B-158145, AUG. 15, 1966

B-158145, AUG. 15, 1966

TO WABASH SMELTING, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 3, 1966, REQUESTING RECONSIDERATION OF OUR EARLIER DECISION OF JANUARY 26, 1966, B-158145, WHICH DENIED REFORMATION OF CONTRACT NO. DSA-34-S-5660, BY REDUCING THE PRICE OF ITEM 18, FOR THE PURCHASE OF GOVERNMENT SURPLUS SCRAP BY YOUR COMPANY. IN YOUR LETTER IT IS ASSERTED CERTAIN FACTS WERE NOT TAKEN INTO CONSIDERATION IN REACHING OUR DECISION.

CONTRACT DSA-34-S-5660 WAS BASED ON INVITATION FOR BIDS (IFB) 34-S 65-78 IN WHICH ITEM 18 WAS DESCRIBED ON PAGE 2 AS FOLLOWS:

"18. ALUMINUM, SCRAP, CONTAMINATED, DERIVED FROM 40MM

NOSE FUSES THAT HAVE BEEN RUN THROUGH DEACTIVATION

FURNACE.

(LOC: OUTSIDE) 100,000 LBS.

SEE SPECIAL CONDITIONS, ARTICLE AH"

BIDS WERE SUBMITTED, AS STATED IN OUR PRIOR DECISION, ON THE BASIS OF WEIGHT WITH THE HIGHEST BID BEING THAT OF YOUR COMPANY AT $0.1778 PER POUND.

YOUR LETTER INDICATES THAT SAMPLES OF ITEM 18 TAKEN BY YOUR COMPANY REVEALED THE FOLLOWING PERCENTAGES ACCORDING TO WEIGHT FOR ITS METAL COMPONENTS:

"ALUMINUM CONTAINED 38 TO 43 PERCENT

IRON CONTAINED 37 TO 48 PERCENT

BRASS CONTAINED 16 TO 19 PERCENT"YOU ASSERT THAT SINCE ALUMINUM CONSTITUTES LESS THAN 50 PERCENT OF THE WEIGHT (THE BASIS ON WHICH SOLD) IT WAS IMPROPER TO DESCRIBE THE SURPLUS PROPERTY AS "ALUMINUM, SCRAP," AND THE DESCRIPTION SHOULD HAVE BEEN AS SET OUT IN CITED SUBSEQUENT GOVERNMENT OFFERS TO SELL SUCH SURPLUS PROPERTY AS "MISCELLANEOUS METALS, SCRAP.'

THE RECORD CONTAINS A REPORT OF A PRIOR SAMPLING OF THE SAME PROPERTY BY A DEFENSE SURPLUS SALES OFFICE (DSSO) REPRESENTATIVE ON AUGUST 20, 1965, WHICH STATES, IN PART, AS FOLLOWS:

"2. MR. WILLIAM WARSHAUER, VICE PRESIDENT OF WABASH SMELTING, INC. TOOK ME TO THE PLANT WHERE SUBJECT ITEM HAD BEEN STORED. I EXAMINED THE ENTIRE BIN USING MY SMALL MAGNET AND FOUND HEAVY CONTAMINATION OF IRON THROUGHOUT.

"3. I REQUESTED ASSISTANCE FROM PLANT PERSONNEL AND TOOK SAMPLES FROM ALL OVER THE PILE AND PLACED IN A CONTAINER, MIXED IT, AND TOOK THREE SAMPLES FROM THE CONTAINER; I WEIGHED THEM, REMOVED THE IRON WITH A MAGNET, THEN WEIGHED THE ALUMINUM, IRON AND DIRT (CHAR FROM FURNACE, ETC.). THE RESULTS ARE AS FOLLOWS:

CHART

SAMPLE NO. 1.

ORIGINAL WEIGHT - 5 LBS.

IRON REMOVED - 1.80 LBS. - 36.00 PERCENT

ALUMINUM - 3.19 LBS. - 63.80 PERCENT

DIRT - .01 LBS. - .20 PERCENT

SAMPLE NO. 2.

ORIGINAL WEIGHT - 4 LBS.

