B-99476, JUL 20, 1951

B-99476: Jul 20, 1951

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 14. AS YOU PREVIOUSLY WERE ADVISED IN OFFICE LETTER OF DECEMBER 8. THE MATTER WAS BROUGHT TO THE ATTENTION OF THE SECRETARY OF THE ARMY WITH THE REQUEST THAT A COMPLETE REPORT THEREON BE FURNISHED THIS OFFICE. THE CONTRACT IN QUESTION WAS OF THE NEGOTIATED TYPE FREQUENTLY USED IN CONNECTION WITH RESEARCH AND DEVELOPMENT ACTIVITIES. IT COVERED THE PROCUREMENT OF FIVE PILOT MODELS OF A SPECIAL 19-FOOT BRIDGE ERECTION BOAT WHICH WAS TO BE SHIPPED TO KOREA FOR TROOP SERVICE TESTS AND OPERATIONAL EVALUATION PRIOR TO FORMAL ADOPTION AS AN ITEM OF STANDARD ARMY ISSUE. WAS NOT REQUIRED THAT THIS TYPE OF NEGOTIATED CONTRACT BE AWARDED TO THE LOWEST BIDDER BUT RATHER IN ACCORD WITH THE PROPOSAL WHICH IS CONSIDERED TO OFFER THE GREATEST OVERALL ADVANTAGE TO THE GOVERNMENT.

B-99476, JUL 20, 1951

PRECIS-UNAVAILABLE

HARWILL, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED NOVEMBER 14, 1950, AND ENCLOSURE, WHEREIN YOU PROTEST AGAINST THE AWARD OF A CONTRACT TO WELIN DAVIT AND BOAT COMPANY BY THE DEPARTMENT OF THE ARMY FOR THE FURNISHING OF FIVE 19-FOOT ALUMINUM BOATS.

AS YOU PREVIOUSLY WERE ADVISED IN OFFICE LETTER OF DECEMBER 8, 1950, THE MATTER WAS BROUGHT TO THE ATTENTION OF THE SECRETARY OF THE ARMY WITH THE REQUEST THAT A COMPLETE REPORT THEREON BE FURNISHED THIS OFFICE. THE REQUESTED REPORT, SETTING FORTH THE FACTS AND CIRCUMSTANCES IN THE MATTER, NOW HAS BEEN RECEIVED AND MAY BE SUMMARIZED AS FOLLOWS:

1. THE CONTRACT IN QUESTION WAS OF THE NEGOTIATED TYPE FREQUENTLY USED IN CONNECTION WITH RESEARCH AND DEVELOPMENT ACTIVITIES. IT COVERED THE PROCUREMENT OF FIVE PILOT MODELS OF A SPECIAL 19-FOOT BRIDGE ERECTION BOAT WHICH WAS TO BE SHIPPED TO KOREA FOR TROOP SERVICE TESTS AND OPERATIONAL EVALUATION PRIOR TO FORMAL ADOPTION AS AN ITEM OF STANDARD ARMY ISSUE. WAS NOT REQUIRED THAT THIS TYPE OF NEGOTIATED CONTRACT BE AWARDED TO THE LOWEST BIDDER BUT RATHER IN ACCORD WITH THE PROPOSAL WHICH IS CONSIDERED TO OFFER THE GREATEST OVERALL ADVANTAGE TO THE GOVERNMENT. IN EVALUATING PROPOSALS OF THIS NATURE SUCH FACTORS AS QUALITY OF WORKMANSHIP, DELIVERY SCHEDULES, PLANT ORGANIZATION AND CAPACITY AND PAST EXPERIENCE IN SIMILAR PROCUREMENT MUST BE CONSIDERED ALONG WITH BID PRICES.

