B-174521, MAR 24, 1972

B-174521, MAR 24, 1972

CONTRACTS - IMPROPER PROCUREMENT PROCEDURES CONCERNING ALLEGATIONS MADE BY SUPERIOR CONTINENTAL CORPORATION (SCC) THAT IT WAS BEING DENIED AN OPPORTUNITY TO COMPETE FOR SUPPLYING COAXIAL CABLE FOR THE SAFEGUARD COMMUNICATIONS SYSTEM. ON MAY 4, 1971, SCC LEARNED THAT THE CABLE WHICH IT HAD SUBMITTED SOME SIX MONTHS EARLIER HAD NOT YET BEEN TESTED. ON MAY 19, 1971, IN SPITE OF PREVIOUS ASSURANCES TO THE CONTRARY, IT WAS INFORMED THAT NO SPECIFICATION CHANGES COULD BE ISSUED SINCE SCC HAD FAILED TO UPDATE ITS 1969 BIDDER'S MAILING LIST APPLICATION AND HAD NO SECURITY CLEARANCE. THE COMPANY PROMPTLY SUBMITTED THE REQUIRED APPLICATION AND REQUESTED AN INTERIM FACILITY CLEARANCE. ON AUGUST 10, THE GOVERNMENT PROPOSED A "NO COST" AGREEMENT FOR CABLE TESTING, BUT FAILED TO STATE THAT SUCH AGREEMENT WOULD BE A MATTER OF FORM, SOLELY INTENDED TO PROVIDE A BASIS FOR OBTAINING THE REQUESTED CLEARANCE. SINCE THE SCC CABLE HAD ALREADY FAILED TO MEET THE GOVERNMENT'S REQUIREMENTS, THE COMPANY OFFERED TO SUBMIT FOUR OTHER CABLE SAMPLES UNDER THE "NO COST" CONDITIONS, BUT THE GOVERNMENT REFUSED THIS ALTERNATE PROPOSAL AND, AS A RESULT, THE SECURITY CLEARANCE WAS NOT ISSUED UNTIL OCTOBER 25. IN VIEW OF THE FOREGOING, THE COMP. GEN. RECOMMENDS THAT STEPS BE TAKEN TO ASSURE THAT MANUFACTURERS ARE PROVIDED A BETTER OPPORTUNITY TO QUALIFY THEIR CABLE FOR THE SAFEGUARD PROGRAM IN FUTURE PROCUREMENTS.

TO MR. SECRETARY:

REFERENCE IS MADE TO LETTER SAOASI&L)-MO OF DECEMBER 16, 1971, FROM THE ASSISTANT DEPUTY FOR MATERIEL ACQUISITION, OFFICE OF THE ASSISTANT SECRETARY, REGARDING THE ALLEGATIONS MADE BY THE SUPERIOR CONTINENTAL CORPORATION (SCC) THAT IT WAS BEING DENIED AN OPPORTUNITY TO COMPETE FOR SUPPLYING COAXIAL CABLE FOR THE SAFEGUARD COMMUNICATIONS SYSTEM.

THE COMMUNICATIONS FOR SAFEGUARD ARE LEASED BY THE GOVERNMENT FROM FRANCHISED COMMON CARRIERS. THE CABLE USED IN THE SAFEGUARD SYSTEM IS PROCURED BY THE COMMON CARRIERS WHO OWN, INSTALL AND OPERATE THE SYSTEM. HOWEVER, THE GOVERNMENT RESERVES THE RIGHT TO APPROVE THE CABLE TO BE USED IN THE SYSTEM. ON NOVEMBER 27, 1971, ON THE BASIS OF URGENT NEED, THE GOVERNMENT ISSUED A COMMUNICATION SERVICE AUTHORIZATION APPROVING ANACONDA CABLE FOR AN AUTHORIZED 83 3/4 MILES TO BE PROCURED BY THE FRANCHISED COMMON CARRIERS.

