B-159250, JUN. 27, 1966

B-159250, JUN. 27, 1966

TO TALLEY INDUSTRIES, INC.:

BY LETTER DATED MAY 19, 1966, WITH ENCLOSURES, YOU PROTESTED AGAINST THE EXCLUSION OF YOUR COMPANY FROM PARTICIPATION IN THE PROCUREMENT SOLICITED BY BUREAU OF NAVAL WEAPONS, DEPARTMENT OF THE NAVY, UNDER REQUEST FOR PROPOSALS NO. 0092-66, DATED FEBRUARY 24, 1966.

PURSUANT TO 10 U.S.C. 2304 (A) (14) AND ARMED SERVICES PROCUREMENT REGULATION 3-214.3, THE ASSISTANT SECRETARY OF THE NAVY (INSTALLATIONS AND LOGISTICS) ISSUED DETERMINATION AND FINDING NO. 0092-66 JUSTIFYING THE PROPOSED NEGOTIATION OF A CONTRACT FOR TECHNICAL OR SPECIALIZED SUPPLIES REQUIRING AN EXTENDED PERIOD OF PREPARATION FOR MANUFACTURE. IN PERTINENT PART THE ASSISTANT SECRETARY FOUND AND DETERMINED THAT:

"1. THE PROPOSED CONTRACT PROVIDES FOR THE PROCUREMENT OF APPROXIMATELY SEVEN HUNDRED AND FIFTY SIX (756) MK 2 MOD 1 AND MK 3 MOD 1 GAS GENERATOR SETS, EACH INCLUDING TWO (2) MK 247 MOD 0 IGNITERS; APPROXIMATELY ONE HUNDRED (100) ADDITIONAL SPARE IGNITERS MK 247 MOD 0; THIRTY EIGHT (38) COMPLETE GAS GENERATOR SET PRODUCTION SAMPLES AND PREPRODUCTION TESTING QUALIFICATION ROGRAM; AND AN OPTION FOR APPROXIMATELY THREE HUNDRED (300) ADDITIONAL COMPLETE GAS GENERATOR SETS WITH THE OPTION TO BE EXERCISED PRIOR TO 31 AUGUST 1966.

"3. THE NAVY HAS REQUIREMENTS FOR THESE GAS GENERATOR SETS BEGINNING IN JULY 1966 AND CONTINUING THROUGH OCTOBER 1966. A LARGE PERCENTAGE OF THE QUANTITY REQUIRED IS URGENTLY NEEDED FOR A REGRAINING PROGRAM FOR OVERAGED GENERATORS; THE REMAINDER IS NEEDED TO MATE WITH DELIVERY OF NEW TARTAR G C AND A UNITS. THE OPTION QUANTITY IS FOR MAP REQUIREMENTS. DELIVERY OF THIS QUANTITY, IF PROCURED, WILL FOLLOW THE INITIAL QUANTITY. ROCKETDYNE DIVISION OF NORTH AMERICAN AVIATION IS THE ONLY SOURCE THAT HAS PRODUCED GAS GENERATORS TO THE SPECIFICATIONS FOR THE PROPOSED PROCUREMENT. IT CAN BEGIN DELIVERY APPROXIMATELY FOUR (4) MONTHS FROM DATE OF CONTRACT. OTHER SOURCE COULD MEET THE INITIAL OR TERMINAL DELIVERY REQUIREMENTS FOR THE BASIC QUANTITY OR THE OPTION QUANTITY. ACCORDINGLY, AWARD OF A CONTRACT BY FORMAL ADVERTISING OR TO A SOURCE OTHER THAN ROCKETDYNE WOULD BE IMPRACTICABLE, BECAUSE IT WOULD UNDULY DELAY DELIVERY OF GAS GENERATORS NEEDED FOR THE TARTAR MISSILE PROGRAM.'

UNDER 10 U.S.C. 2310, AS AMENDED BY PUBLIC LAW 87-653, SUCH DETERMINATION IS FINAL AND NOT SUBJECT TO LEGAL OBJECTION BY OUR OFFICE. HOWEVER, THERE IS FOR OUR CONSIDERATION WHETHER, AS A MATTER OF LAW, YOUR COMPANY WAS ENTITLED TO COMPETE ON A NEGOTIATION BASIS FOR THIS SOLICITATION. U.S.C. 2304 (G) PROVIDES THAT IN ALL NEGOTIATED PROCUREMENTS IN EXCESS OF $2,500 IN WHICH TIME OF DELIVERY WILL PERMIT, PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES "CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED * * *.' UPON REVIEW OF THE REPORT OF THE NAVAL ORDNANCE SYSTEMS COMMAND ON YOUR PROTEST, WE FEEL THAT THE SOLE SOURCE SOLICITATION OF THE ROCKETDYNE DIVISION OF NORTH AMERICAN AVIATION, INC., WAS AMPLY JUSTIFIED ON THE BASIS OF EXTREME URGENCY AS FOUND BY THE ASSISTANT SECRETARY IN HIS FINDING, SUPRA. RELEVANT TO THE FOREGOING IS OUR HOLDING IN 44 COMP. GEN. 590, 593:

