B-131780, JULY 16, 1957, 37 COMP. GEN. 24

B-131780: Jul 16, 1957

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TO REDUCE REPAIR PARTS IN STOCK AND IN STORAGE AND ULTIMATELY TO INCREASE COMBAT EFFICIENCY IN THE MAINTENANCE PIPELINE WAS PROPER. THE NEGOTIATED PROCUREMENT OF SUCH FORK LIFT TRUCKS AND PARTS WHICH WERE FOR USE OVERSEAS FOR REPLACEMENT OF EXISTING. WHICH PERMITS PROCUREMENT WITHOUT ADVERTISING OF TECHNICAL EQUIPMENT WHOSE STANDARDIZATION AND INTERCHANGEABILITY OF PARTS IS NECESSARY IN THE PUBLIC INTEREST. WAS A PROPERLY NEGOTIATED PROCUREMENT UNDER THE LAW. 1957: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 7. YOU STATE IN YOUR LETTER THAT THE INDUSTRIAL TRUCK MANUFACTURERS HAVE BEEN IGNORED AND THAT THE DEPARTMENT OF THE ARMY HAS ARBITRARILY ORDERED PROCUREMENT OF 365 6. YOU ALSO STATE THAT THE TRUCKS WILL BE BUILT TO SPECIFICATIONS WHICH WERE IN EFFECT LAST MAY AND WHICH HAVE NOW BECOME OBSOLETE AS THE RESULT OF THE ISSUANCE OF A NEW MILITARY SPECIFICATION.

B-131780, JULY 16, 1957, 37 COMP. GEN. 24

CONTRACTS - NEGOTIATED - TECHNICAL EQUIPMENT - STANDARDIZATION THE STANDARDIZATION OF FORK LIFT TRUCK SPECIFICATIONS FOR THE PURPOSE OF LIMITING ITEMS IN THE SUPPLY SYSTEM TO SAVE ON COST OF PREPARATION OF TECHNICAL MANUALS, TO ELIMINATE INITIAL REPAIR PART PURCHASES, TO REDUCE REPAIR PARTS IN STOCK AND IN STORAGE AND ULTIMATELY TO INCREASE COMBAT EFFICIENCY IN THE MAINTENANCE PIPELINE WAS PROPER; AND THE NEGOTIATED PROCUREMENT OF SUCH FORK LIFT TRUCKS AND PARTS WHICH WERE FOR USE OVERSEAS FOR REPLACEMENT OF EXISTING, IN USE, EQUIPMENT UNDER 10 U.S.C. 2304 (A) (13), WHICH PERMITS PROCUREMENT WITHOUT ADVERTISING OF TECHNICAL EQUIPMENT WHOSE STANDARDIZATION AND INTERCHANGEABILITY OF PARTS IS NECESSARY IN THE PUBLIC INTEREST, WAS A PROPERLY NEGOTIATED PROCUREMENT UNDER THE LAW.

TO THE YALE AND TOWNE MANUFACTURING COMPANY, JULY 16, 1957:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 7, 1957, CONCERNING THE NEGOTIATION OF A CONTRACT FOR LIFT TRUCKS FOR THE DEPARTMENT OF THE ARMY.

YOU STATE IN YOUR LETTER THAT THE INDUSTRIAL TRUCK MANUFACTURERS HAVE BEEN IGNORED AND THAT THE DEPARTMENT OF THE ARMY HAS ARBITRARILY ORDERED PROCUREMENT OF 365 6,000 LB. CAPACITY LIFT TRUCKS WITHOUT OPEN COMPETITION AND IN TOTAL DISREGARD OF THE RIGHTS OF TAXPAYERS TO A FULL EXPLANATION. YOU ALSO STATE THAT THE TRUCKS WILL BE BUILT TO SPECIFICATIONS WHICH WERE IN EFFECT LAST MAY AND WHICH HAVE NOW BECOME OBSOLETE AS THE RESULT OF THE ISSUANCE OF A NEW MILITARY SPECIFICATION. YOU FURTHER STATE THAT THE CONTRACT WAS AWARDED TO THE TOWMOTOR CORPORATION WHICH HAS REFUSED TO BID ON THE PRESENT MILITARY SPECIFICATION WITHOUT A LENGTHY LIST OF EXCEPTIONS. YOU REQUEST, THEREFORE, THAT THE CONTRACT SHOULD BE STOPPED UNTIL THE INDUSTRY HAS BEEN ACCORDED FULL OPPORTUNITY TO HEAR THE ARMY'S EXPLANATION FOR ELIMINATING OPEN COMPETITION.

