B-136705, DECEMBER 5, 1958, 38 COMP. GEN. 413

B-136705: Dec 5, 1958

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CONTRACTS - NEGOTIATION - LATE LOW OFFERS - ACCEPTANCE - CONTRACT AMENDMENT EXECUTION OF A CONTRACT NEGOTIATED UNDER 10 U.S.C. 2304 (A) (16) WITHIN MINUTES AFTER A NEW LOW OFFER WAS RECEIVED FROM ONE OF THE BIDDERS. A CONTRACT WHICH WAS AWARDED ON THE BASIS THAT NO GOVERNMENT-OWNED TOOLING WOULD BE USED AND WHICH WAS SUBSEQUENTLY AMENDED TO PERMIT THE USE OF GOVERNMENT TOOLING FACILITIES IN CONSIDERATION FOR A PRICE REDUCTION IS NOT IMPROPER IN VIEW OF THE CONTRACTOR'S READINESS AND ABILITY TO PERFORM IN ACCORDANCE WITH THE ORIGINAL TERMS AND EVIDENCE WHICH INDICATES THAT THE BEST INTERESTS OF THE GOVERNMENT WERE SERVED BY THE AMENDMENT WHICH WAS SUPPORTED BY A VALID CONSIDERATION. AFTER PROPOSALS WERE OPENED ON JUNE 6.

B-136705, DECEMBER 5, 1958, 38 COMP. GEN. 413

CONTRACTS - NEGOTIATION - LATE LOW OFFERS - ACCEPTANCE - CONTRACT AMENDMENT EXECUTION OF A CONTRACT NEGOTIATED UNDER 10 U.S.C. 2304 (A) (16) WITHIN MINUTES AFTER A NEW LOW OFFER WAS RECEIVED FROM ONE OF THE BIDDERS, ALTHOUGH THE DEADLINE FOR SUBMISSION OF OFFERS HAD EXPIRED A WEEK BEFORE THE DATE OF EXECUTION, DOES NOT INDICATE UNREASONABLE ACTION ON THE PART OF THE CONTRACTING OFFICER IN FAILING TO DELAY THE AWARD FOR CONSIDERATION OF THE NEW OFFER, NOTWITHSTANDING THAT PROCUREMENTS SHOULD BE NEGOTIATED TO THE BEST ADVANTAGE OF THE GOVERNMENT AND THE CONTRACT PLACED WITH THE SUPPLIER MAKING THE BEST FINAL PROPOSAL. A CONTRACT WHICH WAS AWARDED ON THE BASIS THAT NO GOVERNMENT-OWNED TOOLING WOULD BE USED AND WHICH WAS SUBSEQUENTLY AMENDED TO PERMIT THE USE OF GOVERNMENT TOOLING FACILITIES IN CONSIDERATION FOR A PRICE REDUCTION IS NOT IMPROPER IN VIEW OF THE CONTRACTOR'S READINESS AND ABILITY TO PERFORM IN ACCORDANCE WITH THE ORIGINAL TERMS AND EVIDENCE WHICH INDICATES THAT THE BEST INTERESTS OF THE GOVERNMENT WERE SERVED BY THE AMENDMENT WHICH WAS SUPPORTED BY A VALID CONSIDERATION.

TO JAMES D. WILLIAMS, JR., DECEMBER 5, 1958:

WE REFER TO YOUR LETTER OF JULY 2, 1958, AND SUBSEQUENT CORRESPONDENCE, PROTESTING ON BEHALF OF THE WILKINSON MANUFACTURING COMPANY OF FORT CALHOUN, NEBRASKA, AN AWARD OF A CONTRACT BY ARMY ORDNANCE FOR 500,000 T- 336 E-7 FUSES TO THE NEW HAVEN CLOCK COMPANY.

