Sea-Land Service, Inc.

B-266238 Feb 08, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights A solicitation will not result in the award of an enforceable requirements contract where a solicitation provision disclaims the government's obligation to order its requirements from the contractor and therefore renders illusory the consideration necessary to enforce the contract. Agency's proposed amendment to that solicitation provision is ambiguous and does not clearly revive the government's obligation to order its requirements from the contractor. Sea-Land protests that the RFP will not result in the awards of enforceable requirements contracts. The Interport RFP was issued on October 21. Carriers were required to commit 50 percent of their U.S. flagship capacity. Although multiple awards for each route were possible if the service of more than one carrier was deemed necessary. View Decision Matter of: Sea-Land Service, Inc. File: B-266238 Date: February 8, 1996 A solicitation will not result in the award of an enforceable requirements contract where a solicitation provision disclaims the government's obligation to order its requirements from the contractor and therefore renders illusory the consideration necessary to enforce the contract; agency's proposed amendment to that solicitation provision is ambiguous and does not clearly revive the government's obligation to order its requirements from the contractor. Attorneys DECISION Sea-Land Service, Inc. protests the terms of request for proposals (RFP) No. N62387-95-R-8058 ("the Interport RFP"), issued by the Military Sealift Command (MSC), for ocean and intermodal transportation of Department of Defense (DOD) cargo on specified trade routes. Sea-Land protests that the RFP will not result in the awards of enforceable requirements contracts, as solicited. We sustain the protest. The Interport RFP was issued on October 21, 1994, to obtain rates and services for ocean and intermodal transportation of breakbulk and containerized cargo over eight trade routes from October 1, 1995 to May 31, 1996. [1] Carriers could submit proposals for any trade route on which they maintained regular commercial sailings, using either all-United States (U.S.) flagship service, all-foreign flagship service, or combination service (U.S. and foreign flagship service). The RFP incorporated the Cargo Preference Act of 1904, 10 U.S.C. Sec. 2631 (1994), and accorded a preference to U.S. flagship service over foreign flagship service. Furthermore, to be eligible for award, carriers were required to commit 50 percent of their U.S. flagship capacity, if any, to the DOD Sealift Readiness Program for use in a military or national defense emergency. The RFP, as issued, stated that "[t]he government contemplates award of a Firm-Fixed Rate, Indefinite Delivery, Indefinite Quantity contract." The RFP did not impose any minimum transit time, sailing frequency, or cargo accommodation requirement that a carrier must meet to be eligible for award. Rather, the RFP provided that the government would tender cargo for transport on the carrier's regularly scheduled commercial sailings. The carrier offering the lowest rate for a given route would receive award, although multiple awards for each route were possible if the service of more than one carrier was deemed necessary. The successful carriers' names and their accepted rates would be published in the Interport Container Agreement and Rate Guide. The Agreement, which was included in the RFP, describes the services to be performed, the promises of the parties, and the methods by which the government will fill individual cargo requirements. The promises of the carrier appear in section C-4 of the Agreement, "Carrier Requirements." Under that section, the carrier agrees to transport such cargo as the government might tender based upon the carrier's accepted Interport rates or, if applicable, its lower common carrier rates. Section C-4 does not obligate the carrier to promise the government a minimum amount of space in its vessels, but, if the carrier has adequate space to transport the cargo, the carrier "shall not refuse or discriminate in the matter of cargo space accommodations." This is in accord with The Shipping Act of 1984, 46 U.S.C. App. Secs. 1701, 1709(b)(6) (1988).