[Letter]

B-265884 Nov 07, 1995 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights You request additional information on procurement of high fragmentation projectiles and ask whether costs are affected by restricted competition in artillery projectile procurements. It is not clear from the J&A as written that it fully documents the need for a mobilization base. Receipt of a timely bid protest will permit us to exercise our statutory function to gather all information and render a decision on the validity of the Army's justification for excluding ERI. This was in connection with the development of a Technical Data Package for the M-795. It is generally agreed that limiting competition increases costs. Although cost savings are certainly desirable. Authorizes an exception when: "it is necessary to award the contract to a particular source or sources in order . . . to maintain a facility. View Decision B-265884 November 7, 1995 The Competition in Contracting Act, 10 U.S.C. Sec. 2304, permits restriction of competition to insure suppliers of critical items constantly maintain the production capacity that would be needed in the event of a national emergency. GAO's standard of review recognizes substantial agency discretion in the establishment and composition of a mobilization base. The Honorable Dan Burton House of Representatives Dear Mr. Burton: This responds to your August 4, 1995, letter requesting that our Office review the Army's planned procurement of metal parts for M-795 high fragmentation artillery projectiles. On July 20, 1995, the Deputy Assistant Secretary of the Army for Procurement signed a Justification and Approval (J&A) to authorize limited competition for this procurement. The J&A establishes a mobilization base for the item consisting of two government-owned, contractor-operated Army ammunition plants, the Scranton and Louisiana Army Ammunition Plants (SAAP and LAAP, respectively). You ask several specific questions about the validity of the J&A prepared in this case. First, you ask whether the Army violated the Competition in Contracting Act of 1984 (CICA). You also ask about the accuracy of the J&A's reference to a prior contract for M-795 metal parts, and whether incorrect information about a prior procurement would invalidate the J&A. Finally, you request additional information on procurement of high fragmentation projectiles and ask whether costs are affected by restricted competition in artillery projectile procurements. CICA permits restricted competition when supported by a properly prepared J&A. We note that the Army's J&A includes extensive discussion of the need to "prove out" the new and "vital flex-line manufacturing process," but does not discuss mobilization concerns in the same depth. As a result, it is not clear from the J&A as written that it fully documents the need for a mobilization base. Your staff has advised us that your constituent, ERI Babcock & Wilcox, Inc. of Indianapolis (ERI), intends to file a bid protest contesting the Army's mobilization base determination. Receipt of a timely bid protest will permit us to exercise our statutory function to gather all information and render a decision on the validity of the Army's justification for excluding ERI. In response to your second question, SAAP apparently produced a small quantity of M-795 metal parts in 1978. This was in connection with the development of a Technical Data Package for the M-795. However, the prior contract has no apparent bearing on the validity of the present J&A. As to procurement costs, it is generally agreed that limiting competition increases costs. Although cost savings are certainly desirable, the mobilization base exception in CICA also takes account of the need to preserve production capacity for a national emergency. Statutory Background The Competition in Contracting Act, at 10 U.S.C. Sec. 2304, requires the Department of Defense to obtain full and open competition in its procurements. Subparagraph (c)(3)(A) of section 2304, authorizes an exception when: "it is necessary to award the contract to a particular source or sources in order . . . to maintain a facility, producer, manufacturer, or other supplier available for furnishing property or services in case of a national emergency or to achieve industrial mobilization. . . . " Before using this CICA exception, the procuring agency must prepare a written J&A. A properly prepared and approved J&A permits the agency to restrict competition consistent with the law. Along with other procedural requirements, the statute and the Federal Acquisition Regulation (FAR) provide that a J&A must identify the exception sought, and include: "a demonstration, based on the proposed contractor's qualifications or the nature of the procurement, of the reasons for using that exception" 10 U.S.C. Sec. 2304(f). See also, 48 C.F.R. Secs.