B-147418, OCT. 31, 1961

B-147418, OCT. 31, 1961

TO T. J. PELLERITO AND BRO.:

THERE HAS BEEN RECEIVED YOUR TELEGRAM DATED OCTOBER 19, 1961, PROTESTING THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY IN THE CANCELLATION OF ALL BIDS RECEIVED UNDER INVITATION FOR BIDS NO. QM (CTM/-36-243-62-282, ISSUED BY THE MILITARY CLOTHING AND TEXTILE SUPPLY AGENCY, PHILADELPHIA QUARTERMASTER CENTER, UNDER DATE OF SEPTEMBER 1, 1961. ALSO, WE HAVE RECEIVED YOUR LETTER OF OCTOBER 23, 1961, WITH ENCLOSURES, RELATING FURTHER TO THE MATTER OF YOUR PROTEST.

IN YOUR TELEGRAM REFERENCE WAS MADE TO AN AWARD MADE BY THE PHILADELPHIA QUARTERMASTER CENTER TO THE LEITCHFIELD MANUFACTURING COMPANY UNDER DATE OF JANUARY 18, 1961, FOR THE MANUFACTURE FROM GOVERNMENT-FURNISHED MATERIAL OF 76,075 PAIR, TROUSERS, MEN-S, WOOL AND NYLON SERGE, AT THE PRICE OF $8.25 PER UNIT. YOU ADVISED THAT A "WORD OF CAUTION" WAS INSERTED IN THE INVITATION TO THE EFFECT THAT "WOOL AND NYLON" SEWS DIFFERENTLY FROM "ALL WOOL," AND YOU THEN STATED THAT FOLLOWING THE DESTRUCTION OF THE CONTRACTOR'S PLANT BY FIRE, YOU WERE CONTACTED BY A REPRESENTATIVE OF THAT COMPANY WHO REQUESTED YOUR CONCERN TO MANUFACTURE THE QUANTITY REMAINING FOR DELIVERY UNDER THE CONTRACT, NAMELY, ABOUT 30,000 PAIR. YOU SUGGESTED THAT ON THE BASIS OF THE PRICE BID BY THE LEITCHFIELD COMPANY AND IN VIEW OF THE FIRE, IT COULD NOT BE DETERMINED WHETHER THE CONTRACT IN QUESTION WAS PROFITABLE. THE FURTHER COMMENTS IN YOUR TELEGRAM RELATED GENERALLY TO THE ACTION TAKEN BY THE DEPARTMENT OF THE ARMY IN THE CANCELLATION OF THE BIDS, ETC.

INFORMATION RECEIVED INFORMALLY FROM THE DEPARTMENT OF THE ARMY IS TO THE EFFECT THAT THE LEITCHFIELD COMPANY MANUFACTURED 57,050 PAIR OF TROUSERS PRIOR TO THE DESTRUCTION OF ITS PLANT BY FIRE, AND THAT THEREAFTER THE CONTRACTOR ENTERED INTO A CONTRACT WITH THE STATHAM GARMENT CORPORATION FOR THE MANUFACTURE OF THE BALANCE OF 19,025 PAIR, THE SAME BEING COMPLETED TO THE SATISFACTION OF THE PHILADELPHIA QUARTERMASTER CENTER. RESPECTING THE FOREGOING AWARD, THE REPORT AND RECOMMENDATION OF THE CONTRACTING OFFICER DATED OCTOBER 10, 1961, TRANSMITTED HERE BY THE DEPARTMENT OF THE ARMY, CONTAINED THE FOLLOWING STATEMENT:

"* * * THE AWARD MADE ON 30 JANUARY 1961 WAS TO LEITCHFIELD MFG. CO., LEITCHFIELD, KENTUCKY, FOR 76,075 UNITS AT A UNIT PRICE OF $8.25, WHICH PRICE INCLUDED THE VALUE OF VARIOUS COMPONENTS FURNISHED BY THE GOVERNMENT. THE VALUE OF THESE COMPONENTS FOR DEDUCTION PURPOSES WAS ADMINISTRATIVELY PLACED AT $5.41 PER UNIT. THUS FOR THE SAKE OF CONVENIENCE THE CUT, MAKE AND TRIM PRICE PAID TO LEITCHFIELD MFG. CO., UNDER THE AWARD MADE ON 30 JANUARY 1961 IS CITED AS $2.84 PER UNIT. * *

IT IS TO BE NOTED THAT THE GOVERNMENT-FURNISHED MATERIAL UNDER THE CONTRACT WITH THE LEITCHFIELD COMPANY WAS THE SAME MATERIAL PROPOSED TO BE FURNISHED UNDER THE INVITATION HERE INVOLVED. WHILE WE ARE NOT ADVISED AS TO WHETHER LEITCHFIELD REALIZED A PROFIT AT ITS BID PRICE OF $8.25 PER UNIT, IT IS CLEAR THAT THAT CONCERN--- APPARENTLY AN EXPERIENCED CONTRACTOR--- IN THE LIGHT OF THE "WORD OF CAUTION" CONTAINED IN THE INVITATION, SUBMITTED A BID PRICE SUBSTANTIALLY LOWER THAN THAT SUBMITTED BY YOUR CONCERN, THAT IS TO SAY, AT THE WEIGHTED AVERAGE PRICE OF $9.596 PER UNIT. THIS SHOWING APPEARS TO SUPPORT THE CONTRACTING OFFICER'S DETERMINATION TO REJECT YOUR BID AS EXCESSIVE AND READVERTISE THE PROCUREMENT.

IN YOUR LETTER OF OCTOBER 23, 1961, YOU DEALT GENERALLY WITH CERTAIN FACTORS YOU BELIEVE TO BE FOR CONSIDERATION IN CONNECTION WITH YOUR PROTEST, AND FOR THE REASONS STATED THEREIN YOU EXPRESSED THE VIEW THAT YOUR BID SHOULD HAVE BEEN FAVORABLY CONSIDERED. UNDER DATE OF OCTOBER 17, 1961, THE DEPARTMENT OF THE ARMY REQUESTED OUR DECISION CONCERNING THE ACTION TO BE TAKEN IN THIS CASE, THERE BEING TRANSMITTED A COPY OF YOUR LETTER DATED OCTOBER 4, 1961, TO COLONEL S. R. TODD, CHIEF OF THE PURCHASING DIVISION, AS WELL AS A COPY OF YOUR TELEGRAM OF THE SAME DAY TO THE CONTRACTING OFFICER. ALSO, WITH THE LETTER OF OCTOBER 17, 1961, THERE WAS ENCLOSED A COMPREHENSIVE REPORT BY THE CONTRACTING OFFICER WHEREIN WERE SET FORTH HIS REASONS FOR REJECTING YOUR BID AND READVERTISING THE PROCUREMENT. IN A DECISION DATED OCTOBER 26, 1961 (COPY ENCLOSED), TO THE SECRETARY OF THE ARMY, WE GAVE CONSIDERATION TO THE MATTERS INVOLVED AND FOR THE REASONS SET FORTH THEREIN WE CONCLUDED THAT THERE IS NO LEGAL BASIS ON WHICH OUR OFFICE MAY QUESTION THE ADMINISTRATIVE ACTION TAKEN IN THIS CASE.