B-117440, DECEMBER 28, 1954, 34 COMP. GEN. 300

B-117440: Dec 28, 1954

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BIDDER - DEPOSITS - FORFEITURES - SURPLUS PROPERTY A BIDDER WHO MADE A PERCENTAGE DEPOSIT ON THE TOTAL AMOUNT BID FOR SEVERAL SURPLUS ITEMS OFFERED FOR SALE ON AN "AS IS. - WHERE IS" BASIS WITH EXPRESS DISCLAIMER OF WARRANTY AND WHO REFUSED TO ACCEPT DELIVERY OF THE ONE ITEM AWARDED TO HIM BECAUSE ITS WEIGHT HAD BEEN INCORRECTLY DESCRIBED IN THE INVITATION MAY NOT BE RELEASED FROM HIS CONTRACT OBLIGATION AND INASMUCH AS THE INVITATION PROVIDED FOR THE VESTING OF TITLE UPON THE ACCEPTANCE OF THE BID AND APPLICATION OF THE DEPOSIT TO THE PURCHASE PRICE. THE BIDDER IS REQUIRED TO REMOVE THE PROPERTY AND MAY RECEIVE REFUND OF THAT PORTION OF THE DEPOSIT IN EXCESS OF THE PRICE OF THE PROPERTY.

B-117440, DECEMBER 28, 1954, 34 COMP. GEN. 300

BIDDER - DEPOSITS - FORFEITURES - SURPLUS PROPERTY A BIDDER WHO MADE A PERCENTAGE DEPOSIT ON THE TOTAL AMOUNT BID FOR SEVERAL SURPLUS ITEMS OFFERED FOR SALE ON AN "AS IS--- WHERE IS" BASIS WITH EXPRESS DISCLAIMER OF WARRANTY AND WHO REFUSED TO ACCEPT DELIVERY OF THE ONE ITEM AWARDED TO HIM BECAUSE ITS WEIGHT HAD BEEN INCORRECTLY DESCRIBED IN THE INVITATION MAY NOT BE RELEASED FROM HIS CONTRACT OBLIGATION AND INASMUCH AS THE INVITATION PROVIDED FOR THE VESTING OF TITLE UPON THE ACCEPTANCE OF THE BID AND APPLICATION OF THE DEPOSIT TO THE PURCHASE PRICE, THE BIDDER IS REQUIRED TO REMOVE THE PROPERTY AND MAY RECEIVE REFUND OF THAT PORTION OF THE DEPOSIT IN EXCESS OF THE PRICE OF THE PROPERTY.

ASSISTANT COMPTROLLER GENERAL WEITZEL TO PEOPLES IRON AND METAL COMPANY, DECEMBER 28, 1954:

REFERENCE IS MADE TO YOUR LETTER OF MAY 5, 1954, AND SUPPLEMENTAL COMMUNICATIONS, RELATIVE TO YOUR CLAIM FOR $4,908.20. OF THAT AMOUNT $4,544.64 REPRESENTS AMOUNTS WITHHELD BY THE SAVANNA ORDNANCE DEPOT, ILLINOIS, IN EXCESS OF $1,136.16, OR 20 PERCENT OF THE TOTAL AWARD FOR $5,680.80 MADE UNDER CONTRACT OF SALE NO. DA/S/-11-078-ORD-80, DATED NOVEMBER 7, 1952, AND $363.56 REPRESENTS INTEREST ON THE FORMER AMOUNT COMPUTED AT THE RATE OF 6 PERCENT FOR 16 MONTHS DURING WHICH THE CLAIMED AMOUNT HAS BEEN WITHHELD. APPARENTLY YOU CONTEND THAT SINCE YOU WERE AWARDED ONLY ONE ITEM (1NO. 12) OF THE BID SCHEDULE, HAVING A TOTAL CONTRACT VALUE OF $5,680.80, THE GOVERNMENT IN NO EVENT IS ENTITLED TO RETAIN MORE THAN 20 PERCENT OF THAT AMOUNT, OR $1,136.16.

THE RECORD ESTABLISHES THAT YOUR BASIC PROPOSAL OF NOVEMBER 3, 1952, FOR $48,003.80, WAS ACCOMPANIED BY A BID DEPOSIT OF $9,600.76, REPRESENTING 20 PERCENT OF THE "TOTAL AMOUNT BID," AS REQUIRED BY THE TERMS OF THE INVITATION. INASMUCH AS YOU WERE AWARDED ONLY ONE ITEM OF THE BID SCHEDULE, COVERING 18,000 METAL CONTAINERS, AS SPECIFIED, AT $0.3156 EACH, OF A TOTAL CONTRACT VALUE OF $5,680.80, THIS LATTER AMOUNT WAS RETAINED BY THE SAVANNA ORDNANCE DEPOT IN PAYMENT FOR THE ITEMS, AND THE REMAINDER OF YOUR BID DEPOSIT, AMOUNTING TO $3,919.96, WAS REFUNDED TO YOU AS BEING IN EXCESS OF THE TOTAL CONTRACT PRICE.