"WHILE THE APPLICABLE STATUTE (10 U.S.C. 2304 (G) ( REQUIRES THAT EVEN WHERE AUTHORITY EXISTS TO NEGOTIATE PROCUREMENTS, PROPOSALS SHALL BE SOLICITED FROM THE MAXIMUM NUMBER OF QUALIFIED SOURCES CONSISTENT WITH THE NATURE AND REQUIREMENTS OF THE SUPPLIES OR SERVICES TO BE PROCURED, THE "PUBLIC EXIGENCY" JUSTIFICATION FOR NEGOTIATION IMBUES THE CONTRACTING OFFICER WITH A CONSIDERABLE RANGE OF DISCRETION IN DETERMINING THE EXTENT OF NEGOTIATION CONSISTENT WITH THE EXIGENCY OF THE SITUATION. IN THE ABSENCE OF EVIDENCE INDICATING AN ARBITRARY OR CAPRICIOUS EXERCISE OF THE DISCRETION PERMITTED, OUR OFFICE IS NOT REQUIRED TO OBJECT THERETO. SINCE THE DECISION TO LIMIT NEGOTIATIONS * * * INDICATES A REASONABLE BASIS THEREFOR, IN THE LIGHT OF THE INFORMATION IN HAND AT THE TIME, WE SEE NO BASIS UPON WHICH WE MAY PROPERLY OBJECT.'

THE GRAVAMEN OF YOUR COMPLAINT IS THAT THE MOD 2 GAS GENERATORS OFFERED BY YOUR COMPANY IN ITS UNSOLICITED QUOTATION OF MARCH 25, 1966, ARE EQUIVALENT TO, OR BETTER THAN, THE MOD 1 VERSION SOLICITED FROM ROCKETDYNE. FOR THAT REASON, YOU CONTEND THAT THE NAVY MAY NOT PROPERLY EXCLUDE YOUR COMPANY FROM COMPETING FOR THIS PROCUREMENT. THE BASES OF THE ADMINISTRATIVE CONCLUSION TO EXCLUDE YOUR COMPANY FROM THE NEGOTIATION FOR THIS PROCUREMENT ARE SET OUT BELOW IN ORDER TO AFFORD YOUR COMPANY A CLEAR UNDERSTANDING OF THIS PARTICULAR SOLICITATION.

"THE MK 2 MOD 1 AND MK 3 MOD 1 GAS GENERATORS AND THE IGNITER MK 247 MOD 0 WERE DESIGNED AND DEVELOPED BY ROCKETDYNE IN 1958 AND 1959 UNDER CONTRACT NORD-18145. DURING DEVELOPMENT AND EARLY PRODUCTION, ROCKETDYNE ENCOUNTERED MANY TECHNICAL PROBLEMS BEFORE ACHIEVING SUCCESSFUL RESULTS. THESE PROBLEMS PARTICULARLY CONCERNED FORMULATING, MIXING, CURING AND OTHERWISE PROCESSING AND SHAPING THE COMBUSTIBLE GRAIN IN SUCH A WAY AS TO PROVIDE AND CONSISTENTLY MAINTAIN GAS PRESSURES WITHIN THE MAXIMUM AND MINIMUM TIME/PRESSURE LIMITS REQUIRED FOR PROPER OPERATION OF THE GUIDANCE AND CONTROL ELEMENTS OF THE MISSILE.

"ROCKETDYNE THEREAFTER FOR SEVERAL YEARS WAS USED AS THE NAVY'S SOURCE FOR FURNISHING AND LOADING GRAIN AND IGNITERS IN ACCORDANCE WITH SPECIFICATIONS DERIVED FROM THE DEVELOPMENT EFFORT AND EARLY PRODUCTION EXPERIENCE, WHICH SPECIFICATIONS COVERED THE FORMULATION OF THE GRAIN AND PROCESSING THEREOF AS SO DEVELOPED, AS WELL AS PERFORMANCE REQUIREMENTS FOR ACCEPTANCE TESTS, REGARDING IGNITION OF AND PRESSURE GENERATED BY THE GRAIN. AS LOADED AS SO SPECIFIED, THE GENERATORS WERE DESIGNATED AS GAS GENERATORS MK 2 MOD 1 AND MK 3 MOD 1.

"FOR THE FISCAL YEAR 1963 PROCUREMENT, HOWEVER, IT WAS DECIDED TO OBTAIN COMPETITION BY FORMAL ADVERTISING. THE PROCUREMENT CALLED FOR FABRICATING AND LOADING GRAIN IN ACCORDANCE WITH THE ABOVE-MENTIONED SPECIFICATIONS FOR SOME 1442 GAS GENERATOR SETS. (A "SET" CONSISTS OF ONE MK 2 AND ONE MK 3 GAS GENERATOR, EACH WITH IGNITOR, NEEDED TO EQUIP ONE MISSILE.) BIDS WERE RECEIVED FROM ROCKETDYNE, BERMITE AND TALLEY, TALLEY WAS AWARDED THE PROCUREMENT (CONTRACT NOW 64-0132-F) IN NOVEMBER 1963.

