B-155556, JUN. 24, 1965

B-155556, JUN. 24, 1965

TO THE HONORABLE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTERS DATED JANUARY 15, MARCH 31 AND MAY 27, 1965, FROM THE DIRECTORATE, PROCUREMENT POLICY, FURNISHING REPORTS ON THE REQUEST BY ACSI ENGINEERING COMPANY OF DALLAS, TEXAS, FOR AN ADDITIONAL AMOUNT UNDER CONTRACT NO. AF 09/603/-46905.

THE FACTS INVOLVED AND ADMINISTRATIVE ACTION TAKEN WITH RESPECT TO THE CLAIM ARE SET FORTH IN A MEMORANDUM OF DECISION, DATED AUGUST 25, 1964, IN CONNECTION WITH A REQUEST FOR RELIEF UNDER PUBLIC LAW 85-804, AS FOLLOWS:

"2. THE DIRECTORATE OF PROCUREMENT AND PRODUCTION, WARNER ROBINS AIR MATERIEL AREA, ROBINS AIR FORCE BASE, GEORGIA ISSUED AN INVITATION FOR BIDS TO FORTY-FIVE SOURCES FOR CORDAGE ASSEMBLIES P/N 351113 TO BE MANUFACTURED IN ACCORDANCE WITH LOCKHEED CORPORATION DRAWING 351113, REVISION A. THE INVITATION FOR BIDS SPECIFIED AN INITIAL AWARD OF 273 CORDAGE ASSEMBLIES AND POSSIBLE SUBSEQUENT AWARDS OF INCREMENTAL QUANTITIES OF THE ASSEMBLIES. BECAUSE NO FOLLOW-ON ORDERS AGAINST THE CONTRACT ARE CONTEMPLATED AND BECAUSE THE BID WAS EVALUATED SOLELY ON THE PRICE SUBMITTED FOR THE INITIAL QUANTITY, ONLY THE PRICE OF THE INITIAL QUANTITY IS CONSIDERED PERTINENT TO THIS REQUEST. THE SIX BIDS SUBMITTED AS THE UNIT PRICE FOR THE 273 CORDAGE ASSEMBLIES WERE $17.35, $23.40, $33.88, $33.99, $39.11, AND $39.52. WHEN THE CONTRACTING OFFICER NOTED THE DIFFERENCE BETWEEN THE CONTRACTOR'S LOW BID OF $17.35 EACH AND THE NEXT THREE BIDS, HE SUSPECTED A MISTAKE AND REQUESTED THAT THE CONTRACTOR VERIFY ITS BID. AFTER THE CONTRACTOR REPLIED THAT IT HAD BID INTENTIONALLY LOW TO GET INTO THE SPARES BUSINESS AT THE AIR BASE AND THAT ITS PRICES WERE CORRECT, THE CONTRACT WAS AWARDED TO THE CONTRACTOR.

