B-138183, MARCH 4, 1959, 38 COMP. GEN. 585

B-138183: Mar 4, 1959

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IS UNABLE TO FURNISH THE TOTAL REQUIREMENTS OF THE AGENCY BECAUSE THERE WAS AN UNUSUAL DEMAND AND ORDERS EXCEEDED SEVERAL TIMES THE ESTIMATED MINIMUM QUANTITIES STATED IN THE CONTRACT IS NOT LIABLE FOR EXCESS COSTS INCURRED BY THE GOVERNMENT IN PLACING ORDERS FOR A HIGHER QUALITY AND MORE COSTLY PRODUCT WITH ANOTHER MANUFACTURER. ARE INVOLVED.'. GS-00S-17435 WAS ENTERED INTO AS A RESULT OF COMPETITIVE BIDDING AND WAS A . THE ITEMS WHICH ARE HERE INVOLVED ARE NOS. 11 TO 20. THE ESTIMATED QUANTITY FOR EACH OF THE 10 DESTINATIONS WAS SET OUT IN THE INVITATION. THE MONTHLY MINIMUM QUANTITY WAS STATED AS 1. 728 PLIERS AND THE AGGREGATE MINIMUM GUARANTEED QUANTITY WAS STATED AS 5. THE CONTRACT PROVIDED AS FOLLOWS: MONTHLY MINIMUM QUANTITY: BIDDERS ARE ADVISED THAT NO PROVISION IS MADE HEREIN FOR PROGRESSIVE AWARDS.

B-138183, MARCH 4, 1959, 38 COMP. GEN. 585

CONTRACTS - DEFAULTS - PROCUREMENT FROM ANOTHER SOURCE - VARIANCES IN RELET CONTRACTS A CONTRACTOR WHO, UNDER A "REQUIREMENTS" TYPE CONTRACT WHICH PROVIDED THAT THE CONTRACTOR WOULD MANUFACTURE A PRODUCT FOR THE NORMAL SUPPLY REQUIREMENTS OF AN AGENCY, IS UNABLE TO FURNISH THE TOTAL REQUIREMENTS OF THE AGENCY BECAUSE THERE WAS AN UNUSUAL DEMAND AND ORDERS EXCEEDED SEVERAL TIMES THE ESTIMATED MINIMUM QUANTITIES STATED IN THE CONTRACT IS NOT LIABLE FOR EXCESS COSTS INCURRED BY THE GOVERNMENT IN PLACING ORDERS FOR A HIGHER QUALITY AND MORE COSTLY PRODUCT WITH ANOTHER MANUFACTURER.

TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, MARCH 4, 1959:

YOUR LETTER OF DECEMBER 12, 1958, REQUESTS OUR DECISION AS TO WHETHER H. BOKER AND CO., INC., MAY BE RELIEVED OF PAYING EXCESS COSTS INCURRED BY THE GOVERNMENT BY REASON OF ITS FAILURE TO DELIVER CERTAIN QUANTITIES OF PLIERS UNDER CONTRACT NO. GS-11S-17435 DATED JANUARY 14, 1958. ALSO, YOU REQUEST OUR OPINION AS TO THE FEASIBILITY OF GRANTING RELIEF TO CONTRACTORS "WHENEVER CIRCUMSTANCES DICTATE THE EQUITY OF THE MATTER AND ORDERS, FOR SEVERAL TIMES THE ESTIMATED QUANTITIES, ARE INVOLVED.'

