BNUMBER:  B-278404.2 
DATE:  February 9, 1998
TITLE: Sea-Land Service, Inc., B-278404.2, February 9, 1998
**********************************************************************

Matter of:Sea-Land Service, Inc.

File:     B-278404.2

Date:February 9, 1998

Michael A. Hopkins, Esq., and Raymond S.E. Pushkar, Esq., McKenna & 
Cuneo, for the protester.
Thomas J. Duffy, Esq., Department of the Army, and Charna J. 
Swedarsky, Esq., and John M. Binnetti, Esq., Department of the Navy, 
for the agency.
Tania L. Calhoun, Esq., and Christine S. Melody, Esq., Office of the 
General Counsel, GAO, participated in the preparation of the decision.

DIGEST

1.  Protest that request for proposals (RFP) for international ocean 
and intermodal transportation services improperly fails to set forth 
evaluation criteria for determining technical acceptability is denied 
where these criteria are apparent when the RFP is read as a whole; 
related argument that RFP should impose fixed minimum requirements for 
certain evaluation criteria is denied where the criteria, as stated, 
meet the agency's needs and maximize competition.

2.  RFP's establishment of a price ceiling for contracts involving 
specialized services based upon the pricing for contracts involving 
normal commercial services is unobjectionable where the agency 
reasonably expects that the rates for the specialized services--which 
involve less comprehensive services, more significant cargo 
guarantees, and more substantial liquidated damages for the 
government's failure to meet those guarantees--should be lower than 
the rates for the normal commercial services.

3.  RFP provision instructing that, on each individual route or zone, 
the lowest offered rate for each category will be accepted unless the 
contracting officer determines that it exceeds charges to the public 
for the carriage of like goods is consistent with the Cargo Preference 
Act of 1904 and, therefore, unobjectionable.

4.  RFP provision allowing for the post-award adjustment of maximum 
cargo limitation under certain conditions is unobjectionable where the 
agency has shown that the need to make such adjustments may arise 
under the unique circumstances of the procurement, and where it would 
be unreasonable for offerors to construe the limitation as a guarantee 
of a specific rate of carriage and to structure their proposals 
accordingly.

5.  Under RFP contemplating award of multiple indefinite delivery, 
indefinite quantity contracts, protest that minimum quantity of one 
container per carrier is insufficient consideration to bind the 
parties is denied where the nature of the acquisition dictates the 
possibility that the government may order only this quantity, and 
where other factors surrounding the acquisition show an intent to form 
binding contracts.  Protest that the maximum quantity--the total 
capacity of all contract carriers which is available for transport--is 
unrealistic is denied where the agency reasonably explains that the 
varying nature and unpredictability of its requirements necessitate 
this quantity.

6.  RFP's establishment of predetermined pricing or pricing formulas 
for various specialized services amounting to a small percent of the 
anticipated contract value is unobjectionable where the agency 
explains that charges for such services can unreasonably drive up the 
cost for shipping and the array of rates poses an administrative 
burden; it is within the agency's discretion to solicit a contract 
which maximizes risks on the contractors and minimizes administrative 
burdens on the government.

7.  Protest that RFP's requirement that equipment pool levels be based 
on a shipper's average weekly shipment requirements reflects 
unreasonably high levels is denied where the record reasonably 
supports the stated levels; related liquidated damages provisions are 
unobjectionable where the government has shown that it reasonably 
expects to suffer damages if the level is not maintained and the 
extent of such damages would be difficult to ascertain.

8.  Protest that RFP contains certifications in contravention of a 
statutory prohibition is denied where the prohibition does not apply 
to solicitation provisions, and where, in any event, the provisions at 
issue are not "certifications" within the intent of the prohibition.

9.  Protest that RFP improperly requires carriers to commence 
performance without a valid contract is denied where this 
interpretation of the RFP does not give effect to all of its 
provisions and is, therefore, unreasonable.

DECISION

Sea-Land Service, Inc. protests the terms of request for proposals 
(RFP)
No. N00033-97-R-6723, issued by the Joint Traffic Management Office 
(JTMO) of the Military Traffic Management Command (MTMC), Department 
of the Army,[1] to procure ocean and intermodal transportation 
services on a worldwide basis.  
Sea-Land contends that numerous solicitation terms are defective for a 
variety of reasons.
 
We deny the protest.

BACKGROUND   

DOD has an ongoing need to ship military cargo in support of military 
service personnel and their dependents, as well as defense missions 
and requirements via ocean and intermodal (ocean in combination with 
motor/rail/inland water) transportation between the continental United 
States and numerous worldwide points, as well as between foreign 
points.  This solicitation represents DOD's effort to combine two 
approaches to procuring these services under one umbrella 
solicitation.

The traditional approach asks operators of commercial U.S. flag 
vessels to offer rates to provide the services of their choice between 
the locations of their choice.  Container rates are solicited for the 
ocean transportation portion of a movement and, separately, for the 
overland (linehaul) transportation portion of a movement.  These rates 
are used in combination--as multifactor rates--to derive rates for 
transporting cargo between designated origins and destinations.  
Single factor container rates are also solicited to obtain one rate 
that includes all segments of the transportation.  Breakbulk rates are 
solicited for port-to-port transportation of noncontainerized items.  
Finally, ancillary charges and miscellaneous rates are solicited for 
specific services.  Carriers awarded contracts will ship DOD's cargo 
on their regularly scheduled commercial routes, in the same vessels 
and at the same time as commercial cargo. 

These worldwide solicitations may result in the acceptance of more 
than one carrier's rates to transport cargo between the same points, 
if it is determined that the services of more than one carrier are 
necessary to meet DOD transportation requirements on any route.  At 
the conclusion of negotiations, the JTMO publishes the carriers' names 
and accepted rates.[2]  As DOD customers generate individual 
requirements for ocean transportation, the JTMO books the cargo with 
the carrier whose accepted rates represent the lowest overall cost to 
the government and whose sailing schedule meets the cargo's delivery 
requirements.  If that carrier has space available, the JTMO issues a 
shipping order to that carrier.  If that carrier has no more capacity 
on its vessel at the time of booking, or if its schedule does not meet 
the required cargo delivery date, the JTMO books the cargo with the 
next lowest-priced carrier that can meet the cargo's delivery 
requirements.  