THE RECORD FURTHER SHOWS THAT YOUR PRIOR CLAIMS FOR ADJUSTMENT OF THE CONTRACT PRICE OF THE ARTICLES, BASED UPON AN INCORRECT LISTING IN THE INVITATION OF THE AVERAGE WEIGHT OF THE CONTAINERS, WERE CONSIDERED IN OFFICE DECISIONS OF MARCH 17 AND APRIL 27, 1954, TO YOU, AND WERE DENIED FOR REASONS WHICH NEED NOT BE REPEATED HERE.

CONCERNING YOUR INSTANT CLAIM FOR REFUND OF ALL BUT $1,136.16 OF YOUR BID DEPOSIT, PLUS INTEREST, IT IS TO BE NOTED THAT THE MATERIALS INVOLVED WERE OFFERED FOR SALE " AS IS--- WHERE IS" F.O.B. THE SAVANNA ORDNANCE DEPOT. AS A PERTINENT CONDITION OF THE GOVERNMENT'S INVITATION FOR BIDS, IT WAS PROVIDED THAT "A BID DEPOSIT OF 20 PERCENT OF THE TOTAL AMOUNT BID" WOULD BE REQUIRED. PURSUANT THERETO AND SINCE YOU BID ON SEVERAL ITEMS OF THE SCHEDULE HAVING A TOTAL BID VALUE OF $48,003.80, YOUR PROPOSAL OF NOVEMBER 3, 1952, WERE ACCOMPANIED BY A BID DEPOSIT OF $9,600.76. SHORTLY AFTER AWARD OF ITEM NO. 12 TO YOU ON NOVEMBER 7, 1952, FOR $5,680.80, YOU WERE ADVISED BY ADMINISTRATIVE LETTER DATED NOVEMBER 14, 1952, THAT THE AMOUNT OF YOUR BID DEPOSIT FOR $9,600.76 WAS BEING CREDITED TO YOUR ACCOUNT AND THAT THE EXCESS OF $3,919.96 OVER THE TOTAL CONTRACT PRICE OF $5,680.80 WOULD BE REFUNDED TO YOU, WHICH WAS DONE. IN THAT LETTER YOU ALSO WERE INSTRUCTED TO MAKE "IMMEDIATE ARRANGEMENTS" FOR THE REMOVAL OF YOUR PROPERTY "AS QUICKLY AS POSSIBLE," BUT DESPITE THIS REQUEST AND NUMEROUS SUBSEQUENT SIMILAR REQUESTS, YOU CONSISTENTLY HAVE REFUSED TO PICK UP OR REMOVE THE PROPERTY FROM THE STORAGE LOCATION AT THE SAVANNA ORDNANCE DEPOT. THE BASIS FOR YOUR REFUSAL IS THAT, PENDING THE REQUESTED ADJUSTMENT IN PRICE TO COMPENSATE YOU FOR THE REPORTED DEFICIENCY IN THE WEIGHT OF THE ARTICLES, YOU FEEL THAT YOU ARE NOT LEGALLY OBLIGATED TO PERFORM YOUR CONTRACT.

THIS POINT HAS BEEN CONSIDERED MANY TIMES BY THE COURTS, AS WELL AS BY THIS OFFICE, AND IT HAS BEEN HELD INVARIABLY THAT AN EXPRESS DISCLAIMER OF WARRANTY--- AS HERE--- VITIATES ANY AND ALL WARRANTIES WHICH MIGHT OTHERWISE ARISE OUT OF A SALES TRANSACTION. W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; UNITED STATES V. KELLY, 112 F.1SUPP. 831. TO ILLUSTRATE, THE CASE OF MAGUIRE AND COMPANY V. UNITED STATES, 273 U.S. 67, INVOLVED AN "AS IS" SALE OF BOTH BY THE GOVERNMENT UNDER AN INVITATION WHICH GAVE THE WEIGHT PER YARD OF THE MATERIALS. IT TURNED OUT THAT THE MATERIALS DID NOT CONFORM TO THE SPECIFIED WEIGHT. IN DENYING THE PLAINTIFF RECOVERY, THE UNITED STATES SUPREME COURT HELD THAT THE GIVEN WEIGHT COULD NOT BE CONSIDERED AS A WARRANTY UNDER THE ADVERTISED TERMS OF THE SALE. ALSO, IN LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, AN AGENT FOR THE GOVERNMENT LISTED FOR SALE CERTAIN ITEMS OF JUNK LOCATED AT SEVERAL FORTS, SETTING FORTH THE WEIGHTS AND KINDS OF EACH. ALTHOUGH THE QUANTITIES TURNED OUT TO BE MUCH LESS THAN THOSE SHOWN IN THE ADVERTISEMENT, THE PLAINTIFFS IN THE CASE WERE HELD NOT TO HAVE ANY CAUSE OF ACTION, SINCE, AS STATED BY THE SUPREME COURT, THE MENTIONING OF THE QUANTITIES "CANNOT BE REGARDED AS IN THE NATURE OF A WARRANTY, BUT MERELY AN ESTIMATE OF THE PROBABLE AMOUNTS IN REFERENCE TO WHICH GOOD FAITH ONLY COULD BE REQUIRED OF THE PARTY MAKING IT.' (ITALICS SUPPLIED.)

