oversight

GSA Airline Contracts: Contract Awarded to Eastern Air Lines to Transport Government Travelers

Published by the Government Accountability Office on 1990-08-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

Subcomnnittee,ConkWee on
Government Operations, House of
Repr~scmtatives




Contract Awarded to
Eastern Air Lines to
Transport Government
Travelers
GAO          United States
             General Accounting  Office
             Washington, D.C. 20548

             General   Government   Division

             B-239936

             August 17,199O

             The Honorable John Conyers, Jr.
             Chairman, Legislation and National
               Security Subcommittee
             Committee on Government Operations
             House of Representatives

             Dear Mr. Chairman:

             This fact sheet responds to your questions about the General Services
             Administration’s (GSA)program that awards contracts t.o airlines for fed-
             eral employees’ travel between designated cities. You were concerned
             that Eastern Air Lines received a contract for travel services between
             specific pairs of cities even though it is reorganizing its operations under
             federal bankruptcy laws. Your questions covered three general areas
             including (1) GSA'S contractor qualification and selection factors for
             awarding the airline travel contracts, (2) Eastern’s 1990 contract award
             and contract performance, and (3) whether a contractor may sell its
             routes to another party.

             Answers to your specific questions are summarized below; appendix I
             contains detailed responses. A schedule of Eastern’s contract travel
             routes and the 1990 and 1989 contract prices is in appendix II.

                                       -
             GSA’sFederal Supply Service (FSS)manages the program that provides
Background   airline services for federal employees. The program consists of an
             annual procurement with contract awards for travel between designated
             cities. Federal employees buy their travel tickets and are transported by
             contractors that receive awards. The program is commonly referred to
             as the city-pair program because the services provided are transporta-
             tion between designated cities. The contracts that are awarded to pro-
             vide this service are called city-pair contracts.

             The current city-pair contracts cover the period from February 1, 1990,
             to January 3 1, 1991. For the current period, FSSawarded 21 contracts,
             valued at $986 million, to 20 airlines and AMTRAK for travel on 3,000
             city-pair routes. Eastern .4ir Lines was awarded a contract, valued at
             $52 million, for 220 city-Flair routes.




             Page 1                                     GAO/GGD-9096FS GSA Airline Contracts
                   B23W36




                   FSSis required to follow the basic criteria in the Federal Acquisition Reg-
Results in Brief   ulation to evaluate a bidder’s qualifications for a contract award. Con-
                   tracting officers are required to consider several factors, including a
                   prospective contractor’s financial resources, ability to do the contract
                   work, performance record on prior contracts, and integrity and business
                   ethics.

                   SS’S procedures for awarding city-pair contracts require a comparison
                   of the service and price offered by bidders on routes between selected
                   cities. Evaluation factors used in the selection process included bidders’
                   conformance to FH’S flight time standards; frequency of service and dis-
                   tribution of flights in the morning, afternoon, and evening; fare price;
                   and service to multiple airports in individual cities. For the 1990 con-
                   tracts, bidders were notified that no awards would be made for service
                   that was scheduled to start after January 2, 1990.

                   Although a prospective contractor may be reorganizing under federal
                   bankruptcy laws. we have determined in our bid protest decisions that
                   such reorganization does not automatically disqualify the contractor
                   from receiving a cent ract. The question that must be answered by the
                   contracting officer is whether the prospective contractor can fulfill the
                   contract requirements while it is operating under the bankruptcy laws.

                   Regarding the contract award to Eastern Air Lines, the FSS contracting
                   officer said he was aware of Eastern’s bankruptcy status, had consid-
                   ered Eastern’s ability to operate under bankruptcy laws on its prior con-
                   tract, and had determined that Eastern was qualified for the current
                   contract. As of April 1990, Eastern was servicing 219 of the 220 city-
                   pair routes included in its 1990 contract. Eastern had discontinued ser-
                   vice on one rout,e. a change which was allowed under the terms of the
                   contract. Tickets were available for flights on 49 of the 51 routes we
                   tested. On the remaining two routes, all coach class seats had been filled.
                   Since the contract provides for the seating of federal employees in coach
                   class seating, no scats were available at the government fare.

                    Federal law prohibits the transfer of a government contract from one
                    contractor to a second contractor. However, the government may agree
                    to the transfer if the*second contractor’s interest in the contract was
                    caused by the transl’er of (1) all the original contractor’s assets or (2)
                    the entire portion ot’the original contractor’s assets involved in doing
                    the contract. If tht, government does not agree to the transfer of a con-
                    tract, the original c~lntractor remains contractually obligated to the gov-
                    ernment. The govc~rnmcnt may terminate the contract for default if the


                    Page2                                     GAO/'GGD90-96FSGSAAirlineContracb
           B239936




           original contractor does not do the contract work. An example of how a
           sale of assets may be resolved occurred when Eastern sold the assets of
           its Air Shuttle to Trump Shuttle, Inc., in 1989. Trump, Eastern, and the
           government signed an agreement in which Trump agreed to service
           Eastern’s contract routes for the remainder of the contract.


