B-167386, DECEMBER 22, 1969, 49 COMP. GEN. 402

B-167386, DECEMBER 22, 1969, 49 COMP. GEN. 402

CONTRACTS -- NEGOTIATION -- CHANGES, ETC. -- WRITTEN AMENDMENT REQUIREMENT THE FAILURE TO ISSUE THE WRITTEN AMENDMENT REQUIRED BY SECTIONS 2 3.507(A) AND 1-3.805-1(D) OF THE FEDERAL PROCUREMENT REGULATIONS FOR THE CHANGES IN THE DELIVERY SCHEDULE OF A NEGOTIATED PROCUREMENT AND THE TIME FOR THE SUBMISSION OF FINAL PROPOSALS THAT WERE INSTEAD TELEPHONED TO OFFERORS, AND THE CONTINUED NEGOTIATION AFTER CUT-OFF DATE WITH THE LOW OFFEROR UNDER THE ORIGINAL REQUEST FOR PROPOSALS THAT LED TO AN AWARD OF A MULTI-YEAR CONTRACT WHICH WAS NOT CONTEMPLATED UNDER THE ORIGINAL SOLICITATION--THE FUNDING PROBLEM HAVING SUBSEQUENTLY DEVELOPED--ARE PROCEDURAL ERRORS THAT OBLIGE THE GOVERNMENT TO REOPEN NEGOTIATIONS. THE ERRORS CANNOT BE RECTIFIED BY AGREEMENT WITH THE SUCCESSFUL CONTRACTOR AND THE OFFEROR WITHIN A COMPETITIVE RANGE WHOSE PRICE REDUCTION WAS CONSIDERED TO HAVE BEEN SUBMITTED LATE, THE UNITED STATES GENERAL ACCOUNTING OFFICE SHOULD BE FURNISHED WITH AN ESTIMATE OF COSTS CHARGEABLE TO THE GOVERNMENT IN THE EVENT OF CONTRACT CANCELLATION.

TO THE ADMINISTRATOR, FEDERAL AVIATION ADMINISTRATION, DECEMBER 22, 1969:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 15, 1969, WITH ENCLOSURES, CONCERNING THE PROTEST BY WILCOX DIVISION OF AMERICAN STANDARD, INCORPORATED, AGAINST THE AWARD OF A CONTRACT TO CUTLER-HAMMER, AIRBORNE INSTRUMENTS LABORATORIES (AIL) DIVISION, UNDER REQUEST FOR PROPOSALS (RFP) NO. WA5M-9-0316 ISSUED BY YOUR AGENCY.

THE RFP WAS ISSUED ON JANUARY 15, 1969, AND, AS AMENDED, CALLED FOR PROPOSALS ON A QUANTITY OF 99 FULL AND PARTIAL MARK I INSTRUMENT LANDING SYSTEMS (ILS). PROPOSALS WERE RECEIVED ON MARCH 14, 1969, FROM AIL, WILCOX AND STANDARD TELEPHONE AND CABLE, LIMITED (STC). TECHNICAL AND PRICE NEGOTIATIONS WERE CONDUCTED WITH THESE 3 OFFERORS, AND WERE COMPLETED BY MAY 26, 1969. EACH OF THE OFFERORS, AS REQUESTED, CONFIRMED THE RESULTS OF THE NEGOTIATIONS HELD WITH IT, AND ON JUNE 2, 1969, THE CONTRACTING OFFICER FORWARDED A TELEGRAM TO ALL 3 OFFERORS REQUESTING SUBMISSION OF FINAL PRICES BY JUNE 5, 1969.

