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B-167705, FEB. 12, 1970

B-167705 Feb 12, 1970
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RELIEF DECISION TO GENERAL SMELTING & REFINING COMPANY HOLDING THAT PURCHASER IS ONLY ENTITLED TO SURPLUS MATERIAL ADVERTISED AND BID UPON. PURCHASER WHO ALLEGES THAT QUALITY OF SCRAP PURCHASED WAS INFERIOR IN VALUE TO SCRAP INSPECTED PRIOR TO BIDDING IS NOT ENTITLED TO RELIEF SINCE ALTHOUGH BIDDER MAY HAVE ANTICIPATED RECEIVING MANY SALVAGE ITEMS OTHER THAN ALUMINUM SCRAP. RECORD DOES NOT SHOW THAT HE WAS MISLED AT TIME OF INSPECTION. FURTHER IT IS RESPONSIBILITY OF PURCHASER UNDER SUCH SURPLUS SALES INVITATION TO ASCERTAIN ACCURACY OF INSPECTION GUIDE'S STATEMENTS IN LIGHT OF SALES DESCRIPTION. TO GENERAL SMELTING & REFINING COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 9 AND 21.

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B-167705, FEB. 12, 1970

CONTRACTS--SURPLUS--SALES--MISDESCRIPTION--RELIEF DECISION TO GENERAL SMELTING & REFINING COMPANY HOLDING THAT PURCHASER IS ONLY ENTITLED TO SURPLUS MATERIAL ADVERTISED AND BID UPON. PURCHASER WHO ALLEGES THAT QUALITY OF SCRAP PURCHASED WAS INFERIOR IN VALUE TO SCRAP INSPECTED PRIOR TO BIDDING IS NOT ENTITLED TO RELIEF SINCE ALTHOUGH BIDDER MAY HAVE ANTICIPATED RECEIVING MANY SALVAGE ITEMS OTHER THAN ALUMINUM SCRAP, RECORD DOES NOT SHOW THAT HE WAS MISLED AT TIME OF INSPECTION. FURTHER IT IS RESPONSIBILITY OF PURCHASER UNDER SUCH SURPLUS SALES INVITATION TO ASCERTAIN ACCURACY OF INSPECTION GUIDE'S STATEMENTS IN LIGHT OF SALES DESCRIPTION.

TO GENERAL SMELTING & REFINING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTERS OF AUGUST 9 AND 21, 1969, REQUESTING RELIEF IN CONNECTION WITH THE CONTRACT AWARDED TO YOUR FIRM UNDER SALES INVITATION NO. 8DPS-69-133, ISSUED BY THE GENERAL SERVICES ADMINISTRATION (GSA), PROPERTY MANAGEMENT AND DISPOSAL SERVICE, DENVER, COLORADO.

ON MARCH 4, 1969, THE OFFICE OF NAVAL RESEARCH, TUCSON, ARIZONA, REQUESTED THE DENVER GSA REGIONAL OFFICE TO SELL EIGHT LINE ITEMS OF SCRAP FOR THE NEW MEXICO INSTITUTE OF MINING AND TECHNOLOGY (NMIMT) AT SOCORRO, NEW MEXICO. THE REGIONAL OFFICE DISPOSED OF LINE ITEMS 1 AND 2 UNDER A TERM CONTRACT FOR UNSEGREGATED SCRAP (INVITATION FOR BIDS (IFB) NO. 8DPS- 69-1) WHICH WAS AWARDED TO ESSARY SALES AND SALVAGE, ALBUQUERQUE, NEW MEXICO, FOR THE PERIOD JULY 1, 1968, TO JUNE 30, 1969. LINE ITEM 8, SCRAP BATTERIES, WAS DISPOSED OF TO PETE HEYDORN UNDER A TERM CONTRACT RESULTING FROM THE SAME INVITATION FOR BIDS. IT WAS DETERMINED THAT LINE ITEMS 3 THROUGH 6, SCRAP ALUMINUM, WOULD BE OFFERED FOR SALE AS ONE ITEM, AND LINE ITEM 7, ROLLED STEEL SHEETS, AS ONE ITEM ON A NEW SALE UNDER IFB NO. 8DPS- 69-133, THE INVITATION UNDER WHICH YOU WERE THE SUCCESSFUL HIGH BIDDER FOR THE SCRAP ALUMINUM.

