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UNITED STATES OF AMERIC),

INDEX

Page
Report.

172
Statements presented :
Hébert, Hon. F. Edward, chairman-

1
BeLieu, Kenneth E., Assistant Secretary of Navy--

5, 168
Shoup, Gen. David M., Commandant of the Marine Corps_

10
Sudhoff, Richard, U.S. Marine Corps, Bureau of Ships..

13
Cruden, Joseph C., head of the Contract Clearance Branch, Office
of Naval Material.---

32
Nau, Robert G., vice president-general manager of Electronics Systems
Division, Arvin Industries.--

140
Supplementary statements :
Wilson, Hon. Earl (Indiana)

160
Collins Radio Co----

166
BeLieu, Kenneth E., Assistant Secretary of the Navy---

168
Witnesses :

Beardsley, Vice Adm. George F., U.S. Navy, Chief of Naval Material.- 62
BeLieu, Hon. Kenneth E., Assistant Secretary of the Navy---

5
Cruden, Joseph C., head of Contract Clearance Branch, Office of
Naval Material.-

31
Foster, D. H., counsel, ('ollins Radio Co---

158
Fulton, Adm. R. B., Assistant Chief, Bureau of Ships for Technical
Logistics.

49
Jones, M. E., Assistant Director, Procurement Division of the Office of
Naval Material...

36
Nau, Robert G., vice president-general manager of Electronics Sys-
tems Division, Arvin Industries..

140
Pinn, Samuel, Jr., counsel for Bureau of Ships-

71
Pomerantz, counsel, Arvin Industries, Inc.-

140
Shoup, Gen. David H., Commandant of the Marine Corps-

10
Steger, Meritt H., General Counsel, Navy Department-

12
Sudhoff, Maj. Richard, U.S. Marine Corps, Bureau of Ships_

13
Wells, Capt. G. C., Director of Contracts, Bureau of Ships-

41
Exhibits :
1. Equipment modifications

19, 20
2. Determinations and findings of Kenneth E. BeLieu, Assistant Sec-
retary of the Navy, March 22, 1962.

29
3. Determinations and findings of Kenneth E. BeLieu, Assistant
Secretary of the Navy, June 9, 1962.

30
4. Chief of Bureau of Ships' instruction in respect of the electrical
equipment procurement control board...

64-66
5. Communications concerning Congressman Wilson's findings-- 73-82
6. Collins Radio Co.-Summary of delivery and performance- 102-104
7. U.S. Marine Corps, MIPR, dated October 24, 1961.-

106-109
8. Control steps by the Navy in "sole source designation".

.111-130
9. Retained in subcommittee files (not relevant to testimony).
10. Examples of review actions by Assistant Secretary of the Navy,
Office of Material.-

_137, 138

NAVY DEPARTMENT PROCUREMENT OF AN/PRC-41

RADIO SETS (SOLE SOURCE-COLLINS RADIO CORP.)

THURSDAY, JUNE 28, 1962

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE FOR SPECIAL INVESTIGATIONS,
COMMITTEE ON ARMED SERVICES,

Washington, D.C. The subcommittee met at 10 a.m., Hon. F. Edward Hébert (chairman) presiding.

Mr. HÉBERT. The committee will be in order.

Members of the committee, this morning, as you know, the House goes in session at 11 o'clock, and we will have to suspend at that time.

However, I intend to get permission to sit during the general debate on the trade bill, so we will be back and stay until the first rollcall and then leave and come back this afternoon.

We will continue as late as we can until the general debate finishes.

The Chair wishes to make the usual statement required under our rules of the committee at the opening of any investigation or hearing. This is the Chair's statement on this particular matter.

This hearing has been called to consider a proposed award by the Department of the Navy of an exclusive contract to Collins Radio Corp.

Such an exclusive contract we commonly refer to as a “sole source procurement." This same company has had a research and development contract on the same article over a period of years.

The process by which this proposal originated, was a request from the Marine Corps for the purchase of over 500 units of a military walkie-talkie communication device, which will be described in greater detail in the course of the hearing.

It is for field use; and has certain attachments and advanced technical developments in it.

This purchase is designated as AN/PRC-41.

This purchase is proposed to be made under the authority of section 2304(a) (14) of the Armed Services Procurement Act which, in pertinent part, reads as follows: (a) * *

* the head of an agency may negotiate such a purchase or contract, if

Section (14) is the exception.

