# Appendix — J & E Salvage Co. v. United States, 41 Fed. Cl. 76 (1998) (No. 97-2080)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1998

## Text

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APPENDIX A — DECISION OF THE UNITED STATES
COURT OF APPEALS FOR THE FEDERAL CIRCUIT
DECIDED MARCH 25, 1998

UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT

97-5066

J & E SALVAGE COMPANY, JOHN DARLINGTON, and
TERESA N. DARLINGTON, Executrix of the Estate of
EDWARD DARLINGTON,

Plaintiffs-Appellants,

V.

THE UNITED STATES,
Defendant-Appellee.

DECIDED: March 25, 1998
Before RICH, MICHEL, and SCHALL, Circuit Judges.
SCHALL, Circuit Judge.
DECISION

J&E Salvage Company and the other named plaintiffs
(collectively J&E) appeal the judgment of the United States
Court of Federal Claims (i) dismissing J&E’s Fifth Amendment
taking claim for failure to state a claim upon which relief could
be granted, J&E Salvage Co. v. United States, 36 Fed. Cl. 192,
196 (1996) (J&E IID), and (ii) dismissing J&E’s breach of contract
claim for lack of jurisdiction, J&E Salvage Co. v. United States,
37 Fed. Cl. 256, 260-63 (1997) (J&E IV). We affirm.

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Appendix A

DISCUSSION
I.

Ca May 19, 1992, at the request of the Department of
Defense, the Defense Reutilization and Marketing Office
(DRMO) held an auction at Cherry Point, North Carolina, to
sell surplus material. See J&E III, 36 Fed. Cl. at 193. John and
Teresa Darlington, as general partners of J&E, purchased several
“lots” of surplus merchandise at the auction. Specifically, J&E
purchased lots 42 through 47, which appeared to be large
containers used for shipping and storing helicopter
transmissions. The containers were bolted shut at the time of
the sale, so J&E was unable to determine what, if anything,
was inside the containers. The lots were described in the
invitation for Bids and the Notice of Award as: “Shipping &
Storage Container: 2 EA.” J&E paid a total of $1,075 for the
containers.

After J&E paid for the merchandise, it transported the
containers back to its place of business. Sometime thereafter,
the containers were opened and it was discovered that four of
them contained surplus helicopter transmissions valued at
$289,600 each. When J&E notified DRMO of this discovery,
DRMO claimed that the transmissions were still government
property and demanded their immediate return. J&E, however,
refused to return the transmissions. DRMO then filed suit in
the United States District Court for the Eastern District of North
Carolina seeking a return of the transmissions. In due course,
J&E filed a motion to dismiss for lack of jurisdiction, arguing
that the dispute was governed by the Contract Disputes Act, 41
U.S.C. §§ 601-613 (1994) (CDA), and that the district court
therefore was without subject matter jurisdiction.

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Appendix A

Rejecting J&E’s argument, the district court held that it
had jurisdiction and ordered J&E to return the transmissions to
the government. See United States v. J&E Salvage Co., No.
92-162-CIV-4-H (E.D.N.C. Aug. 19, 1994) (J&E I), rev'd, 55
F.3d 985 (4th Cir. 1995). J&E complied with the court’s order
and returned the transmissions on September 9, 1994. However,
J&E appealed the district court’s decision to the United States
Court of Appeals for the Fourth Circuit. On June 14, 1995, the
Fourth Circuit reversed the district court on the jurisdictional
issue and remanded with instructions to grant J&E’s motion to
dismiss. See United States v. J&E Salvage Co., 55 F.3d 985,
990 (4th Cir. 1995) (J&E IN).

On August 3, 1995, J&E sent a letter to G. Norman Acker,
III, an Assistant United States Attorney for the Eastern District
of North Carolina, requesting that the government return the
transmissions in light of the Fourth Circuit’s decision. Mr. Acker
referred J&E’s letter to counsel for DRMO. Thereafter, on
September 5, 1995, in a document titled “FINDING OF FACT
AND FINAL DECISION,” Dan Hurston, DRMO’s contracting
officer, denied J&E’s request for return of the helicopter
transmissions. In so doing, Mr. Hurston stated that “legal title
of the CH-46 transmissions did not transfer to JRE Salvage as
a result of the sale of the shipping and storage containers.”

Subsequently, J&E filed suit in the Court of Federal Claims
seeking compensation for the transmissions on the ground that
DRMO’s refusal to return them amounted to a Fifth Amendment
taking. The government moved to dismiss the complaint for
failure to state a claim upon which relief could be granted. The
trial court agreed and held, for various reasons, that J&E had
failed to state a Fifth Amendment taking claim. See J&E III, 36
Fed. Cl. at 194-96. However, instead of granting the

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Appendix A

government’s motion to dismiss, the court allowed J&E to
amend its complaint to allege a breach of contract. See id.
Eventually, the government moved to dismiss the breach of
contract claim for lack of subject matter jurisdiction. In J&E
IV, the court granted the government’s motion on the ground
that J&E had failed to submit a valid and certified claim to the
contracting officer as required by the CDA. See 37 Fed. Cl. at
260-63. In the alternative, the court held that even if it had
jurisdiction over the breach of contract claim, J&E would lose
on the merits. See id. at 263-66.

Il.

Whether a motion to dismiss for lack of jurisdiction has
been properly granted is a question of law which we review de
novo. See Gould, Inc. v. United States, 67 F.3d 925, 928 (Fed.
Cir. 1995). Similarly, whether a complaint has been properly
dismissed for failure to state a claim upon which relief may be
granted is also a question of law which we review de novo. See
Dehne v. United States, 970 F.2d 890, 892 (Fed. Cir. 1992).

A.

On appeal, J&E argues that the Court of Federal Claims
erred in concluding that it had failed to state a valid claim for a
Fifth Amendment taking. The court held that J&E could not
proceed with its taking claim because: (1) contractually-based
property rights generally do not give rise to taking claims; (2)
in the Cherry Point auction, the government was acting in its
proprietary capacity rather than in its sovereign capacity; and
(3) the purchase contract had not been fully performed and
therefore ownership of the transmissions had not vested in J&E.
We agree that J&E failed to state a claim for a Fifth Amendment

Sa

Appendix A

taking, but we reach that result based upon our conclusion that
J&E never acquired a compensable property interest in the
helicopter traasmissions because the transmissions were never
part of the subject matter of the contract.

“{A] complaint should not be dismissed for failure to state
a claim unless it appears beyond doubt that plaintiff can prove
no set of facts in support of his claim which would entitle him
to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
Therefore, when a plaintiff is unable to assert a set of facts
Supporting the claim, the motion to dismiss should be granted.
See Chang v. United States, 859 F.2d 893, 894 (Fed. Cir. 1988).
In ruling on a motion to dismiss, the court must “assume all
factual allegations to be true and to draw all reasonable inferences
in plaintiff’s favor.” Henke v. United States, 60 F.3d 795, 797
(Fed. Cir. 1995).

In order to state a valid claim for a Fifth Amendment taking,
J&E must establish a compensable property interest. See Skip
Kirchdorfer, Inc. v. United States, 6 F.3d 1573, 1580 (Fed. Cir.
1993). Here, J&E claims that it acquired a compensable property
interest when title to the transmissions passed to it under the
sales contract. We must therefore look to the contract of sale
and determine whether J&E acquired any property interest in
the transmissions as a result of its contract with DRMO.

Contract interpretation is a question of law which we review
de novo. See C. Sanchez & Son, Inc. v. United States, 6 F.3d
1539, 1544 (Fed. Cir. 1993). Where contract provisions are
clear and unambiguous, they must be given their plain and
ordinary meaning. See Alaska Lumber & Pulp Co., Inc. vy.
Madigan, 2 F.3d 389, 392 (Fed. Cir. 1993). As noted above,
the Invitation for Bids described the items for sale as “Shipping

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Appendix A

& Storage Container: 2 EA” The Notice of Award also described
the items in the same manner. These descriptions clearly and
unambiguously referred only to the containers and not to their
contents. There is no indication that either party intended to
buy or sell anything other than the containers themselves. We
agree with the Court of Federal Claims that “[t]he plain
unambiguous meaning of the contract of sale entered into
between plaintiffs and the Government grants plaintiffs a right
to the shipping and storage containers, nothing more.” J&E IV,
37 Fed. Cl. at 264.

J&E, however, argues that it acquired title to whatever was
physically located in lot numbers 42 through 47. In making
that argument, it assigns importance to the fact that DRMO
stated in the “GENERAL SALE TERMS AND CONDITIONS”
part of the contract, under the heading “CONDITION AND
LOCATION OF PROPERTY,” that it made “no warranty,
express or implied, as to the quantity, kind, character, quality,
weight, size, or description of any of the property.” We do not
believe that the government’s warranty disclaimer helps J&E,
however. The disclaimer simply precluded the purchaser from
alleging a breach of contract if the goods failed to accurately
match their description. This provision did not preclude the
government from recovering possession of merchandise
inadvertently contained within the goods actually sold.

J&E further argues that the container’s contents were made
part of the contract as a result of the operation of 40 U.S.C.
§ 484(d) in conjunction with the procedural requirements set
forth in the Defense Reutilization and Marketing Manual (the
DRMO Manual).' Section 484(d) provides that:

1. The DRMO Manual sets out Department of Defense policies and
procedures for the reutilization and marketing of DOD property.

——————————————EEE

ee

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Appendix A

A deed, bill of sale, lease, or other instrument
executed by or on behalf of any executive agency
purporting to transfer title or any other interest in
surplus property under this subchapter shall be
conclusive evidence of compliance with the
provisions of this subchapter insofar as concerns title
or other interest of any bona fide grantee or
transferree for value and without notice of lack of
such compliance.

