B-151481, MAR. 4, 1964

B-151481, MAR. 4, 1964

TO WAREHOUSE EMPLOYEES UNION:

REFERENCE IS MADE TO YOUR TELEGRAM OF JANUARY 22, 1964, AND LETTER OF FEBRUARY 11, 1964, CONCERNING THE PROPOSED AWARD OF A CONTRACT BY THE DEPARTMENT OF THE AIR FORCE FOR PACKING SERVICES, STORAGE AND DISTRIBUTION OF AIR FORCE PUBLICATIONS AND FORMS FOR FISCAL YEAR 1965. THE AWARD OF THE FISCAL YEAR 1964 CONTRACT FOR SUCH WORK TO J. I. THOMPSON AND COMPANY ON A SOLE SOURCE BASIS WAS THE SUBJECT OF OUR DECISION DATED JUNE 28, 1963 (B151481) TO THE SECRETARY OF THE AIR FORCE.

YOUR LETTER OF FEBRUARY 11 REQUESTS INFORMATION CONCERNING THE IMPLICATIONS OF OUR JUNE 28, 1963, DECISION. SPECIFICALLY YOU ASK WHETHER OUR DECISION IMPLIED THAT THE AIR FORCE PUBLICATIONS DISTRIBUTION CENTER SHOULD BE MOVED TO A GOVERNMENT-OWNED FACILITY AND, ALSO, WHETHER THE DECISION INTENDED TO OPEN THE DOOR TO FAIR COMPETITIVE BIDDING AT THE PRESENT LOCATION.

IN ADDITION, YOU POINT OUT THAT THE AIR FORCE PROPOSES MOVING THE PUBLICATIONS DISTRIBUTION CENTER TO A GOVERNMENT-OWNED FACILITY AT MIDDLE RIVER (BENGIES), MARYLAND, AND YOU QUESTION WHETHER THE PROPOSED MOVE REPRESENTS THE MOST COST-EFFECTIVE SOLUTION TO THE PROBLEM. IN THAT CONNECTION, YOU CONTEND THAT THE MOVE TO BENGIES, MARYLAND, WOULD INVOLVE AN ESTIMATED RELOCATION COST OF $789,000. OUR OFFICE IS PRESENTLY CONDUCTING AN INVESTIGATION INTO THIS ASPECT OF THE CASE BUT AT THE PRESENT TIME WE DO NOT HAVE SUFFICIENT INFORMATION UPON WHICH TO BASE ANY JUDGMENT AS TO WHETHER THE PROPOSED MOVE REPRESENTS THE MOST EFFECTIVE SOLUTION FROM THE COST STANDPOINTS.

YOU ALSO QUESTION THE PROPOSED MOVE IN THE LIGHT OF THE PENDING STUDY BY A DEPARTMENT OF DEFENSE JOINT TASK GROUP TO DETERMINE POSSIBLE ECONOMIES IN PUBLICATIONS DISTRIBUTION, INCLUDING THE POSSIBILITY OF COORDINATING THE DISTRIBUTION OF ALL MILITARY PUBLICATIONS.

