B-144834, FEB. 2, 1961

B-144834, FEB. 2, 1961

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED JANUARY 12, 1961, WITH ENCLOSURES, FROM THE CHIEF, CONTRACTS DIVISION, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN RELATIVE TO THE REQUEST OF THE SCRANTON ELECTRIC CONSTRUCTION COMPANY THAT THE CONTRACT PRICE OF 208 - 10 FOOT PIECES OF RIGID CONDUIT FURNISHED BY IT UNDER PURCHASE ORDER NO. 1496-TSD 60'S BE INCREASED FROM $239.20 TO $2,392 BECAUSE OF A MISUNDERSTANDING EXISTING BETWEEN IT AND THE TOBYHANNA SIGNAL DEPOT AS TO THE UNIT COVERED BY ITS VERBAL BID ON WHICH THE ORDER IS BASED.

IT APPEARS FROM THE RECORD THAT THE TOBYHANNA SIGNAL DEPOT, TOBYHANNA, PENNSYLVANIA, ON AUGUST 4, 1959, CONTACTED BY TELEPHONE A REPRESENTATIVE OF THE SCRANTON ELECTRIC CONSTRUCTION COMPANY FOR QUOTATION ON TWO ITEMS, ONE OF WHICH WAS FOR 208 EACH, CONDUIT, METAL, RIGID THICK WALL TYPE, 2 1/2 INCH STANDARD TRADE SIZE, STEEL, NPT THD, FURNISHED W/COUPLING, ZINC COATED OUTSIDE PROTECTIVE FINISH, 9 FEET 10 1/2 INCHES LG FED SPEC. WW-C- 281, AND THAT THE COMPANY'S REPRESENTATIVE QUOTED A PRICE OF $1.15 EACH FOR THE PIECES OF CONDUIT. ON THE BASIS OF SUCH QUOTATION, PURCHASE ORDER NO. 1496-TSD-60'S WAS PROCESSED ON SEPTEMBER 2, 1959, IN THE AMOUNT OF $294.30, OF WHICH $239.20 COVERED THE CONDUIT ITEM.

THE RECORD INDICATES THAT AFTER DELIVERY OF THE TWO ITEMS, THE COMPANY SUBMITTED ITS INVOICE ON WHICH IT BILLED THE DEPOT FOR 2,080 FEET OF CONDUIT (208 - 10 FOOT PIECES) AT THE RATE OF $1.15 PER FOOT, OR A TOTAL PRICE OF $2,392; THAT AFTER THE DEPOT'S REFUSAL TO PAY THE COMPANY'S BILL AS SUBMITTED, THE COMPANY BY LETTER DATED OCTOBER 20, 1959, SUGGESTED THAT EVIDENTLY THE GOVERNMENT DID NOT REQUIRE 2,080 FEET OF CONDUIT BUT ONLY 208 FEET. IN A LETTER DATED OCTOBER 26, 1959, THE DEPOT ADVISED THE COMPANY THAT IN ITS TELEPHONE REQUEST FOR QUOTATION IT INDICATED IT WANTED 208 UNITS, WHICH WOULD TOTAL 2,080 FEET OF CONDUIT.

IN A LETTER DATED DECEMBER 15, 1959, THE COMPANY REQUESTED THAT THE CONTRACT PRICE OF THE CONDUIT BE INCREASED FROM $239.20 TO $2,392 AND IT STATED THAT AT THE TIME OF THE TELEPHONE QUOTATION, THE GOVERNMENT'S PURCHASING AGENT ASKED FOR A PRICE ON A 2 1/2 INCH CONDUIT, 9 FEET 10 1/2 INCHES LONG, AND ALSO FOR A PRICE ON A COUPLING; AND THAT AT THAT TIME THE COMPANY'S REPRESENTATIVE EXPLAINED THAT ELECTRIC CONDUIT COMES IN 10 FOOT LENGTHS WITH A COUPLING AND THAT THIS BROUGHT UP THE QUESTION OF WHETHER THE GOVERNMENT NEEDED 200 10 FOOT PIECES OR 200 FEET OF CONDUIT. THE COMPANY STATED FURTHER THAT SINCE THE GOVERNMENT'S PURCHASING AGENT WAS NOT CERTAIN OF THE GOVERNMENT'S REQUIREMENTS, THE COMPANY'S REPRESENTATIVE GAVE HIM A PRICE OF $1.15 PER FOOT EXPLAINING THAT REGARDLESS OF WHAT THE GOVERNMENT'S REQUIREMENTS TURNED OUT TO BE THAT WAS THE BEST WAY TO PRICE THE ITEM. WITH ITS LETTER THE COMPANY SUBMITTED THE PRICE LIST OF ITS SUPPLIER, GENERAL ELECTRIC COMPANY, WHICH SPECIFIES AN F.O.B. ORIGIN RETAIL PRICE OF $113.05 PER 100 FEET IN WEIGHTS LESS THAN 5,000 POUNDS, FOR 2 1/2 INCH G-E-GALVANIZED CONDUIT. IN A LETTER DATED JANUARY 21, 1960, THE COMPANY ADVISED THAT TRANSPORTATION CHARGES TO THE DEPOT WOULD INCREASE THE PRICE OF THE CONDUIT TO $115 PER 100 FEET.

THE QUOTATION RECEIVED FROM THE SCRANTON ELECTRIC CONSTRUCTION COMPANY WAS ORAL AND THERE IS NOTHING TO ESTABLISH DEFINITELY THAT THE PRICE QUOTED WAS FOR A 10 FOOT PIECE OF 2 1/2 INCH CONDUIT. MOREOVER, WE CONCUR WITH THE STATEMENT IN THE ADMINISTRATIVE REPORT THAT IN VIEW OF THE NATURE AND PHYSICAL CHARACTERISTICS OF THE ITEM, THE GOVERNMENT'S PURCHASING AGENT SHOULD HAVE REALIZED THAT A STEEL CONDUIT, 2 1/2 INCHES THICK, 10 FEET LONG, WITH COUPLING ATTACHED, COULD NOT BE PROFITABLY FURNISHED AT $1.15 EACH, NOTWITHSTANDING THE EXISTENCE OF THE GOVERNMENT'S ESTIMATE OF $0.50 EACH. IN THE CIRCUMSTANCES, WE THINK IT REASONABLY MAY BE CONCLUDED THERE WAS NO MEETING OF THE MINDS IN RESPECT TO THE SUBJECT MATTER OF THE PURCHASE AND THAT NO BINDING CONTRACT WAS CONSUMMATED.

THE RECORD INDICATES THAT THE COMPANY HAS DELIVERED THE REQUIRED CONDUIT AND THAT IT HAS NOT BEEN PAID FOR THAT ITEM. ACCORDINGLY, THE COMPANY MAY BE PAID FOR THE CONDUIT AT THE RATE OF $1.15 PER FOOT, AS RECOMMENDED BY THE CONTRACTING OFFICER.

A REFERENCE TO THIS DECISION SHOULD BE MADE ON THE VOUCHER COVERING SUCH PAYMENT.