IN RESPONSE TO OUR REQUEST, THE DEPARTMENT OF THE ARMY HAS FURNISHED US A REPORT OF THE FACTS AND THE REASONS WHY NEGOTIATION WAS DEEMED TO BE NECESSARY. IT APPEARS THAT BY MILITARY INTERDEPARTMENTAL PURCHASE REQUEST ( MIPR R-56-3-9038-QM (17) (, DATED MARCH 16, 1956, THE QUARTERMASTER GENERAL OF THE ARMY REQUESTED THE DEPARTMENT OF THE NAVY TO PURCHASE 375 TRUCKS, FORK, GAS, 6,000 LB. LEAD, SOLID RUBBER TIRES, 24 INCH LOAD CENTER. TWO HUNDRED AND TWENTY-FIVE OF THE TRUCKS WERE TO HAVE A LIFT OF 127 INCHES AND THE REMAINDER A LIFT HEIGHT OF 168 INCHES. THE BASIC SPECIFICATION CITED WAS MIL-T-15445C, DATED JUNE 15, 1953, WITH EXCEPTIONS WHICH WERE SET FORTH IN THE MILITARY INTERDEPARTMENTAL PURCHASE REQUEST. THE TRUCKS WERE NEEDED BY THE ARMY TO MEET OVERSEAS REQUIREMENTS FOR REPLACEMENT OF EXISTING, IN USE, EQUIPMENT WHICH WAS OVER-AGE AND HAD EXCEEDED ITS NORMAL LIFE EXPECTANCY.

AS ORIGINALLY ISSUED THE MIPR INDICATED THAT PROCUREMENT WAS TO BE EFFECTED PURSUANT TO SECTION 2C (13) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, NOW CODIFIED IN 10 U.S.C. 2304 (A) (13), BY NEGOTIATION WITH THE CLARK EQUIPMENT COMPANY ONLY. THE MIPR WAS LATER AMENDED TO REQUIRE NEGOTIATION WITH BOTH THE CLARK COMPANY AND THE TOWMOTOR CORPORATION. THE AMENDMENT WAS BASED ON A DETERMINATION THAT COMPETITION WOULD BE SECURED FROM THE TWO SOURCES OF SUPPLY WHOSE TRUCKS HAD BEEN APPROVED FOR STANDARDIZATION, WITH AWARD BEING MADE ON THE BASIS OF LOWEST PRICE. AMENDMENT REQUESTING QUOTATIONS BASED ON THE BIDDER FURNISHING COMPONENT PARTS, AND QUOTATIONS SHOULD THE GOVERNMENT FURNISH CERTAIN OF THE PARTS WAS ALSO EFFECTED SINCE THE QUARTERMASTER CORPS HAD A SUBSTANTIAL INVENTORY OF PARTS FOR CLARK AND TOWMOTOR TRUCKS. SINCE THE TOWMOTOR CORPORATION SUBMITTED THE LOWEST PROPOSAL IN RESPONSE TO THE NAVY'S REQUEST FOR PROPOSALS ISSUED IN MAY 1956, FURTHER NEGOTIATION WAS HAD WITH THE TOWMOTOR CORPORATION AND IN APRIL 1957 THAT CORPORATION WAS AWARDED THE CONTRACT.

AS A RESULT OF THE COMPLAINT MADE IN YOUR TELEGRAM OF MAY 16, AND LETTER OF MAY 18, 1956, AND SIMILAR COMPLAINTS FROM OTHER TRUCK MANUFACTURERS THE DEPARTMENT OF THE ARMY SUSPENDED ACTION ON THE PROCUREMENT IN JULY 1956, PENDING A REVIEW OF THE STANDARDIZATION ACTION AND THE PROCUREMENT.