           Our work was done at M ’S headquarters in Arlington, Virginia, from
Approach   April to June 1990. We reviewed contract and solicitation documents,
           analyzed the source selection process used in the award of Eastern’s
           city-pair contract, verified that Eastern was servicing its contract city-
           pair routes, and interviewed contracting office personnel. Appendix III
           discusses our objectives, scope, and methodology in greater detail,


           We discussed the information presented in this fact sheet with FX offi-
           cials, who agreed with the information we developed.

           As arranged with the Subcommittee, copies of this fact sheet are being
           sent to the Administrator, GSA; Eastern Air Lines; and other interested
           parties.

           The major contributors to this fact sheet are listed in appendix IV. If
           you have any questions, please call me on 275-8676

           Sincerely yours,




           L. Nye Stevens
           Director, Government, Business
              Operations Issues




           Page 3                                     GAO/GGD!JO-96FS GSA Airline Contracts
Contents


Letter                                                                                                1

Appendix I                                                                                            6
Answers to Questions    @“,‘:fltik                                                                    6
                                                                                                      7
                        Question   3                                                                  8
                        Question   4                                                                  8
                        Question   5                                                                  9
                        Question   6                                                                  9
                        Question   7                                                                 10

Appendix II                                                                                          12
Information on
Eastern’s 1990 City-
Pair Contract
                        ________-               -
Appendix III                                                                                         20
Objectives, Scope,and
Methodology
                                            -~
Appendix IV                                                                                          22
Major Contributors to
This Fact Sheet
                                            -
Tables                   Table 1.1: Airlines With 1989 City-Pair Contracts                             9
                         Table 11.1:Schedule of Eastern Air Lines’ 1990 City-Pair                     12
                             Contract



                         Abbreviations

                         DOD       Department of Defense
                         DOT       Department of Transportation
                         FAA       Federal Aviation Administration
                         FAR       Federal Acquisition Regulation
                         F%
                          L        Federal Supply Service
                         GSA       General Services Administration


                         page 4                                      GAO/GGD9@96FS GSA Airline Contracts
Page 5   GAO/GGD9096FS   GSA Airline Contracts
Answers to Questions


                  What are the basic criteria   GSA   uses to determine an air transportation
Question 1        bidder’s qualifications?


Answer            The Federal Property and Administrative Services Act (41 USC. 253b)
                  and the Armed Services Procurement Act (10 USC. 2305), which were
                  amended by the Competition in Contracting Act, require the award of
                  contracts to “responsible” bidders and sources. Responsible means that
                  the prospective contractor has the ability and the will to do the contract
                  work and is eligible to receive a contract award.

                  According to the Federal Acquisition Regulation (FAR), “No purchase or
                  award shall be made unless the contracting officer makes an affirmative
                  determination of responsibility.” To be determined responsible, a pro-
                  spective contractor must meet general responsibility standards by

              . having adequate financial resources or the ability to obtain them to per-
                form the contract;
              . having the ability to meet the required performance schedule;
              s having a satisfactory performance record;
              . having a satisfactory record of integrity and business ethics;
              . having the necessary organization, experience, accounting and opera-
                tional controls, and technical skills, or the ability to obtain them;
              l having the necessary equipment and facilities or the ability to obtain
                them; and
              . being otherwise qualified and eligible to receive an award under appli-
                cable laws and regulations. (See FAR Part 9.104.)

                  In addition to the general standards outlined in the FAR, FSS also speci-
                  fied several special standards for bidders for city-pair contracts to meet.
                  These included a notification that the contractors must comply with all
                  relevant rules and regulations of the Department of Transportation
                  (nor) as well as provisions of the Federal Aviation Act of 1958. Also, air
                  carriers who were not approved by the Department of Defense (DOD)
                  were required to fulfill the following requirements:

              l have appropriate Federal Aviation Administration (FAA) certification;
              . have adequate insurance;
              . have at least 12 months’ experience, immediately preceding request for
                approval, in the movement of passengers;
              l be approved by the Military Traffic Management Command’s Air Car-
                rier Qualification Review Board; and
              . successfully complete a Military Aircraft Command capability survey.
                                        -
                 Appendix I
                 Answers to Questions




                 The requirement for DOD approval is included in 10 USC. 2640 which
                 authorizes DOD to suspend air carriers under contract with DOD for the
                 charter air transportat ion of members of the armed forces.

                 With regard to Eastern Air Lines, the FSS contracting officer said that he
                 followed the required csriteria when making his responsibility determi-
                 nation. Specifically, in regard to Eastern’s reorganization under federal
                 bankruptcy laws he ( 1) checked with GSA'S legal department about
                 awarding a contract to a company operating under the bankruptcy laws,
                 (2) evaluated the financial risk to the government and concluded that it
                 was minimal, and (3) considered the fact that Eastern had been oper-
                 ating under the same financial conditions on its 1989 contract.