SIMILARLY, IN THE INSTANT CASE, THE SALES OFFICER FOR THE SAVANNA ORDNANCE DEPOT LISTED IN THE INVITATION WHAT HE BELIEVED TO BE THE CORRECT WEIGHT OF THE CONTAINER. AS THE RESULT OF ADDITIONAL TESTS, THE LISTED WEIGHT WAS FOUND TO BE INACCURATE, IN THAT THE TESTED WEIGHT OF SEVERAL CONTAINERS WAS APPROXIMATELY 23 POUNDS, INSTEAD OF 30, AS ADVERTISED. COURSE, THE GOVERNMENT HAD NO MEANS OF DETERMINING WHAT USE YOU HAD INTENDED TO MAKE THE CONTAINERS, NOR DID IT KNOW WHETHER YOUR PROPOSAL WAS FIGURED UPON A WEIGHT, OR STRICTLY UPON A UNIT PRICE BASIS. IN THE CIRCUMSTANCES, THE CONTRACTING OFFICER COULD NOT HAVE BEEN CHARGEABLE WITH KNOWLEDGE OF ANY ERROR IN YOUR BID, NOR COULD BAD FAITH BE IMPUTED TO HIM BECAUSE OF THE DISCOVERED DISCREPANCY BETWEEN THE ACTUAL AND ADVERTISED WEIGHT OF THE PRODUCT. FURTHERMORE, IN VIEW OF THE EXPRESS DISCLAIMER IN THE INVITATION OF ANY WARRANTY AS TO THE DESCRIPTION OR "WEIGHT" OF THE ARTICLE, MANIFESTLY NO WARRANTY COULD BE IMPLIED AS TO THE CORRECTNESS OF SUCH LISTED WEIGHT. HENCE, THE ACCEPTANCE OF YOUR PROPOSAL AND THE AWARD OF THE CONTRACT TO YOU ON NOVEMBER 7, 1952, GAVE RISE TO A VALID AND BINDING CONTRACT, THE TERMS OF WHICH CANNOT LEGALLY BE MODIFIED TO THE PREJUDICE OF THE UNITED STATES WITHOUT SOME COMPENSATING BENEFIT OR CONSIDERATION MOVING TO IT. SEE VULCANITE PORTLAND CEMENT COMPANY V. UNITED STATES, 74 C.1CLS. 692, 705.

FURTHERMORE, CONCERNING YOUR CLAIMED RIGHT TO A REFUND OF THE MAJOR PORTION OF THE BID DEPOSIT WHICH ACCOMPANIED YOUR ACCEPTED PROPOSAL, YOUR ATTENTION IS DIRECTED TO ARTICLES 4, 6 AND 7, GENERAL SALE TERMS AND CONDITIONS, WHICH READ, IN PERTINENT PART:

4. BID GUARANTEE.--- THE BIDDER AGREES THAT (1) THE BID WILL NOT BE WITHDRAWN WITHIN THE TIME SPECIFIED FOR ACCEPTANCE AFTER THE OPENING OF BIDS * * * AND WILL DURING THAT TIME REMAIN FIRM AND IRREVOCABLE, AND THAT (2) THE BIDDER WILL PAY TO THE GOVERNMENT THE PURCHASE PRICE OF THE PROPERTY IN ACCORDANCE WITH THE BID IF ACCEPTED. IF A BID DEPOSIT IS REQUIRED, THE BID MUST BE ACCOMPANIED BY SAID BID DEPOSIT. * * * DEPOSITS OF SUCCESSFUL BIDDERS MAY BE APPLIED AGAINST THE CONTRACT PRICE * * *.