"3. PRIOR TO THE AWARD, IN A MESSAGE DATED 20 JANUARY 1964, THE CONTRACTOR HAD REQUESTED COPIES OF THE INVITATION FOR BIDS AND THE NAMES OF THE VENDORS OF THE WM-85/U WIRE AND THE U-94A/U CONNECTOR SPECIFIED ON LOCKHEED DRAWING 35113. A FEW DAYS BEFORE BID OPENING, THE GOVERNMENT REPLIED,"NO RECORD CAN BE FOUND FOR WM-85/U CORDAGE. HOWEVER, BOTH U- 94A/U AND WM-85/U CAN BE ACQUIRED FROM ANY ONE OF THE FOLLOWING: BENDIX, CANNON, WESTERN ELECTRIC, GENERAL TELEPHONE, OR ANY QUALIFIED SUPPLIER OF ELECTRICAL PLUGS AND TELEPHONE WIRE.' THE CONTRACTOR ALLEGES THAT THIS REPLY LED IT TO BELIEVE THAT THE WM-85/U CORDAGE WAS A STANDARD WIRE WHICH COULD BE PROCURED FROM SEVERAL SOURCES. THE CONTRACTOR STATES THAT IT WAS UNABLE TO LOCATE THE CORDAGE BY THE PART NUMBER SO IT CONTACTED ITS VENDOR AND RECEIVED A VERBAL QUOTATION OF $91.00 PER THOUSAND FEET FOR AN EQUIVALENT INTERCOMMUNICATION WIRE. THE CONTRACTOR BASED ITS BID ON THIS PRICE, AND WHEN IT WAS REQUESTED TO VERIFY ITS BID IT CHECKED ITS COMPUTATIONS BUT DID NOT VERIFY THE VERBAL QUOTATION RECEIVED FROM ITS SUPPLIER. AFTER AWARD, THE CONTRACTOR AGAIN REQUESTED THE NAME OF THE VENDOR OF THE WM-85/U CORDAGE OR THE APPLICABLE MILITARY SPECIFICATION. IN RESPONSE TO THE SECOND REQUEST, THE GOVERNMENT REPLIED THAT, ACCORDING TO AVAILABLE RECORDS, THE VENDOR WAS KAISER ALUMINUM AND CHEMICAL SALES, INC. AND THE SPECIFICATION WAS MIL-E 9085. SHORTLY THEREAFTER, THE CONTRACTOR SUBMITTED A REQUEST FOR ADJUSTMENT STATING THAT ITS BID WAS BASED ON THE VENDOR'S QUOTATION OF $91.00 PER THOUSAND FEET WHEREAS KAISER ALUMINUM QUOTED $239.00 PER THOUSAND FEET FOR A TOTAL QUANTITY OF 21,000 FEET. THE CONTRACTOR REQUESTED THAT THE CONTRACT PRICE BE INCREASED BY $3,108 TO COVER ITS INCREASED COST FOR THE CORDAGE USED IN MANUFACTURING THE REQUIRED ASSEMBLIES.

"4. THE PROCURING AGENCY WAS REQUESTED TO CLARIFY WHY THE CONTRACTOR WAS NOT TOLD PRIOR TO AWARD THAT KAISER ALUMINUM WAS THE ONLY KNOWN SOURCE FOR THE WM-85/U CORDAGE. THE PROCURING AGENCY REPLIED THAT BECAUSE THE CONTRACTOR'S INITIAL REQUEST FOR INFORMATION ABOUT THE CORDAGE WAS RECEIVED DURING THE IFB PHASE OF THE PROCUREMENT CYCLE, ONLY A CURSORY INVESTIGATION WAS MADE AND THE NAMES OF SEVERAL LOGICAL VENDORS RATHER THAN KNOWN SOURCES WERE FURNISHED TO THE CONTRACTOR. BECAUSE THE CONTRACTOR'S SECOND REQUEST WAS AFTER AWARD OF THE CONTRACT, A MORE COMPREHENSIVE REVIEW WAS MADE AND THE CONTRACTOR WAS GIVEN THE NAME OF THE ONLY KNOWN VENDOR OF THE CORDAGE. THE CONTRACTING OFFICER STATED THAT THE CONTRACTOR WAS SUFFICIENTLY FOREWARNED OF A POSSIBLE MISTAKE IN BID BY THE REQUEST FOR VERIFICATION AND IT WAS REASONABLE TO ASSUME THAT A PRUDENT CONTRACTOR WOULD CONFIRM SUCH AN IMPORTANT ELEMENT OF AN ESTIMATE AS A VENDOR'S QUOTATION. ACCORDINGLY, THE CONTRACTING OFFICER RECOMMENDS THAT NO ADJUSTMENT BE MADE IN THE CONTRACT PRICE.

