APPELLANT’S MOTION FOR SUMMARY RELIEF ON ENTITLEMENT
 
GRANTED; RESPONDENT’S CROSS-MOTION FOR SUMMARY RELIEF
 
ON ENTITLEMENT DENIED: September 23, 2010
 
CBCA 1834
 
CHARLESTON MARINE CONTAINERS, INC.,
 
Appellant, 
v. 
GENERAL SERVICES ADMINISTRATION, 
Respondent. 
Grace Bateman, Michael B. Hubbard, and Daniel P. Wierzba of Seyfarth Shaw LLP, 
Washington, DC, counsel for Appellant. 
Jennifer L. Howard, Office of General Counsel, General Services Administration, 
Washington, DC, counsel for Respondent. 
Before Board Judges SOMERS , HYATT , and POLLACK . 
SOMERS , Board Judge. 
In this appeal, Charleston Marine Containers, Inc. (CMCI) contends that the 
Government failed to provide notice that it would interpret Federal Acquisition Regulation 
(FAR) 52.247-64 and Department of Defense Federal Acquisition Regulation Supplement 
(DFARS) 252.247-7023 to require the use of a combination of U.S.-flag vessels and foreign-
flag vessels to transport equipment under the contract if U.S.-flag vessels were not available. 
The Government contends that CMCI should have known of this interpretation and should 
have prepared its bid accordingly. We find that nothing in the contract requires the use of 

             
     
  
            
              
             
             
             
             
      
              
         
          
   
           
        
        
        
        
        
             
       
          
       
        
     
         
       
      
       
       
2 CBCA 1834 
a combination of U.S.-flag vessels and foreign-flag vessels to transport equipment. We grant 
appellant’s motion for summary relief on entitlement and deny respondent’s cross-motion. 
Findings of Fact 
On June 11, 2008, the General Services Administration (GSA) issued a request for 
quotations (RFQ) to provide containers to the United States Air Force. The RFQ required 
delivery of these containers to Air Force locations in the United States, Oman, Qatar, 
Luxembourg, Kuwait, and South Korea. The RFQ sought firm fixed-price quotes for the 
containers which were based upon a discount from offerors’ GSA schedule prices for the 
containers. Offerors were also required to include prices for shipping and handling charges 
as an “open market” item. 
Because the contract would require the transportation of some of the goods by sea, the 
RFQ incorporated by reference several regulations, including FAR 52.247-64, entitled 
“Preference for Privately Owned U.S.-Flag Commercial Vessels.” This regulation provides 
in part: 
(a) Except as provided in paragraph (e)
[1] of this clause, the 
Cargo Preference Act of 1954 [2] (46 U.S.C. App. 1241(b)) 
requires that Federal departments and agencies shall transport in 
privately owned U.S.-flag commercial vessels at least 50 percent 
of the gross tonnage of equipment, materials, or commodities 
that may be transported in ocean vessels (computed separately 
for dry bulk carriers, dry cargo liners, and tankers). . . . 
(b) The Contractor shall use privately owned U.S.-flag 
commercial vessels to ship at least 50 percent of the gross 
tonnage involved under this contract (computed separately for 
dry bulk carriers, dry cargo liners, and tankers) whenever 
1 The requirements set forth in paragraph (e) do not apply here. 
2 The primarycargo preference laws in effect today are (1) the Cargo Preference 
Act of 1904, 33 Stat. 518 (1904) (current version codified at 10 U.S.C. § 2631 (2006)), 
which generally requires that only U.S.-flag vessels be used to transport supplies by sea for 
the United States armed forces and (2) the Merchant Marine Act of 1936 (49 Stat. 2016), as 
amended by the Cargo Preference Act of 1954 (46 U.S.C. App. 1241(b)), which generally 
requires that at least fifty percent of any government-controlled cargo shipped by sea be 
carried on privately owned U.S.-flag vessels.  46 U.S.C. § 55305 (2006). 

