Mr. PEED. I could not answer that, sir, because we have had little staff meetings from time to time involving all sorts of questions, and such things as these have been discussed. Mr. BROWNSON. To the best of your knowledge, would it be before those bids from the Retort Pharmaceutical Co. were received? Mr. PEED. Oh, it would have no connection with those particular bids-such instructions. Mr. BROWNSON. Just chronologically, would it be before they were received? Would it be a long time ago? Mr. PEED. I notice that some of these date back to 1952. Unquestionably I have said things of that sort to my people prior to that, and since. Mr. BROWNSON. Can bids received after the last designated day be considered in this form of negotiated bidding? Mr. PEED. Received after the closing date? Mr. BROWNSON. Can they be considered as legitimate bids for negotiation? Mr. PEED. I would say no, sir, to that. However, as I have related, I would certainly review such a bid and if it put me on notice that I could obtain the merchandise at a cheaper price I would take whatever action was indicated. Mr. BROWNSON. The action in that case would be to readvertise and cancel that particular lot of merchandise? Mr. PEED. Yes; which we have done on many occasions. Mr. BROWNSON. But the action would not be to take that bid and include it in with the other bids that had been received on time? Mr. PEED. I would not consider that good practice; no, sir. Mr. BROWNSON. Were any bids considered that were received late in connection with these specific contracts awarded to the Retort Pharmaceutical Co.? Mr. PEED. Not to my knowledge, sir. Mr. BROWNSON. Would you have been informed if such had been the case? Mr. PEED. I would possibly have been informed by the buyer. I have no recollection of any such information. Mr. BROWNSON. What records are maintained in your office to show when each bid is received? Mr. PEED. Each purchasing officer maintains a card record of the invitations on which he works, and we have a control clerk in each branch of our Purchase Division. Mr. BROWNSON. Would that show the actual date on which these bids were received? Mr. PEED. I am not sure whether it would show that or not. Mr. BROWNSON. You say that you have issued instructions that the envelopes would be retained? Mr. PEED. I have issued oral instructions time and time again. I have no written instructions on it. Mr. BROWNSON. Do you know whether any of the envelopes in which these bids were received under these contracts with the Retort Pharmaceutical Co. were retained? Mr. PEED. In searching the files, as I recall it, only one envelope was present. Mr. BROWNSON. And the other five were missing? Mr. PEED. Yes; as I recall it. I am not absolutely positive of that. Mr. BROWNSON. In view of your testimony that purchasing agents make a recommendation after opening the bids on these so-called negotiated contracts unwitnessed, at any convenient time after the last day for filing, what assurance do you have, or what assurance does an unsuccessful bidder have, that all competing bidders have had equal consideration and that there has been no leak of information? Mr. PEED. Well, I have every confidence in my people. I feel the procedure is such that there is no opportunity here that I can see which would afford anyone a chance to do anything that would be detrimental to the Government's best interests. There are too many people involved in every one of these transactions. We in Purchase only take certain steps and then release it. For example, in listening to the testimony this morning concerning inspection, I have no knowledge of that at all. I have no knowledge of the transportation part of it. My knowledge is limited to a consideration of the bids and recommendation of awards. Once the contracts have been entered into and are fulfilled, it is a closed transaction as far as we in Purchase are concerned. Mr. BROWNSON. Suppose a bid came in today that is going to be handled on a negotiated basis and that the actual closing date for that bid is August 2. Would you forward the envelope with that bid in it to your purchasing agent as it came in today? Mr. PEED. You said as of today? Mr. BROWNSON. Yes. This is a bid that is coming in. Mr. PEED. As Mr. Crothers has explained, such bids as of today come into his office and he holds them until the close of business that day. He releases them the following day to the buyer involved. Mr. BROWNSON. The buyer would have that bid tomorrow? Mr. PEED. That is right. Mr. BROWNSON. Is the