B-152933, JAN. 3, 1964

B-152933: Jan 3, 1964

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TO THE JACOBS COMPANY: REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 13. THE RECORD SHOWS THAT ITEM 19 WAS ADVERTISED AS ONE LOT OF PRATT AND WHITNEY AIRCRAFT RECIPROCATING ENGINE PARTS. INCLUDED THEREIN WERE 305 VALVE TAPPET ASSEMBLIES. 7 GEARS AND 3224 PISTON RINGS IN WHICH YOU APPEAR TO HAVE HAD PARTICULAR INTEREST. THE CONDITION OF THE MATERIAL CONTAINED IN ITEM 19 WAS DESCRIBED AS UNUSED-GOOD. 493.33) FOR ITEM 19 WAS SUBMITTED BY YOUR COMPANY AND AWARD WAS MADE TO IT BY LETTER DATED MAY 14. 677 WERE ALSO RECEIVED ON THAT ITEM. YOU WERE AUTHORIZED TO PICK UP THE PROPERTY UNDER THE CONTRACT. LEWIS OF SOUTHWEST AIRCRAFT SUPPLY COMPANY WAS AT THE NAVAL AIR STATION. TO PICK UP THE SUBJECT ITEM AND THAT THE REPRESENTATIVE HAD INFORMED YOU THAT THE MATERIAL WAS "ALL RUSTED AND CANNOT BE USED.'.

B-152933, JAN. 3, 1964

TO THE JACOBS COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 13, 1963, AND ENCLOSURE, REQUESTING REVIEW OF SETTLEMENT DATED NOVEMBER 6, 1963, DISALLOWING YOUR CLAIM FOR REFUND OF $4,493.33 REPRESENTING THE PURCHASE PRICE PAID BY YOU TO THE GOVERNMENT FOR CERTAIN SURPLUS PROPERTY SOLD UNDER ITEM 19 OF INVITATION TO BID NO. 46-S-63-77, DATED APRIL 17, 1963, CONTRACT NO. DSA- 46-S-1451, BY THE DEFENSE SURPLUS SALES OFFICE, DEFENSE LOGISTICS SERVICES CENTER, SAN DIEGO, CALIFORNIA.

THE RECORD SHOWS THAT ITEM 19 WAS ADVERTISED AS ONE LOT OF PRATT AND WHITNEY AIRCRAFT RECIPROCATING ENGINE PARTS, VARIOUS MODELS AND TYPES, WITH INDIVIDUAL LISTING OF THE PARTS COMPRISING THE LOT AND THE ESTIMATED QUANTITY OF EACH. INCLUDED THEREIN WERE 305 VALVE TAPPET ASSEMBLIES, 7 GEARS AND 3224 PISTON RINGS IN WHICH YOU APPEAR TO HAVE HAD PARTICULAR INTEREST. THE CONDITION OF THE MATERIAL CONTAINED IN ITEM 19 WAS DESCRIBED AS UNUSED-GOOD.

THE HIGH BID ($4,493.33) FOR ITEM 19 WAS SUBMITTED BY YOUR COMPANY AND AWARD WAS MADE TO IT BY LETTER DATED MAY 14, 1963. FIFTEEN OTHER BIDS, RANGING FROM $179.77 TO $2,677 WERE ALSO RECEIVED ON THAT ITEM. UPON PAYMENT IN FULL OF THE BALANCE OF THE PURCHASE PRICE, YOU WERE AUTHORIZED TO PICK UP THE PROPERTY UNDER THE CONTRACT. ON MAY 29, 1963, YOU CONTACTED THE DEFENSE SURPLUS SALES OFFICE IN SAN DIEGO BY TELEPHONE AND ADVISED THAT YOUR REPRESENTATIVE, MR. LEWIS OF SOUTHWEST AIRCRAFT SUPPLY COMPANY WAS AT THE NAVAL AIR STATION, NORTH ISLAND, SAN DIEGO, TO PICK UP THE SUBJECT ITEM AND THAT THE REPRESENTATIVE HAD INFORMED YOU THAT THE MATERIAL WAS "ALL RUSTED AND CANNOT BE USED.' FURTHER, THAT YOU WOULD NOT ACCEPT THE MATERIAL AND WOULD FILE A CLAIM FOR REFUND OF THE PURCHASE PRICE ON THE BASIS THAT THE CONDITION OF ITEM 19 WAS INCORRECTLY ADVERTISED AS UNUSED AND GOOD. YOUR TELEPHONE CALL WAS CONFIRMED BY LETTER DATED JUNE 11, 1963, IN WHICH YOU STATED THAT YOU DID NOT INSPECT THE MATERIAL BEFORE BIDDING MAINLY BECAUSE OF THE DISTANCE FROM DALLAS TO SAN DIEGO AND AS IT HAD BEEN YOUR PAST EXPERIENCE AT NORFOLK AND PENSACOLA THAT NAVY DESCRIPTIONS OF ITEMS WERE ALWAYS AS STATED IN THE INVITATIONS.

