B-154557, AUG. 10, 1964

B-154557, AUG. 10, 1964

TO THE SECRETARY OF THE ARMY:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 17, 1964, WITH ENCLOSURES, FOR THE DIRECTOR OF PROCUREMENT, OFFICE OF THE ASSISTANT SECRETARY, REQUESTING OUR DECISION IN REGARD TO THE REQUEST OF MOTT HAVEN TRUCK PARTS, INC., FOR RESCISSION OF ITS CONTRACT NO. DA/S) 92 557-FEC 34737.

IN RESPONSE TO INVITATION NO. 92-557-S-64-18, DATED AUGUST 29, 1963, MOTT HAVEN TRUCK PARTS, INC., SUBMITTED ITS BID FOR THE PURCHASE FROM THE GOVERNMENT OF CERTAIN MISCELLANEOUS SURPLUS PROPERTY. THE BID SUBMITTED BY MOTT ON ITEM NO. 1 AT $13,280 WAS HIGH AND THEREFORE IT WAS AWARDED THE CONTRACT ON OCTOBER 1, 1963, FOR THAT MATERIAL. THE MATERIAL IN ITEM NO. 1 WAS DESCRIBED IN THE INVITATION AS FOLLOWS:

CHART

"1. MISCELLANEOUS SPARE PARTS AND COMPONENTS: 1 LOT

USED AND UNUSED. ESTIMATED WEIGHT: 478.59 SHORT TONS.

ESTIMATED ACQUISITION COST: 287,219.00.

"CONSISTING OF THE FOLLOWING:

"46 EACH--- WHEEL: (2530-563-5849) TRACK SUPPORT ROLLER. CHRYSLER CORPORATION PART NO. E1058611. MOTOR WHEEL CORPORATION PART NO. 32646. PART FOR M4 MEDIUM TANK. (G104)

"25,103 EACH--- TRACK SHOE ASSEMBLY: (2530-704-9657) (G226) PART FOR M26 AND M45 MEDIUM TANKS.

"40 EACH--- TRACK SHOE ASSEMBLY: (2530-709-8074) (G150) 10 SHOES. PART FOR M4A1, 18 TON, HIGH SPEED TRACTOR.

"THIS LOT CONSISTS OF APPROXIMATELY 349.36 SHORT TONS OF METAL AND 129.23 SHORT TONS OF RUBBER.

"LOCATION CODE: R/S 63-2297. L/N 1765-63. (3,20,21,22) R/A 64 10. (1)

SUBSEQUENT TO PAYMENT OF THE PURCHASE PRICE, MOTT ADVISED BY TELEGRAM OF OCTOBER 21, 1963, AND BY LETTER OF OCTOBER 25, 1963, THAT IT WOULD NOT COMPLETE PERFORMANCE OF THE CONTRACT AND DID NOT INTEND TO REMOVE THE PROPERTY BECAUSE THE CATALOG DESCRIPTION "USED AND UNUSED" WAS SERIOUSLY MISLEADING. IT SPECIFICALLY ALLEGED THAT CONTRARY TO THE DESCRIPTION IN THE INVITATION, "USED AND UNUSED" SUBSEQUENT INSPECTION BY ITS TRACK EXPERT REVEALED THAT 12,000 SHOWS APPARENTLY ADVERTISED AS UNUSED HAVE IN FACT BEEN REMOVED FROM TANKS AND SHOW SIGNS OF WEAR.

UNDER ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE SALE, WHICH MOTT AGREED TO WHEN IT SUBMITTED ITS BID ON ITEM NO. 1, ALL PROPERTY WAS OFFERED FOR SALE "AS IS" AND "WHERE IS," WITHOUT EXPRESS OR IMPLIED GUARANTY OR WARRANTY OF ANY KIND, INCLUDING THE CONDITION AND DESCRIPTION OF THE PROPERTY, AND IT WAS ALSO STATED IN THAT ARTICLE THAT "THIS IS NOT A SALE BY SAMPLE.' IT IS EVIDENT, THEREFORE, THAT MOTT HAD ACTUAL NOTICE OF THE FACT THAT THIS WAS NOT A SALE BY SAMPLE AND THAT THE GOVERNMENT'S DESCRIPTION OF THE PROPERTY BEING SOLD UNDER ITEM NO. 1 WAS NOTHING MORE THAN A MERE STATEMENT OF OPINION. MOREOVER, WHILE THE DESCRIPTION OF THE PROPERTY IN QUESTION MAY NOT HAVE BEEN ENTIRELY ACCURATE THERE ARE NO ALLEGATIONS AND THERE IS NOTHING IN THE RECORD TO INDICATE THAT IT WAS INTENTIONALLY MISDESCRIBED IN THE BID INVITATION. THEREFORE, ANY MISDESCRIPTION THAT MAY HAVE OCCURRED, RESULTED FROM NOTHING MORE THAN AN HONEST MISTAKE WHICH IS, OF COURSE, COMPLETELY COVERED BY THE DISCLAIMER OF WARRANTY CLAUSE.

