B-126873, MAY 14, 1956

B-126873, MAY 14, 1956

TO HYMAN-MICHAELS COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 27, 1956, RELATIVE TO THE REFUSAL OF THE DEPARTMENT OF THE AIR FORCE TO RESCIND A CONTRACT AWARDED TO YOU ON OR ABOUT AUGUST 29, 1955, FOR THE PURCHASE OF VARIOUS ITEMS OF SURPLUS SPECIAL TOOLING.

SINCE THIS OFFICE HAD NO FIRST-HAND INFORMATION OF THE CIRCUMSTANCES GIVING RISE TO YOUR REQUEST, YOU WERE ADVISED UNDER DATE OF FEBRUARY 10, 1956, THAT A FULL REPORT IN THE MATTER HAD BEEN REQUESTED FROM THE SECRETARY OF THE AIR FORCE. BASED ON THE RECORD FORWARDED TO THIS OFFICE IN RESPONSE TO SUCH REQUEST IT APPEARS THAT THE MATERIAL IN QUESTION CONSISTED OF GAGES, DIES, FIXTURES, JIGS, TEMPLATES, PLASTERS, TOOLS, BARS, PLATES AND BLOCKS WHICH WERE IN THE POSSESSION OF SOLAR AIRCRAFT COMPANY, DES MOINES, IOWA, A FIRST TIER SUBCONTRACTOR OF THE GENERAL MOTORS CORPORATION, ALLISON DIVISION, UNDER CONTRACTS W-33/038/-AC-7201, AF 33/600/-22495 AND AF 33/600/-27238, AND WAS OFFERED FOR SCRAP SALE AS GOVERNMENT-OWNED TERMINATION INVENTORY ON AN "AS IS, WHERE IS" BASIS BY INVITATIONS FOR BIDS ISSUED BY SOLAR AIRCRAFT COMPANY ON JULY 11, 1955, UNDER THE FOLLOWING DESCRIPTION:

TABLE

CASE CHI-R-X-811 ESTIMATED WEIGHT - TONS

LOT 1 LOT 2 LOT 3 LOT 4

TOOL STEEL 10 10 - -

CAST STEEL 12 12 30 -

MAGNESIUM - - - 1

TOTAL 22 22 30 1

CASE CHI-R-X-811-A

TOOL STEEL 1.5

CAST STEEL 28.5

TOTAL 30

CASE CHI-R-X-811-B

TOOL STEEL 10

CAST STEEL 40

TOTAL 50

YOUR BIDS ON THE ABOVE MATERIALS WERE SOLICITED BY ORAL ADVICE OF THE PROPOSED SALE FROM THE AIR FORCE PLANT CLEARANCE OFFICER, CHICAGO AIR PROCUREMENT DISTRICT. PURSUANT TO SUCH ADVICE YOU SUBMITTED LOT BIDS IN A TOTAL AMOUNT OF $4,820, RECEIVED NOTIFICATION OF AWARD AND REMITTED PAYMENT IN FULL BY CERTIFIED CHECK.

IN SUPPORT OF YOUR REQUEST FOR RESCISSION YOU CONTEND YOUR BID PRICE WAS BASED ON ORAL REPRESENTATIONS OF THE PLANT CLEARANCE OFFICER THAT 52,000 POUNDS OF TOOL STEEL WERE CONTAINED IN THE MATERIAL OFFERED FOR SALE, WHICH HAD A MARKET VALUE OF 7 TO 10 TIMES THE VALUE OF CAST STEEL. HOWEVER, ONLY A NEGLIGIBLE AMOUNT OF METAL CORRESPONDING TO THE TRADE DEFINITION OF TOOL STEEL WAS CONTAINED IN THE MATERIAL RECEIVED BY YOUR CONSIGNEE AT CHICAGO, ILLINOIS. YOU ALSO CONTEND THAT YOU WERE NOT ABLE TO OBTAIN A COPY OF THE INVENTORY OR A WRITTEN INVITATION TO BID UNTIL AFTER THE MATERIALS WERE RECEIVED. HOWEVER, THE REPORT FROM THE DEPARTMENT OF THE AIR FORCE INDICATES YOU WERE ADVISED AT THE TIME OF BID SOLICITATION THAT THE SALE WAS ON AN "AS IS, WHERE IS" BASIS, THE TERMS AND CONDITIONS GOVERNING PRIOR SALES OF SCRAP BY SOLAR AIRCRAFT COMPANY WOULD APPLY TO THIS SALE, AND A COPY OF THE TERMINATION INVENTORY WAS IN THE POSSESSION OF THE PLANT CLEARANCE OFFICER AND WOULD BE MADE AVAILABLE FOR INSPECTION.

