August 28, 2003
Ms. Zita Miller
GE
PO Box 911
Fairfield, Connecticut 06430
Dear Ms. Miller,
As we discussed in our phone conversation yesterday, we are providing a draft of the relevant events surrounding our recent experience with GE.
We are bringing this to your attention because:
We believe it is GE policy to be honest and fair in its dealings with suppliers.
We believe GE has treated us dishonestly and unfairly.
We believe it is GE policy to comply with rules and laws of other countries.
We were asked by GE to violate the CE Marking requirements of the European Common Market.
We don't believe GE would sanction the pirating of supplier products.
We believe that GE is pirating our product.
The parties involved in this issue are as follows. The initials next to each name indicate how they are referenced in the chronology below.
Bill Eberhard (BE-KVB) - Project Management Leader
KVB - GE, a division of GE Power Systems, Hatfield, PA 215-996-4063
David Starkweather - (DS-KVB) Project Manager
KVB - GE, a division of GE Power Systems, Hatfield, PA 215-996-4074
Ed Wadington - (EW-EMRC) President
EMRC - Manufacturer of flow monitors, Tucson, Arizona 520-749-2167
William Walker (WW-CleanAir) President
CleanAir - Distributor of EMRC products in Europe, Palatine, Illinois 847-606-3453
Charles Auzepy - (CA-CleanAir) Product Engineer
CleanAir Europe - a subsidiary of CleanAir, Marseille, France 011 33 491 878 210
Michael Bolton II (MB-EMS) Purchasing Agent
GE Energy Management Services, a division of GE
215-996-9200
Art Dean (AD-CleanAir) Technician, CleanAir, Palatine, Illinois 847-654-4623
Sanford Tudor (ST-EMRC) Product Leader, EMRC, Billings, Montana 406-252-4450
Here is my initial attempt at a chronology on this issue. Since there are several players, I refer to each with their initials and company:
Early March 2003 BE-KVB or DS-KVB contacts EW-EMRC in the US asking for a price for a flow monitor to be delivered to Spain. EW quotes the US price for a non-CE Marked flow monitor at $15,000. The monitor consists of three main components: a probe, an umbilical and a control unit.
EW mentions that CleanAir is working on a CE Marked version for the European market that could possibly be ready in time. BE tells EW the required delivery date is May 30, 2003.
Early April 2003 EMRC and CleanAir agree that CleanAir will commit to a firm price of $18,000 on the first unit. Note this is prior to CE Marking tests and final design release.
April 23, 2003 CleanAir submits a firm quote of $18,000 for the first flow monitor with a CE Marking. This is done through CleanAir Europe. This quotation is for a single flow monitor with pricing valid for 60 days (until June 23). Delivery is promised in four weeks from receipt of purchase order for the first monitor and 8-12 weeks for any additional monitors. (See Item 1)
May 2003 KVB requests that EMRC provide a monitor for system testing. EMRC agrees to provide a non-CE Marked unit for this purpose at no cost. The control unit and probe are sent to Hatfield from EMRC.
May 2003 CleanAir Europe successfully completes CE Marking tests.
June 6, 2003 (approx.) WW-CleanAir calls DS-KVB asking for the PO to prevent further schedule slippage. At this time, DS mentions the project is delayed until November due to a turbine foundation problem.
June 12, 2003 MB-EMS issues PO #095721-0 for a single flow monitor. The requested delivery date of July 1 is not consistent with the promised delivery date of four weeks (July 12).
June 23, 2003 Pricing on original quote expires.
July 3, 2003 E-mail from DS-KVB to WW-CleanAir stating that the control unit will be picked up by GE at the manufacturing facility in Marseilles and shipped to the US. Prior to this the control unit was to be picked up by GE for delivery to plant site in Spain. Also about this time, the umbilical for the first monitor is shipped from Palatine to Hatfield.
July 11, 2003 GE-EMS notified that the control unit is ready for pickup.
July 15, 2003 The control unit is picked up in Marseilles by common carrier.
