B-158900, MAY 9, 1966

B-158900, MAY 9, 1966

TO AMERICAN NICKEL ALLOY MANUFACTURING CORP.:

YOUR LETTER OF MARCH 28, 1966, REQUESTS THAT WE REVIEW OUR SETTLEMENT OF MARCH 1, 1966, IN WHICH WE DENIED YOUR CLAIM FOR A PARTIAL REFUND OF $450 IN CONNECTION WITH ITEM NO. 77 OF CONTRACT DSA 25-S-7252.

SALES INVITATION NO. 25-S-65-33 WAS ISSUED OCTOBER 13, 1964, BY THE DEFENSE SURPLUS SALES OFFICE, NORFOLK, VIRGINIA. ITEM 77 WAS DESCRIBED IN THE INVITATION AS FOLLOWS:

"DUCT - WELDMENT - AFTER BURNER, REAR, PRATT AND WHITNEY, PT. NO. 249343A. HIGH TEMP. ALLOY, BASE ALLOY NICKEL, MATERIAL ALLOY, NIMONIC 75, 80, 80A (WAC) 8730, 7831, 7832, 7834, 7835. USED ON MODEL J57-P-4, 8 AND 12 ENGINES. (LOC: INSIDE STORAGE - PACKED - UNUSED)

"GOVERNMENT'S OPINION AS TO:

CONDITION: APPEARS TO BE GOOD

TOTAL COST: $6,202.00

ETW:3,059 LBS. 7 EA "

OUR RECORDS INDICATE THAT SHORTLY AFTER THE INVITATION WAS ISSUED, YOUR COMPANY INQUIRED OF THE NAVAL SUPPLY CENTER AS TO WHETHER THE 3,059 POUNDS WAS THE GROSS WEIGHT OR THE NET WEIGHT, AND NSC ADVISED YOU, BY LETTER DATED OCTOBER 20, 1964, THAT THE 3,059 POUNDS WAS THE GROSS WEIGHT AND THE NET WEIGHT OF EACH PIECE WAS APPROXIMATELY 285 POUNDS; HOWEVER, THEY ADMONISHED YOU THAT SUCH INFORMATION WAS ONLY AN ESTIMATE AND WAS NOT PART OF THE GUARANTEED DESCRIPTION. BASED UPON THIS INFORMATION AND WITHOUT INSPECTION, OR IN FACT WITHOUT EVEN VISITING THE INSTALLATION, YOUR COMPANY BID $131.60 FOR EACH DUCT, FOR A TOTAL BID OF $921.20. YOU NOW CONTEND THAT THE WEIGHT ESTIMATE BY THE HOLDING ACTIVITY WAS ERRONEOUS IN THAT THE DUCTS ONLY WEIGHED APPROXIMATELY 150 POUNDS, AND YOU REQUEST AN APPROPRIATE REFUND, SINCE YOU FEEL THAT AMERICAN NICKEL SHOULD NOT SUFFER FOR THE MISTAKE OF THE GOVERNMENT.

IN YOUR LETTER OF MARCH 28, 1966, YOU CONTEND THAT YOU PROPERLY COULD RELY ON THE "ETW: 3,059 LBS.' AS REFERRING TO NET WEIGHT RATHER THAN GROSS WEIGHT. YOU SUBMIT A COPY OF A LETTER, DATED APRIL 29, 1965, ADDRESSED TO THE ARMED SERVICES BOARD OF CONTRACT APPEALS, CONCERNING THIS SAME MATTER, IN WHICH YOU REFERRED TO A PRIOR SALE WHERE THE ETW WAS THE NET WEIGHT. YOUR LETTER TO US OF NOVEMBER 2, 1965, HOWEVER, STATED THAT YOUR COMPANY SUBMITTED ITS BID BASED UPON THE ESTIMATED NET WEIGHT OF 285 POUNDS (A TOTAL OF 1995 POUNDS), AND THE AMOUNT CLAIMED FOR REFUND IS BASED ON THIS SAME WEIGHT OF 1995 POUNDS.

THE IFB IN THIS CASE CONTAINED THE FOLLOWING PERTINENT PROVISIONS, BY WHICH THE GOVERNMENT DISCLAIMED VARIOUS WARRANTIES ON THE PROPERTY:

"1. INSPECTION. THE BIDDER IS INVITED, URGED AND CAUTIONED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING A BID. PROPERTY WILL BE AVAILABLE FOR INSPECTION AT THE PLACES AND TIMES SPECIFIED IN THE INVITATION. IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR THE WITHDRAWAL OF A BID AFTER OPENING.

"2. CONDITION AND LOCATION OF PROPERTY. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, ALL PROPERTY LISTED THEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS.' IF IT IS PROVIDED THEREIN THAT THE GOVERNMENT SHALL LOAD, THEN "WHERE IS" MEANS F.O.B. CONVEYANCE AT THE POINT SPECIFIED IN THE INVITATION. THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION. HOWEVER, THE GOVERNMENT MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE. EXCEPT AS PROVIDED IN CONDITIONS NO. 8 AND 10, NO REQUEST FOR ADJUSTMENT IN PRICE OR FOR RESCISSION OF THE SALE WILL BE CONSIDERED. THIS IS NOT A SALE BY SAMPLE.

