B-146509, SEP. 25, 1961

B-146509: Sep 25, 1961

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TO SOUTHERN SHIPBUILDING CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 24. WE BELIEVE IT SHOULD BE POINTED OUT THAT THE WOODS HOLE OCEANOGRAPHIC INSTITUTION IS NOT A GOVERNMENTAL ESTABLISHMENT. THAT TITLE TO THE VESSEL TO BE CONSTRUCTED WILL REMAIN IN THAT INSTITUTION. THE INTEREST OF THE GOVERNMENT IN THE CONSTRUCTION ARISES FROM THE FACT THAT THE COST OF THE VESSEL WILL LARGELY BE MET FROM A GRANT OF $3. WHICH GRANT IS FROM FUNDS APPROPRIATED FROM THE PUBLIC TREASURY BY THE CONGRESS TO THE FOUNDATION. THE GRANT REFERRED TO WAS MADE PURSUANT TO AUTHORITY CONTAINED IN THE NATIONAL SCIENCE FOUNDATION ACT OF 1950. BY SECTION 11 (42 U.S.C. 1870) THE FOUNDATION IS FURTHER AUTHORIZED.

B-146509, SEP. 25, 1961

TO SOUTHERN SHIPBUILDING CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 24, 1961, CONCERNING YOUR BID FOR CONSTRUCTION OF AN OCEANOGRAPHIC RESEARCH VESSEL FOR THE WOODS HOLE OCEANOGRAPHIC INSTITUTION.

AT THE OUTSET, WE BELIEVE IT SHOULD BE POINTED OUT THAT THE WOODS HOLE OCEANOGRAPHIC INSTITUTION IS NOT A GOVERNMENTAL ESTABLISHMENT, BUT A PRIVATE RESEARCH INSTITUTION, AND THAT TITLE TO THE VESSEL TO BE CONSTRUCTED WILL REMAIN IN THAT INSTITUTION, SUBJECT TO THE GOVERNMENT'S RIGHT TO REQUIRE ITS TRANSFER IF NECESSARY IN THE INTERESTS OF NATIONAL DEFENSE, OR IN THE EVENT IT SHOULD NOT CONTINUE TO BE USED BY THE INSTITUTION PRIMARILY FOR THE CONDUCT OF BASIC SCIENTIFIC RESEARCH. THE INTEREST OF THE GOVERNMENT IN THE CONSTRUCTION ARISES FROM THE FACT THAT THE COST OF THE VESSEL WILL LARGELY BE MET FROM A GRANT OF $3,000,000 TO THE INSTITUTION BY THE NATIONAL SCIENCE FOUNDATION, WHICH GRANT IS FROM FUNDS APPROPRIATED FROM THE PUBLIC TREASURY BY THE CONGRESS TO THE FOUNDATION.

THE GRANT REFERRED TO WAS MADE PURSUANT TO AUTHORITY CONTAINED IN THE NATIONAL SCIENCE FOUNDATION ACT OF 1950, 64 STAT. 149, 42 U.S.C. 1861 ET SEQ. SECTION 3 OF THE ACT (42 U.S.C. 1862) AUTHORIZES AND DIRECTS THE FOUNDATION, AMONG OTHER THINGS,"TO INITIATE AND SUPPORT BASIC SCIENTIFIC RESEARCH IN THE MATHEMATICAL, PHYSICAL, MEDICAL, BIOLOGICAL, ENGINEERING, AND OTHER SCIENCES, BY MAKING CONTRACTS OR OTHER ARRANGEMENTS (INCLUDING GRANTS, LOANS AND OTHER FORMS OF ASSISTANCE) FOR THE CONDUCT OF SUCH BASIC SCIENTIFIC RESEARCH * * *.' BY SECTION 11 (42 U.S.C. 1870) THE FOUNDATION IS FURTHER AUTHORIZED, WITHIN THE LIMITS OF AVAILABLE APPROPRIATIONS, TO DO ALL THINGS NECESSARY TO CARRY OUT THE PROVISIONS OF THE ACT, INCLUDING SPECIFICALLY THE AUTHORITY, WHEN DEEMED APPROPRIATE, TO ENTER INTO CONTRACTS OR OTHER ARRANGEMENTS FOR CARRYING ON SUCH BASIC RESEARCH ACTIVITIES "WITHOUT LEGAL CONSIDERATION, WITHOUT PERFORMANCE OR OTHER BONDS, AND WITHOUT REGARD TO SECTION 3709 OF THE REVISED STATUTES" (41 U.S.C. 5).