OUR DECISION OF JUNE 28, 1963, WAS CONCERNED WITH WHETHER THE 1964 FISCAL YEAR PROCUREMENT SHOULD BE OPENED UP TO COMPETITION OR WHETHER IT WOULD BE PERMISSIBLE TO NEGOTIATE THE CONTRACT WITH JITCO ON A SOLE-SOURCE BASIS. WE HELD THAT IN VIEW OF A DETERMINATION BY THE AIR FORCE THAT INSUFFICIENT TIME REMAINED FOR EFFECTING AN ADEQUATE PROCUREMENT WHICH WOULD BE FAIR TO ALL BIDDERS, WE WOULD NOT OBJECT TO AN AWARD OF THE CONTRACT TO JITCO. OUR DECISION WAS NOT CONCERNED WITH THE LOCATION OF THE PUBLICATIONS DISTRIBUTION CENTER IN SUBSEQUENT FISCAL YEAR PROCUREMENTS. HOWEVER, IT SHOULD BE NOTED THAT ONE OF THE PRIMARY JUSTIFICATIONS URGED BY THE AIR FORCE FOR FAILURE TO COMPETE THE PREVIOUS FISCAL YEAR PROCUREMENTS WAS THE INABILITY OF THE AIR FORCE TO OBTAIN A SATISFACTORY GOVERNMENT-OWNED OR LEASED FACILITY FOR THE CENTER IN THE WASHINGTON, D.C. AREA SO AS TO PRECLUDE THE CHANGING OF OPERATING LOCATION EACH YEAR. IN THAT CONNECTION IT WAS REPORTED THAT IF THE AIR FORCE WERE TO CHANGE CONTRACTORS ANNUALLY OR BIENNIALLY, THE COST (WHICH WOULD BE SUBSTANTIAL), OF MOVING APPROXIMATELY 7,500 TONS OF INVENTORY MATERIAL AND EQUIPMENT WOULD, DIRECTLY OR INDIRECTLY, INEVITABLY BE BORNE BY THE GOVERNMENT SINCE EITHER THE SUCCESSFUL BIDDER WOULD BE OBLIGED TO INCLUDE SUCH A COST IN ITS BID PRICE OR, IF THE COSTS WERE TO BE BORNE DIRECTLY BY THE GOVERNMENT, IT WOULD HAVE TO BE CONSIDERED IN THE EVALUATION OF THE BIDS.

AT THE TIME THAT OUR DECISION ISSUED THE AIR FORCE HAD NOT YET OBTAINED A SATISFACTORY GOVERNMENT-OWNED OR LEASED FACILITY, BUT THE PROCUREMENT PLAN SUBMITTED TO OUR OFFICE INDICATED THAT FURTHER EFFORTS WOULD BE MADE TO OBTAIN SUCH FACILITIES. IN A LETTER DATED MAY 31, 1963, TO OUR OFFICE THE ASSISTANT SECRETARY OF THE AIR FORCE STATED THAT:

"* * * IN ORDER TO PERMIT THE FISCAL YEAR 1965 CONTRACTOR TO COMMENCE OPERATION THE FIRST DAY OF THE FISCAL YEAR, THE PROCUREMENT ACTION WILL BE STARTED IN LATE CALENDAR YEAR 1963 OR EARLY CALENDAR YEAR 1964. HOPEFULLY SUCH A COMPETITION WOULD BEST BE PREDICATED UPON THE ESTABLISHMENT OF A GOVERNMENT-OWNED FACILITY FROM WHICH THE ACTIVITY MAY BE CARRIED ON. HOWEVER, MY PRESENT PLANS WOULD NOT LIMIT THE PROPOSED COMPETITION TO THE HAPPENING OF SUCH A CONTINGENCY * * *.'

AS NOTED IN OUR DECISION OF JUNE 28, WE HAVE CONSISTENTLY TAKEN THE POSITION IN REGARD TO PURCHASING BY THE GOVERNMENT THAT THE INTERESTS OF THE UNITED STATES ARE BEST SERVED WHEN MAXIMUM COMPETITION IS OBTAINED, WHETHER THAT PURCHASING IS ACCOMPLISHED BY FORMAL ADVERTISING OR BY NEGOTIATION. WE BELIEVE THAT SOLE-SOURCE PROCUREMENT SHOULD BE AVOIDED WHENEVER POSSIBLE SINCE RESORT TO SUCH PROCUREMENT MAY LEAD TO SUSPICION AND CHARGES OF FAVORITISM AGAINST PROCUREMENT OFFICIALS. MOREOVER, IT IS OUR FIRM OPINION THAT COMPETITION AMONG SUPPLIERS IS THE SUREST METHOD BY WHICH TO OBTAIN THE GOVERNMENT'S NEEDS AT THE LOWEST COST.