THE RFP CALLED FOR THE INITIAL SYSTEM TO BE DELIVERED WITHIN 240 DAYS (8 MONTHS) AFTER AWARD. HOWEVER, ON JUNE 4, THE DAY BEFORE THE FINAL PRICES WERE DUE, THE CONTRACTING OFFICER WAS ADVISED BY HIS TECHNICAL STAFF THAT, IN THEIR OPINION, NONE OF THE OFFERORS COULD REALISTICALLY BE EXPECTED TO DELIVER THE INITIAL SYSTEM IN 8 MONTHS EVEN THOUGH NONE OF THE FIRMS HAD OBJECTED TO THE DELIVERY SCHEDULE. THIS TECHNICAL CONCLUSION WAS REACHED ON THE BASIS OF AN IN-HOUSE EVALUATION DEVELOPED FROM INFORMATION OBTAINED DURING THE PRECEDING NEGOTIATIONS. A 15 MONTH INITIAL DELIVERY PERIOD WAS CONSIDERED TO BE MORE REALISTIC.

BASED ON THIS ADVICE, THE CONTRACTING OFFICER ON JUNE 5, 1969, DECIDED TO EXTEND THE DELIVERY PERIOD FOR THE INITIAL SYSTEM FROM 8 MONTHS OR LESS TO 15 MONTHS OR LESS. IN VIEW OF THE SHORT TIME REMAINING BEFORE FINAL PRICES WERE DUE, EACH OFFEROR WAS CALLED AND READ THE FOLLOWING MESSAGE:

THE DELIVERY SCHEDULE FOR THE INITIAL SYSTEM UNDER SUBJECT RFP IS 240 CALENDAR DAYS (8 MONTHS) FROM DATE OF CONTRACT AWARD. PLEASE INCLUDE IN YOUR FINAL SUBMISSION ON OR BEFORE 6 JUNE 1969 REFLECTING COST IMPACT, IF ANY, OF AN ALTERNATE DELIVERY DATE FOR THE INITIAL SYSTEM OF 540 CALENDAR DAYS (15 MONTHS) FROM DATE OF CONTRACT AWARD, PLUS ADJUSTING THE DELIVERY SCHEDULE FOR THE BALANCE OF THE DELIVERABLE ITEMS ACCORDINGLY. ON JUNE 6, THE FOLLOWING PROPOSALS WERE RECEIVED: COMPANY FINAL OFFER EVALUATION PRICE AIL $6,328,730 $6,395,743 WILCOX $6,731,402 $6,802,811 STC $5,995,564 $6,947,301 IN EVALUATING THESE FINAL PRICES, THE PROVISIONS OF THE BUY AMERICAN ACT (41 U.S.C. 10A) AND THE TARIFF ACT (19 U.S. CODE 1202) WERE APPLIED TO STC'S PROPOSAL. ALSO, CERTAIN FACTORS SUCH AS RELIABILITY, MAINTAINABILITY, AND GROWTH POTENTIAL WERE GIVEN A DOLLAR VALUE AND ADDED ON AS A COST FACTOR TO EACH OF THE FINAL PRICES.

WILCOX'S FINAL PROPOSAL STATED THE FOLLOWING WITH REGARD TO THE TELEPHONE CALLS OF JUNE 5:

CONFIRMING TELEPHONE CALL OF 5 JUNE 1969 BETWEEN MR. GOLRICK OF FAA AND MR. MCINTEER OF WILCOX, WILCOX FURTHER STATES AS FOLLOWS;

WILCOX REAFFIRMS THAT IT CAN MEET THE DELIVERY SPECIFIED IN THE RFP AND THAT OUR QUOTED PRICES ARE BASED UPON THE RFP DELIVERY SCHEDULE.

FURTHER, IF THE GOVERNMENT SO DESIRES, WILCOX WOULD BE WILLING TO ACCEPT A CONTRACT REQUIRING DELIVERY OF THE INITIAL EQUIPMENT--AS QUOTED OR UP TO 15 MONTHS ARO, WITH FURTHER PROVISION THAT THE GOVERNMENT WILL ACCEPT EARLIER DELIVERY, PROVIDED THE EQUIPMENT MEETS THE GOVERNING SPECIFICATIONS.