CONTRACT NO. GS-00S-17435 WAS ENTERED INTO AS A RESULT OF COMPETITIVE BIDDING AND WAS A ,REQUIREMENTS" TYPE CONTRACT. THE CONTRACT COVERED THE PERIOD FROM FEBRUARY 3, 1958, THROUGH JULY 31, 1958, AND REQUIRED THE CONTRACTOR TO SUPPLY SIX LOTS (150 ITEMS) OF PLIERS TO VARIOUS DESTINATIONS AT STIPULATED UNIT PRICES. THE ITEMS WHICH ARE HERE INVOLVED ARE NOS. 11 TO 20, INCLUSIVE (PART OF LOT NO. 1) AND COVER THE DELIVERY OF AN ESTIMATED QUANTITY OF 5,532 PLIERS, CONFORMING TO DESIGNATED SPECIFICATIONS AND HAVING A POLISHED HEAD (STOCK NO. 5120-223-7396), FOR THE UNIT PRICE OF ?42. THE ESTIMATED QUANTITY FOR EACH OF THE 10 DESTINATIONS WAS SET OUT IN THE INVITATION, LATER MADE PART OF THE CONTRACT, AND TOTALED 5,532 PLIERS. THE MONTHLY MINIMUM QUANTITY WAS STATED AS 1,728 PLIERS AND THE AGGREGATE MINIMUM GUARANTEED QUANTITY WAS STATED AS 5,832. WITH REGARD TO THE MATTER OF QUANTITY, THE CONTRACT PROVIDED AS FOLLOWS:

MONTHLY MINIMUM QUANTITY: BIDDERS ARE ADVISED THAT NO PROVISION IS MADE HEREIN FOR PROGRESSIVE AWARDS, THEREFORE, THE BIDDERS' SUPPLY POTENTIAL MUST BE SUFFICIENT TO ADEQUATELY COVER THE ANTICIPATED DEMAND OVER AND ABOVE THE GUARANTEED QUANTITY FOR EACH ITEM. TO ASSURE ADEQUATE SUPPLY QUANTITIES FOR SATISFACTION OF GSA ORDERS, MONTHLY MINIMUM QUANTITIES HAVE BEEN INDICATED FOR EACH STOCK ITEM. THESE QUANTITIES REPRESENT THE MINIMUM ACCEPTABLE SUPPLY POTENTIAL NECESSARY TO PROVIDE SATISFACTORY CONTRACT PERFORMANCES. THE GOVERNMENT DOES NOT GUARANTEE TO TAKE ANY QUANTITY OTHER THAN ELSEWHERE PROVIDED IN THE INVITATION.

GUARANTEED QUANTITIES: THE AGGREGATE QUANTITY FOR EACH STOCK ITEM IS THE GUARANTEED MINIMUM QUANTITY TO BE ORDERED OUT DURING THE TERM OF THE CONTRACT. FOR PURPOSE OF GUIDANCE TO BIDDERS AND FOR THIS PURPOSE ONLY, ESTIMATED QUANTITIES HAVE BEEN INSERTED FOR EACH DESTINATION. THE GUARANTEED MINIMUM DOES NOT APPLY TO EACH DESTINATION BUT ONLY TO THE AGGREGATE FOR EACH STOCK ITEM. SUCCESSFUL BIDDERS WILL BE REQUIRED TO FURNISH THE MINIMUM AGGREGATE QUANTITY FOR EACH STOCK ITEM AWARDED PLUS ANY ADDITIONAL QUANTITIES, WHICH MAY BE REQUIRED DURING THE PERIOD OF CONTRACT AT THE PRICES AND TERMS STATED HEREIN.

FURTHER, WITH REGARD TO STANDBY STOCK, THE CONTRACT REQUIRED THE CONTRACTOR TO PRODUCE, SET ASIDE AND HAVE ON HAND ONE-THIRD OF THE GUARANTEED QUANTITY OF PLIERS AND THIS RESERVE OF STOCK WAS TO BE USED TO MAKE IMMEDIATE SHIPMENT--- 10 DAYS AFTER RECEIPT OF PURCHASE ORDER-- ON "NORMAL PURCHASE ORDERS.' ALSO, THE CONTRACT STIPULATED THAT ANY ORDER TOTALING IN EXCESS OF $3,000 CONSTITUTING AN UNUSUALLY LARGE QUANTITY, OR ANY ORDER REQUIRING DELIVERY TO OTHER THAN GENERAL SERVICES ADMINISTRATION WAREHOUSES, WAS NOT TO BE SHIPPED FROM STANDBY STOCK BUT WAS PROCESSED AGAINST THE CONTRACTOR'S PRODUCTION FACILITY, SHIPMENT IN THIS CASE TO BE MADE WITHIN 21 DAYS AFTER RECEIPT OF PURCHASE ORDER.