A REPORT FROM THE ORDNANCE AMMUNITION COMMAND AT JOLIET, ILLINOIS, DATED JULY 24, 1958, STATES THAT ON MAY 9, 1958, THE COMMAND ISSUED A REQUEST FOR PROPOSALS FOR 1,700,000 FUSE HEAD ASSEMBLIES OF ONE OF TWO GIVEN TYPES WITH AN ADDITIONAL QUANTITY OF 1,700,000 TO BE SET ASIDE FOR SUBSEQUENT NEGOTIATION WITH FIRMS IN LABOR SURPLUS AREAS. AFTER PROPOSALS WERE OPENED ON JUNE 6, 1958, ONE TYPE OF FUSE HEAD ASSEMBLY WHICH GAVE PROMISE OF ULTIMATELY PROVING THE MORE SATISFACTORY WAS DEEMED TO REQUIRE FURTHER DEVELOPMENT. IT WAS, THEREFORE, DECIDED TO PROCURE A QUANTITY OF THE ALREADY DEVELOPED FUSE SUFFICIENT TO SATISFY REQUIREMENTS UNTIL THE FORMER COULD BE FULLY DEVELOPED. ACCORDINGLY, ON JUNE 13, 1958, THE ORDNANCE AMMUNITION COMMAND, THROUGH THE ORDNANCE DISTRICTS, ADVISED ALL FIRMS WHICH HAD ORIGINALLY SUBMITTED OFFERS THAT ONLY 500,000 E-7 FUSES WERE TO BE PROCURED. IT WAS ALSO STATED THAT THE ENTIRE QUANTITY WOULD BE AWARDED TO ONE PRODUCER, THAT THERE WOULD BE NO SET-ASIDE, THAT ALL OTHER TERMS AND CONDITIONS OF THE INITIAL REQUEST FOR PROPOSALS WOULD REMAIN UNCHANGED, AND THAT---

QUOTATIONS FOR THIS REVISED QUANTITY ON E7 ONLY, MUST BE IN OAC HANDS BY LETTER OR TELEGRAPHIC MEANS PRIOR TO OAC CLOSE OF BUSINESS ON 19 JUNE 1958. OFFERORS SHOULD SEND QUOTATIONS DIRECT TO OAC, ATTN: LT. COLONEL CROSSMAN, ORDLY-1AP WITH INFO COPY TO APPROPRIATE ORDNANCE DISTRICT WHO WILL IMMEDIATELY ADVISE OAC AS TO RECOMMENDATION REGARDING OFFERORS' QUOTATION.

TWENTY-ONE FIRMS RESPONDED TO THE SOLICITATION. THE NEW HAVEN CLOCK COMPANY, BY TELEGRAM OF JUNE 19, 1958, SUBMITTED AN OFFER OF $1.36545 PER UNIT. BY TELEGRAM OF THE NEXT DAY, THAT FIRM ADVISED THAT THE PRICE OFFERED WAS FIRM AND WITHOUT PRICE ESCALATION. BY TELETYPE OF JUNE 19, 1958, THE WILKINSON MANUFACTURING COMPANY SUBMITTED AN OFFER FOR THE 500,000 UNITS AT A FIXED PRICE OF $1.46902 PER UNIT, OR, AS AN ALTERNATE, AT A UNIT PRICE OF $1.40 IF A PRICE REDETERMINATION CLAUSE WAS INCLUDED. BOTH PRICE OFFERS SUBMITTED BY THE LATTER FIRM WERE MADE CONTINGENT UPON THE FREE USE OF GOVERNMENT-OWNED EQUIPMENT IN POSSESSION OF THE BULOVA WATCH COMPANY, PROPOSED BY THE WILKINSON MANUFACTURING COMPANY AS A SUBCONTRACTOR. ON JUNE 25, A FURTHER TELETYPE WAS RECEIVED BY THE ORDNANCE AMMUNITION COMMAND AT JOLIET, ILLINOIS, ADVISING THAT THE WILKINSON OFFER HAD BEEN ONE CENT HIGHER THAN INTENDED BECAUSE OF TYPOGRAPHICAL ERROR AND THAT THE PROPOSAL SHOULD HAVE READ $1.45902 PER UNIT. MEANWHILE, ON JUNE 23, 1958, FOUR DAYS AFTER THE DEADLINE FOR THE SUBMISSION OF OFFERS AS INDICATED IN THE TELETYPE OF JUNE 13, THE ALLOCATION BOARD OF AWARDS OF THE COMMAND WAS REQUESTED TO APPROVE AN ALLOCATION TO THE SPRINGFIELD ORDNANCE DISTRICT IN FAVOR OF THE LOW OFFEROR, THE NEW HAVEN CLOCK COMPANY. BOARD APPROVAL WAS OBTAINED AND THE AWARD ALLOCATED ON JUNE 23, 1958. A CONTRACT CONSUMMATING THE AWARD WAS EXECUTED WITH THE NEW HAVEN COMPANY BY THE SPRINGFIELD ORDNANCE DISTRICT ON JUNE 26, 1958, AT 9:30 A.M., JOLIET TIME.

