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CHAPTER V

PURCHASING-OFFICE METHODS AND FORMS

DEFINITIONS OF TERMS "F.O.B.," "F.A.S.," ETC.

A quotation reading "f.o.b. cars our works" or simply "f.o.b. our works," means that the manufacturer will, for the price named, deliver the goods "free on board" the cars at his works, taking out the bill of lading but not prepaying the freight on same. The buyer will then receive a "freight bill" from the R. R. Co. when the goods arrive at their destination, and any claim for damage or loss en route must be made by the buyer.

A quotation reading "f.o.b. our works, freight allowed to Canton, O." (for example), means that the manufacturer will, in this case also, take out the B/L but will not prepay the freight, leaving this,, and the collection of any claims from the R. R. Co., to be done by the buyer at Canton, O. However, in rendering his invoice, the manufacturer will deduct from it the freight charge from his works to the point of delivery; by this means saving himself the trouble of prepaying freight and making any adjustments with the R. R. Co.

A quotation reading "f.o.b. Canton, O." (for example, the point of delivery) means that the manufacturer will, for the price named, supply the goods and prepay freight on same to Canton, O., collecting any damages for breakage or loss from the R. R. Co.; i.e., delivering the goods free to the buyer on board the cars at his siding.

A quotation reading "f.a.s. N. Y. Harbor" (free alongside steamer N. Y. Harbor, for example) is of the same significance as the last described, except that the R. R. Co. will deliver the material alongside the steamer. The liability of the receivers of the goods in this case is of some interest. If the R. R. has a track on the wharf, its responsibility ends with the running of the cars thereon, and the owners or the steamship company are obliged to unload the goods and place them in the vessel. Or the R. R. Co. may deliver the goods on a lighter alongside the vessel, and it then devolves upon the ship to lift the material, by its own tackle, into the hold. In case the goods are of such weight that they cannot be advantageously handled with the ship's ordinary tackle, the vessel's agents may hire a special derrick-lighter capable of handling the material and may direct the R. R. Co. to place the goods on this lighter and bring the same alongside the vessel.

A quotation reading "c.i.f. Manila" (for example) means that the

bid covers "cost, insurance and freight" charges to the port of Manila, and the buyer is supposed to receive his goods on the wharf (or other customary landing place), in good condition and free of any additional expense. It should be noted that the steamship company lifts the material out of the hold and deposits it on the wharf or lighter as part of the freight service. It should further be noted, however, that a quotation "c.i.f." does not cover any "landing charges" that may be made at the port-of-entry for lighterage, etc., nor does it include customs duties.

INVITATIONS TO BID; GENERAL REMARKS

Invitations to bid on material or construction may be made, (1) by a letter notifying the prospective bidder of the forwarding to him of plans and specifications, and perhaps, containing information as to when bids should be handed in, place of delivery, and other data that may not appear in the specifications; (2) by a letter that is in itself a specification or brief description of the work required; (3) by standard "invitation to bid" sheets, containing the general conditions in printed form with spaces for the filling-in of the special requirements; and (4) by a printed or typewritten pamphlet, either complete in itself or bound in with the specifications.

The first two methods are the most common, and "reminders" for their proper compilation are given below; the third is used by firms doing a larger amount of business, and its form eliminates very largely any liability to lack of completeness; and the fourth method is usually adopted on work of considerable magnitude, where there will be many bidders, and where the final papers are required in considerable duplication and in more permanent form than is afforded by mere loose papers clipped together.

"INVITATION TO BID LETTERS

The following "reminders" are intended for use in writing letters of invitation to bid on material or labor (more particularly the former however) in connection with specifications written according to the outlines given in Chap. III. For small jobs several of the items may not be needed, more particularly No. 10, 11 and 12.

Reminders for Invitation to Bid Letters

(1) Notice of enclosure (or of forwarding under separate cover) of plans and specifications, with complete enumeration of the same.

(2) Title of work covered.

(3) Request for price, either "lump sum" or "unit price."

(4) For material delivered f.o.b., c.i.f., etc., at factory, shipping-port, or site of erection; or,

(5) For material erected (give site of erection); or,

(6) For labor to be performed (give site of work).

(7) Material to be packed (for export, etc.).

(8) Time of delivery or erection required; or ask bidder to state earliest convenient

(or possible) delivery, with difference in price, if any.

(9) Estimated shipping weight to be stated in bid.

(10) Bids to be submitted by (give date).

(11) Bids to be submitted in duplicate, triplicate, etc.

(12) Certified check required for performance of proposal; conditions of return or retention.