FROM THE INFORMATION BEFORE THIS OFFICE, IT APPEARS THAT YOU SUBMITTED BIDS ON THE THREE LOTS OF OBSOLETE TOOLING ON THE ASSUMPTION THAT THE SPECIFIC TOOL STEEL ITEMS CONTAINED IN SUCH LOTS WERE CUTTERS, REAMERS, BITS AND DRILLS, WHICH YOUR REPRESENTATIVE HAD OBSERVED IN STORAGE AT THE SOLAR AIRCRAFT COMPANY PLANT PRIOR TO THE DATE ON WHICH YOU WERE INVITED TO BID. THERE IS NO EVIDENCE OF YOUR VISUAL INSPECTION TO CONFIRM SUCH ASSUMPTION, NOR DOES IT APPEAR THAT THERE WAS ANY SPECIFIC ORAL REPRESENTATION BY THE PLANT CLEARANCE OFFICER THAT SUCH MATERIAL WAS INCLUDED IN THE SALE.

ORDINARILY, IN THE SALE OF PERSONAL PROPERTY BY DESCRIPTION THERE IS AN IMPLIED WARRANTY THAT THE PROPERTY WILL CORRESPOND WITH THE DESCRIPTION. HOWEVER, WHERE SURPLUS PROPERTY IS OFFERED FOR SALE BY THE GOVERNMENT ON AN "AS IS, WHERE IS" BASIS WITHOUT WARRANTY OR GUARANTY OF ANY KIND, THE LAW IS CLEAR THAT, IN THE ABSENCE OF A SHOWING OF BAD FAITH ON THE PART OF THE GOVERNMENT, A BIDDER WHO FAILS TO TAKE ADVANTAGE OF AN OPPORTUNITY TO INSPECT CANNOT SUBSEQUENTLY RECOVER ON THE GROUNDS THAT THE GOODS ARE OF AN INFERIOR QUALITY OR THAT THEY ARE SOMETHING OTHER THAN HE THOUGHT HE WAS BUYING. LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, 92; MATTRAM V. UNITED STATES, 271 U.S. 15; MAGUIRE AND CO. V. UNITED STATES, 273 U.S. 67; M. SAMUEL AND SONS V. UNITED STATES, 61 C.CLS. 373; TRIAD CORP. V. UNITED STATES, 63 C.CLS. 151; S. BRODY V. UNITED STATES, 64 C.CLS. 538; SILBERSTEIN AND SON INC. V. UNITED STATES, 69 C.CLS. 412.

THE RECORD BEFORE THIS OFFICE INDICATES THAT AIR FORCE AND SOLAR AIRCRAFT REPRESENTATIVES RESPONSIBLE FOR PREPARATION OF INVITATIONS FOR BIDS ON THE MATERIAL IN QUESTION CONSIDERED THE TERM "TOOL STEEL" AS EMBRACING ANY STEEL OF A HARDENABLE NATURE, AND SUPPORT SUCH INTERPRETATION BY REFERENCE TO A SIMILAR DEFINITION CONTAINED IN SECTION E, STEEL AND WROUGHT IRON PRODUCTS, AMC SUPPLY AND LOGISTICS HANDBOOK. WHILE YOU DO NOT SPECIFICALLY SO STATE, IT IS APPARENTLY YOUR CONTENTION THAT THE TERM "TOOL STEEL," WITHIN THE TERMINOLOGY OF THE TRADE, IS CONFINED TO RAW MATERIALS SPECIALLY PROCESSED AND HEAT TREATED FOR THE MANUFACTURE OF CUTTING TOOLS, DIES, FIXTURES AND JIGS, OR TO ARTICLES MANUFACTURED FROM SUCH MATERIALS. THERE IS NOTHING IN THE RECORD TO INDICATE, NOR DO YOU ALLEGE, THAT BAD FAITH MAY BE ATTRIBUTED TO THE CONTRACTING OFFICER OR HIS AGENTS IN ARRIVING AT THEIR ESTIMATE OF THE QUANTITY OF TOOL STEEL CONTAINED IN THE MATERIALS DESCRIBED IN THE INVITATIONS FOR BIDS. ON THE CONTRARY THE RECORD INDICATES THAT EXTREME CARE WAS EXERCISED BY REPRESENTATIVES OF THE AIR FORCE QUALITY CONTROL AND SOLAR AIRCRAFT COMPANY IN LISTING EACH INDIVIDUAL ITEM ON THE INVENTORY SCHEDULE, IN ESTIMATING THE AMOUNT OF TOOL AND CAST STEEL IN EACH ITEM ACCORDING TO THEIR UNDERSTANDING OF SUCH TERMS, AND IN ASCERTAINING THAT ALL ITEMS LISTED ON THE INVENTORY SCHEDULE AS COMPRISING THE LOTS ON WHICH YOUR BIDS WERE SUBMITTED WERE LOADED INTO RAILROAD CARS FOR SHIPMENT TO YOUR CONSIGNEE AT CHICAGO, ILLINOIS.

