B-143562, AUG. 25, 1960

B-143562, AUG. 25, 1960

TO AJO TRADING CORP.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 13, 1960, REQUESTING REVIEW OF OUR SETTLEMENT DATED JULY 8, 1960, WHICH DISALLOWED YOUR CLAIM UNDER CONTRACT NO. N62204-4423 WITH THE DEPARTMENT OF THE NAVY.

BY INVITATION NO. B-22-60 ISSUED JANUARY 26, 1960, THE REDISTRIBUTION AND DISPOSAL BRANCH, MARINE CORPS SUPPLY CENTER, BARSTOW, CALIFORNIA, SOLICITED BIDS FOR THE PURCHASE FROM THE GOVERNMENT OF 38 LOTS OF SURPLUS NETTING, CLOTH, COTTON, AS DESCRIBED IN THE INVITATION. IN RESPONSE TO THE INVITATION, YOU SUBMITTED A BID WHICH WAS ACCEPTED AT A TOTAL CONTRACT PRICE OF $37,420.50 FOR 32 OF THE 38 LOTS LISTED, INCLUDING ITEMS NOS. 28 AND 36 HERE IN QUESTION, AND NOTICE OF AWARD OF THE SALE WAS ISSUED ON FEBRUARY 16, 1960, WITH ADVICE THAT A BALANCE OF $29,570.50, AFTER CREDIT OF THE AMOUNT OF YOUR BID DEPOSIT OF $7,850, WAS DUE THE GOVERNMENT AND SHOULD BE PAID WITHIN FIVE DAYS AFTER DATE OF THE NOTICE. THE NOTICE ALSO STATED THAT THE ITEMS PURCHASED MUST BE REMOVED FROM THE GOVERNMENT DISPOSAL SITE BY MARCH 2, 1960. THE RECORD SHOWS THAT YOU PAID THE FULL PURCHASE PRICE ON MARCH 2, 1960, AND TOOK DELIVERY OF 30 OF THE LOTS BY MARCH 3, 1960, BUT ON THAT DATE YOU VERBALLY REJECTED LOTS NOS. 28 AND 36, CONTENDING THAT THE MATERIAL THEREIN WAS "TENDER" AND NOT AS ADVERTISED, AND YOU DECLINED TO REMOVE THE DISPUTED LOTS.

THE RECORD SHOWS ALSO THAT BY LETTER DATED MARCH 9, 1960, YOU WERE REQUESTED BY THE CONTRACTING OFFICER TO MAKE ARRANGEMENTS TO EXPEDITE REMOVAL OF THE MATERIAL IN LOTS NOS. 28 AND 36 ON OR BEFORE MARCH 18, 1960. YOU WERE ALSO ADVISED THAT, IN THE EVENT REMOVAL WAS NOT COMPLETED BY THAT DATE, HIS OFFICE WITHOUT FURTHER NOTICE TO YOU WOULD INITIATE THE NECESSARY STEPS TO TERMINATE YOUR CONTRACT AND TO ASSESS 20 PERCENT OF THE CONTRACT PRICE OF THE TWO LOTS AS LIQUIDATED DAMAGES FOR DEFAULT ON THE CONTRACT. IN LETTER OF MARCH 14, 1960, TO THE SECRETARY OF THE NAVY, VIA THE CONTRACTING OFFICER, WITHOUT ANY REFERENCE TO THE LATTER'S LETTER OF MARCH 9, YOU CONFIRMED YOUR PREVIOUS ORAL ALLEGATION THAT THE CONDITION OF THE MATERIAL IN LOTS NOS. 28 AND 36 WAS FOUND TO BE "TENDER AND UNUSABLE AS CLOTH," AND NOT AS ADVERTISED, AND THAT DUE TO THE LARGE QUANTITY OF THE MATERIAL PURCHASED YOU FELT THAT A REFUND FOR THE TWO LOTS WOULD BE IN ORDER. YOU CONTENDED ALSO THAT IT IS IMPOSSIBLE TO INSPECT SO GREAT A QUANTITY, YARD BY YARD, AND THAT THE GOVERNMENT SHOULD APPRECIATE THIS FACT. THEREAFTER, BY LETTER DATED MARCH 21, 1960, THE ASSISTANT SALES CONTRACTING OFFICER ADVISED YOU THAT, IN ACCORDANCE WITH THE ADVICE CONTAINED IN THE LETTER OF MARCH 9, THE CONTRACT HAD BEEN TERMINATED BECAUSE YOU HAD FAILED TO REMOVE THE LOTS OF MATERIAL FROM THE DISPOSAL SITE; THAT LIQUIDATED DAMAGES OF $628.49--- 20 PERCENT OF THE PURCHASE PRICE OF THE MATERIAL--- HAD BEEN ASSESSED AGAINST YOU; AND THAT THE BALANCE, $2,513.94, WOULD BE REFUNDED TO YOU. BY LETTER DATED APRIL 4, 1960, YOU ACKNOWLEDGED RECEIPT OF A REFUND CHECK IN THE AMOUNT OF $2,513.94 AND, ALSO, INQUIRED AS TO THE ACTION BEING TAKEN ON YOUR PREVIOUS LETTER CLAIMING THAT THE CONDITION OF THE MATERIAL IN LOTS NOS. 28 AND 36 WAS "TENDER" AND NOT AS DESCRIBED IN THE INVITATION.

