B-135932, MAY 19, 1958

B-135932, MAY 19, 1958

TO THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO A LETTER DATED APRIL 21, 1958, FROM THE DEPUTY ASSISTANT SECRETARY OF THE AIR FORCE, WITH ENCLOSURES, SUBMITTING FOR DECISION A REQUEST OF UNION STEEL COMPANY, KANSAS CITY, MISSOURI, FOR A PARTIAL CANCELLATION OF SALES CONTRACT NO. AF 01/601/S-2305 AND REFUND OF THE CORRESPONDING CONTRACT PURCHASE PRICE, ON THE GROUNDS OF ALLEGED MISREPRESENTATION OF THE CONDITION OF THE PROPERTY UNDER ITEMS NOS. 89 AND 91 IN THE BID INVITATION.

BY INVITATION NO. 01-601-S-58-15, ISSUED OCTOBER 25, 1957, THE PROCUREMENT DIVISION, BATON ROUGE AIR FORCE STATION, BATON ROUGE, LOUISIANA, SOLICITED BIDS--- TO BE OPENED NOVEMBER 20, 1957--- FOR THE PURCHASE FROM THE GOVERNMENT OF 115 ITEMS OF SURPLUS PROPERTY. ITEMS NOS. 89 AND 91 WERE DESCRIBED IN THE INVITATION AS AIRCRAFT ENGINE COMPONENTS, UNUSED, SUBJECT TO STORAGE DAMAGES.

IN RESPONSE TO THE INVITATION, UNION STEEL COMPANY SUBMITTED BIDS ON A NUMBER OF ITEMS, INCLUDING ITEMS NOS. 89 AND 91. THE COMPANY QUOTED A UNIT PRICE OF $14.11 EACH FOR "ALL OR ANY" OF THE 143 (UNITS) OF AIRCRAFT ENGINE COMPONENTS ASSEMBLIES LISTED UNDER ITEM NO. 89, AND $14.11 EACH FOR "ALL OR ANY" OF THE 90 UNITS IN ITEM NO. 91. THE ABSTRACT OF BIDS SHOWS THAT A BID OF $15.57 EACH FOR 20 OF THE UNITS LISTED UNDER ITEM NO. 89 WAS RECEIVED AND ACCEPTED, AND THAT SEVEN OTHER BIDS WERE RECEIVED ON THIS ITEM WITH UNIT PRICES RANGING FROM $0.67 TO $10. ALSO, EIGHT BIDS IN ADDITION TO THAT OF UNION STEEL COMPANY WERE RECEIVED ON ITEM NO. 91, RANGING FROM $0.65 TO $11.11 PER UNIT.

THE BID OF UNION STEEL COMPANY ON ITEM NO. 89, AT ITS UNIT PRICE OF $14.11 EACH, WAS ACCEPTED FOR 123 OF THE 143 UNITS LISTED, AND ITS BID ON ITEM NO. 91 WAS ACCEPTED AT THE UNIT PRICE OF $14.11 EACH FOR THE 90 UNITS LISTED, THE TOTAL PURCHASE PRICE FOR BOTH ITEMS AMOUNTING TO $3,005.43 WHICH HAS BEEN PAID BY THE PURCHASER.

AFTER AWARD OF THE CONTRACT, IN LETTER DATED DECEMBER 20, 1957, UNION STEEL COMPANY ADVISED THE CONTRACTING OFFICER, BATON ROUGE AIR FORCE STATION, THAT THE CYLINDER-PISTON ASSEMBLIES SOLD TO IS UNDER ITEMS NOS. 89 AND 91 WERE NOT AVAILABLE TO IT IN "UNUSED CONDITION AS DESCRIBED IN YOUR CATALOG," AND REQUESTED A REFUND OF THE PURCHASE PRICE OF THE TWO ITEMS IN THE AMOUNT OF $3,005.43. IN REPLY, THE CONTRACTING OFFICER IN LETTER DATED DECEMBER 27, 1957, FURNISHED INFORMATION TO THE COMPANY FOR CONSIDERATION IN DETERMINING WHETHER IT WISHED TO SUBMIT A FORMAL CLAIM FOR REFUND. THE CONTRACTOR WAS ALLOWED AN ADDITIONAL 20 DAYS FOR PICKUP OF THE PROPERTY, PARTICULAR ATTENTION BEING CALLED TO THE PROVISIONS IN THE CONTRACT RELATING TO DELIVERY AND REMOVAL OF THE PROPERTY.