buyer under any instructions as to when he or she may open that bid? Mr. PEED. No particular instructions on that other than to hold them in safety and secrecy until such time as she can get to them and process them. Mr. BROWNSON. But it would, under the controls that you have set up, be possible for a buyer to open that bid tomorrow and communicate the information as to the price in that bid to somebody else if that buyer were not of the highest integrity? Mr. PEED. I think that is possible. Mr. BROWNSON. It would have been possible at the time these Retort Pharmaceutical bids were processed. Mr. PEED. I will have to agree to that. Mr. BROWNSON. I am not suggesting the slightest doubt as to the integrity of your employees. Mr. PEED. I have no doubt of that. Mr. BROWNSON. As a businessman, I am interested in trying to devise procedures in any business or governmental operation, which would remove all possible temptation from employees. I think that is part of good management, and that is the course I am taking in this questioning. I am not attempting to impugn anyone's character or integrity. In your service is it your opinion that the position of the Government, as well as that of the purchasing agent, would be in a more tenable position if all bids, wherever possible, were processed publicly as in the case of normal or formally advertised bids? Mr. PEED. As far as I am personally concerned, I would prefer it; yes. Mr. BROWNSON. Were all of these contracts which we have shown to you, which you have before you, and awarded to the Retort Pharmaceutical Co., processed by Miss Queen? Mr. PEED. Yes. Mr. BROWNSON. Miss Queen is here at the present time. She was gracious enough to interrupt her vacation and come back, and we will hear from her later today. I would like to introduce into the record at this point exhibit 18, which is a schedule prepared by our staff from the records your office made available, which shows the closing dates of the contracts, the dates they were tabulated, and the dates recommendations were made to you. (Exhibit 18 is as follows:) EXHIBIT 18 Staff-prepared schedule showing dates contracts were closed, tabulated, and recommended Mr. BROWNSON. I will ask our counsel to show this to the witness, and I will ask you whether or not this shows that the dates on which recommendations were made were 9, 6, 4, 29, and 34 days, respectively, after the last date bids were accepted. We are trying to establish the time lag from the time the bid was accepted until it was finally forwarded to you. Mr. PEED. I think that is correct. Mr. BROWNSON. I would like again to refer to exhibit No. 17, which is a letter dated July 8, 1953, from Mr. Hingher, requesting Mr. Bob Ross to cancel contract No. GS-03P-65, and 287 for 4,080 vials of hexylresorcinol and award the contracts to a reliable contractor since pills were urgently needed for a public-health program. On July 14, 1952, Mr. Nathan Fuller of GSA sent a copy of Mr. Hingher's request to you, asking you to take whatever steps were necessary to carry out this request to cancel the contract. I ask unanimous consent to insert Mr. Fuller's letter in the record as exhibit No. 19. (Exhibit 19 is as follows:) EXHIBIT 19 In reply refer to: EML-Ross Mr. J. W. Peed, Purchase, FSS NATHAN F. FULLER FOR T. V. WILDER, Director, Materials Research and Analysis Division PR 84-370-99-990-3516, Contract GS-03P-65 (EC) PR 93-370-00-201-3048, Contract GS-03P-287 (EC) There is attached hereto copy of a memorandum, dated July 8, 1953, from Mr. Hingher, MSA regarding hexylresorcinol pills purchased from the Retort Pharmaceutical Co. under the subject contracts and requisitions. MSA is requesting that these contracts be cancelled or the contractor declared in default and material be obtained from other sources, in light of the fact that several rejections have been made of this type of pill from this company. Also please note that there would apparently be considerable risk in the use of these pills because of improper coating. Please take whatever steps that are necessary to carry out MSA's request in this matter as soon as possible. Attachment. cc: BRoss-EML BRoss: yay Mr. BROWNSON. The contract filed in your branch shows that on the day before you received Mr. Fuller's memo, that is, on July 13, 1953, the Chief of the Inspection Branch, Section 2, sent a memo to you, notifying you that the third offering of pills under these contracts had been rejected by Food and Drug and recommended that the contracts with Retort be canceled