B-147866, FEB. 16, 1962

B-147866, FEB. 16, 1962

TO MR. JAMES B. HEADS, PRESIDENT, BOLTON ELECTRONICS CORPORATION:

YOUR LETTER OF DECEMBER 28, 1961, PROTESTS THE AWARD OF A CONTRACT TO GIANNINI CONTROLS CORPORATION UNDER REQUEST FOR PROPOSALS E-24593, ISSUED BY THE PUGET SOUND NAVAL SHIPYARD, BREMERTON, WASHINGTON, DEPARTMENT OF THE NAVY.

THE RECORD DISCLOSED THAT ON SEPTEMBER 28, 1961, INVITATION FOR BIDS 251/152/62 WAS ISSUED FOR THE PROCUREMENT OF PENDULUMS TO BE USED IN THE MARK 78 TORPEDO EXERCISE HEAD, A UNIT OF THE MARK 44 TORPEDO.

ON OCTOBER 4, 1961, BUREAU OF NAVAL WEAPONS, DEPARTMENT OF THE NAVY, DECLARED THAT THE PRODUCTION OF THE MARK 78 HEAD WAS CRITICAL AND DIRECTED THE NAVAL TORPEDO STATION, KEYPORT, WASHINGTON, TO RETAIN ONLY PROVEN SUBCONTRACTORS FOR THE 1962 FISCAL YEAR BUY.

AS A CONSEQUENCE OF THIS DIRECTION, THE CONTRACTING OFFICER CANCELED THE INVITATION FOR BIDS AND ISSUED A REQUEST FOR PROPOSALS TO THE ONLY KNOWN SOURCES OF SUPPLY, UNITED AIRCRAFT COMPANY AND GIANNINI CONTROLS CORPORATION. SUBSEQUENTLY IT WAS LEARNED THAT UNITED NO LONGER PRODUCED THIS ITEM. ON OCTOBER 25, 1961, THE PROPOSAL SUBMITTED BY GIANNINI CONTROLS CORPORATION WAS APPROVED FOR AWARD. CONTRACT N251/253/-17473A/X) WAS AWARDED TO THAT COMPANY ON OCTOBER 27, 1961, FOR THE PROCUREMENT OF THE REQUIRED MATERIAL.

THE CONTRACT REQUIRED DELIVERY OF 5 PREPRODUCTION SAMPLES WITHIN 30 DAYS AFTER AWARD, AND 100 EACH AT 60 DAYS AFTER THE DATE THE SAMPLES WERE APPROVED, AND 150 EACH EVERY 30 DAYS THEREAFTER UNTIL COMPLETED. SUBSEQUENT TO THE AWARD THE REQUIREMENT FOR PREPRODUCTION SAMPLES WAS WAIVED BY THE NAVAL TORPEDO STATION, KEYPORT, WASHINGTON, IN ORDER TO EXPEDITE DELIVERY.

YOUR LETTER OF NOVEMBER 15, 1961, TO THE U.S. NAVAL BUREAU OF SUPPLIES AND ACCOUNTS, STATES THAT ALTHOUGH YOU REQUESTED TO BE INCLUDED IN ANY PENDING NEGOTIATIONS, AND, ON OCTOBER 23, 1961, SENT AN UNSOLICITED PROPOSAL LETTER TO THE CONTRACTING OFFICER, YOUR COMPANY WAS NOT CONSIDERED IN THE NEGOTIATIONS.

AT THE OUTSET, IT MAY BE POINTED OUT THAT UNDER THE PROVISIONS OF 10 U.S.C. 2304 (A) (2), ITEMS MAY BE PROCURED BY NEGOTIATION WHEN PUBLIC EXIGENCY WILL NOT PERMIT DELAY INCIDENT TO ADVERTISING. UNDER PARAGRAPH 3 -202.2 (II) OF THE ARMED SERVICES PROCUREMENT REGULATION IT IS INDICATED THAT THIS AUTHORITY TO NEGOTIATE A CONTRACT MAY BE PROPERLY USED WHERE SUCH CONTRACT INVOLVES ESSENTIAL EQUIPMENT FOR A SHIP WHICH IS NEEDED AT ONCE FOR COMPLIANCE WITH THE ORDERS OF THE SHIP.

