B-126361, FEB. 21, 1956

B-126361: Feb 21, 1956

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" WAS MADE A PART OF THE AGREEMENT (PROVISION 30). ALL SUPPLIES EXCEPT ROTATING ELECTRICAL POWER EQUIPMENT WILL BE TREATED FOR RESISTANCE TO MOISTURE AND FUNGUS IN ACCORDANCE WITH SPECIFICATIONS MIL-T-10513 (SIG C). WHILE RCA WAS PROCEEDING WITH THE WORK UNDER THE CONTRACT. IT WAS AGREED THAT NO OVERALL MFP WOULD BE APPLIED AS PRESCRIBED IN SPECIFICATION JAN-T-152 AND THAT MFP TREATMENT WOULD BE RESTRICTED TO THE PAPER BASE PHENOLIC INSULATION OF 12 COMPONENTS AND ALSO WOULD BE APPLIED OVER PANEL AND CHASSIS MARKINGS FOR ABRASION PROTECTION ONLY. THIS AGREEMENT WAS INCORPORATED IN TECHNICAL ACTION REQUEST (TAR) 72. NOR IS IT APPARENT FROM OUR RECORDS THAT THE CHANGE WAS TAKEN INTO CONSIDERATION IN REDETERMINING THE PRICE TO BE PAID UNDER THE AGREEMENT.

B-126361, FEB. 21, 1956

TO THE HONORABLE SECRETARY OF THE ARMY:

AT THE REQUEST OF A COMMITTEE OF THE CONGRESS OUR OFFICE HAS CONDUCTED AN INVESTIGATION PERTAINING TO THE PERFORMANCE OF CONTRACT NO. DA-36-039-SC- 1391, ORDER NO. 1758-PHILA-51-01, ENTERED INTO BY THE SIGNAL CORPS WITH THE RADIO CORPORATION OF AMERICA, RCA VICTOR DIVISION (RCA), CAMDEN, NEW JERSEY, ON NOVEMBER 15, 1950.

UNDER THE TERMS OF THE CONTRACT RCA AGREED TO MANUFACTURE AND DELIVER TO THE GOVERNMENT 10,285 WALKIE-TALKIE RADIO SETS AND RELATED MATERIAL AT A STIPULATED TARGET PRICE OF $4,427,945.45 AND A CEILING PRICE OF $5,313,534.54. FROM IV, ENTITLED "PRICE REVISION ARTICLE (JPR4 307.4)," WAS MADE A PART OF THE AGREEMENT (PROVISION 30). REGARDING MOISTURE- FUNGUS-PROOFING, NOTE R OF THE CONTRACT PROVIDED, IN PERTINENT PART, AS FOLLOWS:

"NOTE R: MOISTURE AND FUNGUS PROOFING:

1. ALL SUPPLIES EXCEPT ROTATING ELECTRICAL POWER EQUIPMENT WILL BE TREATED FOR RESISTANCE TO MOISTURE AND FUNGUS IN ACCORDANCE WITH SPECIFICATIONS MIL-T-10513 (SIG C), JAN-T-152 AND -C-173.'

SPECIFICATION JAN-T-152 COVERED THE APPLICATION OF SPECIAL COATING MATERIALS TO ASSEMBLED COMMUNICATIONS, ELECTRONIC AND ASSOCIATED ELECTRICAL EQUIPMENT AND CERTAIN OF THEIR COMPONENT SUBASSEMBLIES TO RENDER THEM MORE RESISTANT TO THE EFFECT OF MOISTURE AND TO FUNGUS GROWTH.

