B-136323, JUL. 22, 1958

B-136323, JUL. 22, 1958

TO AMERICAN NICKEL ALLOY MANUFACTURING CORPORATION:

REFERENCE IS MADE TO YOUR LETTER OF MAY 12, 1958, REQUESTING REVIEW OF SETTLEMENT DATED MAY 2, 1958, WHICH DISALLOWED YOUR CLAIM FOR $154.98, ALLEGED TO BE DUE AS A PARTIAL REFUND OF THE AMOUNT PAID FOR TWO LOTS OF HIPERNIK STRIPS PURCHASED FROM THE GOVERNMENT ON SPOT BID SALE NO. 18-001- S-58-9, AT THE ABERDEEN PROVING GROUND, MARYLAND.

THE RECORD SHOWS THAT ON OCTOBER 1, 1957, YOU WERE FURNISHED WITH A COPY OF CATALOG FOR SPOT BID SALE NO. 18-001-S-58-9 AND ADVISED THAT IF YOU WERE INTERESTED IN BIDDING ON ITEMS B-29, B-30, AND B-60, AN INSPECTION SHOULD BE MADE OF THE MATERIAL PRIOR TO SUBMITTING A BID; THAT BY LETTER DATED OCTOBER 3, 1957, YOU ADVISED THE PROPERTY DISPOSAL BRANCH THAT THE THREE LOTS OF HIPERNIK STRIPS SEEMED TO CONSIST OF ONLY MODERATE QUANTITIES WHICH WOULD NOT WARRANT AN INSPECTION TRIP, AND REQUESTED THE NET WEIGHTS FOR THE THREE LOTS; AND THAT IN SUBSEQUENT CORRESPONDENCE PURSUANT TO YOUR REQUEST, YOU WERE ADVISED THE APPROXIMATE NET WEIGHTS OF THE MATERIAL AND WERE FURNISHED THREE BID CARDS. BY NOTICE OF AWARD DATED OCTOBER 18, 1957, YOU WERE ADVISED THAT YOU WERE THE SUCCESSFUL BIDDER ON ITEMS B-29 AND B-30. ON OCTOBER 22, 1957, YOU FORWARDED A CERTIFIED CHECK IN PAYMENT OF THE TWO ITEMS, TOGETHER WITH SHIPPING INSTRUCTIONS.

IN YOUR LETTER DATED NOVEMBER 14, 1957, YOU ADVISED THE CONTRACTING OFFICER THAT YOU HAD RECEIVED THE TWO LOTS OF HIPERNIK STRIPS COVERED BY ITEMS B-29 AND B-30, BUT THAT UPON WEIGHING THE SAME YOU DISCOVERED THAT ITEMS B-29 AND B-30 WEIGHED 1,507.8 POUNDS AND 286.8 POUNDS, RESPECTIVELY, AND NOT APPROXIMATELY 1,800 POUNDS AND 400 POUNDS, THE WEIGHTS WHICH YOU ALLEGED WERE GIVEN TO YOU BY THE CONTRACTING OFFICER IN HIS LETTER OF OCTOBER 7, 1957. YOU REQUESTED THAT A PARTIAL REFUND OF $90.90 BE MADE TO YOU TO COVER THE ALLEGED SHORTAGE IN THE POUNDAGE RECEIVED. IN REPLY THE CONTRACTING OFFICER ADVISED YOU BY LETTER DATED DECEMBER 6, 1957, THAT THE NET WEIGHTS EXPRESSED IN HIS LETTER OF OCTOBER 7, 1957, WERE SPECIFICALLY NOTED AS APPROXIMATE WEIGHTS, WHICH WERE ARRIVED AT BY WEIGHING INDIVIDUAL REELS AND PIECES AND MULTIPLYING THE AMOUNT OF EACH AT WHAT APPEARED TO BE A REASONABLE TOTAL, AND THAT THE APPROXIMATE WEIGHTS FORWARDED WERE IN NO WAY GUARANTEED AS ACCURATE; AND THAT UNDER THE GENERAL SALE TERMS AND CONDITIONS OF THE SALE, HE HAD NO AUTHORITY TO REFUND ANY PORTION OF THE PURCHASE PRICE, BUT THAT YOU COULD SUBMIT A CLAIM FOR THE AMOUNT BELIEVED DUE TO THE CLAIMS DIVISION OF THE GENERAL ACCOUNTING OFFICE. IN LETTER DATED DECEMBER 11, 1957, YOU ADVISED THE CONTRACTING OFFICER THAT AN ERROR WAS MADE IN YOUR LETTER OF NOVEMBER 14, 1957, IN REGARD TO THE STATING OF THE ACTUAL WEIGHT OF ITEM B-29 AND THAT THE CORRECT WEIGHT OF SUCH ITEM IS 1,221 POUNDS. SUBSEQUENTLY, YOU FILED A CLAIM WITH OUR OFFICE THROUGH THE ADMINISTRATIVE OFFICE FOR REFUND OF THE AMOUNT OF $154.98, REPRESENTING THE ALLEGED SHORTAGE IN THE POUNDAGE RECEIVED, WHICH WAS DISALLOWED BY SETTLEMENT OF MAY 2, 1958.

