B-157206, JUL. 19, 1965

B-157206: Jul 19, 1965

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FOR RESCISSION OF THE CONTRACT AWARDED UNDER SALES INVITATION NO. 44-S-65- 96 ON THE GROUND THAT THE SURPLUS PROPERTY PURCHASED WAS NOT THAT INSPECTED AND BID UPON. ITEM 58 WAS DESCRIBED IN THE SALES INVITATION AS 67 EACH. SINCE ALERT WAS THE HIGHEST BIDDER ON THIS ITEM IN THE AMOUNT OF $1. THE CONTRACT THEREFOR WAS AWARDED TO IT ON APRIL 27. IT ALLEGED THAT THE CYLINDERS WERE JUNK OR REJECTS AND WERE NOT ACCEPTABLE FOR USE AS CONTAINERS FOR ACETONE. THAT THE ITEM IT INSPECTED WAS IN FAIR TO GOOD USABLE CONDITION. THAT THE ITEM IT INSPECTED WAS NOT THE ONE OFFERED FOR SALE. IT FURTHER APPEARS THAT THE PURCHASER WAS DIRECTED ONLY TO THE GENERAL LOCATION OF THE SALE ITEM BY A GOVERNMENT EMPLOYEE BUT WAS NOT DIRECTED TO THE PARTICULAR AREA WHERE THE SALE ITEMS WERE AVAILABLE TO THE PUBLIC FOR INSPECTION.

B-157206, JUL. 19, 1965

TO DIRECTOR, DEFENSE SUPPLY AGENCY:

BY LETTER DATED JULY 7, 1965, WITH ENCLOSURES, YOUR ASSISTANT COUNSEL FORWARDED FOR OUR CONSIDERATION THE REQUEST OF ALERT WELDING SUPPLY CO. FOR RESCISSION OF THE CONTRACT AWARDED UNDER SALES INVITATION NO. 44-S-65- 96 ON THE GROUND THAT THE SURPLUS PROPERTY PURCHASED WAS NOT THAT INSPECTED AND BID UPON.

ITEM 58 WAS DESCRIBED IN THE SALES INVITATION AS 67 EACH, ACETYLENE CYLINDERS, USED, UNPACKED, AND CONDITION "APPEARS TO BE FAIR" IN THE GOVERNMENT'S OPINION. SINCE ALERT WAS THE HIGHEST BIDDER ON THIS ITEM IN THE AMOUNT OF $1,474, THE CONTRACT THEREFOR WAS AWARDED TO IT ON APRIL 27, 1965. ON MAY 4, 1965, AFTER DELIVERY OF THE PROPERTY TO ALERT, IT ALLEGED THAT THE CYLINDERS WERE JUNK OR REJECTS AND WERE NOT ACCEPTABLE FOR USE AS CONTAINERS FOR ACETONE. THE RECORD REASONABLY ESTABLISHES THAT ALERT INSPECTED THE WRONG ITEM AT THE HOLDING ACTIVITY; THAT THE ITEM IT INSPECTED WAS IN FAIR TO GOOD USABLE CONDITION, BUT THAT THE ITEM IT INSPECTED WAS NOT THE ONE OFFERED FOR SALE. IT FURTHER APPEARS THAT THE PURCHASER WAS DIRECTED ONLY TO THE GENERAL LOCATION OF THE SALE ITEM BY A GOVERNMENT EMPLOYEE BUT WAS NOT DIRECTED TO THE PARTICULAR AREA WHERE THE SALE ITEMS WERE AVAILABLE TO THE PUBLIC FOR INSPECTION. WHILE THE HOLDING ACTIVITY DESCRIBED ITEM 58 AS ALSO BEING "CONTRACTOR'S REJECT," THE SELLING ACTIVITY DELETED THAT LANGUAGE FROM ITS DESCRIPTION OF THE ITEM.

ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS PROVIDED, IN PERTINENT PART, AS FOLLOWS:

"2. CONDITION AND LOCATION OF PROPERTY. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, ALL PROPERTY LISTED THEREIN IS OFFERED FOR SALE "AS IS" AND "WHERE IS.' IF IT IS PROVIDED THEREIN THAT THE GOVERNMENT SHALL LOAD, THEN "WHERE IS" MEANS F.O.B. CONVEYANCE AT THE POINT SPECIFIED IN THE INVITATION. THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION. HOWEVER, 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. * * *"

IN ADDITION THE INVITATION CONTAINED THE FOLLOWING SPECIAL CONDITION, HEADED "GUARANTEED DESCRIPTIONS: "

"* * * WITH THE EXCEPTION OF STATED OPINIONS AS TO THE CONDITION OF THE PROPERTY, AND NOTWITHSTANDING ANY OTHER TERMS AND CONDITIONS OF THIS INVITATION FOR BIDS TO THE CONTRARY, THE GOVERNMENT HEREBY WARRANTS AND GUARANTEES THAT THE PROPERTY TO BE DELIVERED TO THE PURCHASER UNDER ANY CONTRACT RESULTING FROM THIS INVITATION FOR BIDS WILL BE AS DESCRIBED IN THE INVITATION FOR BIDS. * * *"

