TITLE:  ABF Freight System, Inc.; Old Dominion Freight Line, Inc.; Overnite, B-291185, November 8, 2002
BNUMBER:  B-291185
DATE:  November 8, 2002
**********************************************************************
ABF Freight System, Inc.; Old Dominion Freight Line, Inc.; Overnite, B-291185,
November 8, 2002

   Decision
    
    
Matter of:   ABF Freight System, Inc.; Old Dominion Freight Line, Inc.;
Overnite Transportation Co.; Roadway Express, Inc.; and Yellow Freight
System, Inc.
    
File:            B-291185
    
Date:           November 8, 2002
    
John R. Bagileo, Esq., for the protester.
Major Art J. Coulter, and Ramon Morales, Esq., Department of the Army, for
the agency.
Guy R. Pietrovito, Esq., and James A. Spangenberg, Esq., Office of the
General Counsel, GAO, participated in the preparation of the decision.
DIGEST
    
1.  Under a solicitation that provides for the award of multiple
indefinite-delivery, indefinite-quantity contracts for freight
transportation services, protest that the minimum order quantity is
inadequate is denied, where the guaranteed minimum amount is sufficient to
support a binding contract and reflects the minimum amount the agency is
fairly certain to order from each contractor.
    
2.  Protest that solicitation for an acquisition, conducted under the
commercial item provisions of Federal Acquisition Regulation (FAR) Part
12, violates FAR S: 47.207‑6(b) because the solicitation specifies
unit pricing that offerors must use for *accessorial services* is denied,
because the agency is not required to apply the requirements in FAR
S: 47.207-6(b) in a commercial item acquisition.
    
3.  Protest objecting to solicitation requiring that certain accessorial
services be provided at no additional charge and that the costs for these
services be factored into offerors' line-haul rates is denied where the
protesters did not show that the solicitation's allocation of cost risk to
the contractors was unreasonable.
DECISION
    
ABF Freight System, Inc.; Old Dominion Freight Line, Inc.; Overnite
Transportation Co.; Roadway Express, Inc.; and Yellow Freight System, Inc.
protest the terms of request for proposals (RFP) No. DAMT01-02-R-0060,
issued by the Military Traffic Management Command (MTMC), Department of
the Army, for the shipment of *freight all kinds* (FAK) and other
commodities for Department of Defense activities within the continental
United States.[1] 
    
We deny the protest.
                                                                
Since 1979, MTMC has acquired FAK shipment services through the agency's
Guaranteed Traffic (GT) program, a Federal Acquisition Regulation
(FAR)-exempt, transportation management tool under which MTMC issues
requests for rate tenders for traffic for particular routes for a
specified period of time, and awards what are, in effect, requirements
contracts to the successful carriers.  See Agency Legal Memorandum at 1;
see also Ready Transportation, Inc., B‑285283.3, B-285283.4, May 8,
2001, 2001 CPD P: 90 at 1-2.  The RFP was issued to implement the agency's
transition from the GT program to a FAR-based procurement system.  See 65
Fed. Reg. 45362 (July 21, 2000) (Notice of Proposed Change to MTMC Freight
Transportation Procurement Procedures).
    
MTMC issued the RFP pursuant to the commercial-item provisions of FAR
Subpart 12.3 and sought proposals for the award of multiple Tailored
Transportation Contracts.  These will be
indefinite-delivery/indefinite-quantity (ID/IQ) contracts for a 1-year
base period with 2 option years.[2]  Unlike the GT program, which was
restricted to carriers, the competition under the RFP is open to any
responsible contractor capable of providing the transportation services
directly or through subcontracts.[3] 
    
Offerors were informed that the transportation services would be acquired
using a regional structure concept developed by MTMC under which there
were nine *origin* regions and six *destination* regions.[4]  RFP S:
C.1.2.  As amended, the solicitation schedule identified lanes between
eight origin regions and six destination regions, and for each lane
identified estimated shipments and average weight and mileage for each
shipment.[5]  See .  For each
lane, and weight category within each lane, offerors were required to
provide a fixed-price rate per hundred weight (CWT) of cargo.  Id.  The
services to be provided included both less-than-truckload (LTL) and
truckload (TL) shipments.  The solicitation also included unit pricing
offerors were required to use for *accessorial services,* such as, for
example, vehicle detention, extra driver, storage, and surveillance
services, which were not included in the fixed transportation rates that
offerors were to propose.[6]  See Agency Report, Tab E, Accessorial
Services for TL and LTL for Base and Option Years.
    