YOUR REQUEST FOR REVIEW OF THE SETTLEMENT APPEARS TO BE BASED PRIMARILY ON TWO CONTENTIONS, NAMELY (A) THAT SINCE THE APPROXIMATE WEIGHTS OF ITEMS B-29 AND B-30 WERE GIVEN TO YOU BY THE CONTRACTING OFFICER IN WRITING, SUCH INFORMATION SUPPLEMENTS ANY PREVIOUS INFORMATION ON THE OMITTED WEIGHTS AND THAT IF SUCH INFORMATION WAS MEANINGLESS OR INCORRECT, IT SHOULD NOT HAVE BEEN GIVEN TO YOU, AND (2) THAT SINCE YOU HAD EXPRESSLY STIPULATED IN YOUR LETTER, BY WHICH YOU TRANSMITTED YOUR CERTIFIED CHECK, THAT PAYMENT FOR SUCH MATERIAL WAS BEING MADE WITH THE PROVISIONS THAT YOU MUST RECEIVE THE APPROXIMATE WEIGHTS GIVEN TO YOU BY THE CONTRACTING OFFICER, YOU SHOULD NOT BE REQUIRED TO ACCEPT A SUBSTANTIALLY SMALLER QUANTITY OF MATERIAL WITHOUT AN ADJUSTMENT IN THE CONTRACT PRICE.

THE FACT THAT YOU STIPULATED IN YOUR LETTER OF OCTOBER 22, 1957, THAT PAYMENT FOR THE PROPERTY WAS CONDITIONED ON IT WEIGHING THE APPROXIMATE WEIGHTS GIVEN TO YOU BY THE CONTRACTING OFFICER IN HIS LETTER OF OCTOBER 7, 1957, MAY NOT SERVE TO ALTER THE RIGHTS AND LIABILITIES OF THE PARTIES TO THE CONTRACT SINCE A VALID AND BINDING CONTRACT WAS CONSUMMATED ON OCTOBER 18, 1957, THE DATE ON WHICH THE NOTICE OF AWARD WAS ISSUED AND MAILED TO YOU.

UNDER THE CONTRACT YOU WERE AWARDED ITEMS B-29 AND B-30 OF THE INVITATION FOR BIDS ON A "PRICE FOR THE LOT" BASIS. PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT PROVIDED THAT THE PROPERTY WAS OFFERED "AS IS" AND "WHERE IS" AND THAT THE DESCRIPTION WAS BASED ON THE BEST AVAILABLE INFORMATION, BUT THAT THE GOVERNMENT MADE NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO QUANTITY OR WEIGHT. ALSO, THE BIDDERS WERE WARNED, UNDER PARAGRAPH 8, THAT IN THE EVENT OF ANY VARIATION BETWEEN THE QUANTITY OR WEIGHT LISTED FOR ANY ITEM AND THE QUANTITY OR WEIGHT OF SUCH ITEM TENDERED OR DELIVERED TO THE PURCHASER, NO ADJUSTMENT FOR SUCH VARIATION WOULD BE MADE WHERE AN AWARD WAS MADE ON A "PRICE FOR THE LOT" BASIS.

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT AN EXPRESS DISCLAIMER OF WARRANTY--- AS HERE--- VITIATED ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. SEE W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; UNITED STATES V. KELLY, 112 F.SUPP. 831; AND TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151. TO ILLUSTRATE, THE CASE OF MAGUIRE AND COMPANY V. UNITED STATES, 273 U.S. 67, INVOLVED AN ,AS IS" SALE OF CLOTH BY THE GOVERNMENT UNDER AN INVITATION WHICH GAVE THE WEIGHT PER YARD OF THE MATERIALS. IT TURNED OUT THAT THE MATERIALS DID NOT CONFORM TO THE SPECIFIED WEIGHT. IN DENYING THE PLAINTIFF RECOVERY, THE UNITED STATES SUPREME COURT HELD THAT THE GIVEN WEIGHT COULD NOT BE CONSIDERED AS A WARRANTY UNDER THE ADVERTISED TERMS OF THE SALE. ALSO, IN LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, AN AGENT FOR THE GOVERNMENT LISTED FOR SALE CERTAIN ITEMS OF JUNK AT SEVERAL LOCATIONS, SETTING FORTH THE WEIGHTS AND KINDS OF EACH. ALTHOUGH THE QUANTITIES TURNED OUT TO BE MUCH LESS THAN THOSE SHOWN IN THE ADVERTISEMENT, THE PLAINTIFFS WERE HELD NOT TO HAVE ANY CAUSE OF ACTION, SINCE, AS STATED BY THE SUPREME COURT, THE MENTIONING OF THE 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.' THE FACT THAT THE GOVERNMENT AND YOU MAY HAVE BEEN MISTAKEN AS TO THE WEIGHT OF THE PROPERTY DOES NOT ENTITLE YOU TO RELIEF SINCE THE COURTS HAVE HELD THAT THE DISCLAIMER OF WARRANTY CLAUSES EMPLOYED IN GOVERNMENT CONTRACTS SUCH AS HERE INVOLVED PRECLUDE RECOVERY ON THE THEORY OF MUTUAL MISTAKE. SEE AMERICAN SANITARY RAG CO. V. UNITED STATES, C.CLS.NO. 161-57, DECIDED MAY 7, 1958, AND CASES CITED THEREIN.

IN VIEW OF THE FOREGOING THERE EXISTS NO LEGAL BASIS FOR MAKING AN ADJUSTMENT OF THE CONTRACT PRICE BASED UPON A SHORTAGE OF THE ITEMS INVOLVED UNLESS IT CAN BE SHOWN THAT THE REPRESENTATIVES OF THE GOVERNMENT DID NOT ACT IN GOOD FAITH. FROM THE EVIDENCE PRESENTED THERE IS NO REASONABLE ..END :