B-157798, OCT. 19, 1965

B-157798, OCT. 19, 1965

TO THE HONORABLE JAMES E. WEBB. ADMINISTRATOR, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION:

BY LETTER DATED OCTOBER 1, 1965, WITH ENCLOSURES, THE DIRECTOR OF PROCUREMENT REQUESTED OUR DECISION AS TO WHETHER CONTRACT NO. NAS 9 4388 WITH ENERGY SYSTEMS, INC., MAY BE MODIFIED TO PROVIDE FOR AN INCREASE IN PRICE FROM $44,304 TO $51,076 ON ACCOUNT OF AN ALLEGED MISTAKE IN A PROPOSAL SUBMITTED TO THE MANNED SPACECRAFT CENTER UNDER REQUEST FOR PROPOSALS NO. BG731-39-5-854P.

ON APRIL 15, 1965, THE CENTER ISSUED THE REQUEST ON A SOLE-SOURCE BASIS TO ENERGY FOR TWO EACH OF THE FOLLOWING ITEM:

"ITEM 1 - TWT POWER AMPLIFIER; 1.710 GHZ; 20 WATT OUTPUT POWER IN ACCORDANCE WITH THE ATTACHED STATEMENT OF WORK TITLED EXHIBIT A AND IDENTICAL TO THE HARDWARE FURNISHED UNDER CONTRACT NAS 8-5494. ENERGY SYSTEMS MODEL NO. 5700 API "

ENERGY WAS REQUESTED ON APRIL 15 TO RESPOND AS QUICKLY AS POSSIBLE TO THE REQUEST SINCE THE EQUIPMENT WAS URGENTLY NEEDED FOR AN APPROACHING SCHEDULED LAUNCH. ENERGY RESPONDED ON APRIL 16, 1965, AND QUOTED A PRICE OF $22,152 PER UNIT, OR A TOTAL OF $44,304. IN A LETTER DATED APRIL 16, 1965, ACCOMPANYING ITS PROPOSAL, ENERGY ADVISED THAT:

"1. OUR BID FOR THESE TWO UNITS IS MADE ON THE SAME BASIS AND TO THE SAME TECHNICAL SPECIFICATION AS THE EQUIPMENT RECENTLY QUOTED TO MARSHALL SPACE FLIGHT CENTER, HUNTSVILLE, ALABAMA, FOR TWO 1710 MC 20W TWT POWER AMPLIFIERS UNDER RFP 2-5-10-32239 S7 DATED MARCH 30, 1965.

"3. BASED ON OUR TWX TO NASA DATED APRIL 13, 1965, THE DELIVERY DATES SPECIFIED IN THIS QUOTATION OF JULY 1, 1965 AND AUGUST 1, 1965 WERE BASED UPON RECEIPT OF AN ORDER FROM NASA BY APRIL 16, 1965. RECEIPT OF AN ORDER AFTER THIS DATE WILL DELAY THE FOREGOING DELIVERY DATES ON A DAY FOR DAY BASIS.

"DUE TO THE TIME FACTORS INVOLVED IN PREPARING AND FORWARDING THIS QUOTATION, AS DISCUSSED AND AGREED TO DURING THE REFERENCE (B) TELEPHONE CONVERSATION, WE ARE FORWARDING WITH THIS LETTER THE FOLLOWING SCHEDULES:

"1. FIXED PRICE PROPOSAL FOR TWO (2) TWT 1710 MC 20W POWER AMPLIFIERS, MODEL 5700-AP1 IN THE AMOUNT OF $22,152 EACH OR A TOTAL PRICE OF $44,304 DATED APRIL 16, 1965.'

THE PROPOSAL WAS ACCEPTED ON APRIL 19, 1965, THE APRIL 16 LETTER BEING MADE A PART THEREOF, FOLLOWING A VERIFICATION OF THE TECHNICAL ASPECTS, INHOUSE REVIEW OF THE CONTRACTOR'S PRICING AND CONFIRMATION OF PRICING WITH THE MARSHALL SPACE FLIGHT CENTER WHICH HAD PERFORMED A COST ANALYSIS AND WHICH HAD PREVIOUSLY PROCURED THE SAME ITEM FROM THE CONTRACTOR.