       
           
          
      
   
              
              
              
             
            
              
      
            
             
       
            
        
              
         
          
        
       
 
              
     
                  
              
           
          
          
3 CBCA 1834 
shipping any equipment, materials, or commodities under the 
conditions set forth in paragraph (a) of this clause, to the extent 
that such vessels are available at rates that are fair and 
reasonable for privately owned U.S.-flag commercial vessels. 
48 CFR 52.247-64 (2008). 
CMCI submitted its proposal to GSA on October 9, 2008. In its proposal, CMCI 
stated that it would produce some of the containers in South Korea, and these containers 
would be shipped from Pusan, South Korea, to those Air Force locations situated outside the 
United States. CMCI used publicly available shipping schedules and rates to calculate its 
shipping charges for deliveries from Pusan. After discovering that no U.S.-flag vessels 
provided service from Pusan to four of the Air Force destinations, CMCI calculated its quote 
for transportation using rates for foreign-flag vessels. 
On November 5, 2008, GSA amended the RFQ to add DFARS 252.247-7023, entitled 
“Transportation of Supplies by Sea” (May 2002), Alternate I (Mar 2000). This regulation 
provides, in pertinent part, as follows: 
(b)(1) The Contractor shall use U.S.-flag vessels when transporting any 
supplies by sea under this contract. . . . 
(c) The Contractor and its subcontractors may request that the Contracting 
Officer authorize shipment in foreign-flag vessels, or designate available U.S.­
flag vessels, if the Contractor or subcontractor believes that – 
(1) U.S.-flag vessels are not available for timely shipment; 
(2) The freight charges are inordinately excessive or unreasonable; 
or 
(3) Freight charges are higher than charges to private persons for 
transportation of like goods. 
(d) The Contractor must submit any request for use of other than U.S.-flag 
vessels in writing to the Contracting Officer at least 45 days prior to the sailing 
date necessary to meet its delivery schedules. The Contracting Officer will 
process requests submitted after such date(s) as expeditiously as possible, but 
the Contracting Officer’s failure to grant approvals to meet the shipper’s 

             
     
              
    
             
              
 
           
             
             
               
             
           
              
              
              
           
              
             
           
  
              
           
          
   
              
           
              
              
     
        
     
       
4 CBCA 1834 
sailing date will not of itself constitute a compensable delay under this or any 
other clause of this contract. 
48 CFR 252.247-7023. The amendment stated that all other terms and conditions of the 
procurement remained the same. 
GSA provided offerors an opportunity to submit revised price proposals in light of the 
insertion of DFARS 252.247-7023 into the RFQ. CMCI elected not to revise its price 
proposal. 
On November 25, 2008, the contracting officer asked CMCI to provide additional 
information about its proposed shipping and handling charges. CMCI explained in an e-mail 
message that its policy was “to only charge the government exactly what the carrier(s) 
charges us for shipping.” The contracting officer did not ask CMCI to indicate whether it 
had based its shipping prices on U.S.-flag vessels or foreign-flag vessels, nor did CMCI 
provide those details to the contracting officer in its proposal. 
The contracting officer awarded the contract to CMCI on December 12, 2008. At a 
post-award meeting held on February 2 and 3, 2009, CMCI notified GSA that when it 
prepared its proposal, no U.S.-flag vessel service was available to four of the Air Force 
overseas destinations. CMCI planned to deliver the containers using foreign-flag vessel 
service should it be unable to obtain U.S.-flag vessel service. The contracting officer asked 
CMCI to document the nonavailability of U.S.-flag vessel service so that GSA could submit 
the information to the Military Surface Deployment and Distribution Command (SDDC) for 
confirmation. 
On February 27, 2009, CMCI submitted the first of several requests for a waiver of 
the U.S.-flag vessel requirement. The contracting officer forwarded these waiver requests 
to the Maritime Administration (MARAD), a bureau within the Department of 
Transportation. On April 8, 2009, the contracting officer informed CMCI that, pursuant to 
MARAD’s direction, GSA had decided to deny CMCI’s request for a waiver to ship the 
containers using foreign-flag vessels. Instead, the contracting officer advised CMCI that 
because MARAD objected to the use of foreign-flag vessels, CMCI would be required to use 
a form of service called Priority Two 
3 (P2) service, which required CMCI to ship the 
3 Priority One (P1) service is defined as all U.S.-flag service from origin to 
destination. A combination of U.S.-and foreign-flag vessels is Priority Two (P2) service. 
See Respondent’s Response to Appellant’s Motion for Summary Relief on Entitlement and 
Respondent’s Cross-Motion for Summary Relief at 10, citing Appendix E to the Statement 