In 1992, DOD implemented an additional approach to contracting for 
these transportation services--individual service contracts.  Under 
such contracts, a shipper commits to providing a carrier with a 
certain minimum quantity of cargo for a fixed period.  In exchange, 
the carrier agrees not only to provide preferred rates but to meet 
certain service commitments.  See The Shipping Act of 1984, 46 U.S.C. 
App.  sec.  1702(21) (1994).  These contracts were initially utilized for 
individual DOD components with clearly defined and predictable cargo 
movement needs.

This RFP, issued September 10, 1997, incorporates both the traditional 
method of contracting for multiple carriers of ocean and intermodal 
transportation services, adding service commitments by the carriers 
and cargo commitments by the government (the General Contract) for 
most DOD customers, as well as the customized single carrier service 
contracts for individual customers with additional special needs (the 
CSS contracts).  Awards of fixed-price, indefinite delivery, 
indefinite quantity (IDIQ) contracts for the General Contract portion 
of the solicitation will be made to the low cost, technically 
acceptable offerors.
RFP  sec.  M-2.a.  Award of a fixed-price IDIQ contract for a route or zone 
under a particular CSS will be made to the single overall low cost, 
technically acceptable offeror meeting the requirements of that 
particular CSS route or zone.
RFP  sec.  M-4.A.  All contracts awarded under this RFP will be effective 
between February 1 and September 30, 1998, at an overall estimated 
value of $250 million.

Each carrier was required to submit rates for all offered services on 
all offered routes or zones, as well as information about its offered 
services.  This information included a detailed description of each 
vessel proposed for use, such as its size and cargo capacity; a 
detailed description of all container types and ancillary equipment 
proposed for use; and a description of the service for all routes or 
zones offered, including the frequency of sailing and transit times.  
In this regard, section L-15 of the RFP advised that offerors were 
required to demonstrate their technical capability to perform the 
offered services in order to receive award; technical capability was 
defined as including the ability to provide the applicable carrier 
services on the routes offered with the assets identified in service 
and equipment profiles.  The determination of technical acceptability 
was also to include a consideration of past performance and compliance 
with solicitation requirements.

Sea-Land filed its initial protest prior to the closing date of 
October 24, and filed its supplemental protest just prior to the 
amended closing date of October 31.  Despite two post-protest 
amendments to the solicitation, Sea-Land's challenges to numerous 
provisions remain.[3]  Among the provisions at issue are those 
concerning certain technical and price evaluation criteria; a maximum 
cargo limitation; the minimum and maximum volume commitments; 
predetermined prices for certain services; and equipment pools.  Our 
review of the record and the arguments submitted by both Sea-Land and 
the JTMO leads us to conclude that the challenged provisions are 
unobjectionable when considered in the context of this acquisition.

EVALUATION CRITERIA

Technical Acceptability 

General Contract awards will be made to the low-cost, technically 
acceptable offerors.  RFP  sec.  M-2.a. provides that all such offers will 
be evaluated for technical acceptability and for fair and reasonable 
prices, as specified in RFP  sec.  M-3.  Since that section only addresses 
the pricing evaluation, Sea-Land argues that the RFP fails to clearly 
set forth the evaluation criteria the agency will use to determine 
whether an offer is technically acceptable.  The JTMO counters that 
the RFP, when read as a whole, does clearly set forth these evaluation 
criteria.

Where a dispute exists as to the actual meaning of a solicitation 
requirement, our Office will resolve the matter by reading the 
solicitation as a whole and in a manner that gives effect to all of 
its provisions.  Sea-Land Serv., Inc., B-246784.2, Aug. 24, 1992, 92-2 
CPD  para.  122 at 11.  While this solicitation is not a model of clarity, 
our review confirms the JTMO's position that the criteria for 
determining technical acceptability are apparent when the solicitation 
is read as a whole.

RFP  sec.  M-1, which applies to all offers of service, sets forth the 
areas that will be considered in determining technical acceptability:  
a contractor must demonstrate its technical capability to provide the 
services on all route indices for which it offers services (RFP  sec.  
M-1.a. and b.); a contractor's failure to comply with any solicitation 
requirements will be grounds for rejection as technically unacceptable 
(RFP  sec.  M-1.c.);[4] a contractor's past performance will be evaluated 
as part of its ability to perform the contract (RFP  sec.  M-1.d.); and 
offers will be evaluated for compliance with the Cargo Preference Act 
of 1904, 10 U.S.C.  sec.  2631 (1994)
(RFP  sec.  M-1.e.).  Sections M-2.b. and M-4.H of the RFP, which apply to 
the General Contracts and CSS contracts, respectively, state that the 
contracting officer will consider information publicly filed with 
various agencies to determine technical acceptability.  Hence, in our 
view, the RFP does set forth the areas that will be considered in 
evaluating an offeror's technical acceptability.  

As to the General Contract, Sea-Land further contends that the RFP 
improperly  fails to set forth fixed minimum requirements for areas 
that will be considered under the technical capability factor--cargo 
capacity commitments, sailing frequency, and transit times.  Sea-Land 
asserts that, in the absence of such requirements, the RFP cannot 
represent the agency's minimum needs and precludes firms from 
intelligently structuring their offers.

A solicitation's evaluation factors and subfactors must be tailored to 
the acquisition in question.  Federal Acquisition Regulation (FAR)  sec.  
15.605(a) (June 1997).  Moreover, in preparing a solicitation for 
supplies or services, a contracting agency must specify its needs and 
solicit offers in a manner designed to obtain full and open 
competition and may include restrictive provisions or conditions only 
to the extent that they are necessary to satisfy the agency's needs.  
10 U.S.C.  sec.  2305(a)(1) (1994).  The determination of the agency's 
needs and the best method of accommodating them is primarily within 
the agency's discretion.  Premiere Vending, 73 Comp. Gen. 201, 206 
(1994), 94-1 CPD  para.  380 at 7.  Agencies enjoy broad discretion in the 
selection of evaluation factors, and we will not object to the use of 
particular evaluation criteria or an evaluation scheme so long as the 
factors used reasonably relate to the agency's needs.  Id.; Leon D. 
DeMatteis Constr. Corp.,
B-276877, July 30, 1997, 97-2 CPD  para.  36 at 3-4.  

