BNUMBER: B-277241.12; B-277241.13
DATE: December 29, 1997
TITLE: Aalco Forwarding, Inc., et al., B-277241.12; B-277241.13,
December 29, 1997
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Matter of:Aalco Forwarding, Inc., et al.
File: B-277241.12; B-277241.13
Date:December 29, 1997
Alan F. Wohlstetter, Esq., and Stanley I. Goldman, Esq., Denning &
Wohlstetter; James M. McHale, Esq., Seyfarth, Shaw, Fairweather &
Geraldson; Thomas M. Auchincloss, Jr., Esq., Leo C. Franey, Esq., and
Brian L. Troiano, Esq., Rea, Cross & Auchincloss, for the protesters.
Thomas J. Duffy, Esq., Maj. Jonathan C. Guden, and Ramon Morales,
Esq., Department of the Army, for the agency.
David R. Kohler, Esq., and Timothy C. Treanor, Esq., for the United
States Small Business Administration.
Adam Vodraska, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
In a solicitation implementing a pilot program to reengineer the
Department of Defense's current program for the shipment and storage
of the personal property of military service members and civilian
employees, challenged requirements that each offeror serve all points
in a traffic channel and that each offeror provide both household
goods and unaccompanied baggage transportation services do not
constitute improper bundling of requirements, where they reasonably
reflect the agency's needs and are necessary to implement the pilot
program's goals of reducing administrative burdens on the agency and
improving the reliability and quality of service.
DECISION
Aalco Forwarding, Inc. and 96 other self-certified small business
concerns protest the terms of request for proposals (RFP) No.
DAMT01-97-R-3001, issued by the Military Traffic Management Command
(MTMC), Department of the Army, for all personnel, equipment,
materials, supervision, and other items necessary to provide
transportation and transportation-related services for 50 percent of
the eligible Department of Defense (DOD) and United States Coast
Guard-sponsored personal property shipments from North Carolina, South
Carolina, and Florida, to any or all of 13 destination regions in the
continental United States (CONUS) and/or any or all of 5 destination
regions in Europe.[1] The solicitation implements a pilot program to
reengineer DOD's current program for shipping and storing the personal
property of its military service members and civilian employees. In
these protests, the protesters contend that the RFP unnecessarily
bundles certain contract requirements to the detriment of small
business concerns.
The protests are denied.
This procurement was the subject of a prior decision in Aalco
Forwarding, Inc., et al., B-277241.8, B-277241.9, Oct. 21, 1997, 97-2
CPD para. 110, which denied various protests primarily against the
acquisition of these services under Federal Acquisition Regulation
(FAR) part 12 commercial item procedures. That decision contains much
of the background for this procurement, which will not be repeated
here.
As described in our earlier decision, the current program is
administratively burdensome for MTMC. Currently, a DOD shipping
office (which covers shipments from a relatively small area) may have
to contact several carriers on its traffic distribution roster before
finding a carrier willing to accept a shipment, and each move involves
significant amounts of paperwork. MTMC reports that resource
constraints at its shipping offices have reduced the functions those
offices customarily perform (such as movement counseling and quality
control monitoring). Because of these resource constraints, as well
as problems experienced with the quality of services provided by
moving companies, MTMC reports that it cannot continue to do business
under the current program and that it must find a streamlined,
efficient way to move its personnel while ensuring high quality moves.
Reflecting these concerns, the reengineering effort aims to improve
the quality of personal property shipment and storage services
provided to DOD, and to simplify the administration of the program so
as to be able to focus more of the resources of the shipping offices
towards customer service and away from the administrative burdens
associated with the current program. Various congressional committees
agreed that MTMC must pursue a higher level of service from the moving
industry with greater reliance on commercial standards of service and
business practices.[2]
MTMC's market research and benchmarking survey revealed that large
commercial shippers and other organizations had successfully
reengineered their employee relocation programs to obtain superior
service, reduce administrative burdens, and adopt better business
practices. In particular, many of these organizations have contracted
with one prime contractor or a small number of prime contractors to
ship an employee's household effects anywhere that is required (rather
than using multiple vendors for the various segments of the move),
utilized "one-stop shopping" (one point of contact for assistance to
the employee), and outsourced various aspects of the management of the
relocation process to the contractor.
In implementing the pilot program through this solicitation, MTMC
seeks to emulate these commercial practices. The agency recognizes,
however, that not all of these practices can be adopted without
modification by DOD. For example, while a large commercial shipper
contracting for moving services may have contracts with a small number
of companies (or even only one) who commit to shipping a customer's
household goods anywhere (at least domestically), such an arrangement
is not feasible for DOD, given the large number of moves (hundreds of
thousands each year) of service members and employees throughout the
nation and the world. Rather, MTMC considered a variety of contract
approaches for dividing its traffic among contractors in order to meet
its needs to reengineer the program. During the planning process,
MTMC invited and received comments from industry.
