B-150846, APR. 9, 1963

B-150846: Apr 9, 1963

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TO THE SECRETARY OF THE ARMY: REFERENCE IS MADE TO LETTER OF FEBRUARY 8. THE LOGS WERE DESCRIBED AS BEING STOCKPILED ALONGSIDE HILLS CREEK PROJECT POWERHOUSE ACCESS ROAD OFF WEST SIDE ROAD APPROXIMATELY 1. BIDDERS WERE INVITED TO INSPECT THE LOGS BETWEEN 8 A.M. THE INVITATION WAS AMENDED BY ADDENDUM NO. THE ADDENDUM STATED THAT "OTHER LOG PILES IN AN EASTERLY DIRECTION ARE THE PROPERTY OF A DIFFERENT AGENCY AND ARE NOT INCLUDED IN THIS OFFERING.'. BIDDERS WERE ADVISED THAT THOSE SUBMITTING BIDS MUST SIGN THE ADDENDUM ACKNOWLEDGING RECEIPT OF THE ABOVE CORRECTIONS AND ADDITIONS TO THE SPECIAL SALE TERMS AND CONDITIONS AND SUBMIT THE SIGNED ADDENDUM WITH THEIR BIDS. JONES IS DATED AUGUST 15.

B-150846, APR. 9, 1963

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO LETTER OF FEBRUARY 8, 1963, FROM THE SPECIAL ASSISTANT TO SECRETARY OF THE ARMY FOR CIVIL FUNCTIONS RELATIVE TO THE CLAIM OF EVERETT W. JONES FOR ADJUSTMENT OF THE PURCHASE PRICE PAID FOR AN ESTIMATED 170,000 FBM LOGS AT HILLS CREEK PROJECT, OAKRIDGE, OREGON, PURCHASED BY HIM UNDER CONTRACT NO. DA/S/-35-026-CIVENG-63-4, DATED AUGUST 22, 1962.

BY SALES INVITATION NO. CIVENG-35-026-S-63-2 ISSUED AUGUST 7, 1962, THE DISTRICT ENGINEER AT PORTLAND SOLICITED BIDS FOR THE SALE OF APPROXIMATELY 170,000 FBM LOGS (DOUGLAS FIR 134,000 FBM AND CEDAR 36,000 FBM), GROSS SCALE. THE LOGS WERE DESCRIBED AS BEING STOCKPILED ALONGSIDE HILLS CREEK PROJECT POWERHOUSE ACCESS ROAD OFF WEST SIDE ROAD APPROXIMATELY 1,000 FEET FROM MIDDLE FORK BRIDGE, OAKRIDGE, OREGON. BIDDERS WERE INVITED TO INSPECT THE LOGS BETWEEN 8 A.M. AND 4 P.M. MONDAY THROUGH FRIDAYS, EXCEPT HOLIDAYS, UNTIL AUGUST 20. THE INVITATION WAS AMENDED BY ADDENDUM NO. I, DATED AUGUST 13, 1962, TO SHOW A NEW LOCATION FOR THE LOGS "JUST OFF THE NEW POWERHOUSE ACCESS ROAD, APPROXIMATELY 2,000 FEET FROM THE WEST SIDE ROAD.' THE ADDENDUM STATED THAT "OTHER LOG PILES IN AN EASTERLY DIRECTION ARE THE PROPERTY OF A DIFFERENT AGENCY AND ARE NOT INCLUDED IN THIS OFFERING.' BIDDERS WERE ADVISED THAT THOSE SUBMITTING BIDS MUST SIGN THE ADDENDUM ACKNOWLEDGING RECEIPT OF THE ABOVE CORRECTIONS AND ADDITIONS TO THE SPECIAL SALE TERMS AND CONDITIONS AND SUBMIT THE SIGNED ADDENDUM WITH THEIR BIDS. WHILE THE BID SUBMITTED BY MR. JONES IS DATED AUGUST 15, 1962, THE STATEMENT OF THE CONTRACTING OFFICER AS SUPPLEMENTED BY HIS COMMENTS OF MARCH 18, 1963, SHOW THAT IT WAS ACTUALLY MAILED AT 5 P.M., AUGUST 13 AND THAT IT WAS RECEIVED IN THE OFFICE OF THE CONTRACTING OFFICER AT 8:39 A.M., AUGUST 14 OR ON THE SAME DAY SIGNS IDENTIFYING THE LOGS INCLUDED IN THE SALE WERE POSTED. ALSO, WHILE ADDENDUM NO. 1 SIGNED BY MR. JONES IS DATED AUGUST 21, 1962, THE DATE OF BID OPENING, THE RECORD SHOWS THAT ON AUGUST 17, MR. JONES STATED THAT HE HAD RECEIVED THE ADDENDUM AND THAT IT WAS RECEIVED IN THE OFFICE OF THE CONTRACTING OFFICER PRIOR TO AUGUST 21.