"GUARANTEED DESCRIPTIONS

"/2) ESTIMATES AS TO "WEIGHT" OF PROPERTY OFFERED FOR SALE BY THE "UNIT" ARE NOT GUARANTEED. * * *"

THE QUESTION AS TO THE LEGAL EFFECT OF ERRONEOUS DESCRIPTIONS AND ESTIMATES IN INVITATIONS FOR THE SALE OF SURPLUS PROPERTY HAS BEEN CONSIDERED IN MANY DECISIONS OF THIS OFFICE AND OF THE COURTS. ONE OF THE BEST DISCUSSIONS OF THE AFFECT OF DISCLAIMER OF WARRANTIES IS FOUND IN THE CASE OF DADOURIAN EXPORT COMPANY V. UNITED STATES, 291 F.2D 178, 182, WHERE THE COURT SAID, IN PART:

"* * * WHEN THE GOVERNMENT SELLS SURPLUS GOODS IT IS TRYING TO DISPOSE OF A VAST MISCELLANY OF USED AND UNUSED PROPERTY IN AN EFFORT, SO FAR AS MAY UNDER THE CIRCUMSTANCES BE POSSIBLE, TO MINIMIZE ITS LOSS. SALES OF THIS CHARACTER ARE PROCESSED ON A MASS QUANTITY BASIS BY MEMBERS OF THE ARMED FORCES WHO SELDOM IF EVER HAVE ANY EXPERTISE IN THE PARTICULAR ITEMS WHICH COME TO THEIR WAREHOUSES AND DEPOTS. BUYERS OF SUCH SURPLUS PROPERTY KNOW PERFECTLY WELL THAT THERE IS ALWAYS THE CHANCE OF BUYING PROPERTY THAT MAY TURN OUT TO BE OF LITTLE VALUE, OR MAY DEVELOP INTO GREAT BARGAIN WITH A HUGE WINDFALL OF PROFIT. ACCORDINGLY, THE GOVERNMENT VERY PROPERLY HAS PROTECTED ITSELF BY FORMULATING ITS CONTRACT FOR THE SALE OF SUCH SURPLUS PROPERTY SO AS TO SHIFT THE RISK FROM ITSELF TO THE BUYER. * * *"

IT IS A WELL-SETTLED RULE THAT, IN THE ABSENCE OF BAD FAITH, AN EXPRESS DISCLAIMER OF WARRANTY SUCH AS WE HAVE HERE, VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. SEE IN THIS CONNECTION W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; I. SHAPIRO AND CO. V. UNITED STATES, 66 CT.CL. 424; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; UNITED STATES V. KELLY, 112 F.SUPP. 831; AMERICAN ELASTICS, INC. V. UNITED STATES, 84 F.SUPP. 194; LUMBREZO V. WOODRUFF, 175 N.E. 525. OUR OFFICE HAS CONSISTENTLY FOLLOWED THESE CASES. SEE OUR DECISION TO YOU, B-149182, JULY 23, 1962. FURTHER, THIS SALE WAS ON A UNIT BASIS, THE WEIGHT BEING ONLY AN ESTIMATE FOR INFORMATION PURPOSES. WITH RESPECT TO WEIGHT ESTIMATES, THE COURTS HAVE SAID THAT GIVEN WEIGHTS IN SALES INVITATIONS SHOULD NOT BE CONSIDERED AS A WARRANTY UNDER THE TERMS OF THE SALE, BUT MERELY AN ESTIMATE OF PROBABLE AMOUNTS. MAGUIRE AND COMPANY V. UNITED STATES, 273 U.S. 67; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90.

IN THIS CASE, THERE IS NO EVIDENCE OF BAD FAITH ON THE PART OF THE NAVAL SUPPLY CENTER IN MAKING THE ESTIMATE, ONLY AN HONEST ERROR. CONSEQUENTLY, THE SPECIFIC DISCLAIMER OF WARRANTY COMPLETELY REMOVED ALL WARRANTIES AS TO THE ESTIMATED WEIGHT.