In response to congressional direction to assess the impact of the
proposed pilot program on small business concerns,[3] MTMC proposed,
in order to accommodate small business concerns, to award a single
contract for each "traffic lane," that is, for all shipments from an
origin shipping office's relatively small area of responsibility to a
destination shipping office's area of responsibility. However, many
household goods industry representatives objected to the single-award,
"winner-take-all" nature of this proposal. In addition, some
companies told MTMC that this proposal would be administratively
burdensome, because thousands of contracts would need to be let and
administered by the agency in order to have a separate contract
covering every possible combination of shipping offices. MTMC also
reached this conclusion, calculating that between 9,000 and 17,000
separate contracts would be needed, which it states it does not have
the resources to manage. MTMC thereafter informed congressional
committees in an updated small business impact report that, because of
opposition from industry and concerns about administrative burden, it
was replacing its "winner-take-all" traffic lane concept with a pilot
contemplating multiple awards for all transportation services from a
single multi-state origin region. Industry opposed this latter pilot
proposal as well because of the large geographic scope of such an
approach.
Following congressional direction to DOD and industry to reach a
mutually agreeable program to pilot,[4] a DOD/industry working group
convened and came to a consensus on a number of issues including that
the pilot program should be based on "traffic channels," each of which
covers all traffic from an origin state (encompassing all shipping
offices within the state) to a destination region (encompassing all
shipping offices within a multi-state or overseas region). However,
the DOD/industry working group could not reach agreement on the
approach to take for the pilot or on various details of the program,
and DOD and industry presented separate pilot proposals. DOD's
proposed pilot program, based on traffic channels from certain origin
states to certain destination regions, became this solicitation.[5]
The solicitation was issued pursuant to the commercial item procedures
of FAR part 12, and contemplates the award of firm, fixed-price,
indefinite quantity/indefinite delivery contracts for a base year with
2 option years. The RFP allows the government to award task order
contracts for the same or similar services to either one or multiple
sources; MTMC anticipates making multiple awards to various
contractors for all the possible services within each traffic
channel.[6] Portions of 27 of the "high volume" traffic channels are
set aside for small business concerns.[7] The government will award
contracts to the responsible offerors whose offers represent the best
overall value based on an integrated assessment of past
performance/experience, subcontracting plan, and price. After certain
contract minimums are met, follow-on task orders will also be issued
on a best value basis.
The protesters and the Small Business Administration (SBA) contend
that the solicitation is unduly restrictive of competition by small
business concerns because the RFP requires that (1) an offeror serve
an entire traffic channel, and (2) that an offeror must provide
transportation services for unaccompanied baggage[8] as well as for
household goods. The protesters and the SBA contend that MTMC has
improperly bundled into a single large contract requirements that were
previously solicited and awarded separately by each shipping office.
They explain that such bundling precludes otherwise qualified small
business carriers from the competition because small moving companies
may only have resources, facilities and/or agents at one or a limited
number of shipping offices within an origin state and may transport
shipments only to a limited number of destinations, and may only
handle household goods or unaccompanied baggage, but not both.
According to the SBA:
Presently, MTMC contracts with carriers on a case-by-case basis
for moving services. Carriers offer to do the work they are able
to do and do not offer on job orders that are outside the scope
of their abilities. Some carriers are capable of transporting
only unaccompanied baggage and thus offer only on those job
orders . . . .
Under the terms of the solicitation, on the other hand, the
successful offerors for any given channel must serve every
geographic location in the origin state for that channel and
every geographic location in the destination CONUS Region or
foreign country for that channel. Contractors may not refuse an
assignment unless they are already doing a pre-agreed level of
work for MTMC. Moreover, successful offerors must move both
household goods and unaccompanied baggage whenever MTMC directs
them to do so.
The protesters and the SBA argue that the agency's justification for
consolidating its traffic distribution system and the unaccompanied
baggage and household goods moving services is not supported by
personnel or budgetary reductions, and amounts to nothing more than a
claim of mere administrative convenience, which is not a sufficient
justification for restrictions on competition. See Airport Markings
of Am., Inc., et al., 69 Comp. Gen. 511, 514 (1990), 90-1 CPD para. 543 at
4-5.
