B-155891, MAR. 22, 1965

B-155891: Mar 22, 1965

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WHICH MATTER IS THE SUBJECT OF LETTERS DATED JANUARY 19 AND FEBRUARY 25. THE M-109 AND XM-551 VEHICLES ARE BEING PROCURED UNDER TWO-STEP. STEP I OF WHICH WAS ISSUED ON OCTOBER 9. STEP II WAS ISSUED ON MARCH 1. (OCCUPANCY OF THE FACILITY BY MORE THAN ONE PRODUCER AT THE SAME TIME IS NOT CONSIDERED FEASIBLE.). IT IS REPORTED THAT THE M-109 WAS FIRST PRODUCED BY CADILLAC AT THE GOVERNMENT-OWNED CATAP FACILITY AND THAT THE VEHICLE IS PRESENTLY UNDER CONTRACT WITH CHRYSLER CORPORATION AT THE FACILITY FOR PRODUCTION THROUGH NOVEMBER 1965. WHICH IS SIMILAR TO THE M 109 ONLY IN THAT BOTH UTILIZE AN ALUMINUM CHASSIS. IS CURRENTLY UNDER CONTRACT WITH THE CADILLAC MOTOR CAR DIVISION. IS LOCATED AT CATAP.

B-155891, MAR. 22, 1965

TO THE HONORABLE SECRETARY OF THE ARMY:

WE REFER TO THE CONTEMPLATED PROCUREMENT OF M-109, XM-551 AND M-113 EQUIPMENT BY THE DEPARTMENT OF THE ARMY AS IT RELATES TO THE CLEVELANDARMY TANK AUTOMOTIVE PLANT (CATAP), WHICH MATTER IS THE SUBJECT OF LETTERS DATED JANUARY 19 AND FEBRUARY 25, 1965, FROM YOUR DIRECTOR OF PROCUREMENT.

THE M-109 AND XM-551 VEHICLES ARE BEING PROCURED UNDER TWO-STEP, MULTI- YEAR, IFB NO. AMC (W/-11-199-65-7, STEP I OF WHICH WAS ISSUED ON OCTOBER 9, 1964, AND OPENED ON JANUARY 29, 1965. STEP II WAS ISSUED ON MARCH 1, 1965, WITH OPENING NOW SCHEDULED FOR MARCH 31, 1965. BIDS MAY BE SUBMITTED FOR THE M-109 AND XM-551 VEHICLES SEPARATELY OR COMBINED. THE INVITATION OFFERS RENT-FREE USE OF THE CATAP FACILITY TO ALL BIDDERS. BIDS MAY ALSO BE SUBMITTED FOR EITHER ONE OR BOTH VEHICLES IN PRIVATELY- OWNED PLANTS, WITH THE RIGHT TO USE, FREE OF CHARGE, GOVERNMENT-OWNED PRODUCTION EQUIPMENT IN CATAP OR ELSEWHERE, TO BE MOVED AND INSTALLED AT BIDDERS' EXPENSE. THE INVITATION PRECLUDES MAKING AWARDS WHICH WOULD RESULT IN OCCUPANCY OF CATAP BY TWO FIRMS. (OCCUPANCY OF THE FACILITY BY MORE THAN ONE PRODUCER AT THE SAME TIME IS NOT CONSIDERED FEASIBLE.)

IT IS REPORTED THAT THE M-109 WAS FIRST PRODUCED BY CADILLAC AT THE GOVERNMENT-OWNED CATAP FACILITY AND THAT THE VEHICLE IS PRESENTLY UNDER CONTRACT WITH CHRYSLER CORPORATION AT THE FACILITY FOR PRODUCTION THROUGH NOVEMBER 1965. THE XM-551 VEHICLE, WHICH IS SIMILAR TO THE M 109 ONLY IN THAT BOTH UTILIZE AN ALUMINUM CHASSIS, IS CURRENTLY UNDER CONTRACT WITH THE CADILLAC MOTOR CAR DIVISION, GMC, FOR PRODUCTION OF PILOT MODELS AND THE TECHNICAL DATA PACKAGE. MOST OF THE M-109 PRODUCTION EQUIPMENT, INCLUDING SPECIAL TOOLING, IS LOCATED AT CATAP, SOME OF WHICH MIGHT POSSIBLY BE USED IN CONNECTION WITH PRODUCTION OF THE XM-551.

