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a more level employment rate in our radio division. As a result, we can visualize a possible lowering of our prices on our commercial line and thereby making us more competitive with foreign manufacturers.

5. If awarded a contract, as a result of the proposal enclosed, our capability in the UHF field would be immeasurably increased. This would have the effect of making available to the Department of Defense an additional source for UHF research and development as well as production. Since Arvin Industries operates within corporateowned facilities only, and since Arvin Industries does not propose to request any Government-owned facilities other than those listed in PR 627D-26112(S), this additional facility becomes available to the Department of Defense without a single dollar expenditure for capi

a tal, plant, or equipment.

We cannot stress too strongly our desire not to become embroiled in any form of politics. As explained to us by Congressman Wilson in his letter requesting this proposal, we are submitting this presentation for the purpose of aiding him in the studies which he is making.

Mr. HÉBERT. Now, let me ask you this one question-Mr. Courtney, before you start.

When you prepared that document and that bid at the request of Mr. Wilson, you believed you had a chance to get this contract ?

Mr. Nau. Yes, sir.

Mr. HÉBERT. If you had known you were only going to be given a courtesy call attention, would you have prepared that?

Mr. Nau. I doubt it.
Mr. GAVIN. Not when it cost $250,000, you wouldn't have.
Mr. Nau. Well, that is the model.
Mr. Gavin. You thought you would-
Mr. Nau. A model would cost that much.
Mr. Gavin. Yes—say-
Mr. NAU. It would cost that much.

Mr. Gavin. There wouldn't be any use of your going ahead with a model that was costing you a quarter of a million dollars when you didn't think you had a chance for the job.

Mr. Nau. That is right.
Mr. Gavin. That's what I am trying to point out.

Mr. HÉBERT. Now, as I understand it, the specification given to you by Mr. Wilson lacked 19 items which would be very important in the final figure.

Mr. Nau. This is what we were told, yes, sir.

Mr. HÉBERT. And you say in your statement that you would revise your figures as to time and cost?

Mr. Nau. That is right.

Mr. HÉBERT. Are you prepared—and if you are not, say you are not. Are you prepared to indicate what the cost raise would be, now that you have knowledge of these 19 missing items?

Mr. Nau. I am not prepared to.
Mr. HÉBERT. Would it be a substantial raise in time and money?

Mr. Nau. The first inkling that we had of these changes was in the meeting I believe in Admiral James' office, which at that time were not detailed.

They were broadly stated.

I believe that the testimony we saw yesterday brought more in detail the specific points that needed work.

a

Mr. HÉBERT. Do you feel that if you had been in possession of these comments which were presented in this extensive hearing before the board lasting some 20 minutes, that you would have been able to knock down the argument for a sole source,

if you

had been given the opportunity for rebuttal?

Mr. Nau. I would think it would have been helpful.

Mr. HÉBERT. Maybe you would have needed more than 20 minutes to be more persuasive.

Mr. NAU. Oh.

Mr. HÉBERT. But do you think you could have overcome this XYZ Co. presentation !

Which was a hypothetical company, they referred to as XYZ.
It wasn't your company. This was the hypothetical company.
Mr. POMERANTZ (aside to Mr. Nau.)
Mr. HÉRBERT. You read the testimony of yesterday, I presume.
Mr. NAU. Yes.

Mr. HÉBERT. Well, they referred-the major referred to the XYZ Co. And then set forth why the Collins Co. had to be given this contract as a sole source.

There is no adversary at these proceedings at all. It is all pro. This is one side of the story, and nobody to refute it.

If you had been given an opportunity to sit in on that meeting, do you think that you could have been successful in convincing these people in 20 minutes' time, or a little more time if they had given it to you, that you could perform according to time?

Mr. NAU. If we had had sufficient time to review what these modifications were, I think, and to review the drawings and specifications,

Mr. Gavin. Did you get a chance, when they were producing the first model, to have an opportunity to bid on the first model that was produced ?

