B-130660, APR. 29, 1957

B-130660, APR. 29, 1957

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED APRIL 11, 1957, WITH ENCLOSURES, FROM THE OFFICE OF THE CHIEF, ADJUDICATIONS BRANCH, SETTLEMENTS DIVISION, AIR FORCE FINANCE CENTER, FURNISHING THE REPORT REQUESTED BY OUR OFFICE RELATIVE TO AN ERROR WHICH THE CHICAGO RIVET AND MACHINE COMPANY, BELLWOOD, ILLINOIS, ALLEGES IT MADE IN ITS BID ON WHICH PURCHASE ORDER NO. (14-604) 57-2953 WAS AWARDED.

THE TOPEKA AIR FORCE DEPOT, TOPEKA, KANSAS, BY INVITATION NO. 14-604 57- 385, REQUESTED BIDS--- TO BE OPENED OCTOBER 18, 1956--- FOR FURNISHING SPECIFIED QUANTITIES OF CERTAIN SPECIAL TYPES OF RIVETS, DESCRIBED UNDER ITEMS 1 TO 12, INCLUSIVE. IN RESPONSE THE CHICAGO RIVET AND MACHINE COMPANY SUBMITTED A BID DATED OCTOBER 17, 1956, OFFERING TO FURNISH THE RIVETS UNDER ITEMS 1 TO 9 AND ITEM 12 AT UNIT PRICES RANGING FROM $5.264 PER THOUSAND TO $16.392 PER THOUSAND. THE ONLY OTHER BIDDER ON ITEMS 1 TO 7, INCLUSIVE, QUOTED UNIT PRICES RANGING FROM $0.134 EACH TO $0.162 EACH. THE BID OF THE CHICAGO RIVET AND MACHINE COMPANY WAS ACCEPTED AS TO ITEMS 1 TO 7, INCLUSIVE, ON NOVEMBER 8, 1956.

IN A LETTER DATED JANUARY 4, 1957, THE CHICAGO RIVET AND MACHINE COMPANY REQUESTED THE TOPEKA AIR FORCE DEPOT TO AMEND THE SPECIFICATIONS SO AS TO PERMIT THE USE OF TYPE 1006/1008 STANDARD COLD HEADING STEEL IN LIEU OF THE REQUIRED SAE AMS 6320 STEEL. THE COMPANY ALSO REQUESTED THAT TOLERANCE OF PLUS OR MINUS .003 BE SUBSTITUTED FOR THE CLOSER TOLERANCES SPECIFIED IN THE DESCRIPTIONS OF THE RIVET ITEMS. BY LETTER DATED JANUARY 24, 1957, THE CONTRACTING OFFICER ADVISED THE COMPANY THAT THE DEPOT'S INTERCHANGEABILITY DIVISION HAD DETERMINED THAT TYPE 1006/1008 STEEL WAS NOT ACCEPTABLE FOR THE MANUFACTURE OF THE RIVETS REQUIRED UNDER ITEMS 1 TO 7, INCLUSIVE, OF THE CONTRACT DUE TO THE DIFFERENCES IN CHEMICAL ANALYSIS, NAMELY, TYPE 1006/1008 STEEL IS A LOW CARBON STEEL WHEREAS SAE AMS 6320 STEEL IS A CHROMIUM, NICKEL, MOLYBDENUM STEEL; AND THAT THE COMPANY WOULD BE REQUIRED TO MANUFACTURE THE RIVETS OF THE REQUIRED TYPE OF STEEL AND WITHIN THE TOLERANCE LISTED IN THE ITEM DESCRIPTION.

BY LETTER DATED FEBRUARY 8, 1957, ADDRESSED TO THE CONTRACTING OFFICER, THE COMPANY REQUESTED THAT THE CONTRACT BE CANCELED ON THE GROUND OF THE WIDE VARIANCE BETWEEN THE AMOUNT BID BY IT AND THE AMOUNT BID BY THE ONLY OTHER BIDDER ON ITEMS 1 TO 7, INCLUSIVE. THE COMPANY STATED THAT IT MISUNDERSTOOD THE REQUIREMENTS OF THE INVITATION AND THAT THE MISTAKE WAS IN THE BELIEF THAT THE ITEM CALLED FOR WAS AN ORDINARY TYPE OF TUBULAR RIVET, WHEREAS IN FACT THE SPECIFICATIONS CALLED FOR A RIVET WHICH WAS TO BE OF A VERY SPECIAL TYPE OF STEEL AND MACHINED TO VERY CLOSE TOLERANCES BY A SCREW MACHINE TYPE OF OPERATION RATHER THAN BY ITS ORDINARY METHOD OF COLD HEADING AND DRILLING.

