B-130792, MAR. 28, 1957

B-130792: Mar 28, 1957

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IN WHICH A DECISION WAS REQUESTED AS TO WHETHER THE OFFICE MACHINE COMPANY. IS LIABLE FOR THE DAMAGES OCCASIONED THE UNITED STATES BY REASON OF ITS DEFAULT IN PERFORMANCE OF UNNUMBERED SALES CONTRACT DATED JANUARY 8. WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $43. WAS ACCEPTED AS TO LOTS NOS. 21. IT WAS STATED THAT PRIOR TO THE DATE ON WHICH THE INVITATION WAS ISSUED. MANY OF WHICH WERE SHOPMADE. WHICH WERE STORED IN THE COLD STORAGE WAREHOUSE PENDING CLEARANCE AND ADVERTISED SALE TO THE PUBLIC. THE SERVICEABLE FURNITURE WAS SEPARATED FROM THE UNSERVICEABLE FURNITURE FOR POSSIBLE UTILIZATION BY OTHER DISTRICTS OR GOVERNMENT AGENCIES. THAT THE REST OF THE FURNITURE WHICH WAS CLASSIFIED AS UNSERVICEABLE ON PROPERTY INSPECTION REPORT DATED OCTOBER 1.

B-130792, MAR. 28, 1957

TO THE SECRETARY OF THE ARMY:

BY 2D INDORSEMENT DATED FEBRUARY 14, 1957, THE ENGINEER COMPTROLLER, CORPS OF ENGINEERS, FORWARDED A LETTER DATED DECEMBER 5, 1956, WITH ENCLOSURES, FROM J. R. HANSEN, DISBURSING OFFICER, IN WHICH A DECISION WAS REQUESTED AS TO WHETHER THE OFFICE MACHINE COMPANY, HAVRE, MONTANA, IS LIABLE FOR THE DAMAGES OCCASIONED THE UNITED STATES BY REASON OF ITS DEFAULT IN PERFORMANCE OF UNNUMBERED SALES CONTRACT DATED JANUARY 8, 1954.

BY INVITATION NO. CIVENG-24-016-54-15, DATED DECEMBER 18, 1953, THE DISTRICT ENGINEER, FORT PECK DISTRICT, FORT PECK, MONTANA, REQUESTED BIDS- -- TO BE OPENED JANUARY 7, 1954--- FOR THE PURCHASE FROM THE GOVERNMENT OF, AMONG OTHER LOTS, THE SURPLUS FURNITURE DESCRIBED UNDER LOTS NOS. 21, 30, AND 31. IN RESPONSE THE OFFICE MACHINE COMPANY SUBMITTED A BID DATED JANUARY 4, 1954, OFFERING TO PURCHASE, IN ADDITION TO LOT NO. 19, THE FURNITURE COVERED BY LOTS NOS. 21, 30, AND 31 AT LOT PRICES OF $64, $57, AND $79, RESPECTIVELY. THE BID OF THE COMPANY, WHICH WAS ACCOMPANIED BY A BID GUARANTEE IN THE AMOUNT OF $43, WAS ACCEPTED AS TO LOTS NOS. 21, 30, AND 31 ON JANUARY 8, 1954.

