B-140049, JUL. 14, 1959

B-140049, JUL. 14, 1959

TO MR. S. MAURICE LIVINGSTON:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 15, 1959, REQUESTING REVIEW OF OFFICE SETTLEMENT DATED MAY 21, 1959, WHICH DISALLOWED YOUR CLAIM FOR ADJUSTMENT AND REFUND IN CONNECTION WITH PURCHASES BY YOU OF CERTAIN LOTS OF SURPLUS PROPERTY FROM THE UNITED STATES ARMY ORDNANCE DEPOT, OPPANA, JAPAN.

THE ADMINISTRATIVE REPORT, ON WHICH OUR SETTLEMENT OF MAY 21, 1959, WAS BASED, STATES THAT ON MORE THAN ONE OCCASION YOU WERE CAUTIONED AND WARNED THAT THE PROPERTY WAS BEING SOLD ON A "LOT BASIS" AND NOT BY WEIGHT, AND THAT YOU WERE FURTHER INFORMED THAT ANY INFORMATION ON TONNAGE WOULD NOT BE ACCURATE AND THAT THE BEST EVIDENCE WOULD BE GAINED BY AN INSPECTION OF THE PROPERTY. THIS REPORT WAS SIGNED BY M. SPIELMAN, CONTRACTING OFFICER, AND YOUR LETTER PRESENTS A DIRECT AND IRRECONCILABLE CONTRADICTION OF HIS STATEMENTS.

FOLLOWING IS A COMPARISON OF THE BIDS RECEIVED UNDER THE THREE REQUESTS FOR PROPOSALS. IN EVALUATING THE OFFERS, IT WILL BE NOTED THAT ALL APPEAR TO BE REASONABLY WITHIN THE SAME RANGE:

CONTRACT FEC-N26962

TABLE

BIDDER NEGOTIATED BID

S. M. LIVINGSTON YEN 3,300,000.00

FUKUSHIMA SHOTEN YEN 3,050,000.00

KOTOBUKI BUSSAN CO, LTD YEN 3,050,000.00

ARAI SHOJI CO, LTD YEN 3,000,000.00

CONTRACT FEC-N26961

TABLE

BIDDER NEGOTIATED BID

S. M. LIVINGSTON YEN 5,000,000.00

KOTOBUKI BUSSEN CO, LTD YEN 4,889,700.00

SANKO KOUZAI CO YEN 4,670,000.00

ARAI SHOJI CO, LTD YEN 4,658,860.00

IKEDA SHOJI CO, LTD YEN 4,510,000.00

TAKAO SHOKAI CO, LTD YEN 2,500,000.00

CONTRACT FEC-N26946

TABLE

BIDDER NEGOTIATED BID

S. M. LIVINGSTON YEN 2,300,000.00

KENEISHI SHOTEN YEN 1,950,000.00

DAIDO SHOKAI YEN 1,920,000.00

KOTOBUKI BUSSEN CO, LTD YEN 1,907,600.00

HONDA PIPE CO, LTD YEN 1,800,000.00"

THE CONTRACTING OFFICER'S REPORT STATED, IN PART, AS FOLLOWS:

"10. IN CORRELATING THE ABOVE-CITED BIDS SUBMITTED BY MR. LIVINGSTON WITH BIDS OF SECOND HIGH BIDDERS, IT IS CONSIDERED THAT BIDS WERE SUBMITTED ON A TRUE LOT BASIS, RATHER THAN ON THE BASIS OF ESTIMATED WEIGHTS. FURTHER, IN ANALYZING THE CORRELATION OF MR. LIVINGSTON'S BIDS WITH THOSE OF SECOND HIGH BIDDERS, IT IS MOST INTERESTING TO NOTE THAT THERE IS AN EXTREMELY LOW MARGIN OF DIFFERENCE IN BIDS SUBMITTED FOR PROPERTY SOLD UNDER CONTRACT N26961. THIS IS THE LOT IN WHICH THERE IS THE BULK OF THE DIFFERENCE IN THE ESTIMATED AND TRUE WEIGHTS (204.6 TONS). THE DIFFERENCE IN BIDS SUBMITTED BY MR. LIVINGSTON AND THE SECOND HIGH BIDDER, WHO WAS NOT FURNISHED WEIGHT FIGURES, AND WHO BASED HIS BID COMPLETELY ON THE INSPECTION OF THE PROPERTY AND ON ITS FAIR VALUE TO HIM, AMOUNTED TO LESS THAN $300 FOR THE ENTIRE LOT (ABOUT $1.15 PER TON OF ACTUAL WEIGHT).

"11. IT IS FURTHER CONSIDERED THAT THE PURCHASE OFFER SUBMITTED BY MR. LIVINGSTON IS A FAIR AND REASONABLE ONE. THIS IS BASED ON THE FOLLOWING:

"A. AVERAGE PRICES RECEIVED FOR THE TYPE OF ITEMS SOLD UNDER THE SAME SALES TERMS, IF CORRELATED TO "PER TON" OFFERS, AVERAGE BETWEEN $40 TO $80 PER TON, DEPENDING ON THE CONDITION OF THE PROPERTY. MR. LIVINGSTON'S OFFER, BASED ON THE ACTUAL "PER TON" COST, AMOUNTED TO APPROXIMATELY $46 PER TON.