THE FACTS AS REPORTED BY THE CONTRACTING OFFICER AND AS DISCLOSED BY THE RECORD SHOW THAT FINAL PAYMENT WAS RECEIVED ON AUGUST 27, 1962, BUT THAT IN AN INDORSEMENT ON THE PROPERTY DISPOSITION VOUCHER SHOWING PAYMENT OF THE AMOUNT OF THE PURCHASE PRICE MR. JONES STATED THAT HE SIGNED THE VOUCHER UNDER PROTEST DUE TO A DISCREPANCY IN THE VOLUME OF THE LOGS IN RELATION TO THE AMOUNT STATED IN THE ORIGINAL ADVERTISEMENT. WHILE NO RELEASE (FORM 3061) HAD BEEN RECEIVED FROM THE PURCHASER AS OF AUGUST 30, 1962, WHEN HE ARRIVED FOR DELIVERY OF THE LOGS HE WAS PERMITTED TO START REMOVAL OF SAME. ON THE FOLLOWING DAY WHEN FORM 3061 WAS PRESENTED TO HIM FOR SIGNATURE HE REFUSED TO SIGN AND HE WAS STOPPED FROM REMOVING THE BALANCE OF THE LOGS.

THE CONTRACTING OFFICER HAS REPORTED THAT HE WAS NOT AWARE OF ANY DIFFICULTIES INCIDENT TO THE MATTER UNTIL SEPTEMBER 5, 1962, AT WHICH TIME HE CALLED THE CONTRACTOR'S ATTENTION TO THE FACT THE LOGS WERE PURCHASED ON A LOT BASIS. THE CONTRACTOR REPLIED THAT THE ERROR WAS TOO MATERIAL TO BE ACCEPTABLE. AS OF THAT TIME SIX LOADS OF LOGS HAD BEEN REMOVED OR APPROXIMATELY 30,000 FBM NET, AND ONLY FOUR LOADS REMAINED. SINCE THE CONTRACTOR HAD THE TRUCKS AND DRIVERS STANDING BY HE WAS PERMITTED TO REMOVE THE BALANCE OF THE LOGS ON CONDITION THAT HE SIGN FORM 3061 WHICH HE AGREED TO DO, SUBJECT TO THIS PROTEST OF THE QUANTITY. THEREAFTER, UPON A RECHECK OF THE LOG SCALE NOTES FURNISHING THE BASIS FOR THE ESTIMATED QUANTITY STATED IN THE ADVERTISEMENT IT WAS DISCOVERED THAT INSTEAD OF AN APPROXIMATE GROSS SCALE OF 170,000 FBM THE GROSS SCALE AGGREGATED ONLY 60,590 FBM AND THE ACTUAL LOG SCALE TICKETS FOR THE LOGS REMOVED BY THE CONTRACTOR TOTALED 48,600 FBM (DOUGLAS FIR 46,880 AND CEDAR 1720). THE CORRECTED ESTIMATED ACTUAL GROSS VOLUME OF 60,590 FBM REPRESENTS 35.6 PERCENT OF THE ADVERTISED ESTIMATED VOLUME OF 170,000 FBM AND THE CONTRACTOR HAS EXPRESSED A WILLINGNESS TO SETTLE FOR $23 PER MFBM OR ON THE BASIS OF $1,117.80 (48.6 M AT $23) FOR THE LOGS ACTUALLY REMOVED AS SHOWN BY THE LOG SCALE TICKETS.

THE PRINCIPAL QUESTION IN CASES OF THIS KIND IS WHETHER THE GOVERNMENT DID OR DID NOT WARRANT THE PROPERTY SOLD. IN THIS REGARD, THE INVITATION SPECIFICALLY STATED THAT THE BID SUBMITTED WOULD BE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH THEREIN AND THAT IT WOULD BE SUBJECT TO ,ALL THE GENERAL TERMS AND CONDITIONS (STANDARD FORM 114-C, MARCH 1960 EDITION), AND ANY SPECIAL CONDITIONS CONTAINED IN THE INVITATION, ALL OF WHICH ARE INCORPORATED AS A PART OF THIS BID.' UNDER PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CITED STANDARD FORM, TO WHICH MR. JONES AGREED WHEN HE SUBMITTED HIS BID, THE BIDDER WAS INVITED AND URGED TO INSPECT THE PROPERTY WHICH IT IS REPORTED HE DID ON SUNDAY AUGUST 12 WITHOUT ASSISTANCE OR KNOWLEDGE OF GOVERNMENT PERSONNEL. UNDER PARAGRAPH 2 THE BIDDERS WERE PUT ON NOTICE THAT THE PROPERTY WAS BEING OFFERED FOR SALE "AS IS" AND "WHERE IS" AND THAT THE DESCRIPTION WAS BASED UPON THE BEST AVAILABLE INFORMATION WITHOUT WARRANTY, EXPRESS OR IMPLIED AS TO QUANTITY, SIZE OR DESCRIPTION OF THE PROPERTY.