                  What factors are used to select the winning airlines for city-pair service?
Question 2

Answer            FSSnotified bidders that bids would be evaluated on the following fac-
                  tors, which are listed in descending order of importance:

             . conformance to minimally acceptable flight time standards. FSS
               designates the minimum level of service for each city-pair route.
               Depending on the route, the minimum service may be listed as (1) non-
               stop service bet,ween points; (2) direct service involving no more than
               one stop between the cities; and (3) connecting service between cities
               with no more than ontbconnecting flight segment, providing the connect
               time does not exceed 1-l/2 hours for domestic or 2-l/2 hours for inter-
               national city-pairs;
             . frequency of service and distribution of daily flights in the morning,
               afternoon, and evening between the hours of 7:00 a.m. and 10:00 p.m.
               On the basis of passt’ngers per month information it receives from fed-
               eral agencies, FSSdetermines the minimum number of flights per day
               that the winning contrac.tor must provide and designates the minimum
               for each city-pair;
             . fare price; and
             . service in cities with multiple airports when the multiple airports are
               not listed as separate routes.

                  ws  also notified bidders that it (1) may verify the flight schedules of
                  bidders, (2) had the right to eliminate bidders for particular routes
                  where it appeared that a bidder’s planned service on those routes was



                   Page 7                                   GAO/GGD-SO-96FS GSA Airline Contracts
             Appendix I
             Answers to Questions




             not bona fide, (3) might award a city-pair contract to an airline that sig-
             nificantly exceeded the minimum requirements even though the airline
             was not the low fare bidder, and (4) might make more than one award
             for a city-pair if no single airline could provide the minimum level of
             service.

             All proposed flight schedules had to begin service by January 2, 1990, to
             be considered for award. The contract period started on February 1,
             1990.

             In its selection of Eastern Air Lines for 220 routes, FSSverified Eastern’s
             flights using Scorpicb--United Airlines’ electronic reservation system-
             and selected Eastern on the basis of price or quality of service on its
             contract routes.


             Did Eastern Air Lines actively service the routes it bid on at the time it
Question 3   bid? To what extent did the contracting officer have to take Eastern’s
             actual (as opposed to prospective) flights into account‘?


Answer       Neither Eastern nor any other bidder was required to service the routes
             it submitted bids on at the time bids were submitted to FSS.However, all
             proposed flights had to be in operation by .January 2, 1990.

             FSS requested bids on July 25, 1989, and all bids were due by September
             7. 1989. FSS notified bidders that “No awards will be made for service
             scheduled to commence later than January 2, 1990.” Therefore, to be
             considered for award. service on proposed routes had to be in operation
             by January 2, 1990.


             Are there precedents for selecting a contractor that is bankrupt?
Question 4

Answer       The fact that a contractor is reorganizing under federal bankruptcy laws
             does not require a finding of nonresponsibility. The appropriate ques-
             tion is whether the contractor has the financial capability or can obtain
             the financial capability to do the contract work in spite of operating
             under the bankruptcy laws. For examples of past cases stating this pre-
             cedent, see Comptroller General Decisions R-228396.4, 88-2 CPD 89,



              Page 8                                    GAO/GGD90-96FS GSA Airline Contracts
                                          Appadix I
                                          Answers to Questions




                                          7/27/88; B-228552,88-1 CPD 56, I/20/88; and B-225469,87-1 CPD 97,
                                          l/29/87.

                                          FSSawarded 1990 contracts to two airlines that were operating under
                                          the bankruptcy laws-Eastern Air Lines and Braniff, Inc. However,
                                          Braniff, Inc., has since ceased operations.


                                          What carriers were displaced by Eastern’s selection’?
Question 5
-
Answer                                    Nine other airlines had 1989 contracts for Eastern’s current city-pairs.
                                          (Eastern also had a prior contract.) Table I shows how many city-pairs
                                          the prior airlines serviced.

Table 1.1: Airlines With 1989 City-Pair
Contracts                                                                                                      Number of
                                          Airline                                                               city-pairs
                                          Eastern                                                                       111
                                          Delta                                                                           33
                                          USA;-                                                                           27
                                          American                                                                         15
                                          Northwest                                                                         8
                                          aranlff                                                                           2
                                          ContInental                                                                       2
                                          United                                                                            1
                                          Pan Am World Airways                                                              1
                                          Trans World                                                                       1
                                          Eastern and Pan Am shared                                                         1
                                             Subtotal                                                                   202
                                           New city-pair routes on c(lrrent contract
                                                                                 .~                                      18
                                           Total                                                                        220


                                                                                                                           -
                                           What is the current status of Eastern’s city-pair contracts‘?
    Question 6

    Answer                                 We compared all of Eastern’s 220 city pair routes with the April 1990
                                           edition of the Federal Travel Directory to determine if Eastern was ser-
                                           vicing its routes. W C found that Eastern was servicing 219 of the city-
                                           pair routes. Eastern discontinued service for the remaining Florence,



                                           Paye 9                                      GAO/GGDSO-St35 GSA Adine Contracts
                                     -~-
             Appendix I
             Answeri to Questions




             South Carolina, to Miami city-pair route. Under the contract provisions,
             airlines are allowed to discontinue service to city-pairs.