THIS INVITATION WAS ISSUED ON APRIL 11, 1969. BIDS WERE OPENED ON APRIL 25, 1969. EIGHT BIDS WERE RECEIVED ON ITEM NO. 1 WHICH WAS DESCRIBED IN THE INVITATION AS FOLLOWS:

"SCRAP ALUMINUM, WRECKED AIRCRAFT, CONSISTING OF AIRCRAFT FUSELAGES, WINGS, TAIL ASSEMBLIES, AND ALUMINUM PIGS, APPROX. 100 TONS (200,000 LBS.) USED"

YOU WERE AWARDED ITEM NO. 1 ON APRIL 29, 1969, BASED UPON YOUR HIGH BID OF $0.1138 PER POUND. OTHER BIDS RECEIVED ON THIS ITEM RANGED FROM $0.021 TO A HIGH OF $0.0668 PER POUND.

BY VARIOUS CORRESPONDENCE BEGINNING WITH YOUR LETTER OF MAY 16, 1969, YOU REQUESTED RELIEF FROM THE CONTRACT BECAUSE THE QUALITY OF SCRAP WAS INFERIOR IN VALUE TO THE SCRAP YOU INSPECTED PRIOR TO BIDDING. YOU ADVISE IN THIS REGARD:

"* * * MR. RICHARD HEATHCOCK (PROPERTY CUSTODIAN) WAS OUT OF TOWN BUT HIS OFFICE SUPPLIED A GUIDE TO SHOW US THE MATERIAL BEING OFFERED. DURING THIS INSPECTION WE PROCEEDED FROM THE END OF THE CANYON CONTAINING A SMALL FURNACE TO THE OTHER END WHERE THE STEEL SHEETS (ITEM 2 UNDER THE IFB) ARE STORED. WE CONSTANTLY POINTED OUT ITEMS OF AIRCRAFT TO OUR GUIDE SUCH AS THE LANDING GEAR AND WHEELS, ENGINE THE TWO OLD AIRCRAFT WITH ITS ENGINES ETC AND ASKED IF THIS MATERIAL WAS INCLUDED IN ITEM #1 OF THE SALE. OUR GUIDE REPEATEDLY STATED 'IT ALL GOES, WE WANT TO CLEAN UP THE WHOLE AREA.' * * *"

YOU CLAIM, THEREFORE, THAT THE GOVERNMENT, DURING YOUR PREBID INSPECTION ON APRIL 22, 1969, MISREPRESENTED THE PROPERTY THAT WAS TO BE SOLD UNDER ITEM 1 OF THE IFB. FURTHER, YOU OBSERVE THAT THE IFB PROVIDED:

"* * * 'THE PURCHASER OF THE ALUMINUM SCRAP SHALL REMOVE ALL METAL, BONES, DROSS, DEBRIS OR OTHER MATERIALS FROM THE WORK AREA'. THE GSA SOCCORO REPRESENTATIVE ADVISED OUR PEOPLE THAT THE WORK AREA COMPRISED THE ENTIRE AREA IN THE INDICATED SOCORRO CANYON DUMP. CONSEQUENTLY, WE HAD NO REASON TO DOUBT, BUT, THAT ALL THESE PREBID DESIGNATED MATERIALS WERE INCLUDED IN THE IFB.

"* * * AFTER OUR AWARD, THE GSA SOCORRO REPRESENTATIVE, MR. RICHARD HEATHCOCK, PROCEEDED TO DESIGNATE THE ALUMINUM SCRAP WE COULD TAKE. THIS ALUMINUM SCRAP DESIGNATED BY MR. HEATHCOCK, AFTER OUR AWARD, WAS SUBSTANTIALLY INFERIOR IN VALUE TO THE ALUMINUM SCRAP WHICH WE PREBID INSPECTED, IN THAT IT WAS SUBSTANTIALLY ALL HIGH ZINC AND HIGH MAGNESIUM ALUMINUM ALLOYS WHICH ARE IN THE LOWEST PRICE CATEGORY IN THE SCRAP MARKET. FURTHERMORE, THIS ALUMINUM SCRAP DESIGNATED BY MR. HEATHCOCK AFTER OUR AWARD WAS IN FORM OF AIRCRAFT CARCASSES WHICH WERE COMPLETELY STRIPPED OF COPPER WIRE, HEAVY ALUMINUM SPARS, PARTS, METALS ETC. WE FURTHER DISCOVERED A LOCAL SCRAP DEALER WAS AFTER OUR AWARD, 'SCROUNGING AND FORAGING' AMONGST THE SCRAP MATERIALS AWARDED US BY THE GSA."