AS TO THE SCOPE OF THE CONTRACT AND THE MAXIMUM ORDER LIMITATION, THE CONTRACTOR PROVIDED AS FOLLOWS:

SCOPE OF CONTRACT: THIS CONTRACT PROVIDES FOR THE NORMAL SUPPLY REQUIREMENTS OF THE GENERAL SERVICES ADMINISTRATION STORES DEPOT DURING THE PERIOD OF FEBRUARY 3, 1958 THROUGH JULY 31, 1958. THE FEDERAL SUPPLY SERVICE IS OBLIGATED EXCEPT IN EMERGENCIES, TO ORDER HEREUNDER SUCH QUANTITIES AS MAY BE NEEDED FROM TIME TO TIME TO FILL ANY GENERAL SERVICES ADMINISTRATION STORES DEPOT REQUIREMENT. EXCEPT AS OTHERWISE HEREIN PROVIDED, THE CONTRACTOR IS OBLIGATED TO DELIVER HEREUNDER ALL SUCH QUANTITIES AS MAY BE ORDERED FROM TIME TO TIME.

THE GOVERNMENT GUARANTEES TO ORDER THE AGGREGATE GUARANTEED QUANTITIES STIPULATED HEREIN DURING THE PERIOD OF THE CONTRACT BUT RESERVES THE RIGHT TO DEFER SHIPMENT OF ANY OPEN BALANCE FOR SIXTY (60) DAYS FOLLOWING EXPIRATION OF CONTRACT.

MAXIMUM ORDER LIMITATION: NO. SINGLE ITEM IN EXCESS OF $5,000.00 AND NO COMBINATION OF ITEMS TOTALING IN EXCESS OF $25,000.00 SHALL BE INCLUDED IN ANY ORDER PLACED UNDER THIS SCHEDULE OF CONTRACTS. THE CONTRACTOR AGREES NOT TO ACCEPT OR FULFILL ANY ORDERS IN VIOLATION OF THIS PROVISION. VIOLATION MAY RESULT IN TERMINATION OF THE CONTRACT PURSUANT TO THE CLAUSE OF THE GENERAL PROVISIONS ENTITLED," " DEFAULTS.'

PURCHASE ORDERS AND/1OR SHIPPING ORDERS: WILL BE ISSUED BY ANY GSA REGIONAL OFFICE AS MATERIAL IS REQUIRED.

IT IS REPORTED IN YOUR LETTER THAT, ALTHOUGH THE GUARANTEED MINIMUM QUANTITY OF PLIERS COVERED BY STOCK NO. 5120-223-7396 WAS 5,832 UNITS, THE TOTAL QUANTITY ORDERED AGAINST THE CONTRACT PRIOR TO ITS EXPIRATION WAS 96,666, OR AN EXCESS OF 90,834 OVER THE ORIGINAL GUARANTEED QUANTITY. EXAMINATION OF THE RECORDS IN THIS CASE BY REPRESENTATIVES OF OUR OFFICE INDICATES THAT AS TO THE SIX LOTS COVERED BY THE INVOLVED CONTRACT, THE MONTHLY MINIMUM QUANTITIES FOR ALL ITEMS WERE STATED AS 78,744 UNITS, AND AS OF SEPTEMBER 12, 1958, THE CONTRACTOR REPORTED ORDERS FOR 445,391 UNITS. AT THAT TIME HE HAD SHIPPED 235,518 UNITS. OUTSTANDING PURCHASE ORDERS WITH BOKER FOR STOCK NO. 5120-223-7396 WHICH TIME A DEFINITE QUANTITY CONTRACT ( NO. GS-00S-20056) CALLING FOR DELIVERY OF 41,352 PLIERS (STOCK NO. 5120-223 7396) AT ?60 EACH WAS NEGOTIATED WITH DIAMOND TOOL AND HORSESHOE COMPANY. THE PRICE UNDER THE BOKER CONTRACT WAS ?42 EACH AND THE CONTRACT DID NOT REQUIRE ANY SPECIAL FINISH FOR THE PLIERS BUT MERELY SPECIFIED A POLISHED HEAD WHILE THE LATER CONTRACT WITH DIAMOND REQUIRED A FULLY CHROME OR NICKELPLATED FINISH WITH POLISHED FACES WHICH RESULTED IN THE INCREASED PRICE. UPON THE EXPIRATION OF THE BOKER CONTRACT DISCUSSED ABOVE, ANOTHER CONTRACT WITH BOKER ( NO. GS 00S-19878) FOR THE PERIOD FROM AUGUST 7, 1958, THROUGH JANUARY 31, 1959, WAS ENTERED INTO AFTER ADVERTISING AND THIS CONTRACT CALLED FOR DELIVERY OF PLIERS WITH A FULLY CHROME OR NICKEL-PLATED FINISH FOR ?62 EACH.

