Sun Company, Inc.

B-275193 Jan 29, 1997 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Agency should be required to include in bid evaluation all costs associated with government controlled facilities which play a role in the transportation of FOB origin offers is denied where the costs at issue are uncertain and speculative and are largely fixed. Would exist regardless of which firms are awarded contracts. The agency uses a computer program in its evaluation under those procurements to determine the combination of contract awards that will result in the lowest overall cost to the government. Offerors are to propose products for each facility on an FOB destination basis. The RFP indicates that DFSC will calculate the cost of transporting the fuel to the line item destination at government expense and add that cost to the offeror's price. View Decision Matter of: Sun Company, Inc. File: B-275193 Date: January 29, 1997 Protest that in procurement for fuel, agency should be required to include in bid evaluation all costs associated with government controlled facilities which play a role in the transportation of FOB origin offers is denied where the costs at issue are uncertain and speculative and are largely fixed, in other words, would exist regardless of which firms are awarded contracts. Attorneys DECISION Sun Company, Inc. protests the method proposed by the Defense Fuel Supply Center (DFSC) to evaluate prices under request for proposals (RFP) No. SPO600-97-R-0061, issued for DFSC's annual purchase of bulk fuel for the gulf and east coasts. We deny the protest. DFSC makes two major bulk petroleum purchases each year to cover fuel requirements for approximately 400 locations. The agency uses a computer program in its evaluation under those procurements to determine the combination of contract awards that will result in the lowest overall cost to the government. This computer program, or bid evaluation model, calculates evaluated prices based on consideration of numerous factors including: (1) locations requiring fuel; (2) the volume of fuel to be procured for each location; (3) acceptable methods of delivery for each location; (4) identity of each offeror; (5) quantities offered, (6) methods of delivery offered; (7) contingencies in offers, such as all-or-none offers, or maximum and minimum quantities; and (8) transportation costs. DFSC issued the RFP for the purchase of approximately 1.7 billion gallons of jet fuel, marine fuel, and gasoline for numerous government facilities in the east and gulf coast regions of the United States. Under the RFP, offerors are to propose products for each facility on an FOB destination basis, including delivery to the destination called for by each line item, or FOB origin basis, not including delivery. For FOB origin offers, the RFP indicates that DFSC will calculate the cost of transporting the fuel to the line item destination at government expense and add that cost to the offeror's price. The agency then compares the FOB origin, plus government expense prices, with prices in FOB destination offers (where delivery is at the offeror's expense) to determine the lowest "laid-down," or delivered, price for each facility. In response to a question asked by Sun, DFSC informed the firm that the costs of using government controlled terminal facilities called Defense Fuel Support Points (DFSP) during transportation of fuel offered FOB origin will not be evaluated when determining the lowest laid-down price. These costs are incurred when the in-transit fuel passes through the DFSPs, such as, for example, when fuel is transferred from a pipeline to a truck or barge. The protester notes that Federal Acquisition Regulation (FAR) Sec. 47.306 requires the use of "transportation and transportation-related costs" when evaluating offers and that the RFP states that "[t]ransportation rates and related costs shall be used in the evaluation of FOB origin . . . proposals." According to Sun, by refusing to evaluate DFSP costs, the agency is not considering all relevant transportation-related costs in violation of the FAR and the RFP. The protester also maintains that the failure to consider DFSP costs is contrary to the Competition in Contracting Act of 1984 (CICA), 10 U.S.C. Sec. 2304(a)(1) (1994), which requires full and open competition and requires that the agency accept the offer that is most advantageous to the government. In addition, the protester argues that the failure to evaluate those costs unfairly favors some firms over others. Sun notes that it offers Philadelphia-origin fuel which "in many cases [does] not require the use of a DFSP to reach government line item destinations." Sun states that its offers are competing against FOB origin offers, often from other parts of the country, which the agency will deliver to line item destinations via DFSP terminals.