B-132604, DECEMBER 23, 1957, 37 COMP. GEN. 430

B-132604: Dec 23, 1957

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CONTRACTS - NEGOTIATION - COST-PLUS-A-FIXED-FEE OR FIXED-PRICE - BID EVALUATION - BIDDER'S QUALIFICATIONS A NEGOTIATED AWARD ON A COST-PLUS-A-FIXED-FEE BASIS RATHER THAN ON A FIXED-PRICE BASIS AFTER AN ADMINISTRATIVE DETERMINATION IS MADE UNDER 10 U.S.C. 2306 (A) THAT THE COST-PLUS-A-FIXED-FEE TYPE WOULD BE LESS COSTLY THAN OTHER METHODS AND THAT IT WAS IMPRACTICAL TO SECURE THE SERVICES OF THE KIND OR QUALITY REQUIRED WITHOUT THE USE OF THIS TYPE DOES NOT AFFORD ANY LEGAL BASIS FOR OBJECTION TO THE TYPE OF CONTRACT SELECTED AND BY LAW. THE ADMINISTRATIVE DETERMINATION IS FINAL. A NEGOTIATED COST-PLUS-A-FIXED-FEE AWARD TO THE BIDDER WHO OFFERED THE LOW FIXED FEE RATHER THAN TO THE BIDDER WHO WAS LOW ON AN OVERALL BASIS FOR THE REASON THAT THE OVERALL ESTIMATE WOULD NOT BIND EITHER THE GOVERNMENT OR THE CONTRACTOR WHEREAS THE FIXED FEE WOULD BIND THE PARTIES IS IN THE BEST INTERESTS OF THE GOVERNMENT.

B-132604, DECEMBER 23, 1957, 37 COMP. GEN. 430

CONTRACTS - NEGOTIATION - COST-PLUS-A-FIXED-FEE OR FIXED-PRICE - BID EVALUATION - BIDDER'S QUALIFICATIONS A NEGOTIATED AWARD ON A COST-PLUS-A-FIXED-FEE BASIS RATHER THAN ON A FIXED-PRICE BASIS AFTER AN ADMINISTRATIVE DETERMINATION IS MADE UNDER 10 U.S.C. 2306 (A) THAT THE COST-PLUS-A-FIXED-FEE TYPE WOULD BE LESS COSTLY THAN OTHER METHODS AND THAT IT WAS IMPRACTICAL TO SECURE THE SERVICES OF THE KIND OR QUALITY REQUIRED WITHOUT THE USE OF THIS TYPE DOES NOT AFFORD ANY LEGAL BASIS FOR OBJECTION TO THE TYPE OF CONTRACT SELECTED AND BY LAW, 10 U.S.C. 2310 (B), THE ADMINISTRATIVE DETERMINATION IS FINAL. A NEGOTIATED COST-PLUS-A-FIXED-FEE AWARD TO THE BIDDER WHO OFFERED THE LOW FIXED FEE RATHER THAN TO THE BIDDER WHO WAS LOW ON AN OVERALL BASIS FOR THE REASON THAT THE OVERALL ESTIMATE WOULD NOT BIND EITHER THE GOVERNMENT OR THE CONTRACTOR WHEREAS THE FIXED FEE WOULD BIND THE PARTIES IS IN THE BEST INTERESTS OF THE GOVERNMENT. A CONTRACT WHICH PROVIDES FOR THE USE IN THE PRODUCTION OF AMMUNITION OF CERTAIN GOVERNMENT-OWNED SUPPLIES TO BECOME THE PROPERTY OF THE REPUBLIC OF CHINA AND WHICH REQUIRES THE USE OF GOVERNMENT PERSONNEL IN THE ADMINISTRATION OF THE CONTRACT IS PROPER UNDER SECTION 102 OF THE MUTUAL SECURITY ACT OF 1954, WHICH PROVIDES FOR MILITARY ASSISTANCE ON A GRANT OR LOAN BASIS AND AUTHORIZES THE ASSIGNMENT OR DETAIL OF MEMBERS OF THE ARMED FORCES AND OTHER PERSONNEL IN CARRYING OUT THE PURPOSES OF THE ACT. A DETERMINATION OF THE QUALIFICATIONS OF A CONTRACTOR IS PRIMARILY THE FUNCTION OF THE CONTRACTING AGENCY AND, IN THE ABSENCE OF BAD FAITH OR LACK OF A REASONABLE BASIS FOR THE DETERMINATION, THERE IS NO BASIS FOR LEGAL OBJECTION.

