B-129991, DEC. 11, 1956

B-129991, DEC. 11, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 5, 1956, WITH ENCLOSURES, REQUESTING A DECISION AS TO WHETHER CONTRACT NO. N155 26399, WITH THE BELMONT SMELTING AND REFINING WORKS, INC., BROOKLYN, NEW YORK, MAY BE CANCELLED.

THE U.S. NAVY GENERAL STORES SUPPLY OFFICE, PHILADELPHIA, PENNSYLVANIA, BY INVITATION NO. 155-/2/-672-57, REQUESTED BIDS FOR FURNISHING 20,000 POUNDS OF FERROCHROMIUM ALLOYING ADDITIVE IN ACCORDANCE WITH FEDERAL SPECIFICATION QQ-F-151A, DATED DECEMBER 3, 1941, GRADE B. THE INVITATION DID NOT STATE THAT THE PRICES WERE REQUESTED ON THE BASIS OF EITHER ALLOY OR OF CONTAINED CHROMIUM. HOWEVER, PARAGRAPH I-1. OF THE FEDERAL SPECIFICATION PROVIDES THAT INQUIRIES OR INVITATIONS FOR BIDS ON FERROCHROMIUM SHOULD REQUIRE THAT ALL BIDDERS QUOTE "PER POUND OF CONTAINED CHROMIUM," AND THAT "PAYMENT SHOULD BE MADE ON THE BASIS OF CHROMIUM CONTENT ONLY.'

IN RESPONSE TO THE INVITATION, BELMONT SMELTING AND REFINING WORKS, INC., SUBMITTED A BID QUOTING A UNIT PRICE OF $39 "PER 100 LBS. OF ALLOY" FOR 15,000 POUNDS TO BE DELIVERED TO BOSTON, MASSACHUSETTS, AND $39.15 "PER 100 LBS. OF ALLOY" FOR 5,000 POUNDS TO BE DELIVERED TO NORFOLK, VIRGINIA. THE AMOUNTS SHOWN IN THE TOTAL AMOUNT COLUMN WERE THE RESULT OF THE UNIT PRICES MULTIPLIED BY THE QUANTITIES, AND UNDERNEATH THE AGGREGATE TOTAL WAS SHOWN AS $7,807.50. EACH OF THE THREE OTHER BIDS RECEIVED WAS IN THE AGGREGATE AMOUNT OF $5,936. IN EVALUATING THE BIDS RECEIVED, THE UNIT PRICES QUOTED BY BELMONT SMELTING AND REFINING WORKS, INC., WERE CONSIDERED AS APPLICABLE TO 75 PERCENT CHROMIUM CONTENT, OR A TOTAL OF 15,000 POUNDS OF CHROMIUM, GRADE B FERROCHROMIUM BEING BETWEEN 65 AND 75 PERCENT CHROMIUM CONTENT. ON SUCH BASIS THE BID AMOUNTED TO A TOTAL OF $5,855.63, AND BEING THE LOWEST RECEIVED, IT WAS ACCEPTED ON NOVEMBER 1, 1956, BY A PRELIMINARY NOTICE OF AWARD. THEREAFTER, THE FORMAL AWARD, CONTRACT NO. N155-26399, WAS SENT AND IT PROVIDED THAT THE TOTAL CONTRACT PRICE STATED THEREIN WAS BASED ON AN ANALYSIS OF 75 PERCENT CONTAINED CHROMIUM AND THAT IN THE EVENT A LESSER PERCENTAGE OF CHROMIUM WAS FURNISHED THE CONTRACT PRICE WOULD BE ADJUSTED ACCORDINGLY.

BY LETTER DATED NOVEMBER 14, 1956, BELMONT SMELTING AND REFINING WORKS, INC., ADVISED THAT THE ACCEPTANCE WAS NOT IN ACCORDANCE WITH ITS BID, SINCE ITS BID WAS SUBMITTED ON THE BASIS OF ALLOY RATHER THAN CHROMIUM CONTENT.

IN VIEW OF THE PRICES QUOTED BY THE OTHER BIDDERS AND BECAUSE OF PAST EXPERIENCE IN THE PROCUREMENT OF THE MATERIAL HERE INVOLVED, THERE APPEARS TO HAVE BEEN AMPLE JUSTIFICATION FOR THE METHOD OF EVALUATION EMPLOYED. IT IS A FACT, HOWEVER, THAT THE BID DID SPECIFICALLY STATE THAT THE PRICES QUOTED THEREIN WERE "PER 100 LBS. OF ALLOY.' UNDER THE CIRCUMSTANCES, THE ACCEPTANCE WAS NOT IN ACCORDANCE WITH THE BID AND DID NOT CONSUMMATE A VALID AND BINDING CONTRACT.

ACCORDINGLY, YOU ARE ADVISED THAT CONTRACT NO. N155-26399, DATED NOVEMBER 1, 1956, MAY BE CANCELLED. THE PAPERS ARE RETURNED HEREWITH.

IT IS SUGGESTED THAT FUTURE SIMILAR INVITATIONS FOR BIDS SPECIFICALLY PROVIDE THAT THE PRICES TO BE QUOTED BY BIDDERS BE BASED ON CONTAINED CHROMIUM AS CONTEMPLATED BY THE INSTRUCTIONS CONTAINED IN THE SPECIFICATION.