The RFP stated that the agency intended to award multiple contracts for
each lane.   As amended, the solicitation also stated a minimum order
quantity for each lane (which was approximately 5 percent of the total
estimated shipments per lane) and a maximum order quantity per lane for
all contractors.  RFP amend. 5.  Offerors were informed as follows:
    
The ordering officer will initially offer shipment to awarded contractors
on a rotational basis until all contractors have reached their contract
minimum guarantee.  After the contract minimum guarantees have been
reached, the ordering officer will award shipments to those contractors
providing the best overall value to the Government, considering the
contractor's record of quality performance since contract award and total
shipment cost.
RFP S: C.2.4, amend. 6 at 2.
    
The protesters, which have identified themselves as LTL motor carriers,
protest a number of terms and conditions of the RFP.[7]  First, the
protesters complain that the guaranteed minimum quantity to be ordered
from each contractor for each lane is no more than a nominal amount that
is *inadequate to give bidders an accurate understanding of what [is]
required of them.*  Protesters' Comments at 3.
    
An agency may use an ID/IQ contract where the government cannot
predetermine, above a specified minimum, the precise quantity 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 S: 16.504(b); Aalco Forwarding, Inc. et al., B-277241.15,
Mar. 11, 1998, 98-1 CPD P: 87 at 6.  The ID/IQ contract must require the
agency to order, and the contractor to furnish, at least a stated minimum
amount of supplies or services, and if ordered, the contractor to furnish
any additional quantities, not to exceed the stated maximum.  FAR
S: 16.504(a)(1).  To ensure that the contract is binding, the minimum
quantity must be more than a nominal amount but should not exceed the
amount the agency is fairly certain to order.  FAR S: 16.504(a)(2).  The
determination of whether a stated minimum quantity is *nominal* must
consider the nature of the acquisition as a whole.  Sea-Land Serv., Inc.,
B-278404.2, Feb. 9, 1998, 98-1 CPD P: 47 at 12.
    
Here, like the situation presented in Aalco Forwarding, Inc. et al.,
supra, the solicitation provided for multiple awards to transport cargo
for each lane and provided for a best-value basis for selecting among the
contractors once all the contractors' minimum quantities have been
ordered.  See also Sea-Land Serv., Inc., supra (award of multiple
contracts for same routes or zones affects the amount the government is
certain to order from each contractor).  Thus, for each lane, the agency
may have multiple choices of contractors to perform the transportation
services.  It is not possible to know, after the minimums are satisfied,
whether a given contractor will be used under the best-value scheme for
any orders until individual orders arise.   For this reason, it is
uncertain that a given contractor will carry more than the minimum
specified for a lane during the life of the contract.  Given this
uncertainty and that the minimum quantity on any one contract may not
exceed the amount the government is fairly certain to order, see FAR S:
16.504(a)(2), we find no basis to object to the stated minimum quantities
here. 
    
We also find here that the minimum quantity guaranteed for each lane, even
if it amounts to only a few hundred dollars, is sufficient consideration
to form a binding contract.  Although it may be true that the guaranteed
minimum quantity for certain lanes appears low (particularly as compared
to the minimums guaranteed for other lanes), this does not alone
demonstrate that the guaranteed quantity is insufficient to support a
contract.  See Sunbelt Props., Inc., B-249307, Oct. 30, 1992, 92-2 CPD P:
309 at 3 n.3.
    
Furthermore, we do not agree that the RFP is *inadequate to give bidders
an accurate understanding of what is required of them,* as claimed by the
protesters.  As described above, the solicitation states, for each lane
between the eight origin regions and the six destination regions, the
estimated number of shipments and average weight and mileage for each
shipment.  We think that this, with the stated minimum and maximum
quantities, is sufficient information to allow offerors to intelligently
prepare their proposals.
    
The protesters also complain that the RFP improperly included unit pricing
that offerors were required to use for accessorial services, such as, for
example, vehicle detention, extra driver, storage, or surveillance
services, which were not included in the offerors' proposed transportation
rates.  The protesters contend that fixing the accessorial charges that
offerors must apply violates FAR S: 47.207-6(b), which the protesters
assert allows offerors for a transportation contract to specify their own
pricing for required services.[8]
    
The Army responds that FAR S: 47.207-6 does not apply to this acquisition
because this procurement is being conducted under the commercial item
provisions of FAR Part 12.  The agency also states that, in any event, the
RFP does not deprive the protesters of the ability to price services to be
provided; rather, *[t]he solicitation just simplifies and provides a
format for the price submission.*  Agency Legal Memorandum at 9.  The
agency states that the RFP establishes various rates for different
accessorial services (which the agency asserts are at a comparable level
*to what many carriers are charging*), and that *[a]ny difference in costs
that a contractor wishes to account for can be added to their line[-]haul
rates and still be able to submit competitive rates.*  Contracting
Officer's Statement at 6.
    