IT IS INDICATED IN YOUR LETTER AND ENCLOSURES THAT YOUR OFFICE CONTRACTED WITH DIAMOND BECAUSE THE AIR FORCE HAD REQUESTED EXPEDITIOUS DELIVERY OF "EXCESSIVE" QUANTITIES OF PLIERS AS A PART OF ITS "IMMEDIATE REQUIREMENTS.' IT APPEARS THAT THERE WERE NO AIR FORCE USAGE FIGURES OR GUIDELINES AVAILABLE TO YOUR OFFICE ON WHICH TO BASE NORMAL REQUIREMENT ESTIMATES OF THE ANTICIPATED DEMAND. THIS LATTER SITUATION APPEARS TO HAVE ARISEN BECAUSE THE PRACTICES OF THE AIR FORCE WERE SUCH THAT THEY COULD NOT FURNISH RELIABLE DEMAND ESTIMATES.

THE INFORMATION FURNISHED BY YOU DOES NOT SET OUT THE AMOUNT OF THE INDIVIDUAL ORDERS, THE ACCEPTANCE OF WHICH MIGHT HAVE RESULTED IN TERMINATION OF THE CONTRACT UNDER THE PROVISIONS QUOTED ABOVE, NOR IS THERE ANY DEFINITE STATEMENT THAT THE AIR FORCE DESIRED DELIVERY EARLIER THAT 21 DAYS AFTER RECEIPT OF ORDER, THE TIME ALLOWED FOR PROCESSING AGAINST THE CONTRACTOR'S PRODUCTION FACILITY.

IN VIEW OF THE " SCOPE OF CONTRACT" PROVISIONS THAT THE CONTRACTOR WAS TO PROVIDE "FOR THE NORMAL SUPPLY REQUIREMENTS" AND THAT EMERGENCY PURCHASES WERE NOT REQUIRED TO BE MADE UNDER THE CONTRACT, OUR OFFICE WOULD NOT BE REQUIRED IN THIS CASE TO OBJECT TO THE PURCHASES AS MADE FROM DIAMOND IF THE QUANTITY SO PURCHASED REPRESENTED THE UNUSUAL DEMAND BY THE AIR FORCE FOR EXPEDITIOUS DELIVERY. FURTHERMORE, SINCE A MORE COSTLY PRODUCT WAS OBTAINED UPON PURCHASE FROM DIAMOND THE CONTRACTOR, H. BOKER AND CO., INC., MAY NOT BE CHARGED WITH THE EXCESS COST TO THE UNITED STATES OCCASIONED THEREBY.

SINCE THE MATERIAL FACTS IN THE VARIOUS CASES AS WELL AS THE TERMS OF THE SEVERAL CONTRACTS MAY WELL VARY, IT WOULD NOT BE FEASIBLE TO RENDER ANY DECISION AT THIS TIME WHICH MIGHT SERVICE AS A GUIDE IN GRANTING RELIEF TO CONTRACTORS WHERE THE ORDERS FOR DELIVERY OF MATERIALS GREATLY EXCEED THE ESTIMATED QUANTITIES.