The Competition in Contracting Act of 1984, 10 U.S.C. sec. 2305(a)(1)
(1994), generally requires that solicitations permit full and open
competition, and contain restrictive provisions and conditions only to
the extent necessary to satisfy the needs of the agency. Since
bundled, consolidated, or total-package procurements combine separate,
multiple requirements into one contract, they have the potential for
restricting competition by excluding firms that can furnish only a
portion of the requirement. Advanced Elevator Servs., Inc., B-272340,
B-272340.2, Sept. 26, 1996, 96-2 CPD para. 125 at 3. We review such
solicitations to determine whether the approach is reasonably required
to satisfy the agency's needs. Border Maintenance Serv., Inc.,
B-260954, B-260954.2, June 21, 1995, 95-1 CPD para. 287 at 2; The Sequoia
Group, Inc., B-252016, May 24, 1993, 93-1 CPD para. 405 at 4.
It is apparent that by awarding contracts to a limited number of prime
contractors responsible for each channel, rather than maintaining the
current traffic distribution system, and by requiring that the
contractors service both household goods and unaccompanied baggage,
one of MTMC's goals is to ease the administration of its household
goods shipping and storage program. The record also shows, however,
that under the pilot program, MTMC's contracting on a traffic channel
basis, and requiring both household goods and unaccompanied baggage
transportation services from each contractor, are not solely for
purposes of administrative convenience, but are driven by other goals
of the reengineering program.
Specifically, MTMC reasonably determined that in order to obtain
superior service, reduce administrative burdens, and adopt better
business practices, it needed to consolidate the transportation
services, that are currently arranged with numerous contractors on an
individual order basis by each shipping office, with a program
utilizing several prime contractors, who will be solely responsible
for managing most aspects of the movement of the household goods and
unaccompanied baggage of service members and employees.[9] The
solicitation's establishment of long-term binding commitments with
fewer contractors, who will potentially be provided greater shipping
volumes than under the current program should help DOD achieve
economies of scale. In addition, using fewer contractors should
provide greater accountability of performance as well as more reliable
and higher quality service. Moreover, the solicitation's best value
selection criteria for initial awards and for follow-on task orders
should improve service quality through greater contractor
accountability, fewer claims, and increased emphasis on customer
satisfaction. Finally, with fewer contracts to administer, and with
some of the functions of the shipping offices (such as movement
counseling) outsourced to the contractors, the agency is seeking cost
savings and the flexibility to staff and manage its shipping offices
according to its needs. This includes focusing more of the attention
of shipping office staff on providing customer service, rather than
administering the burdensome traffic distribution process of the
current system.
Likewise, the solicitation's requirement that contractors service both
unaccompanied baggage and household goods is a reasonable need of the
agency. The use of a single contractor for each move will allow for
"one-stop shopping" and alleviate the burden associated with
administering the household goods and unaccompanied baggage programs
on a separate basis. In addition, combining the two programs under
the solicitation advances the goals of the reengineering effort by
subjecting each contractor to the same requirements designed to
improve the quality of the moving and storage program, such as higher
liability limits for lost and damaged goods, direct claims procedures,
and contractor responsibility for the entire shipment of a service
member's or employee's household goods, regardless of the arrangements
made by each contractor to transport the various components of the
shipment. While we appreciate the distinction the protesters and the
SBA have described between the transportation of unaccompanied baggage
and household goods, they have not persuasively shown why requiring
contractors to service both types of requirements under the
solicitation is unreasonable, given the goals of the reengineering
effort.
In sum, the award of contracts on a traffic channel basis and the
requirement that the contractors provide both household goods and
unaccompanied baggage transportation services reasonably reflect the
agency's needs under the pilot program, and, accordingly, the agency
may so structure its solicitation, even if this means that some small
businesses are less able to compete.[10] See Border Maintenance
Serv., Inc., supra, at 3-4.
The protests are denied.