ON JUNE 12TH THE FOLLOWING LETTER DATED JUNE 9, 1969, WAS RECEIVED FROM WILCOX:

SUBSEQUENT TO OUR REFERENCED JUNE 4, 1969 SUBMISSION IN RESPONSE TO SUBJECT RFP, WE HAVE CONTINUED A REVIEW OF OUR PRICES AS SUBMITTED. THIS REVIEW HAS DISCLOSED CERTAIN REDUCTIONS IN OUR BID COMPUTATIONS THAT SHOULD BE MADE AVAILABLE TO THE GOVERNMENT. WE ARE ACCORDINGLY PREPARED TO REDUCE OUR LAST QUOTED PRICE IN REFERENCED LETTER COVERING ALL LINE ITEMS (BUT EXCLUDING OPTIONS) BY $450,000.00.

BECAUSE OF OUR INTENSE INTEREST IN THIS PROGRAM AND RECOGNIZING YOUR PRESSING NEED FOR ILS SYSTEMS, WILCOX IS PREPARED TO GUARANTEE DELIVERY IN ACCORDANCE WITH THE CONTRACT DELIVERY SCHEDULE CITED IN SUBJECT RFP AND IN THIS RESPECT IS PREPARED TO OFFER THE FAA A "FAILURE TO DELIVER" LIQUIDATED DAMAGES PENALTY IN THE SUM OF $20,000.00 FOR EACH FULL ILS SYSTEM NOT DELIVERED IN ACCORDANCE WITH CONTRACT SCHEDULE, UP TO A MAXIMUM SUM EQUAL TO OUR BID PROFIT IN THIS PROPOSAL.

WE WILL BE PLEASED TO DISCUSS THIS MATTER IN MORE DETAIL.

THE JUNE 12 PRICE REDUCTION OFFERED BY WILCOX WAS DEEMED TO BE A LATE PROPOSAL MODIFICATION. UNDER PARAGRAPH 2-3.508 OF THE FEDERAL AVIATION ADMINISTRATION PROCUREMENT REGULATIONS, A LATE PROPOSAL OR MODIFICATION MAY NOT BE CONSIDERED FOR AWARD EXCEPT WHERE SUCH MODIFICATION IS "OF EXTREME IMPORTANCE TO THE GOVERNMENT." IT IS REPORTED THAT IF THE JUNE 12 PRICE REDUCTION WERE CONSIDERED IN THE AWARD SELECTION, IT WOULD HAVE MADE WILCOX $47,325 LOWER IN ACTUAL PRICE AND $42,932 LOWER IN EVALUATED PRICE THAN AIL. THE CONTRACTING OFFICER CONSIDERED THAT THESE DIFFERENCES DID NOT MAKE THE LATE MODIFICATION OF EXTREME IMPORTANCE TO THE GOVERNMENT, AND THE JUNE 12 PRICE REDUCTION WAS NOT CONSIDERED FOR THE AWARD.

