BNUMBER:  B-266275
DATE:  December 4, 1995
TITLE:  Stapp Towing Company, Inc.

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Matter of:Stapp Towing Company, Inc.

File:     B-266275

Date:     December 4, 1995

Jon N. Kulish, Esq., Haas & Najarian, for the protester.
Robert A. Burgoyne, Esq., Fulbright & Jaworski, for Texas Eastern 
Products Pipeline Company, an interested party.
Bryant S. Banes, Esq., and Nicholas P. Retson, Esq., Department of the 
Army, for the agency.
Christina Sklarew, Esq., and Michael R. Golden, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

A rate tender that alters the government's liability for demurrage 
fees under a guaranteed traffic solicitation is noncompliant with the 
material terms of the solicitation and must be rejected; carrier whose 
rate tender is noncompliant is not eligible for award and therefore 
not interested for purposes of filing a protest.

DECISION

Stapp Towing Company, Inc. protests the award of a contract by the 
Military Traffic Management Command (MTMC) to Texas Eastern Products 
Pipeline Company (TEPP) under Guaranteed Traffic Solicitation (GTS) 
No. GT-NIP-95-001.  Stapp alleges that the agency's evaluation of rate 
tenders was inconsistent with the provisions of the GTS.

We dismiss the protest because we find that Stapp's tender was 
noncompliant with the solicitation terms; since the protester would 
not be eligible for award, it lacks the requisite interest for filing 
a protest.

The GTS solicited rate tenders for the transportation of jet fuel to 
Little Rock Air Force Base under government bills of lading pursuant 
to specified requirements and contemplated the award of a requirements 
contract for 1 base year with 4 option years.  The GTS stated that the 
contract would be awarded "to the responsible carrier bidding the 
lowest cost."  The solicitation provided that all rate tenders 
submitted in response to the solicitation would be subject to the 
terms and conditions contained in Guaranteed Traffic Rules Publication 
GT-NIP-95-001 (GT Rules).  Among other things, the GT Rules 
established a demurrage rate of $250 per hour.  In this context, 
demurrage refers to charges that the contractor may impose on the 
government to compensate for any undue detention of the contractor's 
barges.  

Prior to submission of offers, carriers were permitted to submit any 
questions concerning the solicitation.  Stapp submitted the following 
question:

     "According to Rules Item 30, breakdown of pumping equipment 
     during loading results in the carrier accessing demurrage at 
     one-half the established rate.  Can this be changed so that the 
     full rate applies"?

The agency provided the following response in an amendment to the GTS:

     "No, but the second sentence in Item 30 ["However, the demurrage 
     rate at the loading port shall be reduced 1/2 (one half) if 
     demurrage is incurred due to breakdown of pumping machinery or 
     other causes beyond the control and without the fault and 
     negligence of the Government."] is changed as follows:  "However, 
     the demurrage rate at the loading port shall be reduced 1/2 (one 
     half) if pumping is interrupted due to causes beyond the control 
     of the shipper, the carrier, or the Government, such as 
     interruptions due to weather or closing of the port."

Stapp submitted a "proposal" in response to the GTS which included 
both cost data (on the requisite rate tender form) and technical data.  
In its cover letter, Stapp stated that the firm "takes no exception to 
the requirements of the solicitation."  However, in a section entitled 
"Government Agreements," Stapp included a discussion of demurrage 
charges.  This section included the following provision:

     "The demurrage rate at the loading port shall not be reduced if 
     demurrage is incurred due to breakdown of pumping machinery or 
     other causes beyond the control and without the fault and 
     negligence of the Government or Stapp."

Stapp and TEPP submitted the only two rate tenders in response to the 
GTS.  When these were evaluated, MTMS determined that TEPP's rate was 
low, and awarded the contract to this firm.  

The agency notified Stapp of its award decision, including in its 
letter that it considered Stapp's submission nonresponsive because it 
took exception to the demurrage provision in GT Rule 30.  After Stapp 
filed its protest in our Office, alleging improprieties in the 
evaluation of costs, MTMS requested that we dismiss the protest 
summarily.  The agency argues that Stapp rendered its rate tender 
nonresponsive when it substituted its own demurrage language for the 
language in the GTS.  Since Stapp would be ineligible for award under 
this theory, Stapp would lack the requisite interest for filing a 
protest.