             In addition, we checked 51 city-pair routes to determine if we could get
             next-day reservations on an Eastern flight, at the government fare. On
             49 of the 5 1 city-pair routes, Eastern offered seats on flights at the gov-
             ernment fare. However, on two of the flights, all coach class seats were
             filled. Since the contract provides for government fares only in coach
             class seats, no tickets were available at the government fare.


             If Eastern sells its routes, do the GSA contracts convey?
Question 7

Answer        Title 41 U.S.C. 15 of the lJnited States Code stat,es that

              “No contract or order, #jr any interest therein, shall be transferred by the party to
              whom such contract or order is given to any other party, and any such transfer shall
              cause the annulment of the contract or order transferred, so far as the 1Jnited States
              are concerned. All rights of action, however, for any breach of such contract by the
              contracting parties. aw rewrved to the ITnited States.”

              E’AII Part 42.1204 says that the

              “Government may, in Its interest, recognize a thwd party as the successor in interest
              to a Government contrxt when the third party’s interest in the contract arises out,
              of the transfer of (I ) all the contractor’s assets or (2) the entire portion of the assets
              involved in performing the contract.         When it is in the Government’s interest not
              to concur in the transfw of’a contract from one company to another company, the
              original contractor remains under contractual obligation to the Government, and the
              contract may be termimlted for reasons of default, should the original contractor
              not perform.”

              When the government recognizes a successor contractor, a new agree-
              ment called a novation agreement is signed to indicate the successor’s
              assumption of all the obligations under the contract.

              In 1989, Trump Shuttle, Inc., acquired all of the assets of Eastern’s high
              frequency airline service that operated between New York’s LaGuardia
              Airport and each of Boston’s Logan and Washington, DC’s National Air-
              ports under the names “Eastern Air Shuttle” and “Air-Shuttle.” Trump




              Page 10                                            GAO/GGD-WSGFS GSA Airline Contracts
Appendix 1
Answers to Questions




Shuttle, Inc.; Eastern Air Lines, Inc.; and the government signed a nova-
tion agreement for Trump Shuttle, Inc., to assume Eastern’s contract
responsibilities for the “Shuttle” routes.




 Page 11                                  GAO/GGD9@96PS GSA Airline Contracts
Armendix II

&formation on Eastern’s 1990 City-
Pair Contract

                                                  Table 11.1shows the city-pairs on Eastern’s 1990 contract and price
                                                  changes between the 1989 contracts and Eastern’s 1990 contract. A list
                                                  of coded abbreviation meanings immediately follows the table.


Table 11.1: Schedule   of Eastern __
                                  Air Lines’ 1990 City-Pair     Contract
                                                                                                    Percentage 1990         Percentage 1990
                                            Prior             Prior airline’s     Eastern’s             price is lower         price is higher
Route number             City-pair          airline               1989 price     1990 price          than 1989 price         than 1989 price
122                      AWMSY             -co-                           $195          $17R
                                                                                        _ _                        8 72
148                      A GS/ATL           DC                             66            63                        4 55
2910                     AGSICHI            XX                                          149
2912                     AGSjSDF            xx                                          138
253                      AGSiTYS            US                              94           97                                               3 19
258                      AGSIWAS            us                             127          128                                               0 79
3~                       ALE/AT1            EA                             157          148                       5   73
144                      ATL/AVL            EA ~~                           89           87                       2   25
181                      ATL/BDL            EA                             166          158                       4   a2
207                      ATL/BNA            EA                              81           78                       3   70
152                      Al L/BOS           iA                             181          178                       1 66
153                      ATL/BUI            EA                             159          158                       0 63
242                      ATL/BWI            EA                             119          119                       0 00                    0.00
161                      ATLjCAE            EA                              65           68                                               4 62
157                      ATL/CHA            6L                              90           76                      1556
160                      ATLjCLE            EA                                          148                       0 67
162                      ATLjCMH            iA                             146          148                                               1.37
166                      ATL/DAB            EA                             108           98                       9 26
172                      ATL/FLL            EA                             125          118                       56d
173                      ATLJFMY            EA                             132          128                       3 03
176                      ATL/GNV            EA                             143          138                       3 50
                                                                                                            -
179                      ATL/GPT            Ei                             130          129                       0 7?
177                      ATL/GSO            EA                              96           98 -                                             2 08
184                      ATL/IND            EA                             119          118                       0 84
ii36                     ATLjJAX            EA                              88           98                                              11.36
216                      ATLIMCO            EA                              75           79     -                                         5 33
204                      ATL/MGM            DL                              69           66                       435
200                      ATLJMIA            EA                             124          118                       4 84
i87                      ATL/MKC            BN                             158          138     -                12 66
197                      ATL,‘MLB           Ei                             120          118                       1 67~-   -~
206                      ATL/MYR            EA                             130           98                      24 65
210                      ATL/NYC            EA                             143          139                       2 80
212                      ATLjORF            EA                              82           89                                              8 54
                                                                                                                                  (contmued)




