I would like to turn now to two documents submitted by me to the subcommittee the Arvin and Collins proposals. Both came from the General Accounting Office and are now in the hands of the subcommittee.

We have heard much here of 19 engineering changes that must be made. We heard Arvin representatives say these changes would require more time for the end product. The facts are, and they were not brought out here, it is going to take Collins longer to finish the radio due to these changes, too. The Navy has already recognized this by adding 2 months to the initial delivery schedule it proposes for Collins.

I want to point this out-it was never brought out by the subcommittee Arvin and Collins prepared their bids on the same request for proposal. The same requirements were stated, the same words, the same numbers used-yet Arvin's bid was 34 percent lower. The engineering changes couldn't have been reflected in Collins' bid because they weren't incorporated in the request for proposal.

Arvin was told of these verbal, postbid changes during its "courtesy call" at the Bureau of Ships. These changes, I repeat, were not in the original RFP. Neither Arvin nor Collins bid on them, and the delay in delivery is not reflected in these original bids.

Documents I have provided to the subcommittee prove beyond a shadow of a doubt that the Navy was prepared to extend the initial delivery date for Collins to take care of these changes. The truth of the matter, Mr. Chairman, is that the Navy had started changing this contract even before it was signed. It inferred in its presentation that it will take Arvin longer to perform than Collins, and it inferred the changes were incorporated in the Collins proposal. It never said it-it inferred it, because it knows allowance for the changes is contained in its own proposal to sign a letter contract for the PRC-1 with Collins.

I have stated the way in which this procurement was justified for sole source. The prime reason is time of delivery of the equipment. I think we have a right to expect that any manufacturer who gets this contract should perform excellently and should have a sterling record of delivery. Yet the subcommittee is in possession of documents I received from the General Accounting Office through the Bureau of Ships which shows that out of 66 line items for delivery under previous contracts, Collins has been delinquent in 40, with delinquencies as high as 13 and 14 months. I don't mention this to disparage Collins, but simply to show the superficial manner in which this procurement was examined by the Bureau of Ships before being lined up for the rubberstamp brigade.

Mr. Porter Hardy, of Virginia, summed up Navy's case succinctly on Thursday when he said Navy came here to try to rationalize its position. The Navy's own testimony has shown it didn't start to compile a detailed analysis until it learned of my interest and later of the subcommittee's interest. What would happen if procurement people in industry acted accordingly? I think the Navy simply tried to explain away its own inefficiency and incompetency. To the credit of the committee and its counsel, that did not happen.

In my opinion, the Navy's case boils down to time of delivery and technical nature of the product. Testimony I have heard disproves both contentions. In my opinion, this subcommittee, while pursuing a course that has proven the desirability of the Hébert amendment, has also proven that (1) had the development contract for the PRC-41 been pursued and model and drawings delivered, (2) had engineering changes been noted, and (3) had American industry been given a chance, this radio could have been built and delivered on time and on a competitive bidding basis with a consequent huge saving to the taxpayers.

In his straightforward statement, Mr. Robert Nau, of Arvin Industries, said Arvin still warrants it can build this radio and deliver it in accordance with Navy wishes. This is no fly-by-night manufacturer talking, Mr. Chairman. This is a pioneer in the field-one of the six leading producers of radios in the Nation, a company with an outstanding performance record in the UHF field. This is an industry which does near $100 million of business a year and which is renowned for its conservative approach and excellent performance.

Mr. Chairman, the record speaks for itself. Had the Hébert amendment been law, Navy would have had to justify this sole-source procurement in a similar manner as we have experienced in this hearing. It could not have done this. It could not rationalize under intelligent inquiry. This subcommittee has proved that.

With the Hébert amendment as law, and the General Accounting Office looking over its shoulder, the military will be much more cautious in trying to erroneously justify sole-source awards. The result will be a better, more economical purchasing system and savings to the taxpayers that will amount to billions a year. I repeat what I have said many times today-the Hébert amendment should be passed by the Senate and signed by the President at the earliest possible time. We are just starting a new fiscal year, and it is never too early to begin saving money.

