B-150181, DEC. 18, 1962

B-150181: Dec 18, 1962

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INC.: REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16. THE SUBJECT INVITATION WAS ISSUED ANNOUNCING A NATION-WIDE TELEPHONE AUCTION SALE OF GOVERNMENT PROPERTY TO BE HELD ON MARCH 14. ITEM 233 ON PAGE 77 OF THE INVITATION WAS DESCRIBED AS FOLLOWS: CHART. 100 WAS SUBMITTED BY YOUR FIRM AND ON MARCH 16. THERE WAS ISSUED TO YOUR FIRM A NOTICE OF AWARD AND STATEMENT. EXTERNAL CYLINDRICAL GRINDER AND THAT THE GRINDER TENDERED FOR DELIVERY TO YOU IS NEITHER THE UNIVERSAL-TYPE. THAT THE MACHINE TENDERED TO YOU IS A VERY SPECIAL SURFACE GRINDER. WHICH WAS RECEIVED FROM CINCINNATI MILLING AND GRINDING MACHINES. THE LETTER FROM THE MANUFACTURER STATES THAT THE MACHINE BEARING SERIAL NUMBER 2U3F5A-3 IS A SPECIAL 12 INCH BY 72 INCH UNIVERSAL HYDRAULIC GRINDING MACHINE FROM WHICH CERTAIN STANDARD PARTS HAD BEEN OMITTED.

B-150181, DEC. 18, 1962

TO ALEX ZEEVE AND COMPANY, INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 16, 1962, REQUESTING REVIEW OF SETTLEMENT DATED OCTOBER 4, 1962, WHICH DISALLOWED YOUR CLAIM FOR $620, ALLEGED TO BE DUE AS A REFUND OF THE AMOUNT PAID AS A DEPOSIT ON A GRINDING MACHINE PURCHASED BY YOU FROM THE DEFENSE SURPLUS SALES AGENCY, OGDEN, UTAH, UNDER SALES CONTRACT NO. N63118S 55233, RESULTING FROM THE PACIFIC INTERMOUNTAIN AUDIO AUCTION COVERED BY INVITATION B-62-62-63070.

THE SUBJECT INVITATION WAS ISSUED ANNOUNCING A NATION-WIDE TELEPHONE AUCTION SALE OF GOVERNMENT PROPERTY TO BE HELD ON MARCH 14, 1962. ITEM 233 ON PAGE 77 OF THE INVITATION WAS DESCRIBED AS FOLLOWS:

CHART.

"GRINDING MACHINE, EXTERNAL CYLINDER. MFR. BY CINCINNATI

MILLING AND GRINDING MACHINE CO. MODEL ER, SERIAL NO. 2U3F5A-3,

USW NO. 236-141599. YEAR 1953. UNIVERSAL TYPE, 12 INCH SWING,

72 INCH CENTER TO CENTER, DIRECT DRIVE; 2 MOTORS - AC, 60 CYCLES,

220/440 VOLTS, 1 HP, 3 PHASE; ONE MOTOR 1160 RPM AND THE OTHER

3400 RPM.

"ESTIMATED WEIGHT 8,000 LBS., 840 CU.FT. NOT PACKED FOR

SHIPMENT.

"CONDITION: USED

"ACQ. COST $19,505.00 1 EACH"

THE HIGH BID ON ITEM 233 IN AMOUNT OF $3,100 WAS SUBMITTED BY YOUR FIRM AND ON MARCH 16, 1962, THERE WAS ISSUED TO YOUR FIRM A NOTICE OF AWARD AND STATEMENT.

THE RECORD INDICATES THAT ON MARCH 16, 1962, A REPRESENTATIVE OF YOUR FIRM TELEPHONED THE CONTRACTING OFFICER TO REQUEST THAT ITEM 233 OF THE CONTRACT BE CANCELED FOR THE REASON THAT THE MACHINE COVERED BY THAT ITEM HAD BEEN GROSSLY MISDESCRIBED IN THE INVITATION.