AN INSPECTION OF THE MATERIAL SOLD AS ITEM 19 CONFIRMED THAT IT WAS WEATHERED AND RUSTED TO VARYING DEGREES AND AN INVESTIGATION WAS MADE BY THE CONTRACTING OFFICE AS TO THE CIRCUMSTANCES INVOLVED. IT WAS ASCERTAINED THAT THE CONDITION DESCRIPTION (UNUSED-GOOD) WAS MADE PURSUANT TO A PERSONAL INSPECTION OF SAMPLE OPENINGS BY THE PROPERTY DISPOSAL OFFICER IN DECEMBER 1962 AT THE TIME OF PREPARING THE PROPERTY FOR SALE. NO RUST WAS VISIBLE ON THE PARTS AND THEY WERE THEN IN GOOD CONDITION AS DESCRIBED IN THE INVITATION. IT IS REPORTED THAT COVERED STORAGE WAS NOT AVAILABLE AT THE DISPOSAL ACTIVITY AND THE MATERIAL, OF NECESSITY, WAS STORED IN THE OUTSIDE SALES AREA UNTIL THE BID OPENING DATE SCHEDULED FOR MAY 7, 1963. IT IS FURTHER REPORTED, AS SUGGESTED BY YOU, THAT THE WEATHERED AND RUSTED CONDITION OF THE PARTS WAS OCCASIONED BY AND OCCURRED DURING SUCH OUTSIDE STORAGE IN WEATHER INVOLVING RAIN, FOG AND SALT AIR FROM DECEMBER 1962 TO APRIL 17, 1963, THE DATE ON WHICH INSPECTION BY PROSPECTIVE BIDDERS BEGAN. THE RUSTY CONDITION OF THE PARTS DURING THE INSPECTION PERIOD IS ALSO EVIDENCED BY STATEMENTS FURNISHED BY OTHER BIDDERS WHO MADE ACTUAL INSPECTION OF THE PROPERTY AT THAT TIME.

YOU STATE THAT YOU ARE AWARE OF THE STANDARD PROVISIONS OF THE INVITATION URGING PROSPECTIVE BIDDERS TO INSPECT THE PROPERTY WHICH IS OFFERED SOLELY ON AN "AS IS" AND "WHERE IS" BASIS (PARAGRAPH 2) AND YOU URGE THAT THE GOVERNMENT SHOULD NOT ADHERE TO THOSE CONDITIONS IN YOUR CASE INASMUCH AS YOU HAD NO REASON TO BELIEVE THE MATERIAL WOULD BE OTHER THAN AS DESCRIBED. ALSO, THAT HAD YOU TRAVELED TO SAN DIEGO THERE WOULD HAVE BEEN ADDITIONAL EXPENSES PLUS YOUR ABSENCE FROM DALLAS TO ADD TO THE ORIGINAL COST.

