B-133565, OCT. 16, 1957

B-133565: Oct 16, 1957

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MACHINERY AND ALLOYS CO.: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 14. YOUR BID WAS ACCEPTED AND AWARD MADE TO YOU ON FEBRUARY 19. THE MATERIAL WAS DELIVERED TO YOU. WHEN THE SHIPMENT WENT FORWARD A REFUND OF $3.75 WAS MADE TO YOU BECAUSE OF A SHORTAGE OF 15 PIECES IN THE QUANTITY AS STATED IN THE INVITATION. YOU TELEPHONED THE CONTRACTING OFFICE ADVISING THAT YOU WERE DISSATISFIED WITH THE MATERIAL BECAUSE IT DID NOT MEET THE DESCRIPTION GIVEN IN THE INVITATION. POINTING OUT THAT THE ACQUISITION COST TO THE GOVERNMENT FOR 852 SUCH ITEMS COULD NOT HAVE BEEN $4. YOUR CLAIM WAS DISALLOWED FOR THE REASONS STATED THEREIN. YOUR REQUEST FOR REVIEW OF THE SETTLEMENT IS BASED UPON YOUR CONTENTION THAT THE ESTIMATED ACQUISITION COST OF THE ELECTRODES GIVEN UNDER ITEM NO. 8746 IN THE INVITATION WAS ERRONEOUS.

B-133565, OCT. 16, 1957

TO M. AND M. MACHINERY AND ALLOYS CO.:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 14, 1957, PROTESTING OUR SETTLEMENT OF AUGUST 5, 1957, WHICH DISALLOWED YOUR CLAIM FOR REFUND OF $209.25 REPRESENTING THE AMOUNT PAID BY YOU FOR CERTAIN SURPLUS PROPERTY PURCHASED UNDER CONTRACT NO. N189S-24451A (S) WITH THE NAVY DEPARTMENT.

THE RECORD SHOWS THAT IN RESPONSE TO SALES INVITATION NO. B-119-59 189, ISSUED BY THE NAVAL SUPPLY CENTER, U.S. NAVAL BASE, DISPOSAL DEPARTMENT, NORFOLK, VIRGINIA, YOU SUBMITTED A BID OF $213 ON ITEM (LOT) NO. 8746 FOR THE PURCHASE OF 852 ELECTRODES, DESCRIBED AS FOLLOWS:

"ELECTRODE: SOLID; TUNGSTEN; OVER-ALL DIM: 7/8 INCH LG; 9/16 INCH WIDE; 0.060 INCH H; NO CURRENT RATING; NO VOLTAGE RATING; ADDITIONAL REF NO. RAYTHEON MFG. CO.; CODE 49956; DWG. NO. 3D21-L78 SUBNUMBER 7. PACKED FOR SHIPMENT. APPARENTLY UNUSED, GOOD CONDITION. EST. ACQUISITION $4,260.00.'

YOU FORWARDED THEREWITH A DEPOSIT IN THE FULL AMOUNT OF YOUR BID OF $213. YOUR BID WAS ACCEPTED AND AWARD MADE TO YOU ON FEBRUARY 19, 1957--- CONSUMMATING CONTRACT NO. N189S-24451A/S/--- AT YOUR BID PRICE OF $0.25 FOR EACH ELECTRODE IN THE LOT, AND THE MATERIAL WAS DELIVERED TO YOU. WHEN THE SHIPMENT WENT FORWARD A REFUND OF $3.75 WAS MADE TO YOU BECAUSE OF A SHORTAGE OF 15 PIECES IN THE QUANTITY AS STATED IN THE INVITATION.

UPON RECEIPT OF THE MATERIAL, YOU TELEPHONED THE CONTRACTING OFFICE ADVISING THAT YOU WERE DISSATISFIED WITH THE MATERIAL BECAUSE IT DID NOT MEET THE DESCRIPTION GIVEN IN THE INVITATION. IN LETTER DATED MARCH 5, 1957, YOU CONFIRMED THIS TELEPHONE CONVERSATION, AND ENCLOSED A REPRESENTATIVE SAMPLE ELECTRODE, POINTING OUT THAT THE ACQUISITION COST TO THE GOVERNMENT FOR 852 SUCH ITEMS COULD NOT HAVE BEEN $4,260 AS INDICATED IN THE SALES INVITATION. YOU SUBSEQUENTLY RETURNED THE MATERIAL TO THE DISPOSING AGENCY AND REQUESTED THAT THE PURCHASE PRICE BE REFUNDED TO YOU. BY GENERAL ACCOUNTING OFFICE SETTLEMENT DATED AUGUST 5, 1957, YOUR CLAIM WAS DISALLOWED FOR THE REASONS STATED THEREIN. YOUR REQUEST FOR REVIEW OF THE SETTLEMENT IS BASED UPON YOUR CONTENTION THAT THE ESTIMATED ACQUISITION COST OF THE ELECTRODES GIVEN UNDER ITEM NO. 8746 IN THE INVITATION WAS ERRONEOUS.

IN YOUR LETTER OF MARCH 5, 1957, TO THE CONTRACTING OFFICER, YOU ADMITTED THAT YOU DID NOT INSPECT THE MATERIAL PRIOR TO SUBMITTING YOUR BID ON ITEM NO. 8746 INASMUCH AS IT WAS A SMALL ITEM BUT PLACED YOUR BID ON THE BASIS OF THE ESTIMATED ACQUISITION COST GIVEN IN THE INVITATION. IF YOU HAD MADE AN INSPECTION OF THE MATERIAL PRIOR TO BIDDING, YOU WOULD HAVE DISCOVERED THE DISCREPANCY OF WHICH YOU NOW COMPLAIN. YOU WERE, OF COURSE, UNDER NO OBLIGATION EITHER TO INSPECT THE PROPERTY OR TO BID ON IT, BUT HAVING SUBMITTED A BID IT AND THE RESULTANT SALE ARE SUBJECT TO THE PROVISIONS OF THE GENERAL SALE TERMS AND CONDITIONS MADE A PART OF THE INVITATION AND THE CONTRACT.

