ber 30, 1969, Public Law 91-175, 83 Stat. 805, which created the Overseas Private Investment Corporation. It provides:

SEC. 236. INCOME AND REVENUES. In order to carry out the purposes of the Corporation, all revenues and income transferred to or earned by the Corporation, from whatever source derived, shall be held by the Corporation and shall be available to carry out its purposes, including without limitation—

(a) payment of all expenses of the Corporation, including investment promotion expenses:

(b) transfers and additions to the insurance or guaranty reserves, the Direct Investment Fund established pursuant to section 235, and such other funds or reserves as the Corporation may establish at such time and in such amounts as the Board may determine; and

(c) payment of dividends, on capital stock, which shall consist of and be paid from net earnings of the Corporation after payments, transfers, and additions under subsections (a) and (b) hereof. [Italic supplied.]

During its legislative history, section 236 was designated as section 326 of H.R. 14580. As to that section, the report of the House Committee on Foreign Affairs in House Report No. 91-611, dated November 6, 1969, at page 30 stated:

This section provides for the use of revenues and income earned by the Corporation, including fees from insurance and guaranty programs, interest from loans, dividends, and other receipts characterized as income. Such funds shall be available to carry out the Corporation's purposes, including the payment of all operating and administrative expenses incurred in conjunction with the Corporation's activities. In addition, the Board of Directors may make allocations from this account to the Insurance or Guaranty Reserves, the Direct Investment Fund, or other funds or reserves which the Corporation may establish. The Corporation will then pay to the U.S. Treasury dividends consisting of its net earnings after payment of expenses and allocation to reserves and other funds.

See to the same effect page 16 of the Committee Print of the "Sectionby-Section Analysis of the Proposed Foreign Assistance Act of 1969” dated June 12, 1969, prepared by the Agency for International Development for the use of the members of the Committee on Foreign Affairs and of the House of Representatives in connection with H.R. 11792, an earlier bill which included a similar section.

Neither section 236 nor its legislative history as set out above or elsewhere nor any other provision that we could find expresses a legislative intent directed toward exempting the specific amounts in question. from the requirement of being deposited into the general fund of the Treasury as miscellaneous receipts. Nevertheless there is no doubt that these amounts are acquired as the result of the activities of the Corporation. The language of section 236 is broad and we believe that use of the words "all revenues and income *** earned by the Corporation, from whatever source derived" appearing in that section justifies the conclusion that these amounts be held by the Overseas Private Investment Corporation to be included in amounts available for carrying out its purposes. In view thereof, the questions presented are answered in the affirmative.

[B-174829]

Contracts-Negotiation-Sole Source Basis-Broadening Compe

tition

The sole source award for the procurement of band III variable heads for radio relay sets from the Canadian Commercial Corporation, who together with its subcontractor-the Canadian Marconi Corporation (CCC/CMC)—developed the bands I and II in contemplation of the United States/Canada memorandum of understanding for defense production, which was made on the basis of the absence of engineering drawings suitable for competitive procurement due to the delinquency of CCC/CMC in furnishing the data package, and the urgency of the need for the heads, will not be questioned, as the urgency of the procurement is supported by a Determination and Findings of public exigency that is final pursuant to 10 U.S.C. 2310(b). However, the decisions of the procurement agency contributing largely to the undesirable choice of a sole-source award, future procurement actions should reflect the competition required by the statutory procurement system.

To the Secretary of the Army, August 1, 1972:

We refer to the protest of The Magnavox Company against the proposed sole-source award to the Canadian Commercial Corporation, and subcontract with the Canadian Marconi Corporation (CCC/ CMC), for the production of band III variable heads of the AN/GRC103 (v) radio relay set under request for proposals (RFP) DAABO5– 72-R-0034, issued by the Army Electronics Command (ECOM).

While we find no legal bases to question the proposed sole-source award, we feel that the circumstances involved require our comments as to the efficacy of the band III variable head program. In any event, subject to the time restraints administratively imposed on this program, we believe that the record, as we view it, would require the procurement activity to fully re-review its sole-source decision in the light of our conclusions reached here.

