B-151723, DEC. 4, 1963

B-151723, DEC. 4, 1963

TO IRVING M. WOLFF, ESQUIRE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 18, 1963, ACKNOWLEDGED ON OCTOBER 9, CONCERNING THE PROTEST OF STARFIELD OF PANAMA, C.A., INC., AGAINST THE AWARD MADE UNDER NEGOTIATED PROCUREMENT M.S.T.S. INVITATION NO. 2 TO POMEROY SHIPPING COMPANY FOR HIRE OF LSM UNDER DATE OF APRIL 2, 1963. WE ALSO ACKNOWLEDGE RECEIPT OF YOUR LETTER DATED NOVEMBER 13, 1963, TRANSMITTING A COPY OF DEPOSITION OF JOHN C. POMEROY IN CONNECTION WITH A PENDING ADMIRALTY ACTION IN THE MIDDLE DISTRICT OF FLORIDA, ORLANDO DIVISION, UNITED STATES DISTRICT COURT ENTITLED "COLLINS AND TOLSON, INC., V. M/V GULFSTREAM," NO. 63-1-ADM.

IN YOUR LETTER OF SEPTEMBER 18, YOU MADE SIX ENUMERATIONS OF WHAT YOU CONSIDERED TO BE SO-CALLED DEFICIENCIES OF THE VESSEL SUPPLIED BY THE POMEROY SHIPPING COMPANY. AS YOU WERE INFORMED ON OCTOBER 9, 1963, WE REQUESTED A SUPPLEMENTAL REPORT FROM THE DEPARTMENT OF THE NAVY CONCERNING THE ALLEGATIONS SET FORTH IN YOUR LETTER; AND THE REQUESTED REPORT HAS NOW BEEN RECEIVED. IN THE INTEREST OF CONTINUITY AND CLARITY, THEREFORE, THERE FOLLOWS A TABULATION OF YOUR CONTENTIONS, TOGETHER WITH THE ADMINISTRATIVE RESPONSES THERETO IN SERIATIM FORM:

1. YOU STATE THAT AT THE TIME OF THE INSPECTION BY THE NAVY MATERIAL INSPECTOR, CLEARWATER, FLORIDA, LSM 418 WAS JUST A HULL, HAVING ALL OF HER OPERATING MECHANISM REMOVED, INCLUDING THE MECHANISM OPERATING THE BOW DOORS, AND THE INSPECTOR OF NAVY MATERIAL COULD NOT HAVE APPROVED THE VESSEL WITHOUT HAVING BEEN CLAIRVOYANT.

ADMINISTRATIVE RESPONSE: "AT THE TIME OF THE INSPECTION BY THE INSPECTOR OF NAVAL MATERIAL THE MAJOR PORTION OF THE ENGINE ROOM AUXILIARY EQUIPMENT WAS ABOARD; HOWEVER THE OPERATING MECHANISM FOR THE BOW DOORS AND THE MAIN ENGINE HAD BEEN REMOVED. THE INSPECTOR DID NOT ATTEMPT TO APPROVE THE VESSEL FOR OPERATION. HE INSPECTED TO DETERMINE THAT PLANS FOR CONVERSION HAD BEEN MADE AND WERE PRACTICABLE, AND THE CONVERSION WHEN COMPLETED WOULD LEAVE THE VESSEL IN THE CONDITION REQUIRED BY THE CONTRACT. IT IS TRUE THAT AFTER AWARD THE OWNER RAN INTO DIFFICULTIES IN ACCOMPLISHING THE REQUIRED WORK AND THAT MSTS REFUSED TO ACCEPT THE VESSEL UNTIL ITS REQUIREMENTS HAD BEEN COMPLIED WITH.'

2. YOU STATE THAT THE RECONVERTED M/V GULFSTREAM DOES NOT HAVE THE REQUIRED BOOM AND WINCH. HOWEVER, THE DEPARTMENT ADVISES THAT THE GULFSTREAM NOW HAS A SATISFACTORY BOOM AND WINCH; ALTHOUGH WE ARE INFORMED THAT IT IS TRUE THAT ORIGINALLY THE INSTALLATION WAS NOT SATISFACTORY, AND THE OWNER WAS REQUIRED TO CORRECT THE DEFICIENCY.

3. IT IS YOUR CONTENTION THAT THE RECONVERTED M/V GULFSTREAM IS DEFICIENT AS TO HER MAIN PROPULSION ENGINES, SAID SAME CONSISTING OF TWO PORT SIDE ENGINES.

