B-157250, OCT. 11, 1965

B-157250, OCT. 11, 1965

TO DIVERSIFIED METALS CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS OF JUNE 29 AND SEPTEMBER 2, 1965, REQUESTING RECONSIDERATION OF A SETTLEMENT CERTIFICATE ISSUED BY THE CLAIMS DIVISION OF OUR OFFICE ON MAY 18, 1965, DISALLOWING YOUR CLAIM FOR ADJUSTMENT OF THE PRICE OF BRASS SCRAP PURCHASED BY YOU UNDER INVITATION FOR BIDS NO. 31-S-65-19, SEALED BID SALE, ISSUED SEPTEMBER 22, 1964, BY THE DEFENSE SURPLUS SALES OFFICE (DSSO), MEMPHIS, TENNESSEE. THE AMOUNT CLAIMED ALLEGEDLY REPRESENTS THE EXPENSE INCURRED BY YOU IN SEPARATING CERTAIN CONTAMINATING STEEL FROM THE BRASS.

THE PROPERTY IN QUESTION, LOCATED AT FORT LEONARD WOOD, MISSOURI, AND DESIGNATED AS ITEM NO. 47, WAS DESCRIBED IN THE SALE INVITATION AS FOLLOWS:

"47 BRASS SCRAP

FIRED 7.62 MM CARTRIDGE CASES. MATERIAL IS STORED IN 55 GALLON DRUMS. CONTAINERS ARE TO REMAIN THE PROPERTY OF THE GOVERNMENT.

UNPACKED - OUTSIDE STORAGE ETGW: 400,000 LBS

SEE ARTICLE V"

ARTICLE V OF THE SPECIAL CONDITIONS OF THE INVITATION PROVIDES:

"ARTICLE V: DANGEROUS PROPERTY. ITEMS 6, 11, 26, 33, 34, 36, 44, 47, AND 48. PURCHASERS OF THIS PROPERTY ARE WARNED THAT THE MATERIAL PURCHASED MAY CONTAIN ITEMS OF AN EXPLOSIVE, TOXIC OR INFLAMMABLE NATURE, NOTWITHSTANDING THE CARE EXERCISED BY THE GOVERNMENT TO REMOVE THEM OR RENDER THE MATERIAL HARMLESS. THE GOVERNMENT ASSUMES NO LIABILITY FOR DAMAGES TO THE PROPERTY OF THE PURCHASER, OR FOR PERSONAL INJURIES, OR DISABILITIES TO THE PURCHASER OR THE PURCHASER'S EMPLOYEES, OR TO ANY OTHER PERSON, ARISING FROM OR INCIDENT TO THE PURCHASE OF THIS MATERIAL, OR ITS USE OR DISPOSITION BY THE PURCHASER. THE PURCHASER SHALL SAVE THE GOVERNMENT HARMLESS FROM ANY AND ALL SUCH CLAIMS.'

PARAGRAPH 1 AND 2 OF THE "GENERAL SALE TERMS AND CONDITIONS" OF THE INVITATION READ AS FOLLOWS:

"1. INSPECTION. THE BIDDER IS INVITED, URGED, AND CAUTIONED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING A BID. PROPERTY WILL BE AVAILABLE FOR INSPECTION AT THE PLACES AND TIMES SPECIFIED IN THE INVITATION. IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR THE WITHDRAWAL OF A BID AFTER OPENING.

"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 PURPOSES. EXCEPT AS PROVIDED IN CONDITIONS NO. 8 AND 10, NO REQUEST FOR ADJUSTMENT IN PRICE OR FOR RESCISSION OF THE SALE WILL BE CONSIDERED. THIS IS NOT A SALE BY SAMPLE.'

IN ADDITION, ON PAGE 6 OF THE INVITATION, UNDER "GENERAL INFORMATION AND INSTRUCTION," THE FOLLOWING PERTINENT LANGUAGE APPEARS:

"NO GUARANTEED DESCRIPTIONS: THE BIDDERS ARE CAUTIONED THAT THE PROPERTY BEING OFFERED FOR SALE UNDER THIS INVITATION FOR BID IS SOLD "AS IS," "WHERE IS," WITH NO WARRANTY EXPRESSED OR IMPLIED AS TO QUANTITY, KIND, CHARACTER, QUALITY, WEIGHT, SIZE, OR DESCRIPTION. THE SPECIAL CONDITION ENTITLED "GUARANTEED DESCRIPTION" BEING USED BY CERTAIN DEFENSE SURPLUS SALES OFFICES IS NOT PART OF THIS INVITATION FOR BID.'