This acquisition does not seek to force carriers to alter their normal 
commercial service because the JTMO recognizes that DOD is only one of 
many shippers purchasing cargo space on the carriers' vessels.  In 
recognition of this reality, the JTMO seeks to ship DOD's cargo on 
carriers' regular commercial sailings, allowing the carriers to freely 
select their routes, port itinerary, sailing frequency, vessels (and, 
thus, capacity), vessel rotation, and type of cargo to be carried.  
For this reason, the RFP does not require all carriers to reserve the 
same fixed minimum cargo capacity on their vessels for DOD cargo but, 
rather, a small percentage which varies depending upon the route 
offered.  RFP Attachment (Att.) 11,  sec.  C-7.a.(3)(b) and (c).  All 
carriers must sail at least once a month, id. at  sec.  C-5, but, beyond 
that, all carriers must provide and maintain the regular sailing 
schedules and transit times listed in their proposals or be subject, 
generally, to the payment of liquidated damages.[5]  Id. at  sec.  
H-3.o.B.2., 3., and 5. 

The agency's needs are to transport individual shipments from origin 
to destination with the lowest-cost carriers that can meet the 
shipments' delivery requirements.  Individual shipments are of varying 
sizes and have varying delivery schedules, neither of which can be 
anticipated prior to award.  The absence of fixed minimum requirements 
allows an array of carriers, with varying capacities and services, to 
compete for the opportunity to transport these DOD shipments.  The 
JTMO clearly could establish fixed minimum requirements sufficiently 
high to meet all of its anticipated shipments, but their imposition 
would place a disproportionate burden on smaller carriers with smaller 
vessels and less frequent sailings, perhaps disrupting their normal 
commercial schedules.  Hence, the JTMO believes, and we agree, that 
the absence of fixed minimum requirements under this multiple award 
scheme enables more shippers to compete using the commercial schedules 
of their choice to meet the agency's needs.[6]  Under this approach, 
the JTMO can select a carrier depending upon individual bookings from 
a variety of shippers for the best value tailored to that shipment, 
thereby meeting its needs.  Sea-Land's contention that the absence of 
fixed minimum requirements leaves the JTMO with no objective basis to 
compare offers is incorrect; the basis of comparison is whether 
carriers can provide the services offered.

Pricing 

In evaluating the pricing proposed for CSS contracts, the contracting 
officer will compare the ocean and single factor rates submitted by 
the overall low cost evaluated offer to the corresponding ocean and 
combined ocean/linehaul multifactor rates contained in the General 
Contract.  No contract for a CSS route or zone will be awarded if the 
overall lowest cost offer contains rates equal to or greater than the 
lowest available rates for the same movements under the General 
Contract.  RFP  sec.  M-4.D.

Sea-Land argues that it is not a legitimate government interest for 
the JTMO to use the pricing for a service with normal, commercial 
requirements--the General Contract service--as a ceiling price for a 
service with enhanced, specialized requirements--CSS contracts.  
Sea-Land asserts that the imposition of such a ceiling unduly 
restricts competition by discouraging potential offerors from 
competing for award of CSS contracts because they cannot factor into 
their prices the additional costs of providing specialized services.

We have addressed a similar issue in Sea-Land Serv., Inc., B-246784.6, 
B-253068, Aug. 5, 1993, 93-2 CPD  para.  84 at 7-9; see also Sea-Land Serv., 
Inc., B-246784.2, supra, at 9.  A CSS contract is narrowly defined and 
requires a less comprehensive service capability than a General 
Contract.  Moreover, the cargo commitments under the CSS 
contracts--where the winner takes all--are far more substantial than 
those made in the General Contract--where multiple awardees split the 
requirements.[7]  This allows the awardee to focus its resources on a 
narrow requirement with a high volume of guaranteed cargo movements.  
Its marginal investments to provide the enhanced services are 
compensated for by lower risks and larger volume inherent in the CSS 
contracts.  As in common commercial practice, the JTMO expects that 
these economic realities will be reflected in lower individual rates 
offered for the CSS contracts, and has chosen to incorporate that 
expectation into its price analysis.[8]  

There is nothing inherently unreasonable about conducting procurements 
which parallel commercial sector service contracts, and it is not 
unduly restrictive of competition for an agency to predesignate 
pricing ceilings in order to protect legitimate government interests.  
Sea-Land Serv., Inc.., B-246784.6, B-253068, supra, at 8-9.  Given the 
significant cargo commitments the JTMO is willing to make to one 
carrier under the CSS contract, and the substantial liquidated damages 
for failure to meet those commitments, the agency has a legitimate 
interest in negotiating better rates than it would otherwise have 
available under the General Contract, and in obtaining better rates 
than carriers would generally offer their commercial clients for lower 
volume commitments.  We thus have no objection to the agency's 
designating price ceilings here.  Id. at 9.  

Sea-Land also objects to the language in RFP  sec.  M-3(1)(a)1, which 
concerns the evaluation of pricing for General Contract awards.  That 
provision states that on each individual route or zone, the lowest 
offered rate for each category will be accepted unless the contracting 
officer determines that the rate exceeds charges to the public for the 
carriage of like goods, pursuant to the Cargo Preference Act of 1904.  
Sea-Land argues that this provison is unreasonable and does not 
properly implement that Act because it could allow the government to 
accept a higher-priced offer in lieu of the lowest-priced offer if the 
lowest-priced offeror's price is higher than its commercial price.

The Cargo Preference Act of 1904 and, specifically, the so-called 
McCumber Amendment thereto, restrict American shippers dealing with 
DOD to charges not "higher than the charges made for transporting like 
goods for private persons."  10 U.S.C.  sec.  2631 (1994); Sea-Land Serv., 
Inc., B-270504, Mar. 15, 1996, 96-1 CPD  para.  155 at 3; see United States 
Lines Co. v. United States, 223 F. Supp. 838, 844 (S.D.N.Y.), aff'd on 
other grounds, 324 F.2d 97 (2d Cir. 1963); Sea-Land Serv., Inc., ASBCA 
No. 46,608, Mar. 2, 1995, 95-1 BCA
 para.  27,539.

