B-153847, MAY 27, 1964

B-153847, MAY 27, 1964

TO J. BERMAN AND SONS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 23, 1964, REQUESTING REVIEW OF SETTLEMENT DATED MARCH 19, 1964, WHICH DISALLOWED YOUR CLAIM FOR $415.03 REPRESENTING A PART OF THE PRICE PAID BY YOU FOR ITEM 113 UNDER SURPLUS SALES CONTRACT NO. DSA-11-S-3406 AND CERTAIN LABOR AND TRUCKING EXPENSES.

IN RESPONSE TO INVITATION NO. 11-S-64-59, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA, PENNSYLVANIA, YOU SUBMITTED A BID DATED NOVEMBER 8, 1963, OFFERING TO PURCHASE, AMONG OTHER ITEMS, ITEM 113 AT A PRICE OF $0.0327 PER POUND, DESCRIBED AS STAINLESS STEEL SCRAP AND CONSISTING OF MINESWEEPING FLOATS. YOUR BID AS TO ITEMS 28 AND 113 WAS ACCEPTED ON NOVEMBER 12, 1963. SUBSEQUENT TO DELIVERY OF ITEM 113, YOU ALLEGED THAT SIX OF THE FLOATS WERE CONSTRUCTED OF FIBERGLASS RATHER THAN OF STAINLESS STEEL AS DESCRIBED IN THE INVITATION TO BID. YOU STATED THAT SINCE THE FLOATS WERE PACKED IN WOODEN CRATES, FOUR OF THE FLOATS WERE PLACED ON A FIRE FOR THE PURPOSE OF BURNING OFF THE CRATES AND THAT IT WAS THEN DISCOVERED THAT SUCH FLOATS WERE MADE OF FIBERGLASS.

IN YOUR LETTER REQUESTING REVIEW YOU STATE THAT YOU HAVE HAD MINESWEEPING FLOATS BEFORE ON VARIOUS STAINLESS STEEL OFFERINGS AND THAT THIS IS THE FIRST TIME THAT YOU HAVE COME ACROSS A FIBERGLAS FLOAT. IT IS YOUR CONTENTION THAT SINCE THIS MATERIAL WAS PURCHASED BY YOUR FIRM AS STAINLESS STEEL IN GOOD FAITH, THE GOVERNMENT'S DECISION IS UNFAIR, UNJUST AND DOES NOT CONFORM TO ETHICAL BUSINESS PRACTICES ON ANY LEVEL.

WHILE THE DESCRIPTION OF ITEM 113 WAS NOT COMPLETELY ACCURATE, THE SALES CONTRACTING OFFICER STATES THAT THE DESCRIPTION OF THE MATERIAL COVERED BY ITEM 113 WAS BASED ON INFORMATION FURNISHED BY THE PROPERTY DISPOSAL OFFICER. IN THAT REGARD, THE PROPERTY DISPOSAL OFFICER STATES IN HIS REPORT THAT MATERIALS ARE TURNED IN TO HIS DIVISION BY FEDERAL STOCK NUMBER ONLY; THAT THE SUPERVISOR OF THE SCRAP AND SALVAGE YARD TESTED SEVERAL OF THE MINESWEEPING FLOATS BY HITTING THEM WITH A SHARP INSTRUMENT TO DETERMINE IF THE FLOATS WERE CONSTRUCTED OF STAINLESS STEEL AND THAT THE BALANCE THEREOF WAS TESTED WITH A MAGNET AND WAS FOUND TO BE NONMAGNETIC; AND THAT SINCE STAINLESS STEEL IS NONMAGNETIC IT WAS ASSUMED THAT THE FLOATS WERE CONSTRUCTED OF THAT METAL. IT ALSO WAS STATED THAT NUMEROUS FLOATS SIMILAR TO THOSE OFFERED FOR SALE UNDER THIS INVITATION WERE SOLD BY THE ACTIVITY IN THE PAST AND THAT THIS WAS THE FIRST TIME THAT ANY WERE FOUND TO BE OF PLASTIC CONSTRUCTION. THERE IS NOTHING IN THE RECORD TO INDICATE, AND YOU DO NOT ALLEGE, THAT THE MATERIAL WAS INTENTIONALLY MISDESCRIBED IN THE BID INVITATION, OR THAT THE GOVERNMENT ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE SALE TRANSACTION. UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGATED TO ACT IN GOOD FAITH, AND THIS IT DID. SEE DEDOURIAN EXPORT CORPORATION V. UNITED STATES, 291 F.2D 178.

IN THE SETTLEMENT DATED MARCH 19, 1964, YOUR ATTENTION WAS DIRECTED TO THE GENERAL SALE TERMS AND CONDITIONS MADE A PART OF THE INVITATION FOR BIDS AND, MORE PARTICULARLY, TO PARAGRAPHS 1 AND 2 THEREOF. THOSE PARAGRAPHS PROVIDE, IN PERTINENT PART, THAT IN NO CASE WOULD FAILURE TO INSPECT CONSTITUTE GROUNDS FOR THE WITHDRAWAL OF A BID AFTER OPENING; THAT "THIS IS NOT A SALE BY SAMPLE; , AND THAT "THE GOVERNMENT MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE.'