ON PAGE 9 OF THE INVITATION, BIDDERS WERE INFORMED THAT INSPECTION OF THE PROPERTY WAS INVITED, UPON ARRANGEMENT WITH THE APPROPRIATE DISPOSAL ACTIVITY, BETWEEN THE HOURS OF 9:00 A.M. AND 3:00 P.M. DAILY, EXCEPT SATURDAYS, SUNDAYS, AND HOLIDAYS, FROM SEPTEMBER 22 THROUGH OCTOBER 12; ALSO, THAT BIDS WOULD BE OPENED AT 1:00 P.M., CENTRAL STANDARD TIME, OCTOBER 13, AT THE DSSO, MEMPHIS.

THE RECORD SHOWS THAT BIDS WERE OPENED AS SCHEDULED, AND ON OCTOBER 16, YOU WERE AWARDED ITEM 47, WHICH YOU HAD NOT INSPECTED, AT YOUR BID PRICE OF $0.310599 PER POUND. THE RECORD FURTHER SHOWS THAT THE PROPERTY, WEIGHING 499,800 POUNDS (99,800 POUNDS OVER THE ORIGINAL ESTIMATE), WAS LOADED IN FIVE RAILROAD CARS, FINAL SHIPMENT BEING MADE ON NOVEMBER 10.

ON NOVEMBER 17, THE SALES ACTIVITY WAS ADVISED IN A TELEPHONE CALL FROM YOUR MR. BEN WEINER THAT THE BRASS SCRAP WAS CONTAMINATED BY STEEL, THEREBY NECESSITATING ITS UNLOADING FROM THE RAIL CARS TO REMOVE THE STEEL ITEMS. THE ENSUING INVESTIGATION BY THE SALES ACTIVITY DISCLOSED THE FOLLOWING FACTS:

(1) THE GOVERNMENT EMPLOYEE WHO PREPARED THE SALES DESCRIPTION NOT ONLY USED THE BEST INFORMATION AVAILABLE BUT HAD FIRST MADE A VISUAL INSPECTION OF THE BRASS CARTRIDGES APPEARING ON THE SURFACE OF THE DRUM CONTAINERS AND FAILED TO DETECT ANY FOREIGN METAL.

(2) THE PROPERTY DISPOSAL OFFICER AT FORT LEONARD WOOD NOTED DURING THE LOADING OF THE BRASS SCRAP INTO THE DRUMS THAT SCRAP STEEL ITEMS WERE BEING DISCARDED IN AN EFFORT TO DELIVER CLEAN BRASS, THE PROPERTY OFFERED FOR SALE AS ITEM NO. 47; ALSO, HE PERSONALLY SPOT CHECKED SEVERAL OF THE DRUMS AND FOUND THE CONTENTS TO BE FREE OF FOREIGN MATERIAL.

(3) THE PROPERTY DISPOSAL OFFICER AT GRANITE CITY ARMY DEPOT, GRANITE CITY, ILLINOIS, UPON INSPECTION OF THE BRASS SCRAP DELIVERED TO YOU, FOUND THAT THE QUANTITY OF FERROUS METAL IN THE BRASS WAS NEGLIGIBLE.

(4) MR. KENNETH MELTON, THE INDIVIDUAL DESIGNATED BY YOU TO LOAD THE BRASS, STATED THERE WAS VERY LITTLE CONTAMINATION NOTED DURING THE LOADING.

(5) THE SALES CONTRACTING OFFICER, IN A TELEGRAM CONVERSATION OF DECEMBER 10 WITH YOUR MR. VERNON PFIFFNER, WAS ADVISED BY MR. PFIFFNER THAT UNLOADING OF THE BRASS AND PROCESSING THROUGH A POPPER PRIOR TO DELIVERY TO YOUR CUSTOMER WOULD HAVE BEEN NECESSARY REGARDLESS OF THE CLAIM OF CONTAMINATION.