IN A LETTER DATED MARCH 26, 1962, TO THE CONTRACTING OFFICER, YOU STATED THAT THE INVITATION DESCRIBED ITEM 233 AS A UNIVERSAL-TYPE, EXTERNAL CYLINDRICAL GRINDER AND THAT THE GRINDER TENDERED FOR DELIVERY TO YOU IS NEITHER THE UNIVERSAL-TYPE, EXTERNAL NOR CYLINDRICAL; AND THAT THE MACHINE TENDERED TO YOU IS A VERY SPECIAL SURFACE GRINDER. WITH YOUR LETTER YOU SUBMITTED A LETTER DATED MARCH 23, 1962, WHICH WAS RECEIVED FROM CINCINNATI MILLING AND GRINDING MACHINES, INC., THE MANUFACTURER OF THE MACHINE IN QUESTION. THE LETTER FROM THE MANUFACTURER STATES THAT THE MACHINE BEARING SERIAL NUMBER 2U3F5A-3 IS A SPECIAL 12 INCH BY 72 INCH UNIVERSAL HYDRAULIC GRINDING MACHINE FROM WHICH CERTAIN STANDARD PARTS HAD BEEN OMITTED. BY LETTER DATED AUGUST 21, 1962, THE CONTRACTING OFFICER ADVISED YOUR FIRM THAT YOUR REQUEST FOR CANCELLATION OF ITEM 233 WOULD BE FORWARDED THROUGH HIGHER AUTHORITY TO THE COMPTROLLER GENERAL OF THE UNITED STATES FOR CONSIDERATION. YOUR CLAIM WAS TRANSMITTED TO THIS OFFICE BY THE DEFENSE SUPPLY AGENCY FOR DIRECT SETTLEMENT AND WAS DISALLOWED BY THE SETTLEMENT OF OCTOBER 4, 1962, FOR THE REASONS SET OUT THEREIN.

IN YOUR LETTER REQUESTING REVIEW YOU STATE THAT YOU ARE ASSUMING THAT THE SETTLEMENT OF OCTOBER 4, 1962, IS TO BE DEEMED THE CONTRACTING OFFICER'S DECISION IN THE MATTER AND THAT IF SUCH ASSUMPTION IS CORRECT YOU WISH TO APPEAL TO THE SECRETARY PURSUANT TO THE PROVISIONS OF THE DISPUTED ARTICLE, PARAGRAPH 15 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT. OUR SETTLEMENT OF OCTOBER 4, 1962, HOWEVER, MAY NOT BE CONSIDERED AS THE CONTRACTING OFFICER'S DECISION IN THE MATTER. YOU CONTEND THAT THE GRINDING MACHINE COVERED BY ITEM 233 WAS GROSSLY MISDESCRIBED IN THE INVITATION. IN HIS REPORT THE CONTRACTING OFFICER STATES THAT THE MACHINE COVERED BY ITEM 233 WAS ERRONEOUSLY DESCRIBED IN THE INVITATION. IN VIEW OF THE FOREGOING STATEMENT BY THE CONTRACTING OFFICER THERE DOES NOT EXIST A DISPUTED QUESTION OF FACT PROPERLY FOR SETTLEMENT AS A DISPUTE UNDER PARAGRAPH 15 OF THE GENERAL SALES TERMS AND CONDITIONS PURSUANT TO WHICH THE CONTRACTING OFFICER IS REQUIRED TO DECIDE SUCH MATTERS AND TO FURNISH A COPY OF THE WRITTEN DECISION TO THE CONTRACTOR WHO MAY THEN EXERCISE THE RIGHT OF APPEAL.

THE USUAL CLAIM ARISING OUT OF A SURPLUS SALE PRESENTS PRIMARILY THE LEGAL QUESTION WHETHER, IN VIEW OF THE EXPRESS DISCLAIMER OF WARRANTY BY THE GOVERNMENT, THE GOODS SOLD SUFFICIENTLY APPROXIMATED THE KIND DESCRIBED IN THE INVITATION TO PERMIT THE FORMATION OF A VALID CONTRACT OF SALE.

THE RECORD SHOWS THAT YOU DID NOT INSPECT THE MACHINE COVERED BY ITEM 233 BEFORE SUBMITTING A BID THEREON. YOU CONTEND THAT THE PURCHASER'S WAIVER OF RIGHT TO INSPECT AND THE GOVERNMENT'S PROVISION FOR ITS SALE "AS IS" DO NOT AND CANNOT PERMIT THE PURCHASER TO BE FORCED TO ACCEPT AN UTTERLY DIFFERENT KIND AND TYPE OF ITEM FROM THE ONE DESCRIBED IN THE INVITATION; THAT INSPECTION IS NOT COMPULSORY AND THAT THE PURCHASER HAS A PERFECT RIGHT TO WAIVE INSPECTION AND TO BE PERFECTLY WILLING TO ACCEPT THE ITEM DESCRIBED "AS IS" IN NO MATTER HOW POOR A CONDITION IT MAY BE BUT THAT THE SITUATION IS NOT THE SAME AS THE INVITATION DESCRIBING ONE ITEM AND THEN THE PURCHASER RECEIVING A WHOLLY DIFFERENT ITEM.

