B-148775, JUL. 24, 1962

B-148775: Jul 24, 1962

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO THE SECRETARY OF THE NAVY: REFERENCE IS MADE TO LETTER DATED MAY 25. THE CLAIM ARISES FROM AN ERROR MADE BY HOOVER AWNING AND MANUFACTURING COMPANY IN ITS BID WHICH WAS THE BASIS OF THE CONTRACT INVOLVED. THERE IS NO QUESTION BUT THAT THE COMPANY MADE THE ERROR. THE FACTS IN THE MATTER ARE AS FOLLOWS: INVITATION FOR BIDS NO. WAS ISSUED ON JANUARY 27. THE DETAILED DESCRIPTION OF THE ITEM IS ON PAGE 10. ON THAT PAGE IT IS PROVIDED THAT THE CHUTES SHALL BE IN ACCORDANCE WITH BUREAU OF SHIPS DRAWINGS NOS. 805-1749096 AND 805-1749097. IT IS FURTHER PROVIDED AS FOLLOWS: TABLE "EACH CHUTE TO CONSIST OF: 1- TOP ASSEMBLY 4- INTERMEDIATE ASSEMBLIES 1- METAL CHUTE ASSEMBLY LENGTH OF COMPLETE ASSEMBLY SHALL BE 45 FEET.

B-148775, JUL. 24, 1962

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO LETTER DATED MAY 25, 1962, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, FURNISHING A REPORT CONCERNING THE REQUEST OF HOOVER AWNING AND MANUFACTURING COMPANY FOR RELIEF IN CONNECTION WITH CONTRACT NO. N140 (131) 71564B (X), ISSUED BY THE U.S. NAVY PURCHASING OFFICE, BROOKLYN, NEW YORK.

THE CLAIM ARISES FROM AN ERROR MADE BY HOOVER AWNING AND MANUFACTURING COMPANY IN ITS BID WHICH WAS THE BASIS OF THE CONTRACT INVOLVED. THERE IS NO QUESTION BUT THAT THE COMPANY MADE THE ERROR. THE FACTS IN THE MATTER ARE AS FOLLOWS:

INVITATION FOR BIDS NO. N140-427-61, COVERING STORES HANDLING EQUIPMENT; CHUTE, VERTICAL BAFFLE, 12 EACH, WAS ISSUED ON JANUARY 27, 1961. PAGE 5 OF THE INVITATION CONTAINED A MERE STATEMENT OF THE ITEM (CHUTE, VERTICAL BAFFLE), QUANTITY, AND PLACE FOR BIDDERS TO SHOW THEIR PRICE. THE DETAILED DESCRIPTION OF THE ITEM IS ON PAGE 10. ON THAT PAGE IT IS PROVIDED THAT THE CHUTES SHALL BE IN ACCORDANCE WITH BUREAU OF SHIPS DRAWINGS NOS. 805-1749096 AND 805-1749097, AND IT IS FURTHER PROVIDED AS FOLLOWS:

TABLE

"EACH CHUTE TO CONSIST OF:

1- TOP ASSEMBLY

4- INTERMEDIATE ASSEMBLIES

1- METAL CHUTE ASSEMBLY

LENGTH OF COMPLETE ASSEMBLY SHALL BE 45 FEET, PLUS OR MINUS 5 PERCENT"

THE APPLICABLE DRAWINGS SHOW THE DETAILS OF THE CHUTE, MATERIAL REQUIREMENTS, ETC. HOWEVER, THE DATA ON THE DRAWINGS SHOW THE REQUIREMENTS FOR ONLY ONE INTERMEDIATE ASSEMBLY. THE CHUTE CAN CONSIST OF ONE OR MORE INTERMEDIATE ASSEMBLIES AND, THEREFORE, THE DRAWINGS SHOW THE DETAILS FOR ONLY ONE, SINCE ADDITIONAL INTERMEDIATE ASSEMBLIES WOULD BE THE SAME. APPARENTLY THE DRAWINGS CONTEMPLATED THAT THE NUMBER OF INTERMEDIATE ASSEMBLIES DESIRED WOULD BE SET FORTH IN EACH PARTICULAR PROCUREMENT.