IN SUCH A CLAIM THE PRINCIPAL ISSUE TO BE CONSIDERED IS WHETHER THE GOVERNMENT DID OR DID NOT WARRANT THE PROPERTY. IN THIS REGARD, YOUR ATTENTION IS DIRECTED TO PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS ON PAGE 2 OF THE BID INVITATION, WHEREIN IT IS EXPRESSLY PROVIDED THAT ALL PROPERTY LISTED IS OFFERED FOR SALE "AS IS" AND "WHERE IS," AND WITHOUT RECOURSE AGAINST THE GOVERNMENT; THAT THE GOVERNMENT MAKES NO GUARANTY, WARRANTY, OR REPRESENTATION, EXPRESSED OR IMPLIED, AS TO KIND, CHARACTER, QUALITY, DESCRIPTION, ETC., OF ANY OF THE PROPERTY, OR ITS FITNESS FOR ANY USE OR PURPOSE; AND THAT NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT OR FOR RESCISSION OF THE SALE BASED UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE STANDARD EXPECTED.

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT SUCH CONTRACT PROVISIONS CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY AND, IN THE ABSENCE OF A SHOWING OF BAD FAITH, VITIATE ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALE TRANSACTION. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151.

THE INVITATION STATED THAT THE MATERIAL UNDER ITEMS NOS. 28 AND 36 WAS OF THE SAME DESCRIPTION AS LOT NO. 1, IN PERTINENT PART, AS FOLLOWS:

"NETTING, CLOTH, COTTON, APPROXIMATE WEIGHT 1.8 OZ. PER SQUARE YARD (CAMOUFLAGE), APPROXIMATELY 38 INCHES WIDE. MATERIAL IS IN ROLLS OF VARIOUS LENGTHS. * * * SUGGESTED USE: TENT CURTAINS, COVERS, OR WINDOWS FOR PROTECTION AGAINST INSECTS. MANUFACTURER UNKNOWN. * * * CONDITION: APPARENTLY UNUSED, GOOD. * * *"

NOTWITHSTANDING YOUR ALLEGATION AND THE STATEMENT OF THE CONTRACTING OFFICER THAT HE HAS DETERMINED THAT THE MATERIAL IN QUESTION IS "TENDER," IT CANNOT BE CONCLUDED FROM THAT FACT ALONE THAT THE PROPERTY WAS, IN FACT, MISDESCRIBED IN THE INVITATION. THE RECORD SHOWS THAT THERE WAS TENDERED TO YOU NETTING, CLOTH, COTTON, WHICH, WHILE NOT IN THE CONDITION YOU EXPECTED, WAS THE SPECIFIC MATERIAL OFFERED FOR SALE UNDER ITEMS NOS. 28 AND 36. FURTHERMORE, THE DESCRIPTION STATED THAT THE CONDITION OF THE MATERIAL BEING SOLD WAS "APPARENTLY UNUSED, GOOD.' SUCH DESCRIPTION SHOULD HAVE PUT BIDDERS ON NOTICE THAT THE CONDITION OF THE PROPERTY WAS QUESTIONABLE. THEREFORE, IT CANNOT BE CONCLUDED THAT THE DESCRIPTION WAS EITHER ERRONEOUS OR MISLEADING. ACCORDINGLY, AND AS THE RECORD DOES NOT INDICATE OTHERWISE, BAD FAITH MAY NOT BE IMPUTED TO THE GOVERNMENT IN THE TRANSACTION.