UNDER THE CIRCUMSTANCES, THE SITUATION PRESENTED BY THE INSTANT CASE FALLS SQUARELY WITHIN THE PRINCIPLES SET OUT IN LIPSHITZ AND COHEN V. UNITED STATES, CITED ABOVE, WHEREIN THE SUPREME COURT OF THE UNITED STATES STATED AS FOLLOWS:

"I AM SATISFIED THAT THEY (PLAINTIFFS) CANNOT CLAIM THAT THIS CONTRACT, WORDED AS IT WAS, HAS BEEN BROKEN BECAUSE IT TURNED OUT THAT THERE WAS LESS, EVEN GREATLY LESS, OF SOME OF THE MATERIALS DESCRIBED AS ON HAND THAN THE DESCRIPTION WOULD HAVE LED THE PURCHASER TO SUPPOSE. IT IS NOT MADE TO APPEAR THAT THE UNITED STATES FAILED OR REFUSED TO DELIVER ANY OF THE MATERIAL THAT WAS ACTUALLY AT THE FORTS NAMED AT THE TIME THE CONTRACT WAS MADE. * * * THE NEGOTIATIONS HAD REFERENCE TO SPECIFIC LOTS. THE NAMING OF QUANTITIES CANNOT BE REGARDED AS IN THE NATURE OF A WARRANTY, BUT MERELY AS AN ESTIMATE OF THE PROBABLE AMOUNTS IN REFERENCE TO WHICH GOOD FAITH ONLY COULD BE REQUIRED OF THE PARTY MAKING IT.'

IN THE EVENT YOU HAD TAKEN ADVANTAGE OF THE OPPORTUNITY TO INSPECT THE MATERIAL, IT IS A FAIR ASSUMPTION IT WOULD HAVE BEEN IMMEDIATELY APPARENT THAT QUANTITIES OF MATERIAL CORRESPONDING TO THE TRADE DEFINITION OF TOOL STEEL WERE NOT INCLUDED IN THE VARIOUS LOTS IN THE AMOUNTS REPRESENTED BY THE INVITATIONS FOR BIDS. HOWEVER, WHETHER SUCH INFORMATION WOULD HAVE RESULTED IN ANY APPRECIABLE DIFFERENCE IN YOUR BID PRICES IS CONJECTURAL, SINCE A LOCAL CONTRACTOR WHO HAD INSPECTED THE MATERIALS SUBMITTED BIDS AGGREGATING ONLY $303.68 LESS THAN THE TOTAL AMOUNT OF YOUR BIDS. BE THAT AS IT MAY, THE RECORD LEAVES NO DOUBT THAT YOU RECEIVED ALL OF THE MATERIAL COMPRISING THE LOTS UPON WHICH YOUR BIDS WERE SUBMITTED, AND ANY ERROR IN THE CONTRACT MUST THEREFORE BE HELD TO BE UNILATERAL. SUCH ERROR DOES NOT INVALIDATE THE CONTRACT AND NO OFFICER OR AGENT OF THE GOVERNMENT IS AUTHORIZED TO SURRENDER THE BENEFITS ACCRUING TO THE UNITED STATES UNDER A VALID CONTRACT. PACIFIC HARDWARE AND STEEL CO. V. UNITED STATES, 49 C.CLS. 327; BAUSCH AND LOMB OPTICAL CO. V. UNITED STATES, 78 C.CLS. 584, 607.

ACCORDINGLY, YOUR REQUEST FOR RESCISSION OF THE CONTRACT IS DENIED.