6. TITLE.--- TITLE TO THE ITEMS OF PROPERTY SOLD HEREUNDER SHALL VEST IN THE PURCHASER AS AND WHEN FULL AND FINAL PAYMENT IS MADE * * *.

7. DELIVERY AND REMOVAL OF PROPERTY.--- THE PURCHASER SHALL BE ENTITLED TO OBTAIN THE PROPERTY UPON VESTING OF TITLE OF THE PROPERTY IN HIM, UNLESS OTHERWISE SPECIFIED IN THE INVITATION TO BID. DELIVERY SHALL BE AT THE DESIGNATED LOCATION, AND THE PURCHASER SHALL REMOVE THE PROPERTY AT HIS EXPENSE. * * * IF THE PURCHASER FAILS TO REMOVE THE PROPERTY WITHIN THE SPECIFIED TIME, THE GOVERNMENT SHALL HAVE THE RIGHT TO CHARGE THE PURCHASER AND COLLECT UPON DEMAND A REASONABLE STORAGE CHARGE IF THE PROPERTY IS STORED ON PREMISES OWNED OR CONTROLLED BY THE GOVERNMENT * * *; IN ADDITION TO THE FOREGOING RIGHTS, THE GOVERNMENT MAY * * * AT THE OPTION OF THE CONTRACTING OFFICER * * * RESELL THE PROPERTY APPLYING THE PROCEEDS THEREFROM AGAINST THE STORAGE AND ANY OTHER COSTS INCURRED FOR PURCHASER'S ACCOUNT. * * *

THUS, THE DECLARED PURPOSE OF THE REQUIRED BID DEPOSIT WAS TO SAFEGUARD THE GOVERNMENT AGAINST POSSIBLE LOSS WHICH MIGHT RESULT FROM YOUR DEFAULT OR FAILURE TO PERFORM. SEE 23 COMP. GEN. 234, 235. NOT ONLY DOES THE BID GUARANTEE CLAUSE OF THE CONTRACT AUTHORIZE THE GOVERNMENT TO APPLY THE AMOUNT OF YOUR BID DEPOSIT AGAINST THE STIPULATED CONTRACT PRICE, AS WAS DONE HERE BY THE SAVANNA ORDNANCE DEPOT, BUT UNDER THE TERMS OF ARTICLE 6 OF THE CONDITIONS OF SALE, IT WAS EXPRESSLY PROVIDED THAT TITLE TO THE PROPERTY SHALL BECOME VESTED IN THE PURCHASER "WHEN FULL AND FINAL PAYMENT" IS MADE. HENCE, UPON THE ACCEPTANCE OF YOUR BID BY THE SAVANNA ORDNANCE DEPOT AND DEPOSIT OF YOUR BID DEPOSIT TO YOUR ACCOUNT, TITLE TO THE PROPERTY INVOLVED AUTOMATICALLY BECAME VESTED TO YOU, AND IT IS YOUR CLEAR AND UNEQUIVOCAL DUTY UNDER THE CONTRACT, AS EXECUTED, TO CALL FOR AND REMOVE THE PROPERTY OF THE SALE AT YOUR EXPENSE. OTHERWISE, THE SAVANNA ORDNANCE DEPORT WILL BE LEFT WITH NO OTHER ALTERNATIVES BUT TO (1) DISPOSE OF YOUR PROPERTY FOR A NOMINAL SUM, AS WAS PROPOSED IN ITS LETTER OF JULY 28, 1954, TO YOU, OR (2) PLACE IT IN PUBLIC OR PRIVATE STORAGE FOR YOUR ACCOUNT, AS EXPRESSLY AUTHORIZED BY ARTICLE 7 OF THE SAID CONDITIONS OF SALE.

LIKEWISE, YOUR CLAIM FOR INTEREST IS FOR DISALLOWANCE SINCE IT LONG HAS BEEN RECOGNIZED THAT THE UNITED STATES IS NOT LIABLE FOR THE PAYMENT OF INTEREST EXCEPT WHERE EXPRESSLY STIPULATED FOR BY CONTRACT, OR WHERE ITS ALLOWANCE SPECIFICALLY IS DIRECTED BY STATUTE. ANGARICA V. BAYARD, 127 U.S. 251; SEABOARD AIR LINE RAILWAY COMPANY V. UNITED STATES, 261 U.S. 299.

FOR YOUR INFORMATION, YOU ARE ADVISED THAT A COPY OF THIS DECISION TODAY IS BEING FURNISHED THE CHIEF OF ORDNANCE, DEPARTMENT OF THE ARMY, FOR HIS INFORMATION AND FUTURE GUIDANCE IN THE MATTER.