B-173170, DEC 29, 1971

B-173170: Dec 29, 1971

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ALTHOUGH A SIGNIFICANT ERROR AS TO THE ESTIMATED WEIGHT OF THE FLANGES WAS MADE. IT IS FURTHER ALLEGED THAT THE CONTRACT WAS INVALIDATED WHEN THE GOODS WERE RELEASED TO THE CARRIER BEFORE PAYMENT WAS MADE. SINCE THE INTENTION OF THE REGULATION WAS TO PROTECT THE GOVERNMENT'S INTEREST. THE REQUEST FOR RELIEF IS DENIED. WE INFORMED YOU THAT CONSIDERATION OF THE MATTER BY OUR OFFICE WAS NOT APPROPRIATE WHILE AN APPEAL WAS PENDING WITH ASBCA AND THAT THEREFORE WE WERE CLOSING OUR FILE ON THE MATTER. THE SURPLUS PROPERTY SALE WAS CONDUCTED DECEMBER 8. CONDITIONS APPLICABLE TO SALES OF SURPLUS PROPERTY WAS INCORPORATED INTO THE IFB. COUNT OR MEASURE WILL BE SOLD IN LIKE UNITS UNLESS SPECIFICALLY CHANGED BY ANNOUNCEMENT BY THE AUCTIONEER.

B-173170, DEC 29, 1971

CONTRACTS - MISTAKE IN ESTIMATE - REQUEST FOR RELIEF DENIED DECISION DENYING REQUEST FOR RELIEF BY SURPLUS TIRE SALES ON A CONTRACT AWARDED UNDER AN IFB ISSUED BY THE DEFENSE SURPLUS SALES OFFICE, OAKLAND, CA., FOR THE SALE OF SURPLUS PROPERTY. ALTHOUGH A SIGNIFICANT ERROR AS TO THE ESTIMATED WEIGHT OF THE FLANGES WAS MADE, THE PAMPHLET CONCERNING AUCTION PROCEDURES CLEARLY ABSOLVES THE GOVERNMENT FROM LIABILITY FOR SUCH ERROR. IT IS FURTHER ALLEGED THAT THE CONTRACT WAS INVALIDATED WHEN THE GOODS WERE RELEASED TO THE CARRIER BEFORE PAYMENT WAS MADE. SINCE THE INTENTION OF THE REGULATION WAS TO PROTECT THE GOVERNMENT'S INTEREST, IT MAY NOT BE USED TO ANNUL AN EXISTING CONTRACT. ACCORDINGLY, THE REQUEST FOR RELIEF IS DENIED.

TO SURPLUS TIRE SALES:

WE REFER TO YOUR LETTER OF MAY 28, 1971, QUESTIONING THE VALIDITY OF CONTRACT NO. 44-1080-102, AWARDED UNDER INVITATION FOR BIDS NO. 44 1080, ISSUED BY THE DEFENSE SURPLUS SALES OFFICE (DSSO), OAKLAND, CALIFORNIA, FOR THE SALE OF SURPLUS PROPERTY.

IN A LETTER OF MAY 1, 1971, TO DSSO YOU SUBMITTED THE SAME ISSUE FOR CONSIDERATION BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA) UNDER THE DISPUTES CLAUSE. IN OUR LETTER OF OCTOBER 1, 1971, WE INFORMED YOU THAT CONSIDERATION OF THE MATTER BY OUR OFFICE WAS NOT APPROPRIATE WHILE AN APPEAL WAS PENDING WITH ASBCA AND THAT THEREFORE WE WERE CLOSING OUR FILE ON THE MATTER. IN A LETTER OF OCTOBER 3, 1971, YOU INFORMED US THAT YOU WANTED THE QUESTION TO BE CONSIDERED BY THE COMPTROLLER GENERAL AND IN A LETTER OF OCTOBER 8, 1971, YOU REQUESTED THAT YOUR APPEAL BE WITHDRAWN FROM THE ASBCA DOCKET. THEREFORE, OUR OFFICE HAS CONSIDERED THE VALIDITY OF YOUR CONTRACT WITH DSSO AND YOUR REQUEST FOR RESCISSION OR REFORMATION.

