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it would have tended only to mislead an honest, bona fide bidder, who would have believed that he could meet the time frame requirement of the procurement when in fact by reason of the additional factors shown in the second column, it could not have been done.

Mr. COURTNEY. Well, I guess your answer means that there was not enough available information by deliberate action on the part of the Navy in not completing the drawings so that you were in a position where the time element foreclosed you on the one hand and the incomplete drawings foreclosed you on the other, from having an accurate competitive bid of any kind-is that the fact?

Mr. Pinn. Yes.
Mr. COURTNEY. That is what you mean to say, sir?
Mr. PINN. That is correct, sir.
Major SUDHOFF. I am not sure that I understood
Mr. Pinn. Would you, Mr. Courtney-

Mr. COURTNEY. Well, you always get a chance to answer yes or no, and then you explain.

Mr. Pinn. Mr. Courtney, would you repeat the question?

Mr. HÉBERT. You lawyers get together. You leave me way out in the middle of the stream. Major SUDHOFF. May I make an attempt at it, sir.

Mr. HÉBERT. Yes, I would like you to do it, Major, without all these words.

Mr. COURTNEY. Go ahead.

Major SUDHOFF. We had a situation, as I have indicated before, that began in 1951, when we tried to get a replacement for the obsolescent MAY.

We have tried many times, as I have testified yesterday, to replace this equipment.

We finally, beginning in 1958, had a very, very successful research and development effort in the XN-2-PRC-41.

This situation has been before us not since October 24, 1961, when we received the Marine Corps procurement request, but it has been before us all these years.

It is a very urgent requirement. It is getting more critical every day, as the Commandant of the Marine Corps testified to yesterday.

Now, from the documentary side of it, when we received the procurement request, in October 24, 1961, it transmitted to us the necessary funds and requested that we in effect procure production models of the PRC-41.

We started all of the necessary action to enable us to get into production, starting the specification for the production equipment

Mr. HÉBERT. I want to ask this question. Now, let's see what we are talking about.

Is it envisoned that this is the last order for these items?
Major SUDHOFF. No, sir, it is the first order.
Mr. HÉRBERT. This is the first order?
Major SUDHOFF. Yes, sir.

Mr. HÉBERT. And the whole point revolves around the urgency for this immediate order? Major SUDHOFF. Yes, sir.

Mr. HÉBERT. Now, what is going to allow a legitimate and honest competitor to bid on the next allotment if he does not have the drawings in his possession and all these facts?

In other words, you have built up a Chinese wall now between competition and sole source.

Major SUDHOFF. No, sir. You see the drawings to which we are referring are those drawings that are made to enable the R. & D. contractor, the research and development contractor, to handmake the particular research and development model.

Now, a requirement of the first production procurement is always complete manufacturing drawings of a production type.

On this particular piece of equipment, I think there exists somewhere in the neighborhood of 670 to 680 drawings. This may seem like a lot. It really isn't.

To try and get some feel for the difference between research and development drawings and production drawings

Mr. HÉBERT. Now, we are wondering a little bit, Major.

All I want to know is this: On a future procurement, can a legitimate and honest competitor bid honestly in the absence of a complete set of drawings?

Major SUDHOFF. For the PRC-41 ?

Mr. HÉBERT. Well, we are not talking about the helicopter that just flew out here.

We are talking about this item.
Mr. CRUDEN. Mr. Chairman, may I add a remark-
Mr. HÉBERT. No, let me get the answers now.

What I am saying is: Can a future honest and legitimate competitor come onto the table to bid in the absence of a complete set of drawings?

Now, he can or he can't.
Major SUDHOFF. Yes, sir. In 90 to 95 percent of the cases, he can,

, if he is given enough time to view the model and look over technical manuals.

Mr. HÉBERT. Now, what is the use of having these drawings at all, then, if you don't need them?

Secretary BeLieu. Here is the problem, sir. Yes, he could. Any reputable manufacturer could take the piece of equipment, if it were a production piece, without drawings and tear it apart and reconstitute it. But there you get into the time bind.

