B-153381, FEB. 25, 1964

B-153381, FEB. 25, 1964

TO WOLVERINE METAL COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 10, 1964, WITH ENCLOSURES, REQUESTING REVIEW OF OUR SETTLEMENT DATED DECEMBER 20, 1963, DISALLOWING YOUR CLAIM FOR $777.81 ALLEGED TO BE DUE UNDER DEFENSE SUPPLY AGENCY CONTRACT NO. DSA-39-S-490, DATED FEBRUARY 28, 1963.

IT APPEARS THAT A BID DATED FEBRUARY 11, 1963, WHICH YOU SUBMITTED IN RESPONSE TO INVITATION NO. 39-S-63-35, ISSUED ON FEBRUARY 5, 1963, BY THE DEFENSE SURPLUS SALES OFFICE, FORT LEAVENWORTH, KANSAS, FOR THE SALE OF CERTAIN GOVERNMENT SURPLUS PROPERTY WAS ACCEPTED BY THE SALES OFFICE ON FEBRUARY 28, 1963, FOR ITEMS NOS. 8, 15 AND 16 IN THE TOTAL AMOUNT OF $5,219.20. PAYMENT IN FULL WAS MADE BY YOU AND DELIVERY OF THE PROPERTY, WHICH IS REPORTED TO HAVE INVOLVED CERTAIN WEIGHT OVERSHIPMENTS OF THESE THREE ITEMS, WAS EFFECTED. BY LETTERS DATED APRIL 20, 1963, YOU ADVISED THE DEFENSE SURPLUS SALES OFFICE YOU DISCOVERED THAT ITEM NO. 15, COVERING 4,000 POUNDS OF HIGH TEMPERATURE ALLOY, AND WHICH WAS DESCRIBED, AMONG OTHERS, AS "GROUP 8, INCONEL. 70 TO 75 PERCENT NICKEL" CONTAINED A TOTAL OF 2,248 POUNDS OF MATERIAL KNOWN AS 25-20 WHICH HAS A VALUE OF ONLY $0.15 A POUND. THEREFORE, SINCE THE 25-20 MATERIAL CONSISTS OF ONLY 20 PERCENT NICKEL INSTEAD OF THE 70-75 PERCENT ADVERTISED IN THE INVITATION YOU FILED A CLAIM FOR $777.81 BASED ON THE 2,248 POUNDS RECEIVED AT $0.346 A POUND-- - THE DIFFERENCE BETWEEN YOUR UNIT BID PRICE OF $0.496 AND $0.15, THE VALUE PLACED BY YOU ON THE 25-20 MATERIAL. THE CLAIM WAS DISALLOWED IN OUR SETTLEMENT DATED DECEMBER 20, 1963, FOR THE REASONS SET FORTH THEREIN. YOUR REQUEST FOR REVIEW OF THE SETTLEMENT IS BASED SOLELY ON YOUR ALLEGATION THAT THE QUANTITY OF THE MATERIAL ON WHICH YOUR CLAIM IS BASED CONTAINED ONLY 20 PERCENT NICKEL INSTEAD OF THE 70-75 PERCENT ADVERTISED AND THAT THERE WAS NO WAY OF DETERMINING THE ACTUAL CONTENT OF SUCH METAL EXCEPT BY TESTING UPON RECEIPT THEREOF.

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE, THAT, IN THE ABSENCE OF BAD FAITH, SUCH AN EXPRESS DISCLAIMER OF WARRANTY AS THAT SET FORTH IN PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF CONTRACT NO. DSA-39-S-490, AND REFERRED TO IN OUR SETTLEMENT DATED DECEMBER 20, 1963, VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER CO. V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; AND I. SHAPIRO AND CO. V. UNITED STATES, 66 CT.CL. 424. THERE IS NOTHING IN THE RECORD BEFORE US TO INDICATE BAD FAITH ON THE PART OF THE GOVERNMENT SALES CONTRACTING OFFICER IN CONNECTION WITH THE TRANSACTION AND, IN FACT, THERE IS NOTED THE STATEMENT IN YOUR LETTER DATED JANUARY 10, 1964, THAT YOU DO NOT ATTRIBUTE ANY BAD FAITH TO THE GOVERNMENT IN THIS REGARD. THE BASIC PRODUCT ADVERTISED FOR SALE UNDER ITEM NO. 15 WAS A CERTAIN QUANTITY OF HIGH TEMPERATURE ALLOY AND THAT IS EXACTLY WHAT WAS SOLD AND DELIVERED TO YOU. THUS, THE DESCRIPTION OF THE NICKEL CONTENT OF THE ALLOY OFFERED FOR SALE AS BEING CONSIDERABLY HIGHER THAN IT ACTUALLY WAS MAY BE ATTRIBUTED TO NOTHING MORE THAN AN HONEST ERROR WHICH WAS COMPLETELY COVERED BY THE ABOVE-REFERRED-TO DISCLAIMER OF WARRANTY CLAUSE SET FORTH IN THE CONTRACT.

MOREOVER, NO PARTICULAR MERIT MAY BE ACCORDED YOUR CONTENTION THAT THERE WAS NO WAY OF DETERMINING THE PERCENTAGE OF NICKEL CONTENT IN THE ALLOY EXCEPT BY TESTING IT UPON RECEIPT THEREOF. IN THIS REGARD, THERE WOULD APPEAR TO BE APPLICABLE HERE THE RULE ESTABLISHED BY THE DECISIONS OF OUR OFFICE THAT WHERE A BIDDER, WHO IS PRESUMED TO BE FULLY AWARE THAT THE SALE IS BEING MADE SUBJECT TO THE STRICT TERMS OF A DISCLAIMER OF WARRANTY CLAUSE, FAILS TO MAKE AN INSPECTION UNDER SUCH A CONTRACT OF SALE--- WHETHER SUCH FAILURE WAS DUE TO THE BIDDER'S OPINION THAT INSPECTION WAS NOT NECESSARY OR WHETHER THE INSPECTION WAS IMPRACTICAL, IF NOT IMPOSSIBLE --- THE 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. THE BIDDER'S RESPONSIBILITIES IN THIS CONNECTION APPEAR TO BE CLEARLY SET FORTH IN PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHEREIN IT WAS HELD THAT, NOTWITHSTANDING THE DIFFICULTIES ATTENDANT UPON AN INSPECTION, IT IS INCUMBENT UPON THE BIDDER TO MAKE THE KIND OF INSPECTION THAT IS EFFECTUAL. MOREOVER, IN A RECENT COURT OF CLAIMS CASE DEALING WITH THE IMPOSSIBILITY OF INSPECTION IN A GOVERNMENT SALE CASE OF THIS KIND, STAR WOOLEN COMPANY V. UNITED STATES, CT.CL. 51-61, DATED NOVEMBER 7, 1962, THE COURT DENIED RECOVERY TO A PURCHASER OF SURPLUS GOODS FROM THE GOVERNMENT FOR INFERIOR GOODS RECEIVED ON THE BASIS THAT EVEN IF THE GOVERNMENT HAD FAILED TO DO ALL IT WAS SUPPOSED TO DO TO MAKE ALL OF THE CRATES OF GOODS AVAILABLE FOR INSPECTION, THE PURCHASER WAIVED SUCH FAILURE BY THE SUBMISSION OF ITS BID.