Mr. HÉBERT. The frank admission you are just down there as a courtesy, and the door was already closed and the Chinese wall was being built and you weren't even being allowed a chance to climb over. That is the position in which you found yourself. Now, you submitted these bids or this proposal. Who gave you the specification and the documents? Mr. NAU. Congressman Wilson. Mr. HÉBERT. The Navy gave you nothing. Mr. NAU. That is right. Mr. HÉBERT. Congressman Wilson gave you all the specifications, including the microfilm? Mr. NAU. Right. (Mr. Pomerantz nods.) Mr. GAVIN. Did you require anything from the Navy-ask them for any? Mr. NAU. No, sir. Mr. HÉBERT. You asked them previously and they told you- Mr. HÉBERT. Asked previously, and they said no. Congressman Wilson obtained the information and gave it to them. Mr. NAU. I might add, sir, that we did not-after we received the refusal from the Navy, that we made no further attempts from anyone to proceed with this, because we had been refused on other occasions. Mr. HÉBERT. I think it might be well at this time if you read that letter that accompanied that document that Mr. Courtney has in his hand. Mr. Courtney, will you give it to the gentleman to read it. Mr. COURTNEY. Yes, sir. Mr. HÉBERT. This is part of the bid submitted by you through Mr. Wilson, and in turn I understand submitted a reply in the letter submitted by Mr. Wilson. Mr. COURTNEY. This is the document which bears the date May 21, 1962. Mr. NAU (reading): This presentation embodying a proposal PR 627D-26112(S), is being submitted by Arvin Industries, Inc., of Columbus, Ind., at the request of our Ninth Indiana District Member of Congress, Hon. Earl Wilson. It should be pointed out that Congressman Wilson, who has represented our district for over 20 years, is well aware of Arvin's capabilities, its past performance as a defense contractor, and its future plans. He knows that Arvin is financially capable of fulfilling a contract of the scope contained in this proposal and that our management has sufficient depth, as evidenced by past performance, to make a substantial contribution to the Department of Defense both technically and from a production standpoint. By the same token, we have been aware of Congressman Wilson's constant attention to procurement costs as a result of his membership on the House of Representatives Appropriations Committee. At this point we would like to state that we are in no way anxious to become embroiled in the political aspects of military procurement. We did, at one time, request an opportunity from the Navy to bid on this requirement for the AN/PRC-41 and were refused an opportunity. This we accepted. However, when Congressman Wilson wrote to us after we were refused, asking our cooperation, we felt an obligation to him in support of his work to comply, since the equipment would be within our capability and along the lines of our long-term corporate objectives. Accordingly, this proposal is the result of the analysis of the following information furnished by Congressman Wilson as well as the results of analyzing the production model AN/PRC-4(XN−2) at the Marine Corp Equipment Board in Quantico, Va. 1. Interim equipment reports numbering nine different reports covering a period from August 1, 1958, to November 1, 1960. 2. Final engineering and preproduction test report of August 1, 1961. 3. Manuscript technical manual for radio set AN/PRC-41(XN−1) contract NOBsr-72821. 4. Manuscript technical manual for radio set AN/PRC-41(XN−2) contract NOBsr-72821. 5. Descriptive specifications and complete microfilms of radio set AN/ARC-51, AN/ARC-51X, AN/ARC-51 (XN−3). 6. Specifications ships R-4083, December 22, 1961, radio set AN/ PRC-41. 7. Specifications ships B-4071, December 15, 1961, covering battery pack, silver zinc alkaline. 8. Various commentary notes relative to modifications to be incorporated in production units but not reflected in the models now available. The information which has been given to us in the preparation of this presentation and proposal was more than adequate for the submission of a comprehensive and intelligent cost submission. The work entailed is in a field in which we are competent, since Arvin Industries is today the sixth largest manufacturer of radios in the United States. The units on which we are preparing our proposal embody technical levels we are currently operating in, and are in no way pushing the state of art. To quote from CER-1434 final engineering and preproduction test report AN/PRC-41 (XN−2) dated August 1, 1961: The development of radio set AN/PRC-41 has been a successful attempt to use advance components and techniques with conventional circuitry. This means that there are no basic new circuitry techniques employed which could in any way result in the program being delayed, since Arvin Industries would not have to develop a capability in a new state of art. With the information presented to us by the Congressman Wilson and, in addition, the information which we will receive according to PR 627D-26112(s) (namely an incomplete set of manufacturing drawings) the schedules outlined herein are extremely realistic. The schedules contain within them adequate safety periods allowing for engineering and manufacturing contingencies. We quote from IDR-463-9 interim development report for radio set AN/PRC-41 (XN-1) covering the period August 1, 1960, to November 1, 1960, page 7, paragraph (12) drawings: Effort was continued on drawings during this report period. The drawings are approximately 80 percent complete and Collins expects the remaining to be completed early in the next report. We further report from the same manual paragraph (9) instruction book page 6: The instruction book was revised during this report period and includes the BuShips changes and the design modifications discussed in this report. This effort is being applied toward the manuscript copies of the service textbooks and is also applicable in the final development handbooks. The above quotations indicate that the information which we have, plus that which is evidently available, since the development program was a Government sponsored and paid for project with its normal clauses taking title to models, manuscripts, and incomplete drawings, is more complete information than that upon which the various branches of the Department of Defense normally place contracts. We are submitting this presentation under the assumption that we are in no way acting contrary to the wishes of the Department of Defense or to its ultimate goal of maximum defense at minimum cost. Were we to feel in any way that we could not meet the requirements of PR 627D-26112(S) from both a production standpoint and delivery standpoint, the effort expended in the preparation of this presentation would not have continued. The further we proceeded in the preparation, the more we realized that the continuation of this effort was definitely in accordance with, not only the wishes of Congress, but the expressed policy of the Department of Defense. There are many advantages to be gained by the Department of Defense from an award for AN/PRC-41 radio sets to the Arvin Industries. To name only a few, we list the following: 1. The UHF field is rapidly being concentrated in the hands of a few companies. In the event of mobilization, the concentration of requirements within the few hands would tax their facilities and, furthermore, would make the Department of Defense vulnerable within this highly concentrated area. 2. A research and development contract when completed by a commercial establishment makes that establishment an available source, as a result of the know-how and familiarity with the equipment and the manufacture of both engineering test samples and field test samples. An award now to Arvin would represent the establishment of a second source at no cost to the Government. In fact, we hope that the enclosed proposal will represent, in addition, a considerable saving to the Government. 3. Arvin Industries has utilized the services of various small businesses located in highly distressed labor areas in the preparation of this proposal, and it is anticipated that approximately 50 percent of the work to be done in this Arvin Industries effort, if awarded a contract, would be done by small business in high labor distressed areas. 4. Arvin Industries radio business has been seriously imperiled by the increase of both Japanese and German imports. An award to Arvin Industries would put Arvin Industries in a more favorable competitive situation in the worldwide market. In line with the stated fiscal policies to attempt to stem the flow of U.S. dollars abroad, an award to Arvin Industries of a contract on this piece of radio equipment would actually be an implementation of the President's policy. The burden absorption and the increased productivity of our radio division that a contract resulting from this proposal would represent would mean 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 capital, 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. 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. Mr. HERBERT. You read the testimony of yesterday, I presume. 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, yes, sir. 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. |