B-171054, FEB 17, 1971

B-171054: Feb 17, 1971

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WHICH WAS NOT DONE IN THE PRESENT CASE. 000) WAS ERRONEOUS AND THAT THE QUANTITY ACTUALLY DELIVERED WAS 3. 000 BOLTS WEIGHT 899 POUNDS) SHOULD HAVE BEEN APPARENT TO THE SALES CONTRACTING OFFICER SINCE 350. 000 BOLTS WOULD HAVE WEIGHED IN EXCESS OF 13. TO GENERAL HEDLUND: REFERENCE IS MADE TO A LETTER DATED NOVEMBER 13. THE ESTIMATED WEIGHT OF THE ENTIRE LOT WAS STATED TO BE 899 POUNDS. GOLD WAS THE HIGH BIDDER FOR THE PROPERTY AT $589.89 AND WAS AWARDED A CONTRACT ON SEPTEMBER 1. A REPORT WITH A COPY OF THE TURN-IN DOCUMENT ATTACHED WAS RECEIVED FROM THE PROPERTY DISPOSAL OFFICE STATING THAT THE TURN-IN DOCUMENT SHOWED A TURN-IN OF 3. ALSO THAT THE PROPERTY WAS RECEIVED IN TWO CARTONS WITH A TOTAL WEIGHT OF 144 POUNDS.

B-171054, FEB 17, 1971

CONTRACTS - PRICE ADJUSTMENT DECISION GRANTING AN APPROPRIATE ADJUSTMENT IN THE PURCHASE PRICE FOR 3,500 SQUARE NECK BOLTS, A SUBITEM OF A LOT SALE TO S.A. GOLD COMPANY INCIDENT TO A CONTRACT AWARDED BY THE DEFENSE SURPLUS SALES OFFICE, FORT WORTH, TEXAS. ALTHOUGH THE "GUARANTEED DESCRIPTIONS" PROVISION OF THE SALES INVITATION SPECIFICALLY PROVIDES THAT NO ADJUSTMENT FOR SHORTAGES OF PROPERTY SOLD BY "LOT" SHALL BE ALLOWED UNLESS THE PURCHASER NOTIFIES THE GOVERNMENT OF THE SHORTAGE PRIOR TO REMOVAL OF THE PROPERTY FROM THE INSTALLATION, WHICH WAS NOT DONE IN THE PRESENT CASE, THE PURPOSE OF THE NOTIFICATION REQUIREMENT WOULD NOT BE DEFEATED SINCE THE GOVERNMENT ACKNOWLEDGES THAT BOTH THE QUANTITY SHOWN IN THE INVITATION (350,000) WAS ERRONEOUS AND THAT THE QUANTITY ACTUALLY DELIVERED WAS 3,500. FURTHER, BECAUSE THE MISDESCRIPTION OF THE ITEM (350,000 BOLTS WEIGHT 899 POUNDS) SHOULD HAVE BEEN APPARENT TO THE SALES CONTRACTING OFFICER SINCE 350,000 BOLTS WOULD HAVE WEIGHED IN EXCESS OF 13,000 POUNDS, AN APPROPRIATE ADJUSTMENT MAY BE MADE.

TO GENERAL HEDLUND:

REFERENCE IS MADE TO A LETTER DATED NOVEMBER 13, 1970, WITH ENCLOSURES, FROM THE ASSISTANT COUNSEL, DEFENSE SUPPLY AGENCY, REFERENCE: DSAH-G, REPORTING ON THE CLAIM OF THE S. A. GOLD COMPANY FOR $530.15 UNDER SALES CONTRACT NO. 37-1024-043 AWARDED BY THE DEFENSE SURPLUS SALES OFFICE, FORT WORTH, TEXAS, AND RECOMMENDING THAT THE REQUESTED RELIEF BE GRANTED BY OUR OFFICE.

THE CLAIM, IN THE AMOUNT OF $530.15, CONCERNS ITEM NO. 120 WHICH CONSISTED OF VARIOUS TYPES AND SIZES OF BOLTS INCLUDING ONE SUBITEM DESCRIBED IN THE SALES INVITATION AS "3500 HD." OR 350,000 SQUARE NECK BOLTS. THE ESTIMATED WEIGHT OF THE ENTIRE LOT WAS STATED TO BE 899 POUNDS. S. A. GOLD WAS THE HIGH BIDDER FOR THE PROPERTY AT $589.89 AND WAS AWARDED A CONTRACT ON SEPTEMBER 1, 1970.