MANY CASES INVOLVING SALES OF PUBLIC PROPERTY BY THE GOVERNMENT UNDER CONTRACTS CONTAINING AN EXPRESS DISCLAIMER OF WARRANTY CLAUSE SIMILAR TO THAT INCORPORATED IN THE SALE AGREEMENT HERE INVOLVED HAVE BEEN CONSIDERED BY THE FEDERAL COURTS. THE DECISIONS IN THOSE CASES HAVE UNIFORMLY UPHELD THE USE OF SUCH DISCLAIMER CLAUSES AND CONCLUDED THAT THE RULE OF CAVEAT EMPTOR SHOULD BE APPLIED. SEE, IN THIS CONNECTION, THE CASES OF UNITED STATES V. HATHAWAY, 242 F.2D 897; AND AMERICAN AUTO PARTS COMPANY, INC. V. UNITED STATES, CT.CL. NO. 120-57, DECIDED JUNE 7, 1963. THE COURTS HAVE ALSO HELD THAT AN EXPRESS DISCLAIMER OF WARRANTY AS USED IN SURPLUS PROPERTY SALES BY THE GOVERNMENT PRECLUDES A SUIT FOR DAMAGES ON THE THEORY OF MUTUAL MISTAKE. UNITED STATES V. HATHAWAY,SUPRA; AND AMERICAN SANITARY RAG CO. V. UNITED STATES, 142 CT.CL. 293.

IN YOUR LETTER OF MARCH 23, 1964, YOU STATE THAT ITEM 113 WAS INSPECTED BY ONE OF YOUR REPRESENTATIVES PRIOR TO THE SUBMISSION OF YOUR BID AND YOU CONTEND THAT SINCE STAINLESS STEEL IS NONMAGNETIC AND SINCE THE ITEMS THAT WERE INSPECTED LOOKED EXACTLY LIKE STAINLESS STEEL FLOATS, THERE WAS NO NECESSITY FOR YOUR REPRESENTATIVE TO MUTILATE EACH AND EVERY FLOAT TO CHECK WHETHER SUCH FLOATS WERE CONSTRUCTED OF STAINLESS STEEL. THE BIDDER'S RESPONSIBILITY IN THAT CONNECTION IS CLEARLY SET FORTH IN THE CASE OF PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHEREIN IT WAS HELD THAT, NOTWITHSTANDING THE DIFFICULTY ATTENDANT UPON AN INSPECTION, IT IS INCUMBENT UPON THE BIDDER TO MAKE THE KIND OF INSPECTION THAT IS EFFECTUAL. MOREOVER, IN A RECENT COURT OF CLAIMS CASE DEALING WITH THE IMPOSSIBILITY OF INSPECTION IN A GOVERNMENT SALE CASE OF THIS KIND, STAR WOOLEN COMPANY V. UNITED STATES, CT.CL. NO. 51-61, DATED NOVEMBER 7, 1962, THE COURT DENIED RECOVERY TO A PURCHASER OF SURPLUS GOODS FROM THE GOVERNMENT FOR INFERIOR GOODS RECEIVED ON THE BASIS THAT EVEN IF THE GOVERNMENT HAD FAILED TO DO ALL IT WAS SUPPOSED TO DO TO MAKE ALL OF THE CRATES OF GOODS AVAILABLE FOR INSPECTION, THE PURCHASER WAIVED SUCH FAILURE BY THE SUBMISSION OF ITS BID.

IN CONNECTION WITH YOUR STATEMENT THAT OUR DECISION IS UNFAIR, YOU ARE ADVISED THAT WHILE INDIVIDUALS MAY RECOGNIZE MORAL OR EQUITABLE OBLIGATIONS AND SURRENDER THEIR RIGHTS, OFFICIALS REPRESENTING THE GOVERNMENT DO NOT HAVE THAT FREEDOM OF ACTION. CLAIMS AGAINST THE GOVERNMENT ARE REQUIRED TO BE ADJUSTED AND SETTLED IN ACCORDANCE WITH THE FACTS IN THE CASE AND THE LAW APPLICABLE THERETO. WE REALIZE THAT THE RESULT IN THIS TYPE OF CASE IS SOMETIMES HARSH, BUT IN VIEW OF THE LEGAL PRINCIPLES APPLICABLE, AS OUTLINED ABOVE, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT NO LEGAL BASIS EXISTS FOR AUTHORIZING PAYMENT OF ANY PART OF YOUR CLAIM. ACCORDINGLY, THE SETTLEMENT WHICH DISALLOWED YOUR CLAIM IS SUSTAINED.