             
                
        
             
               
               
 
             
  
              
            
           
                
             
            
                
    
              
    
         
             
             
              
           
            
     
            
          
             
          
             
5 CBCA 1834 
containers via foreign-flag vessels for one segment of the trip and U.S.-flag vessel service 
for the other segment of the trip. The contracting officer had been unaware of the existence 
of P2 service until the previous day, i.e., April 7, 2009.  The contracting officer told CMCI 
that a MARAD representative stated that traditionally P2 service requires the starting vessel 
to be a U.S.-flag vessel, with the cargo transferred to a foreign-flag service at some point. 
The contracting officer told CMCI that it would need to apply for a waiver for each 
shipment. 
CMCI objected because the RFQ did not provide any information about the P2 service 
requirement.  None of the transportation services CMCI contacted for price quotes advised 
it about the possibility of using P2 service to meet the Government’s requirements. CMCI 
noted that the P2 service was significantly more expensive than the foreign-flag service. 
Nonetheless, CMCI complied with the instructions it had received from the contracting 
officer, and planned P2 service for the remainder of the shipments. 
On May 18, 2009, the contracting officer revised his instructions to CMCI based upon 
additional information from MARAD. MARAD told the contracting officer that the longest 
leg of the journey must be provided by a U.S.-flag vessel. Thus, the remainder of the 
shipments could begin on foreign-flag vessels, so long as the majority of the transportation 
occurred on a U.S.-flag vessel. CMCI revised the proposed routes as necessary to comply 
with the new instructions. 
During contract performance, CMCI submitted eight requests to the contracting 
officer for waiver of the requirement to use U.S.-flag vessels on the grounds of 
unavailability. The contracting officer denied the requests and required CMCI to use P2 
service. Accordingly, in each instance, CMCI arranged for P2 service for the shipments. 
On June 15, 2009, CMCI submitted a request for equitable adjustment for 
$188,174.75 in additional costs it incurred as a consequence of the contracting officer’s 
direction to use P2 service. 
On August 8, 2009, MARAD posted an undated two-page document on its website 
entitled “Prioritization of U.S.-Flag Shipping Services for Compliance with the Cargo 
Preference Requirements of the Cargo Preference Act of 1954.” The document sets forth 
MARAD’s interpretation of the requirements of the Cargo Preference Act, including 
MARAD’s view that contractors should use P2 service if U.S.-flag ship service is not 
of Policy on Public Resolution 17 of the 73 rd Congress, approved on March 26, 1934. 

               
          
           
             
              
                
             
              
           
               
              
               
             
             
      
             
              
              
               
           
            
            
               
           
          
              
          
               
             
             
               
             
                
            
