Lankford-Sysco Food Services, Inc.; Sysco Food Services of

Lankford-Sysco Food Services, Inc.; Sysco Food Services of BNUMBER: B-274781; B-275081 DATE: January 6, 1997 TITLE: Lankford-Sysco Food Services, Inc.; Sysco Food Services of Arizona, Inc. ********************************************************************** Matter of:Lankford-Sysco Food Services, Inc.; Sysco Food Services of Arizona, Inc. File: B-274781; B-275081 Date:January 6, 1997 Richard B. Oliver, Esq., and Laura O. Doyle, Esq., McKenna & Cuneo, for the protester. Steve B. Hilkowitz, Esq., Defense Logistics Agency, for the agency. Henry J. Gorczycki, Esq., and James A. Spangenberg, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST Solicitations for acquisition of commercial food distribution services are neither ambiguous nor inconsistent with customary commercial practice where the protested terms of the solicitation considered as a whole have only one reasonable interpretation, which is not inconsistent with customary commercial practice. DECISION Lankford-Sysco Food Services, Inc. and Sysco Food Services of Arizona, Inc.[1] protest the terms of request for proposals (RFP) No. SPO300-96-R-4025 and SPO300-96-R-4016, respectively, issued by the Defense Logistics Agency, Defense Personnel Support Center (DPSC), for full service food distribution support for Navy ships at Norfolk Station, Virginia, and for military installations, hospitals and Job Corps centers in Arizona. We deny the protests. The terms of the RFPs, as relevant to these protests, are identical. The RFPs contemplate award of firm, fixed-price with economic price adjustment, indefinite quantity/indefinite-delivery contracts for a base year with 3 option years. The RFPs list the commercial food items to be supplied under the contracts and the estimated quantity of each item, and require offerors to provide the "delivered price," "distribution price," and "unit price" for each item. These terms are defined in the RFPs. The RFPs also include a price changes clause allowing for changes in the delivered price on a weekly basis, inasmuch as this component of the unit price may fluctuate as a result of "commercial market forces, such as supply and demand, and competition among suppliers." This clause further stated that: "The offeror also warrants that its unit prices are equal to or lower than those offered its most favored customer for similar quantities under comparable terms and conditions while taking into account the requirements of the price adjustment schedule of this clause." The RFPs also included the following price-related provision: "III. REBATES/DISCOUNTS (1) Rebates and discounts are to be returned to DPSC when they are directly attributable to sales resulting from orders exclusively submitted by DPSC or its customers. Additionally any rebates and discounts offered to any commercial customer or to other Governmental organizations shall be returned to the DPSC or its customers in the form of an up-front price reduction and/or lump sum reimbursement. Additional rebates over and above those cited above may be offered to the DPSC to enhance one's proposal but will not be mandated for return to the DPSC or its customers. (2) The Prime Vendor shall be as aggressive as possible in pursuing all rebates and discounts for the customers supported under this contract. Notwithstanding the requirements included herein, the offeror warrants, at a minimum, that the DPSC and its customers will receive rebates and discounts equal to or better than the offeror's most favored commercial or other Governmental customer. The offeror will provide a description of those rebates and discounts meeting the requirements herein as part of their offer in accordance with the provisions outlined [in this solicitation]. The rebates and discounts proposal will be reviewed and if found acceptable, shall become part of the resulting contract(s). A rebate report shall be provided to the Contracting Officer on a quarterly basis as a minimum. . . ." The RFPs require offerors to propose procurement/pricing plans explaining the offerors' purchasing methods and pricing methodology, including an explanation of the proposed discounts and rebates.[2] The protesters allege that the Rebates/Discounts provision in the RFPs contains insufficient detail and is ambiguous and contrary to customary commercial practice. In particular, the protesters are concerned that this provision could be interpreted to include a firm's "earned income" generated by the firm's performance of merchandising services for its suppliers as a rebate or discount payable to the government.