Now, if we need something quickly, you don't have time to let him do it. So

you have got to produce production drawings as fast as you can, with your first-normally your first production run, if you want to get competition as quickly as possible.

Mr. HÉBERT. We are not talking about an urgency now. We are talking about a future contract. Of course, it may be declared urgent to get under this exception, I admit that.

And I also make this observation now. The exercise that we are going through in this committee is what under the law the General Accounting Office cannot do.

We understand and we have said before—as I said in my opening statement-you understood the law right now can let this contract on your own determination that this is a sole source procurement and nobody can go behind that determination.

That is what the bill now before the Senate, which was passed unanimously by the House, provides, that somebody else can make a review.

(Secretary BeLieu nods.)


Mr. HÉBERT. Now, we recognize that. And that is the legislative intent of the hearings now.

Secretary BELIEU. That is right, sir.

Mr. HÉBERT. It is to buttress our previous opinion that this is wrong.

Where there is no review, where the determination is made of a sole source without benefit of review in negotiated contracts, which in contrast is allowed in competitive bidding under the law.

That is simply what we are doing now.

Secretary BeLIEU. I understand, and I compliment the committee on its interest in this, sir.

Because I feel equally sensitive. And I think it is desirable that there be review. It is not good necessarily—

Mr. HÉBERT. I understand by that statement the Department will support the amendment offered to the bill which I have? Secretary BELIEU. I didn't

say that, sir. Mr. HÉBERT. Well, now. Well, don't let's blow hot and cold here. Don't let's blow hot and cold.

Secretary BELIEU. If I could attempt to answer your specific question

Mr. HÉBERT. I know. But now you tell us we are right, there ought to be a review. If there ought to be a review, let the Department support it instead of resisting it.

Secretary BELIEU. Well, a review is fine, sir. I think we welcome it.

Mr. HÉBERT. You don't welcome it when you oppose it. It is a very valid point.

If there are no production drawings—if we continue down this road without production drawings—now we haven't had any production yet, so there is a reason for not having production drawings to date.

Secretary BELIEU. But if we don't ever get them, obviously competition is stifled, because it is very difficult to compete, although a reputable manufacturer could take a piece of equipment apart

Mr. HÉBERT. Almost impossible to compete as a matter of fact.
Secretary BELIEU. I think so, yes, sir.
Mr. Gavin. The time element is concerned.

Secretary BELIEU. However, I have issued instructions—and I am sure they are being followed—but there will be production drawings just as quickly as possible on this first production run. This is part of our program, to get to the position of more competition.

Mr. HÉBERT. Anticipating-
Secretary BELIEU. Competition.
Mr. HÉBERT. A new contract and a competitive contract.
Secretary BELIEU. That is right.

And there is a requirement in the contract, whenever it is signed, requiring drawings. Now, I do not know the specific details on this, but this is a hard and fast policy that we hope to make work.

Mr. HÉBERT. Without benefit of legislation.
Secretary BELIEU. Without the benefit of legislation, yes, sir.

Major SUDHOFF. May I add, sir, that I have in my 4 years of experience in the Bureau of Ships I have not known of any production contract for the first time that has not had a requirement for delivery of complete production manufacturing drawings.

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Secretary BELIEU. That is correct. They always haven't been delivered as rapidly as we need them.

Major SUDHOFF. That is correct.

Mr. HÉBERT. Let us see if we can get through. Have you any more questions, Mr. Courtney?

Mr. COURTNEY. I have a few more questions, Mr. Chairman.

Now, in your thinking and in your planning you have excluded any other competitor successfully from bidding for the reasons which you have assigned—time and the absence of the technical information.

Now, on March 22, Commerce Bulletin invited small businessand this is the purpose of the bulletin-to consider a sole source procurement to Collins Radio Corp. of this gadget, advising that there were no drawings.

I am wondering how a small businessman or the manufacturer of any component of this article would be able to satisfy the requirements of this procurement, and in the circumstances in which the information was insufficient for the whole article how could it be sufficient for its parts?