ON THE MORNING OF JUNE 26, 1958, AN OFFICIAL OF THE ST. LOUIS ORDNANCE DISTRICT WAS ADVISED BY A REPRESENTATIVE OF THE WILKINSON FIRM OF A DOWNWARD REVISION IN ITS PRICE FROM $1.45902 TO $1.35 PER UNIT. IT DOES NOT APPEAR THAT THIS QUOTATION WAS SUBMITTED DIRECT TO LIEUTENANT COLONEL CROSSMAN IN ACCORDANCE WITH THE TERMS OF THE TELETYPE OF JUNE 13 QUOTED ABOVE. SUBSEQUENTLY, HOWEVER, ON THAT SAME MORNING, THE WILKINSON COMPANY, BY TELETYPE SUBMITTED AN ADDITIONAL REVISION TO ITS OFFER REDUCING THE UNIT PRICE TO $1.32. THIS TELETYPE SHOWS DATE STAMPS INDICATING THAT THE MESSAGE WAS RECEIVED IN THE OAC TELETYPE ROOM AT JOLIET AT 9:01 A.M., JOLIET TIME; THAT IT WAS RECEIVED IN THE OAC MESSAGE CENTER AT 10:23 A.M., JOLIET TIME, AND WAS DELIVERED INTO THE HANDS OF LIEUTENANT COLONEL CROSSMAN AT 10:30 A.M., JOLIET TIME.

IN THE LETTER OF PROTEST DATED JULY 2, 1958, REFERRED TO ABOVE, IT IS CONTENDED THAT A "NEW LOW BID" WAS RECEIVED BY OAC FROM WILKINSON PRIOR TO THE SIGNING OF THE CONTRACT WITH NEW HAVEN, AND THAT UPON RECEIPT OF THE LOW OFFER, ACTION ON THE CONTRACT SHOULD HAVE BEEN SUSPENDED AND THE OFFERORS RECIRCULARIZED IN ACCORDANCE WITH ASPR 3 107.2, WHICH PROVIDES:

3-107.2 PROCEDURE. IT IS IMPORTANT AND DESIRABLE THAT THE GOVERNMENT NOT BE PRECLUDED IN SPECIFIC SITUATIONS FROM GAINING THE BENEFIT OF ADVANTAGEOUS LATE PROPOSALS; BUT IT MUST BE RECOGNIZED THAT CAREFUL CONSIDERATION OF SUCH SITUATIONS IS REQUIRED TO PREVENT ABUSES. TO ASSURE SUCH CONSIDERATION, THE FOLLOWING PROCEDURE IS ESTABLISHED:

(A) IN EACH CASE IN WHICH A LATE LOW PROPOSAL, OR A LATE PROPOSAL OTHERWISE WORTHY OF CONSIDERATION, IS RECEIVED FROM A QUALIFIED FIRM, THE CONTRACTING OFFICER SHALL DOCUMENT A RECOMMENDED COURSE OF ACTION WHICH HE DEEMS TO BE IN THE BEST INTERESTS OF THE GOVERNMENT, TAKING INTO ACCOUNT ALL PERTINENT FACTORS, AND SHALL REFER IT FOR DECISION TO SUCH OTHER AUTHORITY AS MAY BE PRESCRIBED BY THE MILITARY DEPARTMENT CONCERNED.

