B-139383, JUL. 10, 1959

B-139383: Jul 10, 1959

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INC.: REFERENCE IS MADE TO LETTERS DATED APRIL 10 AND MAY 21. THAT YOU HAD RECEIVED A LETTER FROM THE PAPER MILL WHICH WAS BUYING THE SCRAP CANVAS FROM YOU EXPRESSING ALARM OVER THE FACT THAT SOME OF THE SCRAP MAIL BAGS IT WAS RECEIVING HAD HEAT-SEALED PLASTIC PATCHES WHICH WERE DELETERIOUS TO THE MANUFACTURE OF FINE PAPER. THE BUREAU OF FACILITIES ADVISED YOU THAT THE VARIOUS MAIL BAG DEPOSITORIES WERE BEING NOTIFIED TO MAKE EVERY EFFORT TO REMOVE MAIL BAGS CONTAINING HEAT-SEALED PATCHES FROM THE SHIPMENTS BEING MADE TO YOU. YOU WERE ADVISED BY THE ADMINISTRATIVE OFFICE THAT IN VIEW OF THE PROVISIONS OF PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS AND OF PARAGRAPH 12 OF THE SPECIAL CONDITIONS OF THE CONTRACT.

B-139383, JUL. 10, 1959

TO S. SCHAPIRO AND SONS, INC.:

REFERENCE IS MADE TO LETTERS DATED APRIL 10 AND MAY 21, 1959, WITH ENCLOSURES, FROM THE LAW FIRM OF GORDON, FEINBLATT AND ROTHMAN, REQUESTING ON YOUR BEHALF A REVIEW OF SETTLEMENT DATED FEBRUARY 5, 1959, WHICH DISALLOWED YOUR CLAIM FOR $5,374.68 UNDER UNNUMBERED CONTRACT DATED JUNE 27, 1957.

UNDER THE CONTRACT YOU AGREED TO PURCHASE ALL OF THE SCRAP CANVAS ACCUMULATED AT 16 MAIL BAG DEPOSITORIES LOCATED THROUGHOUT THE UNITED STATES AT A PRICE OF ?08798 PER POUND DURING THE PERIOD FROM JULY 1, 1957, TO JUNE 30, 1958.

BY LETTER DATED FEBRUARY 6, 1938, YOU ADVISED THE POST OFFICE DEPARTMENT, BUREAU OF FACILITIES, THAT YOU HAD RECEIVED A LETTER FROM THE PAPER MILL WHICH WAS BUYING THE SCRAP CANVAS FROM YOU EXPRESSING ALARM OVER THE FACT THAT SOME OF THE SCRAP MAIL BAGS IT WAS RECEIVING HAD HEAT-SEALED PLASTIC PATCHES WHICH WERE DELETERIOUS TO THE MANUFACTURE OF FINE PAPER. YOU REQUESTED THAT THE BUREAU OF FACILITIES ALERT THE VARIOUS MAIL BAG DEPOSITORIES TO SEPARATE THE MAIL BAGS WITH HEAT-SEALED PATCHES AND NOT SHIP THEM TO YOU. IN A LETTER DATED FEBRUARY 14, 1958, THE BUREAU OF FACILITIES ADVISED YOU THAT THE VARIOUS MAIL BAG DEPOSITORIES WERE BEING NOTIFIED TO MAKE EVERY EFFORT TO REMOVE MAIL BAGS CONTAINING HEAT-SEALED PATCHES FROM THE SHIPMENTS BEING MADE TO YOU, BUT THAT THE BUREAU COULD NOT GUARANTEE THAT THE MAIL BAGS FURNISHED WOULD BE ENTIRELY FREE FROM HEAT-SEALED PATCHES.

IN A LETTER DATED JULY 15, 1958, YOU REQUESTED REIMBURSEMENT OF THE SUM OF $5,374.68 REPRESENTING THE EXTRA COSTS INCURRED BY YOU IN HANDLING THE MAIL BAGS WITH THE HEAT-SEALED PATCHES. IN A LETTER DATED SEPTEMBER 29, 1958, YOU WERE ADVISED BY THE ADMINISTRATIVE OFFICE THAT IN VIEW OF THE PROVISIONS OF PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS AND OF PARAGRAPH 12 OF THE SPECIAL CONDITIONS OF THE CONTRACT, NO LEGAL BASIS EXISTED FOR PAYMENT OF YOUR CLAIM. SUBSEQUENTLY, YOU FILED THE CLAIM WITH OUR OFFICE AND IT WAS DISALLOWED BY SETTLEMENT OF FEBRUARY 5, 1959.