The language in RFP  sec.  M-3(1)(a)1 is similar to that in a clause which 
we have previously found unobjectionable.[9]  In Sea-Land Serv., Inc., 
B-270504, supra, at 2-3, we concluded that the language merely 
reflects the government's statutory right to insist that it not pay 
rates higher than a carrier's comparable commercial rates for the 
shipment of cargo.  As the JTMO states, while the "irrational result" 
cited by Sea-Land is possible, under the plain language of the statute 
the ceiling is based on a carrier's own charges, not another carrier's 
charges.  The burden for ensuring that the statutory price ceiling is 
not breached rests with the individual carrier, and that carrier 
rightfully risks rejection if it is exceeded.  See id. at 3. 

MAXIMUM CARGO LIMITATION

The RFP provides that the government intends to book cargo such that 
no carrier  receives more than 75 percent of the total military 
container cargo, inclusive of CSS contract cargo, available for 
carriage outbound from the United States over certain major routes.  
RFP Att. 11,  sec.  G-2.b.(1).  This provision is intended to support the 
defense mobilization base by ensuring that, to the extent possible, 
more than one U.S. flag carrier will carry DOD cargo on a route.  

The RFP further provides that this percentage may be increased, 
decreased, or deleted, or a similar limitation may be established for 
another route, if the contracting officer determines that such a 
change is warranted in view of (a) the number of carriers who have 
established and maintained a regular carriage service on the stated 
routes; (b) the reasonableness of the rates offered on these routes; 
(c) or in the interest of national defense.  Id. at  sec.  G-2.b.(2).  The 
JTMO explains that if, for example, only two awards are made on a 
route and one awardee subsequently changes its service, the government 
may need to transport more than 75 percent of the cargo with the other 
carrier.    

Sea-Land does not contest the JTMO's right to impose maximum cargo 
limitations, but only its ability to revise or add them after award.  
Sea-Land construes the limitation as a "guarantee" of 75 percent of 
the available cargo on a route to the low-cost carrier meeting the 
delivery requirements of that cargo and, as a result, asserts that 
offerors are entitled to rely upon this 75 percent "guarantee" in 
formulating their technical and price proposals.[10] 

The maximum cargo limitation represents the JTMO's acknowledgment of 
the fact that it is contracting with commercial shippers who are not 
precluded from revising their commercial shipping schedules, after 
award, in ways that might not meet the government's needs.  See RFP 
Att. 10,  sec.  H-5.e.B.3.  Since it has no way to predict the future 
actions of carriers prior to award, the JTMO must retain the 
flexibility to revise the limitations in order to ensure the carriage 
of its cargo.  The most that can be said of the maximum cargo 
limitation is that it "guarantees" the low-cost carrier on these 
routes "up to" 75 percent of the available cargo if it meets the 
delivery requirements for that cargo.  Even so, prior to award, there 
is no way to know how many carriers will service a route or how often 
given carriers will have both sufficient cargo capacity and delivery 
schedules to ship the government's cargo.  As a result, the elements 
of this "guarantee" are so uncertain that it is simply unreasonable 
for an offeror to rely upon the limitation in formulating its 
proposal.  The RFP provides offerors with sufficient data to formulate 
their proposals and, as risk exists in any contract, offerors are 
expected to use their professional expertise and business judgment in 
anticipating a variety of influences affecting performance costs.  
Crowley Am. Transport, Inc., B-259599.2, June 19, 1995, 95-1 CPD  para.  277 
at 4.  To the extent Sea-Land chooses to rely upon the maximum cargo 
limitation in formulating its proposal, it does so at its own risk.

VOLUME COMMITMENTS

Sea-Land argues that the General Contract portion of the RFP is 
defective because it contains minimum quantities that are nominal as 
to each individual carrier, and because the stated maximum quantity is 
not realistic.

An IDIQ contract may be used when the government cannot predetermine, 
above a specified minimum, the precise quantities of supplies or 
services that will be required during the contract period, and where 
it is inadvisable for the government to commit itself for more than a 
minimum quantity.  FAR  sec.  16.504(b).  An IDIQ contract shall require 
the government to order and the contractor to furnish at least a 
stated minimum quantity of supplies or services and, if and as 
ordered, the contractor to furnish any additional quantities, not to 
exceed a stated maximum.  FAR  sec.  16.504(a)(1).  To ensure the contract 
is binding, the minimum quantity must be more than a nominal quantity 
but should not exceed the amount the government is fairly certain to 
order.  FAR  sec.  16.504(a)(2).  Estimated maximum quantities should be 
realistic and based on the most current information available.  FAR  sec.  
16.504(a)(1).  These estimates need not be precise; rather, such 
estimates are unobjectionable so long as they were established in good 
faith or based on the best information available, and accurately 
represent the agency's anticipated needs.  Howard Johnson, B-260080, 
B-260080.2, May 24, 1995, 95-1 CPD  para.  259 at 3; International Tech. 
Corp., B-233742.2, May 24, 1989, 89-1 CPD  para.  497 at 3-4.

The RFP sets forth minimum volume guarantees for all carriers in the 
aggregate on given major trade routes, but guarantees each carrier a 
minimum of one Forty-Foot Equivalent Unit (FEU)[11] over the contract 
term.  RFP Att. 11,  sec.  H-3.o.A.1.(a), (b), and (f).  Sea-Land argues 
that a guarantee of only one FEU for each individual carrier is 
nominal and provides inadequate consideration for each contract with 
individual carriers.

An IDIQ contract is binding so long as the buyer agrees to purchase 
from the seller at least a guaranteed minimum quantity of goods and 
services; the stated minimum quantity forms the consideration for the 
contract.  See Sunbelt Properties, Inc., 
B-249307, Oct. 30, 1992, 92-2 CPD  para.  309 at 3; see Willard, Sutherland 
& Co. v. U.S., 262 U.S. 489, 493 (1923).  Since the prohibition 
against a "nominal" minimum quantity is designed to ensure that the 
intent to form a binding contract is present, the determination 
whether a stated minimum quantity is "nominal" must consider the 
nature of the acquisition as a whole.  

