Determination of the Validity of Certain Allegations on Behalf of Bristol Electronics, Inc., of New Bedford, Massachusetts, Against Cincinnati Electronics Corporation, Cincinnati, Ohio, and Sentinel Electronics, Incorporated, Philadelphia, Pennsylvania, Supplying AN/PRC-77 Radio Sets Under Army Contracts

PSAD-76-41: Nov 3, 1975

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Congress' letter of May 15, 1975, on behalf of Bristol Electronics, Inc., of New Bedford, Massachusetts, requested that we determine the validity of certain allegations against two firms supplying AN/PRC-77 radio sets under Army contracts awarded under invitation for bids No. DAABO5-72-B-0012. The firms involved are the Cincinnati Electronics Corporation, Cincinnati, Ohio, and Sentinel Electronics, Incorporated, Philadelphia, Pennsylvania. The allegations are (1) that both Cincinnati and Sentinel are assembling all or part of these radio sets in Mexico and Israel in possible violation of the Buy American Act of 1933; (2) that both Cincinnati and Sentinel are behind schedule on production; and (3) that both Cincinnati and Sentinel have applied for emergency financial aid which, if approved, will mean an increased cost per unit on the original contracts.

We conclude the following: (1) we believe that the infrequency of questions regarding interpretation of the requirement that end products be "manufactured in the United States" provides little assurance that the requirement is being either appropriately questioned or properly interpreted. Accordingly, we recommend that the Secretary of Defense amend ASPR to define and clarify the requirement that items acquired for public use be "manufactured in the United States"; (2) at the completion of our review, Sentinel and the Electronics Command had not agreed on the causes for the 7-month balance of the 10-month slip on the Sentinel contract and both parties had reserved their rights. The modification revising the delivery schedule states the parties are not in agreement that the delay is excusable and that both agree that the contract modification shall in no way waive, prejudice, or alter the rights and remedies of either; and (3) Cincinnati's request, which was submitted in February 1975, sought relief in the amount of $2,256 million for the full term of the contract. This would amount to a unit price increase of approximately $136 (about 32 percent) on the Cincinnati contract. Sentinel's request, which was submitted in April 1975, sought relief in the amount of $1,708 million for radios scheduled for delivery in the first year of production. This would amount to a unit price increase of approximately $258 (about 60 percent) for first year quantities on the Sentinel contract. Sentinel also requested 100 percent progress payments for first year quantities.