PARAGRAPHS 1, 2, AND 12 OF THE GENERAL SALES TERMS AND CONDITIONS OF THE INVITATION PROVIDED AS FOLLOWS:

"1. INSPECTION. THE BIDDER IS INVITED, URGED, AND CAUTIONED TO INSPECT THE PROPERTY TO BE SOLD PRIOR TO SUBMITTING A BID. PROPERTY WILL BE AVAILABLE FOR INSPECTION AT THE PLACES AND TIMES SPECIFIED IN THE INVITATION. IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR THE WITHDRAWAL OF A BID AFTER OPENING.

"2. CONDITION AND LOCATION OF PROPERTY. UNLESS OTHERWISE SPECIFICALLY PROVIDED IN THE INVITATION, ALL PROPERTY LISTED THEREIN IS OFFERED FOR SALE 'AS IS' AND 'WHERE IS.' IF IT IS PROVIDED THEREIN THAT THE GOVERNMENT SHALL LOAD, THEN 'WHERE IS' MEANS F.O.B. CONVEYANCE AT THE POINT SPECIFIED IN THE INVITATION. THE DESCRIPTION IS BASED ON THE BEST AVAILABLE INFORMATION. HOWEVER, THE GOVERNMENT MAKES NO WARRANTY, EXPRESS 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. * * *

"12. ORAL STATEMENTS AND MODIFICATIONS. ANY ORAL STATEMENT OR REPRESENTATION BY ANY REPRESENTATIVE OF THE GOVERNMENT, CHANGING OR SUPPLEMENTING THIS CONTRACT OR ANY CONDITION THEREOF, IS UNAUTHORIZED AND SHALL CONFER NO RIGHT UPON THE PURCHASER."

THE GUIDE, AN 18-YEAR-OLD STUDENT, WHO ASSISTED YOU IN YOUR PREBID INSPECTION, ADVISED GSA AS FOLLOWS:

"SINCE I WAS ONLY HIRED FOR THAT PARTICULAR DAY, AND THEN ONLY AS A SECURITY GUIDE, I DID NOT KNOW WHAT AIRCRAFT STRUCTURES WERE INVOLVED AS THE ITEMS WHICH WERE TO 'GO' OR NOT. I DID NOT MENTION AT ANY TIME WHICH ITEMS WENT AND WHICH ITEMS DID NOT."

IT IS REPORTED THAT NMIMT HIRED THE STUDENT ON A ONE-TIME BASIS AS A SECURITY GUIDE AND HE HAD NO KNOWLEDGE OR AUTHORITY TO MAKE REPRESENTATIONS BINDING ON THE GOVERNMENT. WE HAVE CONSISTENTLY HELD THAT WHERE THERE ARE DISPUTED QUESTIONS OF FACT, IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF THE CORRECTNESS OF THE ADMINISTRATIVE REPORT, OUR OFFICE WILL ACCEPT THE ADMINISTRATIVE REPORT AS ACCURATELY REFLECTING THE DISPUTED FACTS. 42 COMP. GEN. 124 (1962); 41 ID. 47 (1961); 37 ID. 568 (1958). IT IS REPORTED FURTHER THAT THERE WAS OTHER PROPERTY IN THE AREA AT THE TIME OF INSPECTION, NAMELY, FIVE OR SIX ALUMINUM LIQUID OXYGEN TANKS (100,000 GALLON), 15 TO 20 ARMY TRUCKS, VARIOUS SHAPES OF ALUMINUM AND STEEL ON ROUGH PALLETS, AND TWO RAILROAD TANK CARS. SINCE IT IS OBVIOUS THAT THESE ITEMS COULD NOT HAVE BEEN INCLUDED WITHIN THE DESCRIPTION OF ITEM 1, YOUR RELIANCE ON THE PURPORTED STATEMENTS OF THE GUIDE IS SUBJECT TO SOME QUESTION. WHILE YOU ALLEGE THAT WHEELS, ENGINES, COPPER WIRE, FUSELAGE COUNTERWEIGHTS, HYDRAULICS, PUMPS, ETC; ARE INCLUDED AS PART OF THE SALE TO YOU UNDER ITEM 1, IT IS REPORTED THAT ONLY TO THE EXTENT THAT SUCH ITEMS ARE A PART OF "WRECKED AIRCRAFT, CONSISTING OF AIRCRAFT FUSELAGES, WINGS, TAIL ASSEMBLIES" COULD THEY HAVE BEEN INCLUDED IN ITEM 1.