July 15, 2003 CleanAir receives a second PO issued by MB-EMS via fax for two additional monitors (See Item 2). This PO references the pricing from the expired April 23 quote. Also, this PO has a requested delivery date of August 8, 2003, three weeks from the date of order -- again not in line with the 8-12 weeks promised in the expired quote.
July 21, 2003 (approx.) WW-CleanAir telephones DS-KVB regarding the pricing and delivery requested in the July 15 PO.
Late July 2003 MB-EMS telephones WW-CleanAir stating that issues regarding pricing and delivery should have been addressed to him.
July 23, 2003 CA-CleanAir sends updated quote to MB-EMS for $20,000 per unit with a promised delivery date of September 9. Upon further discussion CA agrees to the $18,000 unit price (without umbilical) and to delivery during the week of September 1, 2003.
July 29, 2003 DS-KVB telephones WW-CleanAir to notify WW that the control unit KVB shipped from France had been damaged in shipment. WW requests control unit be sent overnight to Palatine for repair. DS stated he did not want to ship it and asked WW to send technician. WW agrees to send technician to fix shipping damage. MB-EMS called WW to ask for technician billing rates for insurance purposes.
July 30, 2003 AD-CleanAir arrives at KVB to find that KVB technicians had attempted to repair the shipping damage. AD is not able to the make control unit fully functional at KVB. The control unit is shipped overnight to Palatine for repair.
August 1, 2003 Control unit arrives in Palatine after 1-day delay due to weather. Repaired and returned the same day. The functional problem is found to be unrelated to shipping damage.
August 21, 2003 WW-CleanAir receives an order cancellation from MB-EMS. WW calls MB to ask for an explanation. MB states the order was cancelled since CleanAir raised the price and could not meet the delivery date. WW telephones DS-KVB and requests the return of the loaner unit. DS states he is unable to do it at this time but would try to do it the following week.
Ms. Miller, I believe this chronology illustrates that CleanAir and EMRC have met every commitment made to GE and even gone the extra mile to ensure the success of your project in Spain. I feel we have been treated unfairly in this matter. I fail to understand Michael Bolton's contention that we raised the price and failed to meet the deadlines. We clearly stated in our quotations to GE the price and delivery schedule and met them or were prepared to meet them in each case. When the control unit from France arrived damaged, we immediately dispatched a technician to attempt to repair the damage even though the shipping was the responsibility of GE. At every step of the way, we have bent over backwards to do our part to make this project go smoothly.
We were all shocked when we received the cancellation notice.
What disturbs us much more however is our concern that GE may be copying the design of our CE Marked monitor. This belief is consistent with a previous conversation with Mr. Eberhard, in which he had asked us to send him the CE Marked parts so he could construct the units himself. He dismissed my observations that the monitor must be built per the CE Marking certificate requirements. It appears to us that his intent is to import these units into Europe as CE Marked equipment. If true we believe this is a false representation and a clear violation of European law. If these units are being pirated by GE, Mr. Eberhard's actions and statements over the course of these events represent fraudulent intent on the part of GE.
We believe this is not the first time Mr. Eberhard has asked a supplier to circumvent the CE Marking requirements, so the problem for GE may be bigger than what I describe here.
In conclusion, we are asking that GE investigate these events. More importantly, we would like written assurance that GE is not pirating the design of these monitors and that the monitors you are providing are not being misrepresented to your European clients as CE Marked.
I have additional information on this matter, including a more detailed chronology should you require it in the course of your investigation. I look forward to hearing from you in the near future.
Yours truly,
William I. Walker
President
Subsequent events
September 10, 2003 - WW called Zita Miller to check on status of this issue. Zita said " it is being looked at by patent attorney at GE Power Systems in Alanta. WW said, "It isn't a patent issue it is a fairness issue". WW also said that "to my knowledge KVB has still not returned the loaner (non-CE Marked) unit which should have been returned as soon as KVB received the working European CE marked unit."
September 10, 2003 WW called EW to check on status of the return of the loaner.
September 10, 2003 ED called back saying he has checked both EMRC offices and the loaner is still not back from KVB
