B-143563, NOV. 22, 1960

B-143563, NOV. 22, 1960

TO BENJ. HARRIS AND CO.:

WE REFER TO A LETTER DATED JULY 8, 1960, FROM YOUR ATTORNEYS, REQUESTING ON YOUR BEHALF RECONSIDERATION OF THE SETTLEMENT DATED JUNE 10, 1960, BY WHICH OUR CLAIMS DIVISION DISALLOWED YOUR CLAIM FOR A REFUND OF A PORTION OF THE PURCHASE PRICE OF ITEM 2, INVITATION NO. B 99-60-665, CONTRACT NO. N665S-47537, DATED JANUARY 28, 1960.

IN RESPONSE TO INVITATION NO. B-99-60-665, ISSUED BY THE U.S. NAVAL SUPPLY DEPOT CLEAR FIELD, OGDEN, UTAH, YOU SUBMITTED A BID ON VARIOUS ITEMS AND WERE THE SUCCESSFUL BIDDER ON ITEMS 2, 3, AND 4. YOUR CLAIM REFERS TO ITEM 2 WHICH WAS DESCRIBED AS CONTAMINATED BRASS SCRAP, CONSISTING OF 455,000 POUNDS OF 5 INCHES/38 POWDER AND PROJECTILE HOISTS.

YOUR ATTORNEY STATES THAT PRIOR TO SUBMITTING A BID, MR. J. WAYNE HARRIS OF YOUR COMPANY TRAVELED FROM CHICAGO TO THE U.S. NAVAL ORDNANCE PLANT, POCATELLO, IDAHO, TO INSPECT THE MATERIAL. THE HOISTS, EACH WEIGHING OVER 1,600 POUNDS, WERE STORED IN SEVERAL LARGE PILES AND NONE OF THEM WAS DISMANTLED OR BROKEN OPEN. MR. HARRIS REQUESTED NAVY PERSONNEL AT THE PLANT TO TAKE STEPS TO PERMIT A MORE DETAILED INSPECTION, BUT WAS ADVISED THAT THEY WOULD NOT HANDLE THE MATERIAL FURTHER. WHEN MR. HARRIS INQUIRED ABOUT ANY PRINTED INFORMATION WHICH WOULD SHOW THE DEGREE OF CONTAMINATION, HE WAS ADVISED THAT NO WRITTEN OR PRINTED INFORMATION EXISTED BUT SOME UNIDENTIFIED NAVY PERSONNEL STATED THEY THOUGHT THE IRON CONTAMINATION WOULD NOT EXCEED 10 PERCENT. ON THE BASIS OF A VISUAL INSPECTION AND THE OPINION OF THE NAVY PERSONNEL, MR. HARRIS FIGURED THE CONTAMINATION TO BE LESS THAN 10 PERCENT AND SUBMITTED A BID OF ?19279 PER POUND FOR ITEM 2, WHICH WAS ACCEPTED AS THE HIGHEST BID.

THE HOISTS WERE DELIVERED TO YOUR YARD IN CHICAGO HEIGHTS, ILLINOIS, WHERE YOU FOUND UPON DISMANTLING A HOIST THAT CONTAMINATION IN THE FORM OF IRON AND GREASE EXCEEDED 28 PERCENT. THIS DEGREE OF CONTAMINATION WAS VERIFIED BY THE INSPECTOR OF NAVAL MATERIAL, 536 SOUTH CLARK STREET, CHICAGO, ILLINOIS.

YOU SUBMITTED A CLAIM FOR $15,924.26 AS A PARTIAL REFUND OF THE PURCHASE PRICE FOR THE 454,840 POUNDS OF CONTAMINATED BRASS WHICH WERE DELIVERED, BASED ON 18.16 PERCENT CONTAMINATION OVER AND ABOVE THE 10 PERCENT ON WHICH YOU COMPUTED YOUR BID.