TO GLENN BLACKSHEAR, DECEMBER 23, 1957:

YOUR LETTER OF JULY 16, 1957, WITH ENCLOSURE, PROTESTED THE AWARD OF A CONTRACT TO A FIRM OTHER THAN YOUR CLIENT, THE A. F. HOLDEN COMPANY, BY THE ARMY ORDNANCE CORPS FOR CONSTRUCTION OF AMMUNITION PRODUCTION LINES IN FORMOSA.

A REPORT FROM THE DEPARTMENT OF THE ARMY ON THIS MATTER DATED AUGUST 21, 1957, STATES THAT A REQUEST FOR PROPOSALS ON A COST-PLUS-A-FIXED FEE BASIS WAS ISSUED ON JUNE 3, 1957, FOR THE INSTALLATION OF MORTAR SHELL, CARTRIDGE CASE, AND MORTAR FIN LINES, WITH SPECIFIED MONTHLY PRODUCTION CAPACITIES, IN AN EXISTING BUILDING IN FORMOSA. POTENTIAL CONTRACTORS WERE ADVISED THAT A SUPPLY OF GOVERNMENT-OWNED EQUIPMENT (IDENTIFIED AS SCHEDULE B PROPERTY) WOULD BE AVAILABLE FOR USE IN THE PRODUCTION LINE AND THAT PROPOSAL PRICES SHOULD BE PREDICATED ON THE USE OF SUCH GOVERNMENT- OWNED EQUIPMENT. RESPONSIVE PROPOSALS WERE RECEIVED FROM SIX BIDDERS, INCLUDING A. F. HOLDEN COMPANY, WHICH ALSO SUBMITTED A PROPOSAL ON A FIXED -PRICE BASIS. AFTER INITIAL EVALUATION, REVISION OF THE PROPOSALS WAS REQUESTED ON THE BASIS THAT NO GOVERNMENT OWNED EQUIPMENT WOULD BE UTILIZED, BUT WITH THE GOVERNMENT RETAINING THE RIGHT TO DIRECT SUBSTITUTION OF GOVERNMENT-OWNED EQUIPMENT IN LIEU OF EQUIPMENT TO BE ACQUIRED BY THE CONTRACTOR. PROSPECTIVE CONTRACTORS WERE ALSO INVITED TO SUBMIT ALTERNATE PROPOSALS ON A FIXED-PRICE BASIS, WITH THE UNDERSTANDING THAT A FIXED-PRICE CONTRACT, IF AWARDED, WOULD INCLUDE A PRICE REDETERMINATION PROVISION UNLIMITED DOWNWARD ONLY.

REVISED PROPOSALS RECEIVED FROM THE A. F. HOLDEN COMPANY AND FROM KENNEDY VAN SAUN MANUFACTURING AND ENGINEERING CORPORATION WERE AS FOLLOWS:

PROPOSAL FROM TOTAL CPFF ESTIMATE, FEE TOTAL FIXED

INCLUDING FEE PRICE A. F. HOLDEN-------------- $2,999,429.69 $125,000 $3,081,385.69 KENNEDY VAN SAUN--------- 3,319,902.00 100,000 3,495,702.00

AFTER CONSIDERATION OF THE PROPOSALS, AWARD OF A NEGOTIATED CONTRACT WAS MADE, EFFECTIVE JUNE 27, 1957, TO KENNEDY VAN SAUN. THIS ACTION WAS TAKEN ON THE BASIS OF A UNANIMOUS DECISION REACHED AT A JOINT MEETING OF THE ORDNANCE AMMUNITION COMMAND BOARD OF AWARDS AND BOARD OF CONTRACT REVIEW.