(13) Plans and specifications to be returned with bid.

(14) Terms of payment.

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Please give us your prices (separately on each item) for export to Cuba on material specified below and state how soon you could deliver after receipt of order.

Prices must include first class packages and careful packing for land and sea shipment.
Prices must be F. O. B. vessel N. Y. Harbor. All quotations must be given in Net Prices.
SPECIFY CASH DISCOUNTS.

Req'n No..

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These standard forms for obtaining prices on material, etc., are most commonly used by firms who make frequent purchases for export, by large manufacturing concerns who are constantly purchasing a variety of material, by contracting companies, etc. To the first-mentioned they are often necessary to embody special shipping regulations, and to all large concerns they are essential in order to secure uniformity and celerity in clerical operations. When used by a purchasing department with

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out final reference to the engineering department, however, they may be the means of causing much dissatisfaction and delay in the proper filling of orders, on account of the inflexible characters sometimes fixed upon them by the purchasing department.

An example of an "invitation to bid" sheet or "quotation sheet" is given in Fig. 58, and will serve to illustrate the usual style of such blanks.

"SPECIFICATION LETTERS"

More calls for prices are made by what may be called "specification letters" than in any other way. When the work in question is a standard article, no trouble may be experienced in obtaining a satisfactory quotation; but when, as is frequently the case, a request for a price on a special and complicated machine, or for a building, or for a complete factory, even, is made on a single sheet of writing paper, a prompt and close tender cannot reasonably be expected.

When no plans or specifications are submitted when asking for prices, therefor, special care should be taken to see that all the important items of the proposition are clearly stated in the letter of inquiry. For preliminary quotations, or for obtaining a price on a standard piece of machinery, a carefully written letter is sufficient without submitting a regular specification, and can be prepared in much less time.

Such a letter should embrace the principal points of the "reminders" enumerated above (p. 213), and also those of the "specification reminders" of the article in question (see Chap. IV). It should be properly headed, and the principal divisions of the specifications should also be accentuated by capitals and underlining. An example of a letter of this class is given below.

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Wheeler-Edwards Patent Air Pump for Cane Sugar Factory Use.

In connection with a proposed cane sugar factory on which we are submitting an estimate, we have been asked to give a quotation for the drain pumps for the evaporator on the above type of pump, manufactured by your company. The requirements, operating conditions, etc., will be as follows:

Type.—Steam-driven Triplex (three air cylinders driven by two steam cylinders); each air cylinder for independent connection.

Service. Draining the calandrias of the last three cells of a Standard Quadruple Effect Evaporator concentrating sugar-cane juice; capacity of evaporator 200,000 gallons per 24 hours, 75 percent evaporation by volume.

Capacity. Each air cylinder is to drain the water of condensation from one cell, this amounting to an average (during the 24 hours) of 26 gallons per minute (theoretical).

Steam Pressure

Maximum 125 lb. per square inch, Working, 60 lb. with 10 lb. back-pressure.
Suction Heads

2nd Cell Pump-Vacuum of about 8 in. maximum.
3rd Cell Pump-Vacuum of about 15 in. maximum.
4th Cell Pump-Vacuum of about 22 in. maximum.

In each case the base of the pump will be about 10 ft. below the evaporator
bottom.

Discharge Heads

2nd Cell Pump-10 ft.

3rd Cell Pump-10 ft.

4th Cell Pump--60 ft.

Material Pumped

Water of condensation at 62.3 lb. per cubic foot at temperatures corresponding
to above suction heads.

ONE such unit will be required and we ask that you quote us your best export
price f.a.s. New York Harbor, packed for export, and also state the approxi-
mate shipping weight of the material.

Yours very truly,

HONOLULU IRON WORKS COMPANY

Per

FORMAL INVITATIONS AND INSTRUCTIONS TO BIDDERS

As explained in the introduction to this section, it is usually desirable on important work to have all the papers connected with the letting of the contract prepared in more permanent form than is usual for smaller work. This may be accomplished by having the papers printed and bound in book form. The matter usually included consists of the "Invitation to Bidders," "Instructions to Bidders," blank "Proposal," "Specifications," "Contract," "Index to Specifications" and "Index to Contract.

In this case the "Invitation to Bidders" will consist of a formal invitation, brief description of the work, enumeration of the papers and drawings, terms of payment, reservation as to rejection of bids, etc.; or in other words comprising the information called for on p. 213 of this chapter.

The "Instructions to Bidders" sometimes issued are often barely separable from the "Invitations." They may contain the following directions:

F

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