IN A STATEMENT DATED MARCH 31, 1960, THE CONTRACTING OFFICER AGREED WITH YOUR CONTENTION THAT IT WAS IMPOSSIBLE TO DETERMINE THE DEGREE OF CONTAMINATION AT THE TIME OF INSPECTION AND RECOMMENDED THAT RELIEF BE GRANTED. HOWEVER, HE ALSO RECOMMENDED THAT YOUR CLAIM BE REDUCED BY THE VALUE OF THE CONTAMINATING MATERIAL WHICH HE ESTIMATED TOBE $826. THE NAVY REGIONAL ACCOUNTS OFFICE AND THE BUREAU OF SUPPLIES AND ACCOUNTS DID NOT CONCUR IN THE RECOMMENDATION OF THE CONTRACTING OFFICER AND YOUR CLAIM WAS ADMINISTRATIVELY DISAPPROVED. BY SETTLEMENT DATED JUNE 10, 1960, OUR CLAIMS DIVISION DISALLOWED YOUR CLAIM.

IN REQUESTING A REVIEW OF THE DISALLOWANCE, YOUR ATTORNEY STATED THAT NAVY DEPARTMENT PERSONNEL HAVING DIRECT KNOWLEDGE OF THIS MATTER WERE NOT PRESENT WHEN THE CLAIM WAS SENT TO OUR OFFICE. THIS MATTER WAS REFERRED BACK TO THE NAVY DEPARTMENT, AS REQUESTED. BY LETTER DATED OCTOBER 13, 1960, THE DEPUTY AND ASSISTANT CHIEF OF THE NAVY BUREAU OF SUPPLIES AND ACCOUNTS ADVISED THAT, UPON RECONSIDERATION, HE RECOMMENDED FAVORABLE CONSIDERATION OF YOUR CLAIM.

THE "GENERAL SALE TERMS AND CONDITIONS" OF THE CONTRACT PROVIDE, IN PERTINENT PART, AS FOLLOWS:

"1. INSPECTION.--- BIDDERS ARE INVITED AND URGED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING BIDS. PROPERTY WILL BE AVAILABLE FOR INSPECTION AT THE PLACES AND TIMES SPECIFIED IN THE INVITATION. THE GOVERNMENT WILL NOT BE OBLIGED TO FURNISH ANY LABOR FOR SUCH PURPOSE. NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR THE WITHDRAWAL OF A BID AFTER OPENING.

"2. CONDITION OF PROPERTY.--- 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.

"12. VERBAL MODIFICATIONS.--- ANY ORAL STATEMENT BY ANY REPRESENTATIVE OF THE GOVERNMENT, MODIFYING OR CHANGING ANY CONDITIONS OF THIS CONTRACT, IS AN EXPRESSION OF OPINION ONLY AND CONFERS NO RIGHT UPON THE PURCHASER.'

YOUR ATTORNEY SUBMITS THAT A CONTRACT OF SALE BASED UPON AN INVITATION WHICH REQUIRED INSPECTION AND PROVIDED THAT THE MATERIAL WOULD BE AVAILABLE FOR INSPECTION CANNOT PROPERLY BE CONSTRUED TO DENY A RIGHT TO A REFUND IN A SITUATION IN WHICH FULL INSPECTION WAS IMPOSSIBLE AND YOU MADE AN INSPECTION TO THE FULLEST EXTENT POSSIBLE.

ON THE FACTS PRESENTED, WE SEE NO BASIS FOR THE RELIEF REQUESTED. THE CONTRACTING OFFICER'S STATEMENT THAT "IT WAS IMPOSSIBLE TO DETERMINE THE DEGREE OF CONTAMINATION AT THE TIME OF THE INSPECTION" IS AN INCOMPLETE STATEMENT WHICH MUST BE INTERPRETED TO MEAN THAT IT WAS IMPOSSIBLE FROM VISUAL INSPECTION OF THE OUTSIDE OF THE HOISTS TO DETERMINE THE DEGREE OF CONTAMINATION.

