Award and Administration of Navy Contract for Bomb Suspension Lugs

The Navy's administration of a contract for bomb suspension lugs awarded to the Delaware Fastener Division of David B. Lilly Company, Inc., was reviewed to determine whether the Ships Parts Control Center (SPCC) complied with procurement regulations in awarding the contract and subsequently allowing late deliveries and whether the government incurred additional costs because the contractor failed to meet the original delivery dates.

The Delaware Fastener Division submitted the lowest of three bids for the suspension lugs and received the $223,444 contract without further negotiations. A preaward survey indicated that Delaware Fastener could meet the contract requirements but that a subcontractor had financial problems. Monthly shipments of 5,000 units were to be made until the total quantity of 37,117 was delivered. The contractor missed the first two deliveries because of allegedly defective steel received from suppliers. As of October 31, 1977, Delaware Fastener had only delivered 2,955 of 7,500 units required under a revised schedule. A contract modification was executed on December 5, 1977, to revise further the delivery schedule. SPCC actions in awarding and administering the contract, including the extension of delivery dates, were reasonable under the circumstances and were in accordance with relevant procurement regulations. Little or no additional costs were incurred by the government because of late deliveries.