CW Government Travel, Inc. d/b/a Carlson Wagonlit Travel;, B-283408; B-283408.2, November 17, 1999

CW Government Travel, Inc. d/b/a Carlson Wagonlit Travel;, B-283408; B-283408.2, November 17, 1999 TITLE: CW Government Travel, Inc. d/b/a Carlson Wagonlit Travel;, B-283408; B-283408.2, November 17, 1999 BNUMBER: B-283408; B-283408.2 DATE: November 17, 1999 ********************************************************************** CW Government Travel, Inc. d/b/a Carlson Wagonlit Travel;, B-283408; B-283408.2, November 17, 1999 Decision Matter of: CW Government Travel, Inc. d/b/a Carlson Wagonlit Travel; American Express Travel Related Services Company, Inc. File: B-283408; B-283408.2 Date: November 17, 1999 Lars E. Anderson, Esq., Wm. Craig Dubishar, Esq., and Paul N. Wengert, Esq., Venable, Baetjer and Howard, for CW Government Travel, Inc. d/b/a Carlson Wagonlit Travel; and Hamilton Loeb, Esq., and A. Jeff Ifrah, Esq., Paul, Hastings, Janofsky & Walker, for American Express Travel Related Services Company, Inc., the protesters. Diane L. Celotto, Esq., Department of the Navy, for the agency. Paul Jordan, Esq., Glenn G. Wolcott, Esq., and Paul Lieberman, Esq., Office of the General Counsel, GAO, participated in the preparation of the decision. DIGEST 1. Protests that solicitation requirement for commission-based pricing of travel services is impermissibly inconsistent with customary commercial practice is denied where record, including documents submitted by the protester, demonstrates that a significant portion of the travel service industry continues to rely on commission revenues to fund performance of travel services. 2. Where protesters have submitted declarations stating that they will not respond to a solicitation unless the solicitation's commission-based pricing provisions are removed, and protests challenging those pricing provisions are denied, protesters are not interested parties to challenge other solicitation terms. DECISION CW Government Travel, Inc. d/b/a Carlson Wagonlit Travel (Carlson) and American Express Travel Related Services Company, Inc. (Amex) protest the terms of request for proposals (RFP) No. N00140-99-R-M417, issued by the Department of the Navy for travel management services in the Navy's Eastern Region. [1] Carlson and Amex protest that the pricing provisions of the RFP violate the requirements of the Federal Acquisition Regulation (FAR) concerning the acquisition of commercial services, unreasonably restrict competition, and provide an unfair competitive advantage to the incumbent contractor. The protesters also challenge certain other RFP provisions as exceeding the agency's minimum needs or as being otherwise inappropriate. We deny the protests. BACKGROUND These protests flow from ongoing changes in the manner in which travel agencies receive compensation for the services they provide, particularly with regard to the sale of airline tickets. At the time of airline deregulation in 1978, travel agencies sold about half of the airlines' tickets, with the airlines themselves selling the other half; at that time, airlines paid travel agencies commissions on the ticket sales that averaged approximately 8 percent of the value of the tickets sold. Following deregulation, the airlines sought to lower their marketing costs, shifting more of their ticket sales to travel agencies and increasing the commissions paid. Domestic Aviation: Effects of Changes in How Airline Tickets are Sold, GAO/RCED-99-221, July 28,1999 at 3-7. Commission rates for domestic fares peaked at about 10 percent in 1994. Since then, commission rates have steadily declined. [2] Id. As airline commissions increased, along with total travel agency revenues due to the higher volume of sales, travel agencies competed for travel service contracts by, among other things, offering to share a portion of the airline commissions they received with the buyer for which the travel services were being provided. Since 1995, as commissions have decreased, an increasing number of travel agencies have begun to charge transaction or service fees as compensation for the services they provide. Id. at 10. With regard to the solicitation at issue here, the Navy contracting officer states that she received a request to procure the travel services in February 1999 and, thereafter, conducted market research to determine whether the Navy's needs could be met by acquiring "commercial items," as that term is defined in the FAR. [3] Contracting Officer's Statement at 2. The Navy's market research consisted of: reviewing past performance evaluations of offerors under prior procurements for similar services; conducting discussions with the Navy's current travel service provider; and conducting discussions with Navy officials, as well as with officials from other government agencies.