To reach our conclusions we have drawn on facts reported to us by both the procurement activity and Magnavox. Although not fully documented, we feel that the following is a fair statement of the background leading up to the present controversy.

The radio itself and bands I and II were developed by CCC/CMC in the early 1960's, presumably in contemplation of the United States/ Canada memorandum of understanding for defense production. Initially, no technological data was developed for use of the United States-apparently because the agreement at that time did not provide for the procurement data contract coverage. ASPR 6-507 contains the MOU (Memorandum of Understanding), paragraph 13 of which is pertinent to our inquiry:

13. Other Research and Development Efforts Not in Defense Development Sharing Program:

a. Consistent with normal DOD source selection procedures, Canadian firms may bid for DOD research and development contracts which are to be funded solely by the United States. DOD will evaluate proposals from qualified Canadian

firms on a parity with proposals received from United States firms. CDDP undertakes to ensure that Canadian firms comply with DOD procurement procedures.

All the work on the radio and bands I and II was accomplished on a sole-source basis by CCC/CMC until May 15, 1969, when ECOM issued invitation for bids (IFB) DAAB05-69-B-0422-a two-step procedure for the development and production of a band I head through reverse engineering of a Government-furnished model (CCC/ CMC model) and a performance specification. Various "transferable technologies" were also available in the form of a 1966 test report on the CCC/CMC development efforts. Production quantities over a 2-year period were 71 band I heads for the first year and 840 band I heads for the second year, with a 112-percent option applicable to both years. The IFB also contained a requirement for the independent research and development and production, based on a performance specification only, of 15 band II heads and 15 band III heads, plus delivery of a procurement data package sufficient for competitive reprocurement of the radio and bands I, II and III heads.

On June 25, 1969, Magnavox was awarded contract DAAB05-69C-1332 under this IFB at the following prices: $9,977 each for band I production for both years; $8,945 each for the option quantities; $25,102 each for research, development and production of the band II head; $25,042 each for research, development and production of the band III head; $376,000 for the entire competitive reprocurement data package. We note that CCC/CMC's prices for both years and option quantities of band I heads were $13,995; the cost for the reprocurement package for bands I, II and III was $55,210. We understand that Magnavox performed in accordance with the contract provisions, but the second year production of the band I heads was canceled in August 1971 due to a lack of requirements. It is our further understanding that this competitive procurement was made necessary because of the lack of coverage in the early CCC/CMC contracts for the furnishing of a reprocurement data package, and because separate efforts to purchase a data package from CCC/CMC were unproductive.

On April 8, 1969, sole-source award of contract DAABO7–69–C– 0141 was made to CCC/CMC for the production of bands II and III heads, 100 each at a unit price of $34,950.15. Item 0011 required the delivery of engineering data and drawings applicable to bands II and III at a cost of $642,362. The complete data package has not been delivered to date.

In December 1970, ECOM issued an RFP to CCC/CMC and Magnavox for the production of 131 radios with band II heads, 83 radios with band III heads and 145 band III heads. Contract DAABO5-71

C-3716 was awarded to CCC/CMC on February 18, 1971, at the prices of $11,016, $11,016 and $4,991 each, respectively. The comparable Magnavox prices were $11,591, $11,591 and $5,206, respectively.

On March 29, 1972, RFP DAABO5-72-R-0034, the subject of this protest, was issued to CCC/CMC for production of 216 band III heads. The supporting determination and finding (D&F) cited 10 U.S. Code 2304 (a) (2), as implemented by ASPR 3-202.2 (vi), as negotiation authority because "the public exigency will not permit the delay incident to advertising." The procurement request dated February 15, 1972, invoked Uniform Materiel Movement and Issue Priority System (UMMIPS) "05." ASPR 3-202.2(vi) provides in this regard:

In order for the authority of this paragraph 3-202 to be used, the need must be compelling and of unusual urgency, as when the Government would be seriously injured, financially or otherwise, if the supplies or services were not furnished by a certain date, and when they could not be procured by that date by means of formal advertising. When negotiating under this authority, competition to the maximum extent practicable, within the time allowed, shall be obtained. The following are illustrative of circumstances with respect to which this authority may be used:

(vi) Purchase request citing an issue priority designator 1 through 6, inclusive, under the Uniform Materiel Movement and Issue Priority System (UMMIPS).

