B-174385, MAR 30, 1972

B-174385: Mar 30, 1972

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PROCUREMENTS BY GOVERNMENT PRIME CONTRACTORS ARE NOT SUBJECT TO GENERAL PROCUREMENT REGULATIONS. UNLESS THE CONTRACTOR'S ACTIONS ARE CONTRARY TO THE BEST INTERESTS OF THE UNITED STATES. INCORPORATED: REFERENCE IS MADE TO THE LETTER OF OCTOBER 18. INDIVIDUAL CONTRACTS FOR MEAT SUPPLIES ARE USUALLY LESS THAN $25. THIS IS IN ACCORDANCE WITH THE RCA PRIME CONTRACT WHICH REQUIRES THE WRITTEN CONSENT OF THE CONTRACTING OFFICER ONLY IF THE SUBCONTRACT EXCEEDS EITHER $25. DELIVERIES MADE BY YOU UNDER EACH OF NINE PURCHASE ORDERS CONTAINED AT LEAST ONE MATERIAL DEFICIENCY FROM WHAT WAS REQUIRED. IN SEVERAL INSTANCES WHERE DEFICIENCIES WERE NOT DISCOVERED UPON INSPECTION IN FLORIDA. RCA WAS FORCED TO ACCEPT LESS DESIRABLE CUTS OF MEAT AND THEN NEGOTIATE ADJUSTMENTS WITH YOUR CONCERN.

B-174385, MAR 30, 1972

CONTRACTS - COST-PLUS-AWARD-FEE - PROCUREMENT PRACTICES OF GOVERNMENT PRIME CONTRACTORS CONCERNING A DETERMINATION OF RCA SERVICE COMPANY AS PRIME CONTRACTOR UNDER A COST-PLUS-AWARD-FEE CONTRACT TO MANAGE THE NAVY'S ATLANTIC UNDERSEA TEST AND EVALUATION CENTER (AUTEC) AT ANDROS ISLAND, BAHAMAS, THAT CHANTICLEER, INC., SHOULD NO LONGER BE SOLICITED FOR BIDS ON MEAT PRODUCTS. PROCUREMENTS BY GOVERNMENT PRIME CONTRACTORS ARE NOT SUBJECT TO GENERAL PROCUREMENT REGULATIONS, AND UNLESS THE CONTRACTOR'S ACTIONS ARE CONTRARY TO THE BEST INTERESTS OF THE UNITED STATES, THERE EXISTS NO BASIS FOR OBJECTION TO THE RCA DECISION.

TO CHANTICLEER, INCORPORATED:

REFERENCE IS MADE TO THE LETTER OF OCTOBER 18, 1971, IN WHICH YOU ASK WHY A PRIME CONTRACTOR WITH NAVY, RCA SERVICE COMPANY (RCA), HAS NOT BEEN SOLICITING YOUR CONCERN FOR BIDS ON MEAT PRODUCTS.

RCA HAS A COST-PLUS-AWARD-FEE CONTRACT TO MANAGE AND OPERATE THE NAVY'S ATLANTIC UNDERSEA TEST AND EVALUATION CENTER (AUTEC), AT ANDROS ISLAND, BAHAMAS, AND OTHER AUTEC FACILITIES AND SYSTEMS. RCA'S RESPONSIBILITIES INCLUDE THE FURNISHING OF FOOD PRODUCTS WHICH RCA ACCOMPLISHES THROUGH CONTRACTS WITH SUPPLIERS.

INDIVIDUAL CONTRACTS FOR MEAT SUPPLIES ARE USUALLY LESS THAN $25,000; CONSEQUENTLY, NAVY HAS KEPT ITS INVOLVEMENT IN RCA'S CONTRACTING PROCEDURES FOR SUCH PRODUCTS AT A MINIMUM. THIS IS IN ACCORDANCE WITH THE RCA PRIME CONTRACT WHICH REQUIRES THE WRITTEN CONSENT OF THE CONTRACTING OFFICER ONLY IF THE SUBCONTRACT EXCEEDS EITHER $25,000 OR 5 PERCENT OF THE TOTAL ESTIMATED COST OF THE PRIME CONTRACT. NAVY ADVISES THAT RCA'S PROCUREMENT SYSTEM HAS BEEN APPROVED BY THE DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION (DCASR), PHILADELPHIA, PENNSYLVANIA.

A LETTER FROM RCA DATED NOVEMBER 24, 1971, FORWARDED BY NAVY (COPY ENCLOSED), REPORTS THAT DURING THE PERIOD AUGUST 4, 1970 TO APRIL 29, 1971, DELIVERIES MADE BY YOU UNDER EACH OF NINE PURCHASE ORDERS CONTAINED AT LEAST ONE MATERIAL DEFICIENCY FROM WHAT WAS REQUIRED. NONCONFORMING MEAT OR POULTRY PRODUCTS DELIVERED TO ANDROS ISLAND CANNOT, UNDER LOCAL CUSTOM REGULATIONS, BE RETURNED TO THE UNITED STATES. IN SEVERAL INSTANCES WHERE DEFICIENCIES WERE NOT DISCOVERED UPON INSPECTION IN FLORIDA, RCA WAS FORCED TO ACCEPT LESS DESIRABLE CUTS OF MEAT AND THEN NEGOTIATE ADJUSTMENTS WITH YOUR CONCERN. THE MOST RECENT ADVICE IS THAT RCA HAS DETERMINED THAT YOU SHOULD BE DROPPED FROM THE BIDDER'S LIST UNTIL SUCH TIME AS YOU CAN DEMONSTRATE AN ABILITY TO SATISFACTORILY PERFORM ON FUTURE PROCUREMENTS.

PROCUREMENTS BY GOVERNMENT PRIME CONTRACTORS ARE NOT SUBJECT TO THE RULES APPLIED TO THE AWARD OF CONTRACTS BY GOVERNMENT ACTIVITIES. HOWEVER, CARE IS TAKEN TO INSURE THAT THE GOVERNMENT SPECIFICATIONS ARE MET AND, PARTICULARLY WHERE A COST REIMBURSEMENT PRIME CONTRACT IS INVOLVED, THAT THE PRIME CONTRACTOR PROTECTS THE GOVERNMENT'S INTERESTS. IN THE CIRCUMSTANCES OF THE CASE WE CAN FIND NO BASIS TO OBJECT TO THE ACTION TAKEN BASED ON THE FOREGOING STANDARDS.