract minimums of $25,000 per contract awarded
for the base
period and each exercised option period.[7] RFP at 2. The $25,000
contract minimum amount remains the same independent of the number of
channels awarded per contract. Id. According to the contracting
officer, the $25,000 minimum quantity "is based upon approximately up
to about seven shipments per contract award."[8] The protesters
contend that a contract minimum of $25,000 for each contractor is only
nominal and provides inadequate consideration to make the contracts
binding.
An IDIQ contract is binding so long as the buyer agrees to purchase
from the seller at least a guaranteed minimum quantity of goods and
services; the stated minimum quantity forms the consideration for the
contract. See Sunbelt Properties, Inc., B-249307, Oct. 30, 1992, 92-2
CPD para. 309 at 3; see Willard, Sutherland & Co. v. U.S., 262 U.S. 489,
493 (1923). Since the prohibition in FAR sec. 16.504(a)(2) against a
"nominal" minimum quantity is designed to ensure that the intent to
form a binding contract is present, the determination whether a stated
minimum quantity is "nominal" must consider the nature of the
acquisition as a whole. Sea-Land Serv., Inc., supra, at 12.
The solicitation here allows for multiple awards to transport personal
property shipments on the same channels and provides for a best value
basis for selecting among the contractors once the $25,000 minimums
are satisfied. Thus, for each channel, MTMC may have multiple choices
of contractors in shipping a service member's or civilian employee's
household effects. Since it is not possible to know, after the
minimums are satisfied, whether a given contractor will be used under
the best value ordering scheme until individual orders arise, it is
uncertain whether an individual contractor will carry more shipments
than $25,000 worth per year during the life of the contract.
Moreover, an offeror may be awarded only one of the low volume
channels with a handful of shipments per year. As the minimum
quantity on any one contract may not exceed the amount the government
is fairly certain to order, FAR sec. 16.504(a)(2), we think the $25,000
contract minimum is an amount that would not mislead contractors or
subject the government to undue risk under the best value award scheme
for the task orders.
While the contract minimum of $25,000 may be relatively low for higher
volume channels or where a contractor receives award and commits
capacity for multiple channels with significant volumes, the
establishment of long-term commitments with relatively few prime
contractors, who will potentially be provided greater shipping volumes
than under the current program in order to achieve the needed
economies of scale, underscores the government's intent to form
binding contracts. The fact that the RFP does not provide a minimum
quantity proportionate to contractor's committed daily capacity for
each awarded channel or is not otherwise linked to the estimated
traffic volume for each channel does not detract from the
enforceability of the contracts to be awarded, given the uncertainty
associated with the number of orders to be placed with each
contractor.[9] See Sunbelt Properties, Inc., supra. Considering all
of the circumstances, we cannot conclude that the stated minimum
quantity per contractor here represents insufficient consideration to
form a binding contract. Id.; Sea-Land Serv., Inc., supra, at 12.
With respect to the maximum quantities, MTMC has reiterated in its
response to the protest that the maximum dollar amount for the entire
pilot test program is $75 million for the base period and for each
exercised option period. RFP at 2. Attachment 6 to the RFP specifies
the maximum dollar amount per channel (origin state to destination
region) based on historical data. In this regard, the solicitation
complies with FAR sec. 16.504(a)(4)(ii) by specifying the total maximum
dollar value of services to be acquired under each contract as the
channel maximums. A contractor receiving a contract award of one
channel will be awarded the channel maximum amount for the contract
maximum and all contractors receiving a contract award for the same
channel will receive the same channel maximum. RFP at 2. If a
contractor is awarded a contract containing numerous channels, the
channel maximums will be added to make an aggregate total contract
maximum.[10] Id.