THE SURPLUS PROPERTY SALE WAS CONDUCTED DECEMBER 8, 1970, AT SHARPE ARMY DEPOT, STOCKTON, CALIFORNIA. THE PAMPHLET "SALE BY REFERENCE" (MARCH, 1969), CONTAINING INSTRUCTIONS, TERMS, AND CONDITIONS APPLICABLE TO SALES OF SURPLUS PROPERTY WAS INCORPORATED INTO THE IFB, INCLUDING SPECIFIC INCORPORATION OF PART 6, PAGE 10, ARTICLE DA OF THE PAMPHLET PROVIDING THE FOLLOWING INSTRUCTIONS CONCERNING PROCEDURES AT AUCTION SALES:

"*** (2) ALL ITEMS CATALOGED BY WEIGHT, COUNT OR MEASURE WILL BE SOLD IN LIKE UNITS UNLESS SPECIFICALLY CHANGED BY ANNOUNCEMENT BY THE AUCTIONEER. THE GOVERNMENT RESERVES THE RIGHT TO SELL IN SUCH UNITS OR GROUPS THEREOF AS IT DEEMS MOST EXPEDIENT. *** (3) THE AUCTIONEER'S 'KNOCKING DOWN' AN ITEM WILL CONSTITUTE AN AWARD BY THE SALES CONTRACTING OFFICER TO THE SUCCESSFUL PURCHASER FOR EACH ITEM EXCEPT AS OTHERWISE HEREIN SPECIFICALLY PROVIDED. (4) *** ONCE AN ITEM IS 'KNOCKED DOWN' THE PURCHASER MAY NOT WITHDRAW THE BID. *** (6) ALL BIDDERS ACKNOWLEDGE (BY SIGNING THE REGISTRATION CARD) THAT THEY HAVE FULL AND COMPLETE UNDERSTANDING OF THE TERMS AND CONDITIONS, AND AGREE TO BE BOUND THEREBY."

FURTHERMORE, THE FOLLOWING PROVISIONS OF THE PAMPHLET "SALE BY REFERENCE," PART 2, "GENERAL SALE TERMS AND CONDITIONS - ALL SALES" WERE ALSO INCORPORATED IN THE IFB:

"1. INSPECTION. THE BIDDER IS INVITED, URGED, AND CAUTIONED TO INSPECT THE PROPERTY PRIOR TO SUBMITTING A BID. ***

"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'. THE DESCRIPTION OF THE PROPERTY IS BASED ON THE BEST INFORMATION AVAILABLE TO THE SALES OFFICE. 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 PURPOSE. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION AND EXCEPT AS PROVIDED IN CONDITIONS NO. 12 AND 14, NO REQUEST FOR ADJUSTMENT IN PRICE OR FOR RESCISSION OF THE SALE WILL BE CONSIDERED. ***

"27. GUARANTEED DESCRIPTIONS.

"B. THE GOVERNMENT DOES NOT WARRANT OR GUARANTEE ANY OF THE FOLLOWING:

"(3) ESTIMATES AS TO THE 'WEIGHT' OF PROPERTY OFFERED FOR SALE BY THE 'UNIT' ARE NOT GUARANTEED."