THE JULY 7 LETTER TO OUR OFFICE STATES IN PART:

"IT SEEMS DOUBTFUL THAT THE BEST DESCRIPTION OF THE PROPERTY WAS USED. THE FACT THAT THE CONTRACTOR IS STILL WILLING TO TAKE THE INSPECTED CYLINDERS AT HIS BID PRICE LENDS CREDIBILITY TO HIS ALLEGATION THAT THE CYLINDERS ACTUALLY SOLD WERE UNUSABLE AND JUNK. IN THAT CASE THEY MIGHT BETTER HAVE BEEN DESCRIBED AS "POOR" RATHER THAN "FAIR.' ALSO, THE SELLING ACTIVITY DID DELETE FROM THE DESCRIPTION THE WORDS "CONTRACTOR'S REJECTS" WHICH MIGHT HAVE ALERTED THE ALERT WELDING SUPPLY COMPANY THAT THE PROPERTY OFFERED FOR SALE WAS NOT USABLE.

"IN ADDITION, THE HOLDING ACTIVITY APPEARS TO HAVE CONTRIBUTED TO THE MISIDENTIFICATION OF THE PROPERTY. WHILE ITS NORMAL PROCEDURES AND DIRECTIONS TO PROSPECTIVE BIDDERS DURING INSPECTIONS OF PROPERTY MAY BE ADEQUATE IN ORDINARY CIRCUMSTANCES, IT WOULD SEEM THAT WHERE OTHER LOTS OF LIKE DESCRIBED PROPERTY WERE STORED IN A NEARBY AREA ON THE SAME LOT, STEPS SHOULD HAVE BEEN TAKEN TO DIRECT PURCHASERS TO THE PROPERTY BEING ADVERTISED. THE EVIDENCE IS THAT THIS BUYER INSPECTED PROPERTY TO WHICH HE HAD BEEN GENERALLY DIRECTED.'

GENERALLY, WHEN GOVERNMENT SURPLUS PROPERTY IS SOLD WITH AN EXPRESS DISCLAIMER OF WARRANTY, AS PROVIDED IN THE INSTANT CASE IN ARTICLE 2, SUPRA, THE SUCCESSFUL BIDDER IS NOT ENTITLED TO A REFUND OF MONEY PAID FOR PROPERTY BECAUSE OF ANY ERRONEOUS DESCRIPTION. 41 COMP. GEN. 185. HOWEVER, IN THIS CASE, THE GOVERNMENT EXPRESSLY WARRANTED THE DESCRIPTION, AS TO KIND OR IDENTITY, SO THAT IF THE PROPERTY DELIVERED ACTUALLY CONSTITUTED CONTRACTOR'S REJECTS OR JUNK RATHER THAN USED CYLINDERS IN FAIR CONDITION, THERE WAS A BREACH OF THIS WARRANTY. FURTHERMORE, AN EXCEPTION TO THE GENERAL RULE IS RECOGNIZED WHERE IT CAN BE SHOWN THAT THE DESCRIPTION OBJECTED TO WAS NOT BASED ON THE BEST AVAILABLE INFORMATION. IN THIS REGARD, WE SAID IN OUR DECISION OF MAY 31, 1963, B-151239, TO YOUR PREDECESSOR:

"* * * WE BELIEVE THAT WHERE THE CONDITION OF SURPLUS PROPERTY IS CHANGED FROM THAT SHOWN ON THE TURN-IN DOCUMENT BY A DISPOSAL OFFICER BY REASON OF THE RECEIPT OF ADDITIONAL INFORMATION OR ON THE BASIS OF HIS OWN INSPECTION OF THE PROPERTY THE DISPOSAL OFFICER, OR SUCH OTHER PERSON AUTHORIZING THE CHANGE, OWES THE DUTY OF CAREFULLY EVALUATING ALL CIRCUMSTANCES ASSOCIATED WITH THE CONDITION OF THE PROPERTY TO INSURE THAT THE CHANGE IS BASED ON THE BEST AVAILABLE INFORMATION, AND THIS IS PARTICULARLY TRUE WHERE, AS HERE, THE CHANGE IN THE DESCRIPTION INDICATES THE PROPERTY BEING IN A BETTER CONDITION. * * *"

ACCORDINGLY, AND SINCE THE CONTRACTOR PROMPTLY ALLEGED MISDESCRIPTION OF THE GOODS PURCHASED, WE WOULD NOT OBJECT TO THE CANCELLATION OF THE CONTRACT AND A REFUND OF THE CONTRACT PRICE TO THE COMPANY UPON RETURN OF THE CYLINDERS AT GOVERNMENT EXPENSE.