B-147438, DEC. 15, 1961

B-147438: Dec 15, 1961

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

POLHAMUS: FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 2. WERE ALSO RECEIVED ON ITEM NO. 236. WAS ACCEPTED AND THE MATERIAL COVERED BY ITEM 236 WAS AWARDED TO YOUR FIRM ON CONTRACT NO. ITEM NO. 236 WAS LISTED ON PAGE 90 OF THE SALES CATALOG AND DESCRIBED AS FOLLOWS: "GENERATOR SET. YOU WERE ADVISED BY THE CONTRACTING OFFICER AT THAT TIME THAT HE HAD NO AUTHORITY TO MAKE ANY ADJUSTMENT AS TO THE SALE. ADVISING THE CONSOLIDATED SURPLUS SALES OFFICE THAT YOU WERE HOLDING THE GENERATOR SETS PENDING DISPOSAL OF YOUR CLAIM. YOUR CLAIM WAS FORWARDED TO OUR OFFICE FOR SETTLEMENT. WAS DISALLOWED FOR THE REASONS SET FORTH IN CLAIMS DIVISION CERTIFICATE OF SETTLEMENT DATED AUGUST 21. THE CLAIM WAS BASED ON ALLEGATIONS THAT THE PROPERTY DELIVERED TO YOU UNDER THE SALE IS DIFFERENT FROM THAT DESCRIBED IN THE BID INVITATION.

B-147438, DEC. 15, 1961

TO MR. E. D. POLHAMUS:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 2, 1961, REQUESTING REVIEW OF OUR SETTLEMENT DATED AUGUST 21, 1961, WHICH DISALLOWED YOUR FIRM'S CLAIM FOR $4,069.68 REPRESENTING THE AMOUNT PAID TO THE GOVERNMENT FOR CERTAIN SURPLUS PROPERTY PURCHASED BY IT FROM THE DEPARTMENT OF THE NAVY ON CONTRACT NO. N63067-5039 DATED JUNE 5, 1961.

BY SALE INVITATION NO. B-176-61-63067 CONSOLIDATED SURPLUS SALES OFFICE, NORFOLK, VIRGINIA, SOLICITED BIDS--- OPENING DATE MAY 24, 1961 -- FOR THE PURCHASE FROM THE GOVERNMENT OF A NUMBER OF MISCELLANEOUS ITEMS OF SURPLUS PROPERTY. IN RESPONSE THERETO YOU SUBMITTED A BID ON ITEM NO. 236 OF $1,356.56 EACH AND A TOTAL OF $4.069.68 FOR THE THREE GENERATOR SETS IN THAT ITEM, AND FORWARDED THEREWITH A BID DEPOSIT OF $825. TWO OTHER BIDS. $104.04 AND $100, WERE ALSO RECEIVED ON ITEM NO. 236. YOUR BID, BEING THE HIGHEST RECEIVED ON THE ITEM, WAS ACCEPTED AND THE MATERIAL COVERED BY ITEM 236 WAS AWARDED TO YOUR FIRM ON CONTRACT NO. N63067-5039 DATED JUNE 5, 1961.

ITEM NO. 236 WAS LISTED ON PAGE 90 OF THE SALES CATALOG AND DESCRIBED AS FOLLOWS:

"GENERATOR SET, ELECTRIC PORTABLE, GED, SKID MTD., LIQUID COOLED, 30 KW, HOBART, 30 GN. USED, FAIR CONDITION. TOTAL ACQUISITION COST: $18,720.00 QUANTITY - 3 EACH.'

AND BENEATH THE DESCRIPTION APPEARED TWO PHOTOGRAPHIC VIEWS OF THE INTERIOR OF THE GENERATOR SETS BEING OFFERED FOR SALE, ONE OF THE INSTRUMENT PANEL AND THE OTHER OF THE POWER PLANT.

