B-145875, JUN. 12, 1961

B-145875: Jun 12, 1961

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO A LETTER DATED MAY 15. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 40 ON DECEMBER 13. THAT UPON INVESTIGATION IT WAS FOUND THAT WHEN THE PROPERTY WAS PREPARED FOR SALE. THAT IT WAS ALSO FOUND THAT THE BIDDER WHO HAD BEEN AWARDED ITEM 41 HAD RECEIVED THE MATERIAL IDENTIFIED AS ITEM 40 IN THE INVITATION BUT TAGGED AS ITEM 41 IN THE DISPOSAL YARD. IT IS ALSO REPORTED THAT THE BIDDER WHO PURCHASED ITEM 41 HAS ALREADY SOLD THE MAJOR PORTION OF THE PROPERTY RECEIVED BY HIM. A VALID AND BINDING CONTRACT WAS CREATED FOR THAT ITEM. INASMUCH AS THE ERROR INVOLVED IN THIS TRANSACTION WAS ONE THAT IS SOLELY ATTRIBUTABLE TO THE GOVERNMENT IN TAGGING THE VARIOUS ITEMS FOR IDENTIFICATION.

B-145875, JUN. 12, 1961

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO A LETTER DATED MAY 15, 1961, WITH ENCLOSURES, FROM THE DEPUTY THE QUARTERMASTER GENERAL, REQUESTING A DECISION AS TO WHETHER THERE MAY BE GRANTED THE RELIEF SOUGHT BY THE BRAKE LINING SUPPLY CO., INC., UNDER CONTRACT NO. 01 (S) 233.

THE MT. RAINIER ORDNANCE DEPOT, TACOMA, WASHINGTON, BY INVITATION AVI-45- 021-S-61-9, REQUESTED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 400,000 BRAKE LINING TUBULAR 5/8 INCH RIVETS AND 392,000 BRAKE LINING TUBULAR 3/4 INCH RIVETS, ITEMS 40 AND 41, RESPECTIVELY. IN RESPONSE THE BRAKE LINING SUPPLY CO., INC., SUBMITTED A BID DATED NOVEMBER 28, 1960, OFFERING TO PURCHASE THE 5/8 INCH RIVETS COVERED BY ITEM 40 AT A PRICE OF $0.003112 EACH. THE BID OF THE CORPORATION WAS ACCEPTED AS TO ITEM 40 ON DECEMBER 13, 1960.

THE CONTRACTING OFFICER REPORTS THAT ON JANUARY 16, 1961, MR. ADRIAN COMINS OF THE BRAKE LINING SUPPLY CO., INC., TELEPHONED ALLEGING THAT INSTEAD OF RECEIVING THE PROPERTY DESCRIBED AS ITEM 40 IN THE INVITATION FOR BIDS, HE HAD RECEIVED THAT DESCRIBED AS ITEM 41; THAT UPON INVESTIGATION IT WAS FOUND THAT WHEN THE PROPERTY WAS PREPARED FOR SALE, THE TAGS FOR ITEMS 40 AND 41 HAD BEEN REVERSED; AND THAT IT WAS ALSO FOUND THAT THE BIDDER WHO HAD BEEN AWARDED ITEM 41 HAD RECEIVED THE MATERIAL IDENTIFIED AS ITEM 40 IN THE INVITATION BUT TAGGED AS ITEM 41 IN THE DISPOSAL YARD. IT IS ALSO REPORTED THAT THE BIDDER WHO PURCHASED ITEM 41 HAS ALREADY SOLD THE MAJOR PORTION OF THE PROPERTY RECEIVED BY HIM.

IN LETTERS DATED JANUARY 17 AND APRIL 11, 1961, IN WHICH IT REQUESTED SHIPPING INSTRUCTIONS FOR RETURNING THE RIVETS RECEIVED BY THEM, THE CORPORATION REQUESTED THAT THE PURCHASE PRICE OF ITEM 40 BE REFUNDED TO IT AND THAT IT BE REIMBURSED THE AMOUNTS OF $480.24 AND $18.75, REPRESENTING FREIGHT CHARGES AND COST OF TELEPHONE CALLS MADE BY THE CORPORATION TO THE DISPOSAL AGENCY.