"SEVERAL WEEKS AFTER AWARD, IT APPEARED THAT TALLEY PROPOSED TO DEVIATE FROM THE CONTRACT SPECIFICATION REGARDING THE GRAIN FORMULATION. THIS EVIDENTLY AROSE FROM THE FACT THAT THE PRODUCER (PHILIPPS PETROLEUM) OF AN INGREDIENT SPECIFIED AS A BINDER FOR THE GRAIN HAD DISCONTINUED MANUFACTURE THEREOF, IN FAVOR OF A PRODUCT WHICH PHILLIPS CONSIDERED SUPERIOR FOR ITS GENERAL CUSTOMERS; AND PHILLIPS WAS NOT WILLING TO UNDERTAKE MANUFACTURE OF THE DISCONTINUED MATERIAL TO PROVIDE THE RELATIVELY SMALL QUANTITY NEEDED BY TALLEY.

"SEVERAL CONFERENCES WERE HELD BETWEEN REPRESENTATIVES OF TALLEY AND OF THE BUREAU OF NAVAL WEAPONS AT WHICH THE MATTER OF THE BINDER WAS DISCUSSED. TALLEY EVIDENTLY HAD AT STAKE NOT ONLY THE AVOIDANCE OF THE HIGHER COST OF OBTAINING THE SPECIFIED BINDER BUT ALSO AVOIDING THE DELAY INCIDENT THERETO, IN THE FACE OF THE TIGHT SCHEDULES SET UP IN ITS CONTRACT. MOREOVER, TALLEY ACTUALLY PROCEEDED WITH WORK ON PRODUCTION UNITS AS WELL AS ON PRE-PRODUCTION UNITS IN THE PRE PRODUCTION PHASE UTILIZING THE NEW BINDER; AND THE GREATER TALLEY'S INVESTMENT OF TIME AND MONEY IN PROCEEDING ON THAT BASIS, THE MORE IMPORTANT IT PRESUMABLY BECAME TO TALLEY IN TERMS OF MONEY AND TO ALL CONCERNED IN TERMS OF MEETING SCHEDULES THAT USE OF THE NEW BINDER NOT BE DISAPPROVED BY THE BUREAU.

"THE BUREAU ALSO HAD A STRONG INTEREST IN AVOIDING DELAY, BECAUSE REQUIREMENTS FOR DELIVERY OF ADDITIONAL GAS GENERATORS WERE CONSIDERED URGENT. ON THE OTHER HAND, THE DIFFICULTIES ENCOUNTERED OVER A LONG PERIOD OF TIME BY ROCKETDYNE IN DEVELOPING AND PRODUCING UNITS WHICH WOULD PERFORM AS DESIRED INDICATED THAT A CHANGE IN THE GRAIN FORMULATION INVOLVED RISK THAT THE TALLEY PRODUCT WOULD NOT MEET REQUIREMENTS.

"THE FAMILY OF PROPELLANTS INVOLVED (UTILIZING AMMONIUM NITRATE AS THE OXIDIZER) IS BY NO MEANS PERFECTLY UNDERSTOOD. SUBSTANTIAL VARIATIONS IN THE PERFORMANCE OF THE FINISHED (LOADED) GRAIN CAN BE PRODUCED BY SEEMINGLY INSIGNIFICANT VARIATIONS IN THE PROPORTIONS OF THE GRAIN INGREDIENTS, IN THE METHOD AND RATE OF ADDITION OF INGREDIENTS TO THE MIXER, IN THE DURATION AND TEMPERATURE OF MIXING, AND IN THE MOISTURE IN THE AIR DURING FABRICATION AND LOADING OF THE GRAIN. FOR EXAMPLE, AFTER ROCKETDYNE HAD LONG BEEN IN PRODUCTION, THAT COMPANY DECIDED TO INTRODUCE A MORE UP-TO-DATE MIXER. ROCKETDYNE FOUND THAT IT COULD NOT MAKE ACCEPTABLE GRAIN WITH THIS MIXER BUT WAS ABLE TO DO SO WHEN IT RESUMED USE OF THE OLD ONE. COMMAND TECHNICAL PERSONNEL HAVE FOUND NO SATISFACTORY EXPLANATION FOR THIS.