The D&F states, in part:

2. Procurement by negotiation of the above described equipment is necessary because:

a. The purchase request cites UMMIPS Priority Designator "05" with deliveries required to begin 31 March 1973 and complete 31 January 1974 to support deployment of units in overseas theaters.

b. A complete procurement data package to permit formal advertising will not be available until November 1972, when production drawings will be available. Allowing 4 months administrative lead time to award a contract and 24 months production lead time for a new contractor, the first delivery under formal advertising procedures would be March 1975. The requirement for initial production tests by TECOM would delay fielding equipment made by a new contractor another 6 months until September 1975.

c. Canadian Marconi Company, a current producer of Band III RF Variable Heads and AN/GRC-103 Radio Sets, is the only known source who can furnish the equipment to be interchangeable with Band III RF Variable Heads already fielded. Based on a May 1972 award, Canadian Marconi can begin deliveries in March 1973.

3. Use of formal advertising for procurement of the above described equipment is unpracticable because solicitation by formal advertising procedures and award thereunder cannot be effected in time to assure delivery at the earliest possible date.

Magnavox protests the proposed sole-source award to CCC/CMC under RFP DAAB05-72-R-0034 for the following reasons: (1) CCC/ CMC is not the only qualified source available; (2) the Army possesses sufficient technical data to permit competition; (3) Magnavox can produce an interchangeable, compatible unit from its own band III design; (4) Magnavox can meet the required delivery schedule; and (5) the proposed sole-source award would reward CCC/CMC for its

delinquent furnishing of the required procurement data package and provide it with an it with an incentive to forestall future competitive procurements.

The Army has justified the proposed sole-source award on these bases: (1) the nonavailability of a technical data package precludes competition; (2) the supplies are urgently needed and CCC/CMC is the only source which can meet its required delivery schedule; (3) the Magnavox version of the band III head cannot be introduced into the Army's supply system because of the logistical problems in supporting two different designs; and (4) the administrative decision to negotiate under 10 U.S.C. 2304 (a)(2) is final.

Magnavox offers two methods whereby it could satisfy the urgent time requirements. First, Magnavox proposes to utilize its band III design developed under contract DAAB05-69-C-1332. The Army, however, points out that the Magnavox configuration differs from the CCC/CMC configuration, now part of the Army's supply system. We understand that, except for a difference in size of the pin and hole arrangement which insures proper mechanical alignment when the variable band head is inserted in the radio, both designs are functionally interchangeable and compatible. Moreover, we are informed that the size discrepancy is minor and that no fault for the discrepancies has been assessed. It is not disputed that the Magnavox design performs as contractually required. Rather, the Army maintains that the difference in internal circuitry and components precludes dual logistic support.

The Magnavox units were required under its contract to be interchangeable and compatible with the existing radio configuration. From the record, it is obvious that an effort of the nature expected of Magnavox would not provide for total commonality of components with the CCC/CMC model. Moreover, the Army has expended $375,630 for the Magnavox effort for the development and production of the 15 band III heads plus a portion of $376,000 applicable to the engineering data package for band III. But we have been informed that the Magnavox band III effort was not intended to yield a unit for deployment. Rather, it was ECOM's intention to procure a test model and data for an alternative design as insurance in the event that CCC/CMC either failed to produce a working band III head or deliver an engineering data package suitable for competitive reprocurement. In fact, the Magnavox band III heads were never subjected to testing by the Army's Test and Evaluation Command.

We do not understand the rationale of the Magnavox contract insofar as that contract relates to the CCC/CMC sole-source situation. While ECOM may have intended to utilize the Magnavox contract data to avoid future sole-source awards, no steps were taken to imple