IN THE LETTER OF DECEMBER 16, 1971, IT WAS STATED THAT THE SCC CABLE WAS NOT CONSIDERED FOR THE INITIAL INSTALLATION OF THE SAFEGUARD SYSTEM BECAUSE THE SELECTION WAS MADE FROM CABLE THAT HAD PREVIOUSLY BEEN TESTED FOR NUCLEAR SUSCEPTIBILITY, AND THAT SCC HAD NEVER SUBMITTED A POTENTIALLY ACCEPTABLE CABLE FOR TEST PURPOSES. IT WAS STATED FURTHER THAT THIS DID NOT PRECLUDE SCC FROM HAVING ITS CABLE PRESENTED FOR TESTING FOR CONSIDERATION FOR USE IN FUTURE INSTALLATIONS. IT WAS STATED ALSO THAT THE SAFEGUARD COMMUNICATIONS AGENCY (SAFCA) WAS REVIEWING ITS PROCEDURES TO ASSURE THAT THERE WOULD BE MAXIMUM PRACTICABLE COMPETITIVE OPPORTUNITIES IN THE EXECUTION OF THE COMMUNICATIONS SYSTEM PLAN.

ALTHOUGH WE APPRECIATE ANY STEPS THAT MAY HAVE BEEN TAKEN NOW TO ASSURE THAT CABLE MANUFACTURERS ARE PROVIDED THE MAXIMUM PRACTICABLE OPPORTUNITY TO COMPETE FOR SUPPLYING CABLE FOR THE SAFEGUARD PROGRAM, FROM OUR ANALYSIS OF THE SITUATION, IT DOES NOT APPEAR THAT THE BEST EFFORT WAS MADE TO ASSIST SCC IN THAT REGARD WHEN IT WAS ATTEMPTING TO QUALIFY ITS CABLE FOR THE INITIAL SAFEGUARD INSTALLATION. IN THAT REGARD, WE OBSERVE THAT ALTHOUGH ON OCTOBER 19, 1970, THE COMMUNICATIONS SCOPE CORPORATION, A WHOLLY OWNED SUBSIDIARY OF SCC, SUBMITTED 300 FEET OF SPECIALLY CONSTRUCTED COAXIAL CABLE TO SAFCA FOR TESTING IN ORDER TO QUALIFY FOR THE ABM SAFEGUARD PROGRAM IN FARGO, NORTH DAKOTA, SAFCA DID NOT FURNISH ANY EXPLANATION TO SCC AS TO WHY THE CABLE WAS NOT BEING CONSIDERED UNTIL SCC INITIATED A MEETING SOME 6 MONTHS LATER. AT A MEETING BETWEEN SAFCA AND SCC OFFICIALS ON MAY 4, 1971, SCC LEARNED FOR THE FIRST TIME THAT THE CABLE HAD NOT BEEN TESTED AND THAT IT HAD NOT BEEN ADVISED OF SUBSEQUENT CHANGES IN THE GENERAL SPECIFICATIONS FOR CABLE FOR THE SAFEGUARD SYSTEM. AT THE SAME TIME, SCC OFFICIALS WERE ASSURED THAT SCC WOULD BE GIVEN AN OPPORTUNITY TO HAVE CABLE TESTED FOR THE INITIAL SITE AND WOULD BE PROVIDED WITH THE LATEST SPECIFICATIONS. HOWEVER, SCC WAS LATER ADVISED BY LETTER OF MAY 19, 1971, THAT THE SPECIFICATIONS COULD NOT BE ISSUED TO IT BECAUSE THE COMPANY HAD NOT UPDATED ITS 1969 BIDDER'S MAILING LIST APPLICATION AND IT DID NOT HAVE APPROPRIATE SECURITY CLEARANCE. THE NECESSITY FOR AN APPLICATION BY SCC THAT IT BE INCLUDED ON THE GOVERNMENT BID MAILING LIST IS NOT APPARENT SINCE THE PROCUREMENT FOR CABLE WAS TO BE EFFECTED BY THE COMMON CARRIERS AND NOT THE GOVERNMENT AND THE GOVERNMENT MERELY WAS TO TEST THE CABLE TO SEE THAT IT MET CERTAIN REQUIREMENTS.