40 U.S.C. § 484(d) (1994). The DRMO Manual requires that
all sales solicitations include “an accurate, complete description
of the property being offered for sale.” J&E therefore reasons
that, pursuant to § 484(d), the court must conclusively presume
that the government complied with the DRMO Manual by
accurately describing the lots as including the helicopter
transmissions, regardless of the fact that the government never
actually described the lots in such a manner. We disagree.

Section 484(d) prevents the government from challenging
the sale of surplus goods based on a claim of lack of authority
or mistake. See United States v. Jones, 176 F.2d 278, 288 (9th
Cir. 1949) (discussing section 25 of the War Surplus Property
Act of 1944 (WSPA) which was the predecessor of 40 U.S.C.
§ 484(d)).? In United States v. Jones, the government claimed

2. The War Surplus Property Act of 1944 § 25,50 U.S.C. § 1634 (1946)
(repealed 1949) was the predecessor of 40 U.S.C. § 484(d). Section 1634
stated:

A deed, bill of sale, lease, or other instrument executed by or
on behalf of any Government agency purporting to transfer
title or any other interest in property under this Act. . . shall be
conclusive evidence of compliance with the provisions of this

(Cont'd)

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Appendix A

that certain intra-departmental procedures were not properly
followed in offering universal gear joints for sale. There was
no question that the government had contracted to sell the gear
joints, however. The issue was whether the government could
rescind the contract for unilateral mistake. The court held that
although the facts might be sufficient to justify rescission, section
25 of the WSPA had made the sale immune against attack based
on lack of authority or mistake. See id. at 288.

Similarly, in Turney v. United States, 115 F. Supp. 457
(Ct. Cl. 1953), the government claimed that it lacked authority
to dispose of certain radar equipment that had been sold as
surplus material. The contract purported to transfer title to all
equipment at a military air depot. The Court of Claims held
that section 25 of the WSPA precluded the government from
challenging the sale of the equipment based on lack of authority.
See id. at 463.

In Jones and Turney, the goods clearly were within the
scope of the sales contracts involved; the only question was
whether the sale could be challenged by the government based
on lack of authority or mistake. In this case, the helicopter
transmissions were never part of the sales contract and thus
§ 484(d) is inapplicable. It is ciear from the plain language of
§ 484(d) that the conclusive presumption regarding title only
applies to the property which the instrument purports to transfer.
Here, the contract documents only purported to transfer an

(Cont'd)
Act ... insofar as title or other interest of any bona fide
purchasers for value, or lessees, as the case may be, is
concerned.

50 U.S.C. App. § 1634 (1946).

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Appendix A

interest in the storage containers. As far as these storage
containers are concerned, § 494(d) protects J&E’s property
interest against government claims of lack of authority or
mistake. However, § 484(d) does not create any presumptions
regarding title to the transmissions because they were not
mentioned either explicitly or implicitly in the contract
documents.

Further, government did comply with DRMO Manual
requirement that it provide an accurate description of the property
being offered for sale. Here, the only items offered for sale
were the storage containers and these were accurately described
in the contract documents. As discussed above, the helicopter
transmissions were never offered for sale.

Finally, in arguing that it acquired title to the helicopter
transmissions despite the fact that the contract documents
referred only to the storage containers. J&E relies upon the
unpublished opinion of the Armed Services Board of Contract
Appeals in Appeal of John T. Gonsalves, ASBCA No. 31874
(Mar. 10, 1986). In Gonsalves, a bidder purchased a number of
drums at a surplus auction for $25. Several of the drums were
later found to contain infrared missile heads. The bid documents
simply described the drums as: “Containers, Shipping: Drums,
various sizes.” The missile heads which were found in the drums
had a fair market value of $1,042.65. The board found that at
the time of the auction, Mr. Gonsalves realized that some of the
drums contained items inside and bid accordingly. The board
also found that the Navy knew that the missile heads were within
the drums and concluded that the contract could not be set aside
to correct a unilateral mistake. In a one paragraph analysis, the
board stated that:

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Appendix A

Doubtless the Navy knew the missile heads and
parts were within the drums, whether or not the Navy
conveyed this information to the DPDS [Defense
Property Disposal Service]. Repeatedly respondent
requests that we strictly construe the provisions of
their surplus sales contracts. Respondent cannot now
ask us to set aside a final sale to correct a mistake it
made.

Id. at 2. We do not find this reasoning persuasive. In its brief
Opinion in Gonsalves, the board failed to analyze the
fundamental question of whether the missile heads were within
the scope of the contract. We therefore decline to adopt the
board’s reasoning in the case.

For these reasons, we conclude that the helicopter
transmissions were not within the scope of the sales contract.
Accordingly, J&E never acquired a property interest in the
transmissions, and therefore failed in the Court of Federal Claims
to state a claim for a Fifth Amendment taking.

B.

J&E next argues that the court erred in holding that it lacked
jurisdiction to hear its breach of contract claim. The Court of
Federal Claims is a court of limited jurisdiction. See James M.
Ellett Constr. Co., Inc. v. United States, 93 F.3d 1537, 1541
(Fed. Cir. 1996). The CDA allows the Court of Federal Claims
to entertain claims arising out of any express or implied contract
for the procurement of property. See 41 U.S.C. § 602(a)(1). In
order for the court to have jurisdiction under the CDA, a
government contractor must present a valid claim to the
contracting officer and the contracting officer must issue a final

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Appendix A

decision on the claim.’ See 5 U.S.C. § 605(a), (b) (1994): James
M. Ellett, 93 F.3d at 1541-42. The CDA requires that “[a]ll
claims by a contractor against the government relating to a
contract shall be in writing and shall be submitted to the
contracting officer for a decision.” 41 U.S.C. § 605(a). However,
the CDA does not define what constitutes a claim. In order to
determine whether a particular demand constitutes a claim, the
court must examine the pertinent Federal Acquisition Regulation
(FAR), the language of the contract at issue, and the relevant
facts. See Reflectone, Inc. v. Dalton, 60 F.3d 1572, 1575 (Fed.
Cir. 1995). FAR 33.201 defines a claim as “a written demand
Or written assertion by one of the contracting parties seeking,
as a matter of right, the payment of money in a sum certain, the
adjustment or interpretation of contract terms, or other relief
arising under or relating to the contract.” 48 C.FR. § 33.201
(1997).

On August 3, 1995, J&E’s attorney sent a letter to Assistant
United States Attorney G. Norman Acker, III, demanding return
of the helicopter transmissions. The trial court concluded that
the letter did not constitute a valid claim because it failed to set
forth a contractual basis that would entitle J&E to relief, failed
to request a final decision, and was not submitted to the
contracting officer. We agree with the Court of Federal Claims
that J&E’s letter did not constitute a valid claim under the CDA.

We have strictly construed the CDA jurisdictional
requirements. See, e.g., Paul E. Lehman, Inc. v. United States,

3. If the contracting officer fails to issue a decision within the required
period, the claim is deemed denied, and the contractor may then file an appeal
with the appropriate board of contract appeals or a suit in the Court of Federal
Claims. See 41 U.S.C. § 605(c)(5) (1994); James M. Ellett, 93 F.3d at 1542
n.3,

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Appendix A

673 F.2d 352, 355 (Ct. Cl. 1982) (no jurisdiction to hear a
claim that was not certified, even if contracting officer has
already fully considered the claim on its merits because the
contracting officer had no authority to waive the certification
requirement that Congress imposed). Similarly, we must strictly
construe the requirement that a CDA claim be submitted to the
contracting officer. We have held that a contractor may Satisfy
this requirement if: (1) the contractor sends a proper claim to its
primary contact; (2) the claim contains a request for a final
decision of the contracting officer; (3) the contractor has a
reasonable expectation that such a request will be honored; and
(4) the primary contact in fact timely delivers the claim to the
contracting officer. See Neal & Co., Inc. v. United States, 945
F.2d 385,388-89 (Fed. Cir. 1991). In this case, J&E’s letter
simply stated “please treat this letter as a demand for the United
States to return the helicopter transmissions which it took from
J&E Salvage on September 9, 1994 pursuant to the Order of
Judge Howard dated August18, 1994.” The letter was not sent
to a contracting officer, and it did not request a final decision
from the contracting officer. Nor was there any suggestion in
the letter that J&E intended to invoke the CDA disputes process.
Furthermore, J&E in fact admits that in sending the letter to
Mr. Acker, it had no intent to submit a claim pursuant to the
CDA. We therefore conclude that J&E did not submit a valid
CDA claim. Nonetheless, J&E argues that it was actually the
government that submitted a valid claim when Mr. Acker
forwarded the August 3 letter to the DRMO. We disagree.

The Court of Federal Claims concluded that the government
had not submitted a claim. The court reasoned that the

4. Pursuant to the Federal Courts Administration Act of 1992, proper
certification of a CDA claim is no longer a jurisdictional requirement. See 41
U.S.C. § 605(d); James M. Ellett, 93 F.3d at 1545.

13a
Ap « dix A

Department of Justice simply forwarded J&E’s letter to the
appropriate agency. In addition, the court observed that the
government “neither demanded any form of relief nor requested
any modification of the contract.” J&E IV, 37 Fed. Cl. at 262.
Further, noting that the FAR requires that a claim be a written
demand or assertion, the court stated that there was no suggestion
that the government “made any sort of written demand or
assertion to the DRMO.” /d.

J&E argues that we should infer that the government made
a claim based on the totality of the circumstances and the fact
that the contracting officer issued a final decision. According to
J&E, the most logical inference is that either the Department of
Justice or DRMO demanded an interpretation of the contract
terms So as to give some color of legitimacy to its possession of
the transmissions. J&E further argues that we should not read
FAR 33.201 so as to place a requirement that claims by the
government be in writing, given the fact that 41 U.S.C. § 605
clearly omits such a requirement.