"ALTHOUGH ALLOWING TALLEY TO USE THE NEW BINDER WAS THEREFORE ACKNOWLEDGED TO INVOLVE RISK OF FAILURE, NAVY TECHNICIANS WERE UNABLE TO DEMONSTRATE THAT THE CHANGE WOULD RESULT IN UNACCEPTABLE GRAIN; AND THE CHANGE WAS NOT WITHOUT TECHNICAL ATTRACTIVENESS IN THAT THE FORMULATION WOULD THEN BE MORE CLOSELY AKIN THAN THE MOD 1 FORMULATION TO MATERIALS WITH WHICH TALLEY HAD HAD EXPERIENCE IN PRODUCING. GIVEN THESE FACTORS AND THE MOUNTING OF PRESSURE TO AVOID ANY DELAY TO PRODUCTION AS THE TIME WHEN FINISHED GENERATORS WOULD BE NEEDED DREW NEARER, IT WAS DECIDED TO PERMIT TALLEY TO CONTINUE TO PROCEED WITH USE OF THE NEW BINDER. THE DEGREE OF JEOPARDY TO PROGRAM REQUIREMENTS WAS FELT TO BE NOT UNACCEPTABLE IN THAT IT WAS BELIEVED THAT ROCKETDYNE COULD BE CALLED ON TO MAKE UP THE DEFICIENCY IF TALLEY FAILED. THE DECISION TO PERMIT USE OF THE NEW BINDER WAS EVIDENTLY COMMUNICATED TO TALLEY VERBALLY, WITHOUT ANY EXPRESS WRITTEN CONFIRMATION.

"TALLEY DELIVERED PRE-PRODUCTION SAMPLES ON SCHEDULES IN MARCH 1964, FOR TEST PRIOR TO PROCEEDINGS WITH PRODUCTION, WHICH WAS SCHEDULED TO START IN MAY 1964. THE SAMPLES FAILED THE TESTS IN SOME RESPECTS AND THERE FOLLOWED A YEAR OF EFFORT TO QUALIFY THE TALLEY PRODUCT, ENDING AT THE SUCCESSFUL CONCLUSION OF PRE-PRODUCTION QUALIFICATION TESTS IN MARCH 1965. TALLEY PRODUCTION DELIVERIES STARTED IN APRIL 1965 AND WERE COMPLETED IN NOVEMBER 1965. IN THE INTERIM, IT WAS NECESSARY TO MAKE ADDITIONAL PROCUREMENTS FROM ROCKETDYNE TO MEET URGENT FLEET REQUIREMENTS.

"FOR PRESENT PURPOSES IT MAY BE SAID THAT AT THE TIME OF TESTING OF TALLEY'S PRODUCTION LOTS FOR ACCEPTANCE, THE LOTS ACCEPTED PASSED THE SPECIFIED ACCEPTANCE TESTS RELATING TO THE ABILITY OF THE GENERATORS TO GENERATE PRESSURES WITHIN THE RANGE SET OUT IN THE APPLICABLE CONTRACT SPECIFICATION. HOWEVER, TESTS CONDUCTED BY THE NAVY ON TALLEY UNITS FROM TIME TO TIME FROM 4 TO 6 MONTHS AFTER THEIR ACCEPTANCE RAISED DOUBT AS TO THE SUITABILITY OF THE TALLEY UNITS FOR THEIR INTENDED USE.

"PERIODICALLY, AFTER DELIVERY, GAS GENERATORS ARE TESTED ON A SAMPLE BASIS TO KEEP TRACK OF THE CAPABILITIES OF ASSOCIATED LOTS IN SERVICE AS AGING OF THE GRAIN PROCEEDS. IN JUNE 1965, ON TESTING OF THE TYPE LIFE CONTROL SAMPLE OF TWO MK 2 MOD 2 AND TWO MK 3 MOD 2 UNITS, ONE MK 3 UNIT PRODUCED PRESSURE BELOW SPECIFICATION LIMITS.

"FOLLOWING FAILURES ASCRIBED TO FAULTY GENERATORS IN FIRING OF COMPLETE TARTAR MISSILES WHICH CONTAINED TALLEY GENERATORS, THE NAVAL PROPELLANT PLANT IN JUNE 1965 CONDUCTED AN INVESTIGATION IN WHICH FOURTEEN MK 3 MOD 2 UNITS AND FORTY-FIVE MK 2 MOD 2 UNITS WERE FIRED. (BOTH MK 2 AND MK 3 USE THE SAME PROPELLANTS AND IGNITER.) ONE MK 3 UNIT EXCEEDED THE SPECIFIED UPPER PRESSURE LIMIT. TWELVE MK 2 UNITS FAILED TO MEET MINIMUM SPECIFICATION REQUIREMENTS.