"B. MR. LIVINGSTON'S OFFER FOR THE THREE COMBINED LOTS AMOUNTED TO APPROXIMATELY $29,444. SECOND HIGH BIDS FOR THE COMBINED LOTS SUBMITTED BY BIDDERS ON A "LOT" BASIS AMOUNTED TO APPROXIMATELY $27,470. THIS AMOUNTED TO A DIFFERENCE OF ONLY $1,974. ALSO, IT IS AGAIN POINTED OUT THAT THE DIFFERENCE IN OFFERS FOR THE LOT WHEREIN THE BULK OF THE DIFFERENCE BETWEEN ACTUAL AND ESTIMATED WEIGHTS OCCURRED (N26961) AMOUNTED TO LESS THAN $300.

"12. IN REVIEWING THE ABOVE, IT IS CONCLUDED THAT THE CLAIMANT WAS FULLY AWARE OF THE FACT THAT THE PROPERTY WAS BEING SOLD ON A "LOT BASIS" AND NOT BY WEIGHT; THAT ALTHOUGH HE WAS FURNISHED INFORMATION AS TO WEIGHT HE WAS CAUTIONED MORE THAN ONCE AS TO ITS INACCURACY; THAT WEIGHT WOULD NOT BE CONSIDERED IN MAKING AN AWARD; THAT THE CLAIMANT WAS FULLY AWARE OF THE TERMS AND CONDITIONS OF THE CONTRACT; THAT HE WAS CAUTIONED MORE THAN ONCE TO MAKE AN INSPECTION; THAT AN INSPECTION WAS MADE BY HIS AGENT; THAT THE CLAIMANT CANNOT JUSTLY CONTEND HE WAS MISLED; THAT HIS DEMAND FOR RELIEF IS BASED ON MORAL AND NOT LEGAL GROUNDS; THAT THERE IS CONSIDERABLE EVIDENCE THAT BIDS WERE ACTUALLY SUBMITTED ON A TRUE VALUE "LOT" BASIS; AND THAT BIDS WERE WITHIN THE PRICE RANGE NORMALLY RECEIVED FOR GOODS OF THIS TYPE. THEREFORE, IT IS RECOMMENDED THAT THE CLAIM BE DISAPPROVED.'

OUR OFFICE HAS NO FACILITIES OR PROCEDURES TO RESOLVE DISPUTED QUESTIONS OF FACT, AND, IN CASES OF DIRECT CONFLICT SUCH AS THIS, WE ARE BOUND TO ACCEPT THE ADMINISTRATIVE STATEMENT IN THE ABSENCE OF COMPLETELY CONVINCING RECORD EVIDENCE TO THE CONTRARY.

ACCEPTING, AS WE MUST, THE ADMINISTRATIVE REPORT, WE HAVE NO ALTERNATIVE BUT TO APPLY THE LAW, WHICH IS CLEAR THAT WHERE SURPLUS MATERIALS ARE OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS" BASIS, WITHOUT WARRANTY OR GUARANTY OF ANY KIND, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUNDS THAT THE MATERIALS ARE OF AN INFERIOR QUALITY, OR THAT THEY WERE SOMETHING OTHER THAN WHAT HE THOUGHT HE WAS BUYING. THE UNITED STATES COURT OF CLAIMS AND THE SUPREME COURT OF THE UNITED STATES HAVE RENDERED NUMEROUS DECISIONS IN WHICH THESE PRINCIPLES ARE ASSERTED. SEE H. SAMUEL AND SONS V. UNITED STATES, 61 C.CLS. 373; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; S. BRODY V. UNITED STATES, 64 C.CLS. 538; S. SNYDER CORP. V. UNITED STATES, 68 C.CLS. 667; SILBERSTEIN AND SON V. UNITED STATES, 69 C.CLS. 412; SACHS MERCANTILE CO. V. UNITED STATES, 78 C.CLS. 801; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90; METTRAM V. UNITED STATES, 271 U.S. 15; MAQUIRE AND CO. V. UNITED STATES, 273 U.S. 67. SEE, ALSO, 29 COMP. GEN. 310 AND 32 ID. 181.

ALTHOUGH IT IS ADMITTED THAT THE RESULTS IN THIS TYPE OF CASE SOMETIMES MAY SEEM HARSH, IT DOES NOT APPEAR THAT ANY REASONABLE EQUITABLE INTERPRETATION OF THE PUBLISHED CONDITIONS OF SALE WOULD WARRANT THE CONCLUSION THAT THE GOVERNMENT OWED ANY HIGHER DEGREE OF CARE OR DUTY TO BIDDERS THAN TO DELIVER THE EXACT PROPERTY WHICH WAS AVAILABLE FOR INSPECTION. SEE PAXTON-MITCHELL CO. V. UNITED STATES (C.CLS. APRIL 8, 1959), 172 F.SUPP. 463.

ACCORDINGLY, THE PREVIOUS ACTION TAKEN IN THE MATTER APPEARS PROPER, AND IS SUSTAINED.