THAT ITEM 1 COVERED ONLY, AND THAT THE GOVERNMENT INTENDED IT TO COVER ONLY, SCRAP ALUMINUM IS SUPPORTED BY OTHER PROVISIONS OF THE IFB WHICH PROVIDED THAT THE SUCCESSFUL BIDDER ON ITEM 1 WOULD BE REQUIRED TO FURNISH ITS OWN SWEATING FURNACE (FOR MELTING THE SCRAP ALUMINUM) AND THAT PAYMENT WOULD BE ON THE BASIS OF THE WEIGHT OF INGOTS OBTAINED FROM SUCH MELTING. ADDITIONALLY, UNDER THE REMOVAL PROVISION, THE IFB SPEAKS ONLY OF REMOVING INGOTS NOT SCRAP TO THE WEIGHMASTER AFTER INSPECTION BY THE PROPERTY CUSTODIAN.

IN ALLEGING THAT ITEMS SUCH AS PUMPS, HYDRAULICS, ENGINES, ETC; WERE INCLUDED UNDER ITEM 1, AND THEREFORE ARE A PART OF YOUR CONTRACT, YOU PLACE GREAT WEIGHT ON THE PROVISION IN THE IFB THAT "THE PURCHASER SHALL REMOVE ALL METAL, BONES, DROSS, DEBRIS, OR OTHER MATERIAL FROM WORK AREAS." THIS STATEMENT IS SET FORTH UNDER THE BOLD TYPE HEADING OF "CONDITIONS OF WORK AREA." IT IS POINTED OUT THAT THE PROPERTY REFERRED TO (METAL, BONES, DROSS, DEBRIS, OR OTHER MATERIAL) IS THE RESIDUE FROM THE MELTING OPERATION WHICH IS EITHER HAULED OFF BY THE CONTRACTOR OR BURIED ON THE SITE. IT IS FURTHER POINTED OUT THAT THE IFB PROVIDED THAT "BURIAL OF THE AFOREMENTIONED (PROPERTY) WILL BE PERMITTED ON GOVERNMENT PREMISES AT A SITE DESIGNATED BY THE PROPERTY CUSTODIAN." AS AN EXPERIENCED SCRAP DEALER WHICH HAS HAD OTHER GOVERNMENT SCRAP CONTRACTS, YOUR FIRM SHOULD BE FAMILIAR WITH THIS TERMINOLOGY AND SHOULD HAVE REALIZED ITS PURPOSE AND SCOPE.

THE PROPERTY CUSTODIAN HAS REPORTED THAT: "DURING THE INSPECTION THERE WERE AND STILL ARE A LARGE NUMBER OF TEST-DAMAGED AIRCRAFT WHICH CONTAIN LANDING GEARS, WHEELS, TIRES, COPPER WIRE, HYDRAULICS, ETC;" AND THAT "NO MATERIAL WHICH WAS ON 8DPS-69-133 HAS BEEN 'DEPLETED'." FURTHER, THE LOCAL SCRAP DEALER REFERRED TO BY YOU IS ESSARY SALES AND SALVAGE, ALBUQUERQUE, NEW MEXICO. IT IS REPORTED THAT AWARDED TO HIM UNDER HIS TERM CONTRACT, 8DPS-69-1. THIS SCRAP WAS LOCATED SOME 50 FEET FROM THE NEAREST PROPERTY AWARDED TO YOU. THE MATERIAL THAT YOU ALLEGE WAS WITHDRAWN FROM THE SALE CONSISTED OF AIRPLANE PARTS THAT WERE IN THE AREA OF THE ALUMINUM SCRAP, BUT WAS NOT PART OF THE SALE. THIS PROPERTY IS SHOWN TO BE B-29 FUSELAGES WHICH WERE NOT INCLUDED IN THE SALE.

