H. N. Bailey & Associates v. The United States

449 F.2d 376, 196 Ct. Cl. 166, 1971 U.S. Ct. Cl. LEXIS 9
United States Court of Claims·Decided October 15, 1971·No. 266-70·Published·Cited by 39 cases

Opinion

DURFEE, Judge:

This is a contracts case wherein plaintiff seeks to recover assessed and collected excess reprocurement costs. In addition, plaintiff prays for a declaration that the Government’s termination for default is converted into a termination for the convenience of the Government.

Operation Henhouse is an aerial recovery program that is conducted by the U. S. Air Force as part of our space and missile program. The instant procurement required the production and delivery of manganese bronze pole hooks and manganese bronze loop hooks. These hooks are employed by moving aircraft for the purpose of securing returning packages of scientific instruments. They engage the shroud lines of the parachutes carrying the load to be recovered and thereby prevent the instrument package from descending into the ocean.

The contract proffered in defendant’s Request for Proposals (hereinafter RFP) was for an indefinite quantity, specifying only a minimum and maximum for each item. 1 The first delivery of item 1 (pole hook) was to take place sixty days from the receipt of the order, and the first delivery of item 2 (loop hook) was scheduled for thirty days from the receipt of the order. The RFP requested separate quotations for the minimum quantities and for the optional quantities beginning with 50 units and ending with a quotation for the total optional quantity. A complex method of evaluating which total quotation was the lowest was described and illustrated by means of an example using a unit price of $10.

Plaintiff, a California corporation, submitted low bid, and eventually was awarded the contract. The procurement, which was designated a 100% small business set-aside, was the first for these hooks which was opened for competitive negotiation. The hooks were originally developed in 1959 by All American Engineering Co. of Wilmington, Delaware (hereinafter All American) as subcontractor for Lockheed Aircraft Company. Prior to this procurement, they were produced and delivered' by All American as a sole source supplier. 2

Plaintiff’s low bid proposed $25 as the unit price for each hook. All American’s bid was second lowest, at unit prices of $85.50 and $81.00 respectively, and Brandt’s Foundry (hereinafter Brandt), the reproeurement contractor, was third lowest at unit prices of $113.50 and $106.-20. 3 Thus, plaintiff’s bid was approximately 30% of the next lowest bid.

The urgency of the program and the wide disparity in bid quotations between those submitted by plaintiff and the other bidders prompted the procuring agency to request a pre-award survey. It was immediately conducted by the Defense Contract Administrative Services Region *378 (DCASR), Los Angeles, in June 1966. There is conflicting testimony whether plaintiff was informed at this time, either directly or indirectly, that its bid was only 30% of the next lowest bid. 4 However, it is undisputed that plaintiff was asked to confirm its bid and did, in fact, confirm its proposed prices by letter of June 3,1966.

The award document, which was received by plaintiff on June 27, 1966, provided for the delivery of 350 pole hooks and 500 loop hooks. In accordance with the conditions outlined in the RFP, the following delivery schedule was initiated:

Item 1 Item 2

27 July 1966 ................. 100

26 August 1966 .......... 100 150

10 October 1966 ......... 50 50

25 October 1966 ......... 200 200

350 500

The contract contained an index of General Provisions for Fixed-Price Supply Contracts which incorporated by reference ASPE clauses on disputes, default and convenience termination. There was no provision for the delivery and/or testing of a preproduction model (sometimes referred to as a first article).

Both recovery hooks were to be cast in a manganese bronze alloy, 5 which was required to attain a tensile strength of at least 100,000 psi (pounds per square inch) and a minimum elongation in two inches of 12%. There can be no doubt that manganese bronze of high tensile strength, although not a metallurgical novelty, is exceedingly difficult to pour. This is especially true where the eastings are subject to x-ray inspections for defects such as porosity and shrinkage. 6 Under these strict control conditions, only the most sophisticated melting and poring processes can be used. Success in pouring a manganese bronze alloy with the desired strength depends almost entirely upon the foundry’s ability to achieve the correct copper; zinc; aluminum; iron ratio. That is to say, each metal must be added in compatible proportion to all the other components of the alloy. To insure the proper metallic ratio, precise temperature control, the positioning of gates, risers and chills, 7 and *379 the correct application of certain other technical steps are of prime importance. For example, if the pouring temperature of the metal during the casting process is too cold, shrinkage may occur. If the pouring temperature is too hot, certain elements of the alloy will be “burned out” (oxidized), thereby disrupting the delicate metallic ratio.

In 1966, plaintiff was primarily a manufacturer of spare parts, overhaul kits and related support equipment for various military services. In order for it to participate in the instant procurement, it was necessary to retain the services of an independent foundry which was capable of casting the manganese bronze alloy to specification. The unfinished castings would be transferred to plaintiff who, in turn, would polish and finish them at its plant and finally deliver them to defendant in accordance with the contract delivery schedule. Plaintiff employed the Advance Aluminum & Brass Co. (hereinafter Advance) as subcontractor for this foundry work. During the course of the pre-award investigation, plaintiff was assured by the foundry’s owner that the castings would be supplied well within the time allotted by the RFP. Subsequently, Advance undertook to subcontract for the designing of the required patterns both of wood and aluminum.

As production began and the first delivery date (July 27) drew near, there was no indication from plaintiff that it was encountering any unforeseen difficulties. The only request it made for additional information or assistance was for extra copies of the drawings which defendant promptly furnished.

On July 26, defendant’s engineer, who was visiting plaintiff’s plant in connection with a pre-award survey for another contraet, undertook to survey plaintiff’s progress with respect to the instant procurement. He spoke with plaintiff’s president and visited the foundry and pattern shop. He learned that at least ten additional days were needed to complete the patterns, and that the pattern shop had not been instructed to give priority to item 2 which required delivery earlier than item 1.

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H. N. Bailey & Associates v. The United States, 449 F.2d 376, 196 Ct. Cl. 166, 1971 U.S. Ct. Cl. LEXIS 9 (cc 1971).

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