DURING THE COURSE OF THE AUCTION, YOU MADE A HIGH BID OF $8.50 PER UNIT FOR ITEM NO. 149 OF THE IFB, DESCRIBED AS "MARINE FLANGE ASSEMBLY," 87 EACH, ESTIMATED TOTAL WEIGHT 83,000 POUNDS. THE CONTRACT AWARDED UPON ACCEPTANCE OF THE OFFER DURING THE AUCTION WAS CONFIRMED ON THE SAME DAY BY A NOTICE OF AWARD. ALTHOUGH YOU HAD NOT INSPECTED THE PROPERTY BEFORE THE SALE BEGAN, YOU DISCOVERED IMMEDIATELY AFTER THE AWARD WAS MADE THAT THE ESTIMATED TOTAL WEIGHT OF 83,000 POUNDS LISTED IN THE PROPERTY DESCRIPTION WAS NOT ACCURATE AND THAT STENCILED MARKINGS ON THE BOXES CONTAINING THE FLANGES INDICATED THAT THE ACTUAL TOTAL WEIGHT WAS ABOUT 17,000 POUNDS, A FACT VERIFIED BY THE PROPERTY DISPOSAL OFFICER. THE FIGURE USED IN THE PROPERTY DESCRIPTION FOR ESTIMATED TOTAL WEIGHT WAS TAKEN WITHOUT FURTHER VERIFICATION FROM THE TURN-IN DOCUMENT TRANSFERRING THE FLANGES FROM THE HOLDING ACTIVITY TO THE SALES OFFICE. THE FIGURE ON THE TURN-IN DOCUMENT WAS BASED UPON A DEPARTMENT OF DEFENSE SINGLE LINE ITEM RELEASE-RECEIPT DOCUMENT ON WHICH THE FLANGES WERE LISTED AS WEIGHING 951 POUNDS PER UNIT, ACCOUNTING FOR THE TOTAL APPROXIMATE FIGURE OF 83,000 POUNDS FOR 87 FLANGES. THE CAUSE OF THE MISTAKE ON THE TURN-IN DOCUMENTS WAS NOT EXPLAINED. YOU IMMEDIATELY REQUESTED THAT THE SALES CONTRACTING OFFICER DELETE ITEM NO. 149 FROM THE CONTRACT AND REPEATED THIS REQUEST FOR RELIEF IN A LETTER OF DECEMBER 11, 1970. YOU WERE NOTIFIED BY THE SALES CONTRACTING OFFICER THAT THERE WAS NO LEGAL AUTHORITY FOR DELETING THE ITEM FROM THE CONTRACT.

SUBSEQUENTLY, YOU MADE COMPLETE PAYMENT FOR ALL THE ITEMS PURCHASED AT THE SALE EXCEPT FOR THE FLANGES IN IFB ITEM NO. 149 FOR WHICH ONLY THE REQUIRED 20-PERCENT DEPOSIT WAS MADE. ON JANUARY 7-8, 1971, ALL THE PROPERTY YOU PURCHASED AT SHARPE ARMY DEPOT ON DECEMBER 8, 1971, INCLUDING THE FLANGES FOR WHICH PAYMENT HAD NOT YET BEEN MADE, WAS RELEASED BY THE PROPERTY DISPOSAL OFFICER TO A CARRIER ACTING ON YOUR BEHALF. THAT ACTION PUT INTO DISPUTE THE FREIGHT AND STORAGE CHARGES FOR THE FLANGES WHICH WERE DELIVERED TO SURPLUS TIRE SALES.

OUR OFFICE HAS HELD THAT THE HOLDING ACTIVITY SHOULD BE HELD TO THE STANDARD OF USING THE BEST INFORMATION AVAILABLE WHEN DESCRIBING SURPLUS PROPERTY FOR SALE AND THAT THE STANDARD IS MET WHEN THE PURCHASE DESCRIPTION IS BASED UPON THE TURN-IN DOCUMENT. 50 COMP. GEN. 28 (1970). YOU RELY UPON DECISION B-170310, SEPTEMBER 24, 1970, AS AUTHORITY IN SUPPORT OF YOUR CLAIM. HOWEVER, THE PURCHASER'S CLAIM WAS ALLOWED IN THAT CASE BECAUSE THERE WAS A FAILURE TO USE THE BEST INFORMATION AVAILABLE IN THE TURN-IN DOCUMENTS.

YOU ALSO ALLEGE THAT THE CONTRACT FOR PURCHASE OF THE FLANGES WAS INVALIDATED WHEN THE PROPERTY DISPOSAL OFFICER IMPROPERLY RELEASED THEM TO THE CARRIER BEFORE PAYMENT WAS MADE. HOWEVER, THE REGULATION REQUIRING FULL PAYMENT BEFORE RELEASE WAS CLEARLY INTENDED TO PROTECT THE GOVERNMENT'S INTEREST AND MAY NOT BE USED TO ANNUL AN EXISTING CONTRACT.

IN THE CIRCUMSTANCES, WE CONCLUDE THAT SURPLUS TIRE SALES IS LIABLE TO THE GOVERNMENT FOR THE BALANCE OF THE CONTRACT PRICE FOR THE MARINE FLANGE ASSEMBLIES AND THAT THE GOVERNMENT IS NOT LIABLE TO SURPLUS TIRE SALES FOR ANY FREIGHT AND STORAGE CHARGES THAT MAY HAVE BEEN INCURRED IN THE SHIPMENT OF THE PROPERTY.

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