Sea-Land Service, Inc.

B-270504 Mar 15, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Is ambiguous is denied where the clause at issue merely establishes a price ceiling for such services. Shifts some of the responsibility for assuring that this ceiling is not breached to the potential offeror. Who is in the best position to be aware of its own commercially available tariffs for such services. Liquidated damages provisions in a solicitation are unobjectionable where the record shows that the stated amounts represent a reasonable assessment of the damges to the government due to the contractor's failure to perform. Thus are not punitive. Sea-Land protests that the RFP: (1) is ambiguous in three areas. BACKGROUND The RFP was issued on September 29. Carriers were invited to provide shipping rates for government cargo on their regularly scheduled commercial routes in the same vessels and at the same time as they ship commercial cargo. View Decision Matter of: Sea-Land Service, Inc. File: B-270504 Date: March 15, 1996 Protest contention that a contract clause reflecting the statutory mandate of the McCumber Amendment to the Cargo Preference Act of 1904, 10 U.S.C. Sec. 2631 (1994)--restricting shippers dealing with the Department of Defense to charges not higher than those charged private persons--is ambiguous is denied where the clause at issue merely establishes a price ceiling for such services, and shifts some of the responsibility for assuring that this ceiling is not breached to the potential offeror, who is in the best position to be aware of its own commercially available tariffs for such services. Liquidated damages provisions in a solicitation are unobjectionable where the record shows that the stated amounts represent a reasonable assessment of the damges to the government due to the contractor's failure to perform, and thus are not punitive, excessive, or otherwise unreasonable. Attorneys DECISION Sea-Land Service, Inc. protests the terms of request for proposals (RFP) No. N62387-95-R-8150 ("the Alaska RFP"), issued by the Military Sealift Command (MSC) for ocean and intermodal transportation of Department of Defense (DOD) breakbulk and containerized cargo between specific points in the continental United States (CONUS) and points in the state of Alaska from December 1, 1995, through November 30, 1996. Sea-Land protests that the RFP: (1) is ambiguous in three areas, and that the ambiguities prevent potential offerors from preparing a reasonable, intelligent estimate of the government's requirements; and (2) contains unenforceable penalties in the guise of liquidated damages. We deny the protest. BACKGROUND The RFP was issued on September 29, 1995, to obtain rates and services for shipping cargo to and from Alaska. Carriers were invited to provide shipping rates for government cargo on their regularly scheduled commercial routes in the same vessels and at the same time as they ship commercial cargo. In addition, carriers were invited to provide rates for ancillary services, such as loading or unloading containers, and equipment charges. The contracting scheme here envisions that accepted rates and charges will be published in MSC's "Alaska Container Agreement and Rate Guide." Using this guide, the Army's Military Traffic Management Command books transportation of cargo for individual DOD service components with the carrier, whose rates offer the lowest overall cost to the government, and who can meet the delivery requirements of the cargo. The Alaska RFP anticipates multiple awards of fixed-rate, indefinite quantity requirements contracts, which do not impose minimum transit times, sailing frequencies, or cargo accommodation requirements. Rather, the government's orders are placed using the carrier's regularly scheduled commercial sailings. The carriers agree to transport such cargo as the government might tender based upon the carrier's accepted rates or, if applicable, its lower commercial rates, but the RFP does not obligate the carrier to promise the government a minimum amount of space in any vessel. LIMITATION OF GOVERNMENT LIABILITY CLAUSE One of Sea-Land's five specific challenges to the terms of the RFP--i.e., its claim that the RFP's "Limitation of Government Liability" clause is ambiguous because it vitiates the consideration necessary to make enforceable any contract awarded under this RFP--was recently considered and sustained by our Office in a protest brought by Sea-Land against the same agency and the same contract clause. See Sea-Land Serv., Inc., B-266238, Feb. 8, 1996, 96-1 CPD para. ___. In response to our decision, the agency amended the RFP here to delete the "Limitation of Government Liability" clause.