SINCE THE RECORD CLEARLY SHOWS THAT THE CORPORATION INTENDED TO AND DID SUBMIT A BID FOR ITEM 40 AND SINCE THE GOVERNMENT ACCEPTED THE BID ON ONLY THAT ITEM, A VALID AND BINDING CONTRACT WAS CREATED FOR THAT ITEM. THUS, INASMUCH AS THE ERROR INVOLVED IN THIS TRANSACTION WAS ONE THAT IS SOLELY ATTRIBUTABLE TO THE GOVERNMENT IN TAGGING THE VARIOUS ITEMS FOR IDENTIFICATION, SUCH ERROR CREATES NO LEGAL OBLIGATION ON THE PART OF THE CORPORATION TO ACCEPT ITEM 41. ACCORDINGLY, THE PURCHASE PRICE OF ITEM 40 MAY BE REFUNDED TO THE CORPORATION AFTER THE RETURN TO THE GOVERNMENT OF THE PROPERTY COVERED BY THAT ITEM. IN REGARD TO THE RETURN OF THE MATERIAL, IT IS REPORTED THAT THE PROPERTY MAY BE RETURNED BY THE CORPORATION TO AN ARMY INSTALLATION NEAR LAWRENCE, MASSACHUSETTS, THE PLACE WHERE THE CORPORATION'S PLACE OF BUSINESS IS LOCATED, WHICH WILL MINIMIZE RETURN TRANSPORTATION EXPENSES.

WITH RESPECT TO THE CORPORATION'S CLAIM FOR REIMBURSEMENT OF TRANSPORTATION AND TELEPHONE CALL CHARGES, PARAGRAPH 11 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION PROVIDES AS FOLLOWS:

"11. LIMITATION ON GOVERNMENT'S LIABILITY.--- IN ANY CASE WHERE LIABILITY OF THE GOVERNMENT TO THE PURCHASER HAS BEEN ESTABLISHED, THE EXTREME MEASURE OF THE GOVERNMENT'S LIABILITY SHALL NOT, IN ANY EVENT, EXCEED REFUND OF THE PURCHASE PRICE OR SUCH PORTION THEREOF AS THE GOVERNMENT MAY HAVE RECEIVED.'

A SIMILAR SALES CONDITION WAS CONSIDERED IN THE CASE OF BOY V. UNITED STATES, 179 F.SUPP. 67. THAT CASE INVOLVED AN ACTION BY A BUYER AT A UNITED STATES SURPLUS PROPERTY AUCTION FOR DAMAGES RESULTING FROM DELIVERY OF GOODS, PURCHASED AT AUCTION BY BUYER, TO THE WRONG PERSON. IN DENYING THE PLAINTIFF RELIEF, THE COURT STATED THAT THE CASE WAS RULED BY UNITED STATES V. WEISBROD, 202 F.2D 629; CERTIORARI DENIED 346 U.S. 819, REHEARING DENIED 346 U.S. 880, AND CASES THEREIN CITED. IN UPHOLDING THE VALIDITY OF THE GOVERNMENT CONTRACT PROVISION SUCH AS THE ONE HERE INVOLVED, THE COURT IN THE WEISBROD CASE STATED ON PAGE 633 AS FOLLOWS:

"IN DISPOSING OF SURPLUS PROPERTY THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE. IN DISPOSING OF PROPERTY, IT MAY ATTACH SUCH REASONABLE CONDITIONS AS ARE NECESSARY FOR THE GENERAL WELFARE. IF ONE DOES NOT WITH TO BID FOR GOVERNMENT SURPLUS PROPERTY WITH THE CONDITIONS ATTACHED, HIS ALTERNATIVE IS TO MAKE NO BID.

"WE CONCLUDE THAT APPELLANT'S CLAIM THAT THE CONTRACT IN QUESTION LACKED MUTUALITY OF OBLIGATION IS WITHOUT MERIT.'

SEE ALSO ERIE COAL AND COKE CORPORATION V. UNITED STATES, 266 U.S. 518. WHAT WAS SAID THERE IS EQUALLY APPLICABLE TO THE INSTANT CASE.

ACCORDINGLY, THE CORPORATION MAY NOT BE REIMBURSED FOR THE TRANSPORTATION AND TELEPHONE CALL CHARGES INCURRED BY IT. ..END :