B-143607, AUG. 17, 1960

B-143607: Aug 17, 1960

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TO GONSEL'S SPECIALTY: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 12. WHICH WAS ISSUED ON FEBRUARY 5. IT WAS ACCEPTED BY NOTICE DATED MARCH 4. YOU SUBSEQUENTLY ALLEGED THAT THE ITEM RECEIVED BY YOU WAS A MIDLAND TURRET LATHE INSTEAD OF THE GISHOLT LATHE AS ADVERTISED. WHICH IS THE VALUE YOU PLACE ON THE MIDLAND TURRET LATHE. YOUR REQUEST FOR REVIEW OF THIS MATTER IS BASED ON THE CONTENTION THAT YOUR BID OF $2. WAS WAY OUT OF THE QUESTION" WHEN COMPARED WITH THE NEXT HIGH BID OF $1. THE FACT THAT THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN BID PRICES FOR SURPLUS EQUIPMENT. WE MUST CONCLUDE THAT THE ACCEPTANCE OF YOUR BID WAS MADE IN GOOD FAITH AND THAT SUCH ACCEPTANCE CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES.

B-143607, AUG. 17, 1960

TO GONSEL'S SPECIALTY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 12, 1960, REQUESTING REVIEW OF OUR SETTLEMENT DATED MAY 31, 1960, DISALLOWING YOUR CLAIM FOR $859.89 UNDER DEPARTMENT OF THE NAVY CONTRACT NO. N-228S 44299.

IN RESPONSE TO SALES INVITATION NO. B-141-60-228, WHICH WAS ISSUED ON FEBRUARY 5, 1960, BY THE NAVAL SUPPLY CENTER, DISPOSAL DEPARTMENT, OAKLAND, CALIFORNIA, YOU SUBMITTED A BID OFFERING TO PURCHASE ITEM NO. 33, COVERING ONE LATHE, TURRET, MFR. GISHOLT MACHINE CO., ETC., FOR $2,109.89. YOUR BID BEING THE HIGHEST OF THE BIDS RECEIVED, IT WAS ACCEPTED BY NOTICE DATED MARCH 4, 1960, AND YOU MADE FULL PAYMENT FOR THE ITEM. YOU SUBSEQUENTLY ALLEGED THAT THE ITEM RECEIVED BY YOU WAS A MIDLAND TURRET LATHE INSTEAD OF THE GISHOLT LATHE AS ADVERTISED, AND YOU CLAIM THE DIFFERENCE BETWEEN YOUR BID $2,109.89 AND $1,250, WHICH IS THE VALUE YOU PLACE ON THE MIDLAND TURRET LATHE, OR $859.89.

YOUR REQUEST FOR REVIEW OF THIS MATTER IS BASED ON THE CONTENTION THAT YOUR BID OF $2,109.89 ,WAS WAY OUT OF THE QUESTION" WHEN COMPARED WITH THE NEXT HIGH BID OF $1,210, AND YOU POINT OUT THAT YOU HAD BID ON THE GISHOLT LATHE SPECIFIED BUT RECEIVED A MIDLAND LATHE, AN ITEM OF LESSER VALUE.

THE FACT THAT THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN BID PRICES FOR SURPLUS EQUIPMENT, AS HERE, DOES NOT NECESSARILY ESTABLISH THAT THE LOWER PRICES REPRESENT THE ACTUAL VALUE OF SUCH SURPLUS EQUIPMENT NOR DOES IT PROVIDE A BASIS FOR CHARGING THE GOVERNMENT CONTRACTING OFFICER WITH CONSTRUCTIVE NOTICE OF THE PROBABILITY OF AN ERROR IN THE HIGH BID. OUR OFFICE CONSISTENTLY HAS HELD THAT IN VIEW OF THE WIDE RANGE OF PRICES ORDINARILY RECEIVED ON WASTE, SALVAGE AND SURPLUS PROPERTY, A MERE DIFFERENCE IN THE PRICES BID WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF ERROR IN A BID FOR THE PURCHASE OF SUCH PROPERTY FROM THE GOVERNMENT AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED TO THE GOVERNMENT. THEREFORE, WE MUST CONCLUDE THAT THE ACCEPTANCE OF YOUR BID WAS MADE IN GOOD FAITH AND THAT SUCH ACCEPTANCE CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES.

WITH RESPECT TO THE RECEIPT BY YOU OF A MIDLAND LATHE INSTEAD OF THE GISHOLT TURRET LATHE DESCRIBED IN THE INVITATION, YOUR ATTENTION IS AGAIN DIRECTED TO ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION. AS POINTED OUT IN THE SETTLEMENT OF MAY 31, 1960, IT IS EXPRESSLY PROVIDED THAT THE GOVERNMENT MAKES NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO KIND OR QUALITY OF THE PROPERTY OFFERED FOR SALE. IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT, IN THE ABSENCE OF BAD FAITH, SUCH AN EXPRESS DISCLAIMER OF WARRANTY VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. 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. THERE IS NOTHING IN THE RECORD BEFORE US TO SHOW THAT BAD FAITH MAY BE ATTRIBUTED TO THE GOVERNMENT IN THE TRANSACTION, THE MISDESCRIPTION OF THE MANUFACTURER'S NAME APPEARING TO HAVE BEEN NOTHING MORE THAN AN HONEST ERROR.