B-124713, SEP. 6, 1955

B-124713, SEP. 6, 1955

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER OF JULY 14, 1955, FROM THE ASSISTANT SECRETARY OF THE ARMY (LOGISTICS AND R AND D), REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN BY THE DEPARTMENT OF THE ARMY IN CONNECTION WITH THE DEFAULT OF CLINTON E. HOBBS COMPANY, BOSTON, MASSACHUSETTS, UNDER CONTRACT NO. DA-33-079-ORD-1732.

BY INVITATION NO. ORD-33-079-54-30, DATED MAY 6, 1954, THE ROSSFORD ORDNANCE DEPOT REQUESTED BIDS--- TO BE OPENED JUNE 3, 1954--- FOR FURNISHING 240 CHAINS, TOW "V" " 1 1/4 INCH DIAMETER BY 4 FEET LONG, TO BE DELIVERED BY NOVEMBER 1954. THE INVITATION PROVIDED THAT THE CHAINS SHOULD BE IN ACCORDANCE WITH "ORDNANCE DRAWING NUMBER C5660942.' FOLLOWING A PRE-AWARD SURVEY OF THE CONTRACTOR'S PLANT BY THE CONTRACTING AGENCY'S REPRESENTATIVE, THE LOW BID OF THE CLINTON E. HOBBS COMPANY, IN THE AMOUNT OF $6,446.40, WAS ACCEPTED ON JUNE 25, 1954.

BY LETTER DATED SEPTEMBER 3, 1954, THE CONTRACTOR ADVISED THAT IT HAD INTERPRETED THE PERTINENT DRAWINGS AS REQUIRING THE FURNISHING OF BBB STEEL CHAIN. IN REPLY DATED SEPTEMBER 15, 1954, THE CONTRACTOR WAS ADVISED BY THE BOSTON ORDNANCE DISTRICT THAT THE DRAWINGS IN QUESTION CALLED FOR WROUGHT IRON CHAINS. CONSIDERABLE CORRESPONDENCE BETWEEN THE CONTRACTING AGENCY AND THE CONTRACTOR FOLLOWED IN WHICH THE FORMER REPEATED ITS REQUEST THAT WROUGHT IRON CHAINS BE FURNISHED WITH THE LATTER ASSERTING THAT THERE WAS A MUTUAL MISUNDERSTANDING REGARDING THE DRAWINGS AND SPECIFICATIONS AND OFFERING TO FURNISH STEEL CHAINS. HAVING FAILED TO DELIVER ANY OF THE CHAINS, THE CONTRACTOR WAS DECLARED IN DEFAULT BY LETTER OF FEBRUARY 4, 1955, AND ADVISED THAT THE SUPPLIES WOULD BE PURCHASED AGAINST ITS ACCOUNT AND THAT IT WOULD BE LIABLE FOR ANY EXCESS COST INCURRED. THE CONTRACTOR HAS FILED A NOTICE OF APPEAL OF THIS ACTION UNDER THE "DISPUTES" CLAUSE OF THE CONTRACT BUT THE CHIEF OF ORDNANCE IS OF THE OPINION THAT THE QUESTION INVOLVED IS A ,LEGAL ISSUE" AND RECOMMENDS THAT THE CONTRACT BE RESCINDED.

IN ITS NOTICE OF APPEAL DATED MARCH 4, 1955, THE CONTRACTOR, IN SUPPORT OF ITS CONTENTION THAT THERE WAS A MUTUAL MISUNDERSTANDING THAT STEEL CHAIN WAS TO BE FURNISHED UNDER THE CONTRACT, STATES:

"YOUR ATTENTION IS FURTHER DIRECTED TO THE FACT THAT IN TWO SURVEYS, ONE PRIOR TO THE AWARD AND ONE SUBSEQUENT, THAT MR. WOODSUM FROM THE BOSTON ORDNANCE DISTRICT CALLED AT THIS PLANT IN CONNECTION WITH SAID CONTRACT TO ASCERTAIN WHETHER OR NOT WE HAD SUFFICIENT STEEL ON HAND TO ENABLE US TO FURNISH THE CHAIN CALLED FOR IN THE ORDER. THIS FACT IS CALLED TO YOUR ATTENTION AS WE FEEL IT INDICATES IN CORROBORATION OF THE MUTUAL MISUNDERSTANDING THAT STEEL CHAIN WAS REQUIRED IN SAID CONTRACT AND AT NO TIME DURING EITHER OF THE CONFERENCES WAS ANY MENTION MADE OF WROUGHT IRON AND WE FEEL THAT THIS INDICATES A MUTUAL MISUNDERSTANDING.'

THE ABOVE STATEMENT IS CORROBORATED IN A MEMORANDUM OF THE CHIEF, BOSTON REGIONAL OFFICE, DATED AUGUST 23, 1954, THE PERTINENT PART OF WHICH IS AS FOLLOWS:

"1. ATTENTION IS DIRECTED TO THE FACT THAT THE SUBJECT CONTRACTOR HAS EVIDENTLY MISINTERPRETED THE REQUIREMENTS ON THIS CONTRACT PERTAINING TO THE MATERIAL TO BE USED.

"2. THE CONTRACTOR BASED HIS BID ON THE USE OF FS-1010 STEEL FOR THE MAIN CHAIN, AND WHEN THE PRE-AWARD SURVEY WAS MADE, THE BASIS OF THE BIDDER'S BID WAS ACCEPTED AND SO REPORTED UNDER PARA 17 ON PAGE 4 OF THE SURVEY WITHOUT THE PRODUCTION SPECIALIST REALIZING THAT THE CONTRACTOR HAD MADE A MISTAKE IN INTERPRETING THE DRAWING REQUIREMENTS.

"3. THE SURVEY PASSED THROUGH PRODUCTION SERVICE BRANCH, AND PROCUREMENT SECTION OF PLANNING AND CONTROL BRANCH, AND EVENTUALLY RESULTED IN A CONTRACT BEING AWARDED BY ROSSFORD ORDNANCE DEPOT, APPARENTLY ON THE ASSUMPTION THAT THE MATERIAL TO BE USED WAS TO BE IN ACCORDANCE WITH DRAWING REFERENCES, NOT TAKING INTO CONSIDERATION THE MATERIAL SPECIFIED IN PARA 17 OF THE PRE-AWARD SURVEY.'

CONSIDERING THE FACT THAT, PRIOR TO AWARD, IT WAS A MATTER OF RECORD THAT THE BIDDER INTENDED TO USE STEEL RATHER THAN WROUGHT IRON AS SPECIFIED IN THE INVITATION FOR BIDS, TOGETHER WITH THE FACT THAT THE PRICE BID WAS CONSIDERABLY LOWER THAN THE OTHER BIDS SUBMITTED, IT APPEARS THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN ON NOTICE THAT AN ERROR HAD BEEN MADE IN THE BID AND SHOULD HAVE REQUESTED THE COMPANY TO REVIEW THE SPECIFICATIONS AND TO CONFIRM ITS BID PRICE PRIOR TO THE ACCEPTANCE OF THE BID. IN THE CIRCUMSTANCES, WE WILL NOT OBJECT TO THE CANCELLATION OF THE CONTRACT WITHOUT LIABILITY TO THE CONTRACTOR, AS RECOMMENDED BY THE DEPUTY DISTRICT CHIEF, BOSTON ORDNANCE DISTRICT.