YOUR PROTEST AGAINST THE AWARD IS BASED ON A NUMBER OF GROUNDS WHICH ARE CONSIDERED INDIVIDUALLY BELOW.

YOU FIRST INDICATE THAT A. F. HOLDEN IS BELIEVED TO HAVE SUBMITTED THE LOW PROPOSAL ON A FIXED-PRICE BASIS IN MARCH 1957, FOR A CARTRIDGE CASE LINE ONLY, AND IN APRIL 1957 FOR CARTRIDGE CASE AND MORTAR SHELL LINES, BUT NO AWARD WAS MADE IN EITHER CASE. THE DEPARTMENT OF THE ARMY ADVISES THAT THE LOW PROPOSAL OF MARCH 1957, WAS MADE BY HOLDEN PURSUANT TO A REQUEST OF THE DETROIT ORDNANCE DISTRICT BY LETTER DATED JANUARY 3, 1957, FOR A PROPOSAL COVERING INSTALLATION OF CERTAIN FACILITIES IN FORMOSA. THE PROPOSAL BY HOLDEN IN APRIL 1957, WAS IN RESPONSE TO A REQUEST FOR A REVISED PROPOSAL ON THE BASIS OF DELETING CERTAIN ITEMS COVERED IN EARLIER PROPOSALS. THE REQUESTS REFERRED TO WERE INFORMAL, AND SIMILAR INFORMAL NEGOTIATIONS WERE ALSO CONDUCTED WITH OTHER POTENTIAL CONTRACTORS, ALL HAVING BEEN INITIATED PRIOR TO ACTUAL ALLOCATION OF FUNDS OR DEFINITE DECISION AS TO WHAT TYPES OF FACILITIES SHOULD BE PROVIDED. AFTER EVALUATION OF THE PROPOSALS, IT WAS DETERMINED THAT IT WOULD BE IN THE INTEREST OF THE GOVERNMENT TO COMBINE ALL OF THE SEVERAL TENTATIVE PROCUREMENTS INTO A SINGLE CONTRACT; THEREFORE, NO AWARDS WERE MADE ON ANY OF THE INDIVIDUAL PROPOSALS. IT IS FURTHER REPORTED THAT THE REQUEST FOR PROPOSALS DESCRIBED ABOVE SPECIFIED NEITHER A COST-PLUS-A-FIXED-FEE NOR A FIXED PRICE BASIS AND THAT OF THE FOUR COMPANIES SOLICITED, THREE SUBMITTED ESTIMATES ON A COST BASIS. ONLY THE HOLDEN COMPANY SUBMITTED A FIXED PRICE PROPOSAL.

YOU NEXT CONTEND THAT THE PROPOSAL SUBMITTED BY HOLDEN ON THE CURRENT PROCUREMENT IS LOW ON A FIXED-PRICE AS WELL AS COST-PLUS-A FIXED-FEE BASE THAT THIS STATEMENT IS CORRECT CAN BE SEEN FROM AN EXAMINATION OF THE PRICES SUBMITTED BY HOLDEN AND KENNEDY VAN SAUN AS SHOWN ABOVE.