"5. THE CONTRACTOR MADE A MISTAKE BY BASING ITS BID ON A VENDOR'S QUOTATION FOR CORDAGE SUPPOSEDLY "EQUIVALENT" TO WM-85/U CORDAGE. ALTHOUGH THE GOVERNMENT DID ERR CONCERNING POSSIBLE SOURCES OF THE WM 85/U CORDAGE, THIS ERROR DID NOT DIRECTLY CAUSE THE CONTRACTOR'S MISTAKE. THE MISTAKE AND THE RESULTANT INCORRECT BID PRICE WERE CAUSED BY THE CONTRACTOR'S ACCEPTANCE OF THE VENDOR'S QUOTATION FOR "EQUIVALENT" CORDAGE. THE INVITATION FOR BIDS SPECIFIED ONLY WM-85/U CORDAGE AND DID NOT PROVIDE FOR THE USE OF ANY "EQUAL OR EQUIVALENT" CORDAGE. AFTER THE CONTRACTOR FOUND THAT IT COULD NOT PROCURE THE EXACT ITEM BY ITEM NUMBER FROM THE SOURCES DESIGNATED BY THE GOVERNMENT IT SHOULD HAVE SOUGHT CLARIFICATION FROM THE GOVERNMENT AND THIS WOULD HAVE LED IT TO THE CORRECT SOURCE. FURTHER, THE GOVERNMENT HAD NO RESPONSIBILITY TO PROVIDE SOURCE INFORMATION. THE CONTRACTING OFFICER ACTED REASONABLY WHEN HE ASSUMED THAT THE CONTRACTOR WAS BASING ITS BID ON WM-85/U CORDAGE. THE CONTRACTING OFFICER CLEARLY INDICATED TO THE CONTRACTOR THAT A MISTAKE IN BID WAS SUSPECTED AND THAT THE NEXT LOW BID OF $23.40 EACH WAS CONSIDERABLY ABOVE THE CONTRACTOR'S BID. AFTER THE CONTRACTOR VERIFIED ITS BID AND STATED THAT IT HAD BID INTENTIONALLY LOW, THE CONTRACTING OFFICER HAD NO FURTHER REASON TO SUSPECT A MISTAKE ON THE PART OF THE CONTRACTOR. THEREAFTER, THE CONTRACT WAS EXECUTED IN GOOD FAITH BY THE GOVERNMENT.

"6. BECAUSE THE CONTRACTING OFFICER DID REQUIRE VERIFICATION OF THE BID, IT CAN BE CONSIDERED THAT THE GOVERNMENT GAVE SUFFICIENT NOTICE TO THE CONTRACTOR OF THE POSSIBILITY OF AN ERROR. THE GOVERNMENT'S ACTION IN SUPPLYING INFORMATION ABOUT THE SOURCES DID NOT DIRECTLY CAUSE THE CONTRACTOR'S MISTAKE AND, THEREFORE, DOES NOT JUSTIFY CORRECTION OF THE MISTAKE. HAD THE CONTRACTOR NOT ACCEPTED THE VENDOR'S "EQUIVALENT" BID HE WOULD HAVE RECOGNIZED THAT THE INFORMATION AS A SOURCES WAS INCORRECT. THE MISTAKE MUST BE CONSIDERED UNILATERAL * * *.'

WE AGREE THAT THE CONTRACTOR WAS NEGLIGENT IN SUBMITTING A BID WITHOUT DEFINITE KNOWLEDGE OF EXACTLY WHAT HE WAS BIDDING UPON. HOWEVER, FROM ALL THE FACTS DISCLOSED BY THE PRESENT RECORD WHICH MAY NOT HAVE BEEN AVAILABLE AT THAT TIME, WE BELIEVE THAT PLACING THE COMPLETE BLAME UPON THE CONTRACTOR IS UNWARRANTED.

