B-128049, JUN. 5, 1956

B-128049: Jun 5, 1956

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TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED MAY 24. REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO AN ERROR ALLEGED BY THE FIRESTONE TIRE AND RUBBER COMPANY TO HAVE BEEN MADE IN ITS BID DATED MARCH 19. IT IS TATED: "WE ARE ENTERING THIS BID ON THE BASIS OF EXCLUDING ARTICLE 24 PATENT INDEMNITY CLAUSE.'. TWO OTHER BIDS WERE RECEIVED AT UNIT PRICES OF $755 AND $793.04. BIDS WERE OPENED MARCH 20. SINCE IT WAS INCLUDED IN ERROR.'. IN THE LETTER IT IS STATED: "* * * THE ERROR RESULTED FROM A PRACTICE ESTABLISHED DURING OUR ORIGINAL NEGOTIATIONS WITH BUSHIPS FOR 15 MAN BOATS IN JUNE 1. IN AS MUCH AS THE 15 MAN BOAT WAS A NEW PRODUCTION ITEM AT THAT TIME.

B-128049, JUN. 5, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED MAY 24, 1956, FROM THE ASSISTANT SECRETARY OF THE NAVY (MATERIAL), WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN WITH RESPECT TO AN ERROR ALLEGED BY THE FIRESTONE TIRE AND RUBBER COMPANY TO HAVE BEEN MADE IN ITS BID DATED MARCH 19, 1956, SUBMITTED IN RESPONSE TO INVITATION NO. 600-789-56-S, ISSUED BY THE UNITED STATES NAVY PURCHASING OFFICE, WASHINGTON, D.C.

THE FIRESTONE COMPANY BID, SIGNED BY J. J. SHEA, VICE-PRESIDENT, PROPOSED TO FURNISH 151 INFLATABLE LANDING BOATS AT A UNIT PRICE OF $676.55. HOWEVER, IN THE BIDDER'S LETTER OF MARCH 19, 1956, SIGNED BY C. D. SMITH, MANAGER, DEFENSE PRODUCTS DIVISION, SUBMITTING THE BID, IT IS TATED:

"WE ARE ENTERING THIS BID ON THE BASIS OF EXCLUDING ARTICLE 24 PATENT INDEMNITY CLAUSE.'

TWO OTHER BIDS WERE RECEIVED AT UNIT PRICES OF $755 AND $793.04.

BIDS WERE OPENED MARCH 20, 1956, AS SPECIFIED IN THE INVITATION. LETTER DATED MARCH 28, 1956, J. J. SHEA REQUESTED THAT THE ABOVE QUOTED EXCEPTION BE CONSIDERED "NULL AND VOID, SINCE IT WAS INCLUDED IN ERROR.' IN THE LETTER IT IS STATED:

"* * * THE ERROR RESULTED FROM A PRACTICE ESTABLISHED DURING OUR ORIGINAL NEGOTIATIONS WITH BUSHIPS FOR 15 MAN BOATS IN JUNE 1, 1951. IN AS MUCH AS THE 15 MAN BOAT WAS A NEW PRODUCTION ITEM AT THAT TIME, IT WAS IMPOSSIBLE TO DETERMINE WHETHER PATENT INFRINGEMENTS MIGHT BE INVOLVED. THEREFORE, BUSHIPS AGREED TO THE DELETION OF THE PATENT INDEMNITY ARTICLE IN THE RESULTING CONTRACT NOBS 54704.

"ALL OF THE FOLLOWING CONTRACTS, NEGOTIATED AT LATER DATES, WERE ALSO ON THE SAME BASIS, THE MOST RECENT OF WHICH IS DATED OCTOBER 6, 1955:

NOBS 61195

NOBS 65148

NOBS 67667

"THE PRACTICE ESTABLISHED FOR THE ABOVE CONTRACTS SHOULD NOT HAVE BEEN INCLUDED IN THIS PROPOSAL AS FIRESTONE PRODUCED 7 PERSON BOATS FOR THE NAVY IN THE PAST AND IS AGREEABLE TO ACCEPTANCE OF THE PATENT INDEMNITY ARTICLE IN ANY CONTRACT RESULTING FROM THIS PROPOSAL.'

THE FILE CONTAINS, ALSO, AN AFFIDAVIT BY MR. SMITH DATED APRIL 12, 1956, STATING THAT HE INCLUDED THE EXCEPTION IN HIS LETTER TRANSMITTING THE BID "IN THE MISTAKEN BELIEF THAT THE BID WAS TO BE CONSIDERED IN CONNECTION WITH THE NEGOTIATION OF A CONTRACT" AND THAT HE DID NOT CONSULT MR. SHEA IN THE MATTER. THERE IS ALSO AN AFFIDAVIT BY MR. SHEA DATED APRIL 12, 1956, STATING THAT IN EXECUTING THE BID HE INTENDED "THAT ALL OF THE TERMS AND CONDITIONS THEREOF WERE ACCEPTED BY THE FIRESTONE TIRE AND RUBBER COMPANY" AND THAT THE EXCEPTION INSERTED IN THE LETTER OF TRANSMITTAL WAS NOT BROUGHT TO HIS ATTENTION AND WAS WITHOUT HIS AUTHORIZATION OR CONSENT.

IN VIEW OF THE FACTS AS REPORTED AND AS SHOWN BY THE FILE, IT MAY BE REGARDED AS SATISFACTORILY ESTABLISHED THAT THE FIRESTONE TIRE AND RUBBER COMPANY MADE A BONA FIDE ERROR IN ITS BID AS ALLEGED AND EXPLAINED BY IT. THERE IS NO INDICATION THAT J. J. SHEA, VICE PRESIDENT, WHO EXECUTED THE BID, HAD ANY INTENTION TO INCLUDE THE EXCEPTION WHICH WAS STATED IN THE LETTER OF RANSMITTAL; AND ASSUMING THAT C. D. SMITH, MANAGER, DEFENSE PRODUCTS DIVISION, HAD AUTHORITY TO INCLUDE THE EXCEPTION IN HIS LETTER OF TRANSMITTAL, IT APPEARS THAT HE DID SO UNDER A MISAPPREHENSION AND THAT SUCH INCLUSION CONSTITUTED AN ERROR IN THE BID. ACCORDINGLY, THE BID OF THE FIRESTONE TIRE AND RUBBER COMPANY, AS ORIGINALLY EXECUTED BY J. J. SHEA, MAY BE CONSIDERED IN MAKING THE AWARD.