B-143667, AUG. 24, 1960

B-143667: Aug 24, 1960

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TO OYAMA RUBBER COMPANY: REFERENCE IS MADE TO YOUR LETTER OF JULY 22. "THE PURCHASER REPRESENTS AND WARRANTS TO THE UNITED STATES THAT ANY PROPERTY WHICH IS OFFERED AS SCRAP IN THIS INVITATION TO BID. IS BEING PURCHASED AND RETAINED ONLY AS SCRAP. THAT IT WILL BE SOLD. SCRAP IS DEFINED AS PROPERTY THAT HAS NO VALUE EXCEPT FOR ITS BASIC MATERIAL CONTENT. IT WAS STATED ON THE FACE OF THE INVITATION THAT THE ABOVE SCRAP WARRANTY WOULD APPLY TO THIS SALE. IT WAS FURTHER SPECIFIED THAT IF THE PROPERTY WAS TO BE RETAINED IN JAPAN THE PURCHASERS WOULD BE REQUIRED TO APPLY TO THE APPROPRIATE CUSTOMS OFFICE OF THE JAPANESE GOVERNMENT FOR NECESSARY IMPORT PERMITS AND THAT THE PURCHASER WOULD BE REQUIRED TO FURNISH THE CONTRACTING OFFICER.

B-143667, AUG. 24, 1960

TO OYAMA RUBBER COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF JULY 22, 1960, REQUESTING REVIEW OF SETTLEMENT OF APRIL 20, 1960, WHICH DISALLOWED YOUR CLAIM FOR 1,073,402 YEN FOR STORAGE CHARGES COLLECTED FROM YOUR COMPANY ON ACCOUNT OF ITS DELAY IN REMOVING RUBBER SCRAP FROM THE UNITED STATES PROPERTY DISPOSAL YARDS FOLLOWING PURCHASE OF SAME FROM THE DEPARTMENT OF THE ARMY, QUARTERMASTER CENTER, TOKYO, JAPAN, UNDER CONTRACT NO. DA/S/92-557-FEC- 17552, DATED SEPTEMBER 6, 1957.

THE QUARTERMASTER CENTER AT TOKYO BY INVITATION OF JULY 30, 1957, REQUESTED BIDS FOR VARIOUS LOTS OF "RUBBER (SCRAP) INCLUDING AUTOMOBILE AND AIRCRAFT TIRES AND TUBES" AS DESCRIBED IN THE INVITATION. THE INVITATION CONTAINED A SCRAP WARRANTY PROVIDING THAT--

"THE PURCHASER REPRESENTS AND WARRANTS TO THE UNITED STATES THAT ANY PROPERTY WHICH IS OFFERED AS SCRAP IN THIS INVITATION TO BID, IS BEING PURCHASED AND RETAINED ONLY AS SCRAP, AND THAT IT WILL BE SOLD, SHIPPED, OR USED ONLY AS SCRAP. THIS CONDITION SHALL BE APPLICABLE AND IN EFFECT ONLY IN THE EVENT THAT SPECIFIC INSTRUCTIONS INCLUDED IN THE SCHEDULE SO STATE. SCRAP IS DEFINED AS PROPERTY THAT HAS NO VALUE EXCEPT FOR ITS BASIC MATERIAL CONTENT, TO INCLUDE WASTE.'

IT WAS STATED ON THE FACE OF THE INVITATION THAT THE ABOVE SCRAP WARRANTY WOULD APPLY TO THIS SALE. ALSO, THE INVITATION UNDER THE HEADING GENERAL SALES TERMS AND CONDITIONS SPECIFIED THAT THE PROPERTY MUST BE REMOVED FROM THE GOVERNMENT INSTALLATION WITHIN 20 CALENDAR DAYS AFTER NOTICE OF AWARD, TIME TO BE COMPUTED FROM THE DATE OF MAILING OR OTHERWISE FURNISHING SAID NOTICE. IT WAS FURTHER SPECIFIED THAT IF THE PROPERTY WAS TO BE RETAINED IN JAPAN THE PURCHASERS WOULD BE REQUIRED TO APPLY TO THE APPROPRIATE CUSTOMS OFFICE OF THE JAPANESE GOVERNMENT FOR NECESSARY IMPORT PERMITS AND THAT THE PURCHASER WOULD BE REQUIRED TO FURNISH THE CONTRACTING OFFICER, PRIOR TO THE TRANSFER OF TITLE AND RELEASE OF THE PROPERTY, EVIDENCE OF CLEARANCE THROUGH JAPANESE CUSTOMS.