IN THE INSTANT CASE THE AIR FORCE HAS DETERMINED, AND WE THINK RIGHTLY SO, TO OBTAIN COMPETITION FOR THE FISCAL YEAR 1965 CONTRACT. THE AIR FORCE HAS ALSO DETERMINED, APPARENTLY, THAT COMPETITION WOULD BEST BE PREDICATED UPON THE ESTABLISHMENT OF A GOVERNMENT-OWNED FACILITY FROM WHICH THE ACTIVITY OF THE CENTER MAY BE CARRIED ON. PRESUMABLY, THIS DECISION TO UTILIZE A GOVERNMENT-OWNED FACILITY IS BASED ON THE ASSUMPTION THAT THE OVERALL COSTS TO THE GOVERNMENT OVER THE YEARS WILL BE LESS BECAUSE THE SUBSTANTIAL COSTS OF MOVING FROM ONE LOCATION TO ANOTHER EACH YEAR OR SO WILL BE ELIMINATED. ON THE BASIS OF THE COST DATA AVAILABLE TO US AT THIS TIME WE ARE NOT IN A POSITION TO QUESTION SUCH AN ASSUMPTION. MOREOVER, IT SHOULD BE NOTED THAT THE RESPONSIBILITY FOR EFFECTING PURCHASES OF SUPPLIES AND SERVICES FOR THE GOVERNMENT RESTS WITH THE INDIVIDUAL CONTRACTING AGENCIES. THIS RESPONSIBILITY INCLUDES THE DETERMINATION OF ITS NEEDS AND, WITHIN SPECIFIED LEGAL LIMITS, THE MANNER OF PROCURING THOSE NEEDS. WE RECOGNIZED THIS PRINCIPLE IN OUR DECISION OF JUNE 28 WHEN, IN A CONTROVERSY OVER THE AMOUNT OF TIME NECESSARY TO OBTAIN COMPETITION IN THE 1964 PROCUREMENT SO AS TO INSURE FAIRNESS TO ALL COMPETING SOURCES, WE HELD THAT A DETERMINATION ON THIS MATTER WAS THE PRIMARY RESPONSIBILITY OF THE PROCUREMENT AGENCY. SUCH A DETERMINATION, WE SAID, WOULD NOT BE LIGHTLY DISTURBED SINCE THE AGENCY BEST KNEW ITS OWN NEEDS AND THE AMOUNT OF TIME ADMINISTRATIVELY REQUIRED TO ACCOMPLISH A SOUND AND ORDERLY PROCUREMENT. LIKEWISE, WE THINK THAT A DETERMINATION BY THE AIR FORCE IN THE PRESENT CASE THAT ITS NEEDS WILL BEST BE MET, AND MAXIMUM COMPETITION OBTAINED, BY UTILIZATION OF A GOVERNMENT-OWNED FACILITY, SHOULD NOT, IN THE ABSENCE OF COMPELLING EVIDENCE TO THE CONTRARY, BE LIGHTLY QUESTIONED. ON THE BASIS OF THE RECORD BEFORE US WE CANNOT OBJECT TO THE DETERMINATION MADE BY THE AIR FORCE IN THIS RESPECT.

WITH REGARD TO THE PENDING STUDY BY THE DEPARTMENT OF DEFENSE JOINT TASK GROUP, WE HAVE BEEN INFORMALLY ADVISED BY MR. NICHOLAS SPENCE, DIRECTOR, OFFICE OF PUBLICATIONS AND PRINTING, DEPARTMENT OF THE NAVY, WHO IS THE LEADER OF THIS GROUP, THAT AT LEAST 60 DAYS WILL ELAPSE BEFORE THE STUDY GROUP CAN MAKE ITS REPORT TO THE SECRETARY OF DEFENSE CONCERNING POSSIBLE ECONOMIES IN THE DISTRIBUTION OF PUBLICATIONS. WE WERE ALSO ADVISED THAT IF THE STUDY GROUP RECOMMENDS CONSOLIDATION OF ALL MILITARY PUBLICATIONS DISTRIBUTION, IT WOULD TAKE AT LEAST ONE YEAR, AND PROBABLY MORE, TO ACCOMPLISH THAT GOAL. IN VIEW OF THE INDEFINITENESS AS TO WHEN THE REPORT WILL BE ISSUED AND, ALSO, AS TO WHAT RECOMMENDATIONS THE REPORT WILL CONTAIN, WE WERE ADVISED THAT IT WOULD BE SAFE TO ASSUME AT THE PRESENT TIME THAT THE STUDY GROUP REPORT WILL NOT HAVE ANY IMPACT ON THE PROPOSED MOVE BY THE AIR FORCE TO BENGIES, MARYLAND.