IN AN UNDATED AFFIDAVIT FROM THE ASSISTANT CHIEF, ADMINISTRATIVE DIVISION, OFFICE OF THE DISTRICT ENGINEER, FORT PECK DISTRICT, IT WAS STATED THAT PRIOR TO THE DATE ON WHICH THE INVITATION WAS ISSUED, MR. STRUBECK, OWNER OF THE OFFICE MACHINE COMPANY, INSPECTED A NUMBER OF ITEMS OF SURPLUS USED FURNITURE SUCH AS DESKS, TABLES, CABINETS, STANDS, AND CHAIRS, MANY OF WHICH WERE SHOPMADE, WHICH WERE STORED IN THE COLD STORAGE WAREHOUSE PENDING CLEARANCE AND ADVERTISED SALE TO THE PUBLIC; THAT SUBSEQUENTLY, IN COMPLIANCE WITH THE REGULATIONS, THE SERVICEABLE FURNITURE WAS SEPARATED FROM THE UNSERVICEABLE FURNITURE FOR POSSIBLE UTILIZATION BY OTHER DISTRICTS OR GOVERNMENT AGENCIES; AND THAT THE REST OF THE FURNITURE WHICH WAS CLASSIFIED AS UNSERVICEABLE ON PROPERTY INSPECTION REPORT DATED OCTOBER 1, 1953, WAS REMOVED FROM THE WAREHOUSE AND LOTTED FOR SALE, TOGETHER WITH OTHER ITEMS, ON THE SUBJECT INVITATION, ON WHICH THE CONDITION OF THE FURNITURE WAS NOT INDICATED. IT IS ALSO STATED THAT A FEW DAYS AFTER THE DATE OF THE AWARD, MR. STRUBECK VISITED THE WAREHOUSE AND THAT AT THAT TIME, HE DISCOVERED THAT HE HAD BID ON UNSERVICEABLE FURNITURE; THAT MR. STRUBECK STATED THAT SINCE HE HAD INADVERTENTLY BID ON THE FURNITURE, THINKING THAT IT WAS IN GOOD CONDITION AND THE SAME FURNITURE HE HAD PREVIOUSLY INSPECTED PRIOR TO THE ISSUANCE OF THE INVITATION, THAT HE SHOULD BE RELEASED FROM THE TERMS OF THE CONTRACT AND HIS BID DEPOSIT BE REFUNDED; AND THAT MR. STRUBECK STATED FURTHER THAT HIS BID DEPOSIT OF $43 WAS MORE THAN THE FURNITURE WAS WORTH AND THAT HE WOULD NEVER PAY THE BALANCE AND CONSEQUENTLY WOULD NOT REMOVE THE PROPERTY. IT WAS ALSO STATED THAT MR. STRUBECK WAS ADVISED THAT HE WOULD BE HELD TO THE TERMS OF THE CONTRACT.

IN HIS LETTER DATED MARCH 17, 1954, MR. STRUBECK ADVISED THAT HE WAS UNABLE TO FULFILL THE TERMS OF THE CONTRACT. THE RECORD INDICATES THAT UPON MR. STRUBECK'S REFUSAL TO COMPLETE PAYMENT OF THE PURCHASE PRICE AND TO REMOVE THE FURNITURE FROM GOVERNMENT PROMISES IN ACCORDANCE WITH THE TERMS OF HIS BID, THE FURNITURE WAS READVERTISED AS SALVAGE MATERIAL AND SOLD TO OTHER PARTIES RESULTING IN A LOSS TO THE GOVERNMENT IN THE AMOUNT OF $171.22.

IT IS REPORTED THAT PROPERTY INSPECTION REPORT DATED OCTOBER 1, 1953, LISTED THE CONDITION OF THE FURNITURE IN QUESTION AS BEING UNSERVICEABLE. THE SUBJECT INVITATION DESCRIBED THE TYPE OF FURNITURE OFFERED FOR SALE UNDER LOTS NOS. 21, 30, AND 31 BUT IT DID NOT INDICATE THE CONDITION OF THE FURNITURE. UNDER PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, PROSPECTIVE BIDDERS WERE ADVISED THAT "THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION * * *.' CONSEQUENTLY, IT MAY BE HELD THAT THE DESCRIPTION DID NOT FURNISH "THE BEST AVAILABLE NFORMATION" AS STATED IN THE INVITATION. CONSIDERING THIS FACT, TOGETHER WITH THE FACT THAT PRIOR TO THE ISSUANCE OF THE INVITATION, MR. STRUBECK INSPECTED SERVICEABLE FURNITURE AND THE FACT THAT THE FURNITURE PURCHASED BY MR. STRUBECK WAS READVERTISED IN A SUBSEQUENT INVITATION AS SALVAGE ITEMS AND IN VIEW OF THE CONSIDERABLE DIFFERENCE BETWEEN THE AMOUNT BID BY THE COMPANY FOR THE FURNITURE AND THE AMOUNT REALIZED UPON RESALE TO OTHER BIDDERS, WE ARE OF THE OPINION THAT THE CONTRACT WAS NOT LEGALLY ENFORCEABLE. IT FOLLOWS THAT THE INDEBTEDNESS FOR THE ALLEGED DAMAGES STATED AGAINST THE OFFICE MACHINE COMPANY SHOULD BE CANCELLED.