B-134350, DEC. 12, 1957

B-134350: Dec 12, 1957

Additional Materials:

Contact:

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

 

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

TO PAXTON-MITCHELL COMPANY: REFERENCE IS MADE TO LETTER OF OCTOBER 25. WHICH WE HAVE TREATED AS A REQUEST FOR RECONSIDERATION OF SETTLEMENT DATED SEPTEMBER 4. IN PRIOR CORRESPONDENCE WITH THE DISPOSAL AGENCY YOU CLAIMED A PARTIAL REFUND OF THE CONTRACT CONSIDERATION ON THE BASIS THAT APPROXIMATELY 50 PERCENT OF THE LOT OF METAL DELIVERED WAS MALLEABLE IRON WHICH COULD HAVE BEEN OBTAINED ON THE OPEN MARKET FOR CONSIDERABLY LESS THAN SCRAP STEEL. IN YOUR ATTORNEY'S LETTER THERE IS RECITED THE GENERALLY ACCEPTED DISTINCTION BETWEEN STEEL AND SCRAP IRON WITH THE CONTENTION THAT THE INVITATION INVOLVED DESCRIBED A PRODUCT ENTIRELY FOREIGN TO THE SUBJECT MATTER COVERED BY THE RESULTANT CONTRACT.

B-134350, DEC. 12, 1957

TO PAXTON-MITCHELL COMPANY:

REFERENCE IS MADE TO LETTER OF OCTOBER 25, 1957, WRITTEN IN YOUR BEHALF BY LOREN K. OLSON, ATTORNEY, WHICH WE HAVE TREATED AS A REQUEST FOR RECONSIDERATION OF SETTLEMENT DATED SEPTEMBER 4, 1957, ISSUED BY THE CLAIMS DIVISION OF OUR OFFICE, DISALLOWING YOUR CLAIM FOR $6,361.77, AS AN ADJUSTMENT IN THE PRICE PAID FOR A QUANTITY OF SCRAP METAL PURCHASED FROM THE BLACK HILLS ORDNANCE DEPOT UNDER CONTRACT NO. DA/S/-39-010-ORD-17.

IN PRIOR CORRESPONDENCE WITH THE DISPOSAL AGENCY YOU CLAIMED A PARTIAL REFUND OF THE CONTRACT CONSIDERATION ON THE BASIS THAT APPROXIMATELY 50 PERCENT OF THE LOT OF METAL DELIVERED WAS MALLEABLE IRON WHICH COULD HAVE BEEN OBTAINED ON THE OPEN MARKET FOR CONSIDERABLY LESS THAN SCRAP STEEL. IN YOUR ATTORNEY'S LETTER THERE IS RECITED THE GENERALLY ACCEPTED DISTINCTION BETWEEN STEEL AND SCRAP IRON WITH THE CONTENTION THAT THE INVITATION INVOLVED DESCRIBED A PRODUCT ENTIRELY FOREIGN TO THE SUBJECT MATTER COVERED BY THE RESULTANT CONTRACT.

YOUR ALLEGATION THAT A PART OF THE COMMODITY WAS SCRAP IRON IS NOT DISPUTED BY THE ADMINISTRATIVE OFFICE, AND WE RECOGNIZE THE POINT MADE BY YOUR ATTORNEY THAT THE DEFINITIONS OF STEEL AND OF SCRAP IRON UNDER NORMAL PRACTICE AND USAGE RELATE TO TWO DIFFERENT AND DISTINCT PRODUCTS. HOWEVER, THE RECORD DISCLOSES THAT THE ADVERTISED DESCRIPTION OF THE SCRAP METAL SET FORTH IN THE INVITATION WAS BASED UPON THE BEST INFORMATION AVAILABLE AND THERE IS NOTHING TO INDICATE THAT THE DISPOSAL OFFICERS ACTED OTHER THAN IN GOOD FAITH. MANY CASES INVOLVING SOMEWHAT SIMILAR FACTS HAVE BEEN CONSIDERED BY THE COURTS AND IT HAS BEEN POINTED OUT IN THOSE DECISIONS THAT IN DISPOSING OF SURPLUS GOODS THE GOVERNMENT, ON OCCASION IS UNAWARE OF THE QUALITY OR CONDITION OF THE COMMODITIES IT SELLS. FURTHERMORE, THE IMPLIED WARRANTY WHICH GENERALLY IS IMPOSED BY LAW IN CONNECTION WITH SUCH TRANSACTIONS IS NOT FOR APPLICATION WHERE THE UNITED STATES IS A PARTY SINCE, IN THE DISPOSITION OF EXCESS OR OBSOLETE MATERIALS AND SUPPLIES THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE OR BUSINESS. IT IS FOR THAT REASON THAT PROSPECTIVE BIDDERS ARE APPRISED OF THE FACT THAT THE PROPERTY IS TO BE SOLD WITHOUT ANY WARRANTY WHATEVER AS TO THE DESCRIPTION THEREOF IN THE INVITATION, AND ANY RISK IN THAT REGARD MUST, UNDER THE TERMS OF THE AGREEMENT BETWEEN THE PARTIES, BE ASSUMED BY THE PURCHASER. SEE SILBERSTEIN AND SON, INC. V. UNITED STATES, 69 C.CLS. 412; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; SNYDER CORP. V. UNITED STATES, 68 C.CLS. 667; LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676. THE TERMS OF YOUR CONTRACT CONTAINED THAT PROVISION, AND ALSO STIPULATED THAT THE TRANSACTION WAS NOT A SALE BY SAMPLE, THUS RENDERING A NULLITY THE QUESTION OF CONFORMANCE OF THE SCRAP METAL WHICH YOU PURCHASED BY LOT TO THE TESTED SAMPLES REFERRED TO IN YOUR CLAIM BRIEF DATED FEBRUARY 20, 1957.

THE RECORD FURTHER DISCLOSES THAT YOUR OFFER WAS ACCEPTED IN GOOD FAITH AND THAT SINCE THE AMOUNT QUOTED WAS NOT MATERIALLY OUT OF LINE WITH THE OTHER BIDS RECEIVED THERE IS NO JUSTIFICATION FOR CONCLUDING THAT THIS CONTRACT, WHICH HAS BEEN EXECUTED, WAS UNCONSCIONABLE. ACCEPTANCE OF YOUR BID UNDER THE CIRCUMSTANCES CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. UNITED STATES V. PURCELL ENVELOPE CO., 249 U.S. 313; AMERICAN SMELTING AND REFINING CO. V. UNITED STATES, 259 U.S. 75.

ACCORDINGLY, IN VIEW OF THE FACTS OF RECORD AND APPLICABLE LAW THERE IS NO LEGAL BASIS UPON WHICH WE MAY AUTHORIZE THE REFUND OF ANY PART OF THE AMOUNT CLAIMED.