The agency explains that the contract maximums are simply ordering
limitations per
channel, not estimates of the amount of dollars successful offerors
will be awarded under the resulting contracts. According to MTMC, the
varying nature and unpredictability of the government's requirements
necessitate the use of the stated maximum quantities, which were
derived by multiplying the average cost per shipment by the estimated
average annual number of shipments for the pilot program based on
historical data from fiscal years 1994 and 1995. The resulting amount
was increased by a factor of 50 percent to meet unforeseen
contingencies and to ensure the maximum was high enough to cover
potential increases in requirements.[11] This $75 million contract
maximum was then apportioned to each channel based upon the ratio of
the tonnage in a channel to the total tonnage for the pilot program
based on the historical data.
Some of the protesters contend that the maximums are overstated based
on more recent historical shipment data for fiscal year 1996. Other
protesters apparently argue that the maximums may be understated,
given the requirements of this RFP that are intended to provide for
higher quality service and additional services, and the cost
experience under a pilot program for similar services at Hunter Army
Airfield. However, none of the protesters have shown that the
maximums for these channels are unrealistic in reflecting MTMC's
anticipated needs considering the varying historical data in its
totality, i.e., fiscal years 1994, 1995, and 1996, and the possibility
of large troop deployments from the origin states.[12] In this
regard, an agency can factor in amounts for anticipated surges in the
requirements in establishing maximums. Sea-Land Serv., Inc., supra,
at 13.
Moreover, we note that offerors will not have to unnecessarily commit
resources to service a misleadingly large order limitation because
they are not obligated to accept any shipments beyond their committed
daily capacities, which are based on the resources they wish to commit
to the contract and will be evaluated by the agency based on the
historical tonnage data furnished with the RFP. While the protesters
may disagree with the methodology employed by the agency in
establishing the maximums, we have no basis to conclude that the
contract maximum amounts here were not established in good faith or
based on the best information available, or that they do not
accurately represent the agency's anticipated needs, given the varying
nature and unpredictability of the government's requirements under the
pilot program, as evidenced by the historical data supplied with the
RFP itself. Id.
Price Evaluation for International Channels
Some of the protesters contend that the RFP's price evaluation for the
international channels is an unreasonable hypothetical basis for price
evaluation. The solicitation's price evaluation scheme provides as
follows:
(2) International channels.
A notional international shipment will be used to perform price
analysis for international CLINs. The notional shipment will
consist of a 4000 pound surface shipment and a 500 pound air
shipment. Each shipment will have a 10 cubic feet special
crating requirement, one domestic and international stopoff, [4]
hours of domestic and international regular labor, [4] hours of
domestic and international overtime labor, [4] hours of domestic
and international vehicle waiting time, one reweigh, 90 days
domestic and international SIT, and one excessive distance carry
charge based on 200 pounds for domestic and international
mini-storage. MTMC will select one of the three CLINs for pickup
and delivery out of SIT transportation charge for the price
evaluation. . . . A factor of 65 [percent] will be applied to
the surface shipment and a factor of 35 [percent] will be applied
to the air shipment. The resulting prices will be added together
to determine a cumulative total price, by channel. These prices
for the base period and the two option periods will be reviewed
separately and together for price reasonableness.
RFP at 39. The contracting officer states that the notional shipment
is necessary because MTMC does not have historical data regarding
accessorial services for international shipments, such as special
crating, stopoffs, extra labor, vehicle waiting time, and reweighs,
and consequently could not provide a proposed estimated quantity for
each accessorial service in the price schedule for such shipments.[13]
The contracting officer explains that a notional shipment that
includes all possible accessorial services provides a common baseline
for evaluation for all offers submitted for these channels, and that
without the notional shipment the agency would not be able to
determine which offeror submitted the lowest price.
The protesters argue that the notional shipment is an unreasonable
basis for price evaluation of the proposed CLIN pricing, in lieu of
specifying estimated quantities, because the notional shipment
includes accessorial services for the 500-pound air shipment (which
they claim would typically be an unaccompanied baggage shipment) that
are rarely, if ever, performed, and because the notional shipment does
not allow for consideration of the variances in the need for
particular accessorial services on each shipment. The protesters also
argue that the 65/35 percent weighting factor to be applied to the
notional surface and air shipments dramatically varies from relative
total revenues of surface and air shipments in the current program.