IT IS PRECISELY BECAUSE OF THE POSSIBILITY THAT A PROPERTY DESCRIPTION AS SET FORTH IN AN INVITATION MAY NOT ACCURATELY DESCRIBE THE MATERIAL OFFERED FOR SALE THAT THE GOVERNMENT DISCLAIMS RESPONSIBILITY THEREFOR BY THE CLEAR TERMS OF THE INVITATION AND URGES BIDDERS TO INSPECT THE PROPERTY ON WHICH THEY WISH TO BID. OTHERWISE, THE GOVERNMENT WOULD BE SUBJECTED TO A FLOOD OF COMPLAINTS AND CLAIMS ARISING FROM SALES OF SURPLUS PROPERTY. THE FACT THAT YOU DID NOT CONSIDER THE EXPENSE OF INSPECTION JUSTIFIED IN YOUR PARTICULAR CASE WAS A MATTER OF YOUR PERSONAL DECISION AND CANNOT CHANGE THE LEGAL CONSEQUENCES OF NON-INSPECTION. CONSTRUING LANGUAGE SIMILAR TO THAT CONTAINED IN PARAGRAPH 2 OF THE INVITATION IT HAS CONSISTENTLY BEEN HELD BY THE COURTS THAT SUCH A CONTRACT PROVISION CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY, AND THAT, WHILE ORDINARILY THERE IS AN IMPLIED WARRANTY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION, WHERE THERE EXISTS AN EXPRESS DISCLAIMER OF WARRANTY--- AS IN THE INSTANT CASE--- NO SUCH WARRANTY MAY BE IMPLIED FROM THE ADVERTISED DESCRIPTION OF THE PROPERTY SOLD. SEE W. E. HEDGER COMPANY V. UNITED STATES, 52 F. 2D 31, CERTIORARI DENIED, 284 U.S. 676; UNITED STATES V. KELLY, 112 F.SUPP. 831; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; I. SHAPIRO AND COMPANY V. UNITED STATES, 66 CT.CL. 424, 428; AND SILBERSTEIN AND SON V. UNITED STATES, 69 CT.CL. 412. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH A DISCLAIMER PROVISION IN THE ABSENCE OF BAD FAITH OR FRAUD, BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER.

THERE IS NOTHING IN THE RECORD TO INDICATE THAT THE GOVERNMENT AGENTS ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE SALES TRANSACTION. THE CONDITION OF THE PARTS WAS CORRECTLY DESCRIBED AS THEY WERE WHEN THEY WERE PREPARED FOR SALES ACTION AND NO RESPONSIBILITY ATTACHED TO THE GOVERNMENT TO INSURE THAT THE PROPERTY REMAINED IN THAT CONDITION UNTIL THE TIME SPECIFIED FOR SALE. IT WAS CLEARLY UP TO YOU TO ASCERTAIN BY INSPECTION TO WHAT EXTENT THEY MAY HAVE BEEN DAMAGED SUBSEQUENT TO THE CATALOGUING AND PRIOR TO YOUR BID. UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGED TO ACT IN GOOD FAITH AND THIS IT DID. SEE LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, 92; AND LUMBRAZO V. WOODRUFF, 175 N.E. 525; UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683. ALSO, IN AMERICAN SANITARY RAG CO. V. UNITED STATES, 161 F.SUPP. 414, INVOLVING A SALE OF SURPLUS PROPERTY, THE COURT HELD THAT THE RISK AS TO THE ACTUAL CONDITION OF THE PROPERTY WAS PLACED SQUARELY UPON THE PURCHASER. THE BIDDER'S RESPONSIBILITIES IN THE MATTER OF INSPECTION APPEAR TO BE CLEARLY SET FORTH IN PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHERE IT WAS STATED THAT A BIDDER FAILS TO INSPECT AT HIS PERIL AND THAT HAD THE PLAINTIFF MADE AN INSPECTION BEFORE SUBMITTING ITS BID IT COULD HAVE DISCOVERED THE CONDITION OF THE PROPERTY.

INASMUCH AS YOU FAILED TO INSPECT THE PROPERTY COVERED BY ITEM 19 BUT INSTEAD RELIED ON THE ADVERTISED DESCRIPTION THE RATIONALE OF THE ABOVE CASES IS FOR APPLICATION.