REGARDING THE ALLEGED INFERIOR QUANTITY AND QUALITY OF THE AVAILABLE SCRAP, THE RECORD SHOWS THAT THE 100 TONS OF ALUMINUM SCRAP, AS ADVERTISED, ARE STILL AT THE SITE. AT LEAST 75 PERCENT OF THE SCRAP IS OF A HIGHER GRADE ALUMINUM, BEING COMPOSED OF OLDER VINTAGE AIRCRAFT WHICH WAS CONSTRUCTED FROM HIGHER GRADE ALUMINUM. THE MARKET PRICE FOR THE HIGHER GRADE ALUMINUM SCRAP AT THE TIME OF THE SALE IS REPORTED TO HAVE BEEN $0.1525 TO $0.1575 PER POUND. THE PUBLISHED MARKET PRICE ON SEPTEMBER 17, 1969, WAS $0.1575 TO $0.1625 PER POUND. THE MARKET PRICE FOR LOWER GRADE ALUMINUM, WHICH HAS THE HIGHER ALLOY CONTENT, WAS QUOTED AT $0.1075 TO $0.1175 PER POUND AT THE TIME OF THE SALE. THE PUBLISHED PRICE ON SEPTEMBER 17, 1965, WAS $0.1250 TO $0.1300 PER POUND. IT IS NOTED THAT THE CONTRACT PRICE IS LOWER THAN ALL MARKET PRICES EXCEPT THE LOWEST RANGE FOR THE LOWER GRADE ALUMINUM.

THE RECORD DISCLOSES THAT THE GOVERNMENT IS READY AND ABLE TO DELIVER THE MATERIAL WHICH IT ADVERTISED AND UPON WHICH YOUR BID WAS SUBMITTED. WHILE YOU MAY HAVE ANTICIPATED RECEIPT OF MANY SALVAGE ITEMS OTHER THAN ALUMINUM SCRAP AND ARE DISAPPOINTED IN BEING HELD HELD TO A DELIVERY OF SCRAP ALUMINUM, WE CONCLUDE THAT THE AWARD OF THE ADVERTISED MATERIAL WAS MADE IN GOOD FAITH. IN THIS REGARD, THE CLEAR AND EXPLICIT LANGUAGE OF THE INVITATION PROVISIONS AS TO INSPECTION, CONDITION AND LOCATION OF PROPERTY, ORAL STATEMENTS AND MODIFICATIONS, CONDITIONS OF WORK AREA AND REMOVAL, FULLY APPRISED ALL PROSPECTIVE BIDDERS THAT THEY WERE CONTRACTING FOR THE PURCHASE OF THE ADVERTISED MATERIALS AT THEIR OWN RISK. THE COURTS HAVE HELD REPEATEDLY THAT SUCH PROVISIONS AS THE REQUIREMENT FOR ADEQUATE INSPECTION AND NOTICE OF CONDITION OF PROPERTY CONSTITUTE AN EXPRESS DISCLAIMER OF WARRANTY. COMPARE MAGUIRE & CO. V. UNITED STATES, 273 U.S. 67 (1927); LUMBRAZO V. WOODRUFF, 175 N.E. 525 (1931); W. E. HEDGER CO. V. UNITED STATES, 52 F. 2D 31 (1931) CERTIORARI DENIED 284 U.S. 676 (1931). SEE, ALSO, LIPSHITZ & COHEN V. UNITED STATES, 269 U.S. 90 (1925).

ON THE RECORD BEFORE US, WE CANNOT SAY THAT YOU WERE MISLED BY THE GOVERNMENT SINCE IT WAS YOUR RESPONSIBILITY TO ASCERTAIN FOR YOURSELF THE ACCURACY OF THE GUIDE'S STATEMENTS IN THE LIGHT OF THE SALES DESCRIPTION AND THE TERMS OF THE INVITATION. COMPARE 41 COMP. GEN. 97 (1961); 18 ID. 176 (1938) AND 17 ID. 601 (1938). ACCORDINGLY, THERE IS NO LEGAL BASIS FOR RELIEVING YOU OF YOUR OBLIGATIONS UNDER THE SALES CONTRACT. COMPARE DADOURIAN EXPORT CORPORATION V. UNITED STATES, 291 F. 2D 178, 182 (1961).

WE ARE ADVISED BY GSA THAT THE DEFAULT ACTION TAKEN BY THE SALES AGENCY ON AUGUST 19, 1969, IN CONNECTION WITH YOUR CONTRACT WILL BE RESCINDED AND THAT YOU WILL BE GIVEN 15 DAYS FROM THE DATE OF RECEIPT OF THIS DECISION TO COMMENCE PERFORMANCE UNDER THE CONTRACT, SUBJECT TO THE POSTING OF A SATISFACTORY PERFORMANCE BOND AND PAYMENT IN ACCORDANCE WITH THE CONTRACT. THEREAFTER, YOU WILL BE ALLOWED A REASONABLE TIME TO COMPLETE YOUR CONTRACT UNDER ITS 9TERMS AND CONDITIONS AS AWARDED TO YOU.

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