Agencies must consider cost to the government in evaluating
competitive proposals. 10 U.S.C. sec. 2305(a)(3)(A)(ii) (1994); Health
Servs. Int'l, Inc.; Apex Envtl., Inc., B-247433, B-247433.2, June 5,
1992, 92-1 CPD para. 493 at 3-4. While it is up to the agency to decide
upon some appropriate, reasonable method for proposal evaluation, an
agency may not use an evaluation method that produces a misleading
result. Id. at 4. Such method must include some reasonable basis for
evaluating or comparing the relative costs of proposals, so as to
establish whether one offeror's proposal would be more or less costly
than another's. See Health Servs. Int'l, Inc.; Apex Envtl., Inc.,
supra; Penn, Ferrara, Adler & Eichel, 66 Comp. Gen. 242, 245 (1987),
87-1 CPD para. 134 at 3-4. Where estimates for various types of required
services are not reasonably available, an agency may establish a
reasonable hypothetical, consistent with the RFP requirements, to
provide a common basis for comparing the relative costs of the
proposals. See High-Point Schaer, 70 Comp. Gen. 524, 528-30 (1991),
91-1 CPD para. 509 at 6-8.
As noted, the agency lacks historical data to project estimates for
the accessorial CLINs for the international shipments, but needs a
price evaluation scheme that accounts for the prospective ordering of
all possible accessorial services and that provides a common basis for
proposal comparison and determining the relative cost to the
government. The protesters know from their participation and
experience in the current program that each international shipment
will necessarily be different due to the many variables inherent in
each move.[14] It thus appears that no single realistic shipment
would be sufficiently representative to present a reasonable basis for
cost comparison, particularly given the agency's desire to evaluate
all possible accessorial services.[15] We note that the protesters
have suggested no viable alternative to the agency's approach. Under
the circumstances, we find no basis to object to the use of the
notional shipment, including all possible services, to evaluate the
relative costs of the proposals, even though the notional air and
surface shipments may not be exactly replicated in reality. See id.
The protesters' specific objections to the notional shipment
evaluation scheme also provide no basis for us to object to the RFP.
The protesters assert that certain of the accessorial services
specified in the notional air shipment are rarely, if ever, performed
on unaccompanied baggage shipments. According to the contracting
officer, while this is likely, it will not always be the case under
this RFP because the accessorial services listed in the price schedule
and evaluated in the notional shipment are applicable for all
shipments. In this regard, the RFP requires contractors to service
both household goods and unaccompanied baggage shipments, PWS at 3,
and seeks prices (single factor rates) per hundredweight for surface
or air transportation subject to a 500-pound minimum, with no
distinction being made between household goods and unaccompanied
baggage. RFP section B and attachment 7. In other words, not all air
shipments are unaccompanied baggage shipments, and the premise of the
protester's argument is not consistent with the RFP. Further, the
accessorial services, which are separately priced in the solicitation,
and used for the notional shipments, apply to both household goods and
unaccompanied baggage shipments. RFP attachment 7. Given the
agency's requirement to evaluate all possible accessorial services,
the failure of the protesters to show how this methodology will
necessarily produce a materially misleading result, and the fact that
all proposals will be evaluated on a common basis, the protesters'
assertions regarding the relative rarity of certain accessorial
services on unaccompanied baggage shipments provide no basis to object
to the RFP's notional shipment evaluation scheme. See High-Point
Schaer, supra.