ADMINISTRATIVE RESPONSE: "IT IS NOT KNOWN WHETHER THE GULFSTREAM HAS TWO PORT SIDE ENGINES AS ALLEGED. IT IS NOT KNOWN, AND IT IS IMMATERIAL. THE SHIP HAS TWO FAIRBANKS HORSE NONREVERSING OPPOSED PISTON DIESEL ENGINES WITH MODEL C FAWICK AIRFLEX CLUTCHES. PROPER PROPELLER SHAFT ROTATION DIRECTION CAN BE OBTAINED BY CHANGING THE CAMS IN THE ENGINE TO REVERSE ITS ROTATION OR BY CLUTCH CONTROL FOR CONTINUOUS OPPOSITE PROPELLER ROTATION. IT IS IMMATERIAL WHICH METHOD IS USED AS FAR AS THE TORQUE AT THE PROPELLER SHAFTS IS CONCERNED. THE ENGINE DIRECTION WAS NOT CHECKED BY THE MSTS ENGINEER ON THE SPEED TRIALS; HOWEVER, IT WAS DETERMINED THAT PROPELLER ROTATION IS CORRECT. THE CHOICE OF WHICH METHOD TO USE IS CONSIDERED TO BE COMPLETELY WITHIN THE PROVINCE OF THE OWNER.'

IT IS STATED BY YOU THAT THE RECONVERTED M/V GULFSTREAM HAS DEFICIENT CLUTCHES WHICH ONLY ALLOW HER WITH THE GREATEST DIFFICULTY TO REVERSE HER COURSE.

IN RESPONSE TO THIS STATEMENT, WE ARE INFORMED THAT THE SHIP IN ITS FIRST TRIALS DID HAVE DIFFICULTY WITH ITS CLUTCHES; HOWEVER, AT THE TIME OF THE SPEED TRIALS PRIOR TO ACCEPTANCE OF THE VESSEL THE CLUTCHES WERE OPERATING EFFICIENTLY AND ARE OPERATING WELL AT THIS TIME. FURTHER, IT IS REPORTED THAT ANY DIFFICULTIES WERE APPARENTLY DUE TO POOR MAINTENANCE AND HAVE BEEN CORRECTED.

5. YOU ALLEGE THAT THE M/V GULFSTREAM PRIOR TO HER DELIVERY BY THE COMPANY RECONVERTING HER WAS DECLARED TO BE IN A CONDITION NOT ACCEPTABLE TO THE NAVY, AND IN SPITE OF SAID CONDITION SHE WAS ACCEPTED BY THE POMEROY SHIPPING COMPANY BECAUSE OF THE DEADLINE ESTABLISHED BY THE PROCURING OFFICER FOR DELIVERY OF THE VESSEL AT CAPE CANAVERAL. YOU ALSO STATE THAT AFTER HER DELIVERY AT CAPE CANAVERAL, ADDITIONAL CONVERSION WAS UNDERTAKEN TO CIRCUMVENT THE DELIVERY DATE CONDITION.

ADMINISTRATIVE RESPONSE: "THE CONDITION OF THE SHIP AT THE TIME OF THE DELIVERY TO POMEROY BY THE SHIP REPAIR YARD WORKING ON THE GULFSTREAM IS OF NO INTEREST TO MSTS. MSTS REFUSED TO ACCEPT THE SHIP FOR PERFORMANCE UNDER THE CONTRACT UNTIL ALL WORK REQUIRED TO MAKE HER SUITABLE FOR CONTRACT PERFORMANCE HAD BEEN ACCOMPLISHED.'

6. FINALLY, YOU POINT OUT THAT POMEROY SHIPPING COMPANY BORROWED THE CONVERSION EXPENDITURE FROM A CANADIAN FINANCIAL INSTITUTION, A PORTION OF WHICH SUMS WERE DELIVERED TO THE SHIP REPAIR YARDS, THE BALANCE OF WHICH WAS RELEASED TO POMEROY SHIPPING COMPANY, AND THERE IS NOW PENDING IN THE MIDDLE DISTRICT OF FLORIDA--- UNITED STATES DISTRICT COURT--- IN ADMIRALTY A SUIT BY THE REPAIR YARD FOR THE REMAINDER OF THE UNPAID BALANCE OF ITS BILL FOR RECONVERSION. YOU ADVISE THAT THE M/V GULFSTREAM WAS RELEASED FROM LIBEL BY THE POSTING OF A BOND, AND THAT THE BONDING COMPANY WAS INDEMNIFIED BY POMEROY BY THE LATTER DEPOSITING CASH (THE RESIDUE OF THE MORTGAGE ADVANCE).

ADMINISTRATIVE RESPONSE: "THE TERMS OF POMEROY FINANCING IS IMMATERIAL TO MSTS' CONTRACT WITH POMEROY. MSTS TOOK NUMEROUS PRECAUTIONS, ALL OF WHICH HAVE BEEN LISTED IN THE REPORT TO YOU OF JULY 17, 1963, TO ASSURE ITSELF THAT THE CONTRACTOR WAS FINANCIALLY RESPONSIBLE AND TO PROTECT THE GOVERNMENT BY FINANCIALLY RESPONSIBLE GUARANTEES CONDITIONED ON FULL PERFORMANCE. IT IS ACKNOWLEDGED THAT THE REPAIR YARD HAS FILED A LAW SUIT FOR THE UNPAID BALANCE OF THE RECONVERSION CHARGES AND THAT POMEROY POSTED A BOND TO RELEASE THE GULFSTREAM LIEN SO THAT THE SHIP COULD BE USED IN PERFORMANCE OF ITS GOVERNMENT CONTRACT. IT IS UNDERSTOOD THAT THIS LAW SUIT GROWS OUT OF A DISPUTE BETWEEN POMEROY AND THE SHIP REPAIR YARD FOR DEFICIENCIES IN WORKMANSHIP IN THE ORIGINAL CONVERSION, ALL OF WHICH WERE SUBSEQUENTLY CORRECTED BY ANOTHER YARD AND MOST OF WHICH APPEARED TO BE THE BASIS OF THE ALLEGATIONS MADE IN MR. WOLFF'S LETTER.'