We agree with the Army that the agency was not required to apply FAR S:
47.207-6(b) to this commercial item acquisition.  In this regard, FAR S:
12.301(d) provides that *[n]otwithstanding prescriptions contained
elsewhere in the FAR, when acquiring commercial items, contracting officer
shall be required to use only those provisions and clauses prescribed in
this part.*   There is no requirement in FAR Part 12 to apply the
requirements in FAR S: 47.207-6(b) in commercial item acquisitions.
    
Furthermore, we have recognized the wide discretion an agency has to
prescribe charges for services ancillary to the transportation of goods. 
Such prescription of charges, we found, provides the agency with a
rational and practical means for selecting the low-priced carriers,
without having to account for all the potential variations in charges that
may be submitted by the various offerors.  See Sea-Land Serv., Inc.,
supra, at 13-14.
    
The protesters also complain that the RFP provides that certain
accessorial services, specifically the detention of equipment (that is,
for example, where the loading or unloading of a truck is delayed), are to
be provided at no additional charge and that the costs for these services
must be factored into the offerors' line-haul rate.  The protesters assert
that this pricing scheme is *at odds with industry practice* and restricts
offerors' ability to obtaining *compensation for the delay of the return
of their equipment and/or drivers.*  Protesters' Comments at 22.
    
The Army states that *[t]he conditions we have established in the
solicitation for payment of detention and similar charges are intended to
establish uniform procedures across the Department of Defense.* 
Contracting Officer's Statement at 7.  In this regard, the agency
acknowledges that requiring offerors to recover costs for detention in
proposed line-haul rates shifts risk for these services to the contractors
but nevertheless is not inconsistent with commercial practices.
    
The essence of the protesters' complaint is that requiring a contractor to
recover costs for certain accessorial services (such as detention of
equipment) in the contractor's line-haul rate puts inordinate risk upon
the contractor.  While the Army acknowledges that its solicitation does in
fact shift cost risk for these services to contractors, it is within an
agency's discretion to compete a proposed contract that imposes maximum
risks upon the selected contractor and minimum administrative burdens upon
the agency.  See Sea-Land Serv., Inc., supra, at 14 (a solicitation for a
cargo transportation contract established predetermined pricing or pricing
formulas for various specialized services shifted cost risk to the
contractor); see also N&N Travel & Tours, Inc., B‑283731.2, Dec. 21,
1999, 99-2 CPD P: 113 at 5 (contractor's fixed-price commission under a
travel management services contract required to cover all required
services shifted cost risk to the contractor).  Here, the protesters do
not show that the solicitation's allocation of cost risk to the contractor
is unreasonable or that the solicitation is inconsistent with commercial
practices.
    
The protesters also complain that *bundling* lanes into large geographic
regions is restrictive of competition, particularly small business
contractors.[9]  The agency responds that it is common industry practice
for motor carriers to submit their rates under a region-to-region concept
and that MTMC has followed this practice for the last 20 years. 
Contracting Officer's Statement at 5.  The Army states that it decided
upon this regionalized approach after meeting with industry
representatives and considering, among other things, the numerous shipping
installations and the agency's desire to simplify the evaluation of offers
and the administration of contracts.  Agency Report at 8. 
    
The agency also states that, in any event, the protesters (which are all
large business concerns) do not show that they are unable to compete under
the RFP or will otherwise be prejudiced.  Id.  In response, the protesters
contend that they do not need to demonstrate prejudice.  Protesters'
Comments at 13.  Contrary to the protester's arguments, competitive
prejudice is an essential element of every viable protest, including
protests of consolidated requirements.  While the protester asserts that
the regionalization of the requirements specified in the RFP may result in
higher prices to the government, the protesters have failed to demonstrate
that the regionalization significantly inhibits or precludes their ability
to compete; thus, there is no indication that the protesters were
prejudiced by these requirements.  See MCS Mgmt., Inc., B‑285813,
B-285882, Oct. 11, 2000, 2000 CPD P: 187 at 9-10 (SBA bundling).  Under
the circumstances, we will not consider this protest ground. 
    