Comptroller General
of the United States
1. The following firms are involved in these protests: Aalco
Forwarding, Inc.; AAAA Forwarding, Inc.; Air Van Lines International,
Inc.; Allstates Worldwide Movers; Aloha Worldwide Forwarders, Inc.;
Alumni International, Inc.; American Heritage International
Forwarding, Inc.; American Shipping, Inc.; American World Forwarders,
Inc.; Apollo Forwarders, Inc.; Arnold International Movers, Inc.;
Astron Forwarding Company; BINL Incorporated; Burnham Service Company,
Inc.; Cavalier Forwarding, Inc.; Classic Forwarding, Inc.; Davidson
Forwarding Company; Deseret Forwarding International, Inc.; Foremost
Forwarders, Inc.; Gateways International, Inc.; Great American
Forwarders, Inc.; Hi-Line Forwarders, Inc.; International Services,
Inc.; Island Forwarding, Inc.; Katy Van Lines, Inc.; Lincoln Moving &
Storage; Miller Forwarding, Inc.; Northwest Consolidators; Ocean Air
International, Inc.; Senate Forwarding, Inc.; Shoreline International,
Inc.; Stevens Forwarders, Inc.; Von Der Ahe International, Inc.; Wold
International, Inc.; Zenith Forwarders, Inc.; Acorn International
Forwarding Company; AAA Systems, Inc.; A.C.E. International
Forwarders; Apex Forwarding Company, Inc.; Armstrong International,
Inc.; Art International Forwarding, Inc.; Coast Transfer Company,
Inc.; Crystal Forwarding, Inc.; CTC Forwarding Company, Inc.; Diamond
Forwarding, Inc.; Dyer International, Inc.; Harbour Forwarding
Company, Inc.; HC&D Forwarders International, Inc.; Jag International,
Inc.; The Kenderes Group, Inc.; Pearl Forwarding, Inc.; Rainier
Overseas, Inc.; Rivers Forwarding, Inc.; Ryans's World; Sequoia
Forwarding Company, Inc.; A-1 Relocation, Inc. d/b/a A-1 Movers of
America; A-1 Moving & Storage, Inc.; Able Forwarders, Inc.; Andrews
Van Lines, Inc.; A. Arnold & Son Transfer & Storage Company, Inc.; Art
and Paul Moving & Storage; Associated Forwarding, Inc.; Associated
Storage and Van, Inc.; Carlyle Van Lines, Inc.; Carrier Transport
International, Inc.; Coastal Moving Company, Inc.; Conrad Group, Inc.;
Davidson Transfer & Storage Co., Inc.; Denoyer Brothers Moving &
Storage Co.; Door To Door Moving & Storage Co.; Exhibit Transport,
Inc.; Ferriss Warehouse & Storage Co.; Fogarty Van Lines, Inc.; Horne
Storage Company, Inc.; Lynn Moving and Storage, Inc.; A.D. McMullen,
Inc.; Mid-State Moving & Storage Inc.; Movers Unlimited, Inc.; Nilson
Van & Storage; Northwest Consolidators, Inc.; Ogden Transfer &
Storage, Co.; OK Transfer & Storage, Inc.; Pan American Van Lines,
Inc.; Riverbend Moving & Storage, Inc.; Royal Forwarding, Inc.; Sells
Service, Inc.; South Hills Movers, Inc.; Stanley's Transfer Company,
Inc.; Starck Van Lines, Inc.; StarTrans International, Inc.; Stearns
Forwarders, Inc.; Stearns Moving & Storage of Kokomo, Inc.; Von Der
Ahe Van Lines, Inc.; Wainwright Transfer Co. of Fayetteville, Inc.;
and Weathers Bros. Transfer Co.-NC.
2. H.R. Conf. Rep. No. 104-450, at 762 (1996); H.R. Rep. No. 104-131,
at 164 (1995).
3. H.R. Conf. Rep. No. 104-344, at 58 (1995); H.R. Conf. Rep. No.
104-261, at 58 (1995).
4. S. Rep. No. 104-267, at 270 (1996); H.R. Rep. No. 104-563, at 268
(1996).
5. The protesters dispute the agency's characterization of the
consensus agreement, essentially contending that industry would never
have agreed to structuring the pilot program on a traffic channel
basis if they had known the solicitation would also require each
offeror to commit a daily capacity and to service all shipping offices
in a traffic channel, requirements that the protesters assert restrict
the ability of small businesses to compete.
6. There are 53 traffic channels in the pilot program, 38 domestic and
15 international.
7. The protesters have also protested to our Office that the set-aside
decision was unreasonable. In addition, various protests have been
filed against certain provisions contained in a recently issued
amendment to the solicitation. These protests will be the subject of
a future decision.
8. Unaccompanied baggage is that portion of the service member's or
employee's prescribed weight allowance of personal property shipped
separately from the bulk of the personal property, usually via an
expedited mode, because it is needed immediately, or soon after, a
member's or employee's arrival at destination for interim housekeeping
pending arrival of the major portion of his or her property.
According to the protesters, a small number of firms specialize in
providing unaccompanied baggage transportation services, which
requires consolidation and tracking of many very small shipments in a
manner not required for the movement of household goods.
9. In making multiple awards to different contractors on a traffic
channel basis, the agency is also mitigating the "winner-take-all"
aspect and the large geographic scope of the earlier proposals for the
pilot program objected to by industry, while being able to let and
administer a manageable number of contracts.
10. The protesters contend that the requirement for offerors to commit
daily capacity at each shipping office in each origin state is
unreasonable and unduly restricts the ability of small business
carriers to compete for contracts because small business may not be
able to obtain agency representation at certain shipping offices with
low traffic volumes. However, as stated in our previous decision, we
believe that the agency has reasonably established a need for the
committed daily capacity requirement. Aalco Forwarding, Inc., et al.,
supra, at 20.