The CDA offers minimal guidance regarding what
constitutes a valid government claim, Stating simply that “{aJll
claims by the government against a contractor shall be the subject
of a decision by the contracting officer.” 41 U.S.C. § 605(a).
Government claims include those for reimbursement of costs
of reprocurement, recovery of excess costs due to defects in
performance, recovery of overpayments, recovery of payments
made on undelivered goods, setoff against costs later determined
to be unallowable, and claims for failure to comply with cost
accounting standards. See John Cibinic, Jr. & Ralph C. Nash,
Jr., Administration of Government Contracts 1278 (3d ed. 1995)
(collecting cases).

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Appendix A

We do not read the FAR as requiring that a government
claim be documented in a writing separate from the contracting
officer's final decision. Therefore, the lack of a written document
demand does not defeat J&E’s argument. However, we do not
find that the circumstances in this case suggest that the
government was asserting a claim. At the time J&E submitted
its August 3 letter, the government had possession of the
helicopter transmissions under a claim of ownership. There was
no reason for the government to submit a claim under these
circumstances because it had obtained everything to which it
believed it was entitled. The September 13, 1995 letter from
Mr. Acker to J&E’s counsel states simply that “I referred your
August 3, 1995 letter to the counsel for the DRMO for their
response.” There is no indication in this letter that the
government submitted a claim. Rather, the letter suggests that
Mr. Acker was simply forwarding J&E’s letter to the appropriate
government agency. The most logical inference is that the
contracting officer rendered a decision based on what he
believed to be a valid CDA claim submitted by J&E. In his
final decision, the contracting officer stated that he was “issuing
the final decision of the sales contracting officer regarding your
(J&E’s) demand arising under the sales contract.” The document
also stated that the final decision was “in reference to your
August 3, 1995 letter.” It therefore seems clear that this letter
was written solely in response to J&E’s August 3 letter, and not
in response to any claim submitted by the government.

It is well established that a contracting officer has no
authority to waive a requirement imposed by Congress. See,
e.g., Paul E. Lehman, 673 F.2d at 356. Therefore, even if the
contracting officer rendered what he believed to be a final
decision, such a decision would have no legal significance and
could not establish jurisdiction in the Court of Federal Claims.

=

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Appendix A

See id.; Skelly & Loy v, United States, 685 F.2d 414, 419 (Ct.
Cl. 1982).

For the foregoing reasons, we conclude that J&E’s breach
of contract claim was properly dismissed for lack of jurisdiction.

Each party shall bear its own costs.

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APPENDIX B — JUDGMENT OF THE UNITED STATES
COURT OF FEDERAL CLAIMS FILED FEBRUARY 11, 1997

IN THE UNITED STATES COURT
OF FEDERAL CLAIMS

No. 96-1 C
J & E SALVAGE CO., ET AL..,
v.
THE UNITED STATES
JUDGMENT

Pursuant to the court’s opinion, filed February 7, 1997,
granting defendant’s motion to dismiss.

IT IS ORDERED AND ADJUDGED this date, pursuant
to Rule 58, that the complaint is dismissed without prejudice

for lack of subject matter jurisdiction. No costs.

David A. Lampen
Clerk of Court

By: s/ Amelia C. Simmons

Deputy Clerk

February 11, 1997

NOTE: As to appeal, 60 days from this date, see RCFC 72, re
number of copies and listing of all plaintiffs. Filing fee is
$105.00.

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APPENDIX C — ORDER OF THE UNITED STATES
COURT OF FEDERAL CLAIMS FILED JULY 18, 1996

IN THE UNITED STATES COURT
OF FEDERAL CLAIMS

No. 96-1C
(Filed July 18, 1996)

J & ESALVAGE CO., et al.,
Plaintiffs,
V.
THE UNITED STATES,
Defendant.

Takings; claim for contents of containers bought at government
auction.

ORDER

MILLER, Judge.

This case is before the court on defendant’s motion to
dismiss for failure to state a claim upon which relief may be granted
pursuant to RCFC 12(b)(4). The issue to be decided is whether
defendant’s refusal to return to plaintiffs certain property placed
in containers purchased by plaintiffs constitutes a compensable
taking under the just compensation clause of the Fifth Amendment.
Argument is deemed unnecessary.

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Appendix C
FACTS

The following facts derive from the complaint and are
undisputed, unless otherwise noted. On May 19, 1992, at the
bequest of the United States Department of Defense, the Defense
Reutilization and Marketing Office (the “DRMO”) held an auction
at Cherry Point, North Carolina, to sell certain surplus materials.
John and Teresa Darlington, general partners at J & E Salvage
Co. (“plaintiffs”), purchased several “lots” of surplus
merchandise at this auction. At the time of the sale, the purchased
goods appeared to solely large containers used for shipping and
storing helicopter transmissions. Because the containers were
bolted shut at the time of the sale, plaintiffs were unable to ascertain
what, if anything, was inside the containers.

After plaintiffs paid for the merchandise, government
personnel loaded the goods onto plaintiffs’ truck for
transportation to their company in Onslow County, NC. At some
point after returning to their place of business, plaintiffs opened
the containers and discovered that four of them held surplus
helicopter transmissions valued at $289,660.00 each.

Plaintiffs notified the DRMO of their discovery so as to avoid
any accusations of having acquired the transmissions through
illegal means. The DRMO responded by informing plaintiffs that
the transmissions were still government property and should be
returned immediately. Plaintiffs refused to acquiesce.
Subsequently, as opposed to utilizing the Contract Disputes Acct,
41 U.S.C. §§ 601-613 (1994) (the “CDA”), the DRMO filed suit
in the United States District Court for the Eastern District of
North Carolina on November 12, 1992, seeking a return of the
transmissions.

en

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Appendix C

In their response to the lawsuit, plaintiffs claimed that the
CDA governed the matter and thus the federal district court was
without subject matter jurisdiciton to hear the case. The district
court held that it has requisite jurisdiciton and that the helicopter
transmissions were government property and required plaintiffs
to relinquish possession of the transmissions. Moreover, the
district court declined to dismiss the Government’s claim for
compensatory and punitive damages. United States v. J & E
Salvage Co., No. 92-162-CIV-4-H (E.D.N.C. Aug. 19, 1994)
(unpubl.).

Plaintiffs, fearing the district court’s contempt power, obeyed
the order and turned the transmissions over to the DRMO on
September 9, 1994. Furthermore, to avoid the potential financial
ruin of an adverse damages award, plaintiffs entered into a pre-
appeal stipulation agreement with the DRMO in which they agreed
to pay liquidated damages if the appeals court held that plaintiffs
had wrongfully converted the helicopter transmissions. In return
the DRMO agreed that if judgment were entered for plaintiffs, it
would return the transmissions. Plaintiffs subsequently appealed
the district court’s judgment to the United States Court of Appeals
for the Fourth Circuit on November 9, 1994. On June 14, 1995,
the Fourth Circuit reversed and remanded with instructions to
grant plaintiffs’ motion to dismiss for lack of subject matter
jurisdiciton. United States v. J& E Salvage Co., 55 F.3d 985
(4th Cir. 1995).

Subsequently, on August 13, 1995, plaintiffs’ counsel sent a
letter to the United States Attorney for the Eastern District of
North Carolina requesting that the DRMO return the helicopter
transmissions to plaintiff. In response the DRMO sent plaintiffs
a document written by Dan Hurston, who plaintiffs claim was not
the cognizant contracting officer, entitled “Finding of Fact and

20a
Appendix C

Final Decision.” This document indicated that the DRMO would
not return the transmissions to plaintiffs.

On January 2, 1996, plaintiffs filed a complaint in the United
States Court of Federal Claims seeking an award of damages in
the amount of $1,158,640.00, plus interest and attorneys’ fees.
In lieu of an answer, defendant moved to dismiss the complaint
for failure to state a claim upon which relief may be granted.
Defendant asserted that the dispute in this case is not a Fifth
Amendment takings claim, but is rather of a contractual nature.
Plaintiffs rejoined that full ownership of the transmissions vested
after the auction; thus, the DRMO’s refusal to return the
transmissions constitutes a taking in violation of the Fifth
Amendment.'

DISCUSSION

“[A] complaint should not be dismissed for failure to state a
claim unless it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to
relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Accordingly,
if plaintiffs are unable to assert a set of facts supporting the claim,
the motion to dismiss should be granted. Chang v. United States,
859 F.2d 893, 894 (Fed. Cir. 1988). The severity of such a motion
requires that the court “assume all factual allegations to be true
and to draw all reasonable inferences in plaintiffs favor.” Henke
v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995). To surmount
defendant’s motion to dismiss, plaintiffs must allege a set of facts
demonstrating a sufficient property interest in the helicopter

1. Plaintiffs have requested leave to amend their complaint, rather than
suffer a dismissal, should the court rule that plaintiffs have failed to state aclaim
for a taking.

niin idea

2la

Appendix C

transmissions to render the Government’s refusal to return the
transmissions a taking in violation of the Fifth Amendment.

Plaintiffs contend that the parties entered into an “as-is”
contract for the auction sale of certain surplus goods. Plaintiffs
argue that the contract was fully performed upon the completion
of the sale and they had obtained title and ownership of the
helicopter transmissions. As a consequence plaintiffs assert that
the Government’s failure to return the transmissions constitutes
a taking in violation of the Fifth Amendment. Defendant, however,
suggests that plaintiffs’ claim should properly be characterized
as a breach of contract, not a taking.

To state a valid claim for a taking under the Fifth
Amendment’s just compensation clause, plaintiffs must establish
a compensable property interest. Lucas v. South Carolina
Coastal Council, 505 U.S. 1003, 1027 (1992) (regulatory taking);
Kaiser Aetna v. United States, 444 U.S. 164, 179-80 (1979) (taking
through physical invasion). If a claimant fails to establish a
compensable property interest, no further analysis is necessary.