ON JUNE 30, 1969, THE CONTRACT WAS AWARDED TO AIL, AND WILCOX WAS SO ADVISED. THE CONTRACT WHICH WAS AWARDED TO AIL WAS WRITTEN AS A MULTI YEAR CONTRACT FOR THE TOTAL AMOUNT OF $6,328,730, WITH $3,685,716 AS THE FIRST YEAR OBLIGATION AND THE BALANCE OF $2,643,014 TO BE FUNDED BY OCTOBER 1, 1970, OR IF NOT THE CONTRACT WILL TERMINATE SUBJECT TO A CANCELLATION CEILING OF 9 PERCENT OF THE TOTAL CONTRACT AMOUNT, OR $569,575. IT IS REPORTED BY YOUR AGENCY THAT THE MULTI-YEAR CONTRACT WAS UTILIZED BECAUSE OF FUNDING PROBLEMS WHICH FAA BECAME AWARE OF ON JUNE 10, 1969, AND THAT, IN THE INTEREST OF SAVING THE FAVORABLE PRICE FOR 99 UNITS IT PROCEEDED TO OBTAIN AIL'S AGREEMENT TO ACCEPT, WITHOUT CHANGE IN PRICE, DELIVERY, OR RATE OF DELIVERY, A CONTRACT USING THE MULTI-YEAR TECHNIQUE. THE CANCELLATION CEILING OF $569,575 WAS THEN ESTABLISHED AFTER NEGOTIATIONS WITH AIL DURING WHICH AIL'S REQUEST FOR A HIGHER CANCELLATION CEILING WAS REJECTED. THE RESULTING CONTRACT CONTAINS THE CLAUSES APPROPRIATE TO THE MULTI-YEAR TECHNIQUE, BUT CONFORMS IN THE MATTER OF PRICE, DELIVERY AND DELIVERY RATE TO THE AIL PROPOSAL OF JUNE 6, 1969.

WILCOX HAS PROTESTED THIS AWARD CONTENDING THAT THE TREATMENT OF THE WILCOX PRICE REDUCTION DELIVERED ON JUNE 12, 1969, "WAS PATENTLY ERRONEOUS IN LIGHT OF FAA'S ORAL REQUEST OF JUNE 5 FOR PROPOSALS OR EXPRESSION OF INTEREST FROM THE OFFERORS ON A CONTRACT WHICH WOULD ALLOW A 15-MONTH DELIVERY START, THE ABSENCE OF WRITTEN CONFIRMATION OF SAME AND IN THE LIGHT OF THE NEGOTIATIONS CONDUCTED WITH AIL AFTER JUNE 6 ON PRICE AND TERMS."

WILCOX'S POSITION HAS MERIT. WE BELIEVE THAT A WRITTEN AMENDMENT TO THE RFP SHOULD HAVE BEEN ISSUED TO COVER THE CHANGE IN DELIVERY AND THAT OFFERORS SHOULD HAVE HAD A REASONABLE AMOUNT OF TIME TO CONSIDER THE EFFECT OF THE CHANGE IN DELIVERY BEFORE BEING REQUIRED TO CONFIRM OR MODIFY THEIR PRICES. FAA PROCUREMENT REGULATION 2-3.507(A) CALLS FOR SUCH A PROCEDURE WHENEVER THE QUANTITIES, SPECIFICATIONS, OR DELIVERY SCHEDULES ARE SIGNIFICANTLY CHANGED; AND WE NOTE IN FPR 1 3.805-1(D) THAT CHANGES WHICH RELAX THE STATEMENT OF REQUIREMENTS, AS WELL AS THOSE WHICH INCREASE THE REQUIREMENTS, SHOULD BE MADE BY FORMAL AMENDMENT. IF A WRITTEN AMENDMENT HAD BEEN ISSUED AND THE TIME REASONABLY EXTENDED, WE BELIEVE THAT THE PRESENT CONTROVERSY COULD HAVE BEEN AVOIDED. AS WE STATED IN A RECENT DECISION DATED SEPTEMBER 3, 1969, 49 COMP. GEN. 156;

THE BENEFITS TO BE DERIVED FROM ISSUANCE OF A WRITTEN AMENDMENT ARE EVIDENT. THE PROCUREMENT OFFICIALS OF THE AGENCY ARE ASSURED THAT NOTICE OF THE COMPLETE CHANGE IS IN FACT COMMUNICATED TO THE PROPER OFFICIALS OF ALL COMPETITIVE OFFERORS AND THAT ALL THE ASPECTS OF THE CHANGE REFERENCED TO THE APPLICABLE RFP PROVISIONS ARE INCLUDED IN THE NOTICE. THE POSSIBILITY OF CHARGES OF FRAUD OR FAVORITISM IS THEREBY ELIMINATED OR REDUCED. ALSO, THE WRITTEN AMENDMENT AND ACKNOWLEDGMENT OF ITS RECEIPT PROVIDE A FIRM BASIS FOR REVIEWING AND JUSTIFYING A CHALLENGED PROCUREMENT ACTION. MOREOVER, THE GOVERNMENT IS ASSURED THAT THE RESULTING CONTRACT, AS A LEGAL DOCUMENT, WILL EMBODY THE NEW CHANGED TERMS RATHER THAN THE OLD TERMS.