YOU FURTHER STATE THAT " ASPR AND EXPRESSED INTENT OF CONGRESS FAVOR FIXED-PRICE OVER COST-TYPE CONTRACTS" AND YOU QUESTION COMPLIANCE WITH SUCH INTENT IN THIS CASE. UNDER 10 U.S.C. 2306 (A) WHERE NEGOTIATION IS AUTHORIZED, THE HEAD OF AN AGENCY MAY, WITH CERTAIN EXCEPTIONS NOT HERE APPLICABLE,"MAKE ANY KIND OF CONTRACT THAT HE CONSIDERS WILL PROMOTE THE BEST INTERESTS OF THE UNITED STATES.' ASPR 3-404 (C) FURTHER LIMITS THE USE OF THE CPFF TYPE OF CONTRACT, AS REQUIRED BY 10 U.S.C. 2306 (C), TO THOSE SITUATIONS IN WHICH A DETERMINATION HAS BEEN MADE THAT SUCH METHOD OF CONTRACTING IS LIKELY TO BE LESS COSTLY THAN OTHER METHODS OR WHEN IT IS IMPRACTICABLE TO SECURE THE KIND OF SUPPLIES AND SERVICES REQUIRED WITHOUT THE USE OF SUCH TYPE OF CONTRACT. SUCH DETERMINATION WAS MADE IN THIS INSTANCE UNDER PROPERLY DELEGATED AUTHORITY, FOR THE REASON THAT THE RANGE AND INDEFINITE NATURE OF MANY ESSENTIAL ELEMENTS OF THE PROJECT, MORE SPECIFICALLY SET OUT BELOW, MADE IT IMPOSSIBLE TO FIX THE DEFINITE OBLIGATIONS OF A CONTRACTOR NECESSARY UNDER A FIXED-PRICE CONTRACT SO THAT SUCH FIXED PRICE CONTRACT WOULD BE DEVOID OF MEANING AND ITS LEGAL ENFORCEABILITY DOUBTFUL. THE ESSENTIAL ELEMENTS OF THE PROJECT STATED TO BE INDEFINITE ARE AS FOLLOWS:

(1) THE EQUIPMENT AND MACHINE TOOLS WOULD NOT BE UNDER THE CONTROL OF THE CONTRACTOR FROM THEIR ARRIVAL AT THE PORT UNTIL DELIVERY AT THE SITE IN FORMOSA.

(2) INFORMATION AS TO THE PHYSICAL CONDITIONS AT THE PROPOSED PLANT SITE IN FORMOSA WAS AVAILABLE ONLY IN GENERAL TERMS.

(3) THE CHINESE GOVERNMENT WOULD FURNISH ERECTION AND ALL LABOR FOR INSTALLATION OF EQUIPMENT AND MACHINERY AT THE PLANT SITE.

(4) THE QUANTITIES OF MACHINES REQUIRED, THEIR TYPES, CAPACITIES, AND SPECIFICATIONS, WERE NOT ESTABLISHED WITHIN A REASONABLE APPROXIMATION.

(5) SOME ELEMENTS OF ENGINEERING SUPERVISION OF INSTALLATIONS AND INITIAL OPERATIONS WERE UNKNOWN AND COULD NOT BE ASCERTAINED UNTIL SOME UNDETERMINED FUTURE DATE. THESE ELEMENTS INCLUDE THE EXTENT AND EXACT NATURE OF ENGINEERING SUPERVISION REQUIRED; THE LENGTH OF TIME SUCH SUPERVISION WOULD BE REQUIRED AND THE NUMBER OF ENGINEERING PERSONNEL REQUIRED.

(6) THE MANNER OF PAYMENT HAD NOT BEEN DETERMINED; AND ITS DETERMINATION WAS SURROUNDED BY CONTINGENCIES.

(7) NO DETERMINATION COULD BE MADE AT THIS TIME AS TO THE TIME AND PLACE OF DELIVERY OF MACHINES, TOOLING AND EQUIPMENT.

(8) NO DETERMINATION OF TIME AND PLACE OF INSPECTION AND ACCEPTANCE OF THE EQUIPMENT COULD BE MADE AT THIS TIME.

