B-174453, DEC 29, 1971

B-174453, DEC 29, 1971

TO MR. SECRETARY:

REFERENCE IS MADE TO A LETTER DATED OCTOBER 28, 1971, WITH ENCLOSURES, FROM THE CHIEF, REDISTRIBUTION & MARKETING DIVISION, DIRECTORATE OF DISTRIBUTION, HEADQUARTERS SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AIR FORCE BASE, CALIFORNIA, SUBMITTING FOR DECISION THE CLAIM OF LEE BROTHERS DREDGING COMPANY, INC., FOR FREIGHT, STORAGE AND SERVICE CHARGES INCURRED IN CONNECTION WITH THE GOVERNMENT ERRONEOUSLY FURNISHING ONE LOT OF AUTOMOTIVE TIRES TO LEE BROTHERS' CARRIER.

THE DEFENSE SURPLUS SALES OFFICE, OAKLAND, CALIFORNIA, BY INVITATION NO. 44-1107, REQUESTED BIDS ON SURPLUS PROPERTY. LEE BROTHERS SUBMITTED A BID ON ITEM NO. 225, CONSISTING OF ONE LOT OF TRUCK TIRES, AND ON ITEM NO. 236, CONSISTING OF ONE LOT OF AUTOMOTIVE TIRES. ON JANUARY 27, 1971, CONTRACT NO. 44-1107-322 WAS AWARDED TO LEE BROTHERS AS HIGH BIDDER ON ITEMS 225 AND 236 AND IT WAS NOTIFIED THAT, UNDER THE TERMS OF THE SALE, IT WAS OBLIGATED TO TAKE POSSESSION OF AND REMOVE THE TIRES FROM MCCLELLAN AIR FORCE BASE ON OR BEFORE FEBRUARY 16, 1971.

SUBSEQUENTLY, BY LETTER DATED FEBRUARY 8, 1971, LEE BROTHERS NOTIFIED THE SALES CONTRACTING OFFICER IT HAD DECIDED NOT TO ACCEPT ITEM 236 AND ELECTED, AS IT WAS ENTITLED TO DO UNDER ITS CONTRACT, TO FORFEIT 20 PERCENT OF THE BID PRICE ON THAT ITEM. IN ACCORDANCE THEREWITH, IT ENCLOSED A CHECK IN THE AMOUNT OF $44.01 WHICH, ALONG WITH THE ORIGINAL DEPOSIT, WAS SUFFICIENT TO PAY THE TOTAL CONTRACT PRICE FOR ITEM 225 AND THE 20 PERCENT LIQUIDATED DAMAGES ON ITEM 236. THE CHECK FROM LEE BROTHERS WAS ACCEPTED. ON FEBRUARY 11, 1971, THE SALES CONTRACTING OFFICER PREPARED THE NECESSARY PAPERS TO SHOW THE COLLECTION OF THE LIQUIDATED DAMAGES AND THE CANCELLATION OF ITEM 236 FROM THE CONTRACT. THOSE PAPERS WERE FORWARDED TO THE AIR FORCE REDISTRIBUTION & MARKETING DIVISION. ON FEBRUARY 19, 1971, THE RELEASE DOCUMENT COVERING CONTRACT NO. 44-1107-322 WAS RECEIVED BY THE SALES CONTRACTING OFFICER FROM THE REDISTRIBUTION & MARKETING DIVISION, INDICATING THAT ITEM 225 HAD BEEN DELIVERED ON FEBRUARY 17, 1971, AND NOTING THAT THE CUSTOMER HAD ELECTED TO DEFAULT ON ITEM 236.