This solicitation allows for the award of contracts to multiple 
carriers to transport cargo on the same routes or zones.  Since the 
JTMO may have multiple choices in shipping its cargo on particular 
routes or zones, and since it is not possible to know whether a given 
carrier is the best value until individual orders arise, it is 
impossible to ascertain beforehand whether an individual carrier will 
carry more or less cargo during the life of the contract.  Since the 
minimum quantity may not exceed the amount the government is fairly 
certain to order, FAR  sec.  16.504(a)(2), the JTMO asserts that one FEU is 
the only minimum quantity that would not mislead carriers or subject 
the government to undue risk. 

Sea-Land has given us no reason to disagree with the JTMO's rationale 
here, or to find that the quantity of one FEU per carrier here means 
that there is insufficient consideration.  While the quantity of one 
FEU is minimal, other factors surrounding the acquisition underscore 
the government's intent to form a binding contract.  The JTMO points 
out that, in its experience, all carriers are awarded rates on 
multiple routes and generally receive significant cargo.  Further, 
since the RFP generally prohibits a carrier from transporting more 
than 75 percent of the cargo volume on the major outbound routes, as 
discussed above, as a practical matter no carrier can transport all of 
the cargo on these routes and at least two carriers transport the bulk 
of the cargo.  Considering all of the circumstances, we cannot 
conclude that the stated minimum quantity per carrier here represents 
insufficient consideration to form a binding contract.  

With respect to the maximum quantity, the total cargo to be shipped on 
the specified routes or zones during the term of the contract shall 
not exceed the total FEU vessel capacity of all carriers holding 
contracts under the contract and which are available to transport 
cargo on such routes and zones.  RFP Att. 11,  sec.  H-3.o.A.2.  Sea-Land 
argues that this amount cannot be realistic or based on the most 
current information available, and that it exceeds the agency's needs.  

According to the JTMO, DOD generates large volumes of cargo which are 
transported around the world as requirements arise, and which may 
substantially increase at any given point in time depending on the 
nature of the missions, citing as examples peacekeeping operations 
with the United Nations and allies in Somalia, Haiti, and Bosnia.  
Projections based on historical movements are not useful given the 
unpredictable nature of these events, and the mechanical reliance on 
such projections to establish a maximum quantity could result in DOD's 
inability to respond to rapidly changing requirements.  We cannot 
agree with Sea-Land's assertion that the JTMO can factor in amounts 
for unexpected surges based upon its prior experience with unexpected 
surges; this experience would, by definition, have little specific 
predictive value in determining the maximum quantity that will be 
ordered over the life of the contract.  See Alice Roofing & Sheet 
Metal Works, Inc., B-275477, Feb. 24, 1997, 97-1 CPD  para.  86 at 5-6.  As 
the JTMO explains, this is not a situation where it has simply 
declined to try to establish a more exact level of maximum quantities; 
rather, the varying nature and unpredictability of DOD customers' 
requirements necessitate the use of the stated maximum quantity.  
Under the circumstances, we have no basis to conclude that the 
estimate here is not established in good faith or based on the best 
information available, or that it does not accurately represent the 
agency's anticipated needs.  Howard Johnson, supra, at 4.[12]

PREDETERMINED PRICES

The RFP establishes predetermined pricing or pricing formulas for 
various specialized services.[13]  Sea-Land asserts that the 
imposition of predetermined pricing for these services unduly 
restricts competition; since the government knows when it will require 
these services at the time of booking it should select the low cost 
carrier at the time of booking based on full and open competition.

The government has wide power to prescribe charges for services 
ancillary to transportation of goods.  Household Goods Carriers 
Bureau, Inc. v. Department of Defense, 783 F.2d 1101, 1104 (D.C. Cir. 
1986).  Such prescription of charges gives the agency a rational and 
practical means for selecting low cost carriers, instead of having to 
take account of all the potential variations in changes submitted by 
different carriers.  Id.

The JTMO explains it has found that certain charges ancillary to 
transportation can drive up the total cost for a shipment 
significantly, resulting in extra charges that are out of proportion 
to the basic service.  If the government does not accept these 
necessary ancillary charges as offered by a carrier, the government 
cannot ship the cargo.  If only one carrier services a route and the 
contracting officer has rejected the ancillary charge as unreasonable, 
the government cannot ship cargo requiring the ancillary service 
without modifying the contract.  In addition, the JTMO has found that 
the prices proposed for these services have varied widely between 
offerors in past procurements, making price reasonableness 
determinations difficult.  To avoid this dilemma, the JTMO established 
predetermined pricing or pricing formulas for some of these ancillary 
charges, at rates based upon the contracting officer's business 
judgment as well as prior and current rates for these services.  The 
JTMO has provided a detailed justification for its decision as to each 
contested service.  

Sea-Land's objection that the JTMO will know at the time of booking 
whether these services are necessary and can obtain competitive 
pricing at that time ignores the agency's concerns, which we find 
reasonable.  Sea-Land does not dispute the JTMO's assertion that these 
services account for a tiny percent of the contract's value.  Further, 
while Sea-Land suggests that the prices are not compensatory, the fact 
that solicitation provisions impose a risk that payments under the 
contract might not cover the costs of performance does not, by itself, 
make the provisions improper.  See Courtney Contracting Corp., 
B-242945, June 24, 1991, 91-1 CPD  para.  593 at 5.  It is within the 
agency's discretion to solicit a proposed contract which maximizes 
risks on the contractor and minimizes administrative burdens on the 
government.  James Foos & Assocs., B-249496.2, Jan. 6, 1993, 93-1 CPD  para.  
22 at 3-4.  Offerors must use their professional expertise and 
business judgment to assess the risk's magnitude and the possible 
associated cost in preparing their proposals.  Crowley Am. Transport, 
Inc., supra.  