IT IS CLEAR THAT THE FOUNDATION MIGHT, WITHIN ITS STATUTORY POWERS, HAVE CONTRACTED DIRECTLY FOR THE CONSTRUCTION OF THE DESIRED VESSEL WITHOUT COMPLIANCE WITH THE GENERAL LAWS REQUIRING FORMAL ADVERTISING AND COMPETITIVE BIDDING; ALSO THAT IN THE ABSENCE OF ANY SPECIFIC RESTRICTIONS IN THE TERMS OF THE GRANT THE GRANTEE WOULD BE FREE TO ARRANGE FOR CONSTRUCTION OF THE VESSEL ON ANY TERMS IT SHOULD SEE FIT TO ADOPT.

HOWEVER, IN THE PARTICULAR GRANT HERE INVOLVED, THE FOUNDATION DID IMPOSE CERTAIN CONDITIONS, ONE OF WHICH WAS AS FOLLOWS:

"/A) THE GRANTEE WILL SUBMIT DETAILED CONSTRUCTION PLANS, DRAWINGS AND SPECIFICATIONS, TOGETHER WITH DETAILED COST ESTIMATES BASED THEREON, FOR FOUNDATION APPROVAL PRIOR TO SOLICITATION OF BIDS. IT WILL ALSO SUBMIT FOR FOUNDATION CONCURRENCE PLANS FOR: (1) THE SOLICITATION OF BIDS, (2) AWARD OF THE CONTRACT, AND (3) INSPECTION AND SUPERVISION OF CONSTRUCTION.'

IN VIEW OF THIS CONDITION, AWARD OF THE CONTRACT UNDER THE SUBJECT INVITATION WAS SUBJECT TO APPROVAL BY THE FOUNDATION, AND AS THE RESULT OF YOUR PROTEST AND OF INQUIRIES RECEIVED FROM SEVERAL MEMBERS OF CONGRESS THE FOUNDATION HAS FURNISHED TO OUR OFFICE A COMPLETE REPORT CONCERNING THE MATTER.

FROM THE RECORD FURNISHED IT APPEARS THAT BIDS WERE INVITED ON THE VESSEL FROM 18 SHIPBUILDERS IN THE ATLANTIC, GULF AND GREAT LAKES AREAS. SEVEN ADDITIONAL YARDS, INCLUDING YOURS, REQUESTED OPPORTUNITY TO BID AND WERE SENT INVITATIONS. FOUR BIDS WERE RECEIVED, AS FOLLOWS:

TABLE

BIDDER BID PRICE ADJUSTED BID PRICE (*) SOUTHERN SHIPBUILDING

CORPORATION $3,948,623.80 $4,030,199.80 SLIDELL, LOUISIANA JOHN H. MATHIS COMPANY, INC. 4,091,401.00 4,112,666.00 CAMDEN, NEW JERSEY MARYLAND SHIPBUILDING AND

DRYDOCK COMPANY 4,523,068.00 4,475,458.00 BALTIMORE, MARYLAND BETHLEHEM STEEL COMPANY 5,256,000.00 5,262,105.00 QUINCY, MASSACHUSETTS

(*) BASED ON GEOGRAPHICAL AND TIME OF DELIVERY DIFFERENTIALS.