The protesters also argue that the particular notional shipment
formula substantially misstates the cost to the government by failing
to reflect that, historically, the percentages of total revenue
generated from surface shipments is greater than the 65 percent factor
to be applied to the notional 4000-pound surface shipment and the
percentage of total revenue generated from air shipments is less than
the 35-percent factor to be applied to the notional 500-pound air
shipment. However, the factors to be applied to the notional shipment
reasonably reflect what the agency anticipates will be the allocation
of surface and air shipments during the pilot program, rather than a
replication of the total costs to the government of these two types of
shipments under the current program. Given the substantial
differences in the requirements of the current program compared to the
pilot program, the current program's allocation of revenues to surface
and air shipments may well be inapposite to the relative weights
assigned to the surface and air shipments factors in the notional
shipment price evaluation scheme for the pilot program. Since,
according to the agency, the number of shipments is a more dependable
factor than revenue or tonnage, and since orders will actually be
placed on a per shipment basis, the number of shipments seems an
appropriate basis on which to weight the relative proportions of
surface and air shipments in the notional shipment price evaluation
scheme.
Service Contract Act
As currently amended, the RFP implements the SCA and contains wage
determinations issued by the Department of Labor (DOL) for the origin
states of North Carolina, South Carolina, and Florida, establishing
the minimum wages and fringe benefits to be paid to the following
occupations identified by MTMC as classes of service employees
expected to be employed under the contracts: warehouseman, material
handling laborer, forklift operator, shipping packer, and several
classes of truck driver.
The SCA requires federal contractors to pay minimum wages and fringe
benefits as determined by the Secretary of Labor to employees under
service contracts exceeding $2,500. When the Act applies to a
particular contract, that contract must contain certain provisions
specifying the level of wages to be paid, 41 U.S.C. sec. 351(a)(1), and
the minimum level of fringe benefits to be provided, 41 U.S.C. sec.
351(a)(2).
Some of the protesters contest the applicability of the SCA to this
procurement.[16] The basis of the protesters' contention that the SCA
is inapplicable is the statutory exemption for "any contract for the
carriage of freight or personnel by vessel, airplane, bus, truck,
express, railway line or oil or gas pipeline where published tariff
rates are in effect." 41 U.S.C. sec. 356(3). According to the
protesters, the domestic portion of the pilot program will involve the
carriage of freight (household goods in this case) by truck by common
carriers, and since the contracts to be awarded will be subject to
effective published tariffs which will govern the carriage of the
personal property shipments, the statutory exemption to the SCA
applies to the domestic motor carrier service to be provided under the
pilot program.
DOL, not our Office, has the primary responsibility for interpreting
and administering the SCA, and a contracting agency may follow the
DOL's views on the applicability of the SCA unless they are clearly
contrary to law. Delta Oaktree Productions, B-248903, Oct. 7, 1992,
92-2 CPD para. 230 at 2; Associated Naval Architects, Inc., B-221203, Dec.
12, 1985, 85-2 CPD para. 652 at 1-2. DOL is accorded deference in the
interpretation both of the SCA as a statute that has been committed to
DOL for implementation and enforcement and of the regulations it has
issued in implementing the SCA. Relief Servs., Inc.; Radiological
Physics Assocs., Inc., B-252835.3, B-252835.4, Aug. 24, 1993, 93-2 CPD para.
116 at 4 n.1.
DOL has determined that the SCA applies to this RFP, as evidenced by
its issuance of the wage determinations included in the RFP, the notes
of the meeting between DOL and the Army regarding the applicability of
the SCA, and DOL's concurrence with the Army's position in response to
the protests that the above-cited statutory exemption to the SCA is
inapplicable on the grounds that published tariff rates do not govern
the contracts to be let under the solicitation for the pilot program.
The applicable DOL regulation interpreting the exemption, 29 C.F.R. sec.
