B-130862, APR. 3, 1957

B-130862, APR. 3, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 25, 1957, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH NATIONAL CHEMICAL LABORATORIES, INC., WEST PALM BEACH, FLORIDA, ALLEGES IT MADE IN ITS BID ON WHICH CONTRACT NO. DA-28-024-ORD-2800 WAS AWARDED.

THE RARITAN ARSENAL, METUCHEN, NEW JERSEY, BY INVITATION NO. ORD-28 024- 56-683, REQUESTED BIDS--- TO BE OPENED JUNE 13, 1956--- FOR FURNISHING CORROSION REMOVING COMPOUND (METAL CONDITIONER AND RUST REMOVER) IN 15- GALLON POLYETHYLENE CONTAINERS. ON PAGE 2 OF THE INVITATION UNDER "PACKING," PROSPECTIVE BIDDERS WERE ADVISED: "THE MATERIAL SHOULD BE PACKED FOURTEEN (14) GALLONS IN A POLYETHYLENE CONTAINER CONFORMING TO SPECIFICATION ORDJR-OME PD NO. 108, DATED 16 JANUARY 1956, STYLE A, SIZE B, TYPE 1.' THE LATTER SPECIFICATION COVERS A MOLDED DRUM. IN RESPONSE NATIONAL CHEMICAL LABORATORIES, INC., SUBMITTED A BID DATED JUNE 12, 1956, OFFERING TO FURNISH THE COMPOUND UNDER ITEMS 1 TO 6, INCLUSIVE, AT A PRICE OF $22.19 PER CONTAINER F.O.B. ORIGIN.

THE RECORD INDICATES THAT ON JUNE 25, 1956, THE RARITAN ARSENAL REQUESTED THE BIRMINGHAM ORDNANCE DISTRICT, BIRMINGHAM, ALABAMA, TO CONDUCT A PRE- AWARD SURVEY OF THE ABILITY OF NATIONAL CHEMICAL LABORATORIES, INC., TO PERFORM THE CONTRACT, AND THAT ON JULY 6, 1956, THE BIRMINGHAM ORDNANCE DISTRICT ADVISED THE ARSENAL THAT, ON THE BASIS OF THE SURVEY MADE BY THEM, AN AWARD TO THE CORPORATION WAS RECOMMENDED. THE BID OF NATIONAL CHEMICAL LABORATORIES, INC., WAS ACCEPTED AS TO ITEMS 1 TO 6, INCLUSIVE, ON AUGUST 9, 1956, AND ON AUGUST 23, 1956, THE CONTRACT WAS FORWARDED TO THE BIRMINGHAM ORDNANCE DISTRICT FOR ADMINISTRATION BY THE RARITAN ARSENAL.

BY LETTER DATED AUGUST 28, 1956, ADDRESSED TO THE BIRMINGHAM ORDNANCE DISTRICT, THE CONTRACTOR REQUESTED THAT THE CONTRACT BE AMENDED TO PROVIDE FOR THE USE OF POLYETHYLENE LINED STEEL DRUMS IN LIEU OF THE MOLDED DRUMS REQUIRED BY THE SPECIFICATIONS, AND ALSO THAT THE TIME FOR DELIVERY OF THE COMPOUND BE EXTENDED. THE CORPORATION STATED THAT SUCH REQUEST WAS BEING MADE BECAUSE OF A MISUNDERSTANDING EXISTING BETWEEN THE CORPORATION AND THE RARITAN ARSENAL AS TO THE TYPE OF CONTAINER TO BE USED IN SHIPPING THE COMPOUND. IT ALSO STATED THAT PRIOR TO THE AWARD, ON JUNE 27, 1956, THE DATE ON WHICH ITS PLANT WAS INSPECTED BY THE GOVERNMENT INSPECTOR WHO MADE THE PRE-AWARD SURVEY, IT HAD ADVISED THE RARITAN ARSENAL BY TELEGRAM THAT THE COMPOUND WOULD BE PACKED IN STEEL POLYETHYLENE LINED DRUMS.

BY LETTER DATED SEPTEMBER 12, 1956, THE BIRMINGHAM ORDNANCE DISTRICT ADVISED THE CORPORATION THAT ITS REQUEST FOR RELIEF HAD BEEN CONSIDERED BY THE RARITAN ARSENAL AND THAT THE ARSENAL HAD ADVISED THAT PACKAGING OF THE COMPOUND MUST BE IN STRICT ACCORDANCE WITH PROCUREMENT DESCRIPTION NO. 108, WHICH REQUIRES POLYETHYLENE MOLDED DRUMS.

IN AN AFFIDAVIT DATED NOVEMBER 13, 1956, IN WHICH RESCISSION OF THE CONTRACT WAS REQUESTED, THE TECHNICAL DIRECTOR OF THE CORPORATION STATED THAT ON JUNE 26, 1956, THE CORPORATION RECEIVED A TELEGRAM FROM ONE OF ITS SUPPLIERS, WESTVACO MINERAL PRODUCTS DIVISION, FOOD MACHINERY AND CHEMICAL CORPORATION, IN WHICH THE SUPPLIER INDICATED THE USE OF A LINED DRUM IN PACKAGING THE COMPOUND; THAT, PRIOR TO AWARD, A GOVERNMENT INSPECTOR CALLED AT THE CORPORATION'S PLANT AND PLACE OF BUSINESS, AND THAT IT WAS AT THAT TIME THAT IT WAS POINTED OUT BY THE INSPECTOR THAT MOLDED DRUMS WOULD BE REQUIRED IN THE PACKAGING OF THE COMPOUND; AND THAT IN A TELEGRAM AND A LETTER DATED JUNE 27, 1956, ADDRESSED TO THE RARITAN ARSENAL, THE CORPORATION QUOTED THE MAIN PORTION OF ITS SUPPLIER'S TELEGRAM, WHICH INDICATED THE USE OF STEEL POLYETHYLENE LINED DRUMS. THE DIRECTOR CONTENDED THAT THE CONTRACTING OFFICER HAD ACTUAL NOTICE BY MEANS OF THE TELEGRAM AND THE GOVERNMENT INSPECTOR'S REPORT THAT THE CORPORATION CONTEMPLATED THE USE OF A LINED DRUM INSTEAD OF A MOLDED DRUM AND THAT THIS KNOWLEDGE WAS HAD BY THE CONTRACTING OFFICER OR WAS AVAILABLE TO HIM BEFORE THE CORPORATION'S BID WAS ACCEPTED.

