B-128834, SEP. 24, 1956

B-128834, SEP. 24, 1956

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER DATED AUGUST 3, 1956, WITH ENCLOSURES, FROM THE DEPUTY ASSISTANT SECRETARY OF THE ARMY (LOGISTICS), RELATIVE TO AN ERROR ALLEGED BY INTERNATIONAL BUSINESS MACHINES CORPORATION TO HAVE BEEN MADE IN ITS BID WHICH IS THE BASIS FOR PURCHASE ORDER NO. CP 6-3320-D, DATED OCTOBER 13, 1955.

THE CHEMICAL CORPS RESEARCH PROCUREMENT OFFICE, ARMY CHEMICAL CENTER, MARYLAND, SENT A REQUEST FOR QUOTATION (DD FORM 747) TO THE INTERNATIONAL BUSINESS MACHINES CORPORATION, BALTIMORE, MARYLAND, FOR 300,000 EACH OF TWO TYPES OF TABULATING CARDS. THE REQUEST PROVIDED FOR DELIVERY, F.O.B. EDGEWOOD, MARYLAND, IF BY RAIL, FREIGHT OR EXPRESS; OTHERWISE F.O.B. ARMY CHEMICAL CENTER, MARYLAND. THE CORPORATION, ON OCTOBER 5, 1955, QUOTED A PRICE OF $1.05 AND $1.06 PER THOUSAND FOR ITEMS ONE AND TWO, RESPECTIVELY, AND STATED THAT THE FORMS WERE TO BE MANUFACTURED AT WASHINGTON, D.C. NO EXCEPTION WAS TAKEN WITH RESPECT TO DELIVERY. ON OCTOBER 13, 1955, PURCHASE ORDER NO. CP 6-3320-D WAS ISSUED TO THE INTERNATIONAL BUSINESS MACHINES CORPORATION FOR THE FORMS.

BY LETTER DATED OCTOBER 25, 1955, THE CORPORATION ADVISED THE CONTRACTING OFFICER THAT THERE HAD BEEN OMITTED FROM ITS QUOTATION OF OCTOBER 5 A NOTATION THAT THE PRICES WERE BASED ON AN F.O.B. FACTORY BASIS; AND RETURNED THE PURCHASE ORDER FOR CORRECTION. BY LETTER DATED OCTOBER 28, THE CONTRACTING OFFICE ADVISED THE CORPORATION THAT THE PURCHASE ORDER WAS ISSUED IN ACCORDANCE WITH ITS WRITTEN QUOTATION, WHICH PROVIDED FOR DELIVERY F.O.B. DESTINATION; THAT SINCE THE ORDER HAD BEEN ISSUED THAT OFFICE HAD NO AUTHORITY TO CHANGE IT; THAT THE ORDER WAS RETURNED THEREWITH AND THAT IT WOULD BE NECESSARY FOR THE CORPORATION TO PROCEED WITH THE ORDER IN ITS PRESENT FORM; THAT THE CORPORATION, HOWEVER, COULD SUBMIT A CLAIM TO THE GENERAL ACCOUNTING OFFICE, THROUGH THE CONTRACTING OFFICER, FOR THE ALLEGED INCREASED COST; AND THAT, IN THE MEANTIME, THE CORPORATION WOULD BE EXPECTED TO PERFORM IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE PURCHASE ORDER. THE CORPORATION FURNISHED THE FORMS CALLED FOR BY THE PURCHASE ORDER AND SUBSEQUENTLY SUBMITTED AN INVOICE COVERING THE COST OF TRANSPORTING THE MATERIAL FROM WASHINGTON, D.C., TO THE ARMY CHEMICAL CENTER, EDGEWOOD, MARYLAND.

IT IS REPORTED THAT THE PURCHASE ORDER ISSUED BY THE GOVERNMENT TO THE INTERNATIONAL BUSINESS MACHINES CORPORATION CONTAINED VARIOUS PROVISIONS, INCLUDING A "DISPUTES" ARTICLE AND A ,NONDISCRIMINATION" ARTICLE WHICH WERE NOT CONTAINED IN THE REQUEST FOR QUOTATION. SUCH BEING THE FACTS, THERE WAS NO UNQUALIFIED ACCEPTANCE BY THE GOVERNMENT OF THE CORPORATION'S OFFER. THUS, THE PURCHASE ORDER CONSTITUTED A COUNTER OFFER BY THE GOVERNMENT AND IT WAS REFUSED AND RETURNED BY THE CORPORATION BY LETTER DATED OCTOBER 25. WHILE THE CORPORATION THEREAFTER FURNISHED THE FORMS, IT APPEARS THAT IT MAY HAVE DONE SO WITH THE UNDERSTANDING THAT IT COULD FILE A CLAIM WITH OUR OFFICE FOR THE INCREASE COSTS IN ACCORDANCE WITH THE ADVICE CONTAINED IN THE CONTRACTING OFFICER'S LETTER OF OCTOBER 28. SUCH CIRCUMSTANCES IT WOULD NOT BE PROPER TO HOLD THAT THE CORPORATION WAIVED ITS RIGHTS WITH REGARD TO THE CLAIM AT THAT TIME.

ACCORDINGLY, SINCE THE PURPORTED ACCEPTANCE BY THE GOVERNMENT OF THE QUOTATION SUBMITTED BY INTERNATIONAL BUSINESS MACHINES CORPORATION DID NOT CONSTITUTE A VALID AND BINDING CONTRACT, THE CLAIM FOR THE COST OF TRANSPORTING THE FORMS FROM WASHINGTON, D.C., TO THE ARMY CHEMICAL CENTER, MARYLAND, MAY BE PAID.