United States Government Accountability Office

Washington, DC 20548

Comptroller General

of the United States

Decision

Matter of: Beyel Brothers, Inc.

File: B-406640; B-406640.2

Date: July 18, 2012

Edward J. Kinberg, Esq., and R. Brent Blackburn, Esq., Kinberg & Associates, LLC, 

for the protester.

S. Scott Bluestein, Esq., Bluestein Law Firm, P.A., for Northcliffe Ocean Shipping & 

Trading, Inc., the intervenor.

Robert Elwell, Esq., Kimberly Foxx, Esq., Gordon Ivins, Esq., and Kelly McKallagat, 

Esq., Department of the Navy, for the agency.

Peter D. Verchinski, Esq., and Guy R. Pietrovito, Esq., Office of the General 

Counsel, GAO, participated in the preparation of the decision.

DIGEST

Protest that the awardee’s proposed fuel price was unrealistically low fails to state a

valid basis for protest where the solicitation provided for the award of fixed-price 

contract and did not provide for a price realism analysis.

DECISION

Beyel Brothers, Inc., of Cocoa, Florida, protests the award of a contract to Northcliffe 

Ocean Shipping and Trading Company, Inc. (NOSAT), of Saint Simons Island, 

Georgia, under request for proposals (RFP) No. N00033-11-R-5504, issued by the 

Department of the Navy, Military Sealift Command (MSC), for ship charter services.

We deny the protest.

BACKGROUND

The RFP, issued as a small business set-aside, provided for the award of a 

fixed-price contract for the charter of a vessel to perform logistical support resupply 

services for the Atlantic Undersea Test and Evaluation Center, Andros Island, 

DOCUMENT FOR PUBLIC RELEASE

The decision issued on the date below was subject to 

a GAO Protective Order. This redacted version has 

been approved for public release.
Page 2 B-406640; B-406640.2 

Bahamas.1 Offerors were informed that the agency would charter either a “rollon/roll-off” vessel or a tug/barge combination for a base period of one year with 

3 option years and a single 11-month option. See Contracting Officer’s (CO) 

Statement at 1. 

The RFP provided that award would be made to the firm submitting the lowestpriced, technically-acceptable proposal. The following non-price factors were 

identified for evaluating the acceptability of proposals: technical acceptability 

(compliance with vessel minimum requirements); past performance; and compliance 

with solicitation requirements. RFP at 133-35. Offerors were informed that the 

lowest evaluated price would be computed by adding the offeror’s charter hire rates 

for the entire contract period (base plus option periods) and the cost of fuel.2 Id.

at 136. 

With regard to the cost of fuel, the RFP required offerors to provide fuel consumption 

rates for its proposed vessel.3 The RFP informed offerors that fuel consumption 

rates would be deemed warranties: if the actual performance of the vessel failed to 

meet the warranties, the agency’s remedies included, among other things, an 

equitable adjustment to the charter hire rate. Id. at 23. The RFP also informed 

offerors that their proposed prices and fuel consumption rates would be evaluated 

for reasonableness.4 The RFP stated that fuel consumption costs would be 

calculated using the most current Defense Logistics Agency – Energy standard 

prices and certain fuel conversion factors. Id. at 136. In this regard, the RFP 

provided DLA’s current fuel prices and conversion factors for various types of fuel. 

Id.

The agency received proposals from two offerors, Beyel and NOSAT. Both firms 

proposed a tug and barge combination. NOSAT offered the tug, YBOR City, and 

 1 The RFP was amended 21 times. Our citations to the RFP are to the conformed 

copy of the RFP that includes all amendments.

2 The total evaluated price was also to include the price of any “ballast bonuses,” if 

offered. RFP at 136. Because no firm offered such bonuses, they are not discussed 

further in this decision.

3 The RFP required offerors to submit various fuel consumption rates for certain 

situations (such as, average fuel consumption for vessels laden or carrying ballast, 

auxiliaries underway fuel consumption, and idle period fuel consumption). See RFP 

at 9.