THE RECORD SHOWS THAT YOU PAID $3,244.68, THE BALANCE OF THE PURCHASE PRICE DUE THE GOVERNMENT ON THE SALE, AND THAT ON JUNE 21, 1961, YOU PICKED UP THE THREE GENERATOR SETS FROM THE HOLDING ACTIVITY AT FORT MONROE, VIRGINIA, AND THEN RETURNED TO THE CONTRACTING OFFICER'S OFFICE AND REVIEWED THE ABSTRACT OF BIDS FOR ITEM NO. 236. THEREAFTER, YOU SPOKE TO THE CONTRACTING OFFICER AND PROCLAIMED YOUR DISSATISFACTION WITH THE PURCHASE, STATING THAT YOU EXPECTED THE GENERATOR SETS TO BE "DIESEL POWERED" AND NOT "GASOLINE POWERED.' YOU WERE ADVISED BY THE CONTRACTING OFFICER AT THAT TIME THAT HE HAD NO AUTHORITY TO MAKE ANY ADJUSTMENT AS TO THE SALE, BUT IF YOU WISHED YOU COULD SUBMIT A CLAIM FOR DECISION FROM A HIGHER LEVEL.

UNDER DATE OF JULY 3, 1961, YOU FILED A CLAIM FOR REFUND OF $4,069.68, THE FULL AMOUNT YOU PAID FOR THE THREE GENERATOR SETS. ADVISING THE CONSOLIDATED SURPLUS SALES OFFICE THAT YOU WERE HOLDING THE GENERATOR SETS PENDING DISPOSAL OF YOUR CLAIM. YOUR CLAIM WAS FORWARDED TO OUR OFFICE FOR SETTLEMENT, AND WAS DISALLOWED FOR THE REASONS SET FORTH IN CLAIMS DIVISION CERTIFICATE OF SETTLEMENT DATED AUGUST 21, 1961.

THE CLAIM WAS BASED ON ALLEGATIONS THAT THE PROPERTY DELIVERED TO YOU UNDER THE SALE IS DIFFERENT FROM THAT DESCRIBED IN THE BID INVITATION, SPECIFICALLY THAT EACH OF THE GENERATOR SETS RECEIVED BY YOU CONTAINED A GASOLINE DRIVEN ENGINE RATHER THAN A DIESEL DRIVEN ENGINE WHICH YOU THOUGH YOU WERE BUYING; THAT THE DESCRIPTION IN THE BID INVITATION COVERING THE GENERATOR SETS, UPON WHICH YOU RELIED IN THE COMPUTATION OF YOUR BID, WAS MISLEADING; AND THAT IN VIEW OF THE WIDE DIFFERENTIAL BETWEEN YOUR BID AND THE OTHER TWO BIDS RECEIVED ON ITEM NO. 236 THE CONTRACTING OFFICE SHOULD HAVE BEEN AWARE OF THE POSSIBILITY OF AN ERROR IN YOUR BID AND SHOULD HAVE REQUESTED YOU TO VERIFY YOUR BID PRIOR TO HIS ACCEPTANCE THEREOF. YOU STATED FURTHER THAT WHILE YOU DID NOT PERSONALLY INSPECT THE PROPERTY DURING THE SPECIFIED INSPECTION PERIOD YOU HAD A MR. JOHN KELLY PERFORM AN INSPECTION FOR YOU OF THE PROPERTY IN ITEM NO. 236 PRIOR TO THE SUBMISSION OF YOUR BID AND THAT HE REPORTED TO YOU THAT WHILE MAKING HIS INSPECTION OF THE THREE GENERATOR SETS HE FOUND THEY "LOOKED LIKE NEW" BUT THAT IT WAS "IMPOSSIBLE TO CHECK INSIDE BECAUSE THEY WERE COVERED.'

YOUR REQUEST FOR REVIEW OF THE SETTLEMENT APPEARS TO BE BASED ON THE GROUNDS THAT IT WAS IMPOSSIBLE FOR YOU, FOR PERSONAL REASONS, TO MAKE A PERSONAL INSPECTION OF THE PROPERTY HERE INVOLVED PRIOR TO THE SUBMISSION OF YOUR BID THEREON AND, THEREFORE, IN COMPUTING YOUR BID YOU WERE REQUIRED TO RELY UPON THE TECHNICAL DESCRIPTION OF THE GENERATOR SETS APPEARING IN THE BID INVITATION WHICH YOU NOW CONTEND WAS NOT ONLY INADEQUATE AND MISLEADING BUT ERRONEOUS.

