B-135233, MAR. 6, 1958

B-135233, MAR. 6, 1958

TO THE SECRETARY OF THE NAVY:

REFERENCE IS MADE TO A LETTER DATED FEBRUARY 12, 1958, FILE R11.2 L8) L8/NT4-15, FROM THE ASSISTANT CHIEF FOR PURCHASING, BUREAU OF SUPPLIES AND ACCOUNTS, REQUESTING A DECISION AS TO WHETHER CONTRACT NO. N665S-34618, ENTERED INTO BY THE NAVAL SUPPLY DEPOT CLEAR FIELD, OGDEN, UTAH, WITH UNITED MERCHANDISING CORPORATION, BURBANK, CALIFORNIA, FOR THE SALE OF PORTABLE DECONTAMINATING APPARATUS, MAY BE CANCELLED WITH RESPECT TO ITEM NO. 7 AND THE CONTRACTOR REIMBURSED FOR EXPENDITURES CLAIMED, IN VIEW OF THE FACT THAT THE GOODS SOLD WERE NOT AS ADVERTISED. ADVICE IS ALSO REQUESTED AS TO WHETHER THE DECISION MAY BE APPLIED TO CONTRACTS NOS. N665S-34613 WITH S AND M SALES OF PORTLAND, OREGON, AND N665S-34619 WITH VICTOR HOFFMAN COMPANY OF PORTLAND, OREGON, INVOLVING SIMILAR FACTS IN CONNECTION WITH THE SALE OF GOODS UNDER ITEM NO. 7.

BY INVITATION NO. B-61-58-665 ISSUED OCTOBER 11, 1957, THE NAVAL SUPPLY DEPOT CLEAR FIELD, OFFERED FOR SALE CERTAIN QUANTITIES OF SURPLUS PROPERTY LOCATED AT UTAH GENERAL DEPOT, OGDEN, UTAH, BIDS TO BE OPENED OCTOBER 29, 1957. ITEMS NOS. 5, 6, AND 7 OF THE INVITATION COVERED PORTABLE DECONTAMINATING APPARATUS DESCRIBED IN THE RESPECTIVE ITEMS AS 16,219 "UNUSED, GOOD," 1,600 "UNUSED FAIR," AND 4,407 "UNUSED, FAIR.' EACH OF THE SAID ITEMS INCLUDED A PROVISION AS FOLLOWS:

"BIDS SHALL BE MADE FOR A MINIMUM OF 20 EA. OR ANY MULTIPLE OF 20 EA. AWARDS WILL BE MADE TO THE HIGHEST ACCEPTABLE BIDDER FOR THE QUANTITY BID, THE BALANCE AVAILABLE TO THE NEXT HIGHEST ACCEPTABLE BIDDER AND SO ON. * * * BIDDERS WILL NOT BE PERMITTED TO SELECT INDIVIDUAL UNITS IN AN ITEM SO AS TO HAVE A BETTER CHOICE THAN OTHER BIDDERS. BIDS MUST BE FOR ALL OR ANY PART IN MULTIPLES OF 20 EA.'

IT IS REPORTED THAT THE MATERIAL WAS LEFT IN STORAGE IN CERTAIN WAREHOUSES, SAMPLES BEING DISPLAYED IN ANOTHER WAREHOUSE.

THE PROPERTY WAS OFFERED FOR SALE ON AN "AS IS" AND "WHERE IS" BASIS AND IN PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, THE GOVERNMENT DISCLAIMED ALL WARRANTIES "EXPRESSED 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. PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS URGED BIDDERS TO INSPECT THE PROPERTY BEFORE BIDDING THEREON AND CAUTIONED THEM THAT IN NO CASE WOULD FAILURE TO INSPECT CONSTITUTE GROUNDS FOR A CLAIM AGAINST THE GOVERNMENT. APPARENTLY, UNITED MERCHANDISING CORPORATION INSPECTED THE SAMPLES BEFORE BIDDING.