REPRESENTATIVES OF THE WOODS HOLE INSTITUTION VISITED THE YARDS,INSPECTED THE FACILITIES, AND INTERVIEWED THE EXECUTIVES OF THE THREE LOWEST BIDDERS. BASED ON THEIR EVALUATION OF THE CAPABILITIES OF THE BIDDERS AGAINST THE QUALIFICATION CRITERIA STATED IN THE INVITATION, THE INSTITUTION SUBMITTED TO THE FOUNDATION FOR ITS CONCURRENCE A RECOMMENDATION FOR AWARD OF THE CONTRACT TO MARYLAND SHIPBUILDING AND DRYDOCK COMPANY.

AS THE RESULT OF YOUR PROTEST, THE FOUNDATION DESIGNATED A SPECIAL COMMITTEE, COMPOSED OF THREE RETIRED NAVY OFFICERS CONSIDERED TO BE QUALIFIED IN THE SHIP CONSTRUCTION FIELD, TO CONDUCT AN INDEPENDENT INVESTIGATION AND ADVISE THE FOUNDATION AS TO THE CAPABILITIES OF YOUR FIRM AND OF THE MARYLAND SHIPBUILDING AND DRYDOCK COMPANY. THE REPORT OF THE SPECIAL COMMITTEE CONFIRMED THE FINDINGS OF THE WOODS HOLE INSTITUTION, AND AS A RESULT WE HAVE BEEN INFORMED THAT THE FOUNDATION HAS CONCURRED IN THE RECOMMENDATION OF AWARD TO THE MARYLAND FIRM.

THE GROUNDS FOR REJECTION OF YOUR BID ARE SUMMARIZED IN THE FOLLOWING PORTION OF THE REPORT OF THE ADVISORY COMMITTEE APPOINTED BY THE FOUNDATION:

"* * * THE COMMITTEE WAS IMPRESSED WITH THE ENTHUSIASM, ENERGY, AND DEMONSTRATED INGENUITY IN OVERCOMING DIFFICULTIES (ARISING FROM LACK OF ADEQUATE FACILITIES), SHOWN BY THE PERSONNEL OF THE COMPANY. THE COMMITTEE DID FEEL THAT THE ENGINEERING PERSONNEL OF THE COMPANY WERE INCLINED TO MINIMIZE THE PROBLEMS INVOLVED IN MEETING THE RATHER EXACTING SPECIFICATIONS FOR THE CONSTRUCTION OF THE VESSEL. NOR COULD THE COMMITTEE FAIL TO NOTE THAT THE COMPANY AT THIS TIME POSSESSES NEITHER THE PERSONNEL, EXPERIENCE, OR FACILITIES, THAT SUCCESSFUL COMPLETION OF THE CONTRACT TO CONSTRUCT THE WOODS HOLE VESSEL REQUIRES -- CERTAINLY NOT WITHIN THE SPECIFIED TIME. FURTHER, THE COMMITTEE WAS UNCOMFORTABLY AWARE OF THE HAZARDS THE COMPANY WOULD HAVE TO OVERCOME WERE THEY AWARDED THE CONTRACT. AMONG THESE HAZARDS ARE: THE TOTAL LACK OF PERSONNEL FAMILIAR WITH MARINE STEAM INSTALLATIONS, ESPECIALLY SUPERHEATED STEAM PLANTS; THE LACK OF CERTAIN ADEQUATE DEPTH OF WATER FOR SUCCESSFUL HOLDING OF DOCK TRIALS; THE HAZARDS INVOLVED IN THEIR METHOD OF TURNING OVER THE PARTIALLY COMPLETED HULL, DEPENDENT AS THEY ARE ON THE USE OF CRANES IN MULTIPLE, AN ADDED HAZARD BEING THE FACT THAT (POSSIBLY DUE TO LACK OF ADEQUATE TEST WEIGHTS) THE CRANES ARE NOT GIVEN THE USUAL AND STANDARD STATIC TESTS PRIOR TO IMPOSITION OF THE LIVE LOAD; THE LIMITING DEPTH OF THE DRYDOCK WHICH MIGHT VERY WELL BE INADEQUATE IN CASE OF DAMAGE TO THE HULL IN LAUNCHING; AND THE NECESSITY OF LIGHTENING THE DRAFT OF THE VESSEL BY PONTOONS IN ORDER TO GET THE SHIP FROM THE PLANT TO DEEP WATER.

