B-147856, MAY 7, 1962

B-147856, MAY 7, 1962

TO APEX SMELTING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 21, 1961, WITH ENCLOSURES, SUBMITTING YOUR CLAIM FOR ADJUSTMENT IN THE PRICE OF CERTAIN SCRAP ALUMINUM PURCHASED BY YOU FROM GENERAL ELECTRIC COMPANY, HANFORD ATOMIC PRODUCTS OPERATION, UNDER INVITATION FOR BIDS NO. PS-12 61.

BY INVITATION NO. PS-12-61, THE ATOMIC ENERGY COMMISSION, THROUGH ITS AGENT THE GENERAL ELECTRIC COMPANY, OFFERED FOR SALE APPROXIMATELY 85,000 POUNDS OF SCRAP ALUMINUM SILICON ALLOY. THE APEX SMELTING COMPANY WAS THE HIGHEST BIDDER AT $0.06919 PER POUND. THE NEXT HIGHEST BID WAS $0.05389. YOU DID NOT INSPECT THE PROPERTY, WHICH WAS SOLD ON "AS IS" AND "WHERE IS" BASIS, WITHOUT RECOURSE AGAINST THE SELLER.

FULL PAYMENT HAS BEEN MADE BY YOU FOR THE ENTIRE QUANTITY OF THE MATERIAL AVAILABLE, AND DELIVERY HAS BEEN MADE. IT IS YOUR CONTENTION THAT THE QUALITY OF THE MATERIAL WAS SO GROSSLY MISREPRESENTED THAT THE BID PRICE OF $0.06919 SHOULD BE REDUCED BY A MINIMUM OF $0.01 1/2 PER POUND WHICH WOULD AMOUNT TO A UNIT PRICE OF$0.05419.

THE BASIS FOR YOUR CONTENTION IS THAT THE SCRAP WAS DESCRIBED IN THE INVITATION AS SCRAP ALUMINUM SILICON ALLOY-URANIUM CONTAMINATED, IN THE GENERAL FORM OF TURNINGS, WITH AVERAGE ANALYSIS OF A LIMITED NUMBER OF SAMPLES SHOWING ABOUT 94 PERCENT ALUMINUM, 4 PERCENT SILICON, 0.09 PERCENT URANIUM, AND 1.9 PERCENT IRON, COPPER, NICKEL AND OTHERS; WHEREAS IN FACT THE MATERIAL DELIVERED CONTAINED APPROXIMATELY THREE AND ONE-HALF PERCENT LEAD. YOU ALLEGE THAT THE PRESENCE OF LEAD IS HARMFUL IN THE PROCESSING OF ALUMINUM SCRAP, AND THAT THE PRICE SHOULD BE REDUCED BY A MINIMUM OF ONE AND ONE-HALF CENTS PER POUND.

IT IS REPORTED THAT THE LEAD CONTENT OF THE MATERIAL WAS NOT RECOGNIZED PRIOR TO THE OFFERING AND SALE BECAUSE THE SAMPLES USED FOR ANALYSIS WERE OF LATHE TURNINGS, WHEREAS THE SALE INCLUDED ALSO OTHER TYPES OF SCRAP SUCH AS SKIMMINGS, DROSS, DRIPPINGS, ETC. THESE DO NOT APPEAR TO BE EXCLUDED BY THE TERMS OF THE DESCRIPTION REFERENCE TO THE "GENERAL FORM" OF THE SCRAP AS TURNINGS, AND IT APPEARS THAT THEIR PRESENCE WAS READILY ASCERTAINABLE BY VISUAL INSPECTION.