MORE SIGNIFICANTLY, WE BELIEVE THAT THE SUBSTANTIAL EXTENSION OF THE DELIVERY SCHEDULE, PARTICULARLY WHERE AS HERE A CONSIDERABLE AMOUNT OF ENGINEERING HAD TO BE UNDERTAKEN BY THE CONTRACTOR, CALLED FOR MORE THAN MERELY ASKING THE OFFERORS TO SUBMIT BY THE NEXT DAY A FINAL PRICE INCORPORATING ANY IMPACT IN COST. THE CIRCUMSTANCES APPEAR TO CALL FOR THE GOVERNMENT TO TAKE THE INITIATIVE IN ENCOURAGING A PRICE REDUCTION TO REFLECT THE DELIVERY EXTENSION. WE ALSO BELIEVE THAT CONSIDERABLY MORE TIME SHOULD HAVE BEEN GRANTED THE OFFERORS TO COMPUTE SUCH CHANGE. WHILE THERE MAY HAVE BEEN SIGNIFICANT REASONS TO AWARD THE CONTRACT AS QUICKLY AS POSSIBLE, THE SINGLE DAY GRANTED SEEMS TOTALLY INCONSISTENT WITH THE MAGNITUDE OF THE RECOMPUTATION OR OF THE 7-MONTH EXTENSION IN THE DELIVERY SCHEDULE.

ADMITTEDLY, SO FAR AS CONCERNS THE EQUAL TREATMENT OF PROPOSERS, WE NOTE THE ABSENCE OF ANY INDICATION IN THE RECORD THAT YOUR AGENCY WAS ADVISED ON JUNE 5 OR JUNE 6 OF A DESIRE ON THE PART OF WILCOX OR ANY OTHER PROPOSER TO NEGOTIATE A REVISED PRICE BASED ON A 15-MONTH DELIVERY PERIOD. THE RECORD SHOWS RATHER THAT THE FAA WAS ADVISED BY ALL PROPOSERS THAT A 15-MONTH DELIVERY WOULD HAVE NO COST IMPACT. IT IS FURTHER REPORTED THAT, AT THE TIME, NEITHER WILCOX NOR ANY OTHER PROPOSER INDICATED ANY DESIRE OR NEED FOR AN EXTENSION OF TIME BEYOND JUNE 6 TO COMPUTE THE COST EFFECT OF THE DELIVERY EXTENSION. HOWEVER, AS INDICATED ABOVE, WE DO NOT BELIEVE THAT ANY PROPOSERS COULD MAKE A MEANINGFUL DECISION WITHIN 24 HOURS AS TO THE COST IMPACT OF THE 7 MONTH EXTENSION IN DELIVERY.

THE LAST POINT RAISED BY WILCOX IS THE ALLEGED NEGOTIATION WITH AIL EXCLUSIVELY AFTER THE JUNE 6 CUT-OFF DATE. IT APPEARS THAT THE MULTI YEAR CONTRACT ENTERED INTO WITH AIL RESULTED FROM ACTIONS TAKEN AFTER WILCOX HAD SUBMITTED ITS PRICE REDUCTION OFFER ON JUNE 12. THE ADMINISTRATIVE REPORT STATES THAT AIL *** WAS APPROACHED ON JUNE 12, 1969 AND ASKED IF IT WOULD ACCEPT, WITHOUT CHANGE IN PRICE, DELIVERY, OR DELIVERY RATE, A CONTRACT USING THE MULTIYEAR FUNDING TECHNIQUE. ON RECEIPT OF AN AFFIRMATIVE ANSWER, THE CANCELLATION CEILINGS WERE THEN ESTABLISHED AS WELL AS AGREEMENT REACHED TO INCLUDE IN ANY RESULTING CONTRACT THE NECESSARY CLAUSES RELATIVE TO THE MULTIYEAR TECHNIQUE.