THEREAFTER, ON FEBRUARY 24, 1971, MR. RICHARD LEE, PRESIDENT OF LEE BROTHERS, TELEPHONED THE SALES CONTRACTING OFFICER AND INFORMED HIM THAT HIS CARRIER, CONSOLIDATED FREIGHTWAYS, HAD ARRIVED IN SEATTLE WITH BOTH ITEMS 225 AND 236 AND THAT HE DID NOT WANT ITEM 236. HE WAS TOLD THAT A REPRESENTATIVE OF THE GOVERNMENT FROM FORT LEWIS, WASHINGTON, WOULD PICK UP THE TIRES IN ITEM 236 ABOUT MARCH 9, 1971. HOWEVER, THE TIRES WERE NOT PICKED UP UNTIL APPROXIMATELY MAY 7, 1971, DESPITE PHONE CALLS AND LETTERS FROM MR. LEE DURING THE INTERVENING PERIOD. MR. LEE HAS SUBMITTED A CLAIM FOR THE EXPENSES INCURRED BY HIS FIRM FOR THE TRANSPORTATION AND STORAGE OF ITEM 236 TIRES AND FOR TELEPHONE CALLS AND RELATED OFFICE SERVICES IN ATTEMPTING TO RETURN THEM TO THE GOVERNMENT.

FROM THE RECORD, IT IS NOT UNREASONABLE TO CONCLUDE THAT ALL THE TIRES WERE IN ONE GENERAL AREA, AND THAT THE GOVERNMENT'S EMPLOYEES, WHILE LOADING THE TIRES ONTO THE CARRIER, NEGLECTED TO SEPARATE THE TIRES IN ITEM 236 FROM THOSE IN ITEM 225. IT IS ALSO NOTED THAT THE EXPENSES CLAIMED WERE NOT INCURRED AS THE RESULT OF A PURCHASE OF PROPERTY, BUT CAME ABOUT WHEN GOODS WHICH WERE NOT PURCHASED WERE ERRONEOUSLY SHIPPED TO LEE BROTHERS. THEREFORE, THE LIMITATION ON LIABILITY CLAUSE, PART 2, PARAGRAPH 15 OF THE DEFENSE LOGISTICS SERVICES CENTER PAMPHLET, "SALE BY REFERENCE - INSTRUCTIONS, TERMS AND CONDITIONS APPLICABLE TO DEPARTMENT OF DEFENSE SURPLUS PERSONAL PROPERTY," DATED MARCH 1969, IS NOT APPLICABLE. THE WORDING IN THAT CLAUSE WHICH LIMITS THE GOVERNMENT'S LIABILITY TO REFUND OF PURCHASE PRICE WOULD INDICATE THAT IT IS APPLICABLE TO CIRCUMSTANCES WHERE SPECIFIC PROPERTY HAS BEEN PURCHASED AND NOT TO LOSSES ARISING ON ACCOUNT OF UNPURCHASED PROPERTY. THE COURT OF CLAIMS, IN FREEDMAN V UNITED STATES, 320 F. 2D 359 (1963), CONSTRUED A SIMILAR LIABILITY CLAUSE AND SUGGESTED THAT IF THE CLAUSE WERE READ IN AN UNLIMITED FASHION, EXCUSING THE GOVERNMENT FROM ALL DAMAGES FOR ANY TYPE OF BREACH, IT WOULD "COME CLOSE TO THE PIT OF VOIDNESS."

SINCE IT IS APPARENT THAT THE CHARGES INCURRED BY LEE BROTHERS WERE THE DIRECT RESULT OF THE GOVERNMENT'S ERRONEOUS SHIPMENT OF UNPURCHASED GOODS, AND SINCE LEE BROTHERS MADE REASONABLE EFFORTS TO RETURN THE PROPERTY AND CARED FOR IT DURING THE LENGTHY PERIOD THAT IT WAS LEFT WITH THE COMPANY, IT SHOULD BE REIMBURSED ITS LOSSES INCIDENT TO SUCH ERRONEOUS SHIPMENT.

THE EXPENSES WHICH ARE CLAIMED HAVE BEEN DETERMINED BY THE SALES CONTRACTING OFFICER TO BE REASONABLE. ACCORDINGLY, THE CLAIM MAY BE SETTLED IN THE AMOUNT OF $347.29 AS ADMINISTRATIVELY RECOMMENDED. THE SUPPORTING PAPERS ARE RETURNED HEREWITH.