Court Opinion

ID: 8596532
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:03:47.674909+00
Date Added: 2024-06-11T16:54:58.592854
License: Public Domain

FRIEDMAN, Chief Judge,
dissenting in part.
Although I agree with the court that the non-appropriated-funds doctrine is inapplicable in this case, I disagree with the ruling that the withdrawal-of-property clause of the contract bars the plaintiffs recovery.
If the court were prepared to hold that this clause applies whenever, after disposing of surplus property, the government concludes that the property should not have been declared surplus, I would have no difficulty in holding for the defendant. The court apparently is unwilling to go that far, however, presumably because of the statement in Peck Iron and Metal Co. v. United States that the purpose of this clause is to "confine the Government’s power-to-withdraw to those instances in which it actually needs the property for its own purposes, and not where it intends to resell.” 204 Ct. Cl. 381, 400, 496 F.2d 543, 553 (1974) (emphasis added). The rationale for the court’s holding in this case that the government had "a bonafide requirement for the property” was that "[b]y withdrawing the machine from surplus and trading it in on a new machine, which was badly needed, the Government realized a substantial saving which otherwise would have been lost.”
I do not think that the provision in this clause that the government may withdraw property that it has sold "for its use * * * if a bonafide requirement for the property develops” applies when the only reason for the withdrawal is to save the government some money. I see no difference analytically between the situation in this case — where the government withdrew because after sale it discovered that it could obtain a substantially greater amount on a trade-in than it would realize on the sale — and a case where the government withdraws because it has been offered a higher price by a third party. The Peck Iron and Metal Company decision indicates that in the latter situation the clause *117does not apply, and I think the clause is equally inapplicable in the former. In neither situation does the government "need” the property "for its own purposes” except in the sense that it is financially advantageous for it to renege on its contractual commitment.
The case would be different if the government were required to surrender the sold article in order to obtain a replacement.1 There is no claim, however, that that situation existed here. Indeed, it is far from clear that the withdrawal here was not the functional equivalent of a sale of the property. The amount of the trade-in the government was offered depended upon the cost of a replacement it would purchase. Datagraphix offered the government a trade-in allowance of $34,564 on two model 4440’s if the government purchased replacements costing $173,934, but a trade-in allowance of only $20,000 on those two machines if it purchased equipment costing $119,788. The trade-in allowance thus appears, to a large extent, to be merely a method of providing a discount to the government. It is possible that a substantial, perhaps even comparable, discount could have been obtained even without a trade-in. I do not think that the government’s wish to use this property to obtain a trade-in was sufficient to establish "a bonafide requirement for the property” authorizing the government to withdraw the property "for its use.”

 I therefore agree with the court in rejecting the plaintiffs contention that the clause applies only when the government requires the physical use of the property.