THE M-113 SERIES OF VEHICLES IS BEING PROCURED UNDER TWO-STEP, MULTI- YEAR, IFB NO. AMC-20-113-1460 (T), STEP I OF WHICH WAS ISSUED ON DECEMBER 14, 1964, AND OPENED ON FEBRUARY 12, 1965. STEP II WAS ISSUED ON MARCH 8, 1964, WITH OPENING NOW SCHEDULED FOR APRIL 8, 1965. THE INVITATION SPECIFIES THAT THE USE OF GOVERNMENT-OWNED PLANTS FOR PERFORMANCE WILL NOT BE AUTHORIZED. ALL OF THE RELATED TOOLING, HOWEVER, WHICH IS LOCATED IN THE PLANTS OF THE CURRENT PRODUCER OF THIS EQUIPMENT, FMC CORPORATION, HAVE BEEN OFFERED FOR USE BY ANY INTERESTED BIDDER ON AN EVALUATED BASIS.

IT IS REPORTED THAT THE BASIC M-113 FAMILY OF VEHICLES WAS DEVELOPED AND ENGINEERED FOR PRODUCTION BY FMC CORPORATION; THAT THE INITIAL PRODUCTION CONTRACT WAS AWARDED TO FMC IN FISCAL YEAR 1959 ON A SOLE SOURCE BASIS, AND THAT SINCE THAT TIME, FMC HAS BEEN IN CONTINUOUS PRODUCTION OF THE M- 113 AND OTHER VEHICLES OF THIS FAMILY. IT APPEARS THAT FROM FISCAL YEAR 1960 THROUGH FISCAL YEAR 1963, FMC RECEIVED THE AWARDS PRINCIPALLY ON A COMPETITIVE BASIS, BUT THAT IN FISCAL YEAR 1964, DESPITE NATIONAL SOLICITATION ON A TWO-STEP INVITATION FOR BIDS INVOLVING ALMOST 4,000 VEHICLES, ONLY FMC BID AND THE PROCUREMENT WAS EVENTUALLY MADE FROM FMC BY SINGLE SOURCE NEGOTIATION. THE CURRENT PROCUREMENT INVOLVES 6,327 VEHICLES FOR THE MULTI-YEAR PROCUREMENT.

AN INTERESTED BIDDER UNDER BOTH PRESENT PROCUREMENTS (CHRYSLER CORPORATION) OBSERVES THAT THE CATAP FACILITY COULD BE MADE AVAILABLE ON THE M-113 PROCUREMENT TO ALL BIDDERS IF THE FACILITY IS NOT TO BE USED AS A RESULT OF THE AWARDS ON THE M-109/XM/551 PROCUREMENT, OR TO THE SUCCESSFUL BIDDER IF AN AWARD IS MADE ON THE BASIS OF USE OF THE FACILITY, WITHOUT VIOLATING THE RESTRICTION AGAINST HAVING TWO CONTRACTORS PERFORMING IN CATAP AT THE SAME TIME. THE BIDDER CONTENDS THAT THE PRESENT RESTRICTION AGAINST USING A GOVERNMENT-OWNED PLANT, AS A PRACTICAL MATTER, SERVES TO PRECLUDE ANY EFFECTIVE COMPETITION AGAINST THE CURRENT PRODUCER OF THE M-113 VEHICLES. IT REQUESTS THE OPPORTUNITY TO BID CATAP ON THE M-113, IF THE FACILITY BECOMES AVAILABLE TO IT AS A RESULT OF THE M -109/XM-551 PROCUREMENT. IN THIS CONNECTION, THE RECORD INDICATES THAT IT IS FEASIBLE FOR A PRODUCER TO MAKE ALL THREE VEHICLES AT THE CATAP FACILITY.

THE PROVISIONS OF 10 U.S.C. 4532 (A) REQUIRE THE SECRETARY OF THE ARMY TO HAVE SUPPLIES NEEDED BY THE DEPARTMENT OF THE ARMY MADE IN FACTORIES OR ARSENALS OWNED BY THE UNITED STATES, SO FAR AS THOSE FACTORIES OR ARSENALS CAN MAKE THOSE SUPPLIES ON AN ECONOMICAL BASIS. IN B-143232, DECEMBER 15, 1960, WE CONCLUDED THAT "AN ECONOMICAL BASIS" AS USED IN THE STATUTE MEANS THAT THE SUPPLIES CAN BE MADE AT A COST TO THE GOVERNMENT WHICH DOES NOT EXCEED THE COST OF SUCH SUPPLIES TO THE GOVERNMENT IF PRODUCED IN PRIVATELY-OWNED FACILITIES.