BY THE CONDITIONS OF THE INVITATION YOU HAD NOTICE OF THE FACT THAT THIS WAS NOT A SALE BY SAMPLE, THAT THE GOVERNMENT MADE NO WARRANTY OF ANY KIND AS TO THE QUALITY OR DESCRIPTION OF THE PROPERTY BEING SOLD, AND THAT YOU ASSUMED ALL RISKS WITH RESPECT THERETO. WHILE THE DESCRIPTION OF THE PROPERTY MAY NOT HAVE BEEN ENTIRELY ACCURATE, THERE IS NOTHING IN THE RECORD OTHERWISE TO INDICATE, AND YOU DO NOT ALLEGE, THAT THE MATERIAL WAS INTENTIONALLY MISDESCRIBED IN THE BID INVITATION, OR THAT THE GOVERNMENT THROUGH ITS AGENT ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE SALE TRANSACTION SEE LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, 92; LUMBRAZO V. WOODRUFF, 175 N.E. 525, AND UNITED STATES V. SABIN METAL CORPORATION, 151 F.SUPP. 683, AFFIRMED 253 F.2D 956.

THE RECORDS INDICATES THAT YOU DID NOT MAKE AN INSPECTION OF THE PROPERTY PRIOR TO SUBMITTING YOUR BID THEREON, AS ALL BIDDERS WERE CAUTIONED TO DO. THE ADMINISTRATIVE REPORT STATES THAT THE MATERIAL WAS AVAILABLE FOR INSPECTION THROUGHOUT THE PERIOD INDICATED IN THE INVITATION. IN TAXTON- MITCHELL CO. V. UNITED STATES, 172 F.SUPP. 463, THE COURT OF CLAIMS HELD THAT A BIDDER UNDER THE TERMS OF A GOVERNMENT SURPLUS SALES INVITATION IS CHARGEABLE WITH THE RISK OF EVERYTHING WHICH COULD BE ASCERTAINED BY INSPECTION, EVEN IF ASCERTAINABLE ONLY BY LABORATORY ANALYSIS.

THE FACTS IN THIS CASE ARE SIMILAR TO THOSE CONSIDERED IN THE RECENT CASE OF KRUPP V. FEDERAL HOUSING ADMINISTRATION, 185 F.SUPP. 638, WHEREIN THE COURT STATED THAT IT IS CLEAR THAT THE GOVERNMENT AND ITS AGENCIES IN THE DISPOSAL OF EXCESS PROPERTY ARE NOT TO BE PLACED ON THE SAME FOOTING AS THE ORDINARY COMMERCIAL VENDOR. IT ALSO STATED THAT WHERE THE GOVERNMENT AGENCY DISPOSING OF SUCH PROPERTY MAKES IT CLEAR THAT IT IS MAKING THE SALE ONLY ON THE BASIS THAT THE PROPERTY IS BEING SOLD ON AN "AS IS" BASIS, AND THAT THE PURCHASER IS TO TAKE THE PROPERTY AT HIS OWN RISK WITH DUE OPPORTUNITY FOR INSPECTION BEING AFFORDED HIM, SUCH A CONTRACT IS TO BE STRICTLY INTERPRETED IN FAVOR OF THE GOVERNMENT. THE PURCHASER WHO RELIES ON INFORMATION FURNISHED HIM BY THE GOVERNMENT UNDER THOSE CONDITIONS AND FAILS TO INSPECT OR DOES NOT FULLY INSPECT DOES SO AT HIS OWN RISK; AND EVEN IF HE MAKES A BAD BARGAIN BECAUSE OF DEFECTS IN THE PROPERTY WHICH EVEN A REASONABLY CAREFUL INSPECTION WOULD NOT DISCLOSE, THE RISK OF LOSS STILL FALLS ON HIM; AND IF HE IS MISLED BY HIS RELIANCE ON ANY STATEMENT OF THE SELLER AS TO THE PROPERTY THIS IS THE RISK WHICH HE KNEW OR SHOULD HAVE KNOWN HE WAS TAKING BECAUSE THE PROSPECTUS CLEARLY WARNED HIM THAT THE SALE WAS BEING MADE ON THOSE TERMS. SEE ALSO TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR GRANTING ANY RELIEF UNDER CONTRACT NO. AT (45-1/-1350.