"IN OCTOBER 1965, THE NAVAL PROPELLANT PLANT DESIRED TO CHECK OUT A NEWLY INSTALLED DEVICE CALLED A BALLISTIC CENTRIFUGE, DESIGNED TO SUBJECT GENERATORS TO RAPID ACCELERATION AND OTHER CONDITIONS ENCOUNTERED IN MISSILE FLIGHT, AS ENVISIONED IN TESTS CALLED FOR BY THE SPECIFICATIONS. AVAILABLE TALLEY-PRODUCED UNITS WERE EMPLOYED INITIALLY FOR THE CHECK-OUT OF THE CENTRIFUGE. ON THE FIRST TWO UNITS, THE IGNITER FIRED BUT FAILED TO IGNITE THE GRAIN. SEVEN ADDITIONAL MK 3 MOD 2 UNITS WERE THEN PUT ON THE CENTRIFUGE. THESE IGNITED, BUT TWO EXTINGUISHED AFTER BURNING FOR SEVERAL SECONDS AND TWO OTHERS BURNED BELOW MINIMUM SPECIFICATION LIMITS. AS A CHECK ON THE CENTRIFUGE DEVICE, A SIMILAR NUMBER OF ROCKETDYNE UNITS WAS THEN PUT THROUGH THE SAME TESTS ON THE MACHINE. THESE UNITS WITHOUT EXCEPTION BURNED WITHIN SPECIFICATION REQUIREMENTS.

"THE FOREGOING RESULTS SHOWED SO WIDE A VARIANCE FROM SPECIFIED PERFORMANCE BY TALLEY UNITS ONLY A FEW MONTHS AFTER DELIVERY AS TO INDICATE THE POSSIBLE EXISTENCE OF SERIOUS PROBLEMS. ELEVEN ADDITIONAL TALLEY MK 3 MOD 2 UNITS WERE THEN TESTED IN A MODIFIED (REDUCED) ACCELERATION ENVIRONMENT. NONE OF THESE EXTINGUISHED, BUT TWO PRODUCED PRESSURES CONSIDERABLY EXCEEDING SPECIFICATION LIMITS. "THUS, AT THE CONCLUSION OF THE CENTRIFUGE TESTS IN NOVEMBER 1965, A TOTAL OF 83 TALLEY UNITS HAD BEEN SUBJECTED TO CONTROLLED TESTS FROM FOUR TO SIX MONTHS AFTER ACCEPTANCE INTO INVENTORY, AND 22 UNITS (OR OVER 25 PERCENT) FAILED TO BURN IN ACCORDANCE WITH SPECIFICATIONS. ALL OF THE UNITS WERE FROM LOTS THAT WERE JUDGED SATISFACTORY AT THE TIME OF ACCEPTANCE. EXPERIENCE GAINED FROM THE ROCKETDYNE-PRODUCED MOD 1 GENERATORS INDICATES THAT ABOUT FIVE YEARS SHOULD HAVE ELAPSED BEFORE FAILURES OF THE EXTENT AND QUANTITY EXHIBITED BY THE TALLEY UNITS TESTED WOULD BE ENCOUNTERED. MOST OF THE FAILURES REPRESENT INABILITY TO GENERATE MINIMUM REQUIRED PRESSURE, A PHENOMENON ASSOCIATED WITH AGING. THEREFORE, FOR REASONS NOT NOW KNOWN TO THE NAVY, IT APPEARED IN NOVEMBER 1965, AND STILL APPEARS, THAT THE PROPELLANTS USED IN THE TALLEY UNITS ARE GENERALLY AGING AT AN ABNORMAL RATE AND THEIR SUITABILITY FOR SERVICE USE IN MISSILES IS DEFINITELY DOUBTFUL. THE NAVY'S DOUBT IN THIS REGARD IS INCREASED BY THE TALLEY GENERATORS WHICH PRODUCED PRESSURES EXCEEDING THE SPECIFICATION LIMITS; THIS BEHAVIOR IS ATYPICAL, SUGGESTION ERRATIC INSTABILITY OF THE TALLEY MOD 2 GRAIN, FOR REASONS NOT UNDERSTOOD BY THE NAVY.

"THE PROCUREMENT TO WHICH THE INSTANT PROTEST RELATES WAS FORMALLY PLANNED IN 1965 AS A NEGOTIATED PURCHASE IN WHICH ROCKETDYNE AND TALLEY WOULD COMPETE. THIS PLAN WAS REFLECTED IN THE RELATED PROCUREMENT REQUEST, DATED 22 JUNE 1965 (COPY ATTACHED). THE ABOVE-DESCRIBED TESTS OF TALLEY UNITS IN OCTOBER 1965, WHEN ADDED TO THE RESULTS OF THE EARLIER POST-ACCEPTANCE TESTS ALSO DESCRIBED ABOVE, PERSUADED THE NAVY THAT IT SIMPLY COULD NOT JUSTIFY PERMITTING ACQUISITION OF ANY MORE MOD 2 UNITS UNLESS AND UNTIL SUCH TIME AS IT COULD BE RELIABLY DETERMINED, DESPITE THE EVIDENCE TO THE CONTRARY SHOWN BY THE TESTS, THAT THE MOD 2 (TALLEY) VERSION WOULD AFTER DELIVERY CONTINUE TO PERFORM WITHIN ACCEPTABLE PRESSURE LIMITS WHEN FIRED AT ANY TIME OVER A REASONABLY LONG PERIOD OF SERVICE LIFE. A PRIMARY PURPOSE OF THE SURFACE MISSILE SYSTEMS PROJECT, DESIGNATED BY THE SECRETARY OF THE NAVY FOR HIGH PRIORITY ATTENTION AND EFFORT, IS TO IMPROVE THE RELIABILITY IN PERFORMANCE OF THE FAMILY OF SHIP -LAUNCHED ANTIAIRCRAFT GUIDED MISSILES OF WHICH THE TARTAR IS ONE OF THE PRINCIPAL IN-SERVICE MEMBERS. THE EVIDENCE DERIVED FROM THE ABOVE- MENTIONED TESTS IS CONSIDERED, IN THE TECHNICAL JUDGMENT OF THE PROJECT OFFICE AND OF THIS COMMAND, TO PROVIDE REASONABLE BASIS FOR SUBSTANTIAL DOUBT AS TO THE RELIABILITY IN SERVICE PERFORMANCE OF THE TALLEY (MOD 2) PRODUCT; THE BASIC PURPOSE OF IMPROVING RELIABILITY COULD NOT BE SERVED BY PROCURING MORE MOD 2 UNITS WHILE THAT DOUBT PERSISTED.

