B-133534, SEP. 19, 1957

B-133534: Sep 19, 1957

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TO SECRETARY OF THE NAVY: REFERENCE IS MADE TO A LETTER DATED AUGUST 19. ALLEGES WAS MADE IN ITS BID ON WHICH CONTRACT NO. CL-21-50-29-57 IS BASED. THE PRINCIPAL ITEM OF THE LOT COVERED BY ITEM 8 WAS APPROXIMATELY 32. WAS NOT FORWARDED HERE BUT IT APPEARS FROM THE ABSTRACT OF BIDS THAT THE COMPANY OFFERED TO PURCHASE THE ELECTRICAL PARTS AND EQUIPMENT COVERED BY ITEM 8 FOR THE LUMP SUM OF $688.48. IT IS REPORTED THAT THE 14 OTHER BIDDERS ON ITEM 8 SPECIFIED PRICES RANGING FROM $630.85 TO $31 AND THAT THE BIDDER WHO QUOTED A PRICE OF $630.85 INSPECTED THE PROPERTY BEFORE SUBMITTING A BID. THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEM 8 ON APRIL 9. THE COMPANY REMITTED THE BALANCE OF THE PURCHASE PRICE OF THE ELECTRICAL PARTS AND EQUIPMENT COVERED BY ITEM 8 AND THAT THESE ITEMS WERE DELIVERED TO THE COMPANY.

B-133534, SEP. 19, 1957

TO SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED AUGUST 19, 1957, WITH ENCLOSURES, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO THE ACTION TO BE TAKEN CONCERNING AN ERROR WHICH THE GRAMERCY HARDWARE AND ELECTRICAL SUPPLY CO., NEW YORK, NEW YORK, ALLEGES WAS MADE IN ITS BID ON WHICH CONTRACT NO. CL-21-50-29-57 IS BASED.

BY SALES INVITATION NO. B-29-57, REDISTRIBUTION AND DISPOSAL, BASE MATERIEL COMPANY, 2ND FORCE SERVICE REGIMENT, MARINE CORPS BASE, CAMP LEJEUNE, NORTH CAROLINA, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF ONE LOT OF MISCELLANEOUS ELECTRICAL PARTS AND EQUIPMENT

FOR SHOP AND HOUSE USE, ITEM 8. THE PRINCIPAL ITEM OF THE LOT COVERED BY ITEM 8 WAS APPROXIMATELY 32,774 INCANDESCENT LAMPS DESCRIBED AS "MFR. GENERAL ELECTRIC, 2.7 VOLTS, .15 AMP, NO. PR6, CLEAR 1 1/4 INCH LONG, CLAMP BASE SINGLE CONTACT, USED IN FLASHLIGHTS.' THE BID OF THE GRAMERCY HARDWARE AND ELECTRICAL SUPPLY CO. WAS NOT FORWARDED HERE BUT IT APPEARS FROM THE ABSTRACT OF BIDS THAT THE COMPANY OFFERED TO PURCHASE THE ELECTRICAL PARTS AND EQUIPMENT COVERED BY ITEM 8 FOR THE LUMP SUM OF $688.48. IT IS REPORTED THAT THE 14 OTHER BIDDERS ON ITEM 8 SPECIFIED PRICES RANGING FROM $630.85 TO $31 AND THAT THE BIDDER WHO QUOTED A PRICE OF $630.85 INSPECTED THE PROPERTY BEFORE SUBMITTING A BID. THE BID OF THE COMPANY WAS ACCEPTED AS TO ITEM 8 ON APRIL 9, 1957. THE RECORD INDICATES THAT BY LETTER DATED APRIL 10, 1957, THE COMPANY REMITTED THE BALANCE OF THE PURCHASE PRICE OF THE ELECTRICAL PARTS AND EQUIPMENT COVERED BY ITEM 8 AND THAT THESE ITEMS WERE DELIVERED TO THE COMPANY.