IT IS YOUR POSITION THAT THE PROPERTY WAS ERRONEOUSLY DESCRIBED IN THAT MOST OF THE ITEMS LISTED IN THE INVITATION CARRIED NOTATIONS SUCH AS "UNCLEAN," "CONTAMINATED" OR "CLEAN" AND THE ABSENCE OF ANY SUCH NOTATION FOR ITEM NO. 47, ACCORDING TO THE CUSTOM OF THE TRADE, INDICATED THAT THE LOT WAS CLEAN, WHICH WAS NOT TRUE; ALSO, HAD THERE BEEN A NOTATION INDICATING CONTAMINATION, ETC., YOU WOULD HAVE SENT A REPRESENTATIVE TO INSPECT THE SCRAP. YOU CONTEND, THEREFORE, THAT ON SUCH BASIS, TOGETHER WITH THE FACT THAT THE USE OF A GUARANTEED DESCRIPTIONS CLAUSE IN ALL SUCH SALES OF SURPLUS GOVERNMENT PROPERTY WAS MADE MANDATORY AS OF NOVEMBER 1, 1964, ONLY A SCANT 18 DAYS AFTER BID OPENING, YOU ARE ENTITLED TO THE PRICE ADJUSTMENT CLAIMED.

SIXTY-SEVEN ITEMS WERE ADVERTISED IN THE INVITATION, BUT IN ONLY 28 OF THE SALES DESCRIPTIONS WAS THERE ANY NOTATION SUCH AS "CLEAN," "UNCLEAN," "CONTAMINATED," ETC., INDICATIVE OF THE CONDITION OF THE PROPERTY. OF THE 13 BRASS SCRAP ITEMS, ONLY 6 OF THE SALES DESCRIPTIONS INCLUDED ANY SUCH NOTATION. ONLY FOUR OF THE BRASS SCRAP ITEMS, INCLUDING ITEM NO. 47 PURCHASED BY YOU, CONSISTED OF FIRED BRASS CARTRIDGE CASES, AND NO ONE OF THE FOUR SALES DESCRIPTIONS INDICATED THE CONDITION OF THE CASES.

UNDER THE DISCLAIMER OF WARRANTY INCORPORATED IN THE SALES CONTRACT, PROSPECTIVE PURCHASERS WERE PLACED ON NOTICE THAT THE GOVERNMENT WOULD NOT ASSUME ANY LIABILITY SHOULD THE PROPERTY NOT MEASURE UP TO THE EXPECTATIONS OF THE SUCCESSFUL BIDDER. SUCH PROVISIONS, IN THE ABSENCE OF BAD FAITH OR FRAUD, WHICH ARE NOT EVIDENT HERE AND WHICH YOU DO NOT ALLEGE, IMPOSE ALL RISKS OF MISTAKE UPON THE BUYER AND ALSO PRECLUDE A SUIT FOR DAMAGE ON THE THEORY OF MUTUAL MISTAKE. UNITED STATES V. HATHAWAY, 242 F.2D 897, AMERICAN SANITARY RAG CO. V. UNITED STATES, 142 CT.CL. 293.

IN CONTRACTS SUCH AS THIS, WHERE BIDDERS ARE ALSO INVITED AND URGED TO INSPECT THE PROPERTY BEFORE BIDDING AND WARNED OF THE EFFECT OF FAILURE TO INSPECT, THE BIDDERS ARE REQUIRED TO MAKE EFFECTUAL INSPECTIONS. A BIDDER WHO FAILS TO INSPECT THEREFORE ASSUMES ANY LOSS WHICH MIGHT RESULT FROM A VARIANCE BETWEEN THE PROPERTY DESCRIBED IN THE INVITATION AND THE PROPERTY DELIVERED. PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463 (1959); UNITED STATES V. SILVERTON, 200 F.2D 824 (1952). ACCORDINGLY, EVEN IF THERE HAD BEEN A MISDESCRIPTION OF ITEM NO. 47, THERE WOULD BE NO BASIS FOR GRANTING YOU RELIEF.