4.118 (1997), states in pertinent part that:
a contract for transportation service does not come within [the
statutory] exemption unless the service contracted for is
actually governed by published tariff rates in effect pursuant to
State or Federal law for such carriage. The contracts excluded
from the reach of the [SCA] by this exemption are typically those
where there is on file with the Interstate Commerce Commission
[ICC] or an appropriate State or local regulatory body a tariff
rate applicable to the transportation involved and the
transportation contract between the Government and the carrier is
evidenced by a Government bill of lading citing the published
tariff rate.[17]
While the solicitation requests that prices for the domestic portion
of the pilot program be quoted as a percentage of a specified
commercial tariff, the tariff does not itself govern the rates to be
charged the government, but merely serves as a baseline for pricing of
the contracts to be awarded, and the rates submitted by offerors can
be higher or lower than the specified tariff. In this regard, the
version of the commercial tariff referenced in the solicitation is not
the current version used for commercial purposes and the rates are, in
effect, frozen for the duration of the contracts, notwithstanding any
later versions of the tariff applicable to other shippers. Although,
as the protesters note, individual carrier tenders under the current
system may also be stated as a percentage of a tariff, the current
system is exempt from application of the SCA under a separate
administrative exemption,
4 C.F.R. sec. 4.123(d)(3), and the reduced rates of the current system
are specifically authorized by statute, 49 U.S.C. sec. 13712 (Supp. I
1996) (formerly 49 U.S.C. sec. 10721(b)(1) (1994)).[18]
Thus, we cannot find DOL's position that the statutory exception to
the SCA applies only when tariff rates are applicable without
exception to be clearly contrary to law, and will not further consider
the matter. If the protesters wish to challenge the applicability of
the SCA to the present solicitation, their proper course of action is
to bring the matter before the DOL's Wage and Hour Division
Administrator for an official ruling. 29 C.F.R. sec. 4.101(g); Ober
United Travel Agency, Inc., B-252363, May 7, 1993, 93-1 CPD para. 375 at
3.
The protesters next contend that if the SCA does apply to this
procurement, the statewide wage determinations issued for the three
origin states do not encompass the localities in the CONUS destination
regions where delivery services (such as unloading and unpacking) will
be performed, and thus the wage determinations included with the RFP
are incomplete.
Since the primary responsibility for interpreting and administering
the SCA is vested in DOL, that agency's determination as to the manner
in which the SCA will be applied is not objectionable unless so
unreasonable as to be clearly contrary to law. Midwest Serv. and
Supply Co. and Midwest Engine Inc., B-191554, July 13, 1978, 78-2 CPD para.
34 at 5.
Here, the record shows that the "locality" on which to base the wage
determinations was the subject of discussions between the Army and
DOL. The Army informed DOL that the contracts would be awarded on a
channel basis from each origin state to destination region, explaining
that a contractor would have to pick up shipments from any point
within the origin states, possibly pick up additional shipments en
route, possibly make partial deliveries en route, and provide delivery
at destination, thus presenting the potential for a "bewildering"
number of prevailing wage rate determinations for numerous areas of
performance. In response, DOL recommended the use of statewide wage
determinations for the origin states, which would apply to the
services to be provided for any movements originating in each state
regardless of where the services are in fact provided. MTMC was
informed by DOL officials that contracts let by the United States
Postal Service for the transportation of mail from and to multiple
mail distribution centers follow a similar procedure, which avoids the
assertedly incongruous result of requiring a different wage rate each
time a carrier's covered employees cross into different localities.
Based on DOL's advice, the contracting officer requested and obtained
prevailing wage rate determinations for the three origin states. We
cannot conclude here that the use of statewide wage rate
determinations from the origin states for traffic channels emanating
from those states is so unreasonable as to be clearly contrary to law,
given the "elastic and variable meaning" of the term "locality" as
used by DOL, 29 C.F.R. sec. 4.54(a), and DOL's responsibility for
interpreting and administering the SCA. See Midwest Serv. and Supply
Co. and Midwest Engine Inc., supra, at 5-7; The Cage Co. of Abilene,
Inc., 57 Comp. Gen. 549, 553-554 (1978), 78-1 CPD para. 430 at 7-9.
