B-175982, OCT 17, 1972

B-175982: Oct 17, 1972

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SINCE ALL APPROPRIATE STEPS HAVE BEEN AND ARE BEING TAKEN TO DETECT AND CORRECT ANY VIOLATIONS OF APPLICABLE LAWS. NO FURTHER ACTION BY GAO IS CONTEMPLATED. INCORPORATED: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 12. YOU STATE THAT THERE ARE A NUMBER OF AWARDS BEING MADE TO MANUFACTURERS IN THE NEW JERSEY AREA WHOSE SUBCONTRACTORS ARE REPORTEDLY UTILIZING UNLICENSED HOME WORKERS IN THE PROCESSING OF SHOULDER SLEEVE INSIGNIA. IS YOUR CONTENTION THAT THIS PRACTICE RESULTS IN VIOLATION OF THE WALSH- HEALEY PUBLIC CONTRACTS ACT AND THE FAIR LABOR STANDARDS ACT. THE MATTER WAS REFERRED TO THE DEPARTMENT OF LABOR FOR INVESTIGATION AS RESPONSIBILITY FOR INVESTIGATION OF ALLEGED VIOLATIONS AND ENFORCEMENT OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT AND THE FAIR LABOR STANDARDS ACT IS THAT OF THE WAGE AND HOUR DIVISION.

B-175982, OCT 17, 1972

PROCUREMENT POLICIES - USE OF HOME WORKERS CONCERNING OBJECTIONS OF EMBLEMS, INC., AGAINST THE POLICIES EMPLOYED IN THE PROCUREMENT OF SHOULDER SLEEVE INSIGNIA BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PA., IN THAT THESE POLICIES PERMIT AWARDS TO MANUFACTURERS WHO USE UNLICENSED HOME WORKERS, WHICH ALLEGEDLY RESULTS IN VIOLATION OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, DECREASES THE QUALITY OF THE PRODUCTS, AND CAUSES LOSS OF GOVERNMENT FURNISHED MATERIAL. SINCE ALL APPROPRIATE STEPS HAVE BEEN AND ARE BEING TAKEN TO DETECT AND CORRECT ANY VIOLATIONS OF APPLICABLE LAWS, REGULATIONS OR CONTRACT PROVISIONS, AND TO ASSURE COMPLIANCE THEREWITH IN THE FUTURE, NO FURTHER ACTION BY GAO IS CONTEMPLATED.

TO EMBLEMS, INCORPORATED:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 12, 1972, WITH ENCLOSURES, AND SUPPLEMENTAL CORRESPONDENCE, CONCERNING THE PROCUREMENT OF SHOULDER SLEEVE INSIGNIA BY THE DEFENSE PERSONNEL SUPPORT CENTER, PHILADELPHIA, PENNSYLVANIA.

YOU STATE THAT THERE ARE A NUMBER OF AWARDS BEING MADE TO MANUFACTURERS IN THE NEW JERSEY AREA WHOSE SUBCONTRACTORS ARE REPORTEDLY UTILIZING UNLICENSED HOME WORKERS IN THE PROCESSING OF SHOULDER SLEEVE INSIGNIA. IS YOUR CONTENTION THAT THIS PRACTICE RESULTS IN VIOLATION OF THE WALSH- HEALEY PUBLIC CONTRACTS ACT AND THE FAIR LABOR STANDARDS ACT, A DECREASE IN THE QUALITY OF PRODUCTS, AND THE LOSS OF GOVERNMENT FURNISHED MATERIAL. THEREFORE, YOU CONTEND THAT THE CONTRACTING AGENCY SHOULD NOT AWARD CONTRACTS TO FIRMS USING SUBCONTRACTORS WHO ILLEGALLY EMPLOY THESE HOME WORKERS.

INITIALLY, YOU BROUGHT THIS MATTER TO THE ATTENTION OF DSA IN MAY OF 1971. ALTHOUGH THE CONTRACTING OFFICER'S INVESTIGATION THROUGH THE COGNIZANT DEFENSE CONTRACT ADMINISTRATIVE SERVICES REGION OFFICE FAILED TO CONFIRM YOUR CHARGES, THE MATTER WAS REFERRED TO THE DEPARTMENT OF LABOR FOR INVESTIGATION AS RESPONSIBILITY FOR INVESTIGATION OF ALLEGED VIOLATIONS AND ENFORCEMENT OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT AND THE FAIR LABOR STANDARDS ACT IS THAT OF THE WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR. WE UNDERSTAND THAT THE DEPARTMENT OF LABOR IS INVESTIGATING THE MATTER.

CONCERNING YOUR CONTENTION THAT THE PRESENT PRACTICES RESULT IN A DIMINUTION OF THE QUALITY OF THE PRODUCT, DSA REPORTS THAT FINAL INSPECTION OF END ITEMS BY DCASR QUALITY ASSURANCE REPRESENTATIVES INDICATES THAT THE QUALITY OF THE PRODUCTS RECEIVED BY THE DPSC FROM THE EMBROIDERED INSIGNIA MANUFACTURERS HAS CONTINUALLY BEEN IN ACCORDANCE WITH THE APPLICABLE SPECIFICATIONS. IN ORDER TO ASSURE CONTINUED RECEIPT OF QUALITY PRODUCTS, DSA ADVISES THAT THE PREAWARD SURVEY PROCEDURES INCLUDE A CHECK OF THE IDENTIFIED SUBCONTRACTORS' FACILITIES TO ASSURE THEIR ADEQUACY FOR THE PROPOSED SUBCONTRACT WORK. SINCE IT IS RECOGNIZED THAT THIS PROCEDURE MAY NOT PRECLUDE A SUBCONTRACTOR FROM PERFORMING AT LEAST A PART OF THE WORK ELSEWHERE, THE DEFENSE CONTRACT ADMINISTRATION SERVICES DISTRICT (DCAS) HAS BEEN REQUESTED TO VERIFY, WHERE PRACTICABLE, THAT DESIGNATED SUBCONTRACT FACILITIES, INCLUDING CUTTING AND FINISHING LOCATIONS ARE ACTUALLY BEING USED IN THE PERFORMANCE OF THE WORK SPECIFIED. FURTHERMORE, DSA REPORTS THAT THEIR INVESTIGATION OF THE USE OF GOVERNMENT FURNISHED MATERIAL HAS FAILED TO SUBSTANTIATE YOUR CHARGES IN THIS CONNECTION.

ON THE BASIS OF THE RECORD BEFORE OUR OFFICE, WE BELIEVE THAT APPROPRIATE STEPS HAVE BEEN AND ARE BEING TAKEN TO DETECT AND CORRECT ANY VIOLATIONS OF APPLICABLE LAWS, REGULATIONS OR CONTRACT PROVISIONS, AND TO ASSURE COMPLIANCE THEREWITH IN THE FUTURE. ACCORDINGLY, NO FURTHER ACTION BY OUR OFFICE IS CONTEMPLATED.

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