2. IN THIS INSTANCE PROPOSALS WERE RECEIVED FROM FOUR FIRMS, TWO OF WHICH WERE ELIMINATED FROM CONSIDERATION BECAUSE OF EXCESSIVELY HIGH QUOTATIONS AS WELL AS LACK OF PREVIOUS EXPERIENCE IN FABRICATION OF THIS PARTICULAR BOAT. THE TWO REMAINING BIDDERS, HARWILL, INC., AND WELIN DAVIT AND BOAT COMPANY, SUBMITTED INITIAL BIDS OF $56,845.25 AND $64,795, RESPECTIVELY. EACH OF THESE FIRMS HAD PREVIOUSLY BEEN AWARDED CONTRACTS FOR EARLIER EXPERIMENTAL MODELS OF BOTH THE 19-FOOT LIGHT BRIDGE ERECTION BOAT AND ITS COMPANION 27-FOOT MEDIUM BRIDGE ERECTION BOAT. WELIN HAD PRODUCED THE FIRST EXPERIMENTAL MODEL OF BOTH BOATS; HARWILL HAD MANUFACTURED THREE SUBSEQUENT TEST MODELS OF THE 27-FOOT BOAT AND ALSO HAD AN EXISTING CONTRACT FOR TWO TEST MODELS OF THE 19 FOOT BOAT. ALL FOUR OF THESE PREVIOUS CONTRACTS WERE AWARDED TO THE LOWEST BIDDER.

3. AFTER COMPLETION OF NEGOTIATION, THE CONTRACT HERE IN QUESTION WAS AWARDED TO WELIN DAVIT AND BOAT COMPANY AT THE PRICE OF $58,905 SUBJECT TO THE PROVISIONS OF A PRICE REVISION ARTICLE REQUIRING RETROACTIVE PRICING, UPWARD OR DOWNWARD, BASED ON THE CONTRACTORS ACTUAL COSTS PLUS A LIMITED PROFIT ALLOWANCE; THE MAXIMUM REVISED PRICE IN NO CASE TO EXCEED THE ORIGINAL BID PRICE OF $64,795.

4. THE RECOMMENDATION THAT THE INSTANT CONTRACT BE AWARDED TO WELIN DAVIT AND BOAT COMPANY RATHER THAN TO HARWILL, INC., WAS MADE BY THE PROJECT ENGINEER RESPONSIBLE FOR DESIGN AND SUCCESSFUL DEVELOPMENT OF THE BOAT AND WAS FULLY REVIEWED AND CONCURRED IN BY HIS IMMEDIATE SUPERVISORS AND THE ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES STAFF. THE RECOMMENDATION AND CONCURRENCES WERE BASED ON THE FOLLOWING CONSIDERATIONS:

A. SERIOUS FABRICATION DEFICIENCIES HAD BEEN FOUND DURING TESTS ON ALL THREE OF THE 27-FOOT BOATS DELIVERED BY HARWILL INC., DURING THE LAST SEVERAL MONTHS AND A SUBSTANTIAL AMOUNT OF OVERHAUL AND REWORKING ON EACH BOAT HAD BEEN NECESSARY BEFORE IT COULD BE PUT INTO SERVICE. ALL THREE BOATS HAD FAILURES FROM POORLY FITTED OR RIVETED CONNECTIONS; IMPROPER FORMING AND SHARP BENDS IN HULL PLATES RESULTED IN PROGRESSIVE CRACKING AND EVENTUAL FAILURE; IMPROPER RIVETING RESULTED IN LEAKAGE AND LOOSE RIVETS HAD TO BE REPLACED EXHAUST PORT CONNECTIONS HAD TO BE REWORKED TO PREVENT SERIOUS LEAKAGE; FUEL LINES HAD TO BE REWORKED TO ELIMINATE GASOLINE LEAKAGE AND CONSEQUENT FIRE HAZARD AND ELECTRIC WIRING IN THE ENGINE COMPARTMENTS HAD TO BE RELOCATED TO PERMIT PROPER ENGINE MAINTENANCE. WHILE A CERTAIN AMOUNT OF REWORKING IS TO BE ANTICIPATED ON A DEVELOPMENT TYPE BOAT, DEFICIENCIES FOUND ON THE HARWILL BOATS WERE CONSIDERED EXCESSIVE. APPROXIMATELY TWO YEARS USE AND RIGOROUS TESTING OF PILOT MODELS OF THE 19-FOOT AND 29-FOOT BOATS PRODUCED BY THE WELIN DAVIT AND BOAT COMPANY HAVE NOT REVEALED COMPARABLE DEFICIENCIES.

