B-134340, DEC. 6, 1957

B-134340: Dec 6, 1957

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER DATED NOVEMBER 5. ALLEGES IT MADE IN ITS BID ON WHICH PURCHASE ORDER NO. 22774-P-57-51 (31) IS BASED. THE INDIVIDUAL DESIGNATED BY THE COMPANY IN ITS QUOTATION WAS CALLED. HE WAS CALLED AGAIN AND ASKED TO EXPLAIN THE DIFFERENCE IN THE QUOTED PRICES AND THOSE PAID FOR THE ITEM THE LAST TIME IT WAS PURCHASED FROM THE COMPANY. HE STATED THAT THE NORMAL PRICE IS $3.33 AND THAT THE $35.33 PRICE PROBABLY WAS DUE TO THE FACT THAT THE ITEM WAS NOT THEN IN STOCK AND HAD TO BE RUN AS A SPECIAL ORDER. THE COMPANY ALLEGED THAT THE 72 UNITS PRICED AT $3.33 SHOULD HAVE BEEN PRICED AT $35.33 AND THE 295 UNITS PRICED AT $3.48 SHOULD HAVE BEEN PRICED AT $35.48.

B-134340, DEC. 6, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED NOVEMBER 5, 1957, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (LOGISTICS), WHO REQUESTS A DECISION REGARDING AN ERROR WESTERN ELECTRIC COMPANY, INC., NEW YORK, NEW YORK, ALLEGES IT MADE IN ITS BID ON WHICH PURCHASE ORDER NO. 22774-P-57-51 (31) IS BASED.

IN RESPONSE TO REQUEST FOR PROPOSALS NO. SC-36-039-57-10591-/51), DATED NOVEMBER 15, 1956, WESTERN ELECTRIC COMPANY PROPOSED TO FURNISH SIGNAL ASSEMBLY SWITCHBOARDS CONSISTING OF 5 WECO TYPE 23C COMBINED JACKS AND SIGNALS MOUNTED ON AN 89D SIGNAL MOUNTING AS FOLLOWS:

72 IN COMMERCIAL PACKAGING $3.33 EACH

295 IN MILITARY PACKAGING 3.48 EACH

BECAUSE OF THE VARIANCE BETWEEN THIS PROPOSAL AND THE UNIT PRICE OF $35.33 PAID TO WESTERN ELECTRIC COMPANY UNDER TWO PRIOR AWARDS FOR THE SAME ITEM MADE IN MAY 1956, THE INDIVIDUAL DESIGNATED BY THE COMPANY IN ITS QUOTATION WAS CALLED. HE VERIFIED THE PRICES. SUBSEQUENTLY, HE WAS CALLED AGAIN AND ASKED TO EXPLAIN THE DIFFERENCE IN THE QUOTED PRICES AND THOSE PAID FOR THE ITEM THE LAST TIME IT WAS PURCHASED FROM THE COMPANY. HE STATED THAT THE NORMAL PRICE IS $3.33 AND THAT THE $35.33 PRICE PROBABLY WAS DUE TO THE FACT THAT THE ITEM WAS NOT THEN IN STOCK AND HAD TO BE RUN AS A SPECIAL ORDER.

AFTER NOTICE OF AWARD HAD BEEN SENT TO THE COMPANY, BUT PRIOR TO THE EXECUTION OF THE CONTRACT FORM, BY LETTER DATED FEBRUARY 8, 1957, THE COMPANY ALLEGED AN ERROR IN THAT ITS UNIT PRICE QUOTATION COVERED ONLY THE 89D SIGNAL MOUNTING AND DID NOT INCLUDE THE PRICE FOR THE FIVE 23C COMBINED JACKS AND SIGNALS TO BE EQUIPPED ON THE MOUNTING. THE COMPANY ALLEGED THAT THE 72 UNITS PRICED AT $3.33 SHOULD HAVE BEEN PRICED AT $35.33 AND THE 295 UNITS PRICED AT $3.48 SHOULD HAVE BEEN PRICED AT $35.48. THE PRINTED PRICE LIST SUBMITTED BY THE COMPANY WITH ITS LETTER SUBSTANTIATES THAT THE PRICE FOR THE FIVE 23C COMBINED JACKS AND SIGNALS WOULD BE AN ADDITIONAL $32 AND THAT ONLY THE PRICE FOR THE 89D SIGNAL MOUNTING WAS INCLUDED IN THE PRICE QUOTATION.

PAST PROCUREMENT HISTORY FOR THE SUBJECT ITEM INDICATES THAT FOR THE LAST TEN YEARS THE PRICE HAS RANGED FROM A HIGH OF $39.50 TO A LOW OF $17.42. THE LOWEST PRICE EVER PAID WAS $3.05 TO WESTERN ELECTRIC COMPANY IN 1943, BUT THE CONTRACTING OFFICER DOES NOT CONSIDER THAT SIGNIFICANT AS THE SPECIFICATIONS OF THAT PROCUREMENT ARE NOT KNOWN.

AS OF OCTOBER 8, 1957, 120 OF THE SUBJECT ITEMS HAD BEEN DELIVERED AND ACCEPTED BY THE GOVERNMENT. THE BALANCE OF THE ITEMS ARE REPORTED TO BE IN THE PROCESS OF BEING ACCEPTED.

THE TOTAL PRICE OF THE CONTRACT AS AWARDED IS $1,266.36. THE INTENDED BID PRICE ALLEGEDLY SHOULD HAVE BEEN INCREASED BY $11,744. SINCE THE PRICE QUOTED IS SO COMPLETELY OUT OF LINE WITH THE ALLEGED INTENDED BID PRICE AS WELL AS WITH PRIOR PROCUREMENT HISTORY, IT WOULD BE GROSSLY INEQUITABLE TO REQUIRE THE CONTRACTOR TO ACCEPT THE QUOTED PRICES FOR THE SUPPLIES, DESPITE THE DOUBLE VERIFICATION. THEREFORE, AND SINCE THE AMOUNTS INTENDED TO BE QUOTED APPEAR TO BE SUFFICIENTLY ESTABLISHED BY THE CONTRACTOR'S PRICE LIST, PAYMENT IS AUTHORIZED TO BE MADE AT $35.33 FOR THE UNITS IN COMMERCIAL PACKAGING AND AT $35.48 FOR THE UNITS IN MILITARY PACKAGING. THESE CORRECTED PRICES ARE LOWER THAN THE ONLY OTHER PROPOSAL RECEIVED FOR FURNISHING THE SUBJECT PROCUREMENT.