THE TWO BIDS RECEIVED IN RESPONSE TO THE INVITATION WERE OPENED ON FEBRUARY 27, 1961, AS SCHEDULED. HOOVER AWNING AND MANUFACTURING COMPANY, MIAMI, FLORIDA, BID $434.59 EACH, OR A TOTAL OF $5,215.08, AND PAULSEN WEBBER CORDAGE CORPORATION, NEW YORK, NEW YORK, BID $1,695.10 EACH, OR A TOTAL OF $20,341.20. BOTH BIDS WERE BASED UPON DELIVERY BEING MADE F.O.B. NEW YORK NAVAL SHIPYARD, NAVAL BASE, BROOKLYN, NEW YORK. IN LETTER DATED MARCH 3, 1961, THE WIDE VARIATION IN PRICE WAS CALLED TO THE ATTENTION OF HOOVER AWNING AND MANUFACTURING COMPANY, AND THE COMPANY WAS REQUESTED TO REVIEW ITS BID AND FORWARD A CONFIRMATION OF ITS PRICE, TOGETHER WITH A STATEMENT THAT THE MATERIALS OFFERED WOULD BE IN ACCORDANCE WITH THE SPECIFICATIONS SET FORTH IN THE INVITATION. BY LETTER DATED MARCH 9, 1961, HOOVER AWNING AND MANUFACTURING COMPANY ADVISED THAT IT HAD REVIEWED ITS PROPOSAL, REAFFIRMED THE PRICE OFFERED OF $434.59 PER UNIT, AND STATED THAT THE MATERIAL PRODUCED WOULD CONFORM TO ALL APPLICABLE SPECIFICATIONS OUTLINED IN THE INVITATION AND DRAWINGS.

THE REQUISITIONING ACTIVITY, THE NEW YORK NAVAL SHIP YARD, HAD INDICATED AN ESTIMATED COST OF $2,640 FOR THE MATERIAL, AND THE NAVY PURCHASING OFFICE WENT BACK FOR ADDITIONAL FUNDS. IT IS STATED, IN VIEW OF THE FACT THAT THE DOLLAR VALUE WAS ONLY $5,215.08, NO FURTHER COST ANALYSIS WAS MADE, AND AWARD WAS MADE TO HOOVER AWNING AND MANUFACTURING COMPANY ON MARCH 20, 1961, FOR THE PRICE SET FORTH IN ITS BID.

BY LETTER DATED APRIL 13, 1961, THE CONTRACTOR ADVISED THAT IN PREPARING FOR A VISIT FROM THE INSPECTOR OF NAVAL MATERIAL IT WAS DISCOVERED THAT THE SPECIFICATIONS, AS OUTLINED ON PAGE 10 OF THE CONTRACT, CALLED FOR ONE TOP ASSEMBLY, FOUR INTERMEDIATE ASSEMBLIES, AND ONE METAL CHUTE ASSEMBLY, WHEREAS ITS BID PRICE WAS COMPUTED ON THE BASIS OF THE PARTS OUTLINED ON THE TWO DRAWINGS, NAMELY, ONE TOP ASSEMBLY, ONE INTERMEDIATE ASSEMBLY, AND ONE METAL CHUTE ASSEMBLY. IN VIEW OF THE ERROR HOOVER AWNING AND MANUFACTURING COMPANY REQUESTED THAT IT BE RELIEVED OF THE CONTRACT OR THAT THE UNIT PRICE BE INCREASED TO $912.19 TO COVER THE COST OF THE OMITTED THREE INTERMEDIATE ASSEMBLIES. BOTH REQUESTS WERE DENIED. THE RECORD INDICATES THAT THE CHUTES HAVE BEEN OR ARE BEING DELIVERED AND THAT UPON THE INSISTENCE OF THE NAVY PURCHASING OFFICE THE CONTRACTOR AGREED TO A 1 PERCENT REDUCTION IN THE UNIT PRICE IN CONSIDERATION OF AN EXTENSION OF TIME IN FURNISHING THE CHUTES.