SUCH ARE THE ADMINISTRATIVE RESPONSES TO THE FACTUAL ALLEGATIONS SET FORTH IN YOUR LETTER, FROM WHICH IT MAY REASONABLY BE INFERRED THAT DESPITE THE NUMEROUS DIFFICULTIES ENCOUNTERED BY THE POMEROY SHIPPING COMPANY, IT ULTIMATELY WAS ABLE TO DELIVER TO THE DEPARTMENT OF THE NAVY A VESSEL WHICH ADEQUATELY MEETS ITS NEEDS.

WITH RESPECT TO THE PROCEDURES AND EFFORTS OF THE DEPARTMENT OF THE NAVY TO PROCURE A VESSEL ADEQUATE TO ITS NEEDS, PRICE AND OTHER FACTORS BEING CONSIDERED, WE REFER TO OUR OPINION OF AUGUST 30, 1963, WHEREIN WE POINTED OUT THAT NEGOTIATIONS WERE UNDERTAKEN WITH EACH OF THE SIX OFFERORS; AND THE BASIS FOR EVALUATION INCLUDED NOT ONLY THE PRICE OFFERED BUT ALSO, AMONG OTHER FACTORS, FUEL CONSUMPTION AND TIME OF AVAILABILITY OF THE OFFERED VESSEL. BOTH THE POMEROY SHIPPING COMPANY AND STARFIELD OF PANAMA ESTIMATED THAT THEIR RESPECTIVE VESSELS WOULD BE READY FOR SERVICE WITHIN APPROXIMATELY FIFTY DAYS AFTER AWARD. WE ALSO STATED THAT THE RECORD INDICATED EACH OF THE SIX OFFERORS WAS GIVEN FOUR OPPORTUNITIES TO IMPROVE HIS BID; THAT THE FINAL OFFERS WERE REVIEWED BY THE CONTRACTING OFFICER, THE CONTRACT ADVISORY COMMITTEE OF THE MILITARY SEA TRANSPORTATION SERVICE, THE DEPUTY COMMANDER AND THE COMMANDER OF THE MILITARY SEA TRANSPORTATION SERVICE, AFTER WHICH THE AWARD WAS MADE TO THE LOWEST BIDDER--- THE POMEROY SHIPPING COMPANY. WE ALSO POINTED OUT THAT, FOR THE REASONS STATED, THIS PROCUREMENT ON A NEGOTIATED BASIS WAS NOT IMPROPER. IN ADDITION, WE OBSERVED THAT THE CONTRACT EXECUTED BY POMEROY REQUIRED THE TENDERING OF A NAMED VESSEL, MV GULFSTREAM, WITH NO SUBSTITUTIONS PERMITTED, AND IT ALSO PROVIDED THAT PRIOR TO ACCEPTANCE FOR SERVICE, THE VESSEL MUST BE PRESENTED FOR SPEED TRIALS AND GENERAL SURVEY. WE THEN STATED THAT WE HAD BEEN INFORMED THAT PRIOR TO AWARD THE POMEROY SHIPPING COMPANY WAS SURVEYED BY THE BRANCH OFFICE OF THE INSPECTOR OF NAVAL MATERIAL, CLEARWATER, FLORIDA, AND IT WAS CONCLUDED THAT THE COMPANY HAD SATISFACTORY CAPABILITY FOR PERFORMANCE OF THE CONTRACT. HENCE, FOR THESE AND OTHER REASONS, WE CONCLUDED THAT WE WOULD NOT BE JUSTIFIED IN HOLDING THAT THE ADMINISTRATIVE ACTION WAS ILLEGAL OR IMPROPER.

SINCE YOUR LETTER OF SEPTEMBER 18, 1963, HAS PRESENTED NO LEGAL ARGUMENT WHICH WOULD FORM A BASIS FOR A DEPARTURE FROM THIS CONCLUSION, AND SINCE THE VARIOUS ENUMERATIONS OF SO-CALLED DEFICIENCIES IN THE VESSEL SUPPLIED BY THE POMEROY SHIPPING COMPANY--- ALL OF WHICH INVOLVED QUESTIONS OF FACT --- APPEAR TO HAVE BEEN ADEQUATELY RESOLVED TO THE SATISFACTION OF THE ADMINISTRATIVE OFFICIALS, TOGETHER WITH THE FURTHER FACT THAT THE VESSEL IS REPORTED PRESENTLY TO BE PERFORMING SATISFACTORY SERVICES, WE MUST AFFIRM OUR PREVIOUS CONCLUSION THAT THE ADMINISTRATIVE ACTION MAY NOT BE CONSIDERED AS BEING IMPROPER.