ON THE BASIS OF BIDS RECEIVED, UNITED MERCHANDISING CORPORATION WAS AWARDED CONTRACT NO. N665S-34618 ON OCTOBER 31, 1957, COVERING CERTAIN QUANTITIES UNDER ITEMS NOS. 5 AND 6 AND 500 EACH AT $2.2648, 600 EACH AT $2.0648, 600 EACH AT $1.8648 AND 1,667 AT $1.6348 UNDER ITEM NO. 7. IT IS REPORTED THAT THE PROPERTY SOLD UNDER ITEMS NOS. 5 AND 6 CONFORMED TO THE DISPLAY AND INVITATION AND HAS BEEN DELIVERED. HOWEVER, AFTER RECEIPT OF 518 UNITS UNDER ITEM NO. 7, UNITED MERCHANDISING CORPORATION REPORTED BY TELEPHONE ON NOVEMBER 13, 1957, THAT THE PROPERTY RECEIVED WAS USED AND IN POOR CONDITION. IT IS REPORTED BY THE PROPERTY DISPOSAL OFFICER THAT INVESTIGATION REVEALED THAT THE CONDITION OF MOST OF THE PROPERTY SOLD UNDER ITEM NO. 7 WAS NOT AS ADVERTISED. DELIVERY OF THE 518 UNITS WAS MADE AT UTAH GENERAL DEPOT, OGDEN, UTAH, IN ACCORDANCE WITH THE CONTRACT PROVISIONS, AND IT APPEARS THAT THE UNITS WERE TRANSPORTED FROM OGDEN, UTAH, TO BURBANK, CALIFORNIA, BY A TRUCKING FIRM EMPLOYED BY THE CONTRACTOR.

IN THE CONTRACTING OFFICER'S STATEMENT DATED JANUARY 22, 1958, IT IS STATED:

"THE DECONTAMINATING APPARATUS WERE BOXED AND THE GOVERNMENT, AS WELL AS THE BUYERS, WERE NOT ABLE TO DETERMINE THE CONDITION WITHOUT OPENING THE BOXES AND REMOVING THE CARTONS. THE PACK OF MATERIAL WOULD HAVE PREVENTED THE BIDDERS FROM PERFORMING A THOROUGH INSPECTION OTHER THAN THE SAMPLE DISPLAYED AS THE MATERIAL WAS IN ANOTHER WAREHOUSE AND WAS IN WOODEN BOXES CONTAINING TWO EACH APPARATUS, PACKED INDIVIDUALLY IN CARDBOARD BOXES. FURTHER, IT WAS ASSUMED THAT THE MATERIAL DISPLAYED BY THE UTAH GENERAL DEPOT FOR SALE WAS A FAIR REPRESENTATIVE SAMPLE, CAREFULLY SELECTED FROM THE BULK OF MATERIAL OFFERED. THE BIDDERS, THEREFORE, WOULD HAVE INSPECTED AS FAR AS WAS POSSIBLE. AFTER CLAIMANT REPORTED THE DIFFERENCE IN CONDITION UPON RECEIPT OF THE FIRST TRUCK LOAD, THE REMAINING UNDELIVERED BOXES ON ITEM 7 WERE OPENED BY THE UTAH GENERAL DEPOT, WHICH REVEALED THAT THE MATERIAL WAS NOT AS ADVERTISED AND FURTHER, THAT A CONSIDERABLE QUANTITY WAS IN VERY POOR CONDITION THAT WOULD HAVE LITTLE VALUE OTHER THAN AS SCRAP. AS A RESULT OF THESE FINDINGS, THE DISPOSAL OFFICER IN CONJUNCTION WITH THE CONTRACTING OFFICER STOPPED ALL SHIPMENTS ON ITEM 7, WHICH INVOLVED TWO ADDITIONAL CONTRACTS, N665S-34613 WITH S AND M SALES OF PORTLAND, OREGON AND N665S-34619 WITH THE VICTOR HOFFMAN COMPANY OF PORTLAND, OREGON.'

UNDER DATE OF NOVEMBER 5, 1957, UNITED MERCHANDISING CORPORATION COMPLETED PAYMENT OF THE CONTRACT PRICE TOTALING $11,220.41. HOWEVER, BY LETTER DATED JANUARY 7, 1958, TO THE CONTRACTING OFFICER, THE CORPORATION SUBMITTED ITS CLAIM IN THE AMOUNT OF $1,655.35 ITEMIZED AS FOLLOWS:

CHART

518 UNITS AT $2.2648 $1,173.17

HAULAGE FROM OGDEN, UTAH, TO BURBANK, CALIFORNIA 400.00

ROUND TRIP AIR FARE FROM BURBANK, CALIFORNIA, TO

SALT LAKE CITY 82.18

$1,655.35

THE CONTRACTING OFFICER RECOMMENDS THAT RELIEF BE GRANTED TO UNITED MERCHANDISING CORPORATION.