IT IS REPORTED THAT BASED ON THE INFORMATION AVAILABLE AT THE TIME OF AWARD, OR PRIOR TO AWARD, EXCEPT FOR THE DISPARITY IN BID PRICES, THE CONTRACTING OFFICER HAD NO REASON TO BELIEVE THAT THE CONTRACTOR DID NOT UNDERSTAND THE REQUIREMENTS OF THE SPECIFICATIONS. IT IS FURTHER REPORTED THAT THE ARTICLE IN QUESTION HAD NOT PREVIOUSLY BEEN PURCHASED BY THE NAVY PURCHASING OFFICE, BROOKLYN, BUT THAT SUBSEQUENT TO AWARD IT WAS LEARNED THAT THE ARTICLE HAD PREVIOUSLY BEEN PURCHASED BY THE NAVAL SUPPLY CENTER, BAYONNE, AT A UNIT PRICE OF $950. IT IS ALSO REPORTED THAT THE USING ACTIVITY HAS ADVISED THAT BASED ON AN EXAMINATION OF THE ITEMS WHICH HAVE BEEN DELIVERED, AS WELL AS THE SPECIFICATIONS FOR THE ITEM, THE REASONABLE VALUE IS ESTIMATED TO BE APPROXIMATELY $925 PER CHUTE.

ALTHOUGH THE INVITATION SPECIFICALLY PROVIDED ON PAGE 10 THAT EACH CHUTE WAS TO HAVE FOUR INTERMEDIATE ASSEMBLIES, AND FOUR WOULD BE REQUIRED TO ACHIEVE A TOTAL LENGTH OF 45 FEET, AS SPECIFIED, THE DRAWINGS SHOWED ONLY ONE. IN COMPUTING THE PRICE FOR THE COMPLETE ASSEMBLY, THE DETAILED COSTS PROBABLY WOULD BE COMPUTED FOR ONE INTERMEDIATE ASSEMBLY AND THE RESULTANT FIGURE MULTIPLIED BY FOUR, WHICH WAS NOT DONE. IN ENTERING THE PRICE FOR THE COMPLETE ASSEMBLY ON PAGE 5, THERE WAS NOTHING ON SUCH PAGE TO BRING TO THE BIDDER'S ATTENTION THE FACT THAT EACH CHUTE WAS TO HAVE FOUR INTERMEDIATE ASSEMBLIES, AND SUCH FACT UNDERSTANDABLY COULD HAVE BEEN READILY OVERLOOKED.

AFTER RECEIVING VERIFICATION OF THE BID, AND PARTICULARLY IN VIEW OF THE TOTALLY UNREALISTIC ESTIMATE OF COST GIVEN BY THE REQUISITIONING AGENCY, THE CONTRACTING OFFICER PROBABLY WAS JUSTIFIED IN NOT FURTHER QUESTIONING THE BID. HOWEVER, HAD THE CONTRACTOR ELECTED NOT TO PROCEED WITH THE CONTRACT, IT IS DOUBTFUL WHETHER A COURT WOULD HAVE ENFORCED THE CONTRACT WHICH REQUIRED DELIVERY OF MATERIALS WORTH APPROXIMATELY $11,000 FOR A PRICE OF $5,200.

IN VIEW OF ALL THE CIRCUMSTANCES IN THIS CASE WE BELIEVE IT WOULD BE INEQUITABLE TO REQUIRE THE CONTRACTOR TO PERFORM FOR THE AMOUNT OF ITS BID. ACCORDINGLY, PAYMENT SHOULD BE MADE ON THE BASIS OF A PRICE OF $912.19 PER UNIT FOR THE CHUTES DELIVERED, OR TO BE DELIVERED, BY HOOVER AWNING AND MANUFACTURING COMPANY UNDER CONTRACT NO. N140 (131) 71564B (X).

THERE IS ENCLOSED A COPY OF OUR LETTER OF TODAY TO HOOVER AWNING AND MANUFACTURING COMPANY, ADVISING THEM OF THE ABOVE.