"ACCORDINGLY, AT THE END OF NOVEMBER 1965, THE PROJECT OFFICE DIRECTED THAT THE PROCUREMENT REQUEST BE AMENDED TO DELETE REFERENCE THEREIN TO MOD 2 UNITS, LEAVING ONLY THE MOD 1 PRODUCT IN THE REQUEST.

"MEANWHILE, HOWEVER, THE BUREAU OF NAVAL WEAPONS UNIT WHICH PREPARED SYNOPSES OF PROCUREMENTS FOR PUBLICATION IN THE COMMERCE DAILY HAD ALREADY PREPARED A SYNOPSIS FOR THE PROCUREMENT IN QUESTION, BASED ON THE ORIGINAL PROCUREMENT PLAN, PURSUANT TO A REQUEST ON 17 SEPTEMBER 1965 FROM THE HEAD OF A DIFFERENT UNIT IN THE BUREAU, WHICH PREPARED REQUESTS FOR PROPOSALS OR QUOTATIONS. THAT UNMODIFIED SYNOPSIS, COVERING INTENDED PROCUREMENT OF GAS GENERATORS MOD 1 AND MOD 2, WAS RELEASED CONCURRENTLY WITH THE MODIFIED RFQ DATED 24 FEBRUARY 1966 FOR MOD 1 UNITS ONLY. THE SYNOPSIS PREPARATION UNIT WAS INADVERTENTLY NOT INFORMED BY THE UNIT WHICH PREPARED RFQS OF THE CHANGE IN THE PROCUREMENT PLAN. IT SEEMS LIKELY THAT THE RETIREMENT AND REPLACEMENT IN LATE DECEMBER 1965 OF THE HEAD OF THE UNIT WHICH PREPARED RFQS HAD A BEARING ON THIS FAILURE OF COMMUNICATIONS.

"ON 4 MARCH 1966, TALLEY REQUESTED A COPY OF THE RFQ AND THE SYNOPSIS PREPARATION UNIT THEN LEARNED THAT THE SYNOPSIS WAS IN ERROR. IMMEDIATE ATTEMPT BY TELEPHONE CALL TO CHICAGO TO PREVENT ITS PUBLICATION FAILED, AS THE COMMERCE DAILY HAD ALREADY BEEN PUBLISHED CONTAINING THE SYNOPSIS AS SHOWN IN ATTACHMENT TO TALLEY'S PROTEST. THEREUPON A SYNOPSIS CONSISTENT WITH THE RFQ WAS PREPARED AND PUBLISHED ON 8 MARCH 1966.

"THE EXCLUSION IN THE 8 MARCH SYNOPSIS OF THE MOD 2 (TALLEY) VERSION, WHICH HAD FOUR DAYS EARLIER BEEN SYNOPSIZED AS COMPETITIVE, MIGHT UNDERSTANDABLY SUGGEST AN ARBITRARY ATTEMPT TO EXCLUDE THE MOD 2 FROM COMPETITION. IN FACT, HOWEVER, THE 4 MARCH SYNOPSIS REFLECTED ADMINISTRATIVE ERROR IN FAILURE TO REFLECT THE DECISION MADE SOME THREE MONTHS EARLIER THAT THE MOD 2 COULD NOT BE CONSIDERED ACCEPTABLE FOR PROCUREMENT.