THE SALES CONTRACTING OFFICER REPORTS THAT THE FOLLOWING EVENTS OCCURRED FOLLOWING THE AWARD MADE TO GOLD. ON SEPTEMBER 14, 1970, MR. GOLD'S AGENT REMOVED ITEM NO. 120 AND ON SEPTEMBER 18, 1970, MR. GOLD TELEPHONED THE SALES CONTRACTING OFFICER AND STATED THAT THE PROPERTY AWARDED AS ITEM NO. 120 HAD BEEN RECEIVED AND A SHORTAGE HAD BEEN FOUND IN THAT ONLY 3,500 SQUARE NECK BOLTS, FSN 5306-059-1227, HAD BEEN RECEIVED. THE SALES CONTRACTING OFFICER THEN REQUESTED THE ASSISTANT PROPERTY DISPOSAL OFFICER, DEFENSE DEPOT, MEMPHIS, TO FURNISH A REPORT. ON SEPTEMBER 28, 1970, THE DEFENSE SURPLUS SALES OFFICE RECEIVED A LETTER FROM MR. S. A. GOLD CLAIMING A SHORTAGE OF 346,500 BOLTS WITH A REQUEST FOR A CONTRACT PRICE ADJUSTMENT OF $1.53 PER THOUSAND FOR A TOTAL OF $530.15. ON OCTOBER 5, 1970, A REPORT WITH A COPY OF THE TURN-IN DOCUMENT ATTACHED WAS RECEIVED FROM THE PROPERTY DISPOSAL OFFICE STATING THAT THE TURN-IN DOCUMENT SHOWED A TURN-IN OF 3,500 AND "HUNDREDS" AS A UNIT OF ISSUE; ALSO THAT THE PROPERTY WAS RECEIVED IN TWO CARTONS WITH A TOTAL WEIGHT OF 144 POUNDS.

THE SALES CONTRACTING OFFICER'S REPORT GIVES THE FOLLOWING DETAILS REGARDING THE MATTER:

"PROPERTY OFFERED IN ITEMS 1 THROUGH 390 IN THIS SALE WAS TURNED IN TO THE PROPERTY DISPOSAL OFFICER ON DD FORM 1348-1. FROM THESE FORMS IBM CARDS WERE PUNCHED LOCALLY FOR EACH LINE ITEM. THIS DECK OF CARDS WAS THEN FORWARDED TO THE DEFENSE LOGISTICS SERVICES CENTER, BATTLE CREEK, MICHIGAN. UPON RECEIPT OF THESE CARDS AT THE CENTER, THEY WERE FED INTO A COMPUTER WHICH PRINTED A LISTING REFLECTING A DETAILED DESCRIPTION BY LINE ITEM, (8). THIS LISTING WAS THEN FURNISHED TO THE PROPERTY DISPOSAL OFFICER, DEFENSE DEPOT MEMPHIS, WHO USED IT FOR LOTTING AND REPORTING PROPERTY TO THE FT. WORTH DEFENSE SURPLUS SALES OFFICE FOR CATALOGING AND SALE. THIS LISTING WAS EDITED BY THE MERCHANDISING DIVISION OF THE FORT WORTH SALES OFFICE WITHOUT BENEFIT OF VISUAL INSPECTION OF THE PROPERTY AND ONLY TO A LIMITED DEGREE AND DID NOT INCLUDE ANY VERIFICATION OF WEIGHT PENNED ON THE LISTING BY THE HOLDING ACTIVITY IN RELATION TO QUANTITY OFFERED. OTHER THAN THE ADDITION OF THE MANUFACTURER WHERE KNOWN AND THE DELETION OF SOME UNNECESSARY DESCRIPTIVE DATA, THE DESCRIPTION WAS ACCEPTED BY THE SALES OFFICE AS CORRECT AND WAS INCLUDED IN THE CATALOG ITEM DESCRIPTION."