In this case plaintiffs allege a compensable property interest
that is derived through their sales contract with the DRMO.
Plaintiffs’ reliance on an alleged contractually-based property right
poses a significant hurdle that must be overcome. “(T]he concept
of taking as a compensable claim theory has limited application
to the relative rights of party litigants when those rights have
been voluntarily created by contract. In such instances,
interference with such contractual rights generally gives rise to a
breach claim not a taking claim.” Baggett Transp. Co. v. United
States, 969 F.2d 1028, 1034 (Fed. Cir. 1992) (quoting Sun Oil
Co. v. United States, 215 Ct. Cl. 716, 770, 572 F.2d 786, 818
(1978) (citation omitted)); see also J.J. Henry Co. v. United States

22a
Appendix C

188 Ct. Cl. 39, 46, 411 F.2d 1246, 1249 (1969) (“The amendment
has limited application to the relative rights in property of parties
litigant which have been voluntarily created by contract.”)

Not every deprivation of use or control constitutes a taking.
Sun Oil Co., 215 Ct. Cl. at 769, 572 F.2d at 818. Furthermore,
“(w]hen the government ‘takes’ property, it exercises its rights
as sovereign to acquire property from the rightful owner for the
public good.” DSI Corp. v. United States, 228 Ct. Cl. 299, 302,
655 F.2d 1072, 1074 (1981). In the case at bar, plaintiffs do not
allege or argue that the Government intended to take the
transmissions for the public good. See J.J. Henry Co., 188 Ct.
Cl. at 46, 411 F.2d at 1249. Rather, nothing in the complaint, or
that reasonably could be inferred from it, indicates that the
Government was acting other than in its proprietary capacity to
dispose of certain surplus materials among which were the
helicopter transmissions in question.2 When the Government
“comes down from its position of sovereignty, and enters the
domain of commerce, it submits itself to the same laws that govern
individuals there.” Sun Oil Co., 215 Ct. Cl. at 770, 572 F.2d at
818, (quoting Cooke v. United States), 91 U.S. 389, 398 (1875)).

2. Plaintiffs have suggested that the auction to dispose of the surplus
property was a special situation wherein the Government acted in its soverei gn
capacity to simply dispose of large amounts of unneeded property as promptly
as possible. In such situations, plaintiffs contend, each participant assumes a
certain amount of risk with regard to the transaction. In support of this argument,
plaintiffs rely on Appeal of John T. Gonsalves, ASBCA No. 31874 (1986), an
unpublished decision wherein the Armed Services Board of Contract Appeals
refused to require a bidder to return 43 seeker heads for sidewinder missiles
that the Navy had inadvertently left in containers purchased at a surplus sale.
While Gonsalves may be persuasive with respect to the scope of the sales
contract, that the ASBCA entertained the case certainly militates against plaintiffs’
argument that the action is a taking.

ipermeiniemiaiieieiiail

23a

Appendix C

As a consequence, a takings claim cannot be based on the
Government’s acting in its proprietary capacity. Alaska Airlines,
Inc. v. Johnson, 8 F.3d 791, 798 (Fed. Cir. 1993).

Moreover, the parties in this case dispute the terms of the
contract of sale. The Government clearly did not utilize its position
as sovereign to appropriate private property from its rightful
owner. Instead, each party is asserting a claim of right to the
helicopter transmissions in question, so that neither party has
clear title to the property. The dispute devolves to whether the
Government breached the terms of its contract of sale with
plaintiffs by failing to provide plaintiffs with all of the property to
which plaintiffs believe they are entitled. Ina similar situation, the
United States Court of Claims noted that: “In essence, th[e]...
case involved a contest between two parties over conflicting
claims of ownership. On such facts, it is axiomatic that there is
not taking where, pursuant to a court order, the government is in
possession of property to which it asserts a claim of rightful
ownership.” DS/ Corp., 228 Ct. Cl. at 303, 655 F.2d at 1074.

Plaintiffs also assert that upon paying for the surplus goods,
the contract was fully performed and that they had acquired clear
title to the helicopter transmissions. Therefore, according to
plaintiffs, this action cannot be of a contractual nature and, in
fact, properly is characterized as a taking. However, the
Government’s alleged failure to provide plaintiffs with all of the
property to which plaintiffs believe they are entitled indicates that
the contract cannot have been fully performed. Because the
contract has not been fully performed, ownership has not vested
with plaintiffs. Plaintiffs therefore have failed to allege a set of
facts supporting a takings claim under the Fifth Amendment.

24a

Appendix C

In evaluating plaintiffs’ request to amend their complaint,
the court must consider “undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the
opposing party by virtue of allowance of the amendment, [or]
futility of amendment. . . .” Forman y. Davis, 371 U.S. 178, 182
(1962). No factors are present that would suggest that the court
should not grant plaintiffs’ request for leave to amend. Cf. Mitsui
Foods, Inc. v. United States, 867 F.2d 1401, 1404 (Fed. Cir.
1989) (denying plaintiff leave to amend on ground of futility).
Rather than dismissing plaintiffs’ claim pursuant to RCFC
12(b)(4), the court grants plaintiffs leave to amend their complaint
to allege a breach of contract claim.>

CONCLUSION

Accordingly, based on the foregoing,

IT IS ORDERED, as follows:

1. Defendant’s motion to dismiss is denied.

2. By August 1, 1996, plaintiffs may amend their complaint

to allege a breach of contract claim, with service by overnight
express mail.

3. Inits reply defendant noted that it opposes plaintiffs’ request to amend
their complaint and that, if such leave is granted, defendant likely would file a
motion pursuant RCFC 12(b)(1) to dismiss for lack of subject matter jurisdiction.
In support of its motion to dismiss, defendant included several documents as an
appendix to its reply brief. These documents would controvert plaintiffs’ version
of the terms of sale and be appropniate for consideration on a motion for summary
judgment. The court, however, cannot consider material beyond the pleadings
when evaluating a motion to dismiss under RCFC 12(b)(4).

25a

Appendix C

3. Defendant shall respond to plaintiffs’ amended complaint
by August 11, 1996, with service by overnight express mail.

s/ Christine O.C. Miller
Christine Odell Cook Miller
Judge

26a

APPENDIX D — ORDER OF THE UNITED STATES COURT
OF FEDERAL CLAIMS FILED SEPTEMBER 20, 1996

IN THE UNITED STATES COURT
OF FEDERAL CLAIMS

No. 96-1C
(Filed Sept. 20, 1996)
J & E SALVAGE CO., et al.,
Plaintiffs,
v.
THE UNITED STATES,

Defendant.

ORDER
This case is before the court on plaintiffs’ motion for
reconsideration of an order entered on July 18, 1996, denying
defendant’s motion to dismiss. Plaintiffs ask the court 1) to
reconsider the finding that plaintiffs had failed to state a claim
in support of a taking under the just compensation clause of the

Fifth Amendment, and 2) to allow plaintiffs to amend their
complaint to allege a breach of contract claim.

A motion for reconsideration is addressed to the court’s
discretion. Yuba Natural Resources, Inc. v. United States, 904
F.2d 1577, 1583 (Fed. Cir. 1990). This showing, under RCFC
59, “must be based upon manifest error of law, or mistake of
act, and is not intended to give an unhappy litigant an additional

ws ee

27a

Appendix D

chance to sway the court.” Circle K Corp. v. United States, 23
Cl. Ct. 659, 664-65 (1991) (citation Omitted); see Cohen vy.
Austin, 869 F. Supp. 320, 321, (E.D. Pa. 1994) (discussing
errors in law and fact). To gain relief plaintiffs must demonstrate:
1) that there has been an intervening change in the controlling
law; 2) that evidence previously unavailable has become
available; or 3) that the motion is necessary to prevent manifest
injustice. Bishop v. United States, 26 Cl. Ct. 281, 286 (1992);
Aerolease Long Beach y. United States, 31 Fed. Cl. 342, 376
(quoting Bishop, 26 Cl. Ct. at 286) aff'd, 39 F.3d 1198 (Fed.
Cir. 1994) (Table).

Plaintiffs first contend that, in an action involving surplus
sales, the Government is acting in its sovereign, as opposed to
its proprietary, capacity. In support of this contention, plaintiffs
rely on United States v. Jones, 176 F.2d 278 (9th Cir. 1949),
In making a choice of law determination, Jones states: “This is
a case in which the Government, in its sovereign capacity, deals
with property which it owns.” Jd. at 281. The meaning of the
term “sovereign capacity” only becomes clear if one considers
the quotation on which the Jones court relied:

Every acquisition, holding, or disposition of
property by the Federal Government depends upon
proper exercise of a constitutional grant of power.

...The validity and construction of contracts
through which the United States is exercising
constitutional functions, their consequences on the
rights and obligation of the parties, the titles or liens
which the create or permit, all present questions of
federal law. ...

28a

Appendix D

United States v. County of Allegheny, 322 U.S. 174, 182. 183
(1944) (quoted in Jones, 176 F.2d at 281). The Ninth Circuit
in Jones sought to illustrate the fundamental point that, in order
for the Government to act, a grant of power from the
Constitution to the sovereign must be present. Allegheny, 322
U.S. at 182. This does not mean that every act by the
Government is a sovereign act.

As plaintiffs note, the Government’s power to contract is a
characteristic of its sovereignty. See United states v. Hodson.
77 U.S. 395, 407 (1870): United States v. Tingey, 30 U.S. 115,
128 (1831). However, not every contract that the Government
enters into is one that involves a use of sovereign authority. To
determine if the Goverament has acted in a sOvereign or
proprietary capacity, one must examine “the nature of the
government's action and the relationship of the parties involved.”
Juda v. United States, 6 Cl. Ct. 441, 454 (1984). In this case
the Government has “come[] down from its position of
sovereignty, and enter[ed] the domain of commerce. ... Cooke
v. United States, 91 U.S. 389, 398 (1875).

