B-147579, NOV. 27, 1961

B-147579: Nov 27, 1961

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED NOVEMBER 19. THE AWARD TO CURTISS-WRIGHT WAS THE RESULT OF AN ASSUMPTION BY THE CONTRACTING OFFICER THAT AERODEX WOULD NOT BE ABLE TO COMPLY WITH ITS OFFER OF A 25 PERCENT DISCOUNT ON THE MANUFACTURER'S LIST PRICE FOR CURTISS-WRIGHT PARTS IN VIEW OF INFORMATION CONVEYED TO HIM BY CURTISS WRIGHT THAT IT WOULD NOT SELL PARTS NOR ALLOW ANY DISCOUNT TO AERODEX. THE AERODEX PROPOSAL WAS THE MOST ADVANTAGEOUS RECEIVED. AFTER AERODEX WAS NOTIFIED THAT THE AWARD HAD BEEN MADE TO CURTISS WRIGHT. AN INVESTIGATION WAS MADE OF AERODEX'S FACILITIES AND IT WAS DETERMINED THAT THE COMPANY COULD FURNISH PARTS NECESSARY TO ACCOMPLISH THE REQUIREMENTS OF THE CONTRACT.

B-147579, NOV. 27, 1961

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED NOVEMBER 19, 1961, FROM THE CHIEF, CONTRACT DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, FORWARDING FOR CONSIDERATION A QUESTION WHETHER NEGOTIATED CONTRACT DA 23- 204-TC-1429, WITH THE CURTISS-WRIGHT CORPORATION, FOR THE OVERHAUL OF CERTAIN ENGINES MAY BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT AND AWARD BE MADE TO AERODEX, INC.

THE AWARD TO CURTISS-WRIGHT WAS THE RESULT OF AN ASSUMPTION BY THE CONTRACTING OFFICER THAT AERODEX WOULD NOT BE ABLE TO COMPLY WITH ITS OFFER OF A 25 PERCENT DISCOUNT ON THE MANUFACTURER'S LIST PRICE FOR CURTISS-WRIGHT PARTS IN VIEW OF INFORMATION CONVEYED TO HIM BY CURTISS WRIGHT THAT IT WOULD NOT SELL PARTS NOR ALLOW ANY DISCOUNT TO AERODEX. RELYING UPON THIS INFORMATION, AND WITHOUT VERIFYING WITH AERODEX ITS OFFERED DISCOUNT OR SOURCE OF SUPPLY, THE CONTRACTING OFFICER EVALUATED THE AERODEX PROPOSAL WITHOUT CONSIDERING THE 25 PERCENT DISCOUNT. WITH THE DISCOUNT CONSIDERED, THE AERODEX PROPOSAL WAS THE MOST ADVANTAGEOUS RECEIVED. IN THAT CONNECTION, THE REQUEST FOR PROPOSALS CONTEMPLATED THAT, ALL OTHER FACTORS BEING EQUAL, THE CONTRACT WOULD BE PLACED WITH THE OFFEROR MAKING THE BEST PROPOSAL ON THE BASIS OF THE TOTAL OF THE QUOTED LABOR COST, PLUS THE GOVERNMENT'S ESTIMATE FOR COST OF PARTS AND MATERIALS, INCLUDING THE DISCOUNT QUOTED ON MANUFACTURERS' PARTS, PLUS THE COST OF TRANSPORTATION FROM THE PROPOSER'S PLANT TO THE NEAREST DEPOT.

AFTER AERODEX WAS NOTIFIED THAT THE AWARD HAD BEEN MADE TO CURTISS WRIGHT, IT PROTESTED THE ACTION. THEREAFTER, AN INVESTIGATION WAS MADE OF AERODEX'S FACILITIES AND IT WAS DETERMINED THAT THE COMPANY COULD FURNISH PARTS NECESSARY TO ACCOMPLISH THE REQUIREMENTS OF THE CONTRACT.

THE CONTRACT WITH CURTISS-WRIGHT WAS AWARDED ON OCTOBER 9, 1961, BUT BECAUSE OF THE AERODEX PROTEST, A STOP ORDER EFFECTIVE OCTOBER 25, 1961, WAS ISSUED. AS CURTISS-WRIGHT HAD NOT BEGUN ENGINE OVERHAULING AT THAT TIME, IT IS ESTIMATED ADMINISTRATIVELY THAT THE CONTRACTOR'S CLERICAL AND ADMINISTRATIVE EXPENSES PREPARATORY TO OVERHAULING WOULD BE NOMINAL. HOWEVER, IN VIEW OF THE EXPENSE THAT WOULD BE INCURRED IN SHIPPING THE ENGINES TO BE OVERHAULED FROM THE CURTISS-WRIGHT PLANT IN NEW JERSEY TO THE AERODEX PLANT IN NEW JERSEY TO THE AERODEX PLANT IN FLORIDA, IT IS ESTIMATED THAT THE COST OF TERMINATION AND REAWARD WOULD EXCEED BY APPROXIMATELY $5,855 THE DIFFERENCE BETWEEN THE CURTISS-WRIGHT AND THE AERODEX PROPOSALS.

COUNSEL IN YOUR DEPARTMENT CONSIDERS THAT THE MAINTENANCE OF INTEGRITY AND PUBLIC CONFIDENCE IN THE FAIRNESS OF THE FEDERAL PROCUREMENT SYSTEM OVERRIDES ANY GOVERNMENT INTEREST IN THE ADDITIONAL EXPENDITURE OF FUNDS. HE THEREFORE CONCURS IN THE RECOMMENDATION OF THE CONTRACTING OFFICER THAT THE CURTISS-WRIGHT CONTRACT BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT AND THAT THE AWARD BE MADE TO AERODEX.

WHETHER CONTRACTS SHALL BE TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT DEPENDS UPON WHETHER SUCH ACTION IS IN THE BEST INTEREST OF THE GOVERNMENT. IN 18 COMP. GEN. 826, AT PAGE 828, IT WAS STATED THAT THE DETERMINATION OF THE PUBLIC INTEREST IN THIS TYPE OF CASE IS A MATTER PRIMARILY FOR ADMINISTRATIVE DECISION. ACCORD: 20 COMP. GEN. 358, 360 AND 34 ID. 74, 76. THEREFORE, AND IN VIEW OF THE FACTS INVOLVED HERE AS RELATED ABOVE, OUR OFFICE WILL RAISE NO OBJECTION IF YOUR DEPARTMENT TERMINATES THE CURTISS-WRIGHT CONTRACT FOR CONVENIENCE AND MAKES THE AWARD TO AERODEX ON THE BASIS OF A DETERMINATION THAT SUCH ACTION IS IN THE BEST INTEREST OF THE GOVERNMENT.

THE ENCLOSURES THAT ACCOMPANIED THE LETTER DATED NOVEMBER 19, 1961, ARE RETURNED HEREWITH.