to save the Government further time and expense. I will ask the insertion of this memo into the record as exhibit 20. (Exhibit 20 is as follows:) Chief, Purchase Branch 2 EXHIBIT 20 In reply refer to: FSI-2 Attention: Miss D. Queen Chief, Section 2, Inspection Branch, Central Office, Washington, D. C. Contracts GS-03P-65 (EC); GS-03P-287 (EC) Retort Pharmaceutical Co. As you know, the Hexylresorcinol Pills on Contract GS-03P-65 (EC) have been rejected twice based on unfavorable results of tests performed by the Food and Drug Laboratory. We have just received the Food and Drug report on the third offering of these pills and also on the samples taken from the batch offered under GS-03P-287 (EC). This report states that neither batch meets U. S. P. requirements, and they have therefore both been rejected. Since it appears evident that the contractor cannot successfully manufacture this product, and in order to save the Government further time and expense, it is recommended that this preparation (Hexylresorcinol Pills, U. S. P.) be cancelled from these contracts. cc: New York-Inspection Master Reading File CRWolfe: aww CRW Mr. BROWNSON. Will our counsel please present these exhibits to the witness and ask him to examine them and certify to their authenticity, and I would like to have the witness state what action he took to comply with these requests to cancel these contracts. Mr. PEED. I, of course, do not recall seeing the memoranda now. It was some time back, July 14, 1953, and July 13, 1953. Perhaps one of these came over my desk and perhaps the other one went directly to Miss Queen. I notice that it is directed to her attention. However, to summarily cancel a man's contract, so far as I can see, would not be the lawful thing to do. I do not happen to be a lawyer, but it seems to me that a contractor has some rights in the matter, and to have his contract, after he had gotten into production, summarily canceled would certainly be unfair, to say the least, in my opinion. So, as I recall the record, considerable correspondence ensued at this time between the Inspection Branch and the contractor with respect to his ability to supply. Mr. BROWNSON. Of course, this request for cancellation, as I understand it, was forwarded after three successive failures of hexylresorcinol to pass the Food and Drug Administration test. Mr. PEED. I might add since then those contracts have been declared in default, which would be the normal procedure-not cancellation. Cancellation would mean that he would be relieved of his contract at no expense, whereas we first put him on notice that he was delinquent and later put him on notice that he was in default and our intention to purchase the merchandise in the open market, so-called, whereby he would be charged with any difference in cost which may be occasioned by such action. Mr. BROWNSON. I believe that a telegram was sent to the Retort Pharmaceutical Co. Mr. PEED. With respect to his delinquency. Mr. BROWNSON. Dated July 20, 1953. Mr. PEED. I believe that is the date. Mr. BROWNSON. If you have a copy of that telegram with you, we would like very much to have it in the record at this point. Mr. PEED. I believe it is in my file. I do not have the files here. Mr. BROWNSON. May we request that you supply a copy of that telegram to the staff, and I will ask unanimous consent that this telegram be included in the record at this point when supplied. (The telegram requested is as follows, exhibit 28:) EXHIBIT 28 FEDERAL SUPPLY SERVICE, July 20, 1953. R3.84.1.5200.04 M. MILLER, Retort Pharmaceutical Co., Inc., 42-45 Ninth Street, Long Island City 1, N. Y.: Reurcontracts GS-03P-65 (EC) and GS-03P-287 (EC) 4080 and 30,000 vials hexylresorcinol tablets respectively Inspection Division reports results of several tests made on samples taken from offerings under subject contracts fail to meet U. S. P. requirements due to improper coating of tablets which have therefore been rejected as unsuitable for use. Since these tablets are urgently needed and since delivery periods have long since expired without due explanation from you above contracts are now declared delinquent and your right to deliver will terminate July 28th. Unless you can show cause prior to that date why you should not be declared in default this office will proceed to purchase the hexylresorcinol tablets in the open market and you will be held liable for any excess costs that may be incurred. J. W. PEED, Federal Supply Service, General Services Administration... D. Queen, Ext. 3926. |