(B) IN THE EVENT IT IS DETERMINED BY SUCH OTHER AUTHORITY THAT IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO CONSIDER THE LATE PROPOSAL, THE CONTRACTING OFFICER SHALL RESOLICIT ALL FIRMS (CONSISTENT WITH ASPR 3-805) WHICH HAVE SUBMITTED PROPOSALS AND HAVE BEEN DETERMINED TO BE CAPABLE OF MEETING REQUIREMENTS.

IT IS ALSO STATED IN THE LETTER THAT ON TUESDAY, JUNE 24, MR. COWAN OF THE BULOVA WATCH COMPANY, WILKINSON'S PROPOSED SUBCONTRACTOR, CALLED MR. O. B. SMITH, COLONEL CROSSMAN'S ASSISTANT, AND WAS ADVISED BY MR. SMITH THAT OFFERORS WOULD HAVE UNTIL THE CLOSE OF BUSINESS ON THURSDAY, JUNE 26, TO REVISE THEIR PROPOSALS. IT IS STATED FURTHER IN THE LETTER THAT MR. FRED ARKOOSH, VICE PRESIDENT AND GENERAL MANAGER OF WILKINSON, RECEIVED THE SAME INFORMATION ORALLY FROM THE ST. LOUIS ORDNANCE DISTRICT.

WITH RESPECT TO YOUR BASIC CONTENTION THAT THE WILKINSON OFFER OF $1.32 WAS RECEIVED PRIOR TO EXECUTION OF A CONTRACT AND SHOULD HAVE RESULTED IN SUSPENSION OF ANY FURTHER ACTION, BOTH YOU AND THE DEPARTMENT OF THE ARMY HAVE FURNISHED MOST DETAILED ACCOUNTS, WITH MINUTE BY MINUTE CHRONOLOGIES, OF THE VARIOUS EVENTS AND COMMUNICATIONS WHICH TOOK PLACE ON, AND IMMEDIATELY PRIOR TO, JUNE 26, THE DATE OF EXECUTION OF THE CONTRACT WITH THE NEW HAVEN COMPANY.

THESE ACCOUNTS DIFFER IN SEVERAL MATERIAL RESPECTS, BOTH AS TO WHAT WAS SAID AND AS TO THE EXACT TIMING OF THE VARIOUS COMMUNICATIONS. ASIDE FROM THE FACT THAT MANY OF THE ALLEGATIONS MADE BY MR. ARKOOSH OR OTHER WILKINSON REPRESENTATIVES AS TO STATEMENTS ATTRIBUTED TO ARMY PERSONNEL ARE BASED ON HEARSAY RATHER THAN ON PERSONAL PARTICIPATION IN THE CONVERSATIONS, THE RULE FOLLOWED BY THE ACCOUNTING OFFICERS OF THE GOVERNMENT IS THAT IN CASE OF CONFLICTING VERSIONS OF FACTS WE MUST ACCEPT THE VERSION OF THE GOVERNMENT OFFICIALS INVOLVED IN THE ABSENCE OF VERY CLEAR AND CONVINCING EVIDENCE TO THE CONTRARY. THE EVIDENCE IN THIS INSTANCE IS BY NO MEANS SO STRONG, AND WE MUST CONCLUDE THEREFORE THAT THE RESPONSIBLE OFFICIALS AT THE ORDNANCE AMMUNITION COMMAND DID NOT RECEIVE EFFECTIVE NOTICE OF THE LAST OFFER OF THE WILKINSON COMPANY UNTIL LESS THAN TWENTY MINUTES BEFORE NOTICE WAS RECEIVED OF THE CONSUMMATION OF THE NEW HAVEN CONTRACT, AND THAT THERE WAS NO LACK OF DUE DILIGENCE ON THE PART OF SUCH OFFICIALS IN TAKING ACTION WITH RESPECT TO THE OFFER.