EQUIPMENT POOLS

To meet a given shipper's needs, the contracting officer may 
unilaterally modify a General Contract to require a carrier to 
establish an equipment pool (consisting of containers and chassis) at 
a designated location(s); the cost of establishing and maintaining the 
pool will be borne by the carrier.  RFP Att. 11,  sec.  C-11.a.(2)(a).  A 
"required" pool will only be established if a pool cannot be 
voluntarily agreed upon, and the overall size of the required pool 
will be based on the specific shipper's average weekly shipment 
requirements from a specific point--the number of containers that must 
be in the pool on a day-to-day basis shall be equal to the weekly 
average required.  Id. 
 
This provision arises from a related solicitation for the Defense 
Logistics Agency's  Prime Vendor program for food items, under which 
the prime vendor ships food and beverage products from its continental 
United States distribution centers to overseas U.S. military 
facilities, Navy ships, and military hospitals.  The JTMO explains 
that the requirement is needed to give the customer the flexibility to 
fill weekly supply orders and to react within short time frames for 
out-of-the-ordinary surges.  Since that contract has not yet been 
awarded, the instant RFP cannot specify particular levels which must 
be maintained.  However, the levels set forth here are guided by the 
fact that the requirements that must be met under the Prime Vendor 
program are measured on a weekly volume basis.  Since there is no way 
to predict what the daily requirements will be until orders are 
placed, and since orders are placed on a weekly basis, it is 
conceivable that the daily requirements could necessitate the use of 
the number of containers typically used in a week.   
  
Sea-Land does not dispute the need for equipment pools, and its 
assertion that the JTMO has provided no justification for requiring a 
daily level that is equal to the average weekly requirements is 
unsupported.  The justification--the need to fill unpredictable weekly 
supply orders and to react within short time frames for unusual 
surges--is reasonably related to what is presently known about the 
requirements.  In addition, the RFP provides that, when more 
information is available about those requirements, the contracting 
officer will reduce the pool size by the number of unused containers 
and pay the carrier the cost of positioning a container that was not 
used during the term of the contract.  Id. at  sec.  C-11.a.(2)(c).  We 
therefore find the level of the pool to be unobjectionable.[14]
 
Sea-Land's complaint about the size of the pool is at the heart of its 
challenge to the related liquidated damages provision.  Carriers that 
do not maintain the pool at the stated levels shall be assessed 
container detention charges for each container per day until the 
proper pool level is obtained.  Id. at  sec.  C-11.a.(2)(b).  Sea-Land 
contends that this constitutes an unenforceable penalty because it 
imposes liquidated damages that are not reasonable and have no 
reference to probable actual damages.  Sea-Land maintains that 
liquidated damages should not be imposed until the equipment pool is 
completely depleted.

Liquidated damages provisions are authorized where the government 
reasonably expects to suffer damages if the contract is improperly 
performed and the extent of such damages would be difficult to 
ascertain.  See FAR  sec.  11.502(a).  Before we will rule that a 
liquidated damages provision imposes a penalty, the protester must 
show that there is no possible relationship between the amounts 
stipulated for liquidated damages and losses which are contemplated by 
the parties.  Sea-Land Serv., Inc.,
B-270504, supra, at 5-6.  

Sea-Land has made no such showing.  First, its objection is not based 
upon the liquidated damages rate per container, but upon the size of 
the pool, which we have found unobjectionable.  Further, the record 
shows that the JTMO reasonably expects to suffer damages if the pool 
is not maintained at the stated level.  Again, it is possible that the 
daily requirements could necessitate the use of the number of 
containers typically used in a week, and the failure to meet this 
potential requirement could result in actual damages.  As the JTMO 
explains, the equipment pool is not only for land-based military 
facilities, but also for forward-deployed units for which this is the 
only source of supply; problems associated with failure have a 
real-time adverse impact.  Since the government cannot know the daily 
requirements until the orders are placed, the extent of these damages 
would be difficult to ascertain.  Considering all of the 
circumstances, as well as the RFP's promise to adjust the size of the 
pools when more information is available, we have no basis to object 
to the liquidated damages provisions.

IMPROPER CERTIFICATIONS

Sea-Land argues that the RFP contains certifications in contravention 
of section 29 of the Office of Federal Procurement Policy Act, 41 
U.S.C.A.  sec.  425 (West Supp. 1997), as amended by section 4301 of the 
Defense Authorization Act of 1996, Pub. L. No. 104-106, 110 Stat. 205 
(1996) (the Act).  Under that section, a requirement for a 
contractor's certification may not be included "in the [FAR]" or "in a 
procurement regulation of an executive agency" unless it is 
specifically imposed by statute or has been properly justified.  41 
U.S.C.A.  sec.  425(c)(1) and (2).  Sea-Land asserts that the RFP contains 
three provisions for certifications that are neither imposed by 
statute nor properly justified and are, as a result, improper. 

The plain language of 41 U.S.C.A.  sec.  425(c) does not prohibit the 
inclusion of nonstatutory certifications in solicitations or 
contracts.  In any event, even if one could read the prohibition to 
apply to solicitations or contracts, the provisions here are not 
"certifications" within the intent of the law.  A certification is 
"the formal assertion in writing of some fact."  Black's Law 
Dictionary (5th Ed. 1979) at 206.  Specific certifications elsewhere 
eliminated by the Act include the procurement integrity certification, 
section 4304 of the Act, and the certification regarding a drug-free 
workplace, section 4301(a), both of which required contractors to 
separately certify, in writing, that they met the relevant 
requirements.  In this regard, the Act makes it clear that the impetus 
behind the prohibition was the desire to reduce the administrative and 
enforcement burdens posed by an array of such certifications that had 
accumulated in various sets of procurement regulations.  Sections 
4301(b)(1)(A)(i) and 4301(b)(1)(B)(i)(I).

Two of the provisions here require no separate certification in 
writing, but are merely contract requirements.  RFP Att. 11,  sec.  C-7.b. 
and c generally require the carrier to "represent" that services in 
connection with inland transportation will be performed in accordance 
with applicable law; "warrant" that it can perform certain services 
listed in its schedule; "warrant" that it is authorized to accept 
orders and receive payments for such services; and "warrant" that its 
offer of rates has considered various factors.  RFP Att. 11,  sec.  C-8.a. 
requires the carrier to "warrant" that, notwithstanding the contract 
terms, the government shall be provided transportation at rates that 
do not exceed those charged the public for similar services.  The 
third provision, RFP Att. 11,  sec.  C-11.h(8), does not require the 
contractor to separately certify that it meets some set of 
requirements.  It allows the carrier to assess a maintenance charge on 
the government under certain conditions, and simply requires the 
contractor to "certify" such charges.  In view of the language of the 
law and these provisions, Sea-Land's allegation has no merit.    