THE ADMINISTRATIVE JUSTIFICATION FOR CONSIDERING THAT THIS DID NOT CONSTITUTE A REOPENING OF NEGOTIATIONS IS AS FOLLOWS:

THE MULTIYEAR METHOD OF PROCUREMENT WAS USED BECAUSE OF A SHORTAGE OF FUNDS WHICH DEVELOPED LATE IN THE PROCUREMENT PROCESS. *** THERE WAS NO PREJUDICE TO ANY OTHER OFFEROR SINCE THE CHANGE WAS ENTIRELY FOR THE GOVERNMENT'S BENEFIT (TO PERMIT EXTENDED FUNDING), THERE WAS NO ADVANTAGE CONFERRED ON AIL, AND THE SUBSTANTIVE TERMS OF AIL'S FINAL PROPOSAL REMAINED FIRM. AS INDICATED BY WILCOX IN ITS PROTEST, IT IS TRUE THAT TWO CLAUSES WERE ADDED TO THE CONTRACT, HOWEVER, THESE RELATED ONLY TO THE ESTABLISHMENT OF A LIMITATION IN PRICE AND CANCELLATION CEILINGS FOR A MULTI-YEAR CONTRACT. IT IS TO BE NOTED THAT UNDER FAA PROCUREMENT REGULATIONS, CANCELLATION CEILINGS CANNOT BE CONSIDERED AS AN EVALUATING FACTOR IN DETERMINING THE RECIPIENT OF AN AWARD.

WE CANNOT AGREE WITH THE ADMINISTRATIVE POSITION ON THIS POINT. THERE CAN BE NO DISPUTING THE FACT THAT THE CONTRACT ENTERED INTO WITH AIL IS DIFFERENT FROM ITS PROPOSAL OF JUNE 6, 1969. FROM A LEGAL STANDPOINT, AIL NOW HAS A FIRM CONTRACT FOR ONLY 53 UNITS, NOT 99 UNITS. THERE HAS BEEN ADDED TO THE PRICE FOR THESE UNITS A CONTINGENCY FACTOR WHICH COULD INCREASE THE COST OF THE 53 UNITS BY AS MUCH AS $569.575. THE STATEMENT THAT CANCELLATION CEILINGS ARE NOT TO BE CONSIDERED AS AN EVALUATING FACTOR IN DETERMINING THE RECIPIENT OF A MULTIYEAR AWARD MAY BE A VALID OBSERVATION IN THE SITUATION TO WHICH IT APPLIES, MAINLY, THE EVALUATION OF A SINGLE-YEAR VERSUS MULTIYEAR PROPOSALS SUBMITTED UNDER A MULTIYEAR PROCUREMENT. THE CANCELLATION CEILING UNDER A REGULAR MULTIYEAR PROCUREMENT IS FIXED IN ADVANCE OF SOLICITATION AND OBVIOUSLY WOULD HAVE NO APPLICATION IN THE EVALUATION OF MULTIYEAR PROPOSALS ONLY, SINCE IT WOULD NOT AFFECT THE RELATIVE STANDING OF SUCH PROPOSALS. HOWEVER, THIS HAS NO RELEVANCE TO THE PRESENT SITUATION, WHERE ONLY ONE MULTIYEAR PROPOSAL IS BEING CONSIDERED AS AN ALTERNATIVE TO OTHER PROPOSALS SUBMITTED ON A DIFFERENT BASIS.