IN A LETTER DATED FEBRUARY 8, 1957, ADDRESSED TO OUR OFFICE, THE COMPANY REQUESTED THAT THE CONTRACT BE RESCINDED FOR MUTUAL MISTAKE OF FACT, POINTING OUT THAT TO PRODUCE THE ITEMS IN ACCORDANCE WITH THE SPECIFICATIONS WOULD COST IT $69,000, AND THAT IT WOULD BE UNCONSCIONABLE TO COMPEL THE COMPANY TO PERFORM AT ITS BID PRICE OF $4,111.99. SUPPORT OF ITS ALLEGATION OF ERROR, THE COMPANY, BY LETTER DATED FEBRUARY 20, 1957, SUBMITTED ITS ORIGINAL ESTIMATE SHEETS, WHICH SHOW THAT THE USE OF 1006/1008 STEEL WAS CONTEMPLATED IN THE MANUFACTURE OF THE RIVETS.

THE RECORD INDICATES THAT AS COMPARED WITH THE CHICAGO RIVET AND MACHINE COMPANY'S AGGREGATE BID PRICE OF $4,111.99 FOR ITEMS 1 TO 7, INCLUSIVE, THE ONLY OTHER BIDDER ON THOSE ITEMS QUOTED A TOTAL AGGREGATE BID PRICE OF $73,470. GENERALLY, NO FAIR COMPARISON WITH THE OTHER BIDS CAN BE MADE WHERE ONLY TWO WIDELY VARIANT BIDS ARE RECEIVED ON AN ITEM--- AS IN THIS CASE--- THERE BEING NO MORE REASON FOR CONSIDERING THE LOW BID TOO LOW THAN FOR CONSIDERING THAT A MISTAKE WAS MADE BY THE HIGH BIDDER IN QUOTING A PRICE TOO HIGH. SEE 20 COMP. GEN. 286. HOWEVER, IN SECOND INDORSEMENT DATED APRIL 3, 1957, RECOMMENDING CANCELLATION OF THE CONTRACT, THE CONTRACTING OFFICER STATED THAT DUE TO AN OVERSIGHT ON HIS PART, HE FAILED TO NOTE THAT THE SPECIFICATIONS REQUIRED THAT THE RIVETS BE MANUFACTURED OF A SPECIAL TYPE OF STEEL AND BE MACHINED TO CLOSE TOLERANCES; THAT AWARD WAS MADE TO THE CHICAGO RIVET AND MACHINE COMPANY ON THE BASIS THAT ITEMS 1 TO 7, INCLUSIVE, WERE SIMILAR TO ITEMS PREVIOUSLY PROCURED, WHICH DO NOT REQUIRE THE SPECIAL TYPE OF STEEL AND CLOSE TOLERANCES AND WHICH WERE PRICED IN LINE WITH THE PRICES QUOTED BY THE OMPANY; AND THAT HAD HE BEEN AWARE OF THE SPECIAL FEATURES OF THE RIVETS PRIOR TO AWARD, HE WOULD HAVE REQUESTED THE COMPANY TO VERIFY ITS BID PRIOR TO ITS ACCEPTANCE. ASSUME FROM THIS REPORT AND RECOMMENDATION OF THE CONTRACTING OFFICER THAT THERE WAS READILY AVAILABLE TO HIM, EITHER FROM THE COST ESTIMATE OF THE REQUISITIONING ACTIVITY OR FROM RECORDS OF PRIOR PROCUREMENTS OF THE SAME ITEMS, WHICH WERE REFERENCED IN THE INVITATION, INFORMATION WHICH WOULD HAVE CLEARLY SHOWN THAT THE BID OF THE CHICAGO RIVET AND MACHINE COMPANY WAS SO GROSSLY OUT OF LINE AS TO MAKE THE PROBABILITY OF ERROR APPARENT. IN THE CIRCUMSTANCES, THE BID AS TO ITEMS 1 TO 7, INCLUSIVE, SHOULD NOT HAVE BEEN ACCEPTED WITHOUT REQUESTING THE COMPANY TO VERIFY ITS BID, AND SINCE THERE APPEARS NO ROOM FOR DOUBT THAT THE BID OF THE COMPANY WAS NOT BASED ON FURNISHING THE TYPE OF RIVET SPECIFIED IN THE INVITATION, THE CONTRACT MAY BE CANCELED WITHOUT LIABILITY TO THE COMPANY.