BY LETTER DATED MAY 1, 1957, THE GRAMERCY HARDWARE AND ELECTRICAL SUPPLY CO. ADVISED THAT, UPON EXAMINATION OF THE MATERIALS COVERED BY ITEM 8 AFTER DELIVERY, IT DISCOVERED THAT THE GENERAL ELECTRIC LAMPS, WHICH WERE ADVERTISED IN THE INVITATION AS BEING GENERAL ELECTRIC NO. PR6 LAMPS, WERE ACTUALLY GENERAL ELECTRIC NO. PR9 LAMPS; THAT THE NO. PR9 LAMPS ARE NO LONGER BEING MANUFACTURED BY THE GENERAL ELECTRIC COMPANY AND, THEREFORE, ARE OBSOLETE AND NONSALABLE; AND THAT IT IS OF THE OPINION THAT IT HAS A RIGHT TO RELY ON THE DESCRIPTION WHEN AN ITEM IS DESCRIBED AS HAVING A PARTICULAR MANUFACTURER'S NUMBER. IN A LETTER DATED MAY 8, 1957, THE DISPOSAL OFFICER ADVISED THE COMPANY THAT, IN VIEW OF THE SALE TERMS AND CONDITIONS OF THE CONTRACT, HE WAS WITHOUT AUTHORITY TO MAKE ANY ALLOWANCES OR ADJUSTMENTS IN THE MATTER. IN A LETTER DATED MAY 14, 1957, THE COMPANY STATED THAT ITS BID PRICE FOR ITEM 8 WAS BASED ON THE LAMPS BEING OF THE GENERAL ELECTRIC NO. PR6 TYPE; THAT THE FREIGHT COST ON THE NO. PR9 LAMPS, WHICH, IT STATED CANNOT BE USED IN FLASHLIGHTS AND ARE OF NO VALUE TO IT, AMOUNTED TO $189.83; AND THAT SINCE THE LAMPS DELIVERED TO IT ARE NOT OF THE GENERAL ELECTRIC NO. PR6 TYPE, IT SHOULD BE PERMITTED TO RETURN THE LAMPS AND BE REFUNDED THE PURCHASE PRICE THEREOF. IN A LETTER DATED JULY 15, 1957, THE COMPANY STATED THAT IT HAD RECEIVED AN OFFER OF $400 FOR THE GENERAL ELECTRIC NO. PR9 LAMPS, WHICH OFFER, IT STATED, IT BELIEVED IT SHOULD ACCEPT; AND THAT, IN VIEW OF THE FACT THAT IT STANDS TO LOSE APPROXIMATELY $478 IF THE LAMPS ARE SOLD FOR A PRICE OF $400, IT IS OF THE OPINION THAT AN ADJUSTMENT OF $300 IN THE PURCHASE PRICE OF THE LAMPS BY THE GOVERNMENT WOULD BE FAIR UNDER THE CIRCUMSTANCES.

THE GENERAL SALE TERMS AND CONDITIONS MADE A PART OF THE AGREEMENT PROVIDED THAT THE/MATERIALS LISTED WERE OFFERED WITH THE FOLLOWING PROVIDED THAT THE MATERIALS LISTED WERE OFFERED WITH THE FOLLOWING RESERVATION--- QUOTING FROM PARAGRAPH 2---

"ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND "WHEREIS," AND WITHOUT RECOURSE AGAINST THE GOVERNMENT. * * * THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION, BUT THE GOVERNMENT MAKES NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED 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, AND NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED; THIS IS NOT A SALE BY SAMPLE.'