(14) the purchase or contract is for technical or special property that he determines to require a substantial initial investment of an extended period of preparation for manufacture, and for which he determines that formal adver

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tising and competitive bidding might require duplication of investment or preparation already made or would unduly delay the procurement of that property;

I should point out, after having quoted that text, that the subcommittee is especially interested in this matter because the House, on June 7, passed II.R. 5532 without a dissenting vote, which changes this same section to read as follows:

(14) the purchase or contract is for technical or special property that he le termines to require a substantial initial investment or an extended period of preparation for manufacture, and for which he determines that formal advertising would be likely to result in additional cost to the Government by reason of duplication of investment or would result in duplication of necessary preparation which would unduly delay the procurement of the property;

I repeat, which the House passed on June the 7th without a dissenting vote on a rollcall vote.

It will be noted that the yardstick which the bill applies when exception 14 is used is “additional cost to the Government.'

I mention that now because I want the provision of the bill to come clearly into focus as the facts in this inquiry are developed.

On June 7, 1962, Representative Earl Wilson, of Indiana, presented to the House, in the course of the debate on H.R. 55:2 some findings and conclusions he had reached on this proposed purchase.

(Again on June 20, 1962, Mr. Wilson amplified his earlier remarks in the Congressional Record.)

Following the date of Thursday, June 7, 1962, and on Tuesday, June 12, 1962, in a conference with Mr. Wilson and Mr. Bray, his colleague from Indiana and a member of the Armed Services Committee, this subcommittee at the direction of the chairman of the full committee, began an examination of the facts.

It has been decided that an open hearing should spread all of the facts and the seemingly conflicting conclusion upon the record.

The Secretary of Navy has suspended any action on the part of the Navy pending this inquiry. The public and the subcommittee may now have the benefit of the facts upon which the Navy relies for

any action it ultimately may take.

Today was selected as the first possible date for all concerned. It is important that the inquiry proceed expeditiously.

Additionally, I want to call attention again to H.R. 5532 and the relevancy of this hearing to the bill. H.R. 5532 provides, if passed, that the determinations of the Secretary will not be final, as in the present law, but may be set aside when "clearly erroneous or not supported by substantial evidence."

This is the heart and guts of the bill—which, incidentally, bears my name:

Under the provisions of section 2310 of the present law, determinations and decisions made under the authority of section 2304(a), subsections 11 through 16, are final and, therefore, not subject to question. Section "i" of H.R. 5532 which has just been passed, amends that provision of the law.

Now, to come to matters in this particular hearing.

The subcommittee will have facts and conclusions from all available sources, including the Navy Department, and the contractors most intimately concerned with the decision which will ultimately be made.

It will in a sense be a clinical study" of a pending procurement by the subcommitt

ng and procedures by which deci

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sions to negotiate exclusive contracts are arrived at, and determinations and decisions made under existing law.

The decision which the Secretary will make, will not be subject to challenge. It will be final.

Now, to keep things in focus, this morning's inquiry will disclose the origin, historically, of the article being purchased through its development, at least so far as its contractual arrangements are concerned, up to the point when the Marine Corps initiated the pending requirement. Thereafter, we will consider the necessity or urgency for the purchase in the manner proposed.

Collaterally, we will inquire from the Navy Department, as the purchasing agent for the Marine Corps, the contractual arrangements made for development and the results of those contractual arrangements in preparation for procurement in quantity.

We will consider the nature of the article which is being purchased. We will consider the materials employed; whether they are stock items patented or peculiar and exclusive to this article.

We will consider the state of the art as to whether or not any proprietary rights or information is involved. We will consider as it is reflected from these facts, the competence required to fill the purchase requirements. That includes technical competency, capacity, experience, and the potential ability to deliver on time.

As a first consideration, we want to know why this purchase could not have been made by advertised competitive bidding. After that evidence has been supplied, we shall want to consider the price provisions and this includes price analyses.

By no means do I exclude any other questions which may suggest themselves, but these broadly outline the interest of the subcommittee.

For this purpose, we will have original documents and the persons who initiated or authored the documents. There will be among others (but not exclusively) the requisitions, the determinations and findings, with supporting documents, the specifications, and the model.

The final judgment, as I have said, must be made by the Secretary of the Navy. The Secretary of the Navy is represented here in the person of the Assistant Secretary of the Navy for Materiel.

So, we will first hear from the Honorable Kenneth BeLien, the Assistant Secretary of the Navy.

I want to break in at this point to express the subcommittee's concern for the personal anxieties which Mr. BeLieu has experienced because of family illness during the last few weeks; and to hope for him that the future will be more hopeful.

Secretary BELIEU. Thank you, sir.

Mr. HÉRERT. While the insistent demands of public office do not relax, I should like him to know we do have a genuine concern and sympathy for him in the added tensions of family illness.

The order of witnesses, therefore, will be the Assistant Secretary who will state the official position of the Navy Department, and add to it from documents and their authors and other responsible officials of the Department, the facts and representations that have been made to him and upon which he relies.

Sitting at the table with the Secretary will be the Commandant of the Marine Corps and the General Counsel for the Navy, and cthers who have supplied information to the Secretary.

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