6 CBCA 1834 
available for the delivery. The document had apparently been created on June 15, 1986, but 
had not been posted on the website until 2009. 
On August 13, 2009, the contracting officer denied CMCI’s request for equitable 
adjustment. On September 4, 2009, CMCI submitted a claim for $188,174.75 for increased 
costs, which it certified on September 11, 2009. On November 9, 2009, the contracting 
officer denied the claim. CMCI contends that as of the date of the appeal, December 16, 
2009, it had completed all container deliveries and ultimately incurred a total of $423,899.58 
in additional costs resulting from the requirement to use P2 service for the deliveries. 
Discussion 
The parties have cross-moved for summary relief. Summary relief is appropriate 
when the moving party is entitled to judgment as a matter of law, based upon undisputed 
material facts. The moving party bears the burden of demonstrating the absence of genuine 
issues of material fact. All justiciable inferences must be drawn in favor of the non-movant. 
Government Marketing Group v. Department of Justice , CBCA 964, 08-2 BCA ¶ 33,955, at 
167,990-91 (citing Celotex Corp. v. Catrett , 477 U.S. 317 (1986); Anderson v. Liberty Lobby, 
Inc., 477 U.S. 242 (1986)). 
When, as here, both parties have moved for summary relief, each party’s motion must 
be evaluated on its own merits and all reasonable inferences must be resolved against the 
party whose motion is under consideration. First Commerce Corp. v. United States , 335 F.3d 
1373, 1379 (Fed. Cir. 2003); DeMarini Sports, Inc. v. Worth, Inc ., 239 F.3d 1314, 1322 (Fed. 
Cir. 2001); Metlakatla Indian Community v. Department of Health and Human Services , 
CBCA 181-ISDA, et al., 09-2 BCA ¶ 34,307, at 169,466; Government Marketing Group , 
08-2 BCA at 167,991. The mere fact that both parties have moved for summary relief does 
not impel a grant of one of the motions. Electronic Data Systems, LLC v. General Services 
Administration , CBCA 1552, 10-1 BCA ¶ 34,316, at 169,505 (2009). 
Contract interpretation is a question which is properly resolved through summary 
relief. Varilease Technology Group, Inc. v. United States , 289 F.3d 795, 798 (Fed. Cir. 
2002). Similarly, the interpretation of regulations which are incorporated into government 
contracts is a question of law appropriate for resolution by the Board. Rumsfield v. United 
Technologies Corp. , 315 F.3d 1361, 1369 (Fed. Cir. 2003); Perry v. Martin Marietta Corp. , 
47 F.3d 1134, 1137 (Fed. Cir. 1995), citing Riverside Research Institute v. United States , 
860 F.2d 420, 422 (Fed. Cir. 1988); United States v. Boeing Co. , 802 F.2d 1390, 1393 
(Fed. Cir. 1986). Contract interpretation begins with the plain language of the contract. 
Gould , Inc. v. United States , 935 F.2d 1271, 1274 (Fed. Cir. 1991). The threshold issue 
presented for resolution, therefore, is whether the plain language of either FAR 52.247-64 

               
          
           
   
            
              
            
             
              
     
           
             
             
          
             
              
               
             
          
                
                
     
 
          
            
          
             
           
            
              
    
           
   
7 CBCA 1834 
or DFARS 252.247-7023 requires the use of P2 service in the event that U.S.-flag service is 
unavailable. We will examine each regulation in turn. 
As noted previously, FAR 52.247-64 requires that federal departments and agencies 
transport in privately owned U.S.-flag commercial vessels at least fifty percent of the gross 
tonnage of equipment, materials, or commodities that may be transported in ocean vessels 
if it is “available at rates that are fair and reasonable for privately owned U.S.-flag 
commercial vessels.” The plain language of the regulation requires, at a minimum, 
transportation of fifty percent of the goods in U.S.-flag vessels (if such transportation is 
available at reasonable rates), but says nothing that could be construed as requiring the use 
of 100 percent U.S.-flag vessels.
4 
DFARS 252.247-7023 requires that the contractor use U.S.-flag vessel service to ship 
100 percent of the supplies for delivery to the Government via ocean transportation, provided 
that U.S.-flag service is available for timely delivery and the charge is not excessive, 
unreasonable, or higher than rates offered to private persons. The clause does not reference 
the possibility of using a combination of U.S.-flag vessel service and foreign-flag service. 
GSA asserts that the plain language of the regulations allows for a waiver from the 
requirement to ship by all U.S.-flag vessels if U.S.-flag vessels are not available or the prices 
are unreasonably excessive.  GSA contends that the waiver provision should be interpreted 
to mean that the contracting officer can deny the waiver request, authorize shipment on 
foreign-flag vessels, or, alternatively, authorize a combination of foreign-flag and U.S.-flag 
service. GSA disputes CMCI’s claim that it did not know about the existence of the P2 
service option, stating that the use of P2 service “has been around for decades and is known 
throughout the shipping industry.” 
CMCI counters that neither FAR 52.247-64 nor DFARS 252.247-7023 directs the 
contractor to use P2 service should U.S.-flag service be unavailable. CMCI asserts that the 
contract, through these clauses or otherwise, did not provide adequate information 
concerning the basic requirements to use to determine when to ship using U.S.-flag vessel 
4 GSA could have included Alternative I to FAR 52.247-1, which provides that 
“the Contractor shall use privately owned U.S.-flag commercial vehicles, and no others,” in 
transporting supplies under the contract. Even this clause, however, provides that if no U.S.­
flag commercial vehicles are available, the contractor can request the contracting officer to 
authorize shipment in foreign-flag vessels, or the contracting officer can designate available 
U.S.-flag vessels. 