IT IS WELL ESTABLISHED THAT THE ACCEPTANCE OF A BID CONSUMMATES A VALID AND BINDING CONTRACT UNLESS THE OFFICE ACCEPTING IT WAS ON NOTICE, EITHER ACTUAL OR CONSTRUCTIVE, OF SUCH CIRCUMSTANCES AS WOULD MAKE HIS ACCEPTANCE AN ACT OF BAD FAITH. UNITED STATES V. PURCELL ENVELOPE COMPANY, 249 U.S. 313; AND AMERICAN SMELTING REFINING COMPANY V. UNITED STATES, 259 U.S. 75. THE ACCEPTANCE VESTS IN THE GOVERNMENT THE RIGHT TO HAVE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE TERMS OF THE CONTRACT AND AT THE CONTRACT PRICE; AND NO OFFICER OF THE GOVERNMENT HAS AUTHORITY TO DIVEST THE GOVERNMENT OF SUCH VESTED RIGHT. SIMPSON V. UNITED STATES, 172 U.S. 372; PACIFIC HARDWARE AND STEEL COMPANY V. UNITED STATES, 49 CT.CL. 327, 335; BAUSCH AND LOMB OPTICAL COMPANY V. UNITED STATES, 78 CT.CL. 584, 607, CERTIORARI DENIED 292 U.S. 645; UNITED STATES V. AMERICAN SALES CORPORATION, 27 F. 2D 389, AFFIRMED 32 ID. 141, CERTIORARI DENIED 280 U.S. 574.

THE CONTRACT (STANDARD FORM NO. 114-A, MARCH 1960 EDITION) CONTAINED THE USUAL GENERAL SALE TERMS AND CONDITIONS APPLICABLE TO THE SALE OF GOVERNMENT SURPLUS PROPERTY, WHICH CONDITIONS YOU AGREED TO WHEN YOU SUBMITTED YOUR BID PURSUANT TO BID INVITATION NO. B-176-61 63067.

UNDER CONDITIONS NO. 1, INSPECTION, AND NO. 2, CONDITION AND LOCATION OF PROPERTY, ALL PROSPECTIVE BIDDERS WERE PUT ON NOTICE AND URGED TO INSPECT THE PROPERTY BEING OFFERED FOR SALE PRIOR TO SUBMITTING A BID AS THE PROPERTY WAS BEING SOLD "AS IS" AND "WHERE IS," WITHOUT WARRANTY OR GUARANTY--- EXPRESS OR IMPLIED--- AS TO ITS CONDITION, INCLUDING THE DESCRIPTION OF THE PROPERTY, ITS FITNESS FOR ANY USE OR PURPOSE, AND/OR FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED.

THE COURTS MANY TIMES HAVE CONSIDERED SUCH CONTRACT PROVISIONS IN CASES INVOLVING THE SALE OF GOVERNMENT-OWNED SURPLUS GOODS AND HAVE HELD CONSISTENTLY THAT SUCH STIPULATIONS CONSTITUTE AND EXPRESS DISCLAIMER OF WARRANTY AND, IN THE ABSENCE OF BAD FAITH OR FRAUD, THE ACCEPTANCE OF A BID UNDER SUCH PROVISIONS CONSUMMATES A VALID AND BINDING CONTRACT, AND BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER. W. E. HEDGER COMPANY V. UNITED STATES, 52 F. 2D 31, CERTIORARI DENIED 284 U.S. 676; I. SHAPIRO AND COMPANY V. UNITED STATES, 66 CT.CL. 424, 428, AND SILBERSTEIN AND SON V. UNITED STATES, 69 CT.CL. 412.

REGARDING YOUR ALLEGATION THAT THE DESCRIPTION IN THE BID INVITATION FOR ITEM NO. 236 WAS INADEQUATE AND ERRONEOUS, AND THEREFORE MISLED YOU IN ARRIVING AT YOUR QUOTED BID PRICE, THE INVITATION ADVERTISED AND DESCRIBED THE MATERIAL OFFERED FOR SALE AS "GENERATOR SET, ELECTRIC, PORTABLE, GED,

THE HOLDING ACTIVITY'S REPORT, AS WELL AS THE CONTRACTING OFFICER'S STATEMENT, COVERING THE SALE TRANSACTION STATES THAT ALTHOUGH THE INITIALS "GED" APPEARING IN THE FIRST LINE OF THE BID INVITATION DESCRIPTION OF THE GENERATOR SETS IS A MILITARY ABBREVIATION IT IS WELL KNOWN IN THE TRADE THAT THE ABBREVIATION MEANS "GASOLINE ENGINE DRIVEN.' IT IS ALSO STATED THAT THERE IS A DISTINCT DIFFERENCE IN THE APPEARANCE OF A GASOLINE DRIVEN GENERATOR AND A DIESEL DRIVEN GENERATOR. THE OPINION OF BOTH THE PROPERTY DISPOSAL OFFICER AND OF THE CONTRACTING OFFICER IS THAT ANYONE FAMILIAR WITH THE TWO TYPES, OR EITHER OF THEM, COULD DISTINGUISH THE TYPE BEING OFFERED FOR SALE FROM THE PHOTOGRAPHS IN THE ADVERTISEMENT DESCRIPTION, AND CERTAINLY FROM A CAREFUL INSPECTION OF THE PROPERTY.

