B-132665, AUG. 22, 1957

B-132665, AUG. 22, 1957

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER OF JULY 22, 1957, WITH ENCLOSURES, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH R. E. MICHEL COMPANY, INC., BALTIMORE, MARYLAND, ALLEGES WAS MADE IN ITS BID ON WHICH UNNUMBERED CONTRACT (PURCHASE ORDER NO. FD 7 404-2846) DATED NOVEMBER 21, 1956, IS BASED.

THE BIOLOGICAL WARFARE LABORATORIES, FORT DETRICK, FREDERICK, MARYLAND, BY INVITATION NO. 18-064-57-75, REQUESTED BIDS--- TO BE OPENED NOVEMBER 14, 1956--- FOR FURNISHING A SPECIFIED QUANTITY OF"FILTER, BACTERIAL MEDIA, (TYPE 50)," OWENS-CORNING FIBERGLASAEROCOR TYPE PF-105 OR AMERICAN AIR FILTER COMPANY "NO. 50 F.G. FILTER DOWN," OR EQUAL, ITEM. 1. IN RESPONSE R. E. MICHEL COMPANY, INC., SUBMITTED A BID OFFERING TO FURNISH, IN ADDITION TO ANOTHER ITEM, THE FILTER MATERIAL COVERED BY ITEM 1 AT A PRICE OF $0.29 PER PIECE. THE TWO OTHER BIDDERS ON ITEM 1 SPECIFIED PRICES OF $0.488 AND $0.96 PER PIECE.

IT IS REPORTED THAT THE PURCHASING AGENT, SUSPECTING THAT R. E. MICHEL COMPANY, INC., HAD MADE AN ERROR IN QUOTING ON ITEM 1, REQUESTED THE CORPORATION BY TELEPHONE TO VERIFY ITS BID PRICE ON THAT ITEM AND THAT BY LETTER DATED NOVEMBER 19, 1956, THE CORPORATION ADVISED THAT ITS BID PRICE OF $0.29 PER PIECE FOR ITEM 1 WAS CORRECT AND THAT THE CORRECT OWENS- CORNING TYPE NUMBERS FOR ITEMS 1 AND 2 WERE PF-115 AND PF-334, RESPECTIVELY. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEMS 1 AND 2 ON NOVEMBER 21, 1956.

BY LETTER DATED FEBRUARY 13, 1957, R. E. MICHEL COMPANY, INC., ADVISED THE CONTRACTING OFFICE THAT IT HAD BEEN REQUESTED BY ITS SUPPLIER, OWENS- CORNING FIBERGLAS CORPORATION, TO FILE A CLAIM FOR RELIEF UNDER THE CONTRACT BECAUSE OF AN ERROR MADE BY THE SUPPLIER IN QUOTING A PRICE ON THE FILTER MATERIAL COVERED BY ITEM 1 OF THE INVITATION; THAT THE ERROR WAS MADE BY THE SUPPLIER IN OBTAINING A PRICE FROM ITS HOME OFFICE IN TOLEDO, OHIO; AND THAT THE CORRECT PRICE FOR THE FABRICATED FIBERGLAS PF- 115 REQUIRED UNDER ITEM 1 IS $0.50 PER PIECE. THE CORPORATION REQUESTED THAT THE CONTRACT PRICE OF THE FILTER MATERIAL REQUIRED UNDER ITEM 1 BE INCREASED FROM $0.29 PER PIECE TO $0.488 PER PIECE--- THE AMOUNT OF THE NEXT LOWEST BID ON THAT ITEM. IN SUPPORT OF ITS ALLEGATION OF ERROR, THE CORPORATION, BY LETTER DATED MAY 1, 1957, SUBMITTED (1) A COPY OF AN ACKNOWLEDGEMENT RECEIVED FROM ITS SUPPLIER CONFIRMING ITS ORDER ON THE MATERIAL REQUIRED UNDER ITEM 1 OF THE INVITATION; (2) COPY OF ITS SUPPLIER'S INVOICE ON THE FILTER MATERIAL COVERED BY ITEM 1, WHICH SHOWS A UNIT PRICE OF $0.50 PER PIECE; (3) A COPY OF OWENS-CORNING PRICE SHEET AR 2.LD4, FROM WHICH, IT IS ALLEGED, THE INCORRECT PRICE ORIGINATED; (4) A COPY OF OWENS-CORNING PRICE SHEET AR 2.LD1, FROM WHICH, IT IS ALLEGED, THE PRICE OF ITEM 1 SHOULD HAVE BEEN OBTAINED; AND (5) A COPY OF AN INTER- OFFICE MEMORANDUM DATED MARCH 4, 1957, PREPARED BY K. J. SEWELL OF THE TOLEDO, OHIO OFFICE OF THE OWENS-CORNING FIBERGLAS CORPORATION AND ADDRESSED TO F. V. BRADY OF THE SAME OFFICE, WHICH OUTLINES THE CIRCUMSTANCES WHICH LED TO THE ERROR AND SHOWS THAT THE SUPPLIER FURNISHED ERRONEOUS INFORMATION TO THE CONTRACTOR.