PRIOR TO THE AWARDING OF THE CONTRACTS THE RUBBER SCRAP WAS INSPECTED BY THE JAPANESE CUSTOMS INSPECTORS AND APPROVED FOR IMPORT INTO JAPAN IN THEIR CONDITION AT THAT TIME AS "SCRAP.'

ON SEPTEMBER 6, 1957, YOUR COMPANY'S BIDS FOR ITEMS 3, 6, 7, 8, AND 9, BEING THE HIGHEST RECEIVED FOR THESE ITEMS, WAS ACCEPTED. THIS FIXED THE REMOVAL DATE AS SEPTEMBER 26, 1957. IT IS ADMINISTRATIVELY REPORTED THAT ON OCTOBER 2, 1957, YOUR COMPANY REMOVED SIX TRUCKLOADS (53,000 LBS.) FROM THE DISPOSAL YARD AND THAT ON OCTOBER 3, 1957, SIX MORE TRUCKLOADS WERE LOADED, WEIGHED AND ALLOWED TO LEAVE THE DISPOSAL YARD. IT IS REPORTED, HOWEVER, THAT LATER THE PROVOST MARSHAL STOPPED THE SECOND GROUP OF TRUCKS AND IMPOUNDED THEIR CONTENTS BECAUSE THE TIRES HAD NOT BEEN REDUCED TO SCRAP CONDITION AS REQUIRED BY CERTAIN ADMINISTRATIVE BULLETINS AND ARMY REGULATIONS, WHICH WERE NOT, HOWEVER, MADE A PART OF THE SALES TERMS AND CONDITIONS. A DISPUTE AROSE AS TO YOUR COMPANY'S RIGHT TO REMOVE THE TIRES "AS IS" AND PERFORMANCE OF THE CONTRACT CEASED. DURING THE DISPUTE THE CONTRACTING OFFICER INSISTED THAT THE TIRES HAD TO BE SCRAPPED AND THAT THE SCRAPPING HAD TO BE ACCOMPLISHED ON THE MILITARY RESERVATION PRIOR TO THEIR REMOVAL THEREFROM. ON THE OTHER HAND, YOUR COMPANY INSISTED THAT WHEN TIRES WERE ADVERTISED FOR SCRAP THEY REQUIRED NO FURTHER PROCESSING AND THAT SINCE YOUR COMPANY HAD COMPLIED WITH THE CUSTOMS CLEARANCE REQUIREMENTS IT HAD COMPLIED WITH THE TERMS OF THE CONTRACT. THE MATTER OF A SUPPLEMENTAL AGREEMENT TO THE CONTRACT WAS DISCUSSED WITH YOUR COMPANY WITH A VIEW TO REQUIRING THE TIRES TO BE SCRAPPED BY YOUR COMPANY WITH ITS EQUIPMENT. FINALLY, NO NOVEMBER 26, 1957, A SUPPLEMENTAL AGREEMENT WAS ENTERED INTO WHEREIN YOUR COMPANY UNDERTOOK TO REDUCE THE TIRES TO SCRAP PRIOR TO REMOVAL FROM THE STORAGE YARDS WITHOUT COST TO THE GOVERNMENT. THE WORK WAS TO BE ACCOMPLISHED BY CUTTING TIRES TO SEPARATE THE CAPS FROM THE SIDEWALLS. THIS AGREEMENT RECITED THAT THE PARTIES THEREBY RELEASED AND FOREVER DISCHARGED EACH OTHER FROM ANY AND ALL MANNER OF ACTION, CAUSES OF ACTION, SUITS, CLAIMS AND DEMANDS WHICH THE PARTIES MIGHT HAVE BY REASON OF THE ORIGINAL CONTRACT AND THAT EXCEPT AS THEREIN MODIFIED ALL THE TERMS AND CONDITIONS OF THE ORIGINAL CONTRACT SHOULD REMAIN UNMODIFIED AND IN FULL FORCE AND EFFECT. IT IS CONTENDED BY YOUR COMPANY THAT WHEN THE SUPPLEMENTAL AGREEMENT WAS CONCLUDED THE CONTRACTING OFFICER STATED THAT THERE WOULD BE NO STORAGE CHARGES, BUT THE CONTRACTING OFFICER HAS DENIED MAKING SUCH A STATEMENT.