THE CONTRACT IN QUESTION WAS NEGOTIATED IN ACCORDANCE WITH 10 U.S.C. 2304 (A) (16). NEGOTIATION MEANS TO MAKE WITHOUT FORMAL ADVERTISING. SEE 10 U.S.C. 2302 (2). IT IS OUR VIEW THAT PROCUREMENTS SHOULD BE NEGOTIATED TO THE BEST ADVANTAGE OF THE GOVERNMENT AND THE CONTRACT PLACED WITH THE SUPPLIES MAKING THE BEST FINAL PROPOSAL. 37 COMP. GEN. 855 (B-136411, JUNE 26, 1958). ARMY REGULATIONS ARE TO THE SAME EFFECT. SEE APP E-101 (B) (1). THE TIMING OF THE SIGNIFICANT ADMINISTRATIVE ACTIONS IN THIS CASE (WHICH, AS REPRESENTED ABOVE, WE ARE REQUIRED TO ACCEPT IN THE ABSENCE OF A CLEAR SHOWING TO THE CONTRARY) DOES NOT APPEAR SO UNREASONABLE AS TO WARRANT CRITICISM FOR DELAY. WHILE IT MAY CONCEIVABLY HAVE BEEN WITHIN THE REALM OF POSSIBILITY TO HAVE TAKEN EFFECTIVE ACTION IN POSTPONING THE EXECUTION OF A CONTRACT WITH NEW HAVEN AFTER RECEIPT, ORALLY, OF THE LOWER OFFER BY COLONEL CROSSMAN, WE THINK THAT THE STATEMENT OF FACTS INDICATES THAT COLONEL CROSSMAN COMPORTED HIMSELF IN A REASONABLE MANNER. IN ANY CASE, THE REASONABLENESS OF THESE ACTIONS WOULD NOT AFFECT THE VALIDITY OF THE PROCUREMENT. SEE, IN THIS CONNECTION, B- 118825, NOVEMBER 19, 1954, IN WHICH WE CONSIDERED A SITUATION INVOLVING A NEGOTIATED PROCUREMENT WHEREIN ALL OFFERORS WERE ADVISED THAT PROPOSALS HAD TO BE RECEIVED NOT LATER THAN JANUARY 25, 1954. NOTWITHSTANDING SUCH ADVICE, ONE OFFEROR SUBMITTED A NEW LOW PROPOSAL ON JANUARY 28. THE PROPOSAL WAS IGNORED ALTHOUGH THE CONTRACT WAS NOT EXECUTED UNTIL MARCH 12. EVEN THOUGH WE CRITICIZED THE FAILURE OF THE ADMINISTRATIVE AGENCY TO CONSIDER THE LATE OFFER IN THAT SITUATION, WE HELD THAT THE AWARD COULD NOT BE INVALIDATED FOR THAT REASON. CERTAINLY, NO MORE DRASTIC CONCLUSION IS WARRANTED IN THIS INSTANCE.

IT IS FURTHER CONTENDED IN THE ADMINISTRATIVE REPORT THAT ANALYSES PERFORMED SUBSEQUENT TO THE AWARD OF A CONTRACT HAVE REVEALED THAT EVEN THE LOW OFFER SUBMITTED BY WILKINSON, WHEN EVALUATED IN ACCORDANCE WITH THE TERMS OF THE REQUEST FOR PROPOSALS, WOULD NOT BE LOW. THE PROVISIONS OF THE ORIGINAL REQUEST FOR PROPOSALS, EXCEPT AS MODIFIED BY THE TELETYPE OF JUNE 13, WERE APPLICABLE TO THE PROCUREMENT UNDER CONSIDERATION. ITEM 12 OF THE REQUEST FOR PROPOSALS PROVIDES:

12. USE OF GOVERNMENT-OWNED FACILITIES:

A. IF A CONTRACT RESULTS FROM THIS PROPOSAL, USE OF GOVERNMENT-OWNED EQUIPMENT ( SCHEDULE A AND SCHEDULE B) AS INDICATED IN ITEM 11 ABOVE WILL BE AUTHORIZED IF SPECIFICALLY REQUESTED BY OFFEROR IN THE PROPOSAL. OFFEROR MUST IDENTIFY ON EXHIBIT "M" EACH ITEM OF PRESENTLY ASSIGNED GOVERNMENT-OWNED FACILITIES ( SCHEDULE A AND SCHEDULE B) TO BE USED FOR PERFORMANCE UNDER THIS PROPOSAL.