IT IS WELL RECOGNIZED THAT CERTAIN DISADVANTAGES TO THE GOVERNMENT ARE INHERENT IN THE EMPLOYMENT OF THE CPFF TYPE OF CONTRACT. HOWEVER, IN VIEW OF THE BROAD AUTHORITY VESTED BY LAW IN THE HEAD OF THE AGENCY TO DETERMINE THE TYPE OF CONTRACT TO BE UTILIZED, AND IN VIEW OF THE DETERMINATION MADE UNDER PROPERLY DELEGATED AUTHORITY PURSUANT TO THE STATUTE AND ASPR PROVISION CITED ABOVE, THAT THE COST-PLUS-A-FIXED-FEE TYPE OF CONTRACT IN THIS INSTANCE IS LIKELY TO BE LESS COSTLY THAN OTHER METHODS AND THAT IT IS IMPRACTICABLE TO SECURE THE SERVICES OF THE KIND OR QUALITY REQUIRED WITHOUT THE USE OF THIS TYPE OF CONTRACT, THERE IS NOT APPARENT ANY LEGAL BASIS UPON WHICH WE MAY QUESTION THE SELECTION OF THE TYPE OF CONTRACT EMPLOYED. B-128630, DECEMBER 28, 1956, AND B-120673, NOVEMBER 12, 1954. BY FORCE OF STATUTE, SUCH A DETERMINATION IS FINAL. 10 U.S.C. 2310 (B).

THE REASON GIVEN BY THE ADMINISTRATIVE AGENCY FOR THE AWARD ON A CPFF BASIS TO KENNEDY VAN SAUN RATHER THAN TO HOLDEN IS THAT WHILE HOLDEN'S OVERALL CPFF ESTIMATE IS LOW, SUCH ESTIMATE IS NOT BINDING UPON EITHER THE GOVERNMENT OR THE CONTRACTOR AND THE PROPOSED FIXED FEE SUBMITTED BY HOLDEN, WHICH WOULD BE BINDING UPON THE PARTIES, IS $25,000 HIGHER THAN THE FIXED FEE PROPOSED BY KENNEDY VAN SAUN. SINCE THE SELECTION OF THE CPFF TYPE OF CONTRACT WAS PROPER, AWARD ON THE BASIS OF LOW FIXED FEE RATHER THAN LOW ESTIMATE OF OVERALL COSTS APPEARS TO BE IN THE BEST INTERESTS OF THE GOVERNMENT FOR THE REASONS STATED IN THE ADMINISTRATIVE REPORT.

YOU ALSO QUESTION THE AVAILABILITY OF FUNDS FOR THIS CONTRACT IF THE COST ESTIMATES LATER ARE DETERMINED TO BE INACCURATE. THE ADMINISTRATIVE REPORT STATES THAT SUFFICIENT FUNDS HAVE BEEN OBLIGATED TO COVER THE ESTIMATED COSTS INVOLVED INCLUDING THE FIXED FEE AND THAT THERE WAS REASONABLE ASSURANCE THAT THE CONTRACT CAN BE PERFORMED WITHIN THE FUNDS AVAILABLE AND OBLIGATED.

THE NEXT REASON STATED FOR PROTESTING THE AWARD IS THE QUESTIONABLE LEGALITY OF THE USE OF SCHEDULE B EQUIPMENT AND THE AVAILABILITY OF A BASIS FOR ESTABLISHING THE PRICE OF SUCH EQUIPMENT. THE EQUIPMENT TO BE USED WILL EVENTUALLY BECOME THE PROPERTY OF THE REPUBLIC OF CHINA. THE ADMINISTRATIVE REPORT STATES THAT THERE APPEARS TO BE NO LEGAL BAR TO THE USE OF SCHEDULE B EQUIPMENT PROVIDED THAT ITS VALUE IS DETERMINED AND THE UNITED STATES IS PROPERLY COMPENSATED THEREFOR. IT IS FURTHER STATED THAT NO DIFFICULTY IN ESTABLISHING A VALUE FOR SUCH EQUIPMENT IS ANTICIPATED IN VIEW OF THE FACT THAT THE ORIGINAL ACQUISITION COST, DATE OF ACQUISITION, EXTENT OF USE AND OTHER DATA ON WHICH TO BASE A DETERMINATION OF VALUE ARE KNOWN. THE MUTUAL SECURITY ACT OF 1954, 68 STAT. 832, PROVIDES, UNDER SECTION 102, 22 U.S.C. 1812 THAT "MILITARY ASSISTANCE MAY BE FURNISHED UNDER THIS CHAPTER ON A GRANT OR LOAN BASIS AND UPON SUCH OTHER APPROPRIATE TERMS AS MAY BE AGREED UPON BY THE PROCUREMENT FROM ANY SOURCE AND THE TRANSFER TO ELIGIBLE NATIONS * * *.' SENATE REPORT NO. 1799, 83D CONGRESS, STATES, AT PAGE 85, IN EXPLANATION OF SECTION 102 THAT:

* * * ASSISTANCE MAY INCLUDE THE TRANSFER OF EQUIPMENT, MATERIALS AND SERVICES, AND PROCUREMENT MAY BE FROM ANY SOURCE WITHIN OR OUTSIDE OF THE UNITED STATES.

