exception (10) due to the "impossibility" of drafting specifications adequate for formal advertising must be made at a level higher than that of the contracting officer. 14. Experimental, developmental, or research work. 10 U.S.C. § 2304 (a) (11) (formerly section 2(c) (11) of the Armed Services Procurement Act) authorizes the negotiation of purchases and contracts by the Secretary if— the purchase or contract is for property or services that he determines to be for experimental, developmental, or research work, or for making or furnishing property for experiment, test, development, or research; This exception is substantially a restatement, and an extension to the other armed services, of the authority given to the Navy Department by section 6 of the Act of August 1, 1946,58 to negotiate experimental, developmental, and research contracts. Incidentally, section 6 of this Act of August 1, 1946, was not repealed by section 11 of the Armed Services Procurement Act and is now codified in 10 U.S.C. § 7522.59 It was felt by Congress that the experience gained before and during World War II proved without doubt that the continuation of programs for research and development was of prime importance to the armed services and that the very nature of such programs and of contracts related thereto was inconsistent with procurement by formal advertising. Not only was the field of possible contractors in many cases very limited, but also a research or development contractor would usually have to be selected on the basis of special skills and exceptional facilities in much the same manner that an individual would seek the services or professional advice of an expert. Furthermore, in research and development contracts it is frequently impossible to make accurate forecasts of costs, thereby making it necessary to enter into cost-reimbursement type contracts, which on the one hand are not permitted with respect to contracts entered into by advertising and on the other hand require greater care and independence of contracting than would be necessary in the case of fixed-price contracts or would be possible in the case of procurement by advertising. It should be noted that the negotiation authority given by this exception (11) is basically twofold: on the one hand, applying to experimental, developmental, or research work; and on the other hand, applying to the furnishing of supplies for such work. With respect to the former, the authority may be used for (i) contracts relating to theoretical analysis, exploratory studies, and experimenta ASPR 8-210.2 (xiii) so provides. However, the test of "impossibility" appears to be more restrictive than the terms of exception (10). 60 Stat. 780 (1946). 10 U.8.C. 7522 (1958). tion in any field of science or technology; (ii) developmental contracts calling for the practical application of investigative findings and theories of a scientific or technical nature; and (iii) services, tests, and reports incidental to such experimental, developmental, or research work. With respect to the second part of exception (11), as indicated above, the authority may be used for the purchase of such equipment and supplies (including parts, accessories, patent rights thereto, and drawings or designs thereof) as are necessary for and as are used in connection with any existing research or development program. Navy procuring activities do not, however, use this exception for the purchase of all supplies which are used in experimental, developmental or research work. For example, if coal or fuel oil is required for the purpose of heating a building in which research work is done or is used in connection with testing research equipment, procurement of the coal or fuel oil is effected by formal advertising and not by negotiation under this exception. Moreover, the negotiation authority of this exception (11) is not to be used for any contract for quantity production (other than such kind of contract for supplies needed in connection with a research or development program) however, a research or development contract which calls for the production of a reasonable number of experimental or test models, or of prototypes, would not be regarded as a contract for quantity production. 60 Contracts with educational institutions which could be negotiated under exception (11) are required by ASPR 3-211.3 to be negotiated under the authority of exception (5) rather than under exception (11). As noted in § 3.4, research and development contracts and contracts for supplies related thereto with organizations other than educational institutions for $100,000 or less are required by ASPR 3-201.2 to be negotiated under exception (1) rather than under exception (11). Since Navy procuring activities are required to make written justifications for the negotiation of such research and development contracts in utilizing exceptions (1) and (5), it is considered that this negotiation authority in the research and development field will not be abused by placing it at the procuring activity level rather than at the Secretarial level. And procurements that also come within exceptions (3) and (6) are not negotiated under exception (11).61 It is important to observe that the wording of exception (11), as is almost identically the case with each of the following exceptions (12) through (16), speaks of a determination by the Secretary (in the statute, this actually reads "head of an agency") as being in effect a condition precedent to the use of this negotiation authority. ASPR 3-211.8 (1 July 1960). a Ibid. And as is expressly provided in 10 U.S.C. § 2311,62 the power to make this required determination, and also the power to make the similar determinations required under exceptions (12) through (16), may not be delegated, except that in the case of exception (11) alone this power may be delegated to a chief officer or official who is responsible for procurement but then only to the extent of research and development contracts which will not require the expenditure of more than $25,000. As defined in ASPR 1-201.6 and ASPR 3-303, a chief officer responsible for procurement is deemed to be the head of any procuring activity-which means, for the Navy, the chief of any Bureau, the Chief of Naval Research, the Aviation Supply Officer, the Commander, Military Sea Transportation Service, the Executive Director of the Military Petroleum Supply Agency, the Executive Director of the Military Medical Supply Agency, and the Commandant of the U.S. Marine Corps.62 This problem of required Secretarial determinations, and of their form and use, will be discussed in detail in paragraph 29. It is expressly required by 10 U.S.C. § 2304 (e) that there be furnished twice each year to Congress a report setting forth the name of each contractor with whom a contract has been entered into pursuant to the authority of this exception (11), together with the amount of the contract and (with due consideration given to the national security) a description of the work required to be performed thereunder. For purposes of a combined armed services report, it is provided in the Armed Services Procurement Regulation (not only with respect to this report but also with respect to all other such reports required under the Armed Services Procurement Act or under the Regulation) that each Department submit its report to the Assistant Secretary of Defense (Supply and Logistics). 