THE PURCHASE, IN LETTER DATED JANUARY 3, 1958, TO THE CONTRACTING OFFICER, EXPLAINED THAT THE PROPERTY AWARDED TO IT UNDER ITEMS NOS. 89 AND 91 WAS RELEASED TO A THIRD PARTY; THAT WHEN THIS PARTY INSPECTED THE MATERIAL AT THE DISPOSAL SITE HE FOUND IT IN A "USED CONDITION ONLY" AND THEREFORE REJECTED IT, POINTING OUT TO THE EMPLOYEES OF THE DISPOSAL STATION OBVIOUS SIGNS OF PREVIOUS USE IN ENGINES SUCH AS CARBON DEPOSITS, EXPOSURE TO HEAT, ETC., AND THAT NO CYLINDERS COULD BE FOUND IN EITHER ITEM TO CONFORM TO THE GOVERNMENT CATALOG DESCRIPTION OF "UNUSED.' THE PURCHASER ALLEGED THAT THE MATERIAL HAD BEEN MISREPRESENTED BECAUSE THE INVITATION ADVERTISED IT AS "UNUSED.' IT APPEARS THAT THE CONTRACTOR DID NOT INSPECT THE MATERIAL PRIOR TO SUBMITTING ITS BID ON ITEMS NOS. 89 AND 91, BUT BASED ITS BID PRICE FOR EACH OF THESE ITEMS UPON THE DESCRIPTION IN THE INVITATION THAT THE MATERIAL WAS "UNUSED, SUBJECT TO STORAGE DAMAGES.' THE CONTRACTOR REQUESTED THAT THE GOVERNMENT MAKE AVAILABLE TO IT THE CONTRACT QUANTITIES UNDER THESE ITEMS IN AN "UNUSED (CONTRACT) CONDITION," OR THAT ITS CLAIM FOR REFUND OF $3,005.43 BE SUBMITTED TO THE PROPER AUTHORITIES AND A FURTHER EXTENSION OF TIME BE ALLOWED FOR REMOVAL OF THE PROPERTY IN QUESTION UNTIL THE CLAIM IS ACTED UPON.

THE CONTRACT IN THIS CASE WAS ON STANDARD FORM 114 REVISED AUGUST 1950, AND CONTAINED ON PAGE TWO THEREOF THE USUAL GENERAL SALE TERMS AND CONDITIONS WITH REGARD TO INSPECTION AND DISCLAIMER OF WARRANTY, AND A STATEMENT THAT THE DESCRIPTION WAS "BASED ON THE BEST AVAILABLE INFORMATION.'

REGARDING THE PURCHASER'S ALLEGATION THAT THE MATERIAL IN QUESTION WAS MISREPRESENTED IN THE BID INVITATION AS TO ITS CONDITION, THE CONTRACTING OFFICER IN HIS STATEMENT GIVING THE DETAILS OF THE TRANSACTION STATES THAT THE DESCRIPTIONS OF ITEMS NOS. 89 AND 91 AS GIVEN IN THE BID INVITATION WERE IN ORDER EXCEPT FOR THE INADVERTENT USE OF "UNUSED, SUBJECT TO STORAGE DAMAGES" IN LIEU OF "USED, VARYING DEGREES OF CONDITION; " AND THAT THE ERROR WAS NOT DISCOVERED UNTIL THE MATERIAL WAS RELEASED FOR PICKUP AFTER THE AWARD, EXECUTION OF THE CONTRACT, AND RECEIPT OF FINAL PAYMENT. IT IS THE OPINION OF THE CONTRACTING OFFICER THAT THE DISCREPANCY IN THE DESCRIPTIONS AS TO THE CONDITION OF THE PROPERTY IS DISCERNIBLE UPON NORMAL INSPECTION; THAT THE CONTRACTOR SHOULD HAVE INSPECTED THE MATERIAL PRIOR TO SUBMITTING ITS BID, AS ALL BIDDERS WERE CAUTIONED TO DO; AND THAT THERE IS NO BASIS FOR CONSIDERATION OF INDIFFERENCE, CALLOUSNESS, MALICIOUSNESS, IRRESPONSIBILITY, FRAUDULENT MISREPRESENTATION OR OTHER DISREGARD OF RESPONSIBILITY, SINCE THE INVITATION WAS PREPARED IN GOOD FAITH FROM INFORMATION FURNISHED HIM WHICH CONTAINED THE ERRONEOUS STATEMENT AS TO THE CONDITION OF THE PROPERTY. THE CONTRACTING OFFICER RECOMMENDS DISALLOWANCE OF THE CONTRACTOR'S CLAIM, IN ACCORDANCE WITH THE REQUIREMENTS OF PARAGRAPHS 1 AND 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE CONTRACT.

