Court Opinion

ID: 3151433
Source: CourtListenerOpinion
Date Created: 2015-11-02 22:00:05.633087+00
Date Added: 2024-06-11T08:40:54.775093
License: Public Domain

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of--                                  )
                                             )
Palco Distributing, LLC                      )      ASBCA No. 59892
                                             )
Under Contract No. N61331-15-P-8502          )

APPEARANCE FOR THE APPELLANT:                       Mr. Brent Palmer
                                                     Member

APPEARANCES FOR THE GOVERNMENT:                     Ronald J. Borro, Esq.
                                                     Navy Chief Trial Attorney
                                                    James T. Shepherd, Esq.
                                                     Trial Attorney
                                                     Naval Surface Warfare Center
                                                     Panama City, FL

                 OPINION BY ADMINISTRATIVE JUDGE PAUL

        This a timely appeal of a contracting officer's (CO's) decision cancelling
appellant Palco Distributing, LLC's (Palco's), purchase order in a total amount of
$6,736.20. The Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109, is applicable.
Palco opted to use the accelerated procedure provided by Board Rule 12.3, and the
parties submitted the appeal on the record pursuant to Board Rule 11. We deny the
appeal.

                          SUMMARY FINDINGS OF FACT

        1. On 29 October 2014, the Navy's Surface Warfare Center, Panama City,
Florida, issued a request for quotations (RFQ) in the government's FedBid system for
20 piston/sleeve assemblies (R4, tab I at 1). The Navy employee responsible for
issuing the original purchase request, Mr. Jason White, explained in his declaration
that the piston/sleeve assemblies were to be used in emergency breathing air
compressors (EBACs) which provided "compressed air for emergency breathing
equipment that is used during damage control operations onboard U.S. Naval vessels"
(White decl. at 1).

        2. The RFQ specifically stated that the piston/sleeve assemblies had to be
manufactured by Bauer Compressors, Inc. (Bauer), and had to bear Bauer part number
078043 (R4, tab 1 at 1, 3). Mr. White stated that "[n]o other piston/sleeve assemblies
are suitable for use in the EBACs" (White decl. at 3). The RFQ made the Navy's
intent to accept only Bauer assemblies even clearer by stating in the "Purchase
Description: Exact Match Only" (R4, tab 1 at 1). On page 2 of the RFQ, "Exact
Match Only" was defined as follows:

              The Buyer requires that Sellers bid "exact match to spec".
              That means that NO SUBSTITUTIONS are allowed.
              Sellers MUST provide the item requested in the line item
              description (exact make, model, part number and or
              description). If you are not able to deliver the line item as
              requested, DO NOT BID. Please advise the Buyer of
              issues through our "Submit a Question" button.

(Id. at 2)

       3. On or about 29 October 2014, the Navy received Bid No. 29489011 from
Palco. It offered to supply "Piston/Sleeve Assembly for EBAC, PIN 078043," plus
shipping costs, in a total amount of $6,736.20. The bid referred to "Bauer
Compressors INC" and included the "Exact Match Only" language which was
contained in the RFQ (R4, tab 2 at 1). As stated by the CO, Mr. Donald McManus, in
his declaration, up to this point, Palco did not disclose its intent to ship anything other
than the Bauer parts (McManus decl. at 2).

       4. Palco's bid was the lowest which the Navy received (McManus decl. at 2).
Accordingly, the Navy issued Purchase Order No. N61331-15-P-8502 to Palco in the
total amount stated in its bid. Section F of the purchase order required Palco to deliver
the assemblies by 14 November 2014. (R4, tab 3 at 1, 7)

        5. On 11November2014, the Navy received the shipment of assemblies and
an invoice from Palco and, on 19 November 2014, it rejected the shipment because the
items were not what was ordered (app. rebuttal doc., attach. 6 at 2). Instead of
shipping Bauer assemblies, Palco had forwarded parts manufactured by a company
named Lawrence Factor. Mr. White, the Navy engineer, explained the Navy's
rejection and subsequent cancellation decisions in these terms:

                 However, the Lawrence Factor parts are not the same as
              the OEM Bauer parts required by the purchase order, nor
              are they equivalent to the Bauer parts. NSWC PCD had
              previously obtained Lawrence Factor parts to determine if
              they could be used as an alternate source of supply.
              However, after testing them, we determined that the
              Lawrence [F]actor parts were not suitable for use in the
              EBACs. Specifically, the piston rings in the Lawrence
              Factor parts had end gaps that were significantly larger
              than those on the Bauer parts. The larger ring end gaps

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              significantly reduced the efficiency of the compressors and
              also allowed unacceptable levels of compressor lubricating
              oil to enter the air that would be used in the emergency
              breathing devices (see Tab 4 of Appeal File). I notified the
              Buyer, Mr. Donald McManus, that Palco failed to deliver
              the items required by the contract and, on December 9,
              2014, asked him to cancel the purchase (Tab 5 of Appeal
              File).

(White decl. at 2; see also R4, tab 4)

         6. Accordingly, the Navy advised Palco that it had delivered the wrong parts.
(app. rebuttal doc., attach. 3 at 2). On 8 December 2014, Palco sent the Navy an
unsolicited quote to provide the Bauer assemblies for a total price of $8,533.22
(id., attach. 9 at 1, 3). The Navy did not accept this quote.

        7. On 17 December 2014, the Navy sent the Lawrence Factor assemblies back
to Palco (app. rebuttal doc., attach. 10). On 2 January 2015, Palco advised the Navy
that it would not sign a bilateral modification cancelling the purchase order; instead, it
forwarded a settlement proposal in a total amount of $4,254.43 (R4, tab 7).

       8. On 4 February 2015, the Navy issued a unilateral modification cancelling
the purchase order at no cost to either party (R4, tab 9). This appeal followed.

                                         DECISION

       Palco's sole argument on appeal is that the RFQ issued by FedBid contained no
references to Bauer. In support of its contention, Palco attached a FedBid document of
unknown origin to its brief. We reject this argument. The RFQ contained in the
Rule 4 file clearly referenced not only Bauer's corporate name but also the Bauer part
number. In addition, it specified that the offered assemblies were to be "Exact Match
Only" (finding 2). Moreover, in its bid, Palco referred to Bauer's corporate name,
referenced the Bauer part number, and contained the "Exact Match Only" language
(finding 3). Clearly despite its contentions, Palco was aware of the RFQ's specific
requirements. 1

1
We reject the Navy's argument that the purchase order did not constitute a binding
     contract. Through the purchase order, the Navy accepted Palco's bid. Further,
     Palco's delivery of Lawrence Factor assemblies, even though they did not
     conform to the purchase order's requirements, constituted additional evidence
     supporting a binding contract.

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       Even if the contract permitted it, this is not an instance where a bidder offered
an equivalent product. As explained by Mr. White, the Navy had previously examined
the Lawrence Factor assemblies and determined that they "were not suitable for use in
the EBACs" because the "piston rings in the Lawrence [F]actor parts had end gaps that
were significantly larger than those on the Bauer parts" (finding 5). On this basis, the
Navy correctly cancelled the purchase order at no cost to either party.

                                    CONCLUSION

       The appeal is denied.

       Dated: 22 October 2015

                                                 MICHAEL T. PAUL
                                                 Administrative Judge
                                                 Armed Services Board
                                                 of Contract Appeals

Icon~

RICHARD SHACKLEFORD
Administrative Judge
Vice Chairman
Armed Services Board
of Contract Appeals

       I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 59892, Appeal of Palco
Distributing, LLC, rendered in conformance with the Board's Charter.

       Dated:

                                                 JEFFREY D. GARDIN
                                                 Recorder, Armed Services
                                                 Board of Contract Appeals

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