B. IF A CONTRACT RESULTS FROM THIS PROPOSAL, USE OF GOVERNMENT-OWNED SPECIAL TOOLING ON HAND AT OFFERORS PLANT LEFT OVER FROM PREVIOUS CONTRACTS, WILL BE AUTHORIZED IF SPECIFICALLY REQUESTED BY OFFEROR IN THE PROPOSAL. OFFEROR MUST IDENTIFY ON EXHIBIT "M" EACH ITEM OF PREVIOUSLY ACQUIRED GOVERNMENT-OWNED SPECIAL TOOLING, OR MODIFICATION THEREOF, WHICH HE REQUIRES FOR PERFORMANCE UNDER THIS PROPOSAL.

C. EXHIBIT "M" MUST INCLUDE BY ITEM FOR EVALUATION PURPOSES, THE ORIGINAL ACQUISITION COST TOGETHER WITH TRANSPORTATION AND INSTALLATION CHANGES OF SCHEDULE A AND SCHEDULE B EQUIPMENT.

D. FOR EVALUATION PURPOSES, THE LIFE OF PRODUCTION EQUIPMENT WILL BE CONSIDERED TO BE FIVE (5) YEARS OR SIXTY (60) MONTHS. FOR EACH MONTH THE EQUIPMENT IS TO BE USED DURING A PROPOSED CONTRACT, 1/60TH OF THE EQUIPMENT VALUE WILL BE CHARGED. THIS FIGURE MULTIPLIED BY THE NUMBER OF MONTHS IN THE PROPOSED PRODUCTION PERIOD, DIVIDED BY THE NUMBER OF ITEMS TO BE PRODUCED DURING THE PRODUCTION PERIOD WILL RESULT IN THE UNIT CHARGE TO BE ADDED FOR EVALUATION PURPOSES. ORIGINAL ACQUISITION VALUE OF EQUIPMENT, INCLUDING INSTALLATION COST (IF NOT INSTALLED ANY COST INCIDENT TO INSTALLATION NOT REFLECTED IN BASIC COST WILL BE USED) WILL BE THE BASIS OF COST FOR ABOVE EVALUATION.

THE ADMINISTRATIVE REPORT STATES THAT EVALUATION TO COVER GOVERNMENT TOOLING AND EQUIPMENT TO BE USED IF AWARD HAD BEEN MADE TO WILKINSON WOULD HAVE ADDED $0.04954 PER UNIT TO THE PRICE FOR A TOTAL OF $1.36954 AS COMPARED TO A PRICE OF$1.36545 PER UNIT AT WHICH AWARD WAS MADE TO NEW HAVEN.

AS NOTED IN YOUR LETTER OF SEPTEMBER 26, AND ENCLOSURES THERETO, IT IT YOUR CONTENTION THAT PROPER EVALUATION WOULD ADD ONLY $0.02999 TO THE UNIT PRICE SUBMITTED BY WILKINSON. THE EVALUATION FORMULA APPLIED BY WILKINSON IS BASED ON AN ASSUMPTION THAT BOTH GOVERNMENT EQUIPMENT AND GOVERNMENT TOOLING HAVE A USEFUL LIFE EXPECTANCY OF 60 MONTHS FOR THE PURPOSE OF EVALUATION, AS PROVIDED BY 12 (D), SUPRA. ON THE OTHER HAND, XIOAC ASSUMES THE USEFUL LIFE OF GOVERNMENT EQUIPMENT TO BE 60 MONTHS AS INDICATED IN ITEM 12 (D); BUT THE USEFUL LIFE OF GOVERNMENT TOOLING, WHICH IS NOT SPECIFIED THEREIN, IS ASSUMED TO BE ONLY 24 MONTHS.