THE COURTS MANY TIMES HAVE CONSIDERED SUCH CONTRACT STIPULATIONS IN CASES INVOLVING THE SALE OF GOVERNMENT-OWNED SURPLUS GOODS, AND HAVE HELD CONSISTENTLY THAT SUCH PROVISIONS CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY, PRECLUDING ANY CLAIM FOR NONCONFORMITY OF THE GOODS WITH THE DESCRIPTIONS. SEE W. E. HEDGER CO. V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; SILBERSTEIN AND SON V. UNITED STATES, 69 C.CLS. 412. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH PROVISIONS BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT, ANY WARRANTIES WHATEVER. DISPOSING OF SURPLUS MATERIALS THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS IGNORANT OF THE CONDITION OF THE GOODS IT SELLS. THAT FACT IS MADE KNOWN TO ALL BIDDERS BY THE "AS IS" TERMS OF THE CONTRACT WHEREBY THE PARTIES AGREE THAT THE RISK AS TO THE CONDITION OF THE MATERIAL SOLD IS ASSUMED BY THE PURCHASER AS ONE OF THE ELEMENTS OF THE BARGAIN. IN THE CASE OF OVERSEAS NAVIGATION CORPORATION V. UNITED STATES, 131 C.CLS. 70, THE COURT OF CLAIMS HELD THAT THE TERMS OF THE SALES CONTRACT THERE UNDER CONSIDERATION, INCLUDING ITS "AS IS, WHERE IS" PROVISIONS, SPOKE FOR

WHILE THE GOVERNMENT'S DESCRIPTION OF THE LAMPS COVERED BY ITEM 8 WAS INCORRECT IN THAT THE INCORRECT MANUFACTURER'S CATALOG NUMBER WAS GIVEN, IT IS ALSO REPORTED THAT THE CORRECT AMPERAGE AND VOLTAGE OF THE LAMPS DELIVERED, WHICH ARE NOT THE SAME AS THOSE OF NO. PR6 LAMPS, WERE GIVEN THEREIN. THERE IS NO INDICATION THAT THE DESCRIPTION OF ITEM 8 WAS NOT PREPARED IN GOOD FAITH AND THERE WAS AN EXPRESS DISCLAIMER OF ANY WARRANTY THAT THE PROPERTY WAS AS DESCRIBED. THE TERMS AND CONDITIONS WERE A MATERIAL PART OF THE OFFER OF SALE AND SINCE THE COMPANY'S OFFER TO PURCHASE THE CONTRACT MATERIAL WAS MADE, AS EXPRESSLY STATED ON THE FACE OF THE BID, SUBJECT TO ALL THE GENERAL AND SPECIAL SALE TERMS AND CONDITIONS SET FORTH IN THE INVITATION, THEY ARE BINDING UPON IT, AND NO RELIEF MAY BE GRANTED FOR THE VARIANCE BETWEEN THE DESCRIPTION OF THE PROPERTY IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525, 75 A.L.R. 1017, AND HOOVER V. UTAH NURSERY COMPANY, 7 P.2D 270.

MOREOVER, THE RECORD INDICATES THAT THE COMPANY DID NOT INSPECT THE ELECTRICAL PARTS AND EQUIPMENT COVERED BY ITEM 8 PRIOR TO THE SUBMISSION OF ITS BID. THE LAW IS CLEAR THAT WHERE SURPLUS MATERIALS ARE OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" BASIS, WITHOUT WARRANTY OR GUARANTY OF ANY KIND, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUNDS THAT THE MATERIALS ARE OF AN INFERIOR QUALITY, OR THAT THEY WERE SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING. THE UNITED STATES COURT OF CLAIMS AND THE SUPREME COURT OF THE UNITED STATES HAVE RENDERED NUMEROUS DECISIONS IN WHICH THESE PRINCIPLES ARE ASSERTED. SEE M. SAMUEL AND SONS V. UNITED STATES, 61 C.CLS. 373; S. BRODY V. UNITED STATES, 64 C.CLS. 538; SACHS MERCANTILE CO. V. UNITED STATES, 78 C.CLS. 801; MOTTRAM V. UNITED STATES, 271 U.S. 15; MAGUIRE AND CO. V. UNITED STATES, 273 U.S. 67. SEE, ALSO, 29 COMP. GEN. 310; AND 32 ID. 181.

ACCORDINGLY, ON THE BASIS OF THE FACTS AND EVIDENCE PRESENTLY OF RECORD, THERE APPEARS TO BE NO LEGAL BASIS FOR AUTHORIZING A REFUND OF THE PURCHASE PRICE, AS REQUESTED BY THE COMPANY, OR FOR AUTHORIZING ANY ADJUSTMENT WHATSOEVER IN THE PRICE FIXED IN THE CONTRACT FOR THE MATERIAL INVOLVED.