PERFORMANCE WITHOUT A CONTRACT

An IDIQ contract for services contemplates the issuance of orders for 
the performance of tasks during the period of the contract.  See 10 
U.S.C.  sec.  2304d(1) (1994).  Such orders are contracts within the 
overall IDIQ contract, see FAR  sec.  2.101 (definition of contract), and 
are subject to the terms and conditions of that contract.  FAR  sec.  
52.216-18(b).

Sea-Land asserts that the RFP improperly requires carriers to commence 
performance without a contract of carriage,[15] or task order, citing 
section G-1.a. of RFP Att. 11, entitled "General Conditions of 
Service--Documentation":

     When transportation services are ordered under this Contract, a 
     Shipping Order . . . will be issued by the Government within 
     three days after sail date.  The Government will also prepare all 
     necessary papers, including vessel papers or manifests listing 
     the cargo stowed in containers aboard the vessel and they will be 
     receipted for by the carrier or his agent.  Such papers . . . 
     together with the Shipping Order constitute the contract of 
     carriage, and all the terms of this contract shall be deemed as 
     incorporated therein. . . .

Sea-Land argues that if the Shipping Order is the contract of 
carriage, and is not issued until after the sailing date, the 
government is improperly requiring carriers to perform without a 
contract.  At a minimum, Sea-Land contends, the RFP is ambiguous 
regarding the document or action that forms the contract--whether it 
is when the government places the booking with the carrier or when the 
Shipping Order is issued.  The JTMO counters that the solicitation is 
not ambiguous when read as a whole, but clearly recognizes that the 
booking initiates the contractual relationship and the Shipping Order 
and other papers merely document that relationship.

A solicitation term is only ambiguous if it is susceptible to more 
than one reasonable interpretation when read in the context of the 
solicitation as a whole.  Lankford-Sysco Food Servs., Inc.; Sysco Food 
Servs. of Ariz., Inc., B-274781,
B-275081, Jan. 6, 1997, 97-1 CPD  para.  11 at 3.  Where a dispute exists as 
to the actual meaning of the terms of a solicitation, we will resolve 
the matter by reading the solicitation as a whole and in a manner that 
gives effect to all of its provisions.  Id. at 3-4.

As the JTMO points out, the heading of section G-1.a. makes it clear 
that the provision was intended to describe the documentation of the 
contract, not the contract itself.  The fact that documents will not 
be issued until after sailing does not mean that the carriers are 
required to perform without a contract, since another RFP provision 
makes it clear that the government intends that its contractual 
obligations commence upon the booking.  Under RFP Att. 11,  sec.  
H-3.o.B.5.(d)(2), (3), the government is liable to the carrier for 
liquidated damages if it fails to cancel a booking or if cargo is not 
available to load aboard the scheduled vessel through no fault of the 
carrier.  As a result, the booking unquestionably initiates the 
contractual relationship, and the order culminates upon the issuance 
of the documentation.  Sea-Land's reading of the solicitation 
improperly fails to give effect to these provisions and is, as a 
result, unreasonable.  Nabholz Bldg. and Management Corp., B-274930, 
Nov. 21, 1996, 96-2 CPD  para.  196 at 3.    

In responding to Sea-Land's argument on this issue, counsel for the 
JTMO stated that, with respect to booking procedures, the JTMO may 
need to make oral bookings on rare occasion.  Sea-Land countered that, 
even if a booking creates a binding legal relationship between the 
parties, the RFP nevertheless is defective because it does not 
authorize oral orders.  See FAR  sec.  52.216-18(c) (orders may be issued 
orally only if authorized in the solicitation's schedule).  We need 
not address this issue.  Whether or not a booking is an "order" within 
the meaning of the FAR, the RFP requires that bookings be made by 
electronic means, RFP  sec.  H-3.o.B.4.(a); it makes no reference to oral 
bookings.  Accordingly, any questions about the propriety of oral 
bookings concern not the solicitation, but the administration of the 
contract.[16]     

OTHER CLAUSES

Sea-Land contends that the RFP's incorporation by reference of the 
order of precedence clause, FAR  sec.  52.215-33 (June 1997),[17] is not 
appropriate because the RFP does not use the Uniform Contract Format.  
Sea-Land asserts that the application of the clause would 
"effectively" deviate from the FAR, might not represent the agency's 
intent, and creates an ambiguity in the RFP.  Since the provision is a 
standard clause, it does not improperly deviate from the FAR, and the 
JTMO disputes that it does not represent its intent.  Moreover, no 
ambiguity exists in the RFP since, if the need for its use arises, it 
gives clear guidance as to the order of precedence.

Sea-Land also contends that the RFP improperly incorporates by 
reference Defense Federal Acquisition Regulation Supplement (DFARS)  sec.  
252.209-7003 (Sept.1994), "Disclosure of Commercial Transactions with 
the Government of a Terrorist Country," which has been canceled.  The 
JTMO concedes that Sea-Land is correct, and explains that proofreading 
errors prevented it from correcting this oversight in its last 
amendment.  The JTMO plans to address this oversight administratively, 
and asserts that Sea-Land cannot have been prejudiced by its 
inclusion.

Our Office will not sustain a protest unless the protester 
demonstrates a reasonable possibility that it was prejudiced by the 
agency's actions.  McDonald-Bradley,
B-270126, Feb. 8, 1996, 96-1 CPD  para.  54 at 3; see Statistica, Inc. v. 
Christopher, 102
F. 3d 1577, 1581 (Fed. Cir. 1996).  Sea-Land asserts that the 
inclusion of the clause precluded it from revisiting its corporate 
policies against conducting commercial transactions with the 
governments of terrorist nations.  In our view, this assertion is too 
vague to constitute a reasonable possibility of prejudice; Sea-Land 
has not explained what impact, if any, this policy would have had on 
its proposal.[18]    

The protests are denied.