The protesters finally contend that wage determinations have not been
obtained for each class of service employee who will be performing the
services under the contracts, such as for transportation arrangers
(including freight forwarders), the contract and operations managers
required by the RFP, and the other workers who will perform such
required services as movement counseling; claims processing; quality
control monitoring; answering telephone inquiries; and secretarial,
clerical, and data processing activities.
MTMC explains that the categories of workers included in the wage
determinations were derived based on its experience with other
FAR-based procurements for moving and storage services as well as on
DOL suggestions in this regard. As noted by MTMC, offerors may
utilize different types of employees to accomplish the contract
requirements, and there are established procedures for adding other
occupations to a wage determination known as the "conformance
process," which is detailed in the wage determinations attached to the
RFP and in FAR clause
sec. 52.222-41(c)(2) incorporated in the RFP.[19] See FAR sec. 22.1019.
Since these procedures and the DOL regulations, 29 C.F.R. 4.6(b)(2),
provide an orderly method by which such omitted employees can be
appropriately classified and afforded SCA protection, we do not
conclude that the solicitation is defective in this respect. See
Midwest Serv. and Supply Co. and Midwest Engine Inc., supra, at 8.
The protests are denied.
Comptroller General
of the United States
1. The firms protesting this solicitation are: Aalco Forwarding,
Inc.; AAAA Forwarding, Inc.; Air Van Lines International, Inc.;
Allstates Worldwide Movers; Aloha Worldwide Forwarders, Inc.; Alumni
International, Inc.; American Heritage International Forwarding, Inc.;
American Mopac International, Inc.; American Shipping, Inc.; American
Vanpac Carriers; American World Forwarders, Inc.; Apollo Forwarders,
Inc.; Arnold International Movers, Inc.; Astron Forwarding Company;
BINL Incorporated; Burnham Service Company, Inc.; Cavalier Forwarding,
Inc.; Classic Forwarding, Inc.; Davidson Forwarding Company; Deseret
Forwarding International, Inc.; Foremost Forwarders, Inc.; Gateways
International, Inc.; Global Worldwide, Inc.; Great American
Forwarders, Inc.; Hi-Line Forwarders, Inc.; International Services,
Inc.; Island Forwarding, Inc.; Jet Forwarding, Inc.; Katy Van Lines,
Inc.; Lincoln Moving & Storage; Miller Forwarding, Inc.; Northwest
Consolidators; North American Van Lines; Ocean Air International,
Inc.; Senate Forwarding, Inc.; Shoreline International, Inc.; Stevens
Forwarders, Inc.; Von Der Ahe International, Inc.; Wold International,
Inc.; Zenith Forwarders, Inc.;
A Advantage Forwarders, Inc.; Sentinel International Forwarding, Inc.;
T.R.A.C.E. International, Inc.; Acorn International Forwarding
Company; AAA Systems, Inc.; A.C.E. International Forwarders; American
Red Ball International, Inc.; Apex Forwarding Company, Inc.; Armstrong
International, Inc.; Arpin International Inc.; Art International
Forwarding, Inc.; Atlas Van Lines International Corporation; Coast
Transfer Company, Inc.; Crystal Forwarding, Inc.; CTC Forwarding
Company, Inc.; Diamond Forwarding, Inc.; Dyer International, Inc.;
Harbour Forwarding Company, Inc.; HC&D Forwarders International, Inc.;
Jag International, Inc.; The Kenderes Group, Inc.; Pearl Forwarding,
Inc.; Rainier Overseas, Inc.; Rivers Forwarding, Inc.; Ryans's World;
Sequoia Forwarding Company, Inc.; A-1 Relocation, Inc. d/b/a A-1
Movers of America; A-1 Moving & Storage, Inc.; Able Forwarders, Inc.;