MOTT ALLEGES IN ITS LETTER OF OCTOBER 25, 1963, THAT THE GOODS ARE SUITABLE FOR NO PURPOSES OTHER THAN SCRAP. ALTHOUGH IT SUBMITTED ITS BID ON THE LOT BASIS, IT WAS WELL AWARE OF THE FACT, THAT THE GOVERNMENT SOLICITED BIDS ON AN ALTERNATIVE SCRAP BASIS. THE GOVERNMENT WAS FULLY COGNIZANT THAT THE PROPERTY MAY HAVE VALUE AS SCRAP ONLY, AND THEREFORE SOLICITED BIDS ON THE ALTERNATIVE SCRAP BASIS, WHICH MOTT WAS AWARE OF.

THE RECORD REVEALS THAT A DETAILED INSPECTION OF THE PROPERTY BY THE PROTESTANT WAS DIFFICULT, BECAUSE THE PROPERTY WAS DISPLAYED IN A LONG, HIGH STACK. MOTT'S RESPONSIBILITIES AS A BIDDER IN THIS CONNECTION APPEAR TO BE CLEARLY SET FORTH IN PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463. IT WAS HELD IN THIS CASE THAT NOTWITHSTANDING THE DIFFICULTIES ATTENDANT UPON AN INSPECTION, IT IS INCUMBENT UPON THE BIDDER TO MAKE THE KIND OF AN INSPECTION THAT IS EFFECTUAL. WHETHER MOTT MADE ANY INSPECTION OF THE MATERIAL AFTER THE INVITATION FOR BIDS WAS ISSUED ON AUGUST 29, 1963, IS NOT CLEAR. EVEN IF MOTT HAD EXPERIENCED ANY ACTUAL DIFFICULTIES IN THE INSPECTION REPORTED TO HAVE BEEN MADE, IT WOULD APPEAR TO BE IMMATERIAL, SINCE OUR OFFICE CONSISTENTLY HAS HELD THAT WHERE A BIDDER SUBMITS A BID WITHOUT MAKING SUCH A THOROUGH INSPECTION AS WOULD COMPLETELY PROTECT ITSELF AS TO THE EXACT IDENTITY, QUALITY, CONDITION, CHARACTER, ETC., OF THE PROPERTY BEING OFFERED FOR SALE, IT MUST BE PRESUMED THAT SUCH A BIDDER HAS ELECTED TO ASSUME ANY RISK WHICH MIGHT EXIST BY REASON OF A VARIANCE BETWEEN THE DESCRIPTION OF THE PROPERTY SET FORTH IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. THIS IS OF SPECIAL SIGNIFICANCE SINCE MOTT KNEW THAT IT WAS BIDDING ON AN ALTERNATIVE SCRAP BASIS. THE FACT THAT BOTH PARTIES MAY HAVE BEEN MISTAKEN AS TO THE CONDITION OF THE PROPERTY, AS THE PURCHASER SUGGESTS IN ITS LETTER OF OCTOBER 25, 1963, DOES NOT SHIFT THE RISK OF A MISTAKE TO THE GOVERNMENT WHERE, AS HERE, THE PURCHASER HAS ASSUMED SUCH RISK. UNITED STATES V. HATHAWAY, 242 F.2D. 897; AND AMERICAN SANITARY RAG CO. V. UNITED STATES, 142 CT.CL. 293.

ALTHOUGH THERE IS A WIDE VARIANCE BETWEEN THE BID OF MOTT AND THE OTHER BIDDERS, IT DOES NOT APPEAR THAT THE DIFFERENCE WAS SO GREAT AS TO WARRANT THE CONCLUSION THAT THE CONTRACTING OFFICER WAS PLACED ON NOTICE OF THE PROBABILITY OF ERROR IN HIS BID AND THAT HE SHOULD HAVE REQUESTED A VERIFICATION OF THE BID. IN VIEW OF THE WIDE RANGE OF PRICES ORDINARILY RECEIVED ON SALVAGE, WASTE AND SURPLUS PROPERTY, A MERE PRICE DIFFERENCE WOULD NOT NECESSARILY PLACE A CONTRACTING OFFICER ON NOTICE OF THE POSSIBILITY OF ERROR AS WOULD SIMILAR PRICE DIFFERENCES ON NEW EQUIPMENT OR SUPPLIES TO BE FURNISHED TO THE GOVERNMENT. PRICES OFFERED TO THE GOVERNMENT FOR ITS PROPERTY ARE BASED MORE OR LESS UPON THE USE TO WHICH THE PROPERTY IS TO BE PUT BY THE PARTICULAR BIDDER OR UPON THE RISK OF RESALE THE BIDDER MIGHT WISH TO TAKE. SEE UNITED STATES V. SABIN METAL CORP., 151 F.SUPP. 683, 689. THUS, SINCE NO ERROR WAS ALLEGED UNTIL AFTER AWARD, THE ACCEPTANCE OF THE BID WAS MADE IN GOOD FAITH AND CONSUMMATED A VALID AND BINDING CONTRACT WHICH FIXED THE RIGHTS AND LIABILITIES OF THE PARTIES. SEE AMERICAN SMELTING AND REFINING COMPANY V. UNITED STATES, 259 U.S. 75.

ACCORDINGLY, ON THE BASIS OF THE FACTS OF RECORD AND THE LAW APPLICABLE THERETO, THERE APPEARS NO LEGAL BASIS TO RELEASE MOTT FROM ITS OBLIGATION UNDER THE TERMS OF THE CONTRACT.