Mr. NAU. No.

Mr. Gavin. Or was that under contract, or was that just—the Navy gave it to Collins to produce certain plans and specifications for a certain type of radio.

Mr. Nau. That was done—that contract was let in 1958, and at that time my company had no aggressive plans for entry into this particular field.

Mr. GAVIN. You didn't enter into it then at that time at all. Mr. Nau. No, sir. Mr. Gavin. You just come into the picture later on, after this whole thing has been developed.

Mr. NAU. That is right.

Mr. Gavin. And the Government paid several hundred thousand dollars, I presume, to the Collins Co. to develop this particular model.

And then is when you should have been given an opportunity to bid.

And if you wanted to bid and the plans and specifications and all details given to you

(Mr. Nau nods.)

Mr. Gavin. So you could bid on the job. But you weren't given those.

Mr. Nau. That is correct.

yes, sir.

Mr. COURTNEY. May I ask, Mr. Nau, how it was or how it occurred that you solicited an opportunity to bid upon this article, as you say in the statement of May 21, 1962, from which you have just readyou state at one time:

We did at one time request an opportunity from the Navy to bid on this requirement.

(Mr. Nau nods.)

Mr. COURTNEY. Now, can you tell us the circumstances and approximately when you made the request to bid?

Mr. Nau. Well, I think that is covered—it was in the latter part of March, on the basis of information we read in the Department of Commerce Daily, yes.

Mr. COURTNEY. March 1962?
Mr. NAU. Yes.

Mr. COURTNEY. In other words, you saw the Commerce Department data?

(Mr. Nau nods.)
Mr. COURTNEY. You noticed that the bid was a sole source
Mr. Nau. That's right.
Mr. COURTNEY (continuing). Bid?
(Mr. Nau nods.)

Mr. COURTNEY. But you proceeded from there, with request for an opportunity to bid? Mr. Nau. Yes.

Mr. COURTNEY. And at that time, did you visit the Navy Department?

Mr. NAU. No, sir.
Mr. COURTNEY. Did you write the Navy Department?
Mr. Nau. Wrote the Navy Department.
Mr. COURTNEY. And what followed ?

Mr. Nau. On April 5 we received a mimeographed letter from the Navy Department, stating that drawings—that production drawings and models were not available, and that the award was going to Collins, and that if we cared to discuss subcontracts, that we should do that.

Mr. COURTNEY. Discuss subcontracts with Collins; is that right?
Mr. NAU. That is right.
Mr. COURTNEY. Did you do so?
Mr. Nau. No, we did not.
Mr. COURTNEY. You were interested in the whole operation?
Mr. Nav. Yes, that is right.

Mr. COURTNEY. Had you known at any time that there was a Navy Department policy directive, or rule or whatever you want to call it, for rejecting any opportunity for unsolicited bids in these circumstances ?

Did anyone tell you that!

Mr. NAU. Not until—we were told this by Congressman Wilson at the time when we came to Washington to look at the information which he had.

Mr. COURTNEY. Did the form letter which you received in March make reference to any policy which would forbid the Navy Depart. ment from giving you any proposal, papers, documents or other things upon which to bid?

Mr. NAU. No.

Mr. COURTNEY. The first information, then, is what you got from Mr. Wilson, as you have indicated ?

Mr. Nau. Yes, sir.
Mr. COURTNEY. On that subject.
(Mr. Nau nods.)
Mr. COURTNEY. Now, another question.
Did you examine the production model, which is here in this room?
Mr. NAU. Yes, sir.
Mr. COURTNEY. And did you examine the 51 ?

Mr. Nau. The ARC-51, no. We did not examine the model, of the ARC-51, no, sir.

Mr. COURTNEY. Now, where did you see it and under what circumstances—the 41 ?