SECTION 2C (13) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947 AUTHORIZES THE HEAD OF AN AGENCY TO NEGOTIATE A CONTRACT FOR EQUIPMENT THAT HE DETERMINES TO BE TECHNICAL EQUIPMENT WHOSE STANDARDIZATION AND THE INTERCHANGEABILITY OF WHOSE PARTS ARE NECESSARY IN THE PUBLIC INTEREST. ON MARCH 9, 1956, THE ASSISTANT SECRETARY OF THE ARMY MADE A DETERMINATION THAT THE EQUIPMENT WAS TECHNICAL EQUIPMENT; THAT THE PROCUREMENT THEREOF WITHOUT ADVERTISING WAS NECESSARY TO ASSURE STANDARDIZATION AND INTERCHANGEABILITY OF PARTS; AND THAT SUCH STANDARDIZATION AND INTERCHANGEABILITY WAS NECESSARY IN THE PUBLIC INTEREST. THE DETERMINATION OF THE ASSISTANT SECRETARY OF THE ARMY WAS BASED, IN PART, ON THE RECOMMENDATIONS OF THE DEPARTMENT OF THE ARMY ADVERTISING OF TECHNICAL EQUIPMENT AND COMPONENTS AND ON THE FINDINGS AND DETERMINATION OF THE QUARTERMASTER GENERAL. THESE DOCUMENTS INDICATE THAT THE PURPOSE OF STANDARDIZATION WAS TO LIMIT THE TYPES OF ITEMS IN THE SUPPLY SYSTEM THEREBY ACCOMPLISHING THE MAXIMUM INTERCHANGEABILITY OF PARTS WITH THE RESULTANT SAVINGS IN THE COST OF THE PREPARATION OF TECHNICAL MANUALS, ELIMINATION OF THE REQUIREMENT FOR INITIAL PURCHASE OF REPAIR PARTS, AND A REDUCTION OF REPAIR PARTS IN STOCK AND IN STORAGE. INCREASED COMBAT EFFICIENCY WAS ALSO EXPECTED DUE TO THE REDUCTION IN THE MAINTENANCE PIPELINE WHICH WOULD BE REQUIRED WITH LIMITED TYPES OF ITEMS IN THE SYSTEM.

REGARDING YOUR STATEMENT THAT THE INDUSTRY HAS BEEN IGNORED, THE DEPARTMENT OF THE ARMY HAS REPORTED THAT THE INDUSTRIAL TRUCK MANUFACTURERS HAVE BEEN AFFORDED SEVERAL OPPORTUNITIES TO COMMENT ON AND PARTICIPATE IN THE DEVELOPMENT OF SPECIFICATIONS FOR FORK LIFT TRUCKS. THE SPECIFICATION, MIL-T-15445C, USED FOR THE PURCHASE OF THE 375 TRUCKS FOR THE ARMY, WAS FULLY COORDINATED WITH INDUSTRY PRIOR TO ITS ADOPTION. THE ARMY ALSO HAS REPORTED THAT SPECIFICATION MIL-T 15445D WAS DISCUSSED WITH INDUSTRY REPRESENTATIVES ON SEVERAL OCCASIONS AND THAT YOUR REPRESENTATIVES PARTICIPATED IN MUCH OF THE DISCUSSION. IN ADDITION, THEY REPORT THAT YOUR COMPANY WAS REPRESENTED ON A QUARTERMASTER CORPS INDUSTRY ADVISORY COMMITTEE ON MATERIAL HANDLING AND MOBILE EQUIPMENT SPARE PARTS WHICH MET TO DISCUSS PROCUREMENT METHODS FOR SUCH ITEMS. ALSO, WE ARE ADVISED THAT YOUR COMPANY WAS REPRESENTED AT THE RECENT MILITARY-1INDUSTRY MEETING OF MAY 14-16, 1957, AT WHICH THE ADEQUACY OF THE CURRENT SPECIFICATION REQUIREMENTS AND ABILITY OF INDUSTRY TO MEET THE REQUIREMENTS WERE REVIEWED IN DETAIL. IN VIEW OF THE ABOVE-REPORTED FACTS, WE BELIEVE THAT THE ACTION OF THE DEPARTMENT OF THE ARMY WAS NOT "IN TOTAL DISREGARD OF THE RIGHTS OF TAXPAYERS TO FULL EXPLANATION.'