REGARDING YOUR STATEMENT AS TO THE IMPRACTICABILITY OF MAKING A COMPLETE INSPECTION OF THE MATERIAL IN QUESTION, PARAGRAPH 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE BID INVITATION ALSO 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, 161 F.SUPP. 414, CONCERNING A SALE OF SURPLUS GOVERNMENT PROPERTY WHICH WAS DESCRIBED IN THE INVITATION, AS IN THE INSTANT CASE, "APPARENTLY UNUSED, IN GOOD CONDITION," AND WHERE THE CONTRACT ALSO CONTAINED THE SAME PROVISIONS OF PARAGRAPHS 1 AND 2 REFERRED TO ABOVE, THE COURT HELD THAT THE RISK AS TO THE ACTUAL CONDITION OF THE PROPERTY WAS PLACED SQUARELY UPON THE PURCHASER AND THAT THE PURCHASER CANNOT RELIEVE ITSELF OF RISK BECAUSE IT MADE AN INSPECTION OF A PORTION OF THE PROPERTY. THE BIDDER'S RESPONSIBILITIES IN THIS CONNECTION, ALSO, APPEAR TO BE CLEARLY SET FORTH IN THE RECENT CASE OF PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHEREIN IT WAS HELD THAT, NOTWITHSTANDING THE DIFFICULTIES ATTENDANT UPON A THOROUGH INSPECTION OF SURPLUS PROPERTY OFFERED FOR SALE, IT IS INCUMBENT UPON A BIDDER TO MAKE THE SORT OF INSPECTION THAT IS EFFECTUAL.

IN YOUR LETTER OF JULY 13, 1960, YOU FURTHER CONTEND THAT PARAGRAPH 18--- BID GUARANTEE AND LIQUIDATED DAMAGES--- OF THE ADDITIONAL PROVISIONS, APPEARING ON PAGE 3 OF BOTH THE BID INVITATION AND THE CONTRACT, IS NOT APPLICABLE SINCE YOU HAD "COMPLETE COOPERATION OF THE PROPERTY DISPOSAL OFFICER IN LEAVING THE MERCHANDISE AT THE BASE.' IN THIS CONNECTION, IT IS PROVIDED BY PARAGRAPH 12 OF THE GENERAL SALE TERMS AND CONDITIONS THAT "ANY ORAL STATEMENT BY ANY REPRESENTATIVE OF THE GOVERNMENT, MODIFYING OR CHANGING ANY CONDITIONS OF THIS CONTRACT, IS AN EXPRESSION OF OPINION ONLY AND CONFERS NO RIGHT UPON THE PURCHASER.' YOUR ATTENTION IS DIRECTED TO NOTE: (3) UNDER ADDITIONAL PROVISIONS (PAGE 3 OF THE CONTRACT), WHEREIN IT IS PROVIDED IN PERTINENT PART THAT ,PROPERTY MUST BE REMOVED BY THE SUCCESSFUL BIDDER WITHIN 15 CALENDAR DAYS AFTER NOTICE OF ARD.' THEREFORE, SINCE YOU DID NOT REMOVE THE PROPERTY IN QUESTION BY MARCH 18, 1960--- THE DATE FIXED IN THE NOTICE OF AWARD AS AMENDED BY LETTER DATED MARCH 9, 1960, FROM THE CONTRACTING OFFICER--- AND ELECTED TO DEFAULT ON THE CONTRACT, THE ACTION OF THE DISPOSAL AGENCY IN EXERCISING THE GOVERNMENT'S RIGHTS, UNDER PARAGRAPH 18, TO RETAIN LIQUIDATED DAMAGES CANNOT BE SAID TO HAVE BEEN IMPROPER.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR GRANTING ANY RELIEF UNDER CONTRACT NO. N62204-4423, AND OUR SETTLEMENT DATED JULY 8, 1960, IS SUSTAINED.