We are persuaded that Stapp's rate tender took exception to a material 
term of the GTS.  If in its offer a firm attempts to impose conditions 
that would modify material requirements of the solicitation, limit its 
liability to the government, or limit rights of the government under 
any contract clause, then the offer is noncompliant with the 
solicitation and an award cannot be made to that firm.  See 
Hewlett-Packard Co., B-216530, Feb. 13, 1985, 85-1 CPD  193.  

Stapp concedes that the qualifying language concerning the demurrage 
rule (GT Rule 30) took exception to that rule, but argues that "the 
facially nonconforming language did not make Stapp's proposal 
noncompliant because the monetary effect upon the actual and evaluated 
costs of performance under the solicitation were only trivially 
affected thereby and that the exception was therefore not material."  
Stapp contends that it is able to estimate, based on past years of 
experience transporting fuel by barge, the approximate costs that 
could be incurred under the demurrage clause in Stapp's tender.  Using 
calculations based on this estimate, Stapp argues that any demurrage 
that would be billed under the language in Stapp's tender would be de 
minimus.

We do not agree with Stapp's premise that the monetary impact of the 
exception can be estimated with any certainty.  Demurrage can be 
caused by a number of unforeseeable events; for example, a port may be 
closed because of a fuel or oil spill, a strike, or bad weather.  Any 
attempt to estimate the demurrage fees that might be incurred under a 
particular contract would necessarily be based on speculation and 
assumptions about future events outside the control of the parties.  
The level of disagreement between the protester and the agency on this 
point--the former arguing that the particular type of demurrage at 
issue here would only result in minor amounts, and the latter 
asserting that Stapp itself has in the past sometimes collected 
demurrage payments that were greater than the total contract amount, 
and both parties basing their arguments on past experience--further 
demonstrates that the impact of the clause cannot be accurately 
foreseen.[1]

Further, even if the potential liability at issue could be estimated 
with greater certainty, we disagree with Stapp's premise that the 
monetary impact of the clause would be dispositive here.  The effect 
of the exception was to alter the obligations of the parties, shifting 
certain risks of performance from the contractor to the government.  A 
deviation to a solicitation provision which has the effect of changing 
the legal relationship between the parties is material and cannot be 
waived, even if the impact on price is trivial.  Bishop Contractors, 
Inc., B-246526, Dec. 17, 1991, 91-2 CPD  555.  Here, in addition to 
the most obvious effect of the exception (i.e., doubling the 
government's potential liability for demurrage), the language that 
Stapp substituted introduced ambiguity concerning the events that 
would trigger the government's potential liability.  For example, 
while the relevant language in the amended GTS did not address the 
effect of a pumping machinery breakdown as a basis for demurrage 
payments, Stapp's clause stated that "the demurrage rate at the port 
shall not be reduced if demurrage is incurred due to breakdown of 
pumping machinery"; arguably, under the wording of the clause, the 
government would be liable for full demurrage charges even if the 
contractor's machinery failed due to the contractor's own negligence.  
Thus, Stapp's clause not only doubled the government's potential 
liability for demurrage, it also introduced an element of ambiguity 
into the contract that could require litigation to resolve, exposing 
the government to additional risks and expenses.[2]

We conclude that Stapp's tender took exception to the terms of the 
GTS, and therefore was properly rejected.  Since Stapp would not be 
eligible for award if its protest challenging the evaluation of costs 
were sustained, it is not an interested party for purposes of pursuing 
this protest.  4 C.F.R.  21.0(a) (1995).

The protest is dismissed.

Comptroller General
of the United States

1. Although Stapp argues now that the impact of this provision is 
minimal, it apparently was important enough for the firm to raise it 
as an issue during the pre-bid period and for Stapp to include it in 
its tender, notwithstanding the agency's express refusal to accept it.  
When the agency refused to accept this change, Stapp was on notice 
that the agency considered this clause material.

2. The agency points out that at present, under other contracts, the 
protester has approximately 43 active Armed Services Board of Contract 
Appeals pending regarding demurrage charges.