B-150142, JUN. 12, 1963

B-150142, JUN. 12, 1963

TO THE SECRETARY OF DEFENSE:

REFERENCE IS MADE TO A LETTER DATED MAY 21, 1963, FROM THE DEPUTY ASSISTANT SECRETARY (PROCUREMENT) FORWARDING A DRAFT OF A PROPOSED REVISION TO THE LABOR SURPLUS AREA SET-ASIDE PROVISIONS OF ASPR 1-804.1 (A) (2).

THE FACTORS SET OUT IN SUBPARAGRAPHS (I) THROUGH (V) OF THE DRAFT APPEAR TO BE PROPER FOR CONSIDERATION IN DETERMINING WHETHER A PORTION OF A PROCUREMENT SHOULD BE SET ASIDE, AND WE HAVE NO FURTHER RECOMMENDATION IN THIS AREA.

HOWEVER, WITH RESPECT TO THE PENULTIMATE PARAGRAPH OF THE DRAFT, WE BELIEVE A DETERMINATION THAT A SET-ASIDE OF MORE THAN 50 PERCENT SHOULD NOT RESULT IN PAYMENT OF A PRICE DIFFERENTIAL IS A NECESSARY AND PROPER PREREQUISITE TO SUCH SET-ASIDE ACTION. WE QUESTION WHETHER THE LANGUAGE OF THE DRAFT SETS OUT SUCH A PREREQUISITE WITH SUFFICIENT CLARITY TO PRECLUDE THE POSSIBILITY OF MISINTERPRETATION. WE THEREFORE RECOMMEND THAT THE PENULTIMATE PARAGRAPH BE AMENDED TO READ SUBSTANTIALLY AS FOLLOWS:

"BEFORE A PORTION OR PORTIONS CONSTITUTING MORE THAN 50 PERCENT OF THE TOTAL REQUIREMENT MAY BE SET ASIDE, A DETERMINATION MUST BE MADE THAT THERE IS A REASONABLE EXPECTATION THE ACTION PROPOSED WILL NOT RESULT IN THE PAYMENT OF A PRICE DIFFERENTIAL. THE DETERMINATION AND SUPPORTING INFORMATION WILL BE MADE PART OF THE CONTRACT FILE.'

WE APPRECIATE THE PROMPT CONSIDERATION YOUR DEPARTMENT HAS GIVEN TO OUR RECOMMENDATION FOR A REVIEW OF THE REGULATION IN THIS AREA, AND THE OPPORTUNITY TO COMMENT UPON THE PROPOSED REVISIONS TO THE REGULATIONS.