ON APRIL 20, 1965, ENERGY ALLEGED AN ERROR IN ITS PROPOSAL IN THAT ITS QUOTATION DID NOT REFLECT PROPER PRICING ($28,838 PER UNIT) FOR EXPEDITED DELIVERY. IN SUPPORT OF ITS ALLEGATION OF ERROR AND IMPUTING NOTICE THEREOF TO THE GOVERNMENT, ENERGY REFERS TO ITS TWX OF APRIL 13, 1965, REFERRED TO IN ITS QUOTATION LETTER OF APRIL 16, 1965. IN THIS TWX, ENERGY ADVISED AN ENGINEER AT THE CENTER THAT ITS "PRICES WILL BE AS QUOTED TO MR. PERRY ON 5 APRIL 1965.' IN ITS LETTER OF APRIL 5 TO MR. PERRY (A CENTER ENGINEER), ENERGY QUOTED A PRICE PER UNIT, ON AN EXPEDITED BASIS, OF $28,838 AS AGAINST A NORMAL FABRICATION PRICE OF $22,154 PER UNIT. ENERGY FURTHER STATED THAT EXPEDITED DELIVERY WOULD BE ON OR BEFORE AUGUST 1 AND THAT NORMAL DELIVERY WOULD BE ONE UNIT ON OR BEFORE SEPTEMBER 1 AND THE SECOND UNIT ON OR BEFORE SEPTEMBER 15. IN A PREVIOUS PROPOSAL MADE TO THE MARSHALL SPACE FLIGHT CENTER BY ENERGY (REFERRED TO IN ITS QUOTATION LETTER OF APRIL 16), ENERGY QUOTED A UNIT COST OF $28,838 FOR EXPEDITED DELIVERY AND A UNIT COST OF $22,152 FOR ROUTINE DELIVERY.

FROM THE FOREGOING, IT IS EVIDENT THAT ENERGY MADE AN ERROR IN ITS PROPOSAL AS ALLEGED. IN THIS CONNECTION, THE CONTRACTING OFFICER HAS STATED, IN EFFECT, THAT THE ERROR WAS DUE TO THE ACCELERATED MANNER IN WHICH THE GOVERNMENT REQUESTED A PROPOSAL FROM ENERGY AND THE HASTE IN WHICH ENERGY RESPONDED TO THE REQUEST FOR PROPOSALS. HE RECOMMENDS THAT RELIEF BE GRANTED TO THE CONTRACTOR.

THEREAFTER, ON JUNE 10, 1965, THE CONTRACTING OFFICER NOTIFIED ENERGY THAT EXPEDITED DELIVERY WOULD NO LONGER BE REQUIRED AND REQUESTED THAT ENERGY RESUBMIT ITS CLAIM FOR PRICE ADJUSTMENT ON THE BASIS OF FABRICATING THE REMAINING PORTION OF THE WORK ON A NORMAL PROCESSING BASIS. A NO-COST AMENDMENT WAS SUBSEQUENTLY ISSUED EXTENDING THE DELIVERY TIME BY 40 DAYS FOR EACH UNIT.

ON JUNE 29, 1965, ENERGY RESUBMITTED ITS COST INFORMATION BASED ON EXPEDITED DELIVERY FROM THE INCEPTION OF THE CONTRACT THROUGH JUNE 10, 1965, AND ROUTINE FABRICATION THEREAFTER. BY EXTENDING THE REMAINDER OF THE CONTRACT PERIOD, ENERGY REDUCED THE AMOUNT OF ITS CLAIM FOR ERROR CORRECTION BY $4,553, OR TO A CORRECTED CONTRACT TOTAL OF $53,123. THE CONTRACTOR'S RESUBMITTED CLAIM TOTALING$8,815 IS COMPRISED OF $6,772 FOR EXPEDITED COSTS THROUGH JUNE 10 AND $2,043 REPRESENTING COSTS SUSTAINED IN REVERTING TO A ROUTINE PERFORMANCE PERIOD AT THE GOVERNMENT'S DIRECTION. WE AGREE THAT THE PORTION OF THE CLAIM REPRESENTING "SLOW DOWN" COSTS OF $2,043 IS NOT PROPERLY FOR CONSIDERATION IN DETERMINING THE EXTENT OF ERROR MADE BY ENERGY IN RESPONDING TO THE REQUEST FOR PROPOSALS. RATHER, SUCH CLAIM WOULD APPEAR TO BE ONE FOR UNLIQUIDATED DAMAGES UNRELATED TO THE CLAIM OF ERROR IN THE PROPOSAL. HENCE, THE REQUEST FOR RELIEF WILL BE CONSIDERED IN THE NET AMOUNT OF $6,772.