IRON REMOVED - 1.70 LBS. - 42.50 PERCENT

ALUMINUM - 2.27 LBS. - 56.75 PERCENT

DIRT - .03 LBS. - .75 PERCENT

SAMPLE NO. 3.

ORIGINAL WEIGHT - 9.69 LBS.

IRON REMOVED - 3.04 LBS. - 31.37 PERCENT

ALUMINUM - 6.62 LBS. - 68.31 PERCENT

DIRT - .03 LBS. - .32 PERCENT

"4. DURING MY INSPECTION I NOTED THAT THE IRON CONTAMINATION WAS HEAVIER IN SOME AREAS OF THE PILE THAN OTHERS, MAKING IT DIFFICULT TO ESTIMATE AN AVERAGE CONTAMINATION.

"5. ALTHOUGH THE ONLY WAY TO DETERMINE THE EXACT AMOUNT OF IRON CONTAINED IN SUBJECT ITEM WILL BE TO RUN IT OVER A MAGNETIC BELT, AND THIS WILL REQUIRE RUNNING AT LEAST TWICE DUE TO SMALL PIECES OF ALUMINUM BEING HELD BETWEEN A PIECE OF FERROUS METAL AND THE MAGNET, I ESTIMATE THE IRON CONTAMINATION IN THIS MATERIAL TO BE 40 PERCENT.'

IT APPEARS THAT THE TECHNIQUE EMPLOYED BY YOUR COMPANY IN REACHING ITS CONCLUSIONS WAS BY SAMPLING RATHER THAN BY THE MORE ACCURATE PROCESS OF USING A MAGNETIC BELT AS MENTIONED BY THE DSSO REPRESENTATIVE (SEE NUMBERED PARAGRAPH 5 ABOVE). IN VIEW THEREOF, WE FIND NO COMPELLING REASON TO ADOPT YOUR FINDING OR ESTIMATE OF APPROXIMATELY 40 PERCENT MAXIMUM ALUMINUM OVER THE DSSO FINDING OF APPROXIMATELY 40 PERCENT CONTAMINATION SINCE BOTH ESTIMATES WERE BASED ON A SIMILAR TESTING OF SAMPLES.

YOUR LETTER OF JUNE 3, 1966, POINTS TO SEVERAL SUBSEQUENT GOVERNMENT OFFERS TO SELL SCRAP METALS AND THE FACT THAT ITEM DESCRIPTIONS OF MATERIAL, PRESUMABLY SIMILAR TO THAT HEREIN INVOLVED, HAVE BEEN PROGRESSIVELY CLARIFIED TO INCLUDE STATEMENTS AS TO PERCENTAGES OF CONTAMINATION AND HAVE IN THE LATEST OFFERS USED THE DESCRIPTION "MISCELLANEOUS METALS, SCRAP" IN PLACE OF "ALUMINUM, SCRAP.' PARTICULAR, SALE NO. 37-6035 DATED OCTOBER 5, 1965, DESCRIBED ITEM 2 AS FOLLOWS:

"2. ALUMINUM, SCRAP, CONSISTING OF 40MM NOSE FUSES, HAVE BEEN RUN THROUGH DEACTIVATION FURNACE. WITH OTHER FOREIGN MATTER CONSISTING OF STEEL, BRASS AND ASH RESIDUE NOT TO EXCEED 40 PERCENT OF TOTAL WEIGHT. * * * 100,000 LBS.'

THAT SALE, YOU CONTEND, WAS WITHDRAWN BECAUSE OF A MISDESCRIPTION AND READVERTISED AS PART OF ITEM 47 OF SALE NO. 37-6054 ON NOVEMBER 4, 1965, AND EMPLOYED THE FOLLOWING DESCRIPTION:

"47. MISC. METALS, SCRAP, RESIDUE OF 40MM NOSE FUSES WHICH HAVE BEEN RUN THROUGH A DEACTIVATION FURNACE, INCLUDES 40 PERCENT ALUMINUM, BALANCE STEEL, BRASS AND ASH * * * 200,000 .'

