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.