oversight

Sale of Surplus Government-Owned Milling Machine

Published by the Government Accountability Office on 1971-03-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 COMPTROLLER     GENERAL     OF   THE   UNITED   STATES
                               WASHINGTON.    D.C.   200548




B-171563                                                                  MARIO WI




     On Decmber 13, 1970, you sent us a letter from Mr. Vincent P.
ReusSngwhich questioned the propfiety of the
Government-ownedCincinnati.~~~~~~.~~~~S~~~~~-machine,,by.the
S~I~ti~~~E~r~~~Cornpany.
m~~p~~~-gg"-~~~~~~~                         You requested
                               -‘zbto the sitmtion        that weif
                                                    to detene
it warrants an extensive investigation.
     We discussed this sale with Southern Electronic Engineering
Comm, the selling agent; the Defense Contract-Administration
Services Region, Atlanta, which was responsible for administering
the sale; Department of Defense officials; Mr. Michael P. Reusing
of Tucker Tool and Dye Campany;and Mr. Vincent P. Reusing of'
NewYork. We reviewed surplus sales regulations and instructions
and the bidding and sales records pertinent to this case.
     The milling machine was manufactured by the Cincinnati Milling
and Grinding Machine Company and cost $49,279. ~l21ou.gh the property
record showed 1953 as the date of manufacture, Southern Electronic
E%@.neeringCanrpsnyadvised us that the machine was actually manu-
factured in 194-6or 1947. They stated that this type of machine, '
which traces or mills according to patterns, is no longer mauu-
factured. Newer models use tapes for mil.Eng operations. They
stated that the machine was no longer dependable for milling and
had been used only for drilling holes. According to the property
records, repairing, rebuildiug or overhauling the machine would
cost $35,ooo.
      On April 3, 1970, the Defense&                            Center,
which controls  all Government-owned idle industrial equipment in the
hands of defense contractors, authorized the Defense Contract Admini-
stration Services Region, Atlanta, to dispose of the milling machine
locally.   On July 22, 197'0, Southern Electronic Engineering Company
was advised to sell the millings machine using formal bid procedures
provided in Armed Services Procurement Regulation (Para. 24.206.2).




                        50TH ANNlVERSARY                1921- 1971 [cE77
B-171563

     The bidders' list furnished to Southern Electronic Engineering
Campany contained the names of 16 firms throughout the United States
which previously had shown interest in b@ng surplus machinery.
      On September 30, 1970, Southern Electronic   Engineering Company
requested bids from all the firms on the list plus two others.
Neither Square Service Corporation, the successful bidder, nor Tucker
Tool and Die Compsny were on the biddersa list--they    apparently
learned about the sale through other channels.
      The invitation    for bids specified that sealed bids would be
opened at 4:30 p.m ., on October 19, 1970, and that a bid deposit
equal to 20 percent of the bid price was required with each bid,
Southern Electronic     Engineering Company representatives  opened the
sealed bids on October 19, 1970, in the presence of a Government
representative,     who witnessed the bid opening and signed the abstract
of bids, as required by the Armed Services Procurement Regulation.
According to the bid abstract,      the following responses were received.
                   iz?2E!x                                    Response'
Mickleburgh Machinery Company, Inc., Pennsylvania                 No bid
Campbell-Sorensen,Michigan                                        $2,086
Square Service Corporation, New Jersey                            $2,180
The Tumpane Company of Georgia                                    $1,720
Machinery Systems Corporation, New York                           No bid
A representative   from Ctipbell-Sorensen,   the second highest       bidder,
was also present   at the bid opening.
       On October 21, 1970, an official of the Defense Contract Admini-
stration Services Region, Atlanta, approved the sale to the highest
bidder, the Square Service Corporation.    A representative  of Square
Service Corporation took delivery of the milling machine on October 26,
1970. The net proceeds of the sale were received on October 28, 1970.
      In our opinion, the sale was conducted in accordance with Govern-
ment regulations   and was made to the highest bidder.  In accordance with
discussions with your office,   we plan no further work on this case.
                                             Sincerely   yours,



                                Assistant
                                             of the United States
The Honorable William    Proxmire
United States Senate