4 The RFP, as originally issued, stated that fuel consumption rates would be 

evaluated for realism. The RFP was amended, however, to provide that fuel 

consumption rates would be evaluated only for reasonableness. See RFP, 

amend. 1, at 40.
Page 3 B-406640; B-406640.2 

barge, MB 1219. The agency conducted discussions with the offerors. Each firm 

was provided with a number of discussion items, including the requirement to 

provide up-to-date certifications for their vessels. The firms were also reminded that 

their fuel consumption rates were warranties, and that any breach of the warranty 

would be subject to the remedies contained in the RFP. See Agency Report (AR), 

Tab 26, Beyel Discussion Letter; Tab 27, NOSAT Discussion Letter. 

In its response to the discussion items, NOSAT proposed a different tug/barge 

combination (the tug, [DELETED], and the barge, [DELETED]), and provided 

certifications for this combination as well as the one previously proposed. AR, 

Tab 41, sect. 2, NOSAT Vessel Certifications. Subsequently, the agency closed 

discussions, and requested final revised proposals. RFP amend. 20. In its final 

revised proposal, NOSAT again proposed to provide the YBOR City tug.

The final revised proposals were evaluated as follows:

Beyel NOSAT

Charter Hire [DELETED] [DELETED]

Fuel [DELETED] [DELETED]

Total Evaluated Price $13,398,000 $10,560,867

AR, Tab 29, Price Evaluation Report, at 3. 

Both proposals were found technically acceptable. The contract was awarded to 

NOSAT, and this protest followed. 

DISCUSSION

Beyel challenges the agency’s price evaluation associated with NOSAT’s fuel 

consumption rates. In this regard, Beyel asserts that NOSAT’s initial proposal 

included a price based on fuel consumption rates of [DELETED] barrels per day for 

average fuel consumption (laden and ballast), and yet the awardee increased its 

rates by over 500% in its final revised proposal, offering fuel consumption rates of 

[DELETED] barrels per day. Beyel also contends that NOSAT’s fuel consumption 

rates are too low and notes that its proposed price was based on fuel consumption 

rates (laden and ballast) of [DELETED] barrels per day.

In response, the agency and intervenor explain that NOSAT’s original proposal 

incorrectly provided its fuel consumption rate in tons per day, not barrels per day as 

called for in the RFP. Intervenor’s Comment, exhib. 1, Declaration of NOSAT 

President; Supp. CO’s Statement at 1. NOSAT points out that, after applying the 

DLA conversion factors contained in the RFP (converting from tons to barrels), 

NOSAT’s laden and ballast per day consumption rates remained the same. 

Intervenor’s Comments, exhib. 1, Declaration of NOSAT President.
Page 4 B-406640; B-406640.2 

Beyel does not challenge the agency’s calculation of NOSAT’s fuel consumption 

rates, but argues that the agency failed to properly evaluate the reasonableness of 

NOSAT’s fuel consumption rates. Beyel contends that NOSAT’s final fuel 

consumption rates, which are lower than its own rate and the government’s 

estimate, increase the risk of poor performance and are unreasonable “as a matter 

of law.”5 Protester’s Supp. Comments at 3. 

Beyel’s argument reflects a lack of understanding as to the distinction between price 

reasonableness and realism. The purpose of a price reasonableness review in a 

competition for the award of a fixed-price contract is to determine whether the prices 

offered are too high, as opposed to too low. Sterling Servs., Inc., B-291625, 

B-291626, Jan. 14, 2003, 2003 CPD ¶ 26 at 3; WorldTravelService, B-284155.3, 

Mar. 26, 2001, 2001 CPD ¶ 68 at 4 n.2. Arguments, such as the one raised by 

Beyel here, that an agency did not perform an appropriate analysis to determine 

whether prices are too low such that there may be a risk of poor performance 

concern price realism. C.L. Price & Assocs., Inc., B-403476.2, Jan. 7, 2011, 2011 

CPD ¶ 16 at 3; SDV Solutions, Inc., B-402309, Feb. 1, 2010, 2010 CPD ¶ 48 at 4. A 

price realism evaluation is not required where, as here, a solicitation provides for the 

award of a fixed-price contract and does not include a requirement for a price 

realism evaluation. C.L. Price & Assocs., Inc., supra; WorldTravelService, supra, 

at 3. 