To buttress their takings claims, plaintiffs rely primarily on
Turney v. United States, 126 Ct. Cl. 202. 115 F. Supp. 457
(1953), although plaintiffs previously had not brought this case
to the court’s attention. In Turney the Government inadvertently
included certain military radars in a sale of surplus equipment
held in the Philippines. Upon realization of the mistake, the
Government exerted direct and Significant influence on the
Philippine government to place an embargo on the surplus
material purchased by plaintiff that would permit the United
States to repossess the radars. The United States Court of Claims
held that such behavior constituted a taking. /d. at 214, 115 F
Supp. at 463.

29a

Appendix D

Turney is clearly distinguishable from the instant case. The
Federal Circuit has noted that the Turney rationale for finding a
taking was that the Government had exerted “substantial, direct
involvement in view of then-pervasive United States military
and economic presence.” Erosion Victims of Lake Superior
Regulation v. United States, 833 F.2d 297, 300 (Fed. Cir. 1987).
Such influence is not present in the case at bar. The Government
did not exert its sovereign power to repossess the helicopter
transmissions at issue. Rather, the Government was operating
under a claim of right provided by what at that point was a
valid court order. That the issuing court was later found to lack
subject matter jurisdiction does not alter the fact that when the
Government took possession of the transmissions. it did so under
a claim of right. As the United States Court of Claims has
previously noted: “[I]t is axiomatic that there is no taking where,
pursuant to a court order, the government is in possession of
property to which it asserts a claim of rightful ownership.” DS]
Corp. v. United States, 228 Ct. Cl. 299, 303, 655 F.2d 1072,
1074 (1981). Accordingly, based on the foregoing,

IT IS ORDERED, as follows:

Plaintiffs’ motion for reconsideration of the order entered
on July 18, 1996, is denied. See Order entered on August 9,
1996.

s/ Christine O.C. Miller
Christine Odell Cook Miller
Judge

30a
APPENDIX E — OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE FOURTH CIRCUIT
DECIDED JUNE 14, 1995
PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

V.

J & ESALVAGE COMPANY; JOHN DARLINGTON; TERESA
N. DARLINGTON, Executrix of the Estate of Edward Darlington,

Defendants-Appellants.
Appeal from the United States District Court
for the Eastern District of North Carolina, at New Bern.
Malcolm J. Howard, District Judge.
(CA-92-162)
Argued: May 1, 1995
Decided: June 14, 1995

Before HALL, WILKINSON, and HAMILTON, Circuit Judges.

o* * *

3la

Appendix E
OPINION

WILKINSON, Circuit Judge:

The issue in this appeal is whether the district court had
subject matter jurisdiction over claims brought by the United States
against a government contractor regarding the ownership of
property purchased at a military surplus auction. Relying on the
Contract Disputes Act (“CDA”), 41 U.S.C. § 601 et seq., the
district court determined that it lacked jurisdiction over the
government’s contract claims, yet it allowed additional claims
styled as tort actions for “conversion” and “replevin” to proceed.
We believe that this entire matter was essentially a contract dispute
within the ambit of the Contract Disputes Act, and that the district
court lacked jurisdiction to decide it.

‘:

On May 19, 1992, appellant J&E Salvage Co. (“J&E”)
purchased seven lots of shipping and storage containers at
Defense Reutilization and Marketing Officer (“DRMO”) surplus
auction in Cherry Point, North Carolina. J&E generally bought
such containers at government auctions for the purpose of
converting them into vats of selling them as scrap metal. This
sale was conducted under the terms and conditions of a DRMO
“Sale by Reference” pamphlet issued to all potential buyers at
the surplus auction. A bill of sale, titled as a “Notice of Award,”
was also issued by the DRMO to J&E at the time of purchase.

Unbeknownst to either J&E or the DRMO, the storage bins
purchased at the auction contained four CH-46 helicopter
transmissions. J&E discovered the transmissions roughly two or
three weeks after the sale. John Darlington, one of the partners in

32a

Appendix E

J&E, contacted Alice Martin, the DRMO sales contracting officer,
and notified her about the transmissions. Martin and several other
DRMO officials asked Darlington to return the transmissions,
but he refused, arguing that J&E had lawfully purchased them at
the Cherry Point auction.

The United States then brought this action in federal district
court in the Eastern District of North Carolina to recover the
transmissions. The government alleged several causes of action
including rescission of the contract because of mutual mistake of
fact, conversion, and replevin. In reply, J&E argued that the
district court lacked subject matter jurisdiction over the
government’s case because the matter belonged within the
exclusive province of the administrative scheme established by
the Contract Disputes Act. Acting upon the recommendations of
a magistrate judge, the district court concluded that it had
jurisdiction over the government’s “tort” claims of conversion
and replevin, but not over the contract claim for mutual mistake
of fact. The court then proceeded to reach the merits of the case,
finding that the United States was the true owner of the
transmissions, and granted summary judgment in favor of the
government. J&E now appeals.

II.
A.

Federal jurisdiction over civil actions initiated by the United
States government is provided by 28 U.S.C. § 1345, which states:

Except as otherwise provided by Act of Congress,
the district courts shall have original jurisdiction of
all civil actions, suits or proceedings commenced by

33a
Appendix E

the United States, or by any agency or officer thereof
expressly authorized to sue by Act of Congress.

28 U.S.C. § 1345 (1993). Thus, federal courts have jurisdiction
over any case brought by the United States as a plaintiff unless
Congress has “otherwise provided” for jurisdiction elsewhere.

One area in which Congress has so “otherwise provided” is
the Coniract Disputes Act, 41 U.S.C. § 601 et seq. (1988). The
Contract Disputes Act is a comprehensive statutory scheme for
resolving contractual conflicts between the United States and
government contractors. It applies, inter alia, to actions involving
“any express or implied contract. . . entered into by an executive
agency for ... the disposal of personal property.” 41 U.S.C.
§ 602. Under the CDA, government claims against a contractor
must first be the subject of a decision by the contracting officer,
defined as “any person who ... has the authority to enter into
and administer contracts and make determinations and findings
with respect thereto.” 41 U.S.C. §§ 601(3), 605(a). The decision
by the contracting officer may be appealed to an agency board
of contract appeals or to the United States Court of Federal
Claims. 41 U.S.C. §§ 607(d), 609(c). Further appeals from these
bodies must be filed with the United States Court of Appeals for
the Federal Circuit. 41 U.S.C. § 607(g)(1); see United States v.
Rockwell International Corp., 795 F. Supp. 1131, 1134 (N.D.
Ga. 1992).

The review procedures under the CDA are exclusive of
jurisdiction in any other forum. 41 U.S.C. § 605(b); see also
Management Science America, Inc. v. Pierce, 598 F. Supp. 223,
225 (N.D. Ga. 1984), aff'd, 778 F.2d 792 (11th Cir. 1985). Thus,
federal district courts lack jurisdiction over government claims
against contractors which are subject to the CDA. See S. Rep.

34a

Appendix E

No. 1118, 95th Cong., 2d Sess. 10, reprinted in 978 U.S.C.C.A.N.
5235, 5244 (noting that “U.S. district court jurisdiction is
eliminated from Government contract claims”’).

In order to determine whether the CDA applies, federal courts
generally look to whether the dispute at issue is one of contract.
See Ingersoll-Rand Co. v. United States, 780 F.2d 74, 76 (D.C.
Cir. 1985). The court in Megapulse, Inc. v. Lewis, 672 F.2d 959
(D.C. Cir. 1982), stated that courts should attempt “to make
rational distinctions between actions sounding genuinely in
contract and those based on truly independent legal grounds.”
672 F.2d at 969-70. The Megapulse court further noted that when
examining “competing” jurisdictional bases, the issue is “to
determine if the claim so clearly presents a disguised contract
action that jurisdiction over the matter is properly limited to the
Court of Claims.”' Jd. at 968.

It is well-established therefore that disguised contract actions
may not escape the CDA. See, e.g., Ingersoll-Rand, 780 F.2d at
77; American Science & Engineering, Inc. v. Califano, 571 F.2d
58, 61 (1st Cir. 1978). Neither contractors nor the government
may bring a contract action in federal district court simply by
recasting claims in tort language or as some statutory or regulatory
violation. See Sealtite Corp. v. General Services Admin., 614 F.
Supp. 352, 254 (D. Colo. 1985) (rejecting attempt to “circumvent
the [CDA] by characterizing dispute as an action in replevin”).

1. This mode of analysis was developed in the parallel context of contractor
claims against the government through 28 U.S.C. § 1346, as opposed to the
§ 1345 action in this case. Both situations, however, deal with the identical
question of the applicability of the CDA. Thus, we find that the Megapulse
analysis is equally pertinent in the setting of government claims against conractors.
See S. Rep. No. 1118, reprinted in U.S.C.C.A.N. at 5260 (noting intent of
Congress is to provide “equal rights” under the CDA to both the government
and contractors).

35a

Appendix E

Effective enforcement of the jurisdictional limits of the CDA
mandates that courts recognize contract actions that are dressed
in tort clothing.

B.

This action by the United States is essentially one of contract,
despite the government’s efforts to present it as a tort case. The
crux of the case rests on a specific contract — the bill of sale
between J&E and the DRMO. The merits question presented is
one of contract interpretation, i.e., did the bill of sale and the
accompanying DRMO sales pamphlet allow a transfer of
ownership of the hidden transmissions along with the containers
purchased at the auction. This is a classic “scope of the contract”
issue. See International Engineering Co. v. Richardson, 512
F.2d 573, 578 (D.C. Cir. 1975), cert. denied, 423 U.S. 1048
(1976); see also John Calamari & Joseph M. Perillo, Contracts
§ 3-10 (3d ed. 1987). In order to decide this question, it is
impossible to ignore the terms of the contract documents
surrounding the sale. For example, the DRMO sales pamphlet
specifically states that all property sold at auction is “as is.” On
the other hand, the bill of sale lists the items sold as “containers”
and makes no reference to transmissions. The meaning of these
provisions controls the outcome of this case. Hence, “it is possible
to conceive of this dispute as entirely contained within the terms
of contract.” Jngersoll-Rand 780 F.2d at 78.