REGARDING YOUR STATEMENT THAT THE TRUCKS WILL BE BUILT TO SPECIFICATIONS WHICH ARE NOW OBSOLETE, THE DEPARTMENT OF THE ARMY HAS REPORTED THAT THE SPECIFICATION UNDER WHICH THE TRUCKS WERE PROCURED WAS IN EFFECT AT THE TIME THE PROCUREMENTS WERE INITIATED AND THAT THE NEW SPECIFICATION WAS NOT COMPLETED UNTIL JULY 1956. MAJOR CHANGES MADE BY MIL-T-15445D ARE THE PROVISIONS FOR THE USE OF MIL-STD-268, SUBJECT: TEST AND INSPECTION OF TRUCK, LIFT, FORK, GASOLINE, SOLID RUBBER TIRES, DATED JULY 27, 1956, WHICH OUTLINES PROCEDURES FOR TEST AND INSPECTION OF THE PREPRODUCTION MODEL WHEREAS THE EARLIER SPECIFICATION SET FORTH OPERATION AND TEST REQUIREMENTS FOR OPERATING AND STRUCTURAL ASSEMBLIES AND THE END ITEM. THE EARLIER SPECIFICATION REQUIRED EACH TRUCK TO BE TESTED FOR SATISFACTORY PERFORMANCE UNDER NORMAL OPERATING CONDITIONS WHEREAS THE LATER SPECIFICATION MAKES SUCH TESTING OF PRODUCTION TRUCKS OPTIONAL WITH THE GOVERNMENT. FURTHERMORE, EXCEPTIONS TO MIL-T-15445C WERE CITED IN THE REQUEST FOR PROPOSALS TO OBTAIN THE MAXIMUM BENEFIT FROM PAST EXPERIENCE AND TO INCORPORATE SUCH OF THE CURRENT QUALITY SAFEGUARDS AND ENGINEERING PERFORMANCE FACTORS AS POSSIBLE AT THAT TIME. IT DOES NOT APPEAR THAT THE SPECIFICATION CHANGES ARE OF SUCH IMPORTANCE AS TO AFFECT THE QUALITY AND PERFORMANCE OF THE TRUCKS.

REGARDING YOUR ALLEGATION THAT THE TOWMOTOR CORPORATION HAS REFUSED TO BID ON THE PRESENT MILITARY SPECIFICATION WITHOUT A LENGTHY LIST OF EXCEPTIONS, THE ARMY HAS REPORTED THAT ALTHOUGH THAT CORPORATION HAS SUBMITTED LENGTHY COMMENTS WHENEVER IT BID ON EITHER SPECIFICATION, THE COMMENTS CONSISTED FOR THE MOST PART OF CLARIFICATION AND INTERPRETATIONS OF THE SPECIFICATIONS AND ARE NOT EXCEPTIONS TO THE SPECIFICATION. THEY EXPLAIN IN DETAIL THOSE SPECIFICS WHERE THE TOWMOTOR CORPORATION PROPOSES TO COMPLY WITH THE SPECIFICATIONS AND FURTHER THEY SET FORTH THEIR INTERPRETATIONS OF VARIOUS PARAGRAPHS.

IN VIEW OF THE EXPLANATION FURNISHED BY THE DEPARTMENT OF THE ARMY, WE HAVE CONCLUDED THAT THE PROCUREMENT OF THE TRUCKS WAS IN ACCORDANCE WITH LAW AND WE WOULD NOT BE JUSTIFIED IN QUESTIONING THE STANDARDIZATION ACTION AND THE NEGOTIATED PROCUREMENT OF THE TRUCKS INVOLVED.