Mr. Nau. Our representative went to Quantico and examined the equipment at Quantico. Mr. COURTNEY. At Quantico? Mr. Nay. Yes. Mr. COURTNEY. And I think you said it took him some 3 or 4 days? Mr. NAU. Oh, he was at Quantico 1 day. Mr. COURTNEY. One day.

Now, you did not see any drawings, any preproduction drawings, did you?

Mr. Nau. No, sir.
Mr. COURTNEY. Or did your representative!
Mr. Nau. No, sir.
Mr. COURTNEY. You never had them at any time
Mr. Nau. No.
Mr. COURTNEY (continuing). In the preparation of this proposal ?
Mr. NAU. No.

Mr. COURTNEY. Would these drawings have been of any use to you or any bidder in like circumstances in your field, in preparing a bid? Mr Nau. Yes, sir.

Mr. COURTNEY. Would the fact that they were incomplete be any handicap

Mr. Nau. It would have been very helpful.

Mr. COURTNEY. Would they have assisted any bidder—and I am speaking now in a technical way, of people in your profession-and I assume you must be acquainted with them.

(Mr. Nau nods.)

Mr. COURTNEY. It would have assisted in your opinion any other bidder to compete on an article of this sort?

Mr. NAU. Yes, sir.
Mr. COURTNEY. Is that right?
Mr. Nau. That is right.
Mr. COURTNEY. But there were none such made available to you?
Mr. Nau. That is correct.

Mr. COURTNEY. Now, in the absence of these drawings and having made the examination which you did of the model, as a technical man, as a professional man, are you able to state whether or not you could form an opinion and present a bid which would represent technical competence and sound business from the examination of the model itself?

Mr. Nau. An examination of the model itself, in order to be real precise, would take longer than a day's time.

In this respect, experience certainly has to be a basis of judgment in analyzing the modules and the unit itself, to be able to come up with some opinions as to labor costs that would be involved, based on experience factors.

Mr. COURTNEY. Well, now, this is a handmade model, I think it has been described.

(Mr. Nau nods.)

Mr. COURTNEY. As a handmade or a benchmade model, exclusive for this purpose, as distinguished from a production model.

But from an examination, were you willing to stake your company's—as apparently you did-reputation and its dollars in the production of the proposal to produce from this model?

Mr. Nau. Yes, sir.

Mr. COURTNEY. And you feel that you had adequate information upon which to do it, on the schedule sugested to you?

Mr. Nau. I felt that we had—we felt that we had adequate information, based on what we had seen and heard, and knowing of the competence of Collins Radio Co. and the statements in the request for proposal, that these drawings and the results of the R. & D. effort and the service test model would be made available for assistance.

Mr. COURTNEY. To a manufacturer.

Mr. Nau. That is right. We also felt that an important part of this would certainly have to be the comparative and willing efforts on the part of the customer

Mr. Gavin. Mr. Counsel, at that point.

When the Navy gave you this opportunity to make this courtesy call, as you call it-you were called to come in-did you request from them at that time why you were not being given an opportunity to bid on this job or did you request the plans and specifications and all the details in connection with an opportunity to bid, or did you—what did you do when you went up there, on this courtesy call that you made, that you talked about? ?

Mr. Nau. Well, we listened to about the same presentation that you folks heard yesterday.

Mr. GAVIN. Yes.

Well, did you say "Well now, wait a minute, here, you can't cut us out of this entirely, we want to bid on this job”? Did you tell them that?

Mr. Nau. Not in those words, sir. No, sir.
Mr. Gavin. Well, why not?
Mr. HÉBERT. They are not the Congressman from Pennsylvania.

Mr. Gavin. It doesn't make any difference if they are the Congressman from Pennsylvania or the Congressman from Louisiana.

They have a right to ask for plans and specifications if a job is being let.

And if you were there and they called you in, I can't see or understand why you didn't say “We want to bid on this job and we want all the plans and specifications and details in connection so we can submit our bid.”

But you evidently went up there and had a nice visit and left, and that was the end of that.

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