Alternatively, the question could be phrased as whether the
sale was void for unilateral or mutual mistake of fact. Again,
however, the source of the rights the government seeks to vindicate
are rooted firmly in contract. See Megapulse, 672 F.2d at 968.
Mistake of fact, the government concedes, is unquestionably a
contract doctrine. See Calamari, Contracts § 9-26.

36a

Appendix E

Every aspect of this case relates to these contract questions.
All the evidence gathered during the discovery process deal with
the documents generated during the sale, the conduct of the
auction, and the authority of the DRMO to enter into sales
contracts. Furthermore, the dispute involves issues of custom
and practice in government auctions. J&E contends, for example,
that it is commonly understood that auction purchases of
“container” include whatever may happen to be in the containers.
This matter therefore calls for background in the field of
government contracting — a subject within the unique expertise
of the Court of Claims. /ngersoll-Rand, 780 F.2d at 78.

Perhaps most telling of all, the briefs of the parties allude
over and over to the contractual issues that govern this dispute.
In addition to arguing at length that either a unilateral or mutual
mistake of fact prevented the formation of a contract, the
government refers repeatedly to questions about party “intent,”
“meaning of minds,” the “binding force of the contract,” and the
“terms of the sale,” and relies heavily on contract cases. Likewise,
the government argues extensively about why these rules of
contract law should apply to government contracts generally and
this case in particular, apparently blind to the contradiction
between its position on the merits and its jurisdictional contention
that this is not a contract case. See Manshul Construction Co. v.
United States, 687 F. Supp. 60, 62 (E.D.N.Y. 1988) (“[P]etitioner,
despite strenuous efforts to avoid doing so, occasionally lapses
into language that reveals the fundamentally contractual origins
of the [case]”).

The district court also acknowledged that this is at heart a
contract case when it noted that the “only real dispute is whether
the United States is the true owner of the transmissions,” and
then proceeded to answer that question by looking to contract

J tele jel Nd acta

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CSL OLN OSE. VELEN

37a
Appendix E

law. The court’s opinion granting summary judgment, like the
government’s brief, is replete with references to contract issues
and the contractual documents at the center of this controversy.
In particular, the district court relied on theories of “void versus
voidable” contracts, mistake of fact, and the doctrine of
“unknown contents,” and ultimately held that “no valid contract
was formed to sell the transmissions.”

The district court also rejected the government’s claim for
punitive damages, which is another factor suggesting that the case
was more an action in contract than in tort. Moreover, the principal
remedy sought by the government and granted by the district
court was rescission of the sale and the return of the transmissions.
This was, of course, a contract remedy. See Ingersoll-Rand,

780 F.2d at 79-80 (CDA controls when party is seeking contract
remedy).

The government’s claims of “conversion” and “replevin” are
merely transparent reformulations of the contract dispute. A tort
claim of conversion requires showing some unauthorized act of
control over property belonging to another. See United States v.
Stockton, 788 F.2d 210, 216 (4th Cir.), cert. denied, 479 U.S.
840 (1986). In this case, arguing that J&E “converted” the
transmissions is the same thing as saying that the transmissions
were not covered by the bill of sale. Of course, the mere fact that
a court has to decide some contract issues in the course of
resolving a tort action does not automatically convert the claim
into one sounding in contract if there is some independent basis
for the tort clam. Megapulse, 673 F.2d at 969. See also
Restatement (Second) of Contracts § 355 (1981). Here, however,
there is not independent basis for a tort. The contract between
the parties is the alpha and omega of this dispute. Because the
government’s allegations are no more than cloaked contract

38a

Appendix E

claims, they belong in the Court of Claims under the CDA, and
the district court lacked jurisdiction over them.’

i

Finally, several important considerations counsel against
overly narrow definitions of what qualifies as a “contract action”
for purposes of the CDA. First, allowing the government to attack
contracts of sale with private parties by manufacturing tort claims
undermines the express intent of Congress to reduce and simplify
disputes over the sale of surplus government property. See 40
U.S.C. § 484. The statutory provisions for governing the disposal
of government property indicate, for instance, that bills of sale
are to be conclusive evidence of title, thereby providing some
measure of certainty to private purchases of government material.
40 U.S.C. § 484 (d). Converting claims into tort actions side-
steps these rules, and thus must be discouraged.

Second, respect for the jurisdictional route set forth in the
CDA avoids the inefficiencies involved in splitting an action
between two different forums. As the district court acknowledged,
the core contract question belongs in the Court of Federal Claims.
Taking up the same claim in federal district court merely because
an artful pleader is able to term it a tort significantly increases the
costs of litigation for the government, the private contractor, and
the judicial system. Circumvention of the CDA’s jurisdictional
mandate scatters government contract claims across the judicial

2. The district court relied heavily on Megapulse, which found the action
therein was not a disguised contract claim. We think that the Megapulse analysis
supports the result reached here. The facts of Megapulse, however, are different
from the instant case. There, the dispute arose prior to the contract, no contract
remedy was sought, and several independent statutory issues were presented.
That case was more than simply a tort reformulation of a contract dispute.

ee em er

39a

Appendix E

landscape. If the case can be resolved on a contract basis in the
Claims Court, the most efficient procedure is to dismiss any
phantom “tort” allegations tacked on to the contract claim.

Third, by calling contract actions what they truly are and
enforcing the jurisdictional limits of the CDA, we effectuate
Congress’ intent to employ the expertise of the Court of Claims
in these matters. For example, in addition to questions about
auction customs, this case raises issues about the meaning of
“surplus property” under 40 U.S.C. §§ 472(g) and 484(d), DRMO
property disposal procedures, the extent of DRMO authority,
and the proper interpretation of DRMO sales pamphlet terms. As
noted above, the Court of Claims has specialized experience
regarding the intricate world of government contracting. Congress
believed that issues like the ones presented here will be most
accurately and consistently resolved by a tribunal dedicated to
this particular subject. This case provides a good example of the
kind of government contract action that belongs within the
specialized scheme provided by the CDA.

Il.

For the foregoing reasons, the judgment of the district court
is reversed and remanded with instructions to grant defendant’s
motion to dismiss the action for want of subject matter
jurisdiction. Nothing herein shall prevent a transfer of this action
to a proper forum under the provisions of 28 U.S.C. § 1631, if
the district court finds such transfer appropriate.

REVERSED AND REMANDED

40a
Appendix E
HALL, Circuit Judge, dissenting:

As the majority readily acknowledges, ante at 7, an
unauthorized act of control over property belonging to another
constitutes the tort of conversion. When John Darlington
telephoned Alice Martin, the sales contracting officer at DRMO,
to tell her that he had discovered the transmissions, Martin told
Darlington that J&E should give them back. Within a few days,
another DRMO representative called Darlington to repeat Martin’s
request. These conversations were followed by a written demand
for the transmissions’ return.

If the transmissions belonged to DRMO, then J&E’s failure
to return them was a conversion — and thus a tort. Although
settling the issue of ownership in this case would necessarily
involve examining the contract between J&E and DRMO, such
an examination does not transmogrify a tort claim into a contract
claim. J&E has now returned the transmissions; the only substantial
issues that remain are whether the government owned them, and,
if so, the damages to which it is entitled as a result of J&E’s
tortious conduct.

The Court of Claims, though proficient in settling contract
disputes, is powerless to decide tort cases. See, e.g.,
Transcountry Packing Co. v. United States, 568 F.2d 1333, 1336
(Ct. Cl. 1978) (“This court . . . does not have jurisdiction over
tort claims.”) (citation omitted). Today, the majority remarkably
announces that such cases are likewise outside the reach of the
district court. Although Lewis Carroll might have fancied such a
result, I do not.

[respectfully dissent.

4la
APPENDIX F — APPEAL OF JOHN T. GONSALVES
ARMED SERVICES BOARD OF CONTRACT APPEALS
ASBCA No. 31874
Appeal of —
John T. Gonsalves
Under contract No. 41-4355-326

APPEARANCES FOR THE APPELLANT:

John T. Gonsalves, President

APPEARANCES FOR THE GOVERNMENT:

Roberta T. Eaton, Esq.

Trial Attorney,

Defense Reutilization and Marketing Service
Federal Center (DLA)

Battle Creek, Michigan

OPINION BY ADMINISTRATIVE JUDGE SCHEPERS
PURSUANT TO RULE 12.2

At a Defense Property Disposal sale appellant purchased
drums which were found to contain infrared receivers/seeker
heads. The parties dispute whether the Government may demand
return of these items.

SUMMARY FINDINGS AND CONCLUSIONS

At auction appellant purchased item 128 for $25.00 which
was described as follows:

42a

Appendix F

128. CONTAINER, SHIPPING; Drums, various sizes.
Est. 400 ea.

1 LOT

The Instructions, Terms & conditions applicable to the sale
contain the General Provisions which include: paragraph 2,
Condition and Location of Property; paragraph 30, Guaranteed
Descriptions; and paragraphs D and C, Award of Contract.

Some of the drums had labels which read “Seeker Head”.
“Receiver Infrared” and “[ R Det. Hed.” The labels were green
in color with “NON-RF[“ and “Special Handling”, also printed
on them.

Appellant realized by inspection that some of the drums
contained items inside and “bid accordingly.”

Appellant removed the drums in increments, completing
the removal by 2 July 1984.

Each drum with items inside weighed approximately 40
pounds more than empty drum.

When he opened the drums and saw the items, appellant
assumed he had obsolete surplus electronic junk.

At the suggestion of a surplus dealer friend, appellant
contacted a former Navy sales official who referred appellant to
the Aviation Supply Office. Appellant thought he was contacting
surplus dealers, but later found it was the Department of the
Navy. This contact was on 26 June 1984.

43a

Appendix F

Respondent’s investigation revealed that the infrared
receivers/seeker heads has been declassified by the Navy and
that appellant had approximately 43 of the seeker heads.