A LETTER OF SEPTEMBER 18, 1958, FROM WILKINSON'S PROPOSED SUBCONTRACTOR, ENCLOSED WITH YOUR LETTER OF SEPTEMBER 26, ACKNOWLEDGES THAT THE ORIGINAL REQUEST FOR PROPOSALS DID NOT PROVIDE AN EVALUATION FORMULA FOR GOVERNMENT -OWNED TOOLING. YOUR LETTER ALSO FURNISHED, AS AN ENCLOSURE, AN AFFIDAVIT DATED SEPTEMBER 23, 1958, BY MR. ARKOOSH EFFECT THAT REPRESENTATIVES OF THE ST. LOUIS ORDNANCE DISTRICT, PRIOR TO AWARD, HAD CONCURRED WITH BOTH THE FORMULA AND THE UNIT EVALUATION FIGURE USED BY WILKINSON. IN VIEW OF OUR CONCLUSION WITH REGARD TO THE TIMELINESS OF THE SUBMISSION OF THE $1.32 OFFER, THE MATTER OF PROPER EVALUATION FORMULAE OR AMOUNTS NEED NOT BE DECIDED AT THIS TIME.

BY LETTER OF OCTOBER 15, 1958, YOU PROTESTED ANY CONTEMPLATED MOVEMENT OF GOVERNMENT-OWNED SPECIAL TOOLING FROM THE PLANT OF THE BULOVA WATCH COMPANY TO THAT OF THE NEW HAVEN FIRM PENDING A DECISION BY OUR OFFICE ON THE PROTEST. A COPY OF YOUR LETTER WAS FURNISHED TO THE DEPARTMENT OF THE ARMY WITH A REQUEST FOR THEIR COMMENTS. THOSE COMMENTS HAVE BEEN RECEIVED IN A LETTER DATED NOVEMBER 13, 1958, STATING THAT THE TOOLING IS BEING MADE AVAILABLE TO THE NEW HAVEN CLOCK COMPANY BECAUSE IT WILL BECOME SUBSTANTIALLY OBSOLETE AFTER COMPLETION OF THIS PRODUCTION AND THE NEW HAVEN FIRM HAS AGREED TO AN EQUITABLE PRICE REDUCTION IN CONSIDERATION FOR ITS USE. THE TRANSFER OF THE TOOLING HAS, THEREFORE, BEEN DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT.

GOVERNMENT CONTRACTS ARE REQUIRED TO BE AWARDED ONLY TO THOSE FIRMS DEEMED TO HAVE THE ABILITY TO PERFORM IN ACCORDANCE WITH THE TERMS THEREOF. THE NEW HAVEN PROPOSAL WAS MADE AND ACCEPTED WITH THE UNDERSTANDING THAT NO GOVERNMENT-OWNED TOOLING WOULD BE USED. IF THE AWARD HAD BEEN MADE ON THAT BASIS EVEN THOUGH IT WAS CLEAR THAT THE CONTRACTOR COULD NOT SUCCESSFULLY PERFORM UNDER SUCH TERMS, THE VALIDITY OF THE AWARD WOULD CERTAINLY BE SUBJECT TO QUESTION. IN THIS INSTANCE, HOWEVER, IT IS REPORTED THAT THE CONTRACTOR HAS INDICATED A READINESS AND THE ABILITY TO PERFORM IN ACCORDANCE WITH THE ORIGINAL TERMS. THERE BEING NO CLEAR SHOWING TO THE CONTRARY, WE SEE NO BASIS FOR QUESTIONING THE AWARD ON THIS GROUND; NOR ARE WE AWARE OF ANY VALID BASIS UPON WHICH WE COULD OBJECT TO THE AMENDMENT TO THE CONTRACT UNDER WHICH THE TOOLING IS BEING TRANSFERRED SINCE SUCH AMENDMENT, FOR THE REASONS SET OUT ABOVE, SEEMS CLEARLY TO SERVE THE BEST INTERESTS OF THE GOVERNMENT AND TO BE SUPPORTED BY A VALID CONSIDERATION.

FOR THE REASONS STATED, WE MUST CONCLUDE THAT THERE HAS BEEN PRESENTED NO GROUND UPON WHICH WE MAY QUESTION THE LEGALITY OF THE AWARD TO THE NEW HAVEN CLOCK COMPANY.