Case Study: 7-1 The Power Line Poles:

Instructions: Please answer each question with sufficient words per question.

1. Do you agree with Mr. Yarrow's procedure of sending only the four most acceptable bids to Moren's engineering consultants for complete analysis?

2. Does Mr. Yarrow really have much choice as to whom he awards the pole manufacture contract?

3. Under the circumstances, is the manufacturer of the pole or the engineering consultant responsible for the final specifications?

4. If you were Mr. Yarrow, what additional information would you like beyond that supplied in the case, and how would it affect your final decision?

5. What decision would you make on the basis of the available information?

6. Do you think that all suppliers have been fairly treated?

7) If you were in the position of Gordon Yarrow how would you deal with the bid exceptions requested?

Moren Corporation was building three additional power- pole prototypes and to perform the engineering tests in generating stations to serve the rapidly expanding energy advance of erection. The number of potential suppliers market. To link these stations to the existing area grid, a was limited by two major requirements. Each supplier new method of carrying the power lines using ornamen- had to have a design computer program and a large press tal tubular poles, instead of towers, had been adopted. brake for heavy metal. The second phase of the project involved pole manufacture to a fuhctional engineering design with parameters. neersservicesandtheexperienceofhisownengineer-ingdepartmenttoassisthim.Theconsultingengineeringquotes).AttherequestofMr.Northrup,Gordonnextsentengi- firm on the project had been selected in August, and by neering information only (no prices) on the four remainearlyspringofthefollowingyearithadfurnishedMoreningbidderstoMorensengineeringconsultantsforawithfunctionalspecificationsforthepoles,crossarms,completeanalysisofthebidsonthebasisoftherequested With functional specifications for the poles, cross arms, complete analysis of the bids on the basis of the requested and hardware. Moren engineers recommended that the design, a comparison of designs furnished, and excepquotations should first be obtained on the most press- tions to specifications. Mr. Northrup agreed to meet with ing portion of the line linking Addison to Smithfield. bidders M,N, and P to resolve the engineering and fabThis amounted to about half of the total project distance. ricating capabilities of each. This was not necessary for The expectation was that the experience gained on this bidder O (Henry Nelson Company) because the company first section would guide the contracts on the remaining was already working for Moren. half. Mr. Yarrow had to ensure a start on the 345kV line In mid-June, Mr. Northrup called Gordon Yarrow to by the fall. This left not much time in which to develop share his findings. He said, "I have serious reservations EXHIBIT 1 Quotation Summary-Poles and Arms 345 kV Line Addison-Smithfield Section Purchasing and Supply EXHIBIT 2 Comments on the Exceptions to Specifications in Nelson Company's Bid Exception 1 The exception to the method of shipping would relieve Nelson of the responsibility for poles during shipment from the southern factory to your storage yards. Exception 2 In Nelson's bid, no material could be rejected on the basis of low Charpy values shown on the mill test reports or by sampling on anything but the thickest plate of the heat. Similarly, welding materials or techniques would not be subject to rejection because of low Charpy results, which is inconsistent with the intent of the specifications. Exception 3 Excessive bolt projections represent a hazard to installation and maintenance personnel and would also increase construction costs. Exceptions 4 and 5 Under Nelson Company's proposed Welding and Inspection Specifications, the purchaser would be prohibited from using radiography to determine weld quality, even for the purpose of clarifying the interpretations of ultrasonic indications or for use where ultrasonic inspection cannot be made. Only visual or magnetic particle inspection would be permissible for any welds except the pole shaft to base plate weld and the longitudinal welds at the lap joints. Some welds, such as the arm to butt plate welds, are virtually impossible to adequately inspect after they are completed and require inspection while the work is being performed; most inspection techniques except radiography are of questionable value following galvanizing: all inspection would have to be made in the fabricator's plant. Henry Nelson Company's proposed inspection procedures are less stringent than AWS-D1.0.69 in allowing 3/16"or smaller defects regardless of spacing. Exception 6 Nelson's Conditions of Sale give the purchaser only five days from unloading to make claims for damaged or defective material. The warranty clause is unclear in that it can be interpreted to mean that Nelson has one year in which to make corrections but no provision for correcting defective material unless found in the fiveday inspection period. It is our understanding that the intent is to provide a one-year warranty but the words do not so state. Escalation Clause Delays in delivery that are not caused by the purchaser should not be charged to the purchaser. about three bidders, M,N, and P, based on equipment, NELSON'S EXCEPTIONS plant capacity, and ability to meet our deadlines. Our con- sultants agree." After his visit with Mr. Northrup, Gordon Yarrow "Based on engineering and fabricating experience, returned to his office and examined Nelson's quotation. our first recommendation is Nelson. I will confirm this in Not knowing whether Nelson would be recommended by writing. However, these exceptions to our specifications the engineers, he had not paid much attention to Nelson's would still have to be resolved. I will leave these to you to exceptions to Moren's bid requirements. There were six work out." Mr. Northrup handed a sheet of comments to exceptions noted on Mr. Northrup's summary. Gordon