FOLLOWING THE EXECUTION OF THE SUPPLEMENTAL AGREEMENT THERE WERE FURTHER DELAYS IN THE REMOVAL OF THE TIRES FROM THE DISPOSAL YARDS. SUCH DELAYS WERE CAUSED BY DISPUTES AS TO THE METHOD TO BE EMPLOYED IN THE SCRAPPING PROCESS, THE EQUIPMENT TO BE USED, AND THE REPORTED FAILURE OF THE JAPANESE CUSTOM OFFICIALS TO TIMELY APPROVE YOUR NEW APPLICATION FOR A CERTIFICATE OF REMOVAL. IT IS REPORTED THAT THE SCRAPPING PROCESS WAS COMPLETED BY DECEMBER 3, 1957, BUT THAT REMOVAL OF THE SCRAP COULD NOT BE ACCOMPLISHED UNTIL THE RECEIPT OF CUSTOMS APPROVAL. IT IS REPORTED THAT A REVIEW OF CUSTOMS DECLARATIONS SHOWS THAT THE DECLARATION TO REMOVE 500,000 POUNDS UNDER ITEM 9 WAS DATED DECEMBER 25, 1957, AND THE DATE OF PERMIT TO REMOVE WAS FEBRUARY 3, 1958; THAT THE NEXT DECLARATION TO REMOVE 500,000 POUNDS UNDER ITEM 9 WAS MADE ON MARCH 17, 1958, AND THE PERMIT GRANTED ON MARCH 20, 1958, AND THAT THE DECLARATIONS FOR ITEMS 6, 7, AND 8 WERE MADE ON JANUARY 28, 1958, AND GRANTED ON JANUARY 30, 1958. REMOVAL OPERATIONS WERE RESUMED ON FEBRUARY 3, 1958, WITH RESPECT TO ITEMS 6, 7, AND 8, AND COMPLETED ON FEBRUARY 14, 1958. THE CONTRACTING OFFICER REPORTED THAT NO DELIVERY RECEIPTS FOR ITEM 9 COULD BE LOCATED AND THAT YOUR COMPANY HAS NO RECORD IN THIS RESPECT. FOLLOWING NUMEROUS REQUESTS FOR ELIMINATION OF THE STORAGE CHARGES, WHICH WERE ALL DENIED, STORAGE CHARGES FOR ITEM 3 WERE ELIMINATED AND STORAGE CHARGES FOR ITEMS 6, 7, AND 8 WERE RECOMPUTED USING NOVEMBER 26, 1957, AS THE CONTRACT AWARD DATE AND RELIEVING YOUR COMPANY FROM STORAGE CHARGES FOR 13 DAYS ON ACCOUNT OF EXCESSIVE CUSTOMS CLEARANCE TIME. WITH RESPECT TO ITEM 9 THE DATE OF NOVEMBER 26, 1957, WAS USED ALSO AS THE DATE OF AWARD AND RELIEF WAS GRANTED FROM STORAGE CHARGES FOR REMOVAL TIME OF 40 DAYS. UNDER THE RECOMPUTATION THE TOTAL AMOUNT OF STORAGE DUE THE UNITED STATES WAS COMPUTED AS 1,073,402 YEN. YOU WERE ALLOWED CREDIT FOR 135,000 YEN ON I/B'S 58-830 AND 58-876 AND THERE WAS COLLECTED FROM YOUR COMPANY 938,402 YEN.

THERE IS NOTHING IN THE RECORD WHICH WOULD JUSTIFY REMISSION OF STORAGE CHARGES FOR ANY OF THE ITEMS COVERED BY THE CONTRACT ACCRUING FROM SEPTEMBER 26, 1957, UP TO AND INCLUDING OCTOBER 3, 1957, SINCE THE DELAY IN REMOVAL UP TO THAT TIME WAS CLEARLY CHARGEABLE TO YOUR COMPANY UNDER THE TERMS OF THE CONTRACT. WITH RESPECT TO THE CHARGES ACCRUING AFTER OCTOBER 3, 1957, WHEN THE GOVERNMENT IMPOUNDED THE TIRES LOADED IN THE SECOND GROUP OF TRUCKS, THE AMOUNT THEREOF WILL BE REFUNDED TO YOUR COMPANY SINCE IT IS IMPOSSIBLE TO DETERMINE FROM THE RECORD WHAT PROPORTION OF THE DELAY OCCURRING THEREAFTER WAS DUE TO THE REQUIREMENT THAT YOU REDUCE THE TIRES TO SCRAP FROM THE STORAGE YARDS--- A REQUIREMENT NOT INCLUDED IN THE ORIGINAL CONTRACT. OTHERWISE, THE SETTLEMENT OF APRIL 20, 1960, IS SUSTAINED.