HOWEVER, WE DO NOT CONCUR WITH YOUR CONTENTION THAT THERE WAS AN ERROR IN DESCRIPTION OF ITEM NO. 47 MERELY BECAUSE THE GOVERNMENT DID NOT INDICATE THAT THE PROPERTY MIGHT BE CONTAMINATED AS IT DID FOR SEVERAL OTHER ITEMS. RATHER, IT IS OUR VIEW THAT THE DESCRIPTION OF ANY ONE ITEM WAS NOT AFFECTED BY THE DESCRIPTION OF ANY OTHER ITEM,ALTHOUGH IN THIS CASE IT IS TO BE NOTED THAT THE OTHER THREE ITEMS OF FIRED BRASS CARTRIDGE CASES, LIKE ITEM NO. 47, CARRIED NO STATEMENT AS TO CONDITION. FURTHERMORE, THE STATEMENTS OF THE GOVERNMENT EMPLOYEES WHO INSPECTED THE PROPERTY SOLD TO YOU, AS WELL AS THE STATEMENT OF YOUR OWN REPRESENTATIVE WHO LOADED THE PROPERTY AT THE DISPOSAL ACTIVITY, TO THE EFFECT THAT THERE WAS NO SIGNIFICANT CONTAMINATION, EVIDENCE THAT THE SALES DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION, WITH NO FRAUD OR BAD FAITH ON THE PART OF THE GOVERNMENT, AND, THEREFORE, WAS NOT ERRONEOUS.

AS TO YOUR CONTENTION THAT RELIEF SHOULD BE GRANTED IN VIEW OF THE FACT THAT THE USE OF THE GUARANTEED SALES DESCRIPTION CLAUSE, WHICH WOULD PROVIDE FOR RELIEF IN SUCH CIRCUMSTANCES, BECAME MANDATORY IN ALL SUCH SALES WITHIN A SHORT TIME AFTER THE BID OPENING, YOUR SALES CONTRACT SPECIFICALLY PROVIDED THAT SUCH CLAUSE WOULD NOT APPLY TO THE SALE. FURTHERMORE, FROM THE LANGUAGE CONTAINED IN NASMI BULLETIN NO. 64-14, DATED SEPTEMBER 10, 1964, A COPY OF WHICH YOU FORWARDED WITH YOUR LETTER OF SEPTEMBER 2, 1965, IT IS APPARENT THAT YOU WERE AWARE THAT THE CLAUSE WOULD NOT BE USED ON A NATIONAL SCALE UNTIL NOVEMBER 1, 1964. THEREFORE, IT MUST BE CONCLUDED THAT BY BIDDING UNDER THE INVITATION IN QUESTION, YOU ELECTED TO BE BOUND BY ITS TERMS. IN ANY EVENT, THE MEANING OF A WRITTEN CONTRACT WITH THE UNITED STATES MUST, IF POSSIBLE, BE ASCERTAINED FROM THE LANGUAGE OF THE CONTRACT ITSELF. 14 COMP. GEN. 191, 192. THEREFORE, SINCE YOUR CONTRACT INCLUDED AN EXPRESS DISCLAIMER OF WARRANTY AS TO CONDITION, ETC., OF THE PROPERTY PURCHASED BY YOU, THE PROVISIONS OF THE GUARANTEED DESCRIPTION CLAUSE SUBSEQUENTLY EMPLOYED IN OTHER CONTRACTS CANNOT BE INVOKED CONTRARY THERETO.

ONE ADDITIONAL FACTOR IN THIS CASE WARRANTS DISCUSSION. UNDER THE LANGUAGE OF ARTICLE V OF THE SPECIAL CONDITIONS QUOTED ABOVE, RELATING TO DANGEROUS PROPERTY, YOU WERE PLACED ON NOTICE THAT THE PROPERTY PURCHASED BY YOU MIGHT BE CONTAMINATED BY HARMFUL MATERIAL. THEREFORE, ALTHOUGH YOU CLAIM THAT SCREENING OF THE PROPERTY WAS NECESSITATED BY THE PRESENCE OF THE STEEL, IT APPEARS THAT SCREENING WOULD HAVE BEEN NECESSARY BEFORE RESALE BY YOU AS A SAFETY MEASURE REGARDLESS OF THE ALLEGED CONTAMINATION BY STEEL, AS STATED BY YOUR MR. PFIFFNER, AND, THEREFORE, THAT THE EXPENSES CLAIMED WERE NOT INCURRED SOLELY BECAUSE OF THE PRESENCE OF THE STEEL.

FOR THE REASONS STATED, WE FIND NO LEGAL BASIS FOR THE PAYMENT OF YOUR CLAIM. ACCORDINGLY, THE DISALLOWANCE SET OUT IN OUR SETTLEMENT CERTIFICATE ISSUED ON MAY 18, 1965, IS SUSTAINED.