THE INVITATION FOR BIDS, ISSUED ON JANUARY 9 FOR OPENING ON FEBRUARY 10, 1964, WAS RESTRICTED TO SMALL BUSINESS FIRMS AND CALLED FOR A NUMBER OF P/N 351113 CORDAGE ASSEMBLIES TO BE MANUFACTURED IN ACCORDANCE WITH THE ATTACHED LOCKHEED CORPORATION DRAWING 351113, REVISION A. OBVIOUSLY, IT WAS CONTEMPLATED THAT THE SUCCESSFUL SMALL BUSINESS FIRM BIDDER WOULD PURCHASE THE MAJORITY OF THE MATERIALS, AND THAT THE WORK TO BE PERFORMED BY IT WAS ESSENTIALLY AN ASSEMBLY JOB. THE DRAWING MERELY IDENTIFIED THE REQUIRED CORDAGE (WIRE) AS "WM 85/U," AND NO REFERENCE WAS MADE ON THE DRAWING OR IN THE INVITATION TO THE MILITARY SPECIFICATION INVOLVED. APPARENTLY, THE WM-85/U IS A SPECIALIZED TYPE OF WIRE, SINCE THE APPLICABLE SPECIFICATION, MIL-E 9085A (USAF), PROVIDES:

"1.1 THIS SPECIFICATION COVERS ONE TYPE OF 5-CONDUCTOR CORD, DESIGNATED ELECTRICAL CORD WM-85/U WHICH IS ONE ITEM OF INTERCOMMUNICATION SET AN/AIC -10.

"3.1 QUALIFICATION.--- THE MATERIAL FURNISHED UNDER THIS SPECIFICATION SHALL BE A PRODUCT WHICH HAS BEEN TESTED AND HAS PASSED THE QUALIFICATION TESTS SPECIFIED HEREIN.

"6.2 QUALIFICATION TESTS.--- IN THE PROCUREMENT OF PRODUCTS REQUIRING QUALIFICATION, THE RIGHT IS RESERVED TO REJECT BIDS ON PRODUCTS THAT HAVE NOT BEEN SUBJECTED TO THE REQUIRED TESTS AND FOUND SATISFACTORY FOR INCLUSION ON A QUALIFIED PRODUCTS LIST. THE ATTENTION OF SUPPLIERS IS CALLED TO THIS REQUIREMENT, AND MANUFACTURERS ARE URGED TO COMMUNICATE WITH THE WRIGHT AIR DEVELOPMENT CENTER AND ARRANGE TO HAVE THE PRODUCTS THAT THEY PROPOSE TO OFFER TO THE AIR FORCE TESTED FOR QUALIFICATION, IN ORDER TO DETERMINE IF THEY MAY BE ELIGIBLE TO BE AWARDED CONTRACTS OR ORDERS FOR THE PRODUCTS COVERED BY THIS SPECIFICATION. * * *"

SINCE THE UNIDENTIFIED MILITARY SPECIFICATION REQUIRED CORDAGE WHICH WAS PREQUALIFIED BY THE AIR FORCE, WE BELIEVE, CONTRARY TO THE CONCLUSION IN THE ABOVE-QUOTED MEMORANDUM DECISION, THAT THE GOVERNMENT DID HAVE A RESPONSIBILITY TO PROVIDE SOURCE INFORMATION AND THAT THE INFORMATION FURNISHED THE BIDDER THAT WM-85/U WAS ORDINARY MATERIAL WHICH COULD BE PURCHASED FROM ANY ONE OF SEVERAL LISTED MANUFACTURERS "OR ANY QUALIFIED SUPPLIER OF ELECTRICAL PLUGS AND TELEPHONE WIRE" WAS MISLEADING. CERTAINLY IT WOULD APPEAR THAT THE PROCURING AGENCY, BETTER THAN A SMALL BUSINESS FIRM BIDDER, SHOULD BE AWARE OF THE SPECIALIZED REQUIREMENTS OF THE ITEM BEING PURCHASED. ALSO WHERE ELSE BUT FROM THE AIR FORCE COULD A POTENTIAL BIDDER ASCERTAIN AVAILABLE SOURCES THEN PRESENTLY QUALIFIED BY THE AIR FORCE TO FURNISH THE SPECIAL CORDAGE?