THE CONTRACTING OFFICER HAS EXPLAINED THAT THE WITHDRAWAL OF ITEM NO. 2 OF SALE NO. 37-6035 WAS FOR THE PURPOSE OF CORRECTING THE PERCENTAGE OF CONTAMINATION WHICH SHOULD HAVE READ 60 PERCENT INSTEAD OF 40 PERCENT. SUCH REASONING IS BORNE OUT BY THE REVISED DESCRIPTION CONTAINED IN SALE NO. 37-6054, AND ALSO APPEARS TO EXPLAIN THE REVISING OF THE HEADING DESCRIPTION FROM "ALUMINUM, SCRAP" TO "MISC. METALS, SCRAP.' WHILE YOUR ALLEGATIONS WITH RESPECT TO THAT POINT SEEM TO HAVE CONSIDERABLE MERIT, IN VIEW OF THE FACT THAT YOU HAVE OFFERED NO CONVINCING EVIDENCE SHOWING THAT THE ALUMINUM CONTENT OF ITEM 18 COMPOSED LESS THAN A SUBSTANTIAL PERCENTAGE OF THE WEIGHT AS DETERMINED BY THE DSSO REPRESENTATIVE WE ARE UNABLE TO CONCLUDE THAT THE DESCRIPTION WAS ON ITS FACE AMBIGUOUS OR A MISDESCRIPTION OR THAT YOUR COMPANY WAS, IN FACT, MISLED THEREBY IN PREPARING ITS BID.

REGARDING THE PREPARATION OF YOUR BID IT IS NOTED THAT YOU STATED IN YOUR LETTER OF OCTOBER 13, 1965, TO THE CHIEF COUNSEL, DEFENSE LOGISTICS SERVICES CENTER, BATTLE CREEK, MICHIGAN, THAT YOUR BID HAD BEEN DETERMINED AS FOLLOWS:

"WITH REGARD TO OUR TELEPHONE CONVERSATION OF TODAY CONCERNING ITEM 18, SALE NO. 65-78, PLEASE BE ADVISED THAT OUR BID WAS ARRIVED AT IN THE FOLLOWING MANNER.

"MR. WM. H. SCHULTZ OF OUR COMPANY CALLED MR. GEORGE N. GREEN, PROPERTY DISPOSAL OFFICER, USNAD, HASTINGS, NEBRASKA FOR A DESCRIPTION OF THIS ITEM. IN MR. GREEN'S ABSENCE, HE TALKED TO A MRS. SHEPHERD OF THE SAME OFFICE WHO ADVISED THAT SHE WAS FAMILIAR WITH THE MATERIAL. IN ANSWER TO HIS QUESTION, SHE DESCRIBED THAT THE MATERIAL HAD BEEN RUN THROUGH A FURNACE, WAS IN SMALL PIECES, ETC. WHEN ASKED IF THERE WERE ANY OTHER NON- ALUMINUM CONTAMINATION, SHE ADVISED THAT THE MATERIAL WAS CLEAN, EXCEPT FOR THE CONTAMINATION PICKED UP FROM THE FURNACE.

"FROM THE ABOVE DESCRIPTION, IT WAS OUR FEELING THAT THE MATERIAL HAD A VALUE OF $ .1850 PER POUND, DELIVERED OUR PLANT. SUBTRACTING THE FREIGHT FROM THE DELIVERED PRICE, WE ARRIVED AT OUR FIGURE OF $ .1778 PER POUND.'

IT APPEARS, THEREFORE, THAT YOUR PRICE WAS NOT PREDICATED UPON THE DESCRIPTION SET FORTH IN THE IFB, BUT INSTEAD WAS BASED MAINLY UPON REPRESENTATIONS OF A GOVERNMENT EMPLOYEE IN A TELEPHONE CONVERSATION. STATED IN OUR CITED DECISION OF JANUARY 26, 1966, SUCH REPRESENTATIONS CONFERRED NO RIGHTS AND RELIANCE THEREON WAS EXPRESSLY PRECLUDED BY PARAGRAPH 12, PAGE 11, OF THE IFB.

BASED UPON THE FOREGOING, YOUR REQUEST FOR REFORMATION OF THE CONTRACT IS DENIED.