The project manager should look at other vendors in a timely manner and contact them for a quote. He should also look at the all their track records and only contact the ones with a clean record. He could also host a meeting with project team members and ask their thoughts. He could host a vote amongst members. One of the most important things is to have consensus on the team before a decision is made. It is possible that the damage is fixable and the vendor will just take a price cut. Another option is to discuss it with the vendor and see if he could deliver another batch in time.