AS INDICATED BY THE CONTRACTING OFFICER, THE SALE IN THIS CASE WAS ON A GROSS LOT BASIS. WHILE THE RECORD SHOWS THAT SIGNS DESIGNATING THE LOG PILES OFFERED FOR SALE WERE NOT POSTED WHEN THE CONTRACTOR INSPECTED THE LOGS ON AUGUST 12, 1962, NOR ON THE DATE HIS BID WAS MAILED (AUGUST 13), AS HERETOFORE INDICATED THE RECORD DOES SHOW THAT ON AUGUST 17 HE STATED THAT HE HAD RECEIVED ADDENDUM NO. 1 AND, THEREFORE, HE CLEARLY WAS ON NOTICE THAT SOME OF THE LOG PILES, THE LOCATION OF WHICH WAS DESCRIBED IN THE ORIGINAL INVITATION, BELONGED TO A DIFFERENT AGENCY AND THAT THEY WERE "NOT" INCLUDED IN THE OFFERING. AS REQUIRED BY ADDENDUM NO. 1, MR. JONES SIGNED SAME AND THE CONTRACTING OFFICER HAS REPORTED THAT THE SIGNED COPY, ALTHOUGH DATED AUGUST 21 (THE BID OPENING DATE), WAS RECEIVED IN HIS OFFICE SOMETIME PRIOR THERETO. THEREFORE, EVEN THOUGH MR. JONES MAY HAVE FAILED TO REINSPECT THE LOGS AFTER RECEIPT OF ADDENDUM NO. 1, HE WAS ON NOTICE THAT SOME OF THE LOG PILES AS DESCRIBED IN THE ORIGINAL INVITATION BELONGED TO ANOTHER AGENCY AND WERE "NOT" INCLUDED IN THE OFFERING. IF HE WAS NOT WILLING TO ASSUME THE RISK OF THE QUANTITY OF LOGS OFFERED FOR SALE HE SHOULD NOT HAVE ALLOWED HIS BID TO STAND AFTER RECEIPT OF THE ADDENDUM WITHOUT FURTHER INSPECTION OR INQUIRY.

IN SALES OF THIS KIND WHERE THE PROPERTY IS SOLD ON THE BASIS OF AN EXPRESS DISCLAIMER OF WARRANTY, THE PARTIES AGREE THAT THE RISK AS TO THE CONDITION AND THE QUANTITY OF THE PROPERTY SOLD IS ASSUMED BY THE PURCHASER AS ONE OF THE ELEMENTS OF THE BARGAIN. SEE 36 COMP. GEN. 612; KRUPP V. FEDERAL HOUSING ADMINISTRATION, 185 F.SUPP. 638. AS STATED IN LIPSHITZ AND COHN V. UNITED STATES, 269 U.S. 90, THE MENTIONING OF QUANTITIES IN AN INVITATION FOR BIDS "CANNOT BE REGARDED AS IN THE NATURE OF A WARRANTY, BUT MERELY AN ESTIMATE OF THE PROBABLE AMOUNTS IN REFERENCE TO WHICH GOOD FAITH ONLY COULD BE REQUIRED BY THE PARTY MAKING IT.' THE PRESENT CASE, THERE IS NOTHING IN THE RECORD TO INDICATE THAT THE DISPOSAL OFFICER OR HIS AGENTS ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE TRANSACTION. ON THE CONTRARY, THE RECORD SHOWS THAT THE DESCRIPTIVE INFORMATION IN THE ADVERTISEMENT, INCLUDING QUANTITY, WAS BASED ON A GROSS SCALE MADE BY THE RESIDENT ENGINEER SHOWING THE GROSS SCALE AS SHOWN IN THE ADVERTISEMENT. IF IN SUCH CASES THE RESTRICTIVE PROVISIONS OF INVITATIONS WERE HELD TO BE INEFFECTIVE, THE GOVERNMENT WOULD BE SUBJECTED TO A FLOOD OF COMPLAINTS AND CLAIMS ARISING FROM THE SALE OF SURPLUS PROPERTY. SEE DADOURIAN EXPORT COMPANY V. UNITED STATES, 291 F.2D 178.

WHILE THE CONTRACTOR'S CLAIM HAS BEEN SUBMITTED ON THE BASIS OF A "MUTUAL MISTAKE," IT MAY BE STATED THAT SINCE THE CONTRACT CONTAINS AN EXPRESS DISCLAIMER OF WARRANTY SUCH PRINCIPLE MAY NOT BE APPLIED IN THE PRESENT CASE. TO RECOGNIZE THE "MUTUAL MISTAKE" PRINCIPLE HERE WOULD RESULT IN A PREFERENCE BEING GIVEN TO THE APPLICATION OF A GENERAL PRINCIPLE OF LAW OVER A SPECIFIC PROVISION OF THE CONTRACT, NAMELY, THE "DISCLAIMER OF WARRANTY" CLAUSE, WHICH PREVIOUSLY HAD BEEN AGREED TO BY THE PARTIES AS BEING CONTROLLING IN THE EVENT ANY QUANTITY OR OTHER DISCREPANCIES OCCURRED.

UNDER THE CIRCUMSTANCES AND HAVING REGARD FOR THE PLAIN PROVISIONS OF THE INVITATION AND THE GENERAL SALES TERMS AND CONDITIONS (STANDARD FORM 114C, MARCH 1960 EDITION) IT MUST BE CONCLUDED THAT THERE IS NO LEGAL BASIS FOR THE ADJUSTMENT AS PROPOSED BY THE CONTRACTOR.