                                                  Page 12                                             GAOGGD-90.96FS GSA Airline (‘amtracts
                                  Appendix II
                                  Information on Fstern’s      IWO City-
                                  Pair Contract




                                                                                     Percentage 1990       Percentage 1990
                           Prior            Prior airline’s            Eastern’s         price is lower       price is higher
Route number   Citv-Dair   airline              1989 mice             1990 price      than 1989 price       than 1989 price
241            AT;,;Bi     E/i                           138                  128                   7 25
217            ATLjPFN     EA                             89                    87                  2 25
219            ATL/PHL     US                            147                  138                   6 12
220            ATLjPHX      EA                          219                   199                   9 13
221            ATLiPlT      US                          147                   138                   6 12
218            ATLjPNS      EA                           79                     88                                      11 39
225            ATL/RIC      EA                          175                   168                  4 00
195            ATL;SDF      DL                          102                     98                 3 92
238            ATL/TLH      DL                           91                     98                                       7 69
239            ATL/TPA      EA                           t-39                   98                                      10 11
188            ATL/TYS      DL                           70                     68                 2 86
175            ATL/VPS      EA-                          90                     89                 111
243            ATLJWAS      DL                          129                   129                  0 00                  0 00
1426           BDL/JAX      US                          114                   128                                       1228
1449           BDL,%AV      EA                          103                   108                                       -4 85
328            BHMjCAE      EA                          105                     98                 6 67
330            BHMjDAB      EAT                         116                   108                  6 90
345            BHM/EWR      EA                          160                   158                  1 25
334            BHMIGNV      EA                          156                   148                  5.13
338            BHM/JAX      us                          184                   168                  8 70
342            BHMjMIA      EA                          131                    128                 2 29
344
346 ~ ~~~~~~   BHM/NYC      US                          122                    128                                       4 92
               BHMjORF     -EA                          134                   128                  4 48
348            BHMIPHL      EA                          168                    158                 5 95
352            BHMJSAV      EA                          122                    118                 3 28
357            BHMjWAS      DL                          132                    129                 2 27
549            BNAjCHS      EA                          131                    128                 2 29
1099           BNAjDAB      EAT                         138                    128                 7 25
1352           BNAiFLL      EA                          137                    128                 6 57
2142           BNAjNYC      AA                          120                    118                 1 67
2147           BNA/ORL      AA                          174                    168                 3 45
2159           BNAjPBl     AA                           220                   208                  5 45
2148           BNAjPNS     NW                           100                    108                                       a 00
2155           BNAJSAV     EA                           129                    128                 0 78
2157           BNAjTLH     EA                           127                    118                 7 09
385            BOSICAE     US                            a7                     88                                        1 15
429            BOS/PNS     EA                           249                   238                  4 42
447            BOS/SAV     us                           101                    108                                       6 95
413            BOS/SDF     DL~                          150                    148                  1 33




                                  Page 13                                              GAO/GGD-9086FS GSA Airline Gmtracts
                                Appendix U
                                Information on Eastern’s 1996 City
                                Pair Contract