Comptroller General
of the United States

1. This solicitation was originally issued by the JTMO under the 
authority of the Department of the Navy's Military Sealift Command 
(MSC).  At the time, the JTMO was an MSC/MTMC organization responsible 
for contracting for the transportation of Department of Defense (DOD) 
and DOD-sponsored cargoes on a liner basis in the foreign and domestic 
offshore commerce of the United States.  As a result of a 
reorganization and transfer of functions, this procurement is now 
being conducted by the JTMO as an organization under the sole 
authority of the MTMC.

2. Prior to this solicitation, the rates, terms, and conditions for 
this service were published in the MSC Worldwide Container Shipping 
Agreement, later known as the Global Container and Shipping Agreement, 
and the MSC Interport Agreement(s).  The new contracts resulting from 
this solicitation will be published as the General Contract and, as 
discussed further below, the Customer Service Section (CSS) contracts, 
which will be known collectively as the Universal Service Contract. 

3. The JTMO received numerous proposals in response to the 
solicitation.  On January 12, 1998, the JTMO notified this Office that 
it had proceeded with award notwithstanding the protests.

4. The first sentence of RFP  sec.  M-1.c. reserves to the government "the 
right to reject any offer in whole or in part under this RFP."  
Sea-Land's focus on the "plain meaning" of the language in section 
M-1.c. to argue that this sentence may provide the contracting officer 
an unqualified right to reject offers for any reason is misplaced; the 
provision is unobjectionable when this sentence is read in concert 
with the entire solicitation. 

5. The RFP does allow carriers to modify their schedules after award 
under specified procedures.  RFP Att. 10,  sec.  H-5.e.B.3.

6. Sea-Land contends that the "individualized" requirements put larger 
carriers like itself at an unfair competitive disadvantage because 
they must bear the additional costs and risks associated with 
committing more cargo than their smaller competitors.  We disagree.  
The cargo commitment requirements apply proportionally equally to all 
carriers, and the remaining requirements allow each carrier to retain 
its normal shipping schedule; thus, the overall effect on all carriers 
is the same.  The fact that offerors may respond to the RFP 
differently is a matter of business judgment and does not preclude a 
fair competition.  See US Defense Sys., Inc., B-248845, Sept. 23, 
1992, 92-2 CPD  para.  197 at 4. 

7. Sea-Land's argument that the RFP makes greater cargo guarantees 
under the General Contracts than under most of the CSS contracts is 
premised upon its view that the RFP's maximum cargo limitation 
"guarantees" low cost offerors meeting the delivery requirements 75 
percent of the available cargo on given routes.  As discussed below, 
we disagree.

8. Sea-Land's speculation that this might lead to an irrational result 
by denying a CSS contract to a low-cost offeror with one rate higher 
than a comparable General Contract does not show that the underlying 
basis for the JTMO's rationale is unreasonable. 

9. The principal distinction between the two provisions is that RFP  sec.  
M-3(1)(a)1 contemplates the effect of the ceiling during the 
evaluation, and the provision we previously reviewed contemplated the 
effect of the ceiling after award, in case the parties, through 
oversight or omission, failed to set prices in accordance with the 
ceiling.  There is nothing improper about the solicitation's inclusion 
of both
RFP  sec.  M-3(1)(a)1 and a provision similar to that discussed in our 
prior decision.

10. According to Sea-Land, since its cost of performance would be 
based upon the
75 percent "guarantee," and since the RFP does not give offerors the 
opportunity to obtain an equitable adjustment if the limitation is 
revised, the provision violates the RFP's "Changes Clause," FAR  sec.  
52.243-1, Alternate IV.  That provision generally authorizes the 
contracting officer to make various changes to the contract subject to 
an equitable adjustment if those changes cause an increase or decrease 
in the cost of performance.  Given our conclusion below, we find no 
merit to this allegation.

11. The acronym "FEU" is an industry term for cargo volumes 
transported in standard intermodal containers measuring 8 feet high, 8 
feet wide, and 40 feet deep.

12. We are also unpersuaded by Sea-Land's comparison of this maximum 
quantity with the lesser maximum quantities provided for under the 
RFP's national emergency provisions, as the two programs are 
substantially different. 

13. The services at issue here are stop-off service; empty 
government-owned or leased containers; tank containers; 45-foot 
containers; high cube containers; linehaul for refrigerated cargo; and 
expedited delivery service.  The JTMO's uncontested assessment is that 
these services account for 1 percent of the contract's value.  

14. As for Sea-Land's assertion that allowing the agency to modify the 
contract to establish or change the equipment pool constitutes an 
unauthorized deviation from the RFP's "Changes Clause," the JTMO 
asserts that there would be no changes in the cost of performance 
since the cost to position containers that are used would be incurred 
anyway, and the government will also pay for the costs of positioning 
a container that was not used during the term of the contract.  RFP  sec.  
C-11.a.(2)(c).    The JTMO states that such costs will include both 
out-of-pocket and loss of use costs, and Sea-Land's suggestions to the 
contrary are speculative and will not be considered.

15. A contract for the transportation of property or passengers is 
known as a contract of carriage, or a contract of affreightment.  13 
Am. Jur. 2d Carriers  sec.  226; see also Todd Shipyards Corp. v. The City 
of Athens, 83 Fed. Supp. 67 (D. Md. 1949).

16. As for Sea-Land's arguments that the RFP fails to comply with the 
requirement that orders contain specific information, FAR  sec.  
16.505(a)(6), there is no requirement that this information be set 
forth in the RFP.  To the extent that the JTMO fails to comply with 
these requirements during the term of the contract, such matters 
concern the administration of the contract and are not for our review.  
4 C.F.R.
 sec.  21.5(a) (1997).  

17. This clause is now found at FAR  sec.  52.215-8 (FAC 97-02). 

18. Sea-Land's assertion that the RFP improperly incorporates the June 
1997 version of FAR  sec.  52.215-10 instead of the May 1997 version 
overlooks the fact that the FAR in its entirety was reissued in June.