B-193759.2, SEP 17, 1979

B-193759.2: Sep 17, 1979

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THERE IS SOME QUESTION OF HOW TO INTERPRET OUR POSITION THAT THE STATUTORY NEGOTIATION AUTHORITY DOES NOT AS A MATTER OF COURSE JUSTIFY A PROCUREMENT RESTRICTED TO ONE OR TWO FIRMS WHEN THE AGENCY'S REQUIREMENTS CAN BE MET BY OTHER SUPPLIERS. SEC. 2304(A)(16) PERMITS NEGOTIATION WHEN IT IS IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A FACILITY. IT IS NECESSARY TO KEEP VITAL FACILITIES IN BUSINESS. WE CONSIDERED WHETHER THE AUTHORITY IN SEC. 2304(A)(16) WAS LIMITED TO NEGOTIATION WITH ONE OR TWO PRE DETERMINED SUPPLIERS. WE DO NOT AGREE THAT THE AUTHORITY GRANTED BY THE SECTION IS LIMITED TO SUCH A SITUATION. IT PERMITS NEGOTIATION WHEN IT IS DETERMINED TO BE IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A SUPPLIER AVAILABLE FOR FURNISHING SERVICES IN CASE OF A NATIONAL EMERGENCY BUT NOT NECESSARILY A PARTICULAR SUPPLIER.".

B-193759.2, SEP 17, 1979

PRECIS-UNAVAILABLE

CLIFFORD L. ALEXANDER, JR., SECRETARY OF THE ARMY:

WE REFER TO THE LETTER OF JULY 31, 1979, FROM THE DEPUTY ASSISTANT SECRETARY OF THE ARMY FOR MATERIEL ACQUISITION MANAGEMENT, REQUESTING THAT WE EXPAND UPON THE STATEMENT IN OUR DECISION SAFT AMERICA, INC., B-193759, JULY 12, 1979, CONCERNING THE NEGOTIATION AUTHORITY OF 10 U.S.C. SEC. 2304 (A)(16) (1976). IN LIGHT OF DEFENSE ACQUISITION REGULATION (DAR) 3-216.2, WHICH SETS FORTH CIRCUMSTANCES JUSTIFYING USE OF THIS NEGOTIATION AUTHORITY, THERE IS SOME QUESTION OF HOW TO INTERPRET OUR POSITION THAT THE STATUTORY NEGOTIATION AUTHORITY DOES NOT AS A MATTER OF COURSE JUSTIFY A PROCUREMENT RESTRICTED TO ONE OR TWO FIRMS WHEN THE AGENCY'S REQUIREMENTS CAN BE MET BY OTHER SUPPLIERS.

THE NEGOTIATION AUTHORITY OF 10 U.S.C. SEC. 2304(A)(16) PERMITS NEGOTIATION WHEN IT IS IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A FACILITY, MANUFACTURER, PRODUCER, ETC. 1) AVAILABLE FOR FURNISHING PROPERTY OR SERVICES IN CASE OF A NATIONAL EMERGENCY, OR 2) WHEN THE INTEREST OF INDUSTRIAL MOBILIZATION OR THE INTEREST OF NATIONAL DEFENSE IN MAINTAINING ACTIVE ENGINEERING, RESEARCH, AND DEVELOPMENT WOULD BE SERVED BY HAVING SUCH FACILITY, PRODUCER, ETC. AVAILABLE. IN GENERAL, DAR 3- 216.2 SETS FORTH EXAMPLES OF SITUATIONS WHEN USE OF THE STATUTORY AUTHORITY SHOULD BE CONSIDERED.

IT MAY BE THAT AN INDUSTRIAL MOBILIZATION BASE FOR PRODUCTION OF ESSENTIAL MILITARY SUPPLIES AND SERVICES CAN BE EFFECTED ONLY BY RESTRICTING COMPETITION TO ONE OR TWO PARTICULAR FIRMS WHEN, FOR EXAMPLE, IT IS NECESSARY TO KEEP VITAL FACILITIES IN BUSINESS, TO MAINTAIN PRODUCTION EXPERTISE OF SELECTED SUPPLIERS, OR TO PREVENT A BREAK IN PRODUCTION OF CONTRACTORS MANUFACTURING CRITICAL SUPPLIES. SEE BRASWELL SHIPYARDS, INC., B-188286, JUNE 24, 1977, 77-1 CPD 454; ETAMCO INDUSTRIES, B-187532, FEBRUARY 25, 1977, 77-1 CPD 141.

IN 48 COMP.GEN. 199 (1968), WE CONSIDERED WHETHER THE AUTHORITY IN SEC. 2304(A)(16) WAS LIMITED TO NEGOTIATION WITH ONE OR TWO PRE DETERMINED SUPPLIERS. WE SAID THERE:

"WE AGREE THAT THE USUAL CASE JUSTIFYING NEGOTIATION UNDER 10 U.S.C. 2304(A)(16) MAY WELL REQUIRE CONTRACTING WITH A PREDETERMINED CONTRACTOR OR CONTRACTORS. HOWEVER, WE DO NOT AGREE THAT THE AUTHORITY GRANTED BY THE SECTION IS LIMITED TO SUCH A SITUATION. IT PERMITS NEGOTIATION WHEN IT IS DETERMINED TO BE IN THE INTEREST OF NATIONAL DEFENSE TO HAVE A SUPPLIER AVAILABLE FOR FURNISHING SERVICES IN CASE OF A NATIONAL EMERGENCY BUT NOT NECESSARILY A PARTICULAR SUPPLIER."

WE BELIEVE YOUR DETERMINATIONS TO UTILIZE THIS NEGOTIATION AUTHORITY, AS A RULE, SHOULD INDICATE WHAT CONSIDERATION HAS BEEN GIVEN TO EFFECTING THE DESIRED INDUSTRIAL MOBILIZATION BASE WITH THE MAXIMUM POSSIBLE COMPETITION.

WE TRUST THAT THIS EXPLANATION HAS BEEN HELPFUL.