THE RECORD INDICATES THAT THE PROPERTY WAS OFFERED BY LOT AND, IN THIS REGARD, THE "GUARANTEED DESCRIPTIONS" PROVISION OF THE SALES INVITATION SPECIFICALLY PROVIDES THAT NO ADJUSTMENT FOR SHORTAGES OF PROPERTY SOLD BY "LOT" SHALL BE ALLOWED UNLESS THE PURCHASER NOTIFIES THE GOVERNMENT OF THE SHORTAGE PRIOR TO REMOVAL OF THE PROPERTY FROM THE INSTALLATION. THE RECORDS SHOW THAT PROPERTY WAS REMOVED BY GOLD'S AGENT ON SEPTEMBER 14, 1970, AND THAT GOLD FIRST PRESENTED HIS CLAIM OF SHORTAGE BY TELEPHONE ON SEPTEMBER 18, 1970.

WE ARE ADVISED THAT THE MERCHANDISING DIVISION OF THE SALES OFFICE DID EDIT THE PROPERTY LISTING BUT DUE TO THE TIME AND EFFORT REQUIRED, IT WAS NOT FEASIBLE OR PRACTICAL TO RELATE ALL FACTORS IN THE PROPERTY LIST DESCRIPTION TO DETERMINE THEIR ACCURACY. THE CONTRACTING OFFICER STATES THAT THIS WOULD HAVE INCLUDED WHAT IS NOW AN OBVIOUS DISCREPANCY IN THE WEIGHT OF 144 POUNDS REPORTED BY THE PROPERTY DISPOSAL OFFICE FOR THE BOLTS IN QUESTION AS COMPARED TO THE ACTUAL WEIGHT OF 13,650 POUNDS BASED ON 3,500 HUNDREDS AT 3.9 POUNDS PER HUNDRED.

ON THE BASIS OF THE ABOVE-STATED FACTS, THE SALES CONTRACTING OFFICER CONTENDS THAT RELIEF TO S. A. GOLD IS NOT APPROPRIATE IN THAT THE CLAIM OF SHORTAGE WAS NOT TIMELY PRESENTED AS REQUIRED BY THE "GUARANTEED DESCRIPTIONS" CLAUSE. FURTHER, THE CONTRACTING OFFICER CONTENDS THAT RELIEF UNDER CONDITION NO. 2: CONDITION AND LOCATION OF PROPERTY, GENERAL SALE TERMS AND CONDITIONS OF SALE, IS NOT APPROPRIATE IN THAT THE PROPERTY WAS DESCRIBED AND CATALOGUED FROM THE BEST INFORMATION AVAILABLE TO THE SALES OFFICE. ACCORDINGLY, THE SALES CONTRACTING OFFICER RECOMMENDS THAT GOLD'S REQUEST FOR CONTRACT PRICE ADJUSTMENT BE DENIED.

WE DO NOT AGREE WITH THE SALES CONTRACTING OFFICER'S RECOMMENDATION THAT RELIEF BE DENIED. WHILE GOLD FAILED TO NOTIFY THE GOVERNMENT OF THE SHORTAGE PRIOR TO REMOVAL OF THE PROPERTY FROM THE INSTALLATION AS REQUIRED BY THE "GUARANTEED DESCRIPTIONS" CLAUSE, THE GOVERNMENT ACKNOWLEDGES THAT THE QUANTITY SHOWN IN THE SALES INVITATION WAS ERRONEOUS AND THAT THE QUANTITY OF SQUARE NECK BOLTS ACTUALLY DELIVERED TO GOLD WAS 3,500 RATHER THAN THE 350,000 ADVERTISED. WE ARE ADVISED THAT THE NOTIFICATION REQUIREMENT IN THE ABOVE-REFERRED TO CLAUSE IS NECESSARY TO PROTECT THE GOVERNMENT'S INTEREST SINCE PROPERTY OFFERED FOR SALE BY "LOT" GENERALLY IS OF SUCH A NATURE THAT AN EXACT DETERMINATION OF ITS CONTENT BY THE GOVERNMENT PRIOR TO OR AT THE TIME OF REMOVAL IS NOT JUSTIFIABLE. FURTHER, LOT SHORTAGES DISCOVERED AFTER REMOVAL MAY BE ATTRIBUTABLE TO CIRCUMSTANCES OVER WHICH THE GOVERNMENT HAS NO CONTROL. IT IS FOR THESE REASONS THAT SUCH SHORTAGES MUST BE ALLEGED PRIOR TO REMOVAL.