THE RECORD SHOWS THE PREVIOUS PROCUREMENT HISTORY OF THE ASSEMBLY TO BE AS FOLLOWS: 30 FROM LOCKHEED IN 1961 AT A UNIT COST OF $56.56; 87 FROM LOCKHEED IN 1962,AT A UNIT COST OF 57.01 EACH; AND 252 FROM L AND S MACHINE COMPANY IN 1962 AT A UNIT COST OF $39.42. THE ESTIMATED COST FOR THE PROCUREMENT HEREUNDER WAS $39.42 EACH. THE L AND S MACHINE COMPANY WAS ONE OF THE BIDDERS UNDER THE INVITATION HERE INVOLVED AND QUOTED A UNIT PRICE OF $39.52. ALSO THE RECORD SHOWS THAT DUE TO AN URGENT NEED, THE OPTION FOR AN ADDITIONAL QUANTITY UNDER ACSI'S CONTRACT WAS NOT EXERCISED, AND THAT 230 OF SUCH ASSEMBLIES WERE FABRICATED INHOUSE AT A UNIT COST OF $33.70.

IN A MEMORANDUM DATED MAY 25, 1965, WRIGHT-PATTERSON AIR FORCE BASE, OHIO, STATES THAT WARNER ROBINS AIR MATERIEL AREA RECENTLY ISSUED IFB 09- 603-65-810 COVERING 277 OF THE IDENTICAL ASSEMBLY INVOLVED UNDER ACSI'S CONTRACTS HERE INVOLVED, AND THAT THE FOLLOWING UNIT PRICES WERE RECEIVED: $60.00, $43.20, $42.70, $42.62, $30.58 AND $26.37. A NEGATIVE FCR WAS RECEIVED ON THE LOW BIDDER AND THE SECOND BIDDER, UPON BEING REQUESTED TO VERIFY ITS BID AND TO CONFIRM WHETHER IT WAS BIDDING ON MIL-E-9085, WM- 85/U CORDAGE, ADVISED THAT IT WAS NOT. IT WAS ALSO ASCERTAINED THAT LOW BIDDER WAS NOT BIDDING ON THE PROPER CORDAGE. THE THIRD AND FOURTH BIDDERS CONFIRMED THAT THEY WERE BIDDING ON MIL-E-9085, WM-85/U CORDAGE.

IN VIEW OF THE PREVIOUS PRICES PAID FOR THE ASSEMBLIES, COST OF INHOUSE MANUFACTURE, AND THE PRICES UNDER THE CURRENT PROCUREMENT, IT IS CLEAR THAT THE PRICE OF $17.35 EACH PROVIDED IN ACSI'S CONTRACT NO. AF 09/603/- 46905, IS TOTALLY UNREALISTIC. ALSO IT SEEMS APPARENT THAT THE SECOND LOW BID OF $23.40 UNDER THAT PROCUREMENT WAS ERRONEOUS. ACSI REQUESTS THE ADDITIONAL SUM OF $3,108 AS REPRESENTING THE DIFFERENCE BETWEEN THE COST OF THE CORDAGE UPON WHICH ITS BID WAS BASED AND ITS COST OF THE REQUIRED MIL-E-9085, WM-85/U, OR APPROXIMATELY $11.40 EACH FOR THE 273 ASSEMBLIES FURNISHED UNDER THE CONTRACT, WHICH ADDED TO THE CONTRACT UNIT PRICE OF $17.35 WOULD MAKE A PRICE OF $28.75 EACH.

UNDER THE CIRCUMSTANCES, SINCE WE BELIEVE THE GOVERNMENT ACTUALLY MISLED ACSI AS TO THE TYPE OF CORDAGE REQUIRED AND SINCE THE BID WAS CLEARLY ERRONEOUS AND SHOULD NOT HAVE BEEN ACCEPTED IN SPITE OF THE VERIFICATION (THE REQUEST FOR VERIFICATION WAS ALSO INCOMPLETE SINCE IT DID NOT REFER TO MIL-E-9085), ACSI MAY BE PAID THE SUM OF $3,108, IN ADDITION TO THE CONTRACT PRICE FOR THE 273 ASSEMBLIES DELIVERED UNDER CONTRACT NO. AF 09/603/-46905.