      
        
              
            
            
                
          
           
           
                 
               
              
             
             
                
                
          
    
           
  
            
               
              
              
           
                
                
             
             
               
              
              
             
             
            
8 CBCA 1834 
service.  Thus, CMCI interpreted these clauses as providing only two choices: shipment by 
U.S.-flag vessel service, or shipment by foreign-flag service. 
We find that the plain language of these regulations does not give a contractor any 
notice that it would be required to use P2 service in the event that U.S.-flag service was not 
available. The clauses reference “foreign-flag vessels” and “U.S.-flag vessels” in terms that 
make them appear to be alternative choices. P2 service is not mentioned or defined in either 
of the clauses or anywhere else in the contract. 
In addition, although DFARS 252.247-7023 allows for a waiver of the U.S.-flag 
requirement, nothing would indicate that the possibility exists that the contracting officer 
could grant a waiver with the contingency of using P2 service. GSA asserts that the clause 
should be interpreted to allow the contracting officer to authorize P2 service; we do not find 
GSA’s analysis to be persuasive. While an agency’s interpretation of its own regulations is 
normally entitled to considerable deference, Udall v. Tallman , 380 U.S. 1, 16-17 (1965), such 
deference is not required here because the DFARS regulation is a regulation of the 
Department of Defense, not of GSA. See Perry v. Martin Marietta Corp , 47 F.3d at 1137, 
citing Newport News Shipbuilding & Dry Dock Co. v. Garrett , 6 F.3d 1547, 1551 (Fed. Cir. 
1993). In any event, the regulation does not state that a contractor could be required to use 
P2 service, and we find nothing in the record that indicates that the Department of Defense 
interprets its regulation to include that requirement. 
GSA argues that CMCI should have known that the regulations would have been 
interpreted to mandate a preference for the use of P2 service, as this preference has been 
revealed publicly through various sources. GSA refers to the policy letter issued by MARAD 
on June 16, 1986, which, although not posted on MARAD’s website until May 2009, was 
allegedly widely distributed when issued and has been referenced, although not published, 
in the Federal Register and in a 2008 article published in the Journal of Maritime Law and 
Commerce. GSA then points to a legal opinion issued in November 1991 by the chief 
counsel of MARAD, which concluded that preference must be given to the service that 
maximizes the use of U.S.-flag vessels. Finally, GSA points to unpublished opinions issued 
by the United States District Court for the District of Columbia and the United States District 
Court for the Western District of Washington in support of its contention that CMCI should 
know that the cargo preference priority policy of MARAD includes the use of P2 service. 
Though it may be the case that MARAD interprets the cargo preference priority policy 
to include the use of P2 service, and MARAD’s interpretation has been widely distributed, 
we find nothing in the contract that makes this interpretation binding upon the contractor. 

 
    
   
      
      
    
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9 CBCA 1834 
In the absence of evidence to the contrary, the traditional maxims of contract interpretation 
must apply. 
Decision 
For these reasons, we find that nothing in the contract informs a potential contractor 
that P2 service would be required for shipment of the goods under this contract. 
Accordingly, we GRANT appellant’s motion for summary relief on entitlement and DENY 
the Government’s cross-motion. The parties will be contacted to schedule a status 
conference to discuss future proceedings in this appeal.  
JERI KAYLENE SOMERS 
Board Judge 
We concur: 
CATHERINE B. HYATT HOWARD A. POLLACK 
Board Judge Board Judge