Respondent states the fair market value of the sidewinder
missile heads is $33.63 each for the 19 complete units and
$16.82 each for the 24 incomplete units for a total of $1,042.65.

Appellant states that had respondent approached him in a
business like manner, acknowledging that appellant is the owner
of the seeker heads, the parties could have reached an amicable
solution that would only entail appellant’s costs for transporting
the containers to appellant’s shop.

Respondent contends that it is entitled to either pick up the
missile heads or to demand an amount of $1,042.65 from
appellant.

Doubtless the Navy knew the missile heads and parts were
within the drums, whether or not the Navy conveyed this
information to the DPDS. Repeatedly respondent requests that
we strictly construe the provisions of their surplus sales contracts.
Respondent cannot now ask us to set aside a final sale to correct
a mistake it made.

Accordingly, the appeal is sustained.

Dated 10 March 1986.

s/ Jean Schepers

JEAN SCHEPERS
Administrative Judge

Member of the Armed Services
Board of Contract Appeals

44a

APPENDIX G — SALE OF GOVERNMENT PROPERTY,
GENERAL SALE TERMS AND CONDITIONS

PART 2
DO NOT RETURN WITH BID

SALE OF GOVERNMENT PROPERTY
GENERAL SALE TERMS AND CONDITIONS

1. INSPECTION.

The Bidder is invited, urged, and cautioned to inspect the
property prior to submitting a bid. Property will be available for
inspection at the places and times specified in the Invitation.

2. CONDITION AND LOCATION OF PROPERTY.

Unless otherwise provided in the Invitation, all property listed
therein is offered for sale “as is” and “where is.” Unless otherwise
provided in the Invitation, 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. Except as provided in Conditions No. 12 and 14
or other special conditions of the Invitation, no request for
adjustment in price or for rescission of the sale will be considered.
This is not a sale by sample.

3. CONSIDERATION OF BIDS.

(a) Unless otherwise provided in the Invitation, telegraphic
or telephonic bids will not be considered.

(b) The Bidder agrees that his bid will not be withdrawn
within the period of time specified for the acceptance thereof

45a

Appendix G

following the opening of bids (60 calendar days if no period is
specified by the Government or by the Bidder, but not less than
; 10 calendar days in any case) and that during such period his bid
will remain firm and irrevocable. The Government reserves the
right to reject any or all bids, including bids under which a Bidder
would take unfair advantage of the Government or other Bidders,
to waive any technical defects in bids, and unless otherwise
specified by the Government or by the Bidder, to accept any one
item or group of items in the bid as may be in the best interest of
the Government. Unless the Invitation otherwise provides, a bid
covering any listed item must be submitted on the basis of the
unit specified for that item and must cover the total number of
units designated for that item.

4. FORMS OF BID DEPOSITS AND PAYMENTS.

Unless otherwise provided in the Invitation, bid deposits
(when required by the Invitation) and payments shall be in U.S.
currency or any form of credit instruments other than promissory
notes, made payable on demand in U.S. currency: Provided, That
uncertified personal or business checks must be first party
instruments: Provided further, That if in connection with any prior
sale, the Bidder or Purchaser tendered an uncertified personal or
business check which was not paid by the drawee for any reason
and the Bidder, Purchaser, and the Drawer of the check were so
notified in writing by the selling agency, uncertified personal or
business checks will not be an acceptable form of bid deposit or
payment. Bids submitted after the effective date specified in the
written notification referred to which are not accompanied by the
proper bid deposit will be summarily rejected.

46a

Appendix G
5. BID PRICE DETERMINATION.

When bids are solicited on a unit price basis. Bidders will
insert their unit prices and total prices in the space provided for
each item.

(a) In the event the Bidder inserts a total price on the item
but fails to insert a unit price, the Government will determine the
unit price by dividing the total price by the quantity of the item
set out in the Invitation. The unit price so determined shall be
used for the purpose of bid evaluation, award, and all phases of
contract administration.

(b) When bids are solicited on a “lot” basis, Bidders should
submit a single total price in the Total Price Bid column of the
bid sheet. Bidders should not make any entry in the Unit Price
Bid column. In the event a Bidder submits a total bid price and
also a unit bid price which are not identical, the unit bid price will
not be considered.

6. PAYMENT.

The Purchaser agrees to pay for property awarded to him in
accordance with the prices quoted in his bid. Subject to any
adjustment made pursuant to other provisions of this contract,
payment of the full purchase price, after applying the total bid
deposit, if any, must be made within the time specified in the
Invitation and prior to delivery of any of the property. If an
adjustment is made requiring additional payment, such payment
must be made immediately upon notice of such adjustment. In
the absence of any debts owed to the selling agency, where the
total sum becoming due to the Government from the Purchaser
on a contract awarded to him under the Invitation is less than the

47a

Appendix G

total amount deposited with his bid, the difference will be promptly
refunded and also, deposits accompanying bids which are not
accepted will be promptly refunded to the Bidder. No refund or
demands will be made for any amount less than one dollar ($1).

7. TITLE.

% Unless otherwise provided in the Invitation, title to the
property sold hereunder shall vest in the Purchaser as and when
removal is effected. On all motor vehicles and motor-propelled
or motor-drawn equipment requiring licensing by a State motor
vehicle regulatory agency, a certificate of release, Standard Form
97, will be furnished for each vehicle and piece of equipment
unless otherwise provided in the Invitation.

8. DELIVERY, LOADING, AND REMOVAL OF
PROPERTY.

(a) Unless otherwise provided in the Invitation, the Purchaser
shall be entitled to obtain the property upon full payment therefor
with delivery being made only from the exact place where the
property is located within the installation. The Purchaser must
make all arrangements necessary for packing, removal, and
transportation of property. The Government will not act is liaison
in any fashion between the Purchaser and carrier, nor will the
Government recommend a specific common carrier. Loading will
only be performed as set forth in the Invitation, and unless
otherwise provided in the Invitation, loading will not be performed
on Saturdays, Sundays, Federal holidays, or any day that the
installation where the property is located is closed. Where it is
provided that the Government will load, the Government will make
the initial placement of the property on conveyance(s) furnished
by the Purchaser and the initial placement on the Purchaser’s

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48a

Appendix G

conveyance shall be as determined by the Government. Unless
otherwise provided in the Invitation, the Government will not
block, chock, brace, lash, band, or in any other manner secure
the cargo on such conveyance(s) furnished by the Purchaser.

(b) Where it is provided in the Invitation that the Government
will not load or that the Purchaser will load, the Purchaser will
make all arrangements and perform all work necessary to effect
removal of the property. The Purchaser shall remove the property
at his expense within the period of time allowed in the Invitation.
If the Contracting Officer determines that the failure to remove
the property within the period of time originally allowed arose
out of causes beyond the control and without the fault or
negligence of the Purchaser, such determination shall be reduced
to writing, and a reasonable extension of time for removal shall
be allowed. Such causes may include, but are not restricted to,
acts of God or of the public enemy, acts of the Government in
either its sovereign or contractual capacity, fires, floods,
epidemics, quarantine restrictions, strikes, freight embargoes, and
severe weather. If the Purchaser is permitted to remove the
property after the expiration of the time originally allowed for
removal or any additional time allowed by the Contracting Officer
pursuant to this clause, the Government, without limiting any other
rights which it may have, may require the Purchaser to pay a
reasonable storage charge. The Purchaser shall reimburse the
Government for any damage to Government property caused
during the removal operations by the Purchaser or his authorized
representative.

(c) Items purchased under the Invitation will be released only
to the Purchaser or his authorized representative. The authorized
representative must furnish authorization from the Purchaser to
the Custodian of the property location before any delivery or

w
3
4
2
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49a

Appendix G

release will be made. When property is described as being boxed,
packed, crated, skidded, or in containers, the Government does
not warrant that the property, as packaged, is suitable for shipment.

(d) Segregation, culling, or selection of property for the
purpose of effecting partial or increment removals will not be

permitted except as specifically authorized and prescribed by the
Government.

9. DEFAULT.

If, after the award, the Purchaser breaches the contract by
failure to make payment within the time allowed by the contract
as required by Condition No. 6, or by failure to remove the
property as required by Condition No. 8, then the Government
may send the Purchaser a 15-day written notice of default
(calculated from date of mailing), and upon Purchaser’s failure
to cure such default within that period (or such further period as
the Contracting Officer may allow) the Purchaser shall lose all
right, title, and interest which he might otherwise have acquired
in and to such property as to which a default has occurred. The
Purchaser agrees that in the event he fails to pay for the property
or remove the same within the prescribed period(s) of time, the
Government shall be entitled to retain (or collect) as liquidated
damages a sum equal to the greater of (a) 20 percent of the
purchase price of the item(s) as to which the default his occurred,
or (b) $25, or the purchase price of such item(s) if the

a * *

50a

APPENDIX H — DEFENSE REUTILIZATION AND
MARKETING MANUAL

DoD 4160.21-M
MARCH 1990

DEPARTMENT OF DEFENSE
UNITED STATES OF AMERICA

DEFENSE
REUTILIZATION AND MARKETING
MANUAL
DEPARTMENT OF DEFENSE

OFFICE OF THE ASSISTANT
SECRETARY OF DEFENSE

PRODUCTION & LOGISTICS

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Appendix H

ASSISTANT SECRETARY OF DEFENSE
WASHINGTON, D.C.. 20301-8000

PRODUCTION AND LOGISTICS DOD 4160.21-M

23 Mar 90
FOREWORD

This manual is used under the authority of DoD Directive 4160.21 :
“DoD Personal Property Utilization and Disposal Program.” Its
purpose is to set forth DoD policy and prescribe uniform
procedures for the reutilization and marketing of DoD personal
property. Except where otherwise indicated, this manual is
applicable to all elements of the DoD and their subordinate
commands, installations, and activities.