"SINCE THE VESSEL IN QUESTION IS UNIQUE, WITH NO RECENT PROTO-TYPE (ITS PREDECESSOR IS THIRTY YEARS OLD), AND MUST BE BUILT TO UNUSUAL AND DIFFICULT SPECIFICATIONS, WHICH IN THE COMMITTEE'S JUDGMENT WILL PRESENT VERY REAL PROBLEMS TO EVEN THE FINEST AND MOST EXPERIENCED SHIPBUILDING ORGANIZATION, AND MUST BE COMPLETED WITHIN THE TIME SPECIFIED IF THE UNITED STATES IS TO FULFILL AN INTERNATIONAL COMMITMENT IN WHICH NATIONAL PRESTIGE IS VERY MUCH AT STAKE, THE COMMITTEE DOES NOT FEEL THAT THE RISK OF ENTRUSTING ITS CONSTRUCTION TO ANY BUT A FIRST CLASS SHIPYARD OF DEMONSTRATED ABILITY IS JUSTIFIED.

"IN SUMMARY, THE COMMITTEE, AFTER A THOROUGH INVESTIGATION, IS OF THE OPINION THAT THE MARYLAND SHIPBUILDING AND DRYDOCK COMPANY IS FULLY QUALIFIED AND EQUIPPED TO BUILD THE WOODS HOLE OCEANOGRAPHIC VESSEL. FURTHER, THE COMMITTEE IS OF THE OPINION THAT THE SOUTHERN SHIPBUILDING CORPORATION IS NOT PRESENTLY SUFFICIENTLY EQUIPPED AND MANNED TO BE CAPABLE OF CONSTRUCTING THIS VESSEL WITH CERTAINTY WITHIN THE TIME REQUIRED, AND THE COMMITTEE DEEMS THAT THE AWARD BY WOODS HOLE OCEANOGRAPHIC INSTITUTION TO THE MARYLAND SHIPBUILDING AND DRYDOCK COMPANY IS NOT INAPPROPRIATE.'

BASED ON A CAREFUL REVIEW OF THE REPORTS OF BOTH THE EVALUATING TEAMS WE FIND NO BASIS ON WHICH WE FEEL THAT WE COULD OBJECT TO OR REASONABLY CRITICIZE THE ACTION OF THE FOUNDATION. EVEN WHERE THE AWARD OF CONTRACTS IS GOVERNED BY THE STATUTES REQUIRING PUBLIC ADVERTISING AND AWARD TO THE LOWEST RESPONSIBLE BIDDER, PUBLIC OFFICERS ARE REQUIRED, IN DETERMINING THE RESPONSIBILITY OF A BIDDER, TO CONSIDER HIS FINANCIAL AND PHYSICAL RESOURCES, JUDGMENT, ABILITY, INTEGRITY AND ALL OTHER FACTORS AFFECTING HIS FITNESS SUCCESSFULLY TO FULFILL THE CONTRACT REQUIREMENTS. THE DUTY OF EVALUATING THESE FACTORS IS PRIMARILY THAT OF THE CONTRACTING OFFICER, AND HIS CONCLUSIONS, MADE IN THE EXERCISE OF AN HONEST JUDGMENT ON FACTS FURNISHING A REASONABLE BASIS THEREFOR, ARE NOT NORMALLY QUESTIONED BY OUR OFFICE.