"THE NAVY DOES NOT CONSIDER IT IMPOSSIBLE, AND HOPES, THAT THROUGH SUBSEQUENT AND FUTURE TESTS AND INVESTIGATION IT MAY BE FOUND THAT THE BURNING CHARACTERISTICS OF MOD 2 UNITS IN INVENTORY DEPART LESS DRAMATICALLY FROM THOSE REQUIRED FOR RELIABLE SERVICE THAN IS INDICATED BY THE ABOVE-MENTIONED TESTS ALREADY CONDUCTED. WHILE STEPS TO PERFORM ADDITIONAL TESTS WERE INITIATED AFTER THE "CENTRIFUGE TESTS" IN NOVEMBER 1965, FURTHER TESTS WERE AND HAVE BEEN HANDICAPPED BY LACK OF IGNITERS. THE NOVEMBER TESTS DISCLOSED DEFICIENCIES IN THE DESIGN OF THE IGNITERS DELIVERED, RELATIVE TO INSERTING THEM IN THE UNITS WITHOUT INADVERTENTLY DAMAGING ELECTRICAL CONTACT PINS, AND IT WAS ARRANGED THAT TALLEY WOULD REPLACE ALL THE IGNITERS. DELIVERIES OF THE NEW IGNITERS COMMENCED ONLY RECENTLY. MOREOVER, A NECESSARY PARTY OF TESTING THE CHARACTERISTICS OF THE MOD 2 CONSISTS OF PERIODIC TESTS OVER A PERIOD REASONABLY SIMULATING THE DESIRED SERVICE LIFE OF ABOUT 5 YEARS. THUS, THE DOUBTS AS TO THE MOD 2'S SUITABILITY AS THEY APPEARED IN NOVEMBER 1965 STILL REMAIN AND CANNOT BE EXPECTED TO BE ADEQUATELY RESOLVED (AT LEAST IN FAVOR OF THE MOD 2) FOR A CONSIDERABLE ADDITIONAL PERIOD OF TIME.

"ON THE OTHER HAND, THE NAVY HAS A HIGH DEGREE OF CONFIDENCE IN THE ABILITY OF THE MOD 1 PRODUCT TO OPERATE SATISFACTORILY IN SERVICE USE. THIS CONFIDENCE DERIVES FROM AT LEAST TWO SOURCES. FIRST, THE RESULTS OF CONTROLLED TESTS OF MOD 1 UNITS WHEREIN BURNING AND PRESSURES ARE CLOSELY MEASURED UNDER CONTROLLED CONDITIONS, AS IN THE ABOVE-MENTIONED TESTS OF MOD 2 UNITS. THESE TESTS INCLUDE SOME INCIDENTAL TESTING (AS FOR CHECK- OUT OF THE CENTRIFUGE EQUIPMENT IN NOVEMBER 1965) AND ALSO A PLANNED SERIES OF TESTS, OF SAMPLES OF DELIVERED LOTS, AT SIX-MONTH INTERVALS AFTER DELIVERY, TO MONITOR THE EFFECT OF AGING ON THE BEHAVIOR OF THE UNITS, PARTICULARLY AS TO BURNING PERFORMANCE. AGING FOR THESE LIFE TESTS IS ACCELERATED BY CONTROLLED DEVICES DESIGNED TO SIMULATE IN 6 MONTHS CONDITIONS WHICH UNITS WOULD EXPERIENCE DURING A YEAR IN SERVICE. QUANTITY OF APPROXIMATELY 140 MOD 1 UNITS HAVE BEEN SO TESTED. THE AVERAGE PERCENTAGE OF FAILURE OF TESTED MOD 1 UNITS TO BURN WITHIN SPECIFICATION LIMITS DURING A SIMULATED LIFE OF FOUR YEARS IS ABOUT 8 PERCENT, REFLECTING AN INCREASE IN THE RATE OF FAILURE AS AGE ADVANCES. THE AVERAGE PERCENTAGE OF FAILURE IN THE PERIODIC TESTS PRECEDING THE FOURTH-YEAR TEST IS LESS THAN 4 PERCENT.

"ANOTHER SOURCE OF CONFIDENCE IS THE PERFORMANCE OF COMPLETE TARTAR MISSILES EQUIPPED WITH MOD 1 UNITS WHEN FIRED. * * * PERFORMANCE ON EACH FIRING IS OBSERVED AND REPORTED IN DETAIL. THE * * * FAILURES WHICH CAN BE ATTRIBUTED WITH CERTAINTY TO GAS GENERATOR FAILURE REPRESENT ABOUT 1 PERCENT OF THE TOTAL FLIGHTS. AN ADDITIONAL * * * FAILURES OCCURRED BECAUSE OF ELECTRICAL PROBLEMS, WHICH CAN INCLUDE FAULTY GAS GENERATOR PERFORMANCE, BUT THE REPORTS INDICATE THAT THE MAJORITY OF THESE FAILURES WERE ATTRIBUTABLE TO SO-CALLED SECONDARY FAILURES, SUCH AS POOR CONTACTS, IN THE EXTENSIVE WIRING AND CIRCUITRY IN THE MISSILE GUIDANCE AND CONTROL UNIT. EVEN WERE ALL SUCH FAILURES ATTRIBUTED TO FAULT ON THE PART OF MOD 1 GENERATORS THE THE TOTAL PERCENTAGE OF FAILURE WOULD BE LESS THAN 5 PERCENT.

