B-125933, NOV. 17, 1955

B-125933, NOV. 17, 1955

TO THE HONORABLE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 27, 1955, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY OF THE NAVY (MATERIEL), REQUESTING A DECISION AS TO THE APPROPRIATE ACTION TO BE TAKEN BY YOUR DEPARTMENT IN RESPECT TO AN ADJUSTMENT IN BID PRICE REQUESTED BY H. Z. ROSENBERG AND COMPANY, BUFFALO, NEW YORK, IN CONNECTION WITH CONTRACT NO. N189S-14415A (S) (SALES INVITATION NO. B-30-56), ISSUED BY THE U.S. NAVY SUPPLY CENTER, NORFOLK, VIRGINIA.

BY INVITATION NO. B-30-56, THE U.S. NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA, OFFERED FOR SALE CERTAIN USABLE MATERIAL OF VARIOUS KINDS, THE BIDS TO BE OPENED ON AUGUST 26, 1955. IN RESPONSE THERETO, H. Z. ROSENBERG AND COMPANY SUBMITTED A BID ON ITEM NO. 3103 COVERING 51,663 "MAGAZINE, FILM, METAL, TYPE AN-A-6, EMPTY," ETC., AT A UNIT PRICE OF $0.1377 EACH OR A TOTAL PURCHASE PRICE OF $7,114, AND MADE THE REQUIRED DEPOSIT. THE BID WAS ACCEPTED ON SEPTEMBER 9, 1955.

IT APPEARS THAT SUBSEQUENT TO THE AWARD THE CONTRACTOR ADVISED THAT ON THE BASIS OF A SPOT CHECK OF THE MATERIAL IT APPEARED THAT THE SPECIFIED QUANTITY WAS SHORT APPROXIMATELY 7,000 UNITS. UPON A REINVENTORY OF THE ENTIRE LOT, IT WAS DISCOVERED THAT NOT ONLY DID A LARGE PORTION OF THE MAGAZINE CONTAIN FILM BUT WERE OF SEVERAL DIFFERENT STOCK NUMBERS OTHER THAN THE STOCK NUMBERS APPLICABLE TO THE MAGAZINES OFFERED FOR SALE; THAT 40,810 UNITS WERE REQUIRED TO BE RETURNED TO THE AVIATION SUPPLY OFFICE AT PHILADELPHIA FOR RE-USE, AND THAT 325 MAGAZINES WERE STAMPED ,PROPERTY OF EASTMAN KODAK CO.' THUS, OF THE ENTIRE QUANTITY SOLD AND AWARDED, IT WAS FOUND THAT ONLY 11,085 UNITS, WHICH ARE EMPTY, OF THE SPECIFIC TYPE ADVERTISED REMAINED FOR DELIVERY TO THE CONTRACTOR.

AS THE RESULT OF COMMUNICATIONS BETWEEN THE U.S. NAVAL SUPPLY CENTER AND THE CONTRACTOR, THE LATTER OFFERED IN ITS LETTER OF OCTOBER 10, 1955, TO ACCEPT THE ENTIRE QUANTITY AT THE AGREED CONTRACT PRICE OR TO ACCEPT THE AVAILABLE QUANTITY OF 11,085 UNITS AT AN ADJUSTED PRICE OF $0.095 PER UNIT. IN COMMENTING ON THE CONTRACTOR'S SUGGESTION FOR SETTLEMENT THE CONTRACTING OFFICER POINTED OUT IN HIS STATEMENT OF FACTS AND RECOMMENDATION DATED OCTOBER 12, 1955. THAT THE CONTRACTOR INSPECTED THE MATERIAL--- ADVERTISED AS EMPTY FILM MAGAZINES--- AND FOUND THAT MANY OF THE UNITS CONTAINED FILM, THAT HE WAS AWARE OF THE INCLUSION OF SEVERAL TYPES OF MAGAZINES WITHIN THE LOT, AND MADE HIS BID ACCORDINGLY. IT IS THE VIEW OF THE CONTRACTING OFFICER THAT THE DELIVERY TO THE PURCHASER OF THE 11,085 MAGAZINES AT AN ADJUSTED PRICE OF $0.095 IS EQUITABLE BOTH TO THE PURCHASER AND TO THE GOVERNMENT.

IT APPEARS THAT IN ACCORDANCE WITH THE INVITATION TO BID THE CONTRACTOR INSPECTED THE UNITS AS ADVERTISED AND ON THE BASIS OF SUCH INSPECTION SUBMITTED A BID OF $0.1377 PER UNIT WHICH, BEING THE HIGHEST BID RECEIVED, WAS ACCEPTED BY THE GOVERNMENT. HOWEVER, YOUR DEPARTMENT NOW WISHES TO RETAIN 40,810 UNITS. AS A RESULT, THE MATERIALS AVAILABLE FOR DELIVERY ARE NOT THOSE WHICH WERE ADVERTISED OR DISPLAYED FOR INSPECTION, EITHER AS TO QUANTITY OR QUALITY, AND WHICH THE CONTRACTOR HAD A LEGAL RIGHT TO EXPECT. ACCORDINGLY, THERE IS NO OBJECTION TO DELIVERY OF THE AVAILABLE QUANTITY AT THE SUGGESTED ADJUSTED PRICE WHICH APPEARS TO BE FAIR AND REASONABLE UNDER THE CIRCUMSTANCES.