THE CONTRACTING OFFICER REPORTS THAT HE WAS NOT ON CONSTRUCTIVE NOTICE OF THE PROBABILITY OF ERROR IN ENERGY'S PROPOSAL FOR THESE REASONS:

"A. THE CONTRACTOR WAS PROPOSING ON HARDWARE WITH AN ESTABLISHED MODEL NUMBER.

"B. THE CONTRACTING OFFICER AT NASA-MARSHALL SPACEFLIGHT CENTER WAS CONTACTED PRIOR TO THE AWARD TO DISCUSS PREVIOUS PERFORMANCE, COST AND PRICING DATA. THE DUAL COST FOR ROUTINE AND EXPEDITED DELIVERY WAS VERIFIED; THE TIME DIFFERENCE BETWEEN THE TWO TYPES OF DELIVERY, HOWEVER, WAS NOT DISCUSSED AS OUR PRIMARY INTEREST WAS TO ESTABLISH CONFIDENCE IN THE CONTRACTOR'S ABILITY TO PERFORM AND FAIRNESS OF THE COST PROPOSED TO MSC.

"C. THE PRIOR-TO-AWARD CORRESPONDENCE BETWEEN MSC AND THE CONTRACTOR WAS UNKNOWN TO THE CONTRACTING OFFICER PRIOR TO THE AWARD.

"D. THE CONTRACTOR HAD VERY RECENTLY PROPOSED THE IDENTICAL HARDWARE AND QUANTITY TO NASA-HUNTSVILLE.'

HOWEVER, WE BELIEVE, IN THIS PARTICULAR CASE, THAT HAD IT NOT BEEN FOR THE ACCELERATED ACTIONS TAKEN IN SECURING THE PROPOSAL AND IN MAKING AN AWARD, THE CONTRACTING OFFICER WOULD HAVE REQUESTED VERIFICATION OF THE PROPOSAL. CONSIDERING THE FACT THAT ENERGY IN ITS APRIL 16 QUOTATION LETTER EXPRESSLY BASED ITS QUOTATION ON ITS APRIL 13 TWX WHICH STATED THAT PRICES WOULD BE AS QUOTED IN ITS APRIL 5 LETTER, TOGETHER WITH THE FACT THAT THE CORRECT PRICING INFORMATION WAS READILY AVAILABLE TO THE CONTRACTING OFFICER FROM INTRA-AGENCY SOURCES, WE FEEL THAT THIS CASE REASONABLY COMES WITHIN THE RULES GOVERNING THE REFORMATION OF GOVERNMENT CONTRACTS ON THE BASIS OF BONA FIDE MISTAKES. WE THEREFORE BELIEVE THAT ACCOMPANYING CIRCUMSTANCES INVOLVED HERE WERE SUCH AS TO BRING THIS PARTICULAR CASE WITHIN THE RATIONALE OF 44 COMP. GEN. 383, CITED IN THE LETTER OF OCTOBER 1. CF. ANTHONY C. MARTINOLICH ET AL. V. UNITED STATES, 115 CT.CL. 798; WENDER PRESSES, INC. V. UNITED STATES, 343 F.2D 961.

ACCORDINGLY, YOU ARE ADVISED THAT WE WOULD HAVE NO OBJECTION TO THE EXECUTION OF A SUPPLEMENTAL AGREEMENT INCREASING THE CONTRACT PRICE BY $6,772 TO A TOTAL CONSIDERATION OF $51,076, AS ADMINISTRATIVELY RECOMMENDED.

AS REQUESTED, THE FILE ENCLOSED WITH THE LETTER OF OCTOBER 1, 1965, IS RETURNED HEREWITH.