"THUS, THE NAVY CANNOT AND DOES NOT AGREE WITH TALLEY'S CLAIM, ON WHICH TALLEY'S PROTEST IS BASICALLY FOUNDED, THAT THE MOD 1 AND MOD 2 ARE, FOR PURPOSES OF THE PROTESTED PROCUREMENT, EQUIVALENT PRODUCTS. UNLESS THE NAVY IS TO ABDICATE ITS RESPONSIBILITY FOR CONDUCT OF THE MISSILE PROGRAM CONCERNED, INCLUDING THE PRIMARY EFFORT TO IMPROVE MISSILE RELIABILITY, THE NAVY, NOT TALLEY, MUST DETERMINE EQUIVALENCY. SUCH DETERMINATION IS A MATTER OF PROFESSIONAL, TECHNICAL JUDGMENT. THE PRECEDING PORTIONS OF THIS REPORT SHOW WHY SUCH JUDGMENT BY THE NAVY THAT THE MOD 2 CAN NOT NOW BE DEEMED EQUIVALENT TO THE MOD 1, NOR AN ACCEPTABLE ALTERNATE THERETO, IS NEITHER ARBITRARY NOR UNREASONABLE.

"IT MUST BE ACKNOWLEDGED THAT MUCH TIME HAS PASSED SINCE RECEIPT OF TALLEY'S 15 MARCH 1966 LETTER TO THE SECRETARY OF THE NAVY VIA THE BUREAU OF NAVAL WEAPONS. EFFORTS SPEND IN THE MECHANICS OF PREPARING AND PROCESSING A REPLY TO THAT LETTER, ALONG THE SAME LINES INDICATED HEREIN, WERE DEEMED OVERTAKEN BY EVENTS AND HAVE BEEN REORIENTED TO EXTENSIVE EFFORT, UNDERLYING THE REPORT MADE BY THIS LETTER, TO ASSURE IDENTIFICATION AND VALIDATION OF DATA AND PREMISES FORMING THE BASIS OF THE NAVY'S EXCLUSION OF MOD 2 UNITS FROM COMPETING IN THE PROCUREMENT IN QUESTION HERE. HOWEVER, NOTWITHSTANDING THE TIME EXPENDED BY THE NAVY IN THESE EFFORTS, THE URGENCY OF THE NEED FOR MORE GAS GENERATORS WHICH WILL OPERATE RELIABLY HAS NOT DIMINISHED IN FACT.

"WHILE THE COMMAND UNDERSTANDS TALLEY'S PROTEST AS BEING FOUNDED ON THE NAVY'S EXCLUSION OF THE MOD 2 PRODUCT FROM COMPETING WITH THE MOD 1 PRODUCT, FOR PURPOSES OF THE PROCUREMENT IN QUESTION, IT SHOULD BE NOTED HERE THAT TALLEY'S UNSOLICITED PROPOSAL ALSO INCLUDED A PROPOSAL TO FURNISH THE MOD 1 PRODUCT. TALLEY HAS NOT BEEN A PRODUCER OF THAT PRODUCT; ROCKETDYNE ALONE HAS BEEN A QUALIFIED PRODUCER THEREOF. BECAUSE OF THE UNPREDICTABLE AND UNEXPLAINABLE VAGARIES OF THE MATERIALS INVOLVED, IT IS THE JUDGMENT OF COGNIZANT NAVY TECHNICAL SPECIALISTS THAT IT WOULD REQUIRE A PERIOD OF SEVERAL MONTHS, AND COULD WELL REQUIRE A YEAR, FOR A NEW SOURCE (EVEN ONE WITH TALLEY'S GENERAL COMPETENCE IN THE FIELD) TO LEARN HOW TO PRODUCE ACCEPTABLE AND RELIABLE MOD 1 GRAINS. THESE TECHNICAL CONSIDERATIONS, COUPLED WITH THE URGENCY FOR REASONS ALREADY STATED OF OBTAINING NEWLY-LOADED GAS GENERATORS, REASONABLY WARRANT THE NAVY IN EXCLUDING TALLEY FROM COMPETING AS A SOURCE FOR MOD 1 GAS GENERATORS. IT MAY ALSO BE NOTED, INCIDENTALLY, THAT EVEN AFTER CONSIDERING APPROPRIATE EVALUATION FACTORS, TALLEY'S QUOTE ON MOD 1 GAS GENERATORS SUBSTANTIALLY EXCEEDS THAT OF ROCKETDYNE.'

CONSIDERING THE FINALITY THAT ATTACHED AS A MATTER OF LAW TO THE ASSISTANT SECRETARY'S FINDING AND DETERMINATION, AND THE FACT THAT TECHNICALLY COGNIZABLE PERSONNEL OF THE NAVAL ORDINANCE COMMAND HAVE CAREFULLY AND THOROUGHLY EVALUATED YOUR MOD 2 GAS GENERATORS ON THE BASIS OF THE NAVY'S URGENT REQUIREMENTS, WE HAVE NO ALTERNATIVE BUT TO DENY YOUR PROTEST.