A Columbia Forwarders; Aero Mayflower Transit, Inc.; Lile
International Companies d/b/a American Movers; American Red Ball
Transit Co.; American Van Services, Inc.; Andrews Van Lines, Inc.;
Apollo Express Van, Inc.; A. Arnold & Son Transfer & Storage Company,
Inc.; Paul Arpin Van Lines, Inc.; Art and Paul Moving & Storage;
Associated Forwarding, Inc.; Associated Storage and Van, Inc.; Atlas
Van Lines, Inc.; Bekins Van Lines Co.; Burnham World Forwarders;
Carrier Transport International, Inc.; Carlyle Van Lines, Inc.;
Coastal Moving Company; Conrad Group, Inc.; Davidson Transfer &
Storage Co., Inc.; Denoyer Bros. Moving & Storage Co.; Door To Door
Moving & Storage; Exhibit Transport, Inc.; Ferriss Warehouse &
Storage; Fogarty Van Lines, Inc.; Global Van Lines, Inc.; Horne
Storage Co., Inc.; Lift Forwarders, Inc.; Lynn Moving and Storage,
Inc.; A.D. McMullen, Inc.; Mid-State Moving & Storage Inc.; Movers
Unlimited, Inc.; Nilson Van & Storage; North American Van Lines, Inc.;
Northwest Consolidators, Inc.; Ogden Transfer & Storage Co.; OK
Transfer & Storage, Inc.; Pan American Van Lines, Inc.; Riverbend
Moving & Storage, Inc.; Royal Forwarding, Inc.; Sells Service, Inc.;
South Hills Movers, Inc.; Stanley's Transfer Co., Inc.; Starck Van
Lines, Inc.; StarTrans International, Inc.; Stearns Forwarders, Inc.;
Stearns Moving & Storage of Kokomo, Inc.; Stevens Van Lines, Inc.;
Terminal Storage Company, Inc.; United Van Lines, Inc.; Von Der Ahe
Van Lines, Inc.; Wainwright Transfer Co. of Fayetteville, Inc.; and
Weathers Bros. Transfer.
2. The small business protesters have also protested the agency's
small business set-aside determinations, which are the subject of
another decision of today.
3. Some protesters maintain that it remains unclear how the agency
intends to allot 50 percent of the eligible shipments to the pilot
program. As we have previously indicated, the agency has stated that
orders under the existing program and under the pilot program will be
randomly allocated on a per shipment basis. See Aalco Forwarding,
Inc., et al., B-277241.8, B-277241.9, supra, at 7 n.6. In any event,
we agree with the Army that the solicitation does not have to identify
the agency's internal procedures for managing the allotment of
shipments and we have no reason to question the contracting officer's
statement that the shipping offices will identify the eligible
shipments and assign them equitably between the current program and
the pilot program.
4. Certain tariff provisions are specifically excluded from
application under this solicitation. For example, the tariff's peak
season (summer) transportation rates are inapplicable.
5. There are 53 traffic channels (38 domestic and 15 international)
under the pilot program from the three origin states. Some of the
traffic channels are partially set aside for small business.
6. Contrary to the assertions of some of the protesters, the
solicitation contains provision for price adjustment, FAR sec. 52.222-43,
in the event of adjusted wage determinations during the contract term.
RFP at 32. Because the RFP is issued under the commercial item
procedures of FAR part 12, the SCA is inapplicable to subcontractors.
FAR sec. 12.504(a)(10).
7. Contrary to some protesters' assertions, there is no ambiguity as
to the minimum.
8. The $25,000 contract minimum is based on an average shipment cost,
although the number of shipments actually equating to the $25,000
contract minimum will vary depending on the prices proposed for each
channel, the weight of each shipment, whether any accessorial services
and storage are ordered, and whether the shipments are domestic or
international.