ITEM 1 OF THE CONTRACT REQUIRES THE FURNISHING OF 8,000 PIECES OF OF 24 INCHES BY 36 INCHES BY 1/2 INCHES FIBERGLAS AEROCOR TYPE PF-115 MATERIAL. IT IS NOTED FROM OWENS-CORNING PRICE SHEET AR 2.LD1, THE PRICE SHEET WHICH THE CORPORATION ALLEGES SHOULD HAVE BEEN USED IN COMPUTING ITS BID PRICE ON ITEM 1, SPECIFIES A BID OF $80 PER THOUSAND SQUARE FEET ($0.08 PER SQUARE FOOT) FOR TYPE PF-115 FILTER MATERIAL OF THE SIZE 36 INCHES BY 100 FEET BY 1/2 INCH. IN ITS LETTER OF MAY 1, 1957, R. E. MICHEL COMPANY, INC., STATES THAT THE 24 INCHES BY 36 INCHES BY 1/2 INCH PIECE SUPPLIED BY IT CONTAINS SIX SQUARE FEET MAKING $0.48 PER PIECE FOR THE MATERIAL, TO WHICH A FABRICATION CHARGE OF $0.02 HAS BEEN ADDED FOR A TOTAL COST OF $0.50 PER PIECE.

IN HIS REPORT OF MAY 14, 1957, IN WHICH HE RECOMMENDED THAT THE CONTRACT PRICE OF ITEM 1 BE INCREASED TO THE AMOUNT OF THE NEXT LOWEST BID ON THAT ITEM, THE CONTRACTING OFFICER STATED THAT, AT THE TIME OF THE AWARD, THE PURCHASING AGENT HAD KNOWLEDGE OF THE FACT THAT THE GOVERNMENT ESTIMATE OF THE COST OF MATERIAL REQUIRED UNDER ITEM 1 WAS $0.43 PER UNIT AND THAT THE ITEM HAD BEEN PREVIOUSLY PROCURED AT THE SAME PRICE; THAT AT THE TIME OF SUCH AWARD, THE PURCHASING AGENT CONSIDERED THE CORPORATION'S BID PRICE ON ITEM 1 UNUSUAL, DESPITE THE VERIFICATION THEREOF, IN VIEW OF THE INFORMATION HE POSSESSED AS TO ESTIMATED COST AND PRIOR PROCUREMENT COST; AND THAT THE PURCHASING AGENT FELT THAT IN VIEW OF THE BID VERIFICATION HE HAD NO ALTERNATIVE BUT TO MAKE THE AWARD.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE IS NO ROOM FOR DOUBT THAT THE BID OF THE CORPORATION AS TO ITEM 1 WAS BASED ON THE WRONG TYPE OF FILTER MATERIAL. IT IS REPORTED THAT THE CORPORATION HAS DELIVERED THE MAJOR PORTION OF MATERIAL REQUIRED UNDER ITEM 1. IN THE CIRCUMSTANCES, PURCHASE ORDER NO. FD 7-404-2846 MAY BE AMENDED TO PROVIDE FOR A UNIT PRICE OF $0.488 PER PIECE FOR ITEM 1 AND PAYMENT IS AUTHORIZED TO BE MADE ON THAT BASIS.

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

THERE ARE RETAINED IN OUR OFFICE A COPY OF THE CORPORATION'S LETTER OF MAY 1, 1957, A COPY OF THE SUPPLIER'S INTER-OFFICE MEMORANDUM, COPIES OF THE SUPPLIER'S PRICE LISTS, AND COPIES OF THE REPORTS OF THE PURCHASING AGENT AND CONTRACTING OFFICER. THE OTHER PAPERS IN THE CASE ARE RETURNED.