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092457 1 (1972-01-12)

handle is hein.gao/gaobacwjo0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE U _01 WASHINGTON, D.C. 20548 CIVIL JAN 12 1972 Dear Mr. Shaffer: We have reviewed the Federal Aviation Administration's (FAA) procurement of test-monitor-and-control equipmen (TMC) for use in its short-range air navigational aids system. The procurement wqs made under an incentive-type production contract awarded in June 1964 which, as amended, called for delivery of 195 TMC's and certain related equip- ment and services under a fixed delivery schedule at a ceiling price of about $6.3 million. Under the schedule, the first TMC was to have been delivered in June 1966 and the last in September 1967. The contractor delivered the first TMC in August 1969 and the last in June 1971. The contractor's failure to meet the delivery schedule resulted in a delay of nearly 4 years in the completiort of 4 system which was justi- fied as needed to provide air safety. It also resulted in the loss of the value of warranties, estimated at $140,oob,'on other components of the system which had been delivered earlier because these components could not be put into operation until after the warranties expired. The contractor was selected by FAA because it offered the lowest price, although among the five bidders, it had re~eived the lowest technical point score in FAA's evaluation of bids. The contractor had rnct devel- oped and produced similar equipment in the past, and was not in a position to produce the equipment at the time of contract award. The monitor equipment was a major component with which the contractor experienced difficulty. Another contractor had developed a prototype monitor for FAA for $622,000. FAA evaluators expressed satisfaction with the prototype and FAA made itravailable for the TMC contractor's use. The -contractor was not required to pattern its production model after the pro- totype, although the contract called for 60 percent vacuum tube - 40 per- cent solid state construction, the same as the prototype. FAA officials advised us that they were not able to obtain electronics equipment that met their performance requirements when requiring a production contractor to copy prototype equipment built by another contractor. In February 1965, the contractor proposed the development of a fully solid state monitor. In May 1965, FAA approved the proposal and the con- tract was amended at an additional cost of over $500,000. FAA could not provide us with data justifying its decision to authorize a research and development effort under the production contract, but this decision was material to the contractor's failure to deliver in accordance with the contract terms.