To my knowledge, Mr. Chairman, this is the first time a sole-source award has been challenged before the fact in this manner. There are many after-the-fact cases. The subcommittee has eight from my files, and I will shortly turn over several others. All show that sole-source procurement is a luxury we cannot afford.

In this case, however, we have a chance to prove the theory of the Hébert amendment as opposed to the Navy position. Navy says only Collins can meet its schedule, and I say American industry can perform alongside Collins. My suggestion is simply this: Take the planned procurement and divide it between Collins and Arvin. Call the firms in, give Arvin a model and complete drawings, split the award and tell them to go to work. If Arvin fails to produce, the Navy position is right, and Collins can assume the uncompleted portion of the work. There will be no delay. If Arvin produces, then the position I have taken is right and the Hébert amendment would have been used to stop sole sourcing of this award. To add to that, if both produce, the Government will have a double source of supply to take care of future orders. I propose this in all sincerity, even though

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I know it has little chance. The Navy will welcome this suggestion even as it is welcoming the Hébert amendment right now.

In conclusion, Mr. Chairman, I would again like to thank the subcommittee and its staff for its cooperation in this matter. I think it has proven what it set out to prove that the Hébert amendment is needed and needed now.

I would like to close by predicting a similar case that is coming up in the near future. The statement has been made, "Wilson is out to get the Navy." I am not, and I never have been. I have great admiration for the Navy and what it has accomplished, even as I have admiration for the great majority of Navy employees who are honest, hard-working Americans.

The Navy isn't the only defense arm that abuses the sole-source method of procurement. The Army is another. It is already planning to sole-source the AN/ARC-54 radio set on an urgency-of-delivery basis, and that sole-source award will go to Collins Radio Co. unless there is a change, now that I have made this statement. I invite the subcommittee's attention to this matter when it becomes pertinent. I thank the chairman, the subcommittee members, and counsel for their kind attention and consideration.

STATEMENT OF COLLINS RADIO CO.

Hon. F. EDWARD HÉBERT,

COLLINS RADIO CO.,

Cedar Rapids, Iowa, July 3, 1962.

Chairman, Subcommittee for Special Investigations,
Committee on Armed Services,

Washington, D.C.

MY DEAR CONGRESSMAN HÉBERT: This is in response to your letter of July 3, 1962, requesting certain comments from this company relating to the statement of Hon. Earl Wilson, of Indiana, to the subcommittee on July 3, 1962. On page 6 of his printed statement, Congressman Wilson refers to a report from the General Accounting Office which "* * *shows that out of 66 line items for delivery under previous (BuShips) contracts, Collins has been delinquent in 40, with delinquencies as high as 13 and 14 months." Although we are not certain as to which report the Congressman refers, we understand that the delinquencies refer to Contracts Nos. NÓbsr-75183, 75710 and 81220. We have reviewed our records pertaining to these contracts and have the following comments:

1. NObsr-75183.-This contract covered, among other things, a quantity of 523 antenna coupler, CU-691 and 75 antenna coupler, CU-692. Our records indicate no production delays on this contract. All couplers were completed by Collins 1 month ahead of schedule. In September 1961, a short, temporary delay occurred when units of CU-691 were held in shipping per instructions of INSMAT pending Bureau approval of certain components.

2. NOber-75710.-This contract covered a quantity of 144 AN/ WLR-1 ECM receivers. Certain production delays were experienced,

largely as the result of a 6-week economic strike of production workers at Collins' Dallas plant where this equipment was manufactured. This strike began on May 1, 1960, and ended on June 5, 1960, However, the Dallas plant did not return to full production capacity until July 1, 1960, when the final agreement with the union was reached. Comparisons of scheduled and actual deliveries are shown:

In the case of certain items, delinquencies appear somewhat greater than shown above because of priority assignments as between items. These priorities were established by BuShips in the form of shipping instructions.