WE DEEM THE FOREGOING TO PROVIDE AMPLE LEGAL AUTHORITY FOR THE USE OF SUCH EQUIPMENT IN THE PRESENT CASE. FURTHER, SECTION 107 OF THE ACT, 22 U.S.C. 1817, ORIGINALLY PROVIDED THAT THE PRESIDENT COULD PERFORM ANY OF THE FUNCTIONS AUTHORIZED UNDER CHAPTER 1 OF THE ACT, 22 U.S.C. 1811, WITHOUT REGARD TO THE PROVISIONS OF 10 U.S.C. 1262 (A). AT THE TIME OF ENACTMENT OF THE MUTUAL SECURITY ACT, THE CITED CODE PROVISION PROHIBITED DISPOSAL OF ANY GOVERNMENT-OWNED EQUIPMENT UNLESS THE CHIEF OF STAFF OF THE ARMY FIRST CERTIFIED THAT SUCH MATERIAL WAS NOT ESSENTIAL TO THE DEFENSE OF THE UNITED STATES. THAT PROVISION WAS REPEALED BY PUBLIC LAW 1028, 84TH CONGRESS, 70A STAT. 670. THE REPEAL OF THE CODE PROVISION WAS REFLECTED IN AN AMENDMENT TO THE MUTUAL SECURITY ACT OF 1954, 71 STAT. 355, SINCE THE WAIVER WAS NO LONGER NECESSARY. HOWEVER, THE FOREGOING MAKES IT CLEAR THAT THE MUTUAL SECURITY ACT WAS INTENDED TO PROVIDE FOR TRANSFER OF GOVERNMENT-OWNED EQUIPMENT WHETHER OR NOT DEEMED ESSENTIAL TO THE DEFENSE OF THE UNITED STATES. THEREFORE, PROVISION FOR THE USE OF SUCH EQUIPMENT TO BE TRANSFERRED TO THE REPUBLIC OF CHINA MUST BE REGARDED AS LEGALLY VALID.

YOU ALSO QUESTION THE AVAILABILITY OF FUNDS FOR ADMINISTRATION OF THE CPFF CONTRACT BY THE ORDNANCE CORPS. THE ADMINISTRATIVE REPORT INDICATES THAT THE CONTRACT WILL BE ADMINISTERED BY GOVERNMENT PERSONNEL AND THAT FUNDS HAVE BEEN APPROPRIATED FOR THE PAYMENT OF SALARIES AND HOUSING OF SUCH PERSONNEL. THAT THE USE OF SUCH GOVERNMENT PERSONNEL IS LEGAL IS INDICATED BY SECTION 102 OF THE MUTUAL SECURITY ACT PROVIDING FOR THE ASSIGNMENT OR DETAIL OF MEMBERS OF THE ARMED FORCES AND OTHER PERSONNEL OF THE DEPARTMENT OF DEFENSE TO PERFORM DUTIES OF A NONCOMBATANT NATURE IN CARRYING OUT THE PURPOSES OF THE ACT.