IF VISUAL INSPECTION IS INEFFECTUAL AND A MORE EXTENSIVE INSPECTION IS NECESSARY TO DETERMINE THE TRUE CONDITION OF THE PROPERTY, A BIDDER IS REQUIRED TO MAKE THE SORT OF INSPECTION THAT WILL BE EFFECTUAL AND HE HAS NO CAUSE TO COMPLAIN IF HE FAILS TO DO SO. SEE PAXTON-MITCHELL V. UNITED STATES, 172 F.SUPP. 463 (CT.CL., APRIL 8, 1959.) IN OUR DECISION B- 133881, OCTOBER 7, 1957, WE HELD THAT A PURCHASER OF A USED AIR COMPRESSOR UNIT, WHO MADE A VISUAL INSPECTION BUT FAILED TO DETERMINE THE EXTENT OF REPAIRS REQUIRED, COULD NOT BE ALLOWED A REFUND SINCE HIS FAILURE TO MAKE A COMPLETE INSPECTION DID NOT CHARGE THE GOVERNMENT WITH ANY LEGAL RESPONSIBILITY. THAT CASE WAS SIMILAR TO THE PRESENT CASE ALSO IN THAT THE PURCHASER HAD REQUESTED THE GOVERNMENT TO MOVE THE COMPRESSOR OUT OF THE WAREHOUSE TO PERMIT A MORE COMPLETE INSPECTION, BUT NO CRANE OR OTHER EQUIPMENT WAS AVAILABLE AND THE PURCHASER SUBMITTED HIS BID WITHOUT COMPLETING HIS INSPECTION.

ARTICLE 1 OF THE TERMS OF SALE CONSTITUTES A CLEAR WARNING THAT BIDDERS MUST ASSUME ALL RISKS AS TO ANYTHING WHICH IS NOT DISCLOSED BY INSPECTION AND DOES NOT IMPOSE ANY OBLIGATION UPON THE GOVERNMENT TO FURNISH ANY LABOR OR OTHERWISE ASSIST PROSPECTIVE BIDDERS IN THEIR INSPECTION.

YOUR CLAIM FOR REFUND OF A PORTION OF THE PURCHASE PRICE STATES THAT THERE WAS AN "EXCESS" OF CONTAMINATING MATERIAL, BUT THIS COULD BE TRUE ONLY IF THERE HAD BEEN A WARRANTY OR REPRESENTATION OF SOME PARTICULAR DEGREE OF CONTAMINATION. THE ORAL STATEMENTS BY NAVY PERSONNEL ABOUT THE DEGREE OF CONTAMINATION, UNDER ARTICLE 12 OF THE TERMS OF THE SALE, WERE MERELY AN EXPRESSION OF OPINION AND CONFERRED NO RIGHTS UPON YOU AS PURCHASER. WHEN A SALE IS MADE ON AN "AS IS" AND ,WHERE IS" BASIS, AND THE SELLER MAKES AN EXPRESS DISCLAIMER OF WARRANTY SUCH AS THAT SET FORTH IN ARTICLE 2 OF THE TERMS OF THE SALE, THE COURTS HAVE HELD REPEATEDLY THAT NO WARRANTY MAY BE IMPLIED. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525 AND W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676. THOSE CASES, INVOLVING A VARIANCE IN THE CONDITION OF THE PROPERTY FROM THE DESCRIPTION IN THE INVITATION, HELD THAT UNDER SUCH CIRCUMSTANCES BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATSOEVER.

THE MATTER OF GRANTING RELIEF TO PURCHASERS OF PUBLIC PROPERTY UNDER TERMS AND CONDITIONS SIMILAR TO THOSE PRESENT HERE HAS BEEN THE SUBJECT OF CONSIDERATION IN NUMEROUS DECISIONS OF OUR OFFICE AND OF THE COURTS AND IT HAS BEEN UNIFORMLY HELD THAT RELIEF CANNOT BE GRANTED. SEE 16 COMP. GEN. 749; 18 ID. 594; 28 ID. 306; 36 ID. 612; M. MANUEL AND SONS V. UNITED STATES, 61 CT.CL. 373; SACHS MERCANTILE COMPANY, INC. V. UNITED STATES, 78 ID. 801. THE RECOMMENDATION OF THE NAVY BUREAU OF SUPPLIES AND ACCOUNTS THAT YOUR CLAIM BE GIVEN FAVORABLE CONSIDERATION IS CONTRARY TO THE RULE OF LAW FOLLOWED BY THE COURTS AND BY OUR OFFICE.

IN VIEW OF THE FACTS OF RECORD AND THE APPLICABLE LAW, WE FIND NO BASIS FOR REFUNDING ANY PART OF THE PURCHASE PRICE. THEREFORE, THE SETTLEMENT OF JUNE 10, 1960, MUST BE SUSTAINED.