B-154199, JUL. 31, 1964

B-154199, JUL. 31, 1964

TO AMERICAN NICKEL ALLOY MANUFACTURING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 26, 1964, REQUESTING RECONSIDERATION OF OUR DECISION OF JUNE 8, 1964, WHICH DISALLOWED YOUR CLAIM FOR ADJUSTMENT OF THE PURCHASE PRICE OF A LOT OF SCRAP METAL PURCHASED UNDER SALES INVITATION NO. 11-S-64-22, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, PHILADELPHIA NAVAL BASE, PHILADELPHIA, PENNSYLVANIA.

AS STATED IN OUR DECISION, THE EXPRESS DISCLAIMER OF WARRANTY IN THE INVITATION PRECLUDES A CLAIM BASED ON MISDESCRIPTION IN THE ABSENCE OF EVIDENCE OF BAD FAITH OR FRAUD ON THE PART OF THE GOVERNMENT. THEREFORE, REGARDLESS OF THE WEIGHT OF THE MATERIAL, NO ADJUSTMENT OF THE PURCHASE PRICE MAY BE GRANTED ON ACCOUNT OF ANY ERROR IN DESCRIPTION OF THE MATERIAL.

FURTHERMORE, THE INVITATION URGED BIDDERS TO INSPECT BEFORE BIDDING AND CAUTIONED THAT THE SALE WAS NOT BY SAMPLE. SUCH PROVISIONS PLACED UPON YOU THE RISK OF ANY LOSS WHICH MIGHT RESULT FROM EITHER FAILURE TO INSPECT OR FAILURE TO MAKE AN ADEQUATE INSPECTION. PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463 (1959); DADOURIAN EXPORT CORP. V. UNITED STATES, 291 F.2D 178 (1961).

THE PAXTON-MITCHELL CASE, SUPRA, INVOLVED A SALE OF MATERIAL DESCRIBED AS "STEEL, SCRAP, CAST STEEL.' UPON DELIVERY IT WAS DISCOVERED BY THE PURCHASER THAT 49.7 PERCENT OF THE MATERIAL WAS MALLEABLE IRON. CONCEDING THAT THE TWO MATERIALS WERE DISTINGUISHABLE ONLY BY MICROSCOPIC EXAMINATION OR CHEMICAL ANALYSIS, THE COURT NEVERTHELESS HELD THAT UNDER THE TERMS OF THE SALE, WHICH WERE IDENTICAL TO THOSE HERE INVOLVED, THE PURCHASER HAD NO RECOURSE AGAINST THE GOVERNMENT. IN SUPPORT OF ITS DECISION THE COURT CITED THE EARLIER CASES OF S. SNYDER CORPORATION V. UNITED STATES, 68 CT.CL. 667, WHICH DEALT WITH A SALE OF SCRAP SHELLS, DESCRIBED AS CONTAINING 3.34 POUNDS OF COPPER EACH, BUT ACTUALLY CONTAINING ONLY 2.62 POUNDS; AND M. SAMUEL AND SONS V. UNITED STATES, 61 CT.CL. 373, IN WHICH MATERIAL DESCRIBED AS MALLEABLE IRON WAS FOUND TO BE 25 PERCENT STEEL. IN NEITHER CASE WAS ANY RECOVERY ALLOWED.

SEE, ALSO, VARKELL, ET AL. V. UNITED STATES, CT.CL. NO. 186-63, DECIDED JULY 17, 1964, WHEREIN A PURCHASER WHO FAILED TO INSPECT SURPLUS FILM SOLD UNDER A SIMILAR CONTRACT WAS HELD NOT ENTITLED TO RELIEF BECAUSE THE ROLLS OF FILM WERE ONLY 100 FEET LONG RATHER THAN 400 FEET LONG AS STATED IN THE DESCRIPTION IN THE INVITATION. THE COURT, AFTER NOTING THE LANGUAGE IN THE INVITATION WARNING PROSPECTIVE BIDDERS TO INSPECT, AS WELL AS THE EXPRESS DISCLAIMER OF WARRANTY, STATED:

"UNDER THESE AND SIMILAR PROVISIONS, MANY OTHER PURCHASERS OF SURPLUS PROPERTY HAVE BEEN HELD TO THEIR BARGAINS, EVEN THOUGH THE GOODS TURNED OUT TO BE DIFFERENT IN CHARACTERISTICS FROM THOSE ADVERTISED OR DESCRIBED BY THE GOVERNMENT. IN SUCH SALES THE RISK IS ON THE PURCHASER. PLAINTIFFS, IN NEW YORK, COULD HAVE ARRANGED FOR AN AGENT IN CALIFORNIA TO INSPECT THE PROPERTY, OR THEY COULD HAVE TAKEN ACCOUNT, IN THEIR BID, OF POSSIBLE DEVIATIONS FROM THE DESCRIPTION. AS IN OUR PRIOR DECISIONS, THERE IS NO REASON TO IGNORE THE EXPLICIT PROVISIONS OF THE SALE.'

WITH RESPECT TO YOUR COMPLAINT AS TO THE PROCEDURE FOLLOWED IN THIS CASE, YOU ARE ADVISED THAT OUR OFFICE IS BY STATUTE AUTHORIZED TO SETTLE AND ADJUST "ALL CLAIMS AND DEMANDS WHATEVER BY THE GOVERNMENT OF THE UNITED STATES OR AGAINST IT," (SECTION 305, ACT OF JUNE 10, 1921, 42 STAT. 24; 31 U.S.C. 71). THE SUBMISSION OF YOUR COMPLAINT IN THIS CASE TO OUR OFFICE WAS THEREFORE IN COMPLETE ACCORD WITH ESTABLISHED PROCEDURES.

IN EXERCISING OUR CLAIM SETTLEMENT FUNCTION, WE HAVE NO AUTHORITY TO ALLOW ANY CLAIM EXCEPT IN ACCORDANCE WITH THE LAW AS ESTABLISHED BY STATUTE OR JUDICIAL DECISIONS. IN THE LIGHT OF THE DECISIONS ABOVE REFERRED TO WE HAVE NO ALTERNATIVE TO DENIAL OF YOUR CLAIM AND ASSERTION OF THE GOVERNMENT'S RIGHT TO THE UNPAID BALANCE OF THE PURCHASE PRICE.

AS WAS ALSO STATED IN OUR DECISION, BY SEGREGATING THE INCONEL FROM THE OTHER PARTS OF THE SCRAP, YOU ASSUMED COMPLETE JURISDICTION OVER THE ENTIRE SHIPMENT, AND THE EXCESS MATERIAL NOW ON HAND NO LONGER IS IDENTIFIABLE AS THE INCONEL SCRAP SOLD TO YOU BY THE GOVERNMENT. UNDER THE ,VARIATION IN QUANTITY" CLAUSE OF THE CONTRACT, THE MATERIAL DELIVERED IN EXCESS OF THE 10 PERCENT LIMIT, IF REJECTED, WOULD HAVE TO BE RETURNED IN THE SAME FORM AS THAT IN WHICH IT WAS DELIVERED, AND YOUR ACTION HAS MADE THAT IMPOSSIBLE.