Major SUDHOFF. You mean in relation-

Major SUDHOFF. To some other organization being the prime contractor. Or a subcontractor.

Mr. COURTNEY. Well, I am speaking of the supply parts.
Secretary BELIEU. Subcontractor.
Major SUDHOFF. You are talking about a subcontractor?
Mr. COURTNEY. Yes, sir.

Major SUDHOFF. Well, in that circumstance, sir, the subcontractorwell, in order to get into the position of a subcontractor he would have to have a subcontract with Collins Radio Co., or approach Collins Radio Co. on the possibility.

Mr. COURTNEY. Well, I don't want to be cynical about it, but how could these subcontractors who are potential sources of supply invited to participate by announcement in the Commerce Department Bulletin—how could they have bid on any component of this article in the circumstances and in the state of the development which you have indicated ?

Mr. Jones. Mr. Courtney, if I could reply to that? The purpose of this, where we have a sole source of this nature, is to give small businesses and other potential subcontractors the opportunity to approach the prime contractor.

(Major Sudhoff nods.) Mr. Jones. For the purpose of being considered as a subcontractor. This is the sole purpose of the synopsis in this instance.

Mr. COURTNEY. Well, but I am wondering how, if he were new to the enterprise—if he were new to the development, a good efficient, honest, earnest, and anxious subcontractor could produce anything that Collins could use?

Mr. Jones. I would say that in the subcontract field there are probably many components of a type which Collins could obtain competitively. This is something we are consistently attempting to do, to generate greater competition in the subcontract area.

Mr. COURTNEY. Well, still my question persists, as to how a new individual could get into the business to make the parts when you couldn't make the whole.

Mr. Jones. Because there are certain parts that are not of the same complexity. Therefore, certain of the components could be subjected to competition whereas others could not.

Mr. COURTNEY. So, then, the subcontractor goes out and finds out for himselfis this it?

Mr. JONES. Yes, sir.
Mr. COURTNEY. And takes his chance?
Mr. JONES. Yes, sir.

Mr. COURTNEY. Not knowing whether or not the production parts, or the parts will be acceptable as components.

Mr. Jones. The subcontractor will know his capabilities and he will present his capabilities to the Collins people in this case and the Collins people will make a determination as to his capability,

Mr. COURTNEY. Well, now, in point of time, wouldn't the same time element that you hold here as essential for the performance of this contract and which indicates, as you have said, the reason why Collins was selected as the exclusive producer-wouldn't that same time element apply to the suppliers?

Mr. JONES. Only to the extent of the complexity of the item. If the item

Mr. COURTNEY. Well, would it or wouldn't it? There is either a time element or there isn't.

Mr. Jones. There is a time element and it applies-
Mr. COURTNEY. Wel, doesn't it apply equally— listen to the question.
Mr. Jones. Doesn't it apply equally to the subcontractors?

Secretary BELIEU. I don't believe it does, Mr. Courtney. Although I think this information could best be obtained from Collins, because in their presentation—they obviously have a proposal. They have a time element involved. For example a plat of this nature could be stamped out by probably any man, I don't know. Collins could get it the cheapest way possible.

They must have figured this in their production schedule. Now, they talked with Captain Wells. But we, of course, have not signed the contract. I do not know how deep the negotiations have gone, and perhaps we should not talk too deeply about that openly, for business confidential reasons.

Mr. COURTNEY. Well, I don't want to get into any confidential business, Mr. Secretary.

I am just trying to find out for the information of the committee and this record what the position of a small businessman would be when he read the Commerce Bulletin of March 22.

Secretary BELIEU. He wouldn't know until he went to Collins and got the information from them, I imagine. If you want someone to produce hubcaps for this radio set; you would go to a competent firm and say, “Hubcap producer, what price will you give us?" and that we need them at a certain date; then he would be in business if he won the contract. Major SUDHOFF. May IMr. COURTNEY. You want to add something? Major SUDHOFF. May I quote from my testimony of yesterday, sir? Mr. COURTNEY. That's right.

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