YOUR DEPARTMENT REPORTS THAT WHEN STEP I PROPOSALS WERE SOLICITED FOR THE M-109/XM-551 PROCUREMENT ON OCTOBER 9, 1964, THE ARMY DID NOT HAVE ADEQUATE SPECIFICATIONS TO PERMIT COMPETITIVE BIDDING FOR ONE OF THE FAMILY OF M-113 VEHICLES NEEDED (THE XM548E1); FURTHER, THAT SUBSTANTIAL FOREIGN ORDERS UNDER THE MILITARY ASSISTANCE PROGRAM FOR VEHICLES IN THE M -113 FAMILY COULD NOT PROPERLY BE INCORPORATED IN PROCUREMENT PLANS BEFORE NOVEMBER 20, 1964; AND THAT SUITABLE SPECIFICATIONS FOR THE XM548E1 BECAME AVAILABLE IN EARLY DECEMBER OF 1964, JUST PRIOR TO DECEMBER 14, 1964, WHEN STEP I ON THE M-113 WAS ISSUED. STEP I OF THE M-109/XM-551 PROCUREMENT WAS SCHEDULED TO OPEN (AND WAS OPENED) ON JANUARY 29, 1965. OBVIOUSLY, THE CATAP FACILITY COULD NOT HAVE BEEN OFFERED TO ALL BIDDERS ON THE M-113 PROCUREMENT WITHOUT STARTING OVER AGAIN ON THE M-109/XM-551 PROCUREMENT AND CONSOLIDATING THE REQUIREMENTS FOR ALL THREE VEHICLES INTO A SINGLE PROCUREMENT. THIS, REPORTEDLY, WOULD HAVE CAUSED AN UNACCEPTABLE DELAY IN THE AWARD SCHEDULE ON THE M-109/XM-551 PROCUREMENT.

WE DO NOT INTERPRET THE PROVISIONS OF THE SO-CALLED "ARSENAL" STATUTE, 10 U.S.C. 4532, AS REQUIRING THE SECRETARY OF THE ARMY TO ACCUMULATE PROCUREMENTS WHICH ARE POSSIBLE OF PRODUCTION IN A GOVERNMENT FACILITY OR ARSENAL BY DELAYING EXISTING PROCUREMENT NEEDS UNTIL THERE IS A SUFFICIENT VOLUME TO FILL SUCH FACILITIES OR ARSENALS.

IT IS SUGGESTED THAT THE CATAP FACILITY COULD HAVE BEEN OFFERED FOR THE M -113 PROCUREMENT SUBJECT TO THE CONTINGENCY OF ITS AVAILABILITY AS A RESULT OF THE M-109/XM-551 AWARDS. IT IS APPARENT, HOWEVER, THAT OFFERING THE CATAP FACILITY ON THE M-113 PROCUREMENT EVEN ON A CONTINGENT BASIS COULD HAVE A DISRUPTIVE INFLUENCE ON THE M-109/XM-551 BIDDING COMPETITION. BIDDERS ON THAT PROCUREMENT WOULD HAVE REASON TO DEMAND THAT THEY BE PERMITTED TO RECONSIDER THEIR STEP I PROPOSALS IN THE LIGHT OF THIS NEW COMPETITIVE FACTOR. THE RESULT COULD BE THAT BOTH SOLICITATIONS WOULD HAVE TO BE CANCELLED AND READVERTISED. FURTHERMORE, THE SUGGESTED PROCEDURE WOULD REQUIRE THAT THE M-113 SOLICITATION SET FORTH THE EVALUATION TO BE PLACED ON THE CATAP FACILITY. THIS CANNOT BE DETERMINED UNTIL THE RESULTS OF THE M-109/XM 551 BIDDING ARE KNOWN.

UNDER THE CIRCUMSTANCES, WE BELIEVE THAT THE MOST PRACTICAL PROCEDURE IS TO PROCEED WITH THE M-109/XM-551 PROCUREMENT AS SCHEDULED. THE RESULTS OF THE BIDS ON THE M-109/XM-551 PROCUREMENT WILL DETERMINE THE AVAILABILITY OF THE CATAP FACILITY FOR THE M-113 PROCUREMENT, AND WE HAVE BEEN ADVISED DECISION WILL BE MADE AT THAT TIME BY THE ARMY AS TO THE AVAILABILITY OF CATAP FOR THE M-113 PROCUREMENT AND THE EVALUATION FACTORS TO BE USED IN THE EVENT IT IS DETERMINED TO BE AVAILABLE.

CONCERNING THE EVALUATION OF LAYAWAY AND MAINTENANCE OF THE CATAP FACILITY UNDER THE M-109/XM-551 PROCUREMENT, IT IS OUR OPINION THAT THE PRESENT EXCLUSION OF SUCH FACTORS FROM THE BID EVALUATION IS PROPER.

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