FINALLY, YOU QUESTION THE EXPERIENCE OF THE SUCCESSFUL CONTRACTOR IN MANUFACTURING STEEL CARTRIDGE CASES. THE ADMINISTRATIVE REPORT STATES THAT WHILE KENNEDY VAN SAUN HAS HAD NO PRIOR EXPERIENCE IN THE MANUFACTURING OF CARTRIDGE CASES, AN EVALUATION OF ITS PLANT, PRODUCTION EXPERIENCE, PERSONNEL, TECHNICAL "KNOW-HOW" AND FINANCIAL POSITION INDICATES THAT THE CONTRACTOR IS FULLY QUALIFIED TO PERFORM THE CONTRACT. THE QUESTION OF THE QUALIFICATIONS OF A PROPOSED CONTRACTOR IS PRIMARILY THE FUNCTION OF THE ADMINISTRATIVE OFFICERS CONCERNED AND IN THE ABSENCE OF ANY SHOWING OF BAD FAITH OR LACK OF REASONABLE BASIS FOR THE DETERMINATION, WE ARE NOT REQUIRED TO OBJECT TO THE DETERMINATION MADE BY THE ADMINISTRATIVE AGENCY. B-129561, NOVEMBER 23, 1956. THE ADMINISTRATIVE DETERMINATION THAT KENNEDY VAN SAUN IS QUALIFIED TO PERFORM THE CONTRACT, THEREFORE, MUST BE REGARDED AS PROPER IN THE ABSENCE OF A CLEAR SHOWING TO THE CONTRARY.

IN DISCUSSIONS HELD SUBSEQUENT TO THE SUBMISSION OF YOUR WRITTEN PROTEST YOU QUESTIONED THE MERITS OF THE JUSTIFICATION OF THE COST-TYPE CONTRACT BY SUGGESTING THAT THE DEPARTMENT OF THE ARMY MAY HAVE ENTERED INTO SIMILAR CONTRACTS ON A FIXED-PRICE BASIS. EXTENSIVE REVIEW OF PERTINENT FILES BY REPRESENTATIVES OF OUR OFFICE HAS FAILED TO FURNISH ANY SUBSTANTIATION OF THIS CONTENTION, EACH OF THE SEVERAL PROJECTS MENTIONED BY YOU HAVING BEEN FOUND TO HAVE BEEN CONTRACTED FOR ON A COST-PLUS-A- FIXED-FEE BASIS. IT THUS APPEARS TO BE THE PRACTICE OF THE DEPARTMENT OF THE ARMY TO AWARD CONTRACTS OF THE TYPE IN QUESTION ON A COST-PLUS-A-FIXED -FEE BASIS. IT HAS ALSO BEEN CONTENDED THAT THE HOLDEN FIRM IS SUCCESSFULLY CARRYING OUT A FIXED-PRICE CONTRACT WITH THE GOVERNMENT OF SPAIN FOR THE ESTABLISHMENT OF AMMUNITION PRODUCTION LINES IN THAT COUNTRY. WE HAVE NO KNOWLEDGE CONCERNING THE LAWS AND REGULATIONS APPLICABLE TO PROCUREMENT BY AGENCIES OF THE SPANISH GOVERNMENT AND, THEREFORE, ARE UNABLE TO CONCLUDE THAT BECAUSE THE SPANISH GOVERNMENT HAS LET A CONTRACT OF THIS KIND ON A FIXED-PRICE BASIS THAT THE SAME COURSE COULD, OR SHOULD, BE FOLLOWED BY AGENCIES OF OUR OWN GOVERNMENT. SINCE NO QUESTION HAS BEEN RAISED BY THE ARMY AS TO THE QUALIFICATIONS OF THE HOLDEN COMPANY, ITS PERFORMANCE OF OTHER SIMILAR CONTRACTS SEEMS IMMATERIAL. OUR JURISDICTION IN THIS MATTER EXTENDS ONLY TO A DETERMINATION OF WHETHER THE ACTIONS TAKEN BY THE ARMY IN THIS MANNER WERE PROPERLY WITHIN THE LAWS AND REGULATIONS APPLICABLE THERETO.

FOR THE FOREGOING REASONS, IT DOES NOT APPEAR THAT THE AWARD TO KENNEDY VAN SAUN CONTRAVENED ANY STATUTE OR REGULATIONS APPLICABLE TO THIS TYPE OF PROCUREMENT, OR THAT THERE IS ANY SUBSTANTIAL BASIS ON WHICH WE WOULD BE JUSTIFIED IN OBJECTING THERETO.