B-147489, DEC. 13, 1961

B-147489, DEC. 13, 1961

TO THE SECRETARY OF THE NAVY:

BY SECOND ENDORSEMENT OF SEPTEMBER 1, 1961, THE NAVY REGIONAL ACCOUNTS OFFICE, WASHINGTON, .C., FORWARDED TO OUR CLAIMS DIVISION FOR DIRECT SETTLEMENT A CLAIM BY WESTERN NON-FERROUS METALS CORPORATION FOR $2,606.17 REPRESENTING A REFUND ALLEGEDLY DUE PURSUANT TO SURPLUS SALES CONTRACT NO. N63118S 52920 AWARDED TO THE CLAIMANT ON MAY 11, 1961.

THE ITEM PURCHASED WAS DESCRIBED IN THE INVITATION AS "BRASS SCRAP" WEIGHING APPROXIMATELY 96,035 POUNDS. THE CLAIMANT CONTENDS THAT AN OVERAGE OF SOME 28,000 POUNDS SHIPPED TO HIM AND CHARGED AT THE CONTRACT RATE WAS MADE UP OF INFERIOR STEEL SCRAP WHICH WAS NOT INCLUDED IN THE ITEM AT THE TIME OF HIS INSPECTION PRIOR TO AWARD. THE CONTRACTING AGENCY, ON THE OTHER HAND, CONTENDS THAT THE MATERIAL SHIPPED WAS ONLY THAT REPRESENTED TO THE CLAIMANT TO BE INCLUDED IN THE ITEM AT THE TIME OF HIS INSPECTION.

ON SEPTEMBER 28, 1961, OUR OFFICE ISSUED A SETTLEMENT CERTIFICATE DENYING THE CLAIM. A COPY OF THAT CERTIFICATE WAS FURNISHED TO THE NAVY REGIONAL ACCOUNTS OFFICE. THE CLAIMANT REQUESTED RECONSIDERATION BY LETTER OF OCTOBER 16, 1961.

THE USUAL CLAIM ARISING OUT OF A SURPLUS SALE PRESENTS PRIMARILY THE LEGAL QUESTION WHETHER, IN VIEW OF THE EXPRESS DISCLAIMER OF WARRANTY BY THE GOVERNMENT, THE GOODS SOLD SUFFICIENTLY APPROXIMATED THE KIND DESCRIBED IN THE INVITATION AND SHOWN AS SAMPLES TO THE BIDDERS TO PERMIT THE FORMATION OF A VALID CONTRACT OF SALE. IN THIS CASE, HOWEVER, THE ONLY ISSUE PRESENTED IS WHETHER THE GOODS SHIPPED TO THE PURCHASER WERE THOSE INCLUDED IN THE ITEM AS DISPLAYED TO PROSPECTIVE PURCHASERS OR WHETHER, AS THE CLAIMANT CHARGES, OTHER AND INFERIOR MATERIALS WERE ADDED TO THE ITEM AFTER HIS INSPECTION. IF THE GOODS DELIVERED WERE NOT IN FACT THOSE INSPECTED AND CONTRACTED FOR, THE BUYER IS NOT LIABLE FOR THE PURCHASE PRICE; IF THEY ARE, HE IS. SEE STANDARD MAGNESIUM CORP. V. UNITED STATES, 241 F.2D 677, 679. THIS IS SOLELY A DISPUTED QUESTION OF FACT PROPERLY FOR SETTLEMENT AS A DISPUTE UNDER CLAUSE NO. 15 OF THE GENERAL SALES TERMS AND CONDITIONS, PURSUANT TO WHICH THE CONTRACTING OFFICER IS REQUIRED TO DECIDE SUCH MATTERS AND TO FURNISH A COPY OF A WRITTEN DECISION TO THE CONTRACTOR WHO MAY THEN EXERCISE A RIGHT OF APPEAL. THE RECORD FURNISHED TO OUR OFFICE CONTAINS NO INDICATION THAT THE CONTRACTING OFFICER REDUCED HER DECISION TO WRITING AND FURNISHED A COPY THEREOF TO THE CONTRACTOR.

WHERE, AS IN THIS INSTANCE, A CONTRACT PROVIDES FOR A DECISION WITH RESPECT TO SPECIFIED MATTERS BY A DESIGNATED OFFICIAL, THE CONTRACTOR IS ENTITLED TO HAVE SUCH DECISION MADE BY THE DESIGNATED OFFICIAL. SEE UNITED STATES V. NORTH AMERICAN COMMERCIAL CO., 74 F. 145; PHOENIX BRIDGE CO. V. UNITED STATES, 85 CT.CL. 603, 629; SAMUEL PLATO V. UNITED STATES, 86 CT.CL. 665, 667. FURTHER, WHERE AS HERE THE CONTRACT SETS OUT A PROCEDURE UNDER WHICH DISPUTES AS TO FACT ARE TO BE DECIDED ADMINISTRATIVELY, THE ADMINISTRATIVE REMEDY THEREBY PROVIDED MUST BE EXHAUSTED BY THE CONTRACTOR BEFORE A CLAIM MATERIALLY RELEVANT TO A FACTUAL QUESTION FOR DETERMINATION PURSUANT TO THE PROCEDURE IS COGNIZABLE EITHER BY THE COURTS OR BY OUR OFFICE. UNITED STATES V. JOSEPH A. HOLPUCH CO., 328 U.S. 234; UNITED STATES V. BLAIR, 321 U.S. 730; UNITED STATES V. CALLAHAN WALKER CONST. CO., 317 U.S. 56; B 98784, NOVEMBER 28, 1950; B- 122849, MARCH 21, 1955.

ACCORDINGLY, THE PERTINENT DOCUMENTS FORWARDED WITH THE CLAIM ARE BEING RETURNED SO THAT THE ADMINISTRATIVE PROCEDURE PRESCRIBED BY THE "DISPUTES" CLAUSE OF THE CONTRACT MAY BE CARRIED OUT. A COPY OF OUR LETTER OF TODAY TO THE CLAIMANT IS ALSO ENCLOSED. PREVIOUS SETTLEMENT ACTION OF THIS OFFICE SHOULD BE CONSIDERED CANCELLED.