B-157217, MAY 19, 1966

B-157217, MAY 19, 1966

TO INSTRUMENT SYSTEMS CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 12, 1966, WHEREIN YOU MAKE A CERTAIN ALLEGATION WITH RESPECT TO THE PERFORMANCE OF THE ASTRONAUTICS CORPORATION OF AMERICA UNDER CONTRACT NO. N600/19/64199AWARDED TO THE CORPORATION PURSUANT TO NAVY INVITATION FOR BIDS NO. 600-246-65, ISSUED BY THE NAVY PURCHASING OFFICE, WASHINGTON, D.C.

BY DECISION OF AUGUST 26, 1965, B-157217, WE RESPONDED TO YOUR PROTEST IN CONNECTION WITH THE ABOVE INVITATION FOR BIDS AND ADVISED YOU THEREIN THAT THE AWARD OF THE SET-ASIDE PORTION OF THE PROCUREMENT TO THE ASTRONAUTICS CORPORATION OF AMERICA WAS MADE IN CONFORMITY WITH THE INVITATION FOR BIDS AND THE APPLICABLE REGULATIONS. IN THE DECISION WE STATED THAT THE DETERMINATION TO AWARD THE SET-ASIDE QUANTITIES TO ASTRONAUTICS CORPORATION WAS BASED UPON THE FACT THAT IT WAS A SMALL BUSINESS FIRM REPRESENTING THAT OVER 50 PERCENT OF THE CONTRACTUAL COSTS INVOLVED WOULD BE INCURRED IN LABOR SURPLUS AREAS.

YOU STATE THAT YOU NOW HAVE BEEN INFORMED BY HIGHLY RELIABLE SOURCES THAT ASTRONAUTICS CORPORATION IS NOT PERFORMING MORE THAN 50 PERCENT OF THE CONTRACTUAL COSTS IN LABOR SURPLUS AREAS.

IN RESPONSE TO OUR REQUEST FOR A REPORT CONCERNING THE PERFORMANCE OF ASTRONAUTICS CORPORATION UNDER THE CITED CONTRACT, THE DEPARTMENT OF THE NAVY HAS ADVISED US BY LETTER DATED MAY 9, 1966, AS FOLLOWS:

"A. THE CONTRACT AS AWARDED WAS IN THE TOTAL AMOUNT OF $173,264. THERE HAVE BEEN TWO MODIFICATIONS AFFECTING PRICE, I.E., THE EXERCISE OF THE OPTION RESULTING IN AN INCREASE OF $35,479, AND THE ADDITION OF TESTING IN THE AMOUNT OF $9,895, RESULTING IN A REVISED TOTAL PRICE OF $218,638.

"B. DELIVERIES UNDER THE CONTRACT WERE TO COMMENCE IN MAY 1966 WITH COMPLETION IN APRIL OF 1967. THE CONTRACTOR IS IN PROCESS OF PLACING ITS PURCHASE ORDERS, AND HAS RECENTLY PLACED AN ORDER IN THE AMOUNT OF $93,457 WITH ELECTRONIC INSTRUMENTS CORP., HURLEY, WISCONSIN. HURLEY IS A PERSISTENT LABOR SURPLUS AREA. ANOTHER ORDER IN THE APPROXIMATE AMOUNT OF $7,000 IS BEING PLACED WITH U. S. RADIUM CORP., BLOOMSBURG, PA. BLOOMSBURG IS ALSO A PERSISTENT LABOR SURPLUS AREA.

"ALL ORDERS HAVE NOT AS YET BEEN PLACED. HOWEVER, THE CONTRACT IS BEING CLOSELY MONITORED TO INSURE THAT THE REQUIRED PERCENTAGE OF COSTS IS INCURRED IN A LABOR SURPLUS AREA.'

IT APPEARS FROM THE FOREGOING REPORT THAT AS OF THE DATE THEREOF ASTRONAUTICS CORPORATION HAD ISSUED PURCHASE ORDERS IN THE TOTAL AMOUNT OF $100,457 TO SUBCONTRACTORS WHO ARE LOCATED IN PERSISTENT LABOR SURPLUS AREAS AND THAT SUCH AMOUNT REPRESENTS ABOUT 46 PERCENT OF THE CONTRACT PRICE OF $218,638. SINCE THE DEPARTMENT OF THE NAVY REPORTS THAT ALL ORDERS HAVE NOT AS YET BEEN PLACED BY ASTRONAUTICS CORPORATION WITH ITS SUBCONTRACTORS AND THAT THE CONTRACT IS BEING CLOSELY MONITORED BY THE DEPARTMENT TO INSURE THAT THE REQUIRED PERCENTAGE OF COSTS IS INCURRED BY THE CORPORATION IN LABOR SURPLUS AREAS, WE SEE NO LEGAL BASIS AT THIS TIME FOR QUESTIONING THE PERFORMANCE OF ASTRONAUTICS CORPORATION UNDER THE SUBJECT CONTRACT.