B-143239, AUG. 15, 1960

B-143239, AUG. 15, 1960

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION:

BY LETTER OF JUNE 13, 1960, FROM THE ASSISTANT COMMISSIONER FOR PROCUREMENT POLICY, FEDERAL SUPPLY SERVICE, OUR VIEWS HAVE BEEN REQUESTED ON PROPOSED FEDERAL PROCUREMENT REGULATIONS, SUBPART 1-5.9, WHICH WOULD PRESCRIBE POLICY AND PROCEDURE FOR THE GUIDANCE OF FEDERAL AGENCIES IN AUTHORIZING THE USE OF CERTAIN CENTRAL SUPPLY SOURCES BY THEIR PRIME CONTRACTORS IN PERFORMING COST-REIMBURSEMENT TYPE CONTRACTS.

WE BELIEVE THE DETERMINATION THAT ORDERING SUPPLIES FROM GOVERNMENT CENTRAL SUPPLY SOURCES WOULD BE ADVANTAGEOUS IN THE PERFORMANCE OF COST- REIMBURSEMENT TYPE CONTRACTS SHOULD BE THE RESPONSIBILITY OF BOTH THE CONTRACTING AGENCY AND THE CONTRACTOR. WE THEREFORE RECOMMEND THAT SECTION 1-5.901 (A) BE AMENDED TO READ:

"WHEN A FEDERAL AGENCY DEEMS THAT IT IS IN THE BEST INTEREST OF THE GOVERNMENT TO DO SO, THAT AGENCY SHALL AUTHORIZE ITS PRIME CONTRACTORS TO UTILIZE CENTRAL SUPPLY SOURCES IN PERFORMING COST-REIMBURSEMENT TYPE CONTRACTS WHENEVER IT IS DETERMINED THAT ORDERING FROM SUCH SOURCES WOULD BE ADVANTAGEOUS IN THE PERFORMANCE OF THE COST TYPE CONTRACT - PRICE, DELIVERY, ADMINISTRATIVE ADVANTAGES, AND OTHER SIGNIFICANT FACTORS CONSIDERED.'

UNDER SECTION 1-5.900 THE TERM,"CENTRAL SUPPLY SOURCES," INCLUDES THE STORES AND WAREHOUSE STOCK OF AGENCIES OTHER THAN THE GENERAL SERVICES ADMINISTRATION. HOWEVER, SECTION 1-5.902 (C) REQUIRES THAT COPIES OF THE AUTHORIZATION FOR THE CONTRACTOR TO USE CENTRAL SUPPLY SOURCES BE FURNISHED ONLY TO THE NATIONAL BUYING DIVISION AND THE GSA REGIONAL OFFICE SERVING THE PERTINENT GEOGRAPHICAL AREA. IT IS OUR VIEW THAT NON-GSA SOURCES SHOULD BE NOTIFIED DIRECTLY OF THE POSSIBILITY OF THEIR PARTICIPATION. TO ESTABLISH EFFECTIVE OVER-ALL CONTROL OF SUCH SALES, THEREFORE, WE RECOMMEND THAT THE PROPOSED REGULATIONS BE AMENDED TO PROVIDE THAT COPIES OF THE AUTHORIZATION WILL ALSO BE FURNISHED TO NON-GSA SOURCES IN THE FEDERAL GOVERNMENT WHICH ARE EXPECTED TO BE CALLED ON TO FURNISH SUPPLIES FOR THE PARTICULAR CONTRACT.

THE GOVERNMENT, UNDER SECTION 22 OF THE INTERSTATE COMMERCE ACT, HAS NEGOTIATED LOWER FREIGHT RATES WITH COMMON CARRIERS COVERING PROPERTY SHIPPED BY OR FOR THE BENEFIT OF THE GOVERNMENT. WE RECOMMEND THE INCLUSION IN THE PROPOSED REGULATION OF A PROVISION REMINDING GOVERNMENT SUPPLY SOURCES TO TAKE FULL ADVANTAGE OF SUCH RATES WHEREVER POSSIBLE IN THE SHIPMENT OF SUPPLIES AND MATERIAL TO COST-TYPE CONTRACTORS FOR USE ON GOVERNMENT CONTRACTS.

WE NOTE NO PROVISION IN THE PROPOSED REGULATION ESTABLISHING, OR CALLING FOR THE ESTABLISHMENT OF, A PROCEDURE WHEREBY THE GOVERNMENT AND ITS SUPPLY SOURCES CAN BE ASSURED THAT COST-TYPE CONTRACTORS ARE LIMITING THEIR ORDERS TO QUANTITIES OF SUPPLIES FOR USE IN THE CONTRACT OR CONTRACTS FOR WHICH THE AUTHORIZATION IS GRANTED. IN OUR VIEW, SOME EFFECTIVE TYPE OF CONTROL SHOULD BE ESTABLISHED TO PREVENT POSSIBLE ABUSES OF THE AUTHORIZATIONS. COUNTERSIGNATURE OF ORDERS BY A CONTRACTING OFFICER'S REPRESENTATIVE MIGHT BE ONE METHOD OF ACCOMPLISHING THIS RESULT.

THE FOREGOING COMMENTS ARE GENERAL ONLY AND SHOULD NOT BE REGARDED AS CONTROLLING OUR DETERMINATIONS WITH RESPECT TO SPECIFIC ACTIONS TAKEN.