THE CHIEF, BUREAU OF NAVAL WEAPONS, DEPARTMENT OF THE NAVY, OFFERED THE FOLLOWING REASONS AS TO WHY THE REQUIREMENT OF THIS PROCUREMENT WAS DECLARED CRITICAL:

"A. A MARK 78 TORPEDO EXERCISE HEAD IS AN UNLOADED RECORDING UNIT UTILIZED IN LIEU OF AN EXPLOSIVE LOADED WARHEAD FOR PROOFING, FLEET EXERCISE AND TRAINING PURPOSES FOR THE MK 44 TORPEDO.

"B. INITIALLY THE EXERCISE HEAD MK 81-1 WAS DESIGNATED FOR FLEET USE IN EXERCISE AND TRAINING. IT WAS DETERMINED EARLY IN THE PROGRAM THAT THIS HEAD WAS UNSUITABLE FOR THE PURPOSE INTENDED, AND THE EXERCISE HEAD MK 78- 0 WAS DESIGNATED AS THE FLEET TRAINING UNIT FOR THE TORPEDO MK 44. THE EXERCISE HEAD MK 78-0 IS A COMPLEX TECHNICAL RECORDER, CONSISTING OF VARIOUS ELECTRONIC AND MECHANICAL-ELECTRO COMPONENTS PROCURED ON A SUB- CONTRACT BASIS COMMERCIALLY. COMPETENT PRODUCERS OF THE COMMERCIAL COMPONENTS ARE DETERMINED ONLY AFTER AN EXHAUSTIVE TRIAL AND ERROR PROCEDURE, WHICH GENERALLY CAUSES INITIAL PRODUCTION DELAYS.

"C. THIS NECESSITATED URGENT PROCUREMENT OF THE NEW TYPE EXERCISE HEAD IN ORDER TO SATISFY PROOFING AND FLEET REQUIREMENTS WITH A MINIMUM DELAY, * *

MOREOVER, ON OCTOBER 18, 1961, THE ASSISTANT SECRETARY OF THE NAVY, INSTALLATIONS AND LOGISTICS, MADE THE FOLLOWING DETERMINATION:

"ALL THE ITEMS TO BE PROCURED REQUIRE PRODUCTION ENGINEERING AND TESTING EXPERIENCE OR KNOW-HOW. PROCUREMENT FROM SOURCES OTHER THAN THE DEVELOPER OR AN EXPERIENCED MANUFACTURER WHO HAS PREVIOUSLY CONSTRUCTED THE SAME OR SUBSTANTIALLY SIMILAR EQUIPMENT WOULD INVOLVE A SUBSTANTIAL ADDITIONAL PERIOD OF TIME FOR DELIVERY AND REQUIRE DUPLICATION IN PART, OF PREPARATION TIME ALREADY SPENT. THE URGENCY OF THE MK 44 TORPEDO PROGRAM ADD-ON REQUIREMENTS MAKES IT IMPERATIVE THAT EXISTING SUPPLIERS BE UTILIZED TO MEET THE ACCELERATED DELIVERY DATES.'

IN VIEW OF THE FOREGOING, AND SINCE YOUR COMPANY HAD NOT PREVIOUSLY SUPPLIED THE ITEM TO THE GOVERNMENT, WE MUST CONCLUDE THAT THERE IS NO PROPER BASIS UPON WHICH THIS OFFICE WOULD BE JUSTIFIED IN OBJECTING TO THE ACTION OF THE DEPARTMENT OF THE NAVY IN REFUSING TO CONSIDER YOUR PROPOSAL AND PROCURING THE EQUIPMENT HERE INVOLVED BY NEGOTIATING ONLY WITH PROVEN SOURCES OF SUPPLY.