WHILE IT MAY BE THAT THE GOVERNMENT'S DESCRIPTION OF THE MATERIAL WAS NOT AS DETAILED AS IT MIGHT HAVE BEEN, AND EVEN IF THE DESCRIPTION HAD BEEN ERRONEOUS, AS YOU ALLEGE, THIS COULD HAVE NO BEARING ON THE SETTLEMENT OF YOUR CLAIM BECAUSE THE PROPERTY WAS SOLD WITHOUT ANY WARRANTY OR GUARANTY OF ANY KIND. FURTHERMORE, THE FACT IS THAT "GENERATOR SETS" WERE OFFERED FOR SALE AND THE RECORD SHOWS THAT GENERATOR SETS WERE DELIVERED TO YOU, AND THERE IS NOTHING IN THE RECORD OTHERWISE TO INDICATE THAT THE CONTRACTING OFFICER OR ANY OTHER GOVERNMENT EMPLOYEE ACTED OTHER THAN IN GOOD FAITH THROUGH THE SALE TRANSACTION.

AS TO YOUR CONTENTION THAT THE CONTRACTING OFFICER SHOULD HAVE BEEN AWARE OF AN ERROR IN YOUR BID BECAUSE OF THE WIDE RANGE IN THE PRICES BID FOR THE PROPERTY IN ITEM NO. 236, THE RECORD DOES NOT INDICATE THAT YOU MADE AN ERROR, IN FACT, IN YOUR BID SINCE YOUR BID PRICE WAS EXACTLY AS YOU INTENDED. MOREOVER, THIS WAS A SALE OF SURPLUS GOVERNMENT PROPERTY AND, SINCE A WIDE RANGE IN THE PRICES BID FOR SUCH PROPERTY IS USUAL AS BIDDERS GENERALLY CAN BE EXPECTED TO PLACE DIFFERENT VALUES ON SUCH MATERIALS DEPENDING UPON THEIR INDIVIDUAL NEEDS OR THEIR CHANCES OF RESALE, A MERE DIFFERENCE IN THE AMOUNT OF THE BIDS WOULD NOT NECESSARILY PLACE THE CONTRACTING OFFICER ON NOTICE OF AN ERROR AS WOULD A LIKE DIFFERENCE IN THE PRICES QUOTED ON NEW EQUIPMENT, SUPPLIES, ETC., TO BE FURNISHED THE GOVERNMENT. SEE 28 COMP. GEN. 550, 551; ALSO, UNITED STATES V. SABIN METAL ORP., 151 F.SUPP. 683, AFFIRMED 253 F. 2D 956. NEITHER DOES IT APPEAR THAT A BID OF $4,069.68, WHEN COMPARED WITH THE ESTIMATED ACQUISITION COST OF $18,720 FOR SUCH PROPERTY, WOULD BE CONSIDERED UNREASONABLE TO ANYONE WITH AUTHORITY TO ACCEPT BIDS.

CONCERNING YOUR STATEMENT THAT IT WAS IMPRACTICABLE FOR YOU TO MAKE AN INSPECTION OF THE PROPERTY AND THAT IT WAS IMPOSSIBLE FOR YOUR AGENT TO MAKE A COMPLETE INSPECTION OF THE PROPERTY PRIOR TO THE SUBMISSION OF YOUR BID, ATTENTION IS AGAIN INVITED TO CONDITION NO. 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE SALE WHICH PROVIDED THAT "IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR THE WITHDRAWAL OF A BID AFTER OPENING.' FURTHERMORE, THE LAW IS CLEAR THAT WHERE SURPLUS MATERIALS ARE OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" AND "WHERE IS" BASIS, WITHOUT A WARRANTY OR GUARANTY OF ANY KIND, AS IN THE INSTANT SALE, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUNDS THAT THE MATERIALS ARE OF AN INFERIOR QUALITY OR THAT THEY ARE SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING. SEE TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; PAXTON MITCHELL COMPANY V. THE UNITED STATES, 172 F.SUPP. 463; KRUPP V. FEDERAL HOUSING ADMINISTRATION, 185 ED. 638; AND DADOURIAN EXPORT CORPORATION V. UNITED STATES, 291 F. 2D 178 (1961).