IN REGARD TO THE PRE-AWARD SURVEY, THE BIRMINGHAM ORDNANCE DISTRICT STATES IN A TELETYPE DATED JANUARY 15, 1957, AS FOLLOWS:

"SUBJECT NATIONAL CHEMICAL LABORATORIES. CONTRACT DA-28-ORD-4800. J. P. FLOOD WHO MADE PREAWARD SURVEY NO LONGER WITH DISTRICT. CONVERSATION OF MR. DRISKILL THIS OFFICE WITH MR. FLOOD AFTER AWARD AND RECEIPT OF REQUEST FOR DEVIATION APPROVAL INDICATED MR. FLOOD DISCOVERED CONTRACTOR BID BASED ON USE OF POLYETHYLENE LINED DRUMS. FLOOD ADVISED CONTRACTOR TO WIRE RARITAN ARSENAL FOR DEVIATION. FLOOD STATEMENT IN PREAWARD SURVEY APPARENTLY INDICATES CONTRACTOR UNDERSTOOD PACKAGING REQUIREMENTS OF IFB AFTER THEY WERE EXPLAINED TO HIM DURING SURVEY. NO INDICATION THAT THIS OFFICE WAS AWARE OF CONTRACTOR'S PROPOSED METHOD OF PACKAGING PRIOR TO AWARD. COPY OF MR. DRISKILL'S STATEMENT BEING FORWARDED"

IN FIRST INDORSEMENT DATED NOVEMBER 20, 1956, THE CONTRACTING OFFICER OF THE RARITAN ARSENAL ADVISED THE DEPUTY CHIEF, BIRMINGHAM ORDNANCE DISTRICT, THAT THE TELEGRAM OF JUNE 27, 1956, WAS ADDRESSED TO THE BUYER, AND THAT THIS FACT MAY ACCOUNT FOR ITS NOT BEING ROUTED DIRECTLY TO HIS OFFICE; THAT ON AUGUST 27, 1956, A REPRESENTATIVE OF THE CORPORATION TELEPHONED THE BUYER AND INQUIRED ABOUT THE ACTION TAKEN ON ITS TELEGRAM OF JUNE 27; THAT A COPY OF THE TELEGRAM WAS OBTAINED BY THE BUYER FROM THE TELETYPE OFFICE; AND THAT ON AUGUST 28, 1956, THE REPRESENTATIVE WAS ADVISED BY TELEPHONE TO TAKE THE MATTER UP WITH THE BIRMINGHAM ORDNANCE DISTRICT. THE CONTRACTING OFFICER ALSO STATED THAT IF THE TELEGRAM OF JUNE 27, 1956, HAD BEEN RECEIVED IN HIS OFFICE PRIOR TO AWARD OF THE CONTRACT, NO AWARD WOULD HAVE BEEN MADE UNTIL THE MATTER HAD BEEN RESOLVED.

THE RECORD INDICATES THAT THE GOVERNMENT INSPECTOR, WHO MADE THE PRE- AWARD SURVEY OF THE FACILITIES OF NATIONAL CHEMICAL LABORATORIES, INC., DISCOVERED, AT THE TIME OF HIS INSPECTION, THAT THE CORPORATION'S BID PRICE WAS BASED ON THE USE OF POLYETHYLENE LINED DRUMS; THAT THE INSPECTOR ADVISED THE CORPORATION THAT IT SHOULD REQUEST THE RARITAN ARSENAL TO ALLOW A DEVIATION FROM THE SPECIFICATIONS, WHICH THE CORPORATION DID BY TELEGRAM DATED JUNE 27, 1956; THAT THE TELEGRAM,WHICH WAS ADDRESSED TO THE BUYER FOR THE ARSENAL, WAS MISFILED IN THE ADMINISTRATIVE OFFICE; AND THAT THE CONTRACTING OFFICER, UNAWARE OF THE EXISTENCE OF THE CORPORATION'S TELEGRAM OF JUNE 27, 1956, AND OF THE FACT THAT THE PRE-AWARD SURVEY REPORT WAS ERRONEOUS, MADE THE AWARD TO THE COMPANY BECAUSE OF THE RECOMMENDATION MADE IN SUCH REPORT.

SINCE IT APPEARS THAT THE BIDDER ACTED PROMPTLY IN AN EFFORT TO ADVISE THE GOVERNMENT OF THE MISUNDERSTANDING, AND SINCE THE CONTRACTING OFFICER STATES THAT IF HE HAD BEEN AWARE OF THE EXISTENCE OF THE CORPORATION'S TELEGRAM OF JUNE 27, 1956, HE WOULD HAVE MADE NO AWARD UNTIL THE MATTER HAD BEEN RESOLVED, AND SINCE THERE IS SOME GROUND FOR CONSIDERING THE GOVERNMENT TO HAVE BEEN AS MUCH AT FAULT AS THE BIDDER, THE CONTRACT INVOLVED MAY BE CANCELLED WITHOUT LIABILITY TO THE CORPORATION, AS RECOMMENDED BY THE CONTRACTING OFFICER.