IN THE PRESENT SITUATION, THE PURPOSE OF THE NOTIFICATION REQUIREMENT WOULD NOT BE DEFEATED IF AN ADJUSTMENT IN THE CONTRACT PRICE IS ALLOWED SINCE THE GOVERNMENT ACKNOWLEDGES THAT BOTH THE QUANTITY SHOWN IN THE INVITATION WAS ERRONEOUS AND THAT THE QUANTITY ACTUALLY DELIVERED TO GOLD WAS 3,500. WE HAVE RECOGNIZED THAT A BIDDER IS NOT NECESSARILY CHARGEABLE WITH KNOWLEDGE OF AN ERROR IN A PURCHASE DESCRIPTION MERELY BECAUSE HE COULD HAVE BECOME AWARE OF THE ERROR IF HE HAD MADE AN ANALYSIS USING CERTAIN EXTRANEOUS INFORMATION REQUIRING SPECIALIZED KNOWLEDGE. SEE B- 167926, JULY 15, 1970, 50 COMP. GEN. . USUALLY THE SELLING ACTIVITY HAS SUPERIOR KNOWLEDGE OF THE DESCRIPTION OF AN ITEM AND IN DETERMINING IF A BIDDER OTHERWISE ENTITLED TO RELIEF SHOULD BE BARRED THEREFROM BECAUSE HE HAD CONSTRUCTIVE NOTICE OF THE ERROR IN THE PURCHASE DESCRIPTION, THERE MUST BE A BALANCING BETWEEN THE DUTY OF THE PARTY PREPARING THE DESCRIPTION AND THAT OF THE PARTY RELYING ON SUCH DESCRIPTION. CHARGING A BIDDER WITH CONSTRUCTIVE NOTICE OF AN INACCURATE PURCHASE DESCRIPTION, WE THINK A DISTINCTION MUST BE MADE BETWEEN A DESCRIPTION WHICH IS OBVIOUSLY ERRONEOUS AND THE SITUATION WHERE A MIS-DESCRIPTION CAN ONLY BE DISCOVERED BY USING SPECIALIZED KNOWLEDGE SUCH AS THE REASONABLE WEIGHT OF A QUANTITY OF BOLTS. IN THE LATTER SITUATION, IT IS OUR VIEW THAT KNOWLEDGE OF THE MISDESCRIPTION SHOULD NOT BE AUTOMATICALLY CHARGEABLE TO THE BIDDER. THIS CASE FALLS WITHIN THE SPECIALIZED KNOWLEDGE CATEGORY AND ON THE BASIS OF THE RECORD PRESENTED, WE FIND THAT RELIEF SHOULD NOT BE PRECLUDED ON A CONSTRUCTIVE NOTICE THEORY.

WE THINK THAT THE S. A. GOLD CO. MAY BE GRANTED AN ADJUSTMENT IN THE PURCHASE PRICE FOR ITEM NO. 120, AS ADMINISTRATIVELY RECOMMENDED, ON THE BASIS THAT THE CONTRACTING OFFICER HAD ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF THE MISDESCRIPTION. THE TOTAL WEIGHT LISTED IN THE INVITATION FOR ITEM NO. 120 WAS 899 POUNDS. WE ARE ADVISED THAT THE MISDESCRIPTION OF ITEM NO. 120 SHOULD HAVE BEEN APPARENT TO THE SALES CONTRACTING OFFICER SINCE 350,000 CARRIAGE BOLTS WOULD HAVE WEIGHED IN EXCESS OF 13,000 POUNDS.

FROM A REVIEW OF THE RECORD BEFORE US, WE BELIEVE THAT THE CONTRACTING OFFICER WAS ON CONSTRUCTIVE, IF NOT ACTUAL, NOTICE OF THE ERROR IN THE DESCRIPTION OF ITEM NO. 120, I.E., EITHER IN THE QUANTITY OF THE PROPERTY BEING OFFERED OR IN ITS ESTIMATED TOTAL WEIGHT.

THEREFORE, GOLD MAY BE GRANTED AN APPROPRIATE ADJUSTMENT IN THE PURCHASE PRICE FOR ITEM NO. 120 AS ADMINISTRATIVELY RECOMMENDED. BY LETTER OF TODAY, WE ARE TRANSMITTING A COPY OF THIS DECISION TO SENATOR VANCE HARTKE.