B-146067, AUG 11, 1961

B-146067: Aug 11, 1961

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INC.: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 26. WAS ACCEPTED AND THE ITEM WAS AWARDED TO YOU ON CONTRACT NO. THE CONTRACTING OFFICER AT THE DISPOSAL AGENCY WAS ADVISED BY YOU THAT YOU HAD BEEN INFORMED BY A COMPETITOR THAT THE VALVES INVOLVED WERE "USED IN LIEU OF UNUSED AS ADVERTISED.'. YOU STATED THAT YOUR BID OF $1.271 EACH FOR THESE UNITS WAS BASED ON THE GOVERNMENT'S ADVERTISED DESCRIPTION OF THE PROPERTY AS BEING UNUSED. 250 WHICH THE GOVERNMENT WAS HOLDING AT THAT TIME. YOUR CLAIM WAS FORWARDED BY THE NAVY REGIONAL ACCOUNTS OFFICE TO OUR CLAIMS DIVISION FOR SETTLEMENT. THE CLAIM WAS DISALLOWED ON THE GROUND GENERALLY THAT THE PROPERTY HERE INVOLVED WAS OFFERED FOR SALE ON AN "AS IS" BASIS AND WITHOUT AN EXPRESS OR IMPLIED WARRANTY OR GUARANTY OF ANY KIND.

B-146067, AUG 11, 1961

TO HABER AIRCRAFT CO., INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED MAY 26, 1961, REQUESTING REVIEW OF OUR CLAIMS DIVISION SETTLEMENT DATED MAY 9, 1961, WHICH DISALLOWED YOUR CLAIM FOR REFUND IN CONNECTION WITH CERTAIN PROPERTY PURCHASED BY YOU UNDER SALES CONTRACT NO. N63067-2644 WITH THE DEPARTMENT OF THE NAVY.

BY SALES INVITATION NO. B-121-61-63067 DATED JANUARY 6, 1961, U.S. CONSOLIDATED SURPLUS SALES OFFICE, NAVAL SUPPLY CENTER, NORFOLK, VIRGINIA, SOLICITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF CERTAIN MISCELLANEOUS SURPLUS PROPERTY, SUBJECT TO THE GENERAL SALE TERMS AND CONDITIONS AND THE SPECIAL CONDITIONS SET FORTH IN THE INVITATION. RESPONSE THERETO YOU SUBMITTED A BID, ACCOMPANIED BY A BID DEPOSIT OF $2,250, WITH QUOTATIONS ON SEVERAL OF THE ADVERTISED ITEMS, INCLUDING ITEM NO. 38 DESCRIBED IN THE INVITATION AS FOLLOWS:

"VALE, ENGINE, PT.NO. 44764. O/A DIM.: O.D. VALVE 2 19/32 INCHES, O.D. SHAFT 11/16 INCH, LENGTH 6 1/4 INCHES. MFR:PRATT AND WHITNEY. PACKED FOR SHIPMENT. UNUSED. TOTAL ACQUISITION COST: $138,432.00. QUANTITY - 5768 EACH.'

YOUR BID AT $1.271 EACH AND A TOTAL OF $7,331.13 ON ITEM NO. 38, BEING THE HIGHEST RECEIVED ON THAT ITEM, WAS ACCEPTED AND THE ITEM WAS AWARDED TO YOU ON CONTRACT NO. N63067-2644 UNDER DATE OF FEBRUARY 9, 1961, AT THAT PRICE.

BY TELEPHONE CALL (CONFIRMED BY LETTER DATED FEBRUARY 16, 1961), THE CONTRACTING OFFICER AT THE DISPOSAL AGENCY WAS ADVISED BY YOU THAT YOU HAD BEEN INFORMED BY A COMPETITOR THAT THE VALVES INVOLVED WERE "USED IN LIEU OF UNUSED AS ADVERTISED.' AT THAT TIME YOU DEMANDED THAT YOU RECEIVE 5,768 NEW UNUSED VALVES OR THAT THE FULL PURCHASE PRICE BE RETURNED TO YOU. SUBSEQUENTLY, IN LETTER DATED FEBRUARY 22, 1961, YOU STATED THAT YOUR BID OF $1.271 EACH FOR THESE UNITS WAS BASED ON THE GOVERNMENT'S ADVERTISED DESCRIPTION OF THE PROPERTY AS BEING UNUSED, BUT THAT AFTER RECEIPT OF NOTICE OF AWARD YOU FOUND THE MATERIAL TO BE USED AND REPACKED BY THE GOVERNMENT. YOU THEN ALLEGED MISREPRESENTATION BY THE GOVERNMENT OF THE MATERIAL OFFERED FOR SALE, AND STATED THAT YOU EXPECTED TO RECEIVE REFUND OF THE TOTAL OF $2,250 WHICH THE GOVERNMENT WAS HOLDING AT THAT TIME.