                                                                                  Percentage 1990        Plercentage 1990
                           Prior               Prior airline’s      Eastern’s         price is I(Dwer         mice is higher
Route number   City-pair   airline                1989 price       1990 Drice      than 1989 price         tlian 19;89 price
454            BOS/TLH     us                               199            178                  1055
397            BOSjVPS     EA                               209            198                    5.26
488            BUFjCAE     EA                               119            118                    0.84
511            BUF/PBI     us                               126            138                                          9 52
1127           BWljDAB     EA                               120            128                                          6.67
2116           BWljMO0     AA                               167            158                   5 39
2436           BWljPNS     EA                               184            178                   3.26
2680           BWljSAV     EA                               122            118                   3.28
623            CAEjCHl     UA                               119            118                   0 a4
840            CAE/HSV     EA                               123            118                   4 07
841            CAE/IND     us                               138            138                   0 00                   0.00
842            CAE/JiX     EA                               112            108                   3 57
858            CAE/MCO     us                               130            128                   1 54
848            CAE/MKE     EA                               199             198                  0.50
851            CAEIMSY     EA                                162            158                  2 47
853            CAEiNYC      us                                91            108                                        1868
847            CAEjSDF      DL                               i13
612            CHAJWAS      us                               126           128                                           1 59
628            CHI/DAB      EA                               154           148                    3 90
2939           CHI/MLB      XX                                             159
2945           CHI/PFN      xx                                             169
694            CHI/SAV      us                               98             98                    0 00                  0.00
532            CHSIDAB      EA                              115            118                                          261
536            CHS/FLL      EA                              115
550            CHS/MSY      EA                              155            148                    4 52
552             CHSjNYC     EA                              143            138                    3.50
558             CHSjPNS     EA                              130            128                    1.54
566             CHSITPA     EA                              153            148                    3.27
543             CHS/TYS     DL                              160            148                    7 50
760             CLE/JAX     AA                              145            138                    4 83
770             CLEiPNS     DL                              248            248                    0 00                   0 00
601             CLT/SFO     us                              312            208                   33 33
880             CMHIJAX     us                              177            178                                           0 56
890             CMH/PNS     DL                              214            218                                           I a7
898             CMHjSAV     EA                              144            138                    4.17
1084            DAB/HSV     EA                              130            128                    1 54
1085            DABjlND     EA                              157            148                    5.73
1096            DAB/MKE     EA                              181            178                    1.66
I 098           DAB/MOB     DL                              166            158                    482
                                                                                                                 (continued)




                                     Page 14                                         GAO/GGD-SO-96FS GSA Airline Contracts
                                          Appendix II
                                          Information on Eastern’s 1990 City-
                                          Pair Contract




                                                                                          Percentage 1990       Percentage 1990
                                   Prior               Prior airline’s      Eastern’s         price is lower       price is higher
Route number         City-pair     airline                 1989 price      1990 price      than 1989 price       than 1989 price
1100                  QAE/MSY      EA                               140           138                   1 43
1102                  DAB/NYC       EA                              115           118                                         2 61
                      _-~~~~      ~-~            -     ~~~        -
1104                  DABJORF       EA                              104           108                                         3.85
1112                  DAB/POX       EA                              270           268                   0 74
               ~~___-         -   ~~ -~
1109
  _.                  DABlPHL       EA                              103           108                                         4 85
1111                 DAB/PIT        FA                              124           128                                         3 23
1113                 DABiRDU       AA                               117           Ilam-                                       085
1120                 DABjSAV       EA                                89             98                                       10 11
1093                 DAB/SDF       DL                               170           158                   7.06
                                                                                -
1171                 DABISEA       EA                               270           268                   0 74
1118                 DAB/SF0       FA                               252           248                   1.59
                     DABISJU        xx                                            199
1123                 DAB/STL        DL                             193            178                    7 77
1088                 DAB/TYS        DL                             197            188                    4 57
117R                 DAB/WAS        EA                                            118                                          442
1270                 DHNjPHX        DL                              265           258                    2.64
1271                 DHNIWAS        EA                              189            188                   0 53
1230                 DTT/MLB        AA                              216           204-                   556
1245                 DTT/PNS        NW                              149            148                   0 67
1354                 FLL/NYC        EA          ~~                  143            138                   3 50
1259                 DTTjSAV        US                              160         - 146                    8 75
1262                 DTT/TLH        EA                              163            158                   3.07
2268                 EWRjPNS        EA                              183            178                   2 73
2287                 EWR/SAV        EA                               122           118                   3 28
1351                 FLL/MOB         EA                              187           178                   4.81
1365                  FLL/RDU       kA                               168
1371                  FLLjSAV        DL                             193         -
1373                  FLLjSTL        TW                              197
 1330                 FLO/MIA        xx                                             178
 1379                 FMY/LAX      -EA                              334             328                  180
 1406                 GPT/HSV       ~NW                 -           160             146                  8 75
 1398                 GSP/MSY        EA                             143             138                  3 50
 1400                 GSP/NYC        E.k                            133             138                                        3 76
 1526                 HSV/EWR        E-A                            156             148                  5 13
 1529                 HSV/MCO        DL                             172             157                 -8 72
 1536                 HSV/PBI       ~DL                             173             159                  8.09
 1546                 lND/JAX       EA                               164            158                 -366
 1551                 IND/MtA       BN                               158            148                  6 33
 1574                 IND/PBI       DL                               157            184                  6 60
                                                                                                                        (conttnued)




                                             Page 15                                          GAO/GGDSO-SBFS GSA Airline Ckmtracts
                                 Appendix II
                                 Information on Eastern’s 1990 City-
                                 Pair Contract