9. Some protesters now contend that instead of $25,000 as the uniform
minimum for each contract, the contract minimums should take into
account the substantial and significant variances in the awarded
contracts, and the obligations assumed by the awardees with regard to
domestic and international services, traffic volume per channel,
number of channels awarded per contract, and contractors' committed
daily capacity per contract. However, we note that the $25,000
contract minimum was established by MTMC in response to earlier
protests by many of these same protesters against the RFP's previous
contract minimums of an aggregate minimum guarantee (approximately 10
percent of the total projected annual pilot program cost) broken down
by each traffic channel, and then designated in the aggregate for each
contractor in proportion to the capacity each contractor committed to
the channels for which it received award. In the earlier protests,
the protesters stated that "[t]he need for identical, fixed minimums
and maximums . . . is obvious" and requested that the solicitation
instead state the minimum to be guaranteed each contractor. In
response, MTMC agreed that the RFP did not clearly state the minimum
guaranteed quantity and amended the solicitation accordingly to
provide a contract minimum of $25,000 per contractor, and the
protesters have given us no convincing reason to find that this is
insufficient consideration.
10. Contrary to some protesters' assertions, we find no ambiguity with
regard to the stated maximums.
11. The agency also states that the added percentage accounts for the
possibility that contractors providing exceptional service might be
offered additional shipments above and beyond their committed daily
capacities.
12. Some protesters contend that the RFP fails to provide a reasonable
estimate of MTMC's requirements for the pilot program because the
historical data supplied with the RFP may not reflect MTMC's projected
requirements, especially as the most recent fiscal year 1996 data
evidences a significant decline in shipments on some of the
international channels. We have previously found reasonable the
agency's position that the historical information is the best
available to the government. Aalco Forwarding, Inc., et al.,
B-277241.8, B-277241.9, supra, at 8 n.9. The protesters have not
persuaded us that the inclusion of the recent historical data for
fiscal year 1996 warrants a different conclusion, or that MTMC need
provide further assurances that no further adjustments to the data are
needed. Additionally, MTMC states that any current information on
base closings or force reductions potentially affecting the number of
shipments will be furnished to interested parties whenever it becomes
available (the agency states it does not yet have such information).
13. According to the contracting officer, had such data been
available, it would have been provided as estimates in the RFP, and an
extended or total price for each service could then have easily been
obtained by multiplying each offeror's proposed unit price by the
estimated quantity for each accessorial service.
14. The protesters contend that since, in calculating the average cost
per shipment for the contract maximums, the agency included a
percentage for accessorial services, the agency must have information
that can be used for estimates of accessorial services. However,
there is no indication that the agency has information that would
allow it to provide quantity estimates for each type of accessorial
service for which the RFP requests prices, and the protesters have not
shown that reasonable estimates are otherwise available.
15. The contracting officer also states that by including all
accessorial services that may be ordered in the notional shipment, she
will be able to take into consideration unbalanced offers which might
not otherwise be evaluated.
16. MTMC had initially determined that the SCA did not apply to this
RFP. In earlier protests, other protesters alleged that the RFP
should have incorporated the SCA and applicable DOL wage
determinations. After meeting with DOL officials concerning this
matter, the contracting officer concluded that the procurement was
indeed subject to the SCA, requested wage determinations from DOL, and
proceeded to amend the solicitation to incorporate the relevant SCA
clauses and wage determinations.
17. Although tariffs are no longer filed with the ICC following the
enactment of the ICC Termination Act of 1995, Pub. L. No. 104-88,
carriers are still required to publish their tariff rates. 49 U.S.C. sec.
13702 (Supp. I 1996).
18. These statutes also exempt government traffic moving at the
reduced rates from application of 41 U.S.C. sec. 5 (1994), which requires
advertisement for proposals and contracts for supplies or services for
the government. In contrast to the current program, the pilot program
is being advertised and conducted under FAR procedures, and offers can
be based on percentage increases, not just reductions, to the
specified tariff.
19. Under these procedures, the contractor initiates the "conformance
process" on a Standard Form 1444, Request for Authorization of
Additional Classification and Rate, which is submitted to the
contracting officer for review. The contracting officer then submits
the form with recommendation to the DOL Wage and Hour Division for
appropriate action. Here, the contracting officer notes that no
prospective offerors have contacted her at any time to inquire or
complain about occupations which were not listed in the RFP's wage
determinations.