YOUR CLAIM WAS FORWARDED BY THE NAVY REGIONAL ACCOUNTS OFFICE TO OUR CLAIMS DIVISION FOR SETTLEMENT. AS INDICATED IN THE SETTLEMENT OF MAY 9, 1961, THE CLAIM WAS DISALLOWED ON THE GROUND GENERALLY THAT THE PROPERTY HERE INVOLVED WAS OFFERED FOR SALE ON AN "AS IS" BASIS AND WITHOUT AN EXPRESS OR IMPLIED WARRANTY OR GUARANTY OF ANY KIND.

IN YOUR LETTER DATED MAY 26, 1961, YOUR REQUEST FOR REVIEW OF OUR SETTLEMENT APPEARS TO BE BASED ON THE CONTENTION THAT THE VALVES SOLD TO YOU HAD BEEN OFFERED PREVIOUSLY FOR SALE "AS NEW AND THEN WITHDRAWN" AND THAT THE DISPOSAL AGENCY PERSONNEL WERE FULLY AWARE OF THAT FACT. YOU FURTHER CONTEND THAT THE GOVERNMENT, THEREFORE, KNEW AT THE TIME BID INVITATION NO. B-121-61-63067 WAS ISSUED THAT THE VALVES OFFERED UNDER ITEM NO. 38 WERE NOT "UNUSED" AS STATED THEREIN AND THAT "THIS CONSTITUTED A TRAP WITH ITS FULL KNOWLEDGE OF CONDITION.'

CONCERNING THESE CONTENTIONS, WE ARE NOW IN RECEIPT OF A REPORT FROM THE DEPARTMENT OF THE NAVY WHEREIN IT IS STATED THAT THE VALVES DESCRIBED UNDER ITEM NO. 38 "HAD NEVER PREVIOUSLY BEEN CATALOGED AND ADVERTISED FOR SALE NOR WITHDRAWN AND READVERTISED FOR SALE.'

WHILE IN THE CONTRACTING OFFICER'S STATEMENT OF FACTS PERTAINING TO THE SALE TRANSACTION IT IS REPORTED THAT AN EXAMINATION OF THE VALVES OFFERED UNDER ITEM NO. 38 REVEALED THAT IN 21 BOXES 2,222 OF THE VALVES AWARDED WERE FACTORY NEW IN A SATISFACTORY PRESERVED CONDITION AND THAT SPOT RANDOM CHECKING OF ALL REMAINING BOXES REVEALED READY-FOR ISSUE RECONDITIONED USED VALVES, THE DISPOSAL AGENCY CONTRACTING OFFICER STATES THE ITEM AVAILABLE FOR DELIVERY IS THE IDENTICAL MATERIAL SET UP FOR INSPECTION PURPOSES, AND INSPECTION BY THE BIDDER PRIOR TO SUBMISSION OF BID WOULD HAVE REVEALED THAT YOU FAILED TO AFFORD YOURSELF OF INSPECTION PRIVILEGES PRIOR TO BIDDING.

ALTHOUGH IT IS ADMITTED THAT AN ERROR WAS MADE IN THE DESCRIPTIVE MATTER IN THE INVITATION UNDER ITEM NO. 38, SUCH ADMISSION, HOWEVER, WITHOUT MORE MAY NOT BE ACCEPTED AS RENDERING INAPPLICABLE THE EXPRESS TERMS AND CONDITIONS OF THE SALE TO WHICH YOU AGREED.

AS WE STATED IN THE SETTLEMENT DISALLOWING YOUR CLAIM, WHILE ORDINARILY IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION, NO SUCH WARRANTY MAY BE IMPLIED WHERE, AS HERE, THE SALES CONTRACT CONTAINS AN EXPRESS DISCLAIMER. MOREOVER, THE GOVERNMENT IN DISPOSING OF ITS SURPLUS PROPERTY IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS IGNORANT OF THE TRUE DESCRIPTION OF THE GOODS IT SELLS. LUMBRAZO V. WOODRUFF, 175 N.E. 525; UNITED STATES V. KELLY, 112 F.SUPP. 831; I. SHAPIRO AND COMPANY V. UNITED STATES, 66 CT.CL. 424; AND MAGUIRE AND CO. V. UNITED STATES, 273 U.S. 67. THESE CASES AND OTHERS CONCLUDE THAT UNDER SUCH PROVISIONS, IN THE ABSENCE OF BAD FAITH OR FRAUD, BUYERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT, AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER.