Beyel also challenges the award to NOSAT on the basis that NOSAT’s final revised 

proposal was ambiguous as to which tug the firm was proposing. Protester’s Supp. 

Comments at 1. Beyel argues that, in its final revised proposal, NOSAT did not 

clearly indicate whether it would provide the YBOR City or the [DELETED]. We 

disagree. NOSAT’s final revised proposal identified the YBOR City as the tug it 

would provide and included pricing sheets and other required information specifically 

for this vessel. See

 5 Beyel also argues that the agency improperly evaluated price because the agency 

failed to include NOSAT’s cancellation fees as part of the agency’s price evaluation. 

We disagree. The price evaluation scheme laid out in the RFP did not permit the 

agency to include such fees in its price evaluation. To the extent the protester 

believes that such fees should have been included in the price evaluation, Beyel was 

required to challenge the RFP’s price evaluation scheme prior to the closing time for 

receipt of proposals. 4 C.F.R. § 21.2(a)(1) (2012); see e.g. Technical & Admin. 

Servs. Corp., B-279828, July 24, 1998, 98-2 CPD ¶ 85 at 6-7 (protest that agency 

failed to consider transition costs in price evaluation where the solicitation did not 

provide for such consideration is untimely). 

AR, Tab 41, NOSAT Final Revised Proposal, Feb. 10, 2012. 

The documents which Beyel references to show that NOSAT proposed the 
Page 5 B-406640; B-406640.2 

[DELETED] were provided in response to discussions, and were not included in the 

firm’s final revised proposal.

Beyel also complains that the agency should not have included NOSAT’s proposal in 

the competitive range, because NOSAT’s initial proposal should have been found to 

be technically unacceptable on the basis of its allegedly low fuel consumption rates.6

This argument is without merit. Even if the agency concluded that NOSAT’s fuel 

consumption rates were too low such that this was a deficiency (which, as explained 

above, the agency did not), there is no requirement preventing an agency from 

including a technically unacceptable proposal in the competitive range for the 

purpose of conducting discussions. The determination of whether a proposal is in 

the competitive range is principally a matter within the sound judgment of the 

procuring agency. Dismas Charities, Inc., B-284754, May 22, 2000, 2000 CPD ¶ 84 

at 3. While exclusion of technically unacceptable proposals is permissible, it is not 

required. Grove Resource Solutions, Inc., B-296228, b-296228.2, July 1, 2005, 

2005 CPD ¶ 133 at 3-4. A fundamental purpose in conducting discussions is to 

determine whether deficient proposals are reasonably susceptible of being made 

acceptable. Id. at 4. 

The protest is denied.7

Lynn H. Gibson

General Counsel

 6 The protester also argues that the agency did not provide meaningful discussions. 

In this regard, Beyel maintains that the agency should have informed NOSAT during 

discussions that its fuel consumption rate was unreasonably low. We find no merit 

to this argument as, explained above, the RFP contained no requirement that the 

agency analyze whether NOSAT’s fuel consumption rates were too low.

7 Beyel also contends that NOSAT’s proposal should have been rejected as 

unbalanced. In support of this, Beyel points to the fact that NOSAT’s price for its 

charter rate drops approximately [DELETED] for the third and fourth options years. 

There is no merit to this argument here. Unbalanced pricing exists where, despite 

an acceptable total evaluated price, the price of one or more are significantly 

overstated or understated as indicated by the application of cost or price analysis 

techniques. See Federal Acquisition Regulation (FAR) § 15.404-1(g)(1). There is 

no indication that NOSAT’s prices were significantly understated.