YOUR ATTORNEY'S BASIC CONTENTIONS IN SUPPORT OF HIS REQUEST FOR REVIEW OF THE SETTLEMENT APPEAR TO BE THAT (1) THE PROVISIONS OF PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT ARE NOT APPLICABLE IN YOUR CASE FOR THE REASON THAT THE DESCRIPTION OF THE MATERIAL FURNISHED IN THE INVITATION WAS NOT BASED ON THE BEST INFORMATION AVAILABLE TO THE GOVERNMENT; (2) THAT NO OPPORTUNITY FOR PRIOR INSPECTION BY BIDDERS EXISTED; AND (3) THAT YOU WERE INDUCED TO FULLY PERFORM THE CONTRACT ON THE REPRESENTATION BY POST OFFICE DEPARTMENT OFFICIALS THAT YOUR CLAIM FOR THE ADDITIONAL EXPENSES INCURRED AND TO BE INCURRED IN HANDLING THE MAIL BAGS WITH THE HEAT SEALED PATCHES WOULD BE PAID.

IN REGARD TO YOUR ATTORNEY'S FIRST CONTENTION THAT THE DESCRIPTION OF THE SCRAP CANVAS WAS NOT BASED ON THE BEST INFORMATION AVAILABLE TO THE GOVERNMENT BECAUSE THE USE OF THE HEAT-SEAL PATCH WAS CONTEMPLATED AT THE TIME BIDS WERE REQUESTED THE DIRECTOR, DIVISION OF SUPPLIES STATES IN HIS REPORT THAT SUCH CONTENTION IS UNFOUNDED; THAT WHILE THE HEAT-SEALED PATCH METHOD HAD BEEN SUGGESTED TO THE POST OFFICE DEPARTMENT AT APPROXIMATELY THE SAME TIME THE INVITATION WAS ISSUED IT WAS NOT CONTEMPLATED FOR USE AT THAT TIME; AND THAT THE USE OF THE HEAT-SEALED PATCHES IN REPAIRING THE MAIL BAGS WAS INTRODUCED DURING THE SECOND HALF OF THE CONTRACT PERIOD PRIMARILY ON AN EXPERIMENTAL BASIS AND ONLY A VERY LOW PERCENTAGE OF THE BAGS WERE AFFECTED.

CONCERNING THE ALLEGED PROMISE BY POST OFFICE DEPARTMENT OFFICIALS TO PAY YOU THE ADDITIONAL EXPENSES INCURRED IN HANDLING THE MAIL BAGS WITH THE HEAT-SEALED PATCHES IF YOU CONTINUED PERFORMANCE OF THE CONTRACT, THE DIRECTOR, DIVISION OF SUPPLIES REPORTS THAT NEITHER HE NOR THE CHIEF OF PROCUREMENT HAD MADE ANY COMMITMENTS, EITHER IN WRITING OR ORALLY, TO YOU WITH REGARD TO PAYMENT OF SUCH EXPENSES.

WE AGREE WITH YOUR ATTORNEY'S SECOND CONTENTION THAT NO OPPORTUNITY FOR PRIOR INSPECTION OF ALL THE MATERIAL EXISTED FOR BIDDERS SINCE THE MATERIAL TO BE PURCHASED UNDER THE CONTRACT WAS TO BE GENERATED OVER A PERIOD OF ONE YEAR. WE DO NOT AGREE, HOWEVER, THAT THIS FACT RENDERS INOPERATIVE THE PROVISIONS OF THE CONTRACT EXPRESSLY DISCLAIMING ANY WARRANTIES AS TO THE DESCRIPTION OF THE MATERIAL OR ITS FITNESS FOR ANY USE OR PURPOSE.

PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, WHICH APPLIES TO THE CONDITION OF THE PROPERTY, EXPRESSLY STATES:

"ALL PROPERTY LISTED HEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS," 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.'