                                                                                 Percentage 1990       Percentage 1990
                           Prior           Prior airline’s         Eastern’s         price is lower       price is higher
Route number   City-pair   airline             1989 price         1990 price      than 1989 price       than 1989 price
1559           INDjPNS     NW                           142               138                   282
1569           INDjSAV     us                           178               164                   787
1572           lND/TLi     EA                           176               168                   455
1608           JAX/MSY     EA                           171               168                   1 75
1610           JAXINYC     EA                           107               108                                        0.93
1623           JAXjPVD     us                           117               128                                        9.40
1641           JAXjWAS     EA                            96                 98                                       2.08
1855           LAX/MC0     DL                           208               195                  625
1918           LAX/TLH     xx                                             218
niin           MGMINYC     EA                          195                182                  667
2019           MIA/BNA      AA                         128                138                                        781
2018           MIA/MOB     SEA                         187                178                  481
2032           MIAIRDU      AA                         101                108                                        693
2040           MlAjSAV      DL                         142                148                                        423
2039           MIAJSJU      EA                         122                119                  246
2046           MlAjSTT     EA                          154                149                  325
1702           MIA/TVS     EA                          154                148                  390
2050           MIA/WAS     DL                          149                139                  671
2064           MKE/PBI     AA                          157                148                  573
1983           MLBjPHL     co                          149                148                  067
2105           MOB/EWR     EA                          189              -188                   053
2104           MOB/NYC     EA                          102                108                                        588
2115           MOB/PBl     EA                          154                148                  390
2108           MOBjPHL     EA                          162                158                  247
2117           MOB/WAS     DL                          151                149                  132
2175           MSY/RDU     us                          158                144                  886
2177           MSY/RlC     us                          181                167                  7 73
2184           MSYjSAV     EA                          185                178                  378
1704           MSY/TYS     NW                          180                166                  7 78
2206           NYCIPHX     EA                          144                148                                        278
2202           NYC;PNS     NW                          180                166                  7 78
2238           NYC/SAV      DL                         125                138                                       1040
2317           ORFjORL     EA                          112                118                                        536
3065           ORFjPFN     -xx                                            148
3070           ORFjSAV      xx                                            148
1951           ORFjSDF      us                         168                154                  833
2335           ORF/TPA     us                          111                108                  2 70
2486           PBI/PHX     DL                          219                207                  5 48
2541           PBI/RDU     AA                          128                138                                        781
                                                                                                              (contmued)




                                 Page 16                                           GAO/GGD-SO-S6FSGSA Airline Contracts
                                                                   Percentage 1990       Percentage 1990
                           Prior airline’s       Eastern’s             price is lower       price is higher
Route number   City-pair      1989 price        1990 price          than 1989 price       than 1989 price
2679           PBI/SAV                  Igil,           ‘86                       6 53
                                        ,,                18                      2 48
2732           PBliWAS
2419           PFN/WA:i                  ‘i-            : 88                      1 57
2420           PFN;WA!‘,                  i-            158                       0 53
2424           PHL,‘PN:,                                  38
1382           PHXIVPS                  ,‘!,’           .!56                      1 54
2426           PlTjPNS                                    38
2498           PlTjSAV                                   1.K                     9 68
2497           PITISJU                                  ,!48                                          11 71
2427           PNS/PVII                                 .‘R3                      3 41
1952           PNSjSD’                                   ( Kc                     6 63
1710           RDU/TYS                                   ‘3H                                           0 73
2571           tx/s-rI                                     .i(j                   8 75
2676           SAVjSTl                                  ‘68                       5 62
2678           SAVjTPA                                   IO8                                            693
 1715          SAVITYS                                  145                       8 81
2681           SAVIWAS                                   118                                            5 36
3035           SDFJMSY                                   1‘29
 1953          SDF/Pl-L                                  : 74                     6 95
 3037          SDF/RIC                                   151’
               SDFiTPA                                   l5i                      8 54
               SFO/TFA                                  178
               SJUjWAS                                  <‘2H                                           53 02
2987           VPS/MOCI                                 168
2985           VPSJMIA                                  208
2988           VPS/Sl I.                                  4P
2989           VPS/TF’A                                 ‘78
1387           VPS/WAS                                   !P                       6 84
2794           MIA/P:”                                  :>1‘;                     9 28
                                                         .! ! i,                  6 11
2817            NYC,‘YJL                                   83                                          1139
2889-           SJOIWAS                                  L)z$i.                   5 41
Appendix II
Information on Eastern’s 1990 City-
Pair Contract