IN THIS REGARD, HOWEVER, THE RECORD SHOWS THAT THE DOCUMENTS TRANSFERRING THE MATERIAL IN QUESTION TO THE AIR FORCE STATION AT BATON ROUGE FOR DISPOSAL LISTED THE CONDITION OF THE MATERIAL AS "E2" FOR ITEM NO. 89 AND AS "E2" AND "E3" FOR ITEM NO. 91; THAT "E2" MEANS "USED, RECONDITIONED GOOD" AND "E3" MEANS "USED, RECONDITIONED FAIR; " AND THAT THE TYPIST AT THE DISPOSAL ACTIVITY IN PREPARING THE LIST OF ITEMS FOR USE IN MAKING UP THE BID INVITATION INCORRECTLY TRANSLATED THESE CONDITION CODES TO MEAN "USED, SUBJECT TO STORAGE DAMAGES.' IN THE FIRST INDORSEMENT DATED FEBRUARY 20, 1958, FROM THE COMMANDER, HEADQUARTERS AMC, WRIGHT-PATTERSON AIR FORCE BASE, OHIO, AND IN THE LETTER OF APRIL 21, 1958, TO OUR OFFICE FROM THE DEPUTY ASSISTANT SECRETARY, IT IS STATED THAT THE CORRECT INFORMATION AS TO THE CONDITION OF THE PROPERTY WAS NOT INCLUDED IN ITEMS NOS. 89 AND 91 OF THE BID INVITATION BECAUSE OF THE TYPIST'S ERROR IN PREPARING THE LIST, AND THAT SINCE CORRECT INFORMATION WAS AVAILABLE IN THE RECORDS AT THE DISPOSAL DEPOT IT APPEARS THAT THE ERROR SHOULD HAVE BEEN DETECTED BY THE GOVERNMENT PRIOR TO THE PREPARATION AND DISTRIBUTION OF ITS INVITATION FOR BIDS AND THAT ITS FAILURE TO DO SO RESULTED IN A "MAL-ADVERTISEMENT" OF THE PROPERTY TO BE DISPOSED OF, AND THE CLAIMANT THEREFORE IS ENTITLED TO CONSIDERATION.

WHILE THE RECORD INDICATES THAT UNION STEEL COMPANY DID NOT MAKE AN INSPECTION OF THE MATERIAL PRIOR TO SUBMITTING ITS BID AND THAT SUCH NEGLIGENCE CONTRIBUTED TO THE POSITION IN WHICH IT NOW FINDS ITSELF, IT IS APPARENT THAT THE DESCRIPTIONS OF THE PROPERTY OFFERED FOR SALE UNDER ITEMS NOS. 89 AND 91 WERE ERRONEOUS IN THE INVITATION AND THAT CORRECT INFORMATION AS TO THE CONDITION OF THE PROPERTY WAS AVAILABLE AT THE DISPOSAL DEPOT WHEN THE LIST WAS MADE UP AND THE INVITATION FOR BIDS WAS PREPARED. CONSEQUENTLY, IT MUST BE CONCLUDED THAT THE ERRONEOUS DESCRIPTIONS IN THE INVITATION AS TO THESE TWO ITEMS WERE NOT "BASED ON THE BEST AVAILABLE INFORMATION" IN POSSESSION OF THE DISPOSAL OFFICE AS STATED IN THE GENERAL SALE TERMS AND CONDITIONS CONTAINED IN THE INVITATION.

IN VIEW OF THE FOREGOING, AND SINCE IT IS REPORTED THAT THE MATERIAL IS STILL IN THE POSSESSION OF THE GOVERNMENT WITH THE EXCEPTION OF "1 EACH OF ITEM 91," THAT PORTION OF THE COMPANY'S SALES CONTRACT PERTAINING TO ITEMS NOS. 89 AND 91 MAY BE CANCELLED AND THE PURCHASE PRICE PAID FOR THOSE MATERIALS WHICH ARE STILL IN THE POSSESSION OF THE GOVERNMENT MAY BE REFUNDED TO UNION STEEL COMPANY.