B-123716, FEB. 24, 1956

B-123716, FEB. 24, 1956

TO HONORABLE E. H. CHAMBERLIN, EXECUTIVE OFFICER, NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 26, 1955, WITH ENCLOSURES, REQUESTING REMOVAL OF GAO EXCEPTION NO. 500005, DATED JANUARY 4, 1955, STATED AGAINST D.O. VOUCHER NO. 20-1756, IN THE FEBRUARY 1952 ACCOUNTS OF ROSE PICKLE, COVERING PAYMENT TO WESTINGHOUSE ELECTRIC CORPORATION OF THE SUM OF $8,388.20 UNDER NACA LETTER OF INTENT NO. NAW-6021, DATED DECEMBER 11, 1950, AS AMENDED.

UNDER THE LETTER OF INTENT WESTINGHOUSE WAS AUTHORIZED TO COMPLETE SUCH PORTION OF THE DESIGN WORK INCIDENT TO THE FABRICATION AND INSTALLATION OF AN ADJUSTABLE NOZZLE FOR A SUPERSONIC WIND TUNNEL AT THE AMES AERONAUTICAL LABORATORY, AT A COST OF NOT TO EXCEED $40,000, AS WOULD BE NECESSARY TO ENABLE THE CONTRACTOR TO SUBMIT A FIRM QUOTATION FOR THE ENTIRE PROJECT. THE LETTER OF INTENT PROVIDED THAT, IF THE PARTIES WERE NOT SUCCESSFUL IN NEGOTIATING A FINAL CONTRACT FOR THE WORK, THE CONTRACTOR WOULD FURNISH THE NACA SHOP DRAWINGS, COST ESTIMATES, AND A FULL REPORT OF THE RESULTS OF ALL OTHER WORK ACCOMPLISHED UNDER THE LETTER OF INTENT, AND THE GOVERNMENT WOULD REIMBURSE THE CONTRACTOR, SUBJECT TO THE $40,000 LIMITATION, AT CERTAIN SPECIFIED RATES WHICH REPRESENTED ITS AVERAGE OPERATING COSTS AS QUOTED IN ITS LETTER OF NOVEMBER 7, 1950.

AMENDMENT NO. 2, DATED DECEMBER 26, 1951, PURPORTED TO AMEND THE LETTER OF INTENT BY INCREASING THE MAXIMUM LIMITATION ON COSTS INCURRED THEREUNDER FROM $40,000 TO $50,000.

WESTINGHOUSE WAS PAID THE AMOUNT OF $48,388.20 FOR ITS SERVICES UNDER THE LETTER OF INTENT, AND EXCEPTION WAS TAKEN TO THE PAYMENT OF $8,388.20, AS BEING IN EXCESS OF THE CONTRACTUAL LIMIT. THIS WAS ON THE BASIS THAT, SINCE THE RECORDS MADE AVAILABLE TO OUR OFFICE FAILED TO SHOW THAT THE CONTRACTOR HAD BEEN AUTHORIZED TO DO ANY DESIGN WORK IN ADDITION TO THAT WHICH IT FOUND NECESSARY TO BE DONE IN ORDER TO SUBMIT ITS BID, OR THAT WHICH WAS REQUIRED TO BE DONE FOR THE MAXIMUM PRICE OF $40,000, THERE APPEARED TO HAVE BEEN NO LEGAL CONSIDERATION FOR THE EXECUTION OF AMENDMENT NO. 2.

IN YOUR LETTER YOU DRAW ATTENTION TO THE FACT THAT THE BID OF DECEMBER 13, 1951, WHICH WESTINGHOUSE SUBMITTED PURSUANT TO THE LETTER OF INTENT, WAS BASED UPON DRAWINGS DATED ON OR BEFORE NOVEMBER 1, 1951, AND STATE THAT DRAWINGS FURNISHED TO THE GOVERNMENT UNDER THE LETTER OF INTENT WERE NOT COMPLETED UNTIL DECEMBER 21, 1951, WHEN THEY WERE PICKED UP BY THE GOVERNMENT AT THE CONTRACTOR'S PLANT. YOU STATE THAT, PRIOR TO THE TIME THE WESTINGHOUSE BID WAS SUBMITTED, NACA AND AMES LABORATORY OFFICIALS HAD DECIDED IN CONFERENCE THAT, IF SUCH BID WAS NOT SATISFACTORY, THE CONTRACTOR WOULD BE REQUESTED TO COMPLETE THE DESIGN WORK FOR THE NOZZLE IN SUFFICIENT DETAIL TO ENABLE OTHER QUALIFIED FIRMS TO SUBMIT BIDS FOR THE PROJECT, AND, HENCE, WHEN THE BID WAS PRESENTED TO AMES LABORATORY OFFICIALS ON DECEMBER 13, 1951, AND IT WAS APPARENT THAT THE QUOTED PRICE AND DELIVERY TERMS WERE NOT ACCEPTABLE, THE CONTRACTOR WAS DIRECTED TO CONTINUE THE DESIGN WORK BEYOND THAT REQUIRED FOR SUBMITTING ITS QUOTATION, OR TO THE POINT WHERE THE DATA COULD BE USED IN REQUESTING QUOTATIONS FROM OTHER PROSPECTIVE BIDDERS. YOU STATE THAT AMENDMENT NO. 2, WHEREBY THE COST LIMITATION FOR THE WORK AUTHORIZED UNDER THE LETTER OF INTENT WAS INCREASED TO $50,000, WAS MERELY CONFIRMATORY OF THE FOREGOING INFORMAL ORDER FOR EXTRA WORK, AND THAT THE SUM OF $8,388.20 REPRESENTED PAYMENT TO THE CONTRACTOR FOR SUCH EXTRA WORK.

IN VIEW OF YOUR EXPLANATION AS TO THE BASIS FOR PAYMENT TO THE CONTRACTOR OF THE SUM IN QUESTION, THE EXCEPTION WILL BE REMOVED.