B-126338, JAN. 4, 1956

B-126338, JAN. 4, 1956

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED DECEMBER 8, 1955, WITH ENCLOSURES, FROM THE ASSISTANT SECRETARY (MATERIAL), RELATIVE TO AN ERROR ALLEGED TO HAVE BEEN MADE BY THE STAR WOOLEN COMPANY, COHOES, NEW YORK, IN ITS UNDATED BID ON WHICH CONTRACT N60136S-2913, IS BASED.

BY INVITATION NO. B-3-56 DATED AUGUST 16, 1955, THE UNITED STATES NAVAL AMMUNITION DEPOT, HASTINGS, NEBRASKA, REQUESTED BIDS, TO BE OPENED SEPTEMBER 6, FOR THE PURCHASE FROM THE GOVERNMENT OF APPROXIMATELY 51,840 POUNDS OF SCRAP SILK. BEFORE BIDDING THE CONTRACTOR REQUESTED THAT A SAMPLE OF THE SILK (POWDER BAGS/--- WHICH WAS AVAILABLE FOR INSPECTION AT THE DEPOT--- BE FORWARDED TO IT, AND IF THE LOT DID NOT RUN UNIFORM THAT SEVERAL SAMPLES BE SENT, IN ORDER THAT IT MIGHT JUDGE THE QUALITY OF THE MERCHANDISE OFFERED. A SAMPLE BAG, OF A NATURAL SHADE, WAS FURNISHED, AND ON THE BASIS OF THIS SAMPLE THE CONTRACTOR SUBMITTED A BID OF $0.3111 PER POUND, OR A TOTAL CONTRACT PRICE OF $16,127.42. ONE OTHER BID OF $9,211.97 WAS RECEIVED AND IT IS REPORTED THAT THE ESTIMATED ACQUISITION COST OF THE MATERIAL WAS $7,776. THE DESCRIPTION OF THE MATERIAL DID NOT SPECIFY COLOR AND IT WAS NOT A SALE BY SAMPLE. CONTRACT N60136S-2913 WAS AWARDED TO THE COMPANY ON SEPTEMBER 7, 1955, AT ITS BID PRICE, AND THE MATERIAL HAS SINCE BEEN DELIVERED AND THE FULL PRICE PAID.

IMMEDIATELY UPON RECEIPT OF THE MATERIAL THE CONTRACTOR, BY LETTER DATED SEPTEMBER 28, 1955, INFORMED THE CONTRACTING OFFICER THAT THE SAMPLE FURNISHED DID NOT REPRESENT THE DELIVERY THAT WAS RECEIVED SINCE THE DELIVERED MATERIAL CONTAINED A HIGH PERCENTAGE OF COLORED MATERIAL WHEREAS IT HAD BASED ITS BID PRICE ON THE SAMPLE OF NATURAL SHADE SILK THAT HAD BEEN FURNISHED. BY LETTER DATED OCTOBER 13, 1955, THE CONTRACTOR STATED THAT OVER THE PAST SEVERAL YEARS IT HAD PURCHASED HUNDREDS OF THOUSANDS OF POUNDS OF SILK POWDER BAG CUTTINGS AND THAT SUCH PURCHASES USUALLY WERE IN A NATURAL SHADE. IT WAS FURTHER STATED THAT DURING WORLD WAR II THE COMPANY HAD PROCESSED THE MAJORITY OF SILK FIBRE WHICH WENT INTO THE MANUFACTURE OF SILK POWDER BAGS AND, KNOWING THE GOVERNMENT SPECIFICATIONS AT THAT TIME, IT COULD NOT VISUALIZE THAT THESE BAGS WOULD CONTAIN A HIGH PERCENTAGE OF COLOR. THE COMPANY FURTHER STATED THAT IT HAD ATTEMPTED TO SORT THE BAGS BUT THAT IT WAS UNSUCCESSFUL SINCE IT FOUND THAT AT LEAST ONE PANEL OF EVERY BAG CONTAINED COLORED MATERIAL AND THAT THE ONLY OTHER SOLUTION TO MAKE THESE BAGS USABLE WOULD BE TO PUT THEM THROUGH A STRIPPING PROCESS AND REMOVE THE COLOR CHEMICALLY AT A COST OF $0.12 PER POUND. THE CONTRACTING OFFICER IN HIS REPORT STATES THAT "IT IS UNFORTUNATE THAT THE SAMPLE FORWARDED WAS OF A NATURAL SHADE, WHEN THE LOT DID CONTAIN COLORED MATERIAL.'

WHILE THE RECORD INDICATES THAT THE STAR WOOLEN COMPANY FAILED TO MAKE AN INSPECTION OF THE MATERIAL PRIOR TO THE SUBMISSION OF ITS BID AND THAT SUCH NEGLIGENCE CONTRIBUTED TO THE POSITION IN WHICH THE COMPANY NOW FINDS ITSELF, IT SEEMS APPARENT THAT THE SAMPLE FURNISHED MISREPRESENTED THE MATERIAL AND IN VIEW OF THE VAST DIFFERENCE BETWEEN THE COMPANY'S BID AND THE OTHER BID SUBMITTED AND THE REPORTED COST OF THE MATERIAL, IT WOULD BE UNCONSCIONABLE TO HOLD THE COMPANY TO ITS BID PRICE.

ACCORDINGLY, YOU ARE AUTHORIZED EITHER TO CANCEL THE CONTRACT AND REFUND THE AMOUNT PAID UPON RETURN OF THE GOODS, OR TO ADJUST THE CONTRACT PRICE BY AN APPROPRIATE AMOUNT--- NOT TO EXCEED TWELVE CENTS PER POUND--- FOR SO MUCH OF THE MATERIAL AS MAY BE DETERMINED TO CONTAIN COLOR.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE CONTRACT.