IN ANY EVENT, SCC PROMPTLY FURNISHED THE REQUESTED APPLICATION DATED MAY 25, 1971. IN AN EFFORT TO OVERCOME THE HANDICAP OF NOT HAVING A SECURITY CLEARANCE AND THE TIME IT WOULD TAKE TO OBTAIN ONE, SCC REQUESTED AN INTERIM FACILITY CLEARANCE IN ORDER THAT IT MIGHT BE GRANTED ACCESS TO CLASSIFIED CABLE SPECIFICATIONS. ACCORDING TO THE RECORD, BEFORE AN INTERIM SECURITY CLEARANCE COULD BE INITIATED IT WAS NECESSARY THAT THERE BE A CONTRACT WITH SCC WHICH REQUIRED DISCUSSION OF CLASSIFIED MATTERS AND IT WAS DECIDED THAT A "NO COST" AGREEMENT FOR TESTING THE SCC CABLE SAMPLE WOULD SATISFY THE REQUIREMENT. BY LETTER OF AUGUST 10, 1971, SCC WAS REQUESTED TO ENTER INTO THE "NO COST" AGREEMENT. HOWEVER, SCC WAS NOT ADVISED THAT THIS WAS STRICTLY INTENDED TO BE A MATTER OF FORM THAT WOULD PROVIDE A BASIS FOR OBTAINING AN INTERIM SECURITY CLEARANCE.

THUS, SINCE AT THE MAY 4, 1971, MEETING IT WAS AGREED THAT THE CABLE SCC SUBMITTED IN OCTOBER 1970 DID NOT MEET THE GOVERNMENT'S REQUIREMENTS, SCC REFUSED TO ENTER INTO A "NO COST" AGREEMENT TO TEST THAT CABLE AND OFFERED TO SUBMIT FOUR OTHER CABLE SAMPLES UNDER THE "NO COST" AGREEMENT CONDITIONS. INSTEAD OF INFORMING SCC THE PURPOSE OF THE AGREEMENT, ITS ALTERNATE PROPOSAL WAS REFUSED. WHEN SCC COMPLAINED OF THE REFUSAL, IT WAS INFORMED THAT IT SHOULD SUBMIT SPECIFICATIONS ON THE ALTERNATE CABLE AND THAT IF SAFCA DESIRED SAMPLES IT WOULD PURCHASE THEM. SINCE THE "NO COST" AGREEMENT WAS NOT ENTERED INTO, AN INTERIM CLEARANCE WAS NOT INITIATED AND THE SECURITY CLEARANCE FOR SCC WAS NOT ISSUED UNTIL OCTOBER 25, 1971. FROM THE FOREGOING, IT IS EVIDENT THAT THE FAILURE OF SCC TO OBTAIN AN INTERIM SECURITY CLEARANCE IS ATTRIBUTABLE TO THE GOVERNMENT. FURTHER, IF THE "NO COST" AGREEMENT WAS INTENDED ONLY AS A MATTER OF FORM AS A BASIS FOR REQUESTING AN INTERIM SECURITY CLEARANCE, IT IS NOT APPARENT WHY THIS COULD NOT HAVE BEEN EXPLAINED TO SCC. MOREOVER, WE DO NOT UNDERSTAND THE LOGIC OF ADVISING SCC THAT IF THE GOVERNMENT WISHED SAMPLES OF SCC CABLE IT WOULD PURCHASE THEM WHEN SCC HAD INDICATED THAT IT WAS PREPARED TO FURNISH SAMPLES AT NO COST TO THE GOVERNMENT.

FURTHER, THE REPRESENTATION THAT IT WOULD TAKE A MINIMUM OF 7 MONTHS TO QUALIFY THE NUCLEAR HARDNESS OF ANY NEW CABLE APPEARS INCONSISTENT WITH SAFCA CORRESPONDENCE IN MAY AND AUGUST 1971 ASSURING SCC THAT THERE WAS ADEQUATE TIME FOR TESTING THE CABLE.

WE TRUST THAT APPROPRIATE STEPS WILL BE TAKEN TO PRECLUDE A REPETITION OF THE SITUATION NOTED HEREIN.