ALSO, PARAGRAPH 12 OF THE SPECIAL CONDITIONS OF THE CONTRACT PROVIDES AS FOLLOWS:

"12. QUALITY CONDITION AND QUANTITY NOT GUARANTEED--- THE MATERIAL WILL BE UNSEGREGATED AND CONSIST MAINLY OF OLD CANVAS WITH AND WITHOUT METAL PARTS ATTACHED; CANVAS CUTTINGS, PRACTICALLY FREE OF METAL; LACING CORD IN SACK AND POUCH HEADS, WITH METAL PARTS ATTACHED; MAIL BAGS AND CANVAS CUTTINGS CONTAINING PAINT, VARNISH, OIL, GREASE, MILDEW, ETC.; AND DYED MATERIAL, SUCH AS AIR MAIL BAGS. SHIPMENTS WILL NOT CONTAIN OLD BURLAP, LACING CORD NOT ATTACHED TO SACK OR POUCH HEADS, CANVAS BASKET INSERTS, OR BURNT MATERIAL. THE QUANTITIES GIVEN ARE ESTIMATED ON THE BASIS OF PAST EXPERIENCE.'

YOU WERE SPECIFICALLY WARNED IN PARAGRAPH 12 OF THE SPECIAL CONDITIONS THAT THE SCRAP CANVAS WOULD CONSIST OF, AMONG OTHER THINGS, "MAIL BAGS AND CANVAS CUTTINGS CONTAINING PAINT, VARNISH, OIL, GREASE, MILDEW, ETC.; AND DYED MATERIAL, SUCH AS AIR MAIL BAGS.' AT THE TIME IT ISSUED THE INVITATION, THE GOVERNMENT WAS UNAWARE OF THE SUBSTANCES WHICH MIGHT CONTAMINATE THE MAIL BAGS IN THE FUTURE AND, THEREFORE, BY THE USE OF THE CHARACTER "ETC., " PROSPECTIVE BIDDERS WERE PLACED ON ACTUAL NOTICE OF THE FACT THAT THE MAIL BAGS COULD BE CONTAMINATED BY SUBSTANCES OTHER THAN THOSE NAMED. UNDER THE PROVISIONS OF PARAGRAPH 12 OF THE SPECIAL CONDITIONS, THE GOVERNMENT ONLY GUARANTEED THAT "SHIPMENTS WILL NOT CONTAIN OLD BURLAP, LACING CORD NOT ATTACHED TO SACK OR POUCH HEADS, CANVAS BASKET INSERTS, OR BURNT MATERIAL.' IN THESE AND SIMILAR CIRCUMSTANCES THE COURTS HAVE HELD THAT THE ELEMENT OF GOOD FAITH IS ALL THAT IS REQUIRED OF THE VENDOR. SEE W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; AND TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151, 156. THERE IS NO EVIDENCE IN THE RECORD OF WILLFUL MISREPRESENTATION OR BAD FAITH ON THE PART OF THE GOVERNMENT. ASSUMING THAT AT THE TIME THE INVITATION WAS ISSUED, POST OFFICE DEPARTMENT OFFICIALS KNEW THAT HEAT-SEALED PATCHES WOULD BE USED IN REQUIRING THE MAIL BAGS, THERE IS NO EVIDENCE INDICATING THAT SUCH OFFICIALS KNEW THAT THE EXISTENCE OF SUCH PATCHES ON BAGS WOULD SUBSTANTIALLY REDUCE THEIR VALUE. THE MATERIAL WAS SOLD FOR WHAT THE GOVERNMENT THOUGHT IT TO BE AND AS STATED IN STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 241 F.2D 677, 679,"THERE WAS, BY NO MEANS, A RIDICULOUS DISCREPANCY BETWEEN THE GOODS TENDERED AND THE GOODS DESCRIBED; "THIS IS NOT A CASE OF ORDERING APPLES AND GETTING ORANGES.'" UNDER THE CONDITIONS OF THE SALE OF THE GOVERNMENT WAS ONLY OBLIGED TO ACT IN GOOD FAITH, AND THIS IT DID. SEE LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, 92; MAGQUIRE AND CO. V. UNITED STATES, 273 U.S. 67; AND LUMBRAZO V. WOODRUFF, 175 N.E. 525.

ON THE BASIS OF THE FACTS AND EVIDENCE OF RECORD, THERE APPEARS TO BE NO LEGAL BASIS FOR AUTHORIZING PAYMENT OF THE ADDITIONAL EXPENSES INCURRED BY YOU IN HANDLING THE MAIL BAGS WITH THE HEAT-SEALED PATCHES.