15. Classified purchases. 10 U.S.C. § 2304 (a) (12) (formerly section 2(c) (12) of the Armed Services Procurement Act) authorizes the negotiation of purchases and contracts by the Secretary if the purchase or contract is for property or services whose procurement he determines should not be publicly disclosed because of their character, ingredients, or components; Although this exception is substantially a new negotiation authority, at least in its broad coverage and in its extension to all of the armed services, neverthless there have been in existence three Army statutes (all expressly repealed by section 11 of the Armed Services Procurement Act) which granted certain negotiation authority along the lines of the authority granted by this exception (12). Thus, the Act of May 11, 1908, authorized the War Department to purchase ordnance equipment in such a manner as was deemed most economical 63 62 Formerly 7 of the Armed Services Procurement Act, 62 Stat. 24 (1948). and efficient, whenever the public interest would be injured by publicly divulging the character or ingredients of such equipment; the Act of May 15, 1936, extended the aforementioned authority to cover chemical warfare and signal property; and the Act of July 13, 1939, extended the authority to cover aircraft parts, instruments and aeronautical accessories. 65 It was the view of Congress that broad discretion should be given to the armed services to determine when and whether the considerations of national security or safety required that procurement by means of advertising, with its unavoidable publicity and disclosure, should be rejected in favor of the more guarded and controllable method of procurement by negotiation. Accordingly, ASPR 3-212 provides that this authority may be used for purchases or contracts classified "Confidential" or higher, or where because of other considerations, the purchase or contract should not be publicly disclosed; but also provides that this authority shall not be used when negotiation is authorized by any other exception, except that if a procurement may be negotiated either under exception (4) or exception (12), exception (12) shall be used in preference to exception (4).“ 16. Technical equipment requiring standardization and interchangeability of parts. 10 U.S.C. § 2304 (a) (13) (formerly section 2(c) (13) of the Armed Services Procurement Act) authorizes the negotiation of purchases and contracts by the Secretary if the purchase or contract is for equipment that he determines to be technical equipment whose standardization and the interchangeability of whose parts are necessary in the public interest and whose procurement by negotiation is necessary to assure that standardization and interchangeability; This exception is entirely new and unprecedented (other than, of course, that purchases of this sort, and in fact any kind of purchase, could have been made by negotiation under the First War Powers Act of 1941). This negotiation authority grew out of the pressing need on the part of the armed services to be able to negotiate purchases of additional units, spare parts, and replacement items, the initial procurement of which would for the most part be made by advertising and would result in the standardization for general use of the particular equipment of that supplier whose bid was accepted. The argument was advanced to Congress, and was accepted by Congress, that the military importance of and the financial savings resulting from standardized equipment and interchangeable parts made it important for the services to be able to standardize on major items of technical equipment, and that thereafter additional 64 49 Stat. 1277 (1936). 65 53 Stat. 1000 (1939). See ASPR 8-212.2 and .3 (1 July 1960). or replacement units thereof, as well as interchangeable spare parts therefor, should be obtainable by means of negotiation. The present policy governing the use of this exception is prescribed by ASPR 3-213.67 This policy recognizes that in certain instances it is necessary in the interest of standardization of technical equipment and the interchangeability of parts for such equipment to procure from one supplier or a limited number of suppliers technical equipment which, although available from a number of suppliers, would, if procured from a number of sources, have such varying characteristics (notwithstanding detailed performance specifications and rigid inspection) as would prevent standardization and interchangeability of parts. Since the standardization of equipments ordinarily restricts normal competition and in most cases results in noncompetitive procurement, determinations to standardize on technical equipment and related components or spare parts must comply with the following criteria: (a) Standardization is confined to items of technical equipment and related components or spare parts which are for use in theaters of operations, or on board naval vessels or at advance bases. Accordingly, items of technical equipment which are to be used exclusively at installations in the continental United States cannot be standardized under this policy. (b) The determination must be reviewed at least every two years. (c) The determination cannot be utilized for the initial procurement of the related equipment or parts. However, a determination to standardize may apply to the procurement of later types and models of the particular equipment which has been standardized. (d) A current or recurring requirement for the equipment must be present. In making a determination to standardize on specific technical equipment, consideration must also be given to the various factors set forth in ASPR 3-213.2(b),68 such as (i) the effect of the proposed standardization upon the capability to procure the equipment at reasonable prices, and to produce mobilization requirements; (ii) the practicability of interchangeability of parts and cannibalization of equipment; and (iii) whether standardization will appreciably reduce the quantity of spare parts that must be carried in stock. With respect to the Secretarial determination required to be made as a condition precedent to the use of the negotiation authority given by exception (13), ASPR 3–213.3 prescribes the following three detailed determinations under this exception: (a) the supplies constitute technical equipment or component parts thereof; (b) standardization of such equipment and interchangeability of its parts are necessary in the public interest; and 1 July 1960. es Ibid. |