YOU STATE, HOWEVER, THAT SINCE THE GOVERNMENT REFUSED TO OPEN THE PACKING CONTAINERS DUE TO THE GREAT EXPENSE INVOLVED, YOU FOUND IT QUITE IMPRACTICAL TO ASSUME THAT SAME EXPENSE AND, THEREFORE, COULD MAKE NO INSPECTION. CONSEQUENTLY, YOU DO NOT FEEL THAT YOU SHOULD BE HELD ACCOUNTABLE FOR THE MISTAKE. IN THAT CONNECTION, IT WAS HELD IN THE CASE OF PAXTON-MITCHELL CO. V. UNITED STATES, 172 F.SUPP. 463, THAT NOTWITHSTANDING THE DIFFICULTY ATTENDANT UPON AN INSPECTION, IT IS INCUMBENT UPON THE BIDDER TO MAKE THE SORT OF INSPECTION THAT IS EFFECTUAL. AND, EVEN IN A SITUATION WHERE INSPECTION IS AN "ABSOLUTE PHYSICAL IMPOSSIBILITY," A BUYER IN AN "AS IS" SALE MAY NOT RECOVER BECAUSE OF A VARIANCE BETWEEN ESTIMATED AND ACTUAL QUANTITIES. ALLOYS AND CHEMICALS CORPORATION V. UNITED STATES, 324 F.2D 509.

YOU ALSO CLAIM RELIEF UNDER PARAGRAPH 8 OF THE GENERAL TERMS AND CONDITIONS, WHICH PROVIDES:

"ADJUSTMENT FOR VARIATION IN QUANTITY OR WEIGHT.

WHEN PROPERTY IS SOLD ON A "UNIT PRICE" BASIS, THE GOVERNMENT RESERVES THE RIGHT TO VARY THE QUANTITY OR WEIGHT DELIVERED BY 10 PERCENT FROM THE QUANTITY OR WEIGHT LISTED IN THE INVITATION; AND THE PURCHASER AGREES TO ACCEPT DELIVERY OF ANY QUANTITY OR WEIGHT WITHIN THESE LIMITS. THE PURCHASE PRICE WILL BE ADJUSTED UPWARDS OR DOWNWARDS IN ACCORDANCE WITH THE UNIT PRICE AND ON THE BASIS OF THE QUANTITY OR WEIGHT ACTUALLY DELIVERED. NO ADJUSTMENT FOR VARIATION WILL BE MADE WHERE PROPERTY IS SOLD ON A "PRICE FOR THE LOT" BASIS.'

YOU CONTEND THAT SINCE THERE WAS A VARIANCE OF MORE THAN 10 PERCENT YOUR CLAIM MAY BE ALLOWED AS THE ADJUSTMENT. THIS CONTENTION HAS BEEN POSED BY YOUR COMPANY PREVIOUSLY AND REJECTED BY OUR OFFICE IN B 148436, APRIL 20, 1962.

SALES OF SURPLUS PROPERTY ARE GENERALLY LISTED EITHER ON A BASIS OF POUNDAGE OR NUMBER OF ITEMS TO BE SOLD. THEY MAY BE SOLD EITHER ON A LOT BASIS, AS IS THE USUAL CASE OF MISCELLANEOUS SCRAP METALS, OR ON A UNIT PRICE BASIS AS IS THE USUAL CASE OF SEPARABLE AND IDENTIFIABLE PIECES OF EQUIPMENT. UNDER THE UNIT PRICE BASIS, TO WHICH PARAGRAPH 8 APPLIES, THE UNIT MAY BE IN TERMS OF WEIGHT OR QUANTITY. THE ADJUSTMENT IN PARAGRAPH 8 APPLIES TO WEIGHT WHERE THE SALE IS OFFERED IN TERMS OF WEIGHT BUT WHERE, AS HERE, THE SALE IS OFFERED IN TERMS OF QUANTITY (7 EA), THE ADJUSTMENT APPLIES ONLY TO A VARIANCE IN QUANTITY. THE INVITATION OFFERED SEVEN PIECES OF EQUIPMENT, AND SEVEN PIECES OF EQUIPMENT WERE DELIVERED. CONSEQUENTLY, PARAGRAPH 8 HAS NO APPLICATION TO THIS CASE. IN THIS RESPECT, WE INVITE YOUR ATTENTION TO THE CASE OF WESTERN NON-FERROUS METAL CORP. V. UNITED STATES, 192 F.SUPP. 774, A CASE INVOLVING A SALE OF SURPLUS PROPERTY ON A UNIT BASIS AND INVOLVING A PROVISION SIMILAR TO PARAGRAPH 8. THE COURT HELD THE PROVISION INAPPLICABLE AS A BASIS FOR RECOVERY, STATING THAT THE ESTIMATED WEIGHT IN THE SALES INVITATION WAS OFFERED ONLY AS PART OF THE GOVERNMENT'S DESCRIPTION OF THE PROPERTY AND NOT AS A MEASURE OF QUANTITY, AND THAT THE UNIT OF SALE FOR ALL PROPERTY WAS "EACH" OR BY THE PIECE, RATHER THAN BY WEIGHT. SINCE THE NUMBER OF PIECES OFFERED WAS ACTUALLY DELIVERED, RECOVERY WAS DENIED. SEE ALSO PAUL VARKELL AND HYMAN NUTKIS V. UNITED STATES, 167 CT.CL. 522.

IN VIEW OF THE FOREGOING, YOUR CLAIM MUST BE DENIED; ACCORDINGLY, OUR SETTLEMENT OF MARCH 1, 1966, IS SUSTAINED.