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PLRD-83-53 1 (1983-03-15)

handle is hein.gao/gaobabmwo0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 AND RADINESS DIVISION 'k0 . MARCH 15, 1983 B-210758 0 _000 *RELEASED The Honorable Les Aspin House of Representatives 120898 Dear Mr. Aspin: Subject: The Army's Award of a Contract for Power Supply Units Under the Authority of 10 U.S.C. 2304(a)(161)(GAO/PLRD-83-53) In your request of November 17, 1982, your expressed concern about the price differential between establishinq another source (Union Carbide Corpora- tion) and using an existing source (Accudyne Corporation) to produce power supply units used in a variety of conventional ammunition. We found that there is no cost limitation or ceiling under existing legislation or regulation to establish a second source for mobilization base purposes. The legislation, 10 U.S.C. 2304(a)(16), authorizes the negotiation of purchases and contracts by the Secretaries of the Army, Navy, and Air Force if they determine that it is in the interest of national defense to have a producer, manufacturer, or other suppliers available for furnishing property or services in case of a national emergency. In this regard, Senate Report No. 571, July 16, 1947 (reprinted in 1948 U.S. Code Congressional Service (1048, 1062)), provides, in connection with this portion of the Armed Servines Procurement Act of 1947, that: The committee recognizes that this subsection would authorize the making of contracts which might not represent the most economical procure- ment of the items involved. However, it is believed that the national security requires the granting of this power. Furthermore, Comptroller General decisions B-195679 of December 19, 1979, and B-187532 of February 25, 1977, have recognized that the exercise of this authority sometimes requires payment of a premium without regard to prices available from other sources and that this was contemplated by the Congress. The Army surveyed the integrated production facility at Union Carbide to determine its readiness posture in the event of mobilization. The survey revealed that it would take 6 months before there would be any assurance the equipment would be capable of achieving its design capacity. The survey team, therefore, recomnended that funds be allocated so that defects would be corrected while the integrated production facility was producinq the power supply units. The Armament Material Readiness Comtend (ARRCOM), acting on the survey's reccmuendation, awarded Union Carbide the contract in question. Union Carbide's price includes the cost for starting up the facility and correcting defects as well as producing the units. (942260)

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