THE INVITATION CONTAINED THE USUAL PROVISIONS CAUTIONING BIDDERS TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS AND PUT THEM ON NOTICE AND CHARGED THEM WITH THE DUTY OF ASCERTAINING, FOR THEMSELVES, THE NATURE AND CONDITION OF THE PROPERTY INSTEAD OF RELYING ON THE GOVERNMENT TO FURNISH A FULL AND ACCURATE DESCRIPTION. PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS PROVIDED THAT IN NO CASE WOULD FAILURE TO INSPECT CONSTITUTE GROUND FOR A CLAIM OR FOR WITHDRAWAL OF A BID AFTER OPENING. PARAGRAPH 2 OF THAT DOCUMENT STATED THAT THE PROPERTY LISTED FOR SALE "AS IS," THAT THE DESCRIPTION WAS BASED UPON THE BEST AVAILABLE INFORMATION BUT THE GOVERNMENT MADE 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 THAT NO CLAIM WOULD BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED SINCE THIS WAS NOT A SALE BY SAMPLE.

THE LANGUAGE OF PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS HAS BEEN HELD BY THE COURTS TO CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY; THAT THERE IS ESPECIALLY FOR APPLICATION THE PRINCIPLE THAT THE PURCHASER BUYS ENTIRELY AT HIS OWN RISK; AND THAT RECOVERY CANNOT BE HAD AGAINST THE VENDOR ON THE GROUND THAT THE PURCHASER WAS MISTAKEN AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE OR DESCRIPTION OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; M. SAMUEL AND SONS V. UNITED STATES, 61 C.CLS. 373; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; S. BRODY V. UNITED STATES, 64 C.CLS. 538; I. SHAPIRO AND COMPANY V. UNITED STATES, 66 C.CLS. 424; SACHS MERCANTILE CO. V. UNITED STATES, 78 C.CLS. 801; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; AND MAGUIRE COMPANY V. UNITED STATES, 273 U.S. 67.

IN VIEW OF THE FOREGOING, THERE EXISTS NO LEGAL BASIS FOR REFUNDING THE PURCHASE PRICE UNDER THE CONTRACT BASED UPON A MISDESCRIPTION OF THE PROPERTY IN THE INVITATION UNLESS IT CAN BE SHOWN THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH.

THE RECORD SHOWS THAT YOUR TOTAL BID PRICE OF $213 FOR THE LOT OF MATERIAL IS BUT A FRACTION OF THE TOTAL ESTIMATED ACQUISITION COST OF $4,620 SHOWN IN THE INVITATION, AND YOUR BID DOES NOT APPEAR OUT OF LINE WITH THE FIVE OTHER BIDS--- RANGING FROM $0.0007 TO $0.177 FOR EACH ELECTRODE--- RECEIVED ON ITEM NO. 8746, CONSIDERING THE TRANSACTION INVOLVED A SALE OF SURPLUS PROPERTY AS DISTINGUISHED FROM BIDS FOR THE PERFORMANCE OF WORK OR THE FURNISHING OF SUPPLIES, EQUIPMENT, ETC., SINCE BIDDERS MIGHT BE EXPECTED TO PLACE A WIDE RANGE OF VALUES ON SURPLUS PROPERTY BASED MORE OR LESS ON INDIVIDUAL NEEDS OR OPPORTUNITIES FOR RESALE. SEE UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 684. THE ADMINISTRATIVE AGENCY HAS REPORTED THAT THE ESTIMATED ACQUISITION COST GIVEN IN THE INVITATION FOR ITEM NO. 8746 WAS BASED ON THE BEST INFORMATION AVAILABLE TO IT AND THAT, EXCEPT FOR THE STOCK TRANSFER ON WHICH THE MATERIAL IN QUESTION WAS TRANSFERRED TO THE DISPOSAL AGENCY CARRYING THE COST FIGURE OF $4,260, NO INFORMATION IS NOW AVAILABLE TO CONFIRM OR REFUTE THE VALIDITY OF THE ACQUISITION COST AS STATED IN THE INVITATION. ALSO, THERE IS NOTHING IN THE RECORD TENDING TO SHOW THAT THE DISPOSAL OFFICER OR ANY OTHER GOVERNMENT EMPLOYEE CONNECTED WITH THE TRANSACTION INTENTIONALLY MISSTATED THE ACQUISITION COST OF THE COMMODITY, IF IN FACT THERE WAS ANY MISSTATEMENT.

ON THE RECORD, THEREFORE, IT MUST BE HELD THAT THE DESCRIPTION OF THE PROPERTY, INCLUDING ITS ESTIMATED ACQUISITION COST, WAS BASED ON THE BEST AVAILABLE INFORMATION AND THAT THERE IS NO REASONABLE BASIS FOR CONCLUDING THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH.

UNDER THE CIRCUMSTANCES IN THIS CASE, THE LAW IS CLEAR THAT THE ACCEPTANCE OF YOUR BID CREATED A VALID AND BINDING CONTRACT WHICH MAY NOT BE RESCINDED. ACCORDINGLY, THE SETTLEMENT OF AUGUST 5, 1957, IS SUSTAINED.