WHILE IT IS TRUE, OF COURSE, THAT YOU ARE UNDER NO OBLIGATION EITHER TO INSPECT THE PROPERTY OR TO BID ON IT, YOUR BID AND THE SALE, NEVERTHELESS, WERE SUBJECT TO THE PROVISIONS OF THE GENERAL SALE TERMS AND CONDITIONS. THE PROPERTY AT THE AUCTION WAS OFFERED FOR SALE ON AN "AS IS" AND ,WHERE IS" BASIS AND PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION URGED BIDDERS TO INSPECT THE PROPERTY BEFORE BIDDING THEREON. PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS STATED THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION BUT THAT THE GOVERNMENT DISCLAIMED ALL WARRANTIES, EXPRESS OR IMPLIED, AS TO QUALITY, QUANTITY, KIND, CHARACTER, WEIGHT, SIZE, OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE.

THE COURTS HAVE DRAWN A DISTINCTION BETWEEN A SALE OF GOVERNMENT SURPLUS PROPERTY AND AN ORDINARY SALE OF SOME VALUABLE COMMODITY. KRUPP V. FEDERAL HOUSING ADMINISTRATION, 185 F.SUPP. 638. IN DISPOSING OF SURPLUS PROPERTY THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE. AS WAS NOTED BY ONE COURT IN A RECENT CASE, WHEN THE GOVERNMENT SELLS SURPLUS GOODS IT IS TRYING TO DISPOSE OF A VAST MISCELLANY OF USED AND UNUSED PROPERTY IN AN EFFORT, SO FAR AS POSSIBLE, TO MINIMIZE ITS LOSS. SURPLUS SALES ARE PROCESSED ON A MASS QUANTITY BASIS BY GOVERNMENT PERSONNEL WHO SELDOM IF EVER HAVE ANY EXPERTISE IN THE PARTICULAR ITEMS WHICH COME TO THEIR WAREHOUSES AND DEPOTS. BUYERS OF SUCH SURPLUS PROPERTY KNOW THAT THERE IS ALWAYS THE CHANCE OF BUYING PROPERTY THAT MAY TURN OUT TO BE OF LITTLE VALUE, OR MAY DEVELOP INTO A GREAT BARGAIN WITH A HUGE WINDFALL OF PROFIT. ACCORDINGLY, THE GOVERNMENT VERY PROPERLY PROTECTS ITSELF BY FORMULATING ITS CONTRACTS SO AS TO SHIFT THE RISK FROM ITSELF TO THE BUYER. DADOURIAN EXPORT CORPORATION V. UNITED STATES, 291 F.2D 178, 182.

WHEN A GOVERNMENT AGENCY DISPOSING OF SURPLUS PROPERTY MAKES IT CLEAR, AS IN THE PRESENT CASE, THAT IT IS MAKING THE SALE ONLY ON THE BASIS THAT IT IS MAKING NO WARRANTY OR REPRESENTATION AS TO THE PROPERTY, THAT THE PROPERTY IS BEING SOLD ON AN "AS IS" AND "WHERE IS" BASIS, AND THAT THE PURCHASER IS TO TAKE THE PROPERTY AT HIS OWN RISK, WITH DUE OPPORTUNITY FOR INSPECTION BEING AFFORDED HIM, SUCH A CONTRACT IS STRICTLY INTERPRETED IN FAVOR OF THE GOVERNMENT. KRUPP V. FEDERAL HOUSING ADMINISTRATION, SUPRA. WHEN SURPLUS PROPERTY IS SOLD ON THESE TERMS, THERE IS NO IMPLIED WARRANTY THAT THE DESCRIPTION GIVEN IS CORRECT AND THE SUCCESSFUL BIDDER CANNOT ESCAPE LIABILITY UNDER A CONTRACT, NOR IS HE ENTITLED TO REFUND OF MONEY PAID FOR PROPERTY, BECAUSE IT DOES NOT FULLY ANSWER THE DESCRIPTION GIVEN. LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; MOTTRAM V. UNITED STATES, 271 U.S. 15; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; AND YANKEE EXPORT AND TRADING CO. V. UNITED STATES, 72 CT.CL. 258. MOREOVER, IT IS GENERALLY HELD THAT IN THE ABSENCE OF GUILTY KNOWLEDGE ON THE SELLER'S PART, INSPECTION OR AN OPPORTUNITY FOR IT PRECLUDES THE EXISTENCE OF ANY IMPLIED WARRANTY. GILLETTE V. KELLING NUT CO., 185 F.2D 294.