THE RECORD SHOWS THAT, WHILE RCA WAS PROCEEDING WITH THE WORK UNDER THE CONTRACT, A QUESTION AROSE AS TO THE EXTENT THAT MOISTURE-FUNGUS PROOFING (MFP) WOULD BE APPLIED ON THE RADIO SETS UNDER THE PRESCRIBED SPECIFICATION. IT WAS AGREED THAT NO OVERALL MFP WOULD BE APPLIED AS PRESCRIBED IN SPECIFICATION JAN-T-152 AND THAT MFP TREATMENT WOULD BE RESTRICTED TO THE PAPER BASE PHENOLIC INSULATION OF 12 COMPONENTS AND ALSO WOULD BE APPLIED OVER PANEL AND CHASSIS MARKINGS FOR ABRASION PROTECTION ONLY. THIS AGREEMENT WAS INCORPORATED IN TECHNICAL ACTION REQUEST (TAR) 72, FORWARDED BY RCA TO THE SIGNAL CORPS ON JUNE 4, 1951, AND APPROVED BY THE RESIDENT INSPECTOR IN CHARGE AND THE FIELD ENGINEER OF THE SIGNAL CORPS ON JUNE 12, 1951.

NOTWITHSTANDING THE CONTRACT CONTAINS THE STANDARD "CHANGES" ARTICLE (ARTICLE 2 OF THE GENERAL PROVISIONS), THE CONTRACTING OFFICER APPARENTLY DID NOT MODIFY THE CONTRACT SO AS TO PROVIDE FOR AN EQUITABLE DOWNWARD ADJUSTMENT OF THE CONTRACT PRICE BY REASON OF THE OMISSION OF A PORTION OF THE MOISTURE-FUNGUS-PROOFING REQUIREMENTS. NOR IS IT APPARENT FROM OUR RECORDS THAT THE CHANGE WAS TAKEN INTO CONSIDERATION IN REDETERMINING THE PRICE TO BE PAID UNDER THE AGREEMENT.

IT IS, THEREFORE, REQUESTED THAT YOU FURNISH A DETAILED REPORT, INCLUDING AN EXPRESSION OF YOUR VIEWS AS TO WHY, UNDER THE FACTS APPEARING AND THE APPLICABLE PROVISIONS OF THE CONTRACT, AN ADJUSTMENT IN THE CONTRACT PRICE, IF NOT ALREADY ACCOMPLISHED, SHOULD NOT BE REQUIRED, AND ALSO A STATEMENT AS TO THE ACTION TAKEN OR PROPOSED TO BE TAKEN BY YOUR DEPARTMENT IN THIS MATTER.

YOU MAY WISH TO CONSIDER CONTRACT NO. DA-36-039-SC-30758 WHICH SUBSEQUENTLY WAS NEGOTIATED WITH RCA AND COVERED THE PROCUREMENT OF SIMILAR RADIO SETS. BY REFERENCE, THIS LATTER CONTRACT INCORPORATED THE WAIVER OF OVERALL MFP REQUIREMENTS UNDER CONTRACT NO. DA-36-039-SC 1391 WHICH WAS THE SUBJECT OF TAR 72, REFERRED TO ABOVE. HOWEVER, FOLLOWING REPORTS OF CORROSION AND FUNGUS IN RADIO SETS PREVIOUSLY FURNISHED, REPRESENTATIVES OF THE SIGNAL CORPS AND RCA AGREED TO REINSTATE THE OVERALL MFP TREATMENT UNDER CONTRACT NO. DA-36-039-SC 30758. MODIFICATION NO. 10 WAS ACCORDINGLY EXECUTED WHICH, AMONG OTHER THINGS, PROVIDED FOR AN INCREASE OF $4.95 PER SET FOR THE EXTENSION OF THE MFP TREATMENT ON 17,573 SETS. THIS WOULD APPEAR TO BE INDICATIVE OF THE PROPER MEASURE OF ADJUSTMENT WHICH SHOULD HAVE BEEN EFFECTED UNDER CONTRACT NO. DA-36-039-SC -1391.

IN VIEW OF THE CONGRESSIONAL INTEREST THAT HAS BEEN EXPRESSED REGARDING THIS MATTER, IT IS REQUESTED THAT YOUR REPLY BE FURNISHED AT THE EARLIEST PRACTICABLE DATE.