DESPITE THE EXPRESS DISCLAIMER BY THE GOVERNMENT OF ANY WARRANTY AS TO THE "DESCRIPTION" OF THE PROPERTY OFFERED FOR SALE, THE LAW NEVERTHELESS RECOGNIZES A DISTINCTION BETWEEN SALES BY LOT AND SALES OF PARTICULAR QUANTITIES TO BE TAKEN FROM A LARGER STOCK, SO THAT, AS HERE, THE PARTICULAR UNITS PURCHASED MAY NOT BE SPECIFICALLY IDENTIFIABLE AT THE TIME THE SALE IS MADE. SEE B-130448, FEBRUARY 4, 1957 (36 COMP. GEN. 572), AND B-131586, MAY 24, 1957, TO YOU. IN THIS SITUATION, THE LANGUAGE OF THE DESCRIPTION HAS BEEN HELD TO RELATE MORE TO THE IDENTIFY OF THE ITEMS THAN TO A DESCRIPTION OF THEIR CONDITION AND THERE IS IMPOSED UPON THE SELLER IN SUCH CASES THE UNEQUIVOCAL OBLIGATION TO DELIVER ITEMS WHICH CONFORM TO THE PROVISIONS OF THE CONTRACT IDENTIFYING THE SUBJECT MATTER.

IN VIEW OF THE FOREGOING, AND CONSIDERING THE FACT THAT THE THREE CONTRACTORS CONCERNED COULD NOT HAVE ASCERTAINED THE TRUE CONDITION OF THE ADVERTISED PROPERTY BY SUCH AN INSPECTION AS WAS REASONABLY CONTEMPLATED WITH RESPECT TO ITEM NO. 7 OF THE INVITATION, WE WOULD INTERPOSE NO OBJECTION TO CANCELLATION OF THE CONTRACTS.

WITH RESPECT TO THE CLAIM OF UNITED MERCHANDISING CORPORATION, THERE SHOULD BE REFUNDED TO THE CORPORATION THE AMOUNT PAID BY IT UNDER ITEM NO. 7, PLUS ITS ACTUAL AND REASONABLE TRANSPORTATION EXPENSES FOR THE DELIVERED ITEMS, LESS SUCH AMOUNT AS DETERMINED TO BE THE VALUE AT ITS PLACE OF BUSINESS IN BURBANK OF THE 518 UNITS DELIVERED. UNITED STATES V. KOPLIN, 24 F.2D 840.

THE AMOUNT CLAIMED FOR ROUND TRIP AIR FARE FROM BURBANK, CALIFORNIA, TO SALT LAKE CITY AND RETURN IS NOT FOR ALLOWANCE. IN COMMENT NO. 1, DATED JANUARY 17, 1958, BY THE PROPERTY DISPOSAL OFFICER, IT IS STATED:

"6. IN TELEPHONE CONVERSATION OF 15 NOVEMBER 1957, MR. MILLER (VICE PRESIDENT OF UNITED MERCHANDISING CORPORATION) REQUESTED THAT HE BE CONTACTED BY PHONE AND INFORMED AS TO WHAT ACTION HE SHOULD TAKE. HOWEVER, PRIOR TO SUCH CALL, MR. MILLER ARRIVED AT THE DEPOT EARLY ON THE MORNING OF 18 NOVEMBER 1957.'

THEREFORE, IT DOES NOT APPEAR THAT THE TRAVEL EXPENSE INCURRED BY MR. MILLER WAS NECESSARY OR THAT IT WAS INCURRED AS A RESULT OF A REQUEST OR AUTHORIZATION BY ANY GOVERNMENT AGENT. SEE 5 COMP. GEN. 187.

THE PAPERS TRANSMITTED WITH THE LETTER OF FEBRUARY 12, 1958, ARE RETURNED HEREWITH.