B. DELIVERY DATES SPECIFIED BY THE WELIN DAVIT AND BOAT COMPANY BETTERED THOSE OF HARWILL INC., BY FROM ONE TO TWO WEEKS ON INDIVIDUAL BOATS AND THE WELIN DAVIT AND BOAT COMPANY APPEARED TO BE IN A BETTER POSITION TO IMPROVE DELIVERY TIME SINCE THEY HAVE CONSIDERABLY MORE WORKING SPACE AND EXPERIENCED PERSONNEL AND ALSO HAD THE NECESSARY ALUMINUM (EXCEPTING SPECIAL EXTRUSIONS AND CASTINGS) AND RIVETS ON HAND.

C. THE PLANT AND FACILITIES OF BOTH COMPANIES WERE EXAMINED BY PERSONNEL OF THE ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES AND BY DISTRICT OFFICE INSPECTORS PRIOR TO AWARD OF CONTRACT. THESE EXAMINATIONS INDICATED THAT WORKMAN IN THE HARWILL PLANT LACKED SKILL IN WORKING FROM DRAWINGS AND IN FORMING AND TEMPLATE WORK AND THAT INSPECTION AND CHECKING OF WORK IN PROGRESS WAS NOT SUFFICIENTLY THOROUGH WHEREAS THE WELIN DAVIT AND BOAT COMPANY HAD EXCELLENT FACILITIES, TOOLING, SKILLED WORKMEN AND THOROUGH SUPERVISION WHICH APPEARED TO PROVIDE ADEQUATE ASSURANCE THAT THE COMPANY COULD PRODUCE WELL CONSTRUCTED BOATS IN THE SHORTEST FEASIBLE TIME.

D. SINCE THE FIVE BOATS IN QUESTION WERE TO BE SHIPPED DIRECTLY FROM THE CONTRACTOR'S PLANT TO THE KOREAN THEATER WITHOUT FURTHER TESTING OR REWORKING BY THE ENGINEER RESEARCH AND DEVELOPMENT LABORATORIES, IT WAS CONSIDERED ESSENTIAL THAT EVERY REASONABLE PRECAUTION BE TAKEN TO INSURE THAT THE BOATS ARRIVE IN THE BEST POSSIBLE CONDITION.

THUS, IT APPEARS FROM THE ADMINISTRATIVE REPORT THAT DUE CONSIDERATION WAS GIVEN TO THE QUALIFICATIONS AND RESPONSIBILITY OF HARWILL, INC., AND THE WELIN DAVIT AND BOAT COMPANY BEFORE AWARD OF CONTRACT WAS MADE TO THE LATTER COMPANY.

MOREOVER, IT IS STATED IN THE REPORT THAT THE CONTRACT WITH WELIN DAVIT AND BOAT COMPANY WAS ENTERED INTO PURSUANT TO THE PROVISIONS OF SECTION 2(C)(2) OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, 62 STAT. 21. THE SAID SECTION 2(C)(2) PROVIDES THAT ALL PURCHASES AND CONTRACTS FOR SUPPLIES AND SERVICES MAY BE NEGOTIATED BY THE AGENCY HEADS SPECIFIED IN SECTION 2(A) OF THE ACT, INCLUDING THE SECRETARY OF THE ARMY, WITHOUT ADVERTISING, IF THE PUBLIC EXIGENCY WILL NOT ADMIT OF THE DELAY INCIDENT TO ADVERTISING. WHILE THE ADMINISTRATIVE REPORT SHOWS THAT PROPOSALS WERE RECEIVED FROM FOUR FIRMS, IT IS UNDERSTOOD THAT SUCH PROPOSALS WERE OBTAINED FOR NEGOTIATION PURPOSES RATHER THAN FOR THE PURPOSE OF FORMING THE BASIS FOR AN AWARD. IN FACT, IT HAS BEEN INFORMALLY ASCERTAINED BY THIS OFFICE THAT NO FORMAL ADVERTISING WAS HAD IN THE MATTER DUE TO THE LACK OF FIRM SPECIFICATIONS FOR THE BOATS AND TO THE URGENT NEED FOR THE BOATS IN THE KOREAN SITUATION. IN VIEW OF THE SPECIFIC AUTHORITY CONFERRED BY THE REFERRED-TO PROVISION OF THE ARMED SERVICES PROCUREMENT ACT OF 1947, THIS OFFICE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE AWARD OF THE CONTRACT TO THE WELIN DAVIT AND BOAT COMPANY.

ACCORDINGLY, IT MUST BE HELD THAT YOUR PROTEST AFFORDS NO LEGAL BASIS FOR ANY ACTION IN THE MATTER BY THIS OFFICE.