B-128159, JUN. 26, 1956

B-128159: Jun 26, 1956

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CHAIRMAN NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS: REFERENCE IS MADE TO A LETTER DATED JUNE 7. WAS AWARDED. IT IS STATED THAT AT A PREAWARD CONFERENCE HELD ON MAY 4. THE BID OF THE SOUTHWEST WELDING AND MANUFACTURING COMPANY WAS ACCEPTED AS TO ITEM 3A ON THE BASIS OF ITS BID PRICE OF $317. IS BASED ON A BASIC STEEL PRICE INCREASE OF $11 PER TON COVERING 1. IN WHICH THE COMPANY WAS ADVISED THAT. IT IS STATED THAT AN EXAMINATION OF THE ESTIMATE SHEETS SUBMITTED BY THE SOUTHWEST WELDING AND MANUFACTURING COMPANY INDICATED THAT THE COMPANY USED THE BASE PRICE OF STEEL IN EFFECT BEFORE THE PRICE INCREASE OF APRIL 28. THAT NO ALLOWANCE WAS INCLUDED IN THE BID FOR A PRICE INCREASE IN MATERIALS OR FOR PROFIT.

B-128159, JUN. 26, 1956

TO HONORABLE JEROME C. HUNSAKER, CHAIRMAN NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS:

REFERENCE IS MADE TO A LETTER DATED JUNE 7, 1956, WITH ENCLOSURES, FROM THE EXECUTIVE OFFICER OF YOUR COMMITTEE, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR THE SOUTHWEST WELDING AND MANUFACTURING COMPANY ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. NA2 -1067/W), DATED MAY 23, 1956, WAS AWARDED.

THE AMES AERONAUTICAL LABORATORY, MOFFETT FIELD, CALIFORNIA, BY INVITATION NO. A-15378, REQUESTED BIDS--- TO BE OPENED MAY 1, 1956,--- FOR FURNISHING MATERIALS AND LABOR AND PERFORMING THE WORK NECESSARY FOR THE CONSTRUCTION AT THE LABORATORY OF PRESSURE CHAMBER AND PIPING IN ACCORDANCE WITH SPECIFICATION A-15242, DATED MARCH 19, 1956, AND OF A FLIGHT TEST CHAMBER, BLAST SPHERES, AND SURGE TANK, IN ACCORDANCE WITH SPECIFICATION A-15248, DATED MARCH 20, 1956. IN RESPONSE THE SOUTHWEST WELDING AND MANUFACTURING COMPANY SUBMITTED A BID DATED APRIL 30, 1956, OFFERING TO PERFORM THE SEVERAL ITEMS OF WORK AT THE PRICES SET FORTH OPPOSITE EACH ITEM, INCLUDING A PRICE OF $317,522 FOR THE WORK COVERED BY ITEM 3A. THE FOUR OTHER BIDDERS ON ITEM 3A SPECIFIED PRICES OF $377,390, $398,890, $407,110, AND $460,729.

IN THE EXECUTIVE OFFICER'S LETTER OF JUNE 7, 1956, IT IS STATED THAT AT A PREAWARD CONFERENCE HELD ON MAY 4, 1956, A REPRESENTATIVE OF SOUTHWEST WELDING AND MANUFACTURING COMPANY ALLEGED THAT THE COMPANY HAD MADE AN ERROR IN ITS BID IN THAT IT HAD FAILED TO INCLUDE AN ALLOWANCE IN ITS BID PRICE TO COVER AN INCREASE IN STEEL PRICES EXPECTED DURING THE LIFE OF THE CONTRACT. BECAUSE TIME DID NOT PERMIT THE SUBMISSION OF THE MATTER TO OUR OFFICE PRIOR TO AWARD, THE BID OF THE SOUTHWEST WELDING AND MANUFACTURING COMPANY WAS ACCEPTED AS TO ITEM 3A ON THE BASIS OF ITS BID PRICE OF $317,522, SUBJECT TO CORRECTION, IF AUTHORIZED, BY THE GENERAL ACCOUNTING OFFICE, AND THE COMPANY ACCEPTED THE AWARD UPON THAT CONDITION.

IN A CONFIRMING LETTER OF MAY 14, 1956, THE COMPANY REQUESTED THAT THE CONTRACT PRICE OF THE WORK BE INCREASED BY $6,303, WHICH AMOUNT, IT STATED, IS BASED ON A BASIC STEEL PRICE INCREASE OF $11 PER TON COVERING 1,146,000 POUNDS OF MATERIAL AS LISTED IN ITS ESTIMATE SHEETS. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY SUBMITTED ITS ESTIMATE SHEETS, A COPY OF A QUOTATION MADE TO ONE OF ITS CUSTOMERS, COPIES OF INTER-OFFICE MEMORANDA DATED MAY 4 AND 7, 1956, AND A COPY OF A LETTER DATED MAY 4, 1956, RECEIVED FROM A SUPPLIER, THE COLORADO FUEL AND IRON CORPORATION, IN WHICH THE COMPANY WAS ADVISED THAT, EFFECTIVE ON ALL SHIPMENTS 12:01 A.M., APRIL 28, AND LATER, THE BASE PRICE ON CARBON STEEL PLATES WOULD $5.35 PER CWT. AND ON ABRASION RESISTANT STEEL, $6.20 PER CWT., F.O.B. CLAYMONT, DELAWARE. IN THE EXECUTIVE OFFICER'S LETTER OF JUNE 7, IT IS STATED THAT AN EXAMINATION OF THE ESTIMATE SHEETS SUBMITTED BY THE SOUTHWEST WELDING AND MANUFACTURING COMPANY INDICATED THAT THE COMPANY USED THE BASE PRICE OF STEEL IN EFFECT BEFORE THE PRICE INCREASE OF APRIL 28, 1956, AND THAT NO ALLOWANCE WAS INCLUDED IN THE BID FOR A PRICE INCREASE IN MATERIALS OR FOR PROFIT.

IN THESE CIRCUMSTANCES, AND SINCE THE ERROR WAS ALLEGED AND SATISFACTORILY EXPLAINED PRIOR TO AWARD--- WHICH AWARD WAS MADE AND ACCEPTED SUBJECT TO CORRECTION BY OUR OFFICE--- CONTRACT NO. NA2 1067/W) MAY BE AMENDED TO INCREASE THE CONSIDERATION TO $323,825, WHICH AMOUNT IS STILL LOWER THAN ANY OF THE OTHER BIDS RECEIVED ON THE PROJECT.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE AMENDMENT TO BE ATTACHED TO THE CONTRACT.

THE PAPERS, WITH THE EXCEPTION OF THE CONTRACTOR'S BID AND BID BOND, ARE BEING RETAINED.