B-128336, I-19416, NOV. 9, 1956

B-128336, I-19416, NOV. 9, 1956

TO THE SECRETARY OF THE NAVY:

ENCLOSED IS A COPY OF OUR LETTER TO MR. HAROLD J. EFFRON, PRESIDENT, THE EFFRON CORPORATION, CINCINNATI, OHIO, WHICH CONTAINS OUR REPLY TO HIS PROTEST OF THE AWARD OF CONTRACT NO. N151S-3168A EXECUTED APRIL 1, 1956 WITH ROSS AND ROSS AUCTIONEERS, MINNEAPOLIS, MINNESOTA, FOR AUCTIONEERING SERVICES AT THE PHILADELPHIA NAVAL SHIPYARD.

IN THE COURSE OF OUR INQUIRY INTO THE PROTEST OF THE AWARD OF THE CONTRACT, ALLEGATIONS WERE RECEIVED WHICH CHARGED THAT ROSS AND ROSS AUCTIONEERS DERIVED FINANCIAL BENEFITS BY THE PERFORMANCE OF THE CONTRACT OTHER THAN FROM THE COMMISSIONS OR FEES PAID BY THE NAVY IN VIOLATION CLAUSES 1 (D) AND 5 (A) OF THE CONTRACT.

IN SUBSTANCE THE INFORMATION WAS THAT THE FIRM OF ROSS AND ROSS AUCTIONEERS, MINNEAPOLIS, MINNESOTA, IS THE EXCLUSIVE OWNER AND OPERATOR OF A PUBLICATION CALLED THE EQUIPMENT ADVERTISER, WITH THE DIRECTORS AND OFFICERS OF ROSS AND ROSS AUCTIONEERS BEING DIRECTORS AND OFFICERS OF THE PUBLICATION. THE JUNE 7, 1956, ISSUE OF THE EQUIPMENT ADVERTISER CONTAINED AN ADVERTISEMENT OF THE PUBLIC AUCTION SALE WHICH WAS TO BE HELD AT THE PHILADELPHIA NAVAL SHIPYARD ON JUNE 27-28, 1956. IT WAS ESTIMATED THAT THE ADVERTISEMENT COST APPROXIMATELY $750. CLAUSE 1 (D) OF THE CONTRACT REQUIRED THAT ROSS AND ROSS AUCTIONEERS WERE TO:

"* * * PREPARE AND PLACE ALL ADVERTISING IT CONSIDERS NECESSARY IN REGULAR AUCTION TRADE PUBLICATIONS AND OTHER MEDIA, AND TO PREPARE, PRINT AND PUBLISH A SALES BROCHURE. THE CONTRACTOR AGREES TO SPEND NOT LESS THAN $9,000.00 FOR SUCH ADVERTISING AND THE PREPARATION AND HANDLING OF THE SALES BROCHURE. CATALOGS AND SALES BROCHURES SHALL BE FURNISHED IN SUFFICIENT QUANTITY (APPROX. 8000) TO COVER BIDDERS LISTS AND SHALL BE SIMILAR AND EQUAL TO GOVERNMENT SAMPLE REVIEWED PRIOR TO BIDDING. ALL COPY TO BE USED IN SUCH BROCHURE AND ADVERTISING AND THE PROPOSED DISTRIBUTION THEREOF SHALL HAVE THE ADVANCE APPROVAL IN WRITING OF THE DISPOSAL SUPT. THE GOVERNMENT SHALL BEAR THE COSTS OF PREPARATION AND DISTRIBUTION OF SUCH SALES CATALOGS UP TO THE SUM OF $3,500.00. ALL OTHER COSTS FOR THE ABOVE ADVERTISING SHALL BE BORNE BY THE CONTRACTOR. THE CONTRACTOR SHALL SUBMIT PROPERLY CERTIFIED INVOICES EVIDENCING THE AMOUNT OF ALL BROCHURE EXPENSES AND SHALL CERTIFY THAT SUCH EXPENSES DO NOT EXCEED THE APPLICABLE COMMERCIAL RATES. IN ADDITION, THE CONTRACTOR SHALL PRODUCE RECEIPTS INDICATING THAT $5,500.00 WAS EFFICIENTLY SPENT FOR ADVERTISING THE SALE. THE CONTRACTOR SHALL PROVIDE ALL PARAPHERNALIA AND FORMS NECESSARY TO CONDUCT THIS AUCTION, I.E., PADDLES, INVOICES, DEPOSIT SLIPS, ETC.'

CLAUSE 5 (A) PROVIDES THAT:

"THE CONTRACTOR, AT THE TIME OF EXECUTION OF THIS CONTRACT, WILL FURNISH A BOND, IN THE SUM OF TWENTY-FIVE THOUSAND DOLLARS ($25,000) ON A GOVERNMENT FURNISHED STANDARD FORM. NO. 25, AND WITH A COMPANY SATISFACTORY TO THE CONTRACTING OFFICER, GUARANTEEING THE FAITHFUL PERFORMANCE OF THIS CONTRACT. THE CONTRACTOR WARRANTS THAT IT WILL NOT PURCHASE ANY MATERIAL WHATSOEVER AT THE SALE EITHER FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANY AFFILIATE THEREOF, NOR FOR THE ACCOUNT OF ANY OTHER PERSON OR PERSONS. THE CONTRACTOR WARRANTS AND AGREES THAT IT WILL NOT SOLICIT OR RECEIVE ANY COMMISSION, PROFIT, GAIN OR ADVANTAGE,DIRECT OR INDIRECT, IN MONEY OR FAVOR FROM THE SALE AND THAT ITS SOLE COMPENSATION WILL BE THE PERCENTAGE FEE PAID TO IT BY THE GOVERNMENT UNDER THE CONTRACT. BREACH OF THESE WARRANTIES BY THE CONTRACTOR, ITS EMPLOYEES OR AGENTS SHALL ENTITLE THE GOVERNMENT TO COLLECT THE AMOUNT OF $25,000 IN LIQUIDATED DAMAGES, THE PARTIES HERETO AGREEING THAT IT IS IMPOSSIBLE IN ADVANCE TO ESTIMATE THE ACTUAL DAMAGES SUFFERED BY THE GOVERNMENT IN THE EVENT OF SUCH BREACH.'

INASMUCH AS THE TERMS OF THE CONTRACT PROVIDE THAT THE ADVERTISING RECEIPTS WERE TO BE SUBMITTED BY THE CONTRACTORS INDICATING HOW THE GOVERNMENT'S $3,500 AND THE CONTRACTOR'S $5,500 WERE SPENT, AS WELL AS PROVIDING FOR THE MAINTAINING OF ADMINISTRATIVE RECORDS AS TO WHERE AND HOW THE ADVERTISING WAS TO BE PLACED, IT IS REQUESTED THAT YOU FURNISH US A REPORT ON THE PERFORMANCE OF CLAUSES 1 (D) OF CONTRACT N151S 3168A. ALSO WE REQUEST ANY INFORMATION YOU MAY HAVE REGARDING A BREACH OF CLAUSE 5 (A) OF THE CONTRACT.