The protesters also generally complain that the RFP is *inconsistent with
the intent* of the commercial acquisition provisions of FAR Part 12. 
Protesters' Comments at 19.  We do not address this allegation because it
was not raised in the protesters' agency-level protest and is thus
untimely.  Our Bid Protest Regulations require that protests of apparent
solicitation improprieties be filed prior to the closing time for receipt
of initial proposals be filed before that time.  4 C.F.R. S: 21.2(a)(1)
(2002).  Here, although the protesters filed an agency-level protest prior
to the closing date for receipt of proposal, this protest allegation was
not raised in the agency-level protest.  Our Regulations provide that
where, as here, a protest has been filed initially with the contracting
agency, we will consider a subsequent protest only if the initial protest
to the agency was timely filed.  4 C.F.R. S: 21.2(a)(3).  Since our
Regulations do not contemplate the unwarranted piecemeal presentation of
protest issues, where a protester initially files a timely agency-level
protest, and subsequently files a protest with our Office that includes
additional grounds, the additional grounds must independently satisfy our
timeliness requirements. 
Research Tech. Int'l, B-243844, Aug. 19, 1991, 91-2 CPD P: 165 at 2-3;
Armstrong Motorcycles Ltd., B-238436, B-238436.2, June 5, 1990, 90-1 CPD
P: 531 at 3-4.  Thus, we will not consider this issue.[10]
    
The protest is denied.
    
Anthony H. Gamboa
General Counsel
    
    
    

   ------------------------

   [1] The RFP stated that the shipments would consist of FAK, aircraft
engines, motor vehicles, Direct Procurement Method-crated household goods
and unaccompanied baggage, Army Tracked Vehicles (vehicle weight less than
40,000 pounds), and hazardous material.  RFP S: C.2.1.
[2] The RFP was issued electronically on the Federal Business
Opportunities web site:  .
[3] This means that firms that do not necessarily own trucks or other
transportation assets (such as transportation brokers and third party
logistics companies) can compete for awards.  Agency Legal Memorandum at
2.
[4] For example, the RFP identified Defense Depot Puget Sound, Washington
to be origin region 1 and the states of Washington, Oregon, Idaho,
California, and Nevada to be the Pacific destination region.
[5] Services within the ninth region are currently being provided under a
third party logistics contract.
[6] An *accessorial service* is defined by the RFP to be a *service
performed by the contractor in addition to the line-haul,* and *line-haul*
is in turn defined to be *[t]ransportion of freight over contractor routes
from point of origin to destination, excluding local pickup, delivery, and
switching service.*  RFP  S: C.6.1.  In essence, an accessorial service is
a service other than transportation.
[7] The protesters initially filed an agency-level protest prior to the
closing date for receipt of proposals, challenging the RFP terms and
conditions.  In response to the protest, MTMC established minimum and
maximum quantities for each lane, and agreed to review current industry
accessorial rates and refresh the accessorial rates contained in the RFP. 
MTMC denied the remainder of the agency-level protest allegations, and
this protest to our Office followed.
[8] FAR S: 47.207-6(b) states:
The contracting officer shall include in the solicitation a tabulation
listing each required service and the basis for the rate (price); e.g.,
*unit of weight* or *per work-hour,* leaving sufficient space for offerors
to insert the rates offered for each service.
[9] The Competition in Contracting Act of 1984, 10 U.S.C. S: 2305(a)(1)
(2000), 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.  Aalco Forwarding, Inc. et al., B-277241.12, B-277241.13,
Dec. 29, 1997, 97-2 CPD P: 175 at 6. 
[10] The protesters also complain in their comments on the report that the
Army, after proposals were received, executed a waiver to adopt certain
terms and conditions in the RFP *that might be considered inconsistent
with customary commercial practices.*  Agency Report, Tab H, Waiver (Sept.
13, 2002).  FAR S: 12.302(c) allows an agency to include terms or
conditions in a commercial item acquisition that are inconsistent with
customary commercial practices where a waiver is executed by the agency. 
The fact that such a waiver is executed after the solicitation issued or
even during the pendency of a protest is not a sufficient basis to
challenge the waiver.  See Crescent Helicopters, B-284706 et al., May 30,
2000, 2000 CPD P: 90 at 5-6 (FAR S: 12.302(c) waiver executed during
protest).