UA    United
us    USAlr
xx    lndlcates new route on currenl contract



A B E Allentown. Pa
AGS Augusta, Ga
ALE Albany, NY
AVL Asheville. N C
BDL Hartford. CO””
B H M Blrmlngham, Ala
RNA Nashville. Ten”
BOS Boston, Mass
BUF Buffalo, N Y
BWI WashIngto”, DC
CAE Columbia, S C
CHA Chatianooqa, Ten”
CHI Chlcago, II-
CHS Charleston, SC
CLE Cleveland Ohlo
CLT Charlotte NC
 CMH Columbus, Ohlo
 DAB Daytona Beach, Florida
 DHN Dotha” Ala
 DTT Detroit. Mich
 E W R Newark. N J
 FLL Fort Lauderdale. Fla
 FL0 Florence, S C
 F M Y Fort Myers, Fla
 GNV Galnewlle, Fla
 GPT Gulfport, MISS
 GSO Greensboro. NC
 HSV HuntswIle-Decatur Ala
 IND Indlanapoli?, Ind
 JAX Jacksonville Fla
 LAX Los Angeles, Calli
 MC0 Orlando, Fla
 M G M Montgomery. Ala
  MIA Mlaml, Fla
  M K C Kansas City, M D
  M K E Milwaukee, WIS
  MLB Melbourne, Fla
  M O B MoblIe, Ala
  M S Y New Orleans, La
  M Y R Myrtle Beach, S C
  NYC New York, N Y
  ORF Norfolk Va
  ORL Orlando, Fla
  PBI West Palm Beach Fla
  PDX Portland. Ore
  PFN Panama City Fla
  PHL Philadelphia, Pa
  PHX Phoenix, Arlz
  PIT Pltlsburgh, Pa
  PNS Pensacola, Fia
  PTY Panama City Panama
  PVD Providence, R I
  RIC Richmond, Va
  RDU Raleigh-Durham N C
  S A V Savannah, Ga
  SDF Louisville. Kv




  Page 18                                       GAO/GGD9@96FS GSA Airlhe   Contracts
                             --
Appendix II
Information on Eastern’s 1990 City-
Pair Contract




SEA   Seattle-Tacoma, Wash
SF0   San Franc~sco, CalIf
SJO   San Jose, Costa Rica
SJU   San Juan, P R
STL   St LOUIS,MO
STT   St Thomas, VI
TLH   Tallahassee, Fla
TPA   Tampa, Fla
TYS   Knoxville. Term
VPS   Ft Walton Beach Fla
WAS   Washington, D C
YUL   Montreal. Canada




 Page 19                              GAO/GGD9096FS   GSA Airline Contracts
Appendix III

Objectives, Scope,and Methodology


               Our objective was to answer the following questions asked by the
               Chairman, Legislation and National Security Subcommittee, House Com-
               mittee on Government, Operations.

               1. What are the basic criteria   GSA   uses to determine an air transportation
               bidder’s qualifications?

               2. What factors are used to select the winning airline for city-pair
               service?

               3. Did Eastern Air Lines actively service the routes it bid on at the time
               it bid? To what extent did the contracting officer have to take Eastern’s
               actual (as opposed to prospective) flights into account?

               4. Are there precedents for selecting a bankrupt contractor?

               5. What carriers were displaced by Eastern’s selection?

               6. What is the current status of Eastern’s city-pair contracts?

               7. If Eastern sells its routes, do the   GSA   contracts convey?

               To answer questions 1 and 4, we reviewed the FAR, GAO bid protest deci-
               sions, the solicitation document for the city-pair contracts, and inter-
               viewed the FSS contracting officer who awarded the Eastern contract.

               To answer questions 2, 3, and 5, we reviewed the document FSSused to
               solicit offers for the city-pair contracts and the source selection docu-
               ments FSSused to select the 220 city-pair routes included in Eastern’s
               contract.

               To answer question 6, we determined if Eastern was servicing its city-
               pair routes by verifying that its city-pair routes were included in the
               April 1990 edition of the Federal Travel Directory. Additionally, we
               selected 52 city-pair routes to determine if we could get reservations on
               Eastern flights at the government fare. The 52 routes were selected by
               picking 1 city-pair route from each city that was listed first in a city-
               pair route. For example, there were four city-pair routes from Augusta,
               Georgia; these connected, respectively, with Chicago; Louisville, Ken-
               tucky; Knoxville, Tennessee; and Washington, DC.

               In this case, we selected the Augusta/Chicago city-pair because it was
               the first city-pair route listed from Augusta.


               Page 20                                         GAO/GGD9l%S6FSGSA Airline Contracts
Appendix III
Objectives, Scope, and Methodology




After we selected the 52 routes, we found that service on 1 route had
been discontinued. Because the route was discontinued, we excluded it
from the routes that we tested for availability of reservations. To deter-
mine if we could get reservations at the government fare on the 51
routes, we telephoned Eastern and asked for seats on flights at the gov-
ernment fare for the day following our telephone call. We made our
phone calls on April 11 and 12,199O.

To answer question 7, we reviewed federal procurement laws, the FAR,
the contract file for Eastern’s prior contract, and interviewed the con-
tracting officer who awarded Eastern’s contract.




Page 21                                   GAO/GGD9INWS    GSA Airline Contracts
Appendix IV

Major Contributors to This Fact Sheet


      1
General Government        Issues
Division, Washington,   Robert M. Antonio, Evaluator-in-Charge
                        Vernette R. Gilliam, Evaluator
D.C.




  (240026)               Page 22                                 GAO/GGDSO-SBFS GSA Airline Contracts
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