B-125934, NOV. 23, 1955
Highlights
FEDERAL MARITIME BOARD: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 27. THE BOARD PROPOSES TO DETERMINE THAT THE FIXED PRICE BID OF NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY AND THE ADJUSTED PRICE BID OF NEW YORK SHIPBUILDING CORPORATION ARE BOTH "FAIR AND REASONABLE. " AND THAT THE FORMER IS THE "LOWEST RESPONSIBLE DOMESTIC BID" UPON WHICH THE CONSTRUCTION-DIFFERENTIAL SUBSIDY AND PAYMENTS FOR NATIONAL DEFENSE FEATURES WILL BE BASED. YOU ARE INFORMED THAT AFTER CONSIDERATION OF THE STAFF MEMORANDUM ENCLOSED WITH YOUR LETTER AND OF THE EFFECT UPON THE PROBABLE ULTIMATE COSTS TO THE GOVERNMENT RESULTING FROM THE DISPARITY BETWEEN THE TWO BIDS OF THE ADDED COSTS FOR NATIONAL DEFENSE FEATURES.
B-125934, NOV. 23, 1955
TO HONORABLE CLARENCE G. MORSE, CHAIRMAN, FEDERAL MARITIME BOARD:
REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 27, 1955, IN CONNECTION WITH THE APPLICATION OF GRADE LINE, INC., FOR CONSTRUCTION-DIFFERENTIAL SUBSIDY AID UNDER THE PROVISIONS OF SECTION 504 AND OTHER APPLICABLE PROVISIONS OF TITLE V OF THE MERCHANT MARINE ACT, 1936, AS AMENDED, IN THE CONSTRUCTION OF TWO NEW PASSENGER-CARGO VESSELS. YOU INFORM ME THAT OF THE BIDS RECEIVED BY GRACE LINE, INC. FOR THE CONSTRUCTION OF THE VESSELS, THE BOARD PROPOSES TO DETERMINE THAT THE FIXED PRICE BID OF NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY AND THE ADJUSTED PRICE BID OF NEW YORK SHIPBUILDING CORPORATION ARE BOTH "FAIR AND REASONABLE," AND THAT THE FORMER IS THE "LOWEST RESPONSIBLE DOMESTIC BID" UPON WHICH THE CONSTRUCTION-DIFFERENTIAL SUBSIDY AND PAYMENTS FOR NATIONAL DEFENSE FEATURES WILL BE BASED.
YOU ARE INFORMED THAT AFTER CONSIDERATION OF THE STAFF MEMORANDUM ENCLOSED WITH YOUR LETTER AND OF THE EFFECT UPON THE PROBABLE ULTIMATE COSTS TO THE GOVERNMENT RESULTING FROM THE DISPARITY BETWEEN THE TWO BIDS OF THE ADDED COSTS FOR NATIONAL DEFENSE FEATURES, WE FIND NO LEGAL OBJECTION TO YOUR PROPOSED DETERMINATIONS. HOWEVER, IT SHOULD BE NOTED THAT IF THE GRACE LINE DECIDES TO ACCEPT THE ADJUSTED PRICE BID, IT IS POSSIBLE, IN THE EVENT OF DECLINING INDICES, THAT THE AMOUNT OF SUBSIDY DETERMINED FROM A COMPARISON OF THE FIXED PRICE BID WITH THE ESTIMATED FOREIGN COST MAY EXCEED 50 PERCENT OF THE FINAL CONSTRUCTION COST TO THE APPLICANT OF THE VESSEL CONTRARY TO THE PROVISIONS OF SECTION 502 OF THE ACT. ACCORDINGLY, SHOULD THE ADJUSTED PRICE BID BE ACCEPTED BY THE GRACE LINE, WE SUGGEST THAT THERE BE A PROVISION IN THE SUBSIDY CONTRACT EXPRESSLY PROVIDING THAT, UNDER THE CIRCUMSTANCES ABOVE INDICATED, THE COMPANY WILL BE REQUIRED TO REPAY ANY EXCESS TO THE GOVERNMENT.