B-152598, DEC. 3, 1963

B-152598, DEC. 3, 1963

TO HOLMES AND NARVER, INCORPORATED:

WITH REFERENCE TO YOUR LETTER OF OCTOBER 24, 1963, WITH ENCLOSURE, AND TELEGRAM OF OCTOBER 16, 1963, THERE IS ENCLOSED A COPY OF OUR LETTER OF TODAY TO THE ATTORNEYS FOR THE TRANSPORT COMPANY OF TEXAS SETTING FORTH OUR CONCLUSIONS CONCERNING THE PROPRIETY OF THE CONTRACT AWARD PROPOSED BY THE DEPARTMENT OF THE NAVY FOR SUPPORT SERVICES AT KWAJALEIN AND ENIWETOK.

IN ADDITION TO THE CONTENTIONS ANSWERED IN THE ENCLOSED LETTER, YOU URGE THAT THE RFP WOULD PERMIT THE JOB TO BE ESTIMATED ON THE BASIS OF LOW- PRICED LABOR CLASSIFICATION, AND LATER ACTUALLY STAFFED WITH HIGH PRICED JOURNEYMAN LABOR CLASSIFICATIONS. WITH RESPECT TO THIS MATTER WE HAVE BEEN ADVISED BY THE DEPARTMENT OF THE NAVY AS FOLLOWS:

"* * * BUT A PROPOSAL UNREALISTICALLY LOADED IN THAT FASHION WOULD RISK BEING REJECTED IN THE TECHNICAL EVALUATION. MORE IMPORTANTLY, HOWEVER, AN EXAMINATION OF GLOBAL'S PROPOSAL, PARTICULARLY IN THE DETAILED MANNING TABLES IN SCHEDULE 5 OF PART II, REVEALS THAT, IN FACT, THIS WAS NOT DONE. ON THE CONTRARY, THE CLASSIFICATIONS OF THE WORK FORCES IN VARIOUS AREAS APPEARS REASONABLE. ALSO, WITH RESPECT TO THE LABOR FORCE ACTUALLY EMPLOYED IN PERFORMANCE, THE CONTRACT, IN CONFORMANCE WITH THE PROPOSAL OF GLOBAL ASSOCIATES, WILL INCLUDE AN EXPRESS PROVISION PRECLUDING THE CONTRACTOR'S ESTABLISHING NEW LABOR CLASSIFICATIONS WITHOUT PRIOR APPROVAL OF THE CONTRACTING OFFICER.'

WITH RESPECT TO YOUR SUGGESTION THAT THE INCENTIVE FEE FORMULA WOULD FAIL TO PENALIZE THE USE OF UNREALISTIC HIGH-PRICED LABOR CATEGORIES, THE DEPARTMENT OF THE NAVY STATES:

"* * * BUT THE PERFORMANCE EVALUATION MANUAL, WHICH WILL BE INCORPORATED IN THE CONTRACT BY REFERENCE, IN ACCORDANCE WITH GLOBAL'S PROPOSAL, ESTABLISHES "EFFICIENCY" AS ONE OF THE EVALUATION FACTORS IN DETERMINING THE QUALITY OF PERFORMANCES AND STATES: "CONTRACTOR EFFICIENCY WILL BE MEASURED THROUGH EVALUATION OF HIS ORGANIZATION, UTILIZATION OF MATERIAL, EQUIPMENT AND FACILITIES AND INITIATIVE IN CONSERVATION. HERE THE EMPHASIS IS ON GOOD MANAGEMENT PRACTICES AND FUND UTILIZATION OR COST CONSCIOUSNESS.' THE IMPROPER USE OF HIGH CLASSIFICATION LABOR WHERE LESS EXPENSIVE LABOR IS NORMAL, OR CUSTOMARY, WILL DETRIMENTALLY AFFECT CONTRACTOR'S RATING IN THE QUALITY OF OPERATIONS PART OF THE INCENTIVE PLAN, AND THUS REDUCE HIS FEE IN THE PORTION RELATED TO QUALITY OF PERFORMANCE.'

FOR THE REASONS STATED IN THE ENCLOSURE IT REMAINS OUR VIEW THAT THE SELECTION OF GLOBAL ASSOCIATES FOR AWARD OF THE CONTRACT, WHATEVER ITS WISDOM, REPRESENTS A VALID EXERCISE OF THE DEPARTMENT OF THE NAVY'S CONTRACTING AUTHORITY.