THE BASIC QUESTION, IN OUR OPINION, IS WHETHER THE CHANGES IN AIL'S PROPOSAL OF JUNE 6 WHICH WERE NEGOTIATED THEREAFTER BETWEEN AIL AND FAA WERE SUBSTANTIAL ENOUGH TO BE CONSIDERED A REOPENING OF NEGOTIATIONS WITH AIL. IT IS CLEAR THAT THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN A MULTIYEAR CONTRACT FOR 99 UNITS WITH A FIRM COMMITMENT FOR ONLY 53 UNITS, AND A FIRM CONTRACT FOR ALL 99 UNITS. THE GOVERNMENT'S POTENTIAL LIABILITIES ARE SUBSTANTIALLY DIFFERENT IN EACH CASE. THE ADMINISTRATIVE POSITION APPEARS TO REST PRINCIPALLY ON THE FACT, WHICH MAY BE CONCEDED, THAT THE CHANGES MADE WERE SOLELY FOR THE BENEFIT OF THE GOVERNMENT, FROM WHICH IT IS ARGUED THAT SUCH CHANGES GAVE NO ADVANTAGE TO AIL AND DID NOT PREJUDICE ANY OTHER OFFEROR. THIS ARGUMENT IGNORES THE FACT THAT AS LONG AS NEGOTIATIONS ARE OPEN EVERY PROPOSER HAS A RIGHT TO CHANGE HIS PRICE FOR ANY REASON WHATEVER, WHETHER IT BE A CONSEQUENCE OF THE CHANGES IN THE TERMS OF THE SOLICITATION OR NOT. IN THIS CONNECTION THE RECORD SHOWS THAT WILCOX WAS WILLING TO OFFER A GENERAL PRICE REDUCTION. IN OUR OPINION, THE DEALINGS WITH AIL AFTER JUNE 6 CONSTITUTED A REOPENING OF NEGOTIATIONS. HAVING THUS REOPENED NEGOTIATIONS WITH AIL, YOUR AGENCY WAS UNDER AN OBLIGATION TO REOPEN NEGOTIATIONS WITH OTHER PROPOSERS WITHIN A COMPETITIVE RANGE, WHICH INCLUDED WILCOX IN VIEW OF THE $450,000 PRICE REDUCTION SUBMITTED ON JUNE 12TH. SEE FEDERAL PROCUREMENT REGULATION 1- 3.805.

WE ARE NOT UNMINDFUL OF THE URGENCY OF THE NEED FOR THE SYSTEMS NOW UNDER CONTRACT WITH AIL. NOR CAN WE IGNORE THE POSSIBLE FINANCIAL CONSEQUENCES OF A CANCELLATION OF THE AIL CONTRACT. BUT FOR THESE CONSIDERATIONS IT IS OUR VIEW THAT THE CONTRACT WITH AIL SHOULD BE CANCELED, AND FURTHER NEGOTIATIONS CONDUCTED WITH BOTH WILCOX AND AIL. WE BELIEVE AN EFFORT SHOULD BE MADE BY YOUR AGENCY, UNDER YOUR AUTHORITY TO NEGOTIATE THIS PROCUREMENT, TO RECTIFY THE PROCEDURAL ERRORS MADE, AND TO REACH SOME AGREEMENT BETWEEN YOURSELVES, AIL, AND WILCOX WHICH WILL BEST SERVE THE INTERESTS OF THE GOVERNMENT IN SECURING THE MOST EXPEDITIOUS AND ECONOMICAL DELIVERY OF THE SYSTEMS NEEDED.

IF SUCH AGREEMENT CANNOT BE REACHED, WE REQUEST THAT YOU FURNISH US AN ESTIMATE OF COSTS CHARGEABLE TO THE GOVERNMENT IN THE EVENT OF CANCELLATION OF THE AIL CONTRACT BOTH IN WHOLE AND AS TO THE 46 UNITS COVERED BY THE SECOND YEAR OF THE CONTRACT.