3. NObsr-81220.-This contract was for a quantity of 580 AN/ URC-32 transceivers. We understand that 28 of the 40 items identified by Congressman Wilson as being delinquent relate to this contract. We are somewhat surprised that this contract should have been selected for comment, as we feel that it is an outstanding example of Collins' ability to meet and surpass production schedules for highly complex electronic systems. For example, items 1, 3, 4, 6, 7, 46, 47, 48, 49, 50, 51, 68, 73, 75, 77, and 80 were delivered on or as much as 3 months ahead of schedule. Items 5 and 9 were 1 month late due to delay from BuShips for shipping authority. Items 10, 11, 66, 67, 69, 70, 74, 79, and 81 involved delays of short duration. Item 5 was 90 days late but this delay was made up on item 49 which was an identical article. In summary it may be said that contract production schedules for all major equipment items were met.

We are completely unable to substantiate the report that certain items on this contract were 10 to 14 months delinquent.

We have examined the copy of exhibit 6 which you provided us this week and, although we have not yet examined all of the pertinent contract records, we find it to be a generally correct appraisal of our performance record with respect to timeliness. We will be happy to discuss any of these contracts with the subcommittee and disclose the reason for any apparent delays. We would particularly welcome a comparison of Collins' performance record on these contracts with that of other concerns manufacturing the same equipment or equipment of comparable complexity.

We trust that this information will enable the subcommittee to complete its record in this matter.

Very truly yours,

D. H. FOSTER, General Attorney.

CONCLUDING STATEMENT OF HON. KENNETH E. BELIEU, ASSISTANT SECRETARY OF THE NAVY (INSTALLATIONS AND LOGISTICS), IN CONNECTION WITH PROPOSED PROCUREMENT OF AN/PRC-41 RADIO SETS, JULY 5, 1962

Mr. Chairman and members of the subcommittee, I wish to thank the committee for having conducted these hearings on the current procurement of the PRC 41 ultrahigh frequency radio transceiver sets. I also thank the committee for allowing me to make this concluding statement. These hearings afforded the Navy the opportunity to present to you and to the general public the basic facts in this case. We welcomed that opportunity and have presented responsible and knowledgeable witnesses from the Navy and Marine Corps. You have heard not only their testimony but that of management officials of Arvin Industries and of Collins Radio.

In my view, this evidence confirms the judgments we had previously reached in the Navy that our requirement for the PRC-41 is most urgent and that only the developer of that complex UHF equipment, Collins Radio, can meet the delivery schedule to fill the urgent requirements of the Marine Corps and of the Navy, Army, and the Air Force. As the Commandant of the Marine Corps, General Shoup stated:

We urgently need the AN/PRC-41 * * At this moment, the combat readiness of the Fleet Marine Forces in Thailand, in Okinawa, in the Mediterranean and the Caribbean, and in the United States is impaired for lack of adequate replacement for the M-A-Y. The original schedule for delivery of a replacement radio cannot now be met—and the requirement becomes more urgent with each additional delay.

The Marine Corps has been trying since 1951 to develop a replacement for the M-A-Y transceiver, intending to retire the M-A—Y's beginning in 1954. Unfortunately, three attempts to develop a successful replacement failed and, by 1960, the Marines' situation had become critical necessitating commercial rebuild of M-A-Y sets. Not only has the M-A-Y become obsolete due to its marginal capability for communicating with modern jet aircraft, but there is an everincreasing shortage of serviceable units. Thus, the need of Marine Corps for the PRC-41, the first and only acceptable replacement for the M-A-Y, is an urgent one of long standing.

The Marine Corps witnesses pointed out the complexities of the PRC-41. They analyzed the time (16 months) it would take Collins Radio, the developer of the PRC-41 and of some 34 other military UHF radio equipments, to make delivery of these equipments. They also analyzed the time (26 to 39 months) it would take any other electronics firm competent in the military UHF field to complete deliveries of the same equipments. Moreover, they explained the reasons why we concluded that only Collins can meet the required delivery schedule and that Arvin's proposal to complete deliveries in 12 months cannot be accomplished by it.

This Arvin now seems to recognize also. Arvin's vice-president testified that it would have to amend its proposal both in terms of time and dollars. From his testimony (Tr. 305), it also appears that when Arvin prepared its proposal it did not realize that although a service test model was available, it was not a production model, and similarly that the drawings that were available were not production drawings.