THERE IS NO INDICATION IN THE RECORD BEFORE US THAT THE INCORRECT DESCRIPTION OF THE GRINDER IN THE INVITATION FOR BIDS BROCHURE WAS A RESULT OF BAD FAITH ON THE PART OF THE OFFICIALS DRAWING THE INVITATION, NOR IS BAD FAITH ALLEGED.

NOR DO WE THINK THAT THE DISCREPANCY BETWEEN THE DESCRIPTION IN THE INVITATION AND THE GRINDER ACTUALLY TENDERED BY THE GOVERNMENT SO GREAT THAT IT AMOUNTS TO WHAT WAS STATED IN STANDARD MAGNESIUM CORPORATION V. UNITED STATES, 241 F.2D 677, AS A "RIDICULOUS DISCREPANCY" OR AS A "CASE OF ORDERING APPLES AND GETTING ORANGES.' THE GRINDER TENDERED BY THE GOVERNMENT, ALTHOUGH NOT A UNIVERSAL-TYPE, EXTERNAL CYLINDRICAL WAS NEVERTHELESS A GRINDER. IT CANNOT BE SAID THAT THE DIFFERENCE BETWEEN THE GRINDER DESCRIBED IN THE INVITATION AND THE GRINDER TENDERED FOR DELIVERY BY THE GOVERNMENT PRESENTS A GREATER DISPARITY THAN THAT PRESENTED IN THE DADOURIAN EXPORT CORPORATION CASE, SUPRA. THERE THE GOVERNMENT SOLD SHIPPING NETS ADVERTISED AS CARGO NETS MADE OF MANILA ROPE BUT WHICH WERE IN FACT SAVE ALL NETS ONLY PART OF WHICH WERE MADE OF MANILA ROPE. THE COURT DENIED RELIEF TO THE PURCHASER HOLDING THAT THE WORD "MANILA" WAS MERELY DESCRIPTIVE WHICH COULD NOT BE RELIED UPON BY PROSPECTIVE BIDDERS IN VIEW OF THE EXPRESS DISCLAIMER OF WARRANTY CLAUSE IN THE INVITATION.

THE FACTS IN YOUR CASE ARE SIMILAR TO THOSE CONSIDERED IN OUR DECISION B- 145702, SEPTEMBER 7, 1961, REPORTED IN 41 COMP. GEN. 185. IN THAT DECISION WE HELD AS FOLLOWS (QUOTING THE SYLLABUS):

"THE DISCREPANCY BETWEEN A GRINDING MACHINE DESCRIBED AS A CYLINDRICAL, TRAVELING TABLE TYPE, UNIVERSAL MACHINE IN A SURPLUS SALES INVITATION CONTAINING AN EXPRESS DISCLAIMER OF WARRANTY CLAUSE AND CAUTIONING BIDDERS TO INSPECT THE PROPERTY PRIOR TO SUBMISSION OF BIDS AND THE CHUCKING GRINDER TENDERED BY THE GOVERNMENT WHICH WAS NOT A TRAVELING TABLE TYPE AND HAD A LESSER CAPACITY AND A MORE RESTRICTED APPLICATION IS NOT SO GREAT AS TO AMOUNT TO A "RIDICULOUS DISCREPANCY" ENTITLING A PURCHASER TO RELIEF SO THAT A PURCHASER WHO FAILED TO INSPECT THE PROPERTY MUST BE HELD TO HAVE ASSUMED THE RISK THAT THE PROPERTY TENDERED FOR DELIVERY MIGHT NOT BE THE EXACT PROPERTY DESCRIBED IN THE INVITATION AND, THEREFORE, THE CONTRACT MAY NOT BE RESCINDED NOR MAY AN AMOUNT LESS THAN THE BID PRICE BE ACCEPTED IN FINAL SETTLEMENT.'

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR GRANTING YOU ANY RELIEF AND OUR CLAIMS DIVISION SETTLEMENT OF OCTOBER 4, 1962, IS, AND MUST BE, SUSTAINED.