IN THE PAXTON MITCHELL COMPANY CASE, SUPRA, IT WAS STATED THAT A BIDDER FAILS TO INSPECT AT HIS PERIL AND THAT HAD PLAINTIFF MADE AN INSPECTION BEFORE SUBMITTING ITS BID, AS IT DID AFTERWARDS, IT COULD HAVE DISCOVERED THE CONDITION OF THE PROPERTY OF WHICH IT COMPLAINED. ALSO, IN THE KRUPP CASE THE COURT, IN A SIMILAR CASE, HELD THAT THE PURCHASER WHO RELIES ON INFORMATION FURNISHED HIM BY THE GOVERNMENT AND FAILS TO INSPECT OR DOES NOT FULLY INSPECT DOES SO AT HIS OWN RISK, AND EVEN IF HE MAKES A BAD BARGAIN BECAUSE OF DEFECTS IN THE PROPERTY WHICH EVEN A REASONABLY CAREFUL INSPECTION WOULD NOT DISCLOSE, THE RISK OF LOSS STILL FAILS ON HIM; AND THAT, IF HE IS MISLED BY HIS RELIANCE ON ANY STATEMENT OF THE SELLER AS TO THE PROPERTY, THIS IS THE RISK WHEN HE KNEW OR SHOULD HAVE KNOWN HE WAS TAKING BECAUSE THE PROSPECTUS CLEARLY WARNED HIM THAT THE SALE WAS BEING MADE ON THOSE TERMS.

IN THE INSTANT CASE, THE PROPERTY WAS AVAILABLE FOR YOUR INSPECTION PRIOR TO SUBMITTING YOUR BID. THE RECORD DOES NOT INDICATE, AND YOU DO NOT ALLEGE, THAT YOU OR YOUR AGENT WERE PRECLUDED BY THE GOVERNMENT OR ANY OF ITS EMPLOYEES AT ANY TIME FROM MAKING A THOROUGH INSPECTION OF THE PROPERTY IN QUESTION. ON THE CONTRARY, YOU STATE THAT, FOR PERSONAL REASONS, YOU COULD NOT MAKE AN INSPECTION PERSONALLY, BUT HAD A MR. JOHN KELLY INSPECT THE PROPERTY PRIOR TO SUBMITTING YOUR BID. THERE IS A LETTER IN THE RECORD, SIGNED BY JOHN KELLY, IN WHICH HE STATES THAT HE WAS DIRECTED BY YOU TO INSPECT THE GENERATOR SETS FOR CONDITION ONLY AND, THEREFORE, IN INSPECTING THEM HE LOOKED AT THE "SWITCH BOARDS" BUT "DID NOT RAISE THE HOODS AS THEY LOOKED LIKE NEW.' THE RECORD SHOWS THAT EACH OF THE GENERATOR SETS HAS A HINGED METAL HOOD TO PROTECT THE INSTRUMENT PANEL AND THE OPERATING MECHANISM FROM THE ELEMENTS, AND THAT THE HOOD CAN BE RAISED EASILY FOR OPERATING PURPOSES OR FOR INSPECTION PURPOSES. HAD YOU TAKEN ADVANTAGE OF THE OPPORTUNITY TO MAKE A FULL INSPECTION OF THE GENERATOR SETS PRIOR TO SUBMITTING YOUR BID, AS YOU WERE URGED AND CAUTIONED TO DO, YOU WOULD HAVE BEEN AWARE OF THE CONDITION OF WHICH YOU NOW COMPLAIN.

FOR THE ABOVE REASONS, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT NO LEGAL BASIS EXISTS FOR RELIEVING YOU OF YOUR OBLIGATIONS UNDER SALE CONTRACT NO. N63067-5039 (ITEM NO. 236 OF SALE INVITATION NO. B-176-61 63067). ACCORDINGLY, THE SETTLEMENT OF AUGUST 21, 1961, IS SUSTAINED.