THERE IS NO EVIDENCE IN THE RECORD OF WILLFUL MISREPRESENTATION OR OF BAD FAITH ON THE PART OF THE GOVERNMENT. IT DOES NOT APPEAR THAT THE OFFICER IN CHARGE OF THE SALE KNEW THAT ALL OF THE MATERIAL WAS NOT AS DESCRIBED. THE MATERIAL WAS SOLD FOR WHAT THE GOVERNMENT THOUGHT IT TO BE, AND THERE IS NOTHING OTHERWISE IN THE RECORD TO INDICATE THAT THE GOVERNMENT AGENTS ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE SALES TRANSACTION. UNDER THE CONDITIONS OF THE SALE THE GOVERNMENT WAS ONLY OBLIGED TO ACT IN GOOD FAITH, AND THIS IT DID. SEE LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, 92; AND LUMBRAZO V. WOODRUFF, SUPRA; ALSO, UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, AFFIRMED 253 F.2D 956.

REGARDING YOUR STATEMENT AS TO THE IMPOSSIBILITY OR THE IMPRACTICABILITY OF MAKING AN INSPECTION OF THE PROPERTY PRIOR TO SUBMITTING YOUR BID PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE BID INVITATION PROVIDED THAT "IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM OR FOR THE WITHDRAWAL OF A BID AFTER OPENING.' IN THE CASE OF AMERICAN SANITARY RAG CO. V. UNITED STATES, 151 F.SUPP. 414, CONCERNING A SALE OF SURPLUS PROPERTY, THE COURT HELD THAT THE RISK AS TO THE ACTUAL CONDITION OF THE PROPERTY WAS PLACED SQUARELY UPON THE PURCHASER. THE BIDDER'S RESPONSIBILITIES IN THIS CONNECTION ALSO APPEAR TO BE CLEARLY SET FORTH IN THE CASE OF PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHERE IT WAS STATED THAT A BIDDER FAILS TO INSPECT AT HIS PERIL AND THAT HAD PLAINTIFF MADE AN INSPECTION BEFORE SUBMITTING ITS BID IT COULD HAVE DISCOVERED THE CONDITION OF THE PROPERTY OF WHICH IT COMPLAINED.

SEE ALSO THE RECENT CASE OF KRUPP V. FEDERAL HOUSING ADMINISTRATION, 185 F.SUPP. 638, WHEREIN THE COURT, IN A SIMILAR CASE, HELD THAT THE PURCHASER WHO RELIES ON INFORMATION FURNISHED HIM BY THE GOVERNMENT AND FAILS TO INSPECT OR DOES NOT FULLY INSPECT DOES SO AT HIS OWN RISK, AND EVEN IF HE MAKES A BAD BARGAIN BECAUSE OF DEFECTS IN THE PROPERTY WHICH EVEN A REASONABLY CAREFUL INSPECTION WOULD NOT DISCLOSE, THE RISK OF LOSS STILL FALLS ON HIM; AND THAT, IF HE IS MISLED BY HIS RELIANCE ON ANY STATEMENT OF THE SELLER AS TO THE PROPERTY, THIS IS THE RISK WHICH HE KNEW OR SHOULD HAVE KNOWN HE WAS TAKING BECAUSE THE PROSPECTUS CLEARLY WARNED HIM THAT THE SALE WAS BEING MADE ON THOSE TERMS.

WE REALIZE THAT THE RESULT IN THIS TYPE OF CASE IS SOMETIMES HARSH, BUT IN VIEW OF THE SETTLED LEGAL PRINCIPLES APPLICABLE, AS OUTLINED ABOVE, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT NO LEGAL BASIS EXISTS FOR RELIEVING YOU OF YOUR OBLIGATIONS UNDER SALES CONTRACT NO. N63067-22644 (ITEM NO. 38 OF SALES INVITATION NO. B-121-61-63067). ACCORDINGLY, THE SETTLEMENT OF MAY 9, 1961, IS SUSTAINED.

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