DoD 4160.21-M is retitled “Defense Reutilization and Marketing
Manual.” It is restructured to reflect a renumbering of chapters
to provide an orderly sequence of reutilization and marketing
procedures for personal property of DoD Components.

Recommended revisions to this manual should be submitted
through proper DoD Component channels to:

Director

Defense Logistics Agency
ATIN: DLA-SMP

Cameron Station

Alexandria, Virginia 22304-0100

DoD components may obtain their copies of this manual through
their publication channels. Other Federal agencies and the public

52a
Appendix H

may obtain copies from HQ Defense Logistics Agency, ATTN:
DLA-XPD, Cameron Station, Alexandria, Virginia, 22304-0100.

s/ Diane K. Morales

Diane K. Morales

Deputy Assistant Secretary
(Logistics)

This manual supersedes DoD 4100.21-M, 15 Sep 82, and Changes |
through Q.

53a
Appendix H
CHAPTER I
INTRODUCTION

A. GENERAL. This manual implements DoT directives and
instructions which affect the reutilization and marketing of
personal property and takes precedence over conflicting
instructions.

B. PURPOSE.

1. The purpose of this manual is to prescribe the policies
and procedures to be followed by DoD installations worldwide
for the reutilization and marketing of excess, surplus, and foreign
excess personal property and other categories of property as
covered here.

2. The policies and procedures in this manual take
precedence over conflicting instructions in Defense Agency and
Military Service regulations.

C. SCOPE AND APPLICABILITY.

1. The contents of this manual are applicable to all elements
of the DoD, their subordinate commands, installations, and
activities, worldwide, except as otherwise indicated. It applies to
the reutilization and final disposition of supply system stocks,
excess, surplus and foreign excess personal property, and other
property as authorized.

2. Unless otherwise stated, this manual is not applicable to:

54a
Appendix H

a. Items under management control or the Defense
Nuclear Agency in Federal Supply Group 11; all Department of
Energy (DoE) special design and quality controlled items; and all
DoD items designed specifically for use on or with nuclear
weapons (identified by manufacturers’ codes 57991, 67991,
77991, and 87991 in the Defense Logistics Services Center master
item file). These items shall be processed in accordance with
Technical Publication, Supply Management of Nuclear Weapons
Materiel. DoE-DNA TP 100-1. Navy SWOP 100-1. Army TM
39-10-0-1. Air Force T.O. 11N- 1DO-1.

ie ryptologic Materiel. This materiel shall be processed
in accordance with NACSI 2001 (FOUO) and NSA Circular
60-5(C).

c. Naval Nuclear Propulsion Plant Materiel. This materiel
shall be processed in accordance with NAVSEAINST C5511.32
and SPCCINST 4440-376H as stated in paragraph B69, Chapter
VII, Property Requiring Special Processing.

d. Contractor Inventory and Army Corps of Engineers
Civil Works Property. When considered to be in the best interest
of the U.S. Government, the services of Defense Reutilization
and Marketing Offices (DRMOs) and Defense Reutilization and
Marketing Regions (DRMRs) may be used.

e. Automation Equipment (AE) items under the
management control of the Defense Automation Resources
Information Center (DARIC).

D. OBJECTIVES. Personal property (including scrap) shall be
reutilized or disposed of in a manner that ensures maximum use
to satisfy valid needs, permits authorized donations, obtains

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55a
Appendix H

optimum monetary return to the U.S. Government for property
sold, protects the environment, and minimizes the need for
abandonment or destruction. The procedures, codes and uniform
formats of the Military Standard Data Systems, Military Standard
Requisitioning and Issue Procedures (MILSTRIP), Military
Standard Transaction Reporting and Accounting Procedures
(MILSTRAP), etc., shall be used to the maximum extent possible
in all property reutilization and marketing transactions. Precious
metals bearing scrap and end items containing precious metals
shall be disposed of in a manner which will assure cost effective
disposition and recovery of precious metals when economically
feasible under the Precious Metals Recovery Program. Military
Service excesses containing components required to offset buy,
budget, and repair needs shail be reclaimed before disposal.

/. Donation.

a. Donation of personal property in the United States,
American Samoa, Guam, Puerto Rico, TTPI, and the Virgin
Islands shall be made to eligible donees after it has been
determined through the reutilization screening process, that no
Federal need exists for the property.

b. Donation of foreign excess property shall be made
under authority contained in 40 U.S.C. 512 and as further carried
out in this manual.

2. Sale. Personal property shall be advertised for sale only
after prescribed reutilization, transfer, and donation actions have
been taken. Defense Reutilization and Marketing Service
(DRMS) shall employ the most efficient and economical methods
of identifying, segregating, merchandising, and selling personal
property.

56a
Appendix H

a. Sale of personal property in the United States.
American Samoa, Guam, Puerto Rico, TTPI, and the Virgin
Islands shall be conducted as authorized and prescribed in this
manual, under authority delegated to the Secretary of Defense by
the Administrator of General Services.

b. Sale of personal property in overseas areas (other
than named in subparagraph D2a) shall be conducted by the
Defense Logistics Agency (DLA) under authority delegated by
the DoD, and as prescribed in this manual. Sales in nonexempted
overseas areas shall be subject to security trade controls issued
by the Deputy Under Secretary of Defense (Trade Security Policy)
(DUSD(TSP)), as set forth in this manual.

c. Withdrawal from Sale. As a general policy, property
once advertised for sale may not be withdrawn. Exceptions to
this general statement shall be permitted only when property
involved is required in support or approved U.S. Government
programs, and the action is determined to be in the best interest
of the U.S. Government. Heads of DoD components shall ensure
that this withdrawal authority is stringently controlled and applied.
(This policy is predicated upon the workload and adverse public
relations, up to and including court cases, which result unless
careful control is placed on withdrawals. )

3. Coordination. Coordination shall be made with:

a. The Department of State, or the U.S. Diplomatic
Missions in the country or countries concerned, regarding the
reutilization and marketing of personal property in foreign
countries to assure conformance with United States foreign
policies.

S7a

Appendix H

b. The Department of the Treasury, relative to the
acceptance of foreign currencies in payment for personal property.

c. The Bureau of Domestic Business Development,
Department of Commerce, concerning proposed sales or personal
property which could have an impact on United States markets.

d. The Department of Justice to obtain antitrust advice
on certain sales as prescribed in this manual. Instances of
suspected collusion shall be referred to the Department of Justice
or the Department of State representative.

e. The Military Services Defense Agencies, and the
General Services Administration (GSA) when changes to this
publication are proposed.

4. Demilitarization. Personal property shall be demilitarized
in accordance with policy and procedures covered in DoD
4160.21-M-1, Defense Demilitarization Manual.

5. Classified Material. Items which are classified may not
be released to a DRMO for final disposition until they have been
declassified in the manner prescribed by the owning DoD
component.

6. Abandonment or Destruction. Personal property which
cannot be disposed of through authorized sale or donation
procedures may be abandoned or destroyed as set forth in this
manual.

a. Abandonment or destruction of property may not be
accomplished in a manner detrimental or dangerous to public

58a
Appendix H

health, safety, or the environment, or which may cause infringement
on the rights of others.

b. Bejore any abandonment action is taken of foreign
excess personal property, the advice or the local representative
of the Department of State must be obtained to prevent, in
particular, the possibility of such property falling into the hands
of individuals or firms intending to put it to uses unfavorable or
harmful to the interests of the United States.

c. Personal property shall be donated under authorized
surplus and foreign excess property donation procedures in
~—preference to abandonment or destruction.

7. Precious Metals Recovery. Precious metals contained in
scrap or other personal property shall be recovered for DoD use
or as Government furnished material (GFM). Policy and
procedures for the recovery of precious metals are contained in
Chapter X, Precious Metals Recovery Program.

8. Reclamation. Components contained in Military Service
excesses shall be reclaimed to fill internal service needs or
interservice/ Defense Agency needs as prescribed in paragraph
A, Chapter IV. Interservice Utilization of Supply System Stocks.

9. Environmental Considerations. Guidance concerning
environmental considerations in the disposal of hazardous
property is included in Chapter 1X, Hazardous Property
Management.

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59a

Appendix H
E. PERSONNEL AND TRAINING.

1. Selection of Key Personnel. Exceptional care shall be
exercised in the selection and assignment of personnel to property
reutilization and marketing functions. The magnitude of the
reutilization and marketing program and its effects on public
relations require that only qualified personnel be assigned to this
program. The duties and responsibilities attendant with
reutilization and marketing positions require that key personnel
possess more than an average amount of ingenuity,
aggressiveness, conscientiousness, and diplomacy, and that they
be well versed in DoD personal property reutilization and
marketing policy, regulations, and procedures.

2. Training.
a. Property Reutilization and Marketing Personnel.

(1) To provide fur a more effective career program
for functions relating to the reutilization and marketing or excess,

surplus, and foreign excess property, training is of great
importance.

(2) The magnitude of importance of the reutilization
and marketing program requires that key personnel connected
with the program receive training in the field or property
reutilization and marketing, related technical areas, safety,
environmental protection, administration, and management.

b. Formal training in the area of reutilization and
marketing is covered in DoD Directive 5010.16, Defense
Management Education and Training Program.

60a
Appendix H

F. CONFERENCES.

1. Conferences are invaluable to exchange ideas, resolve
differences and problems, and to discuss other matters of mutual
interest to conferees, as well as for an interchange of views in
order to develop and nurture mutual understanding among the
participants. With the increased magnitude of property
reutilization and marketing, operating procedures must be
reviewed continually to assure they are focused in the proper
direction to ensure standardization. Due to the nature of the
reutilization and marketing program, which requires dealing with
the general public, it is extremely important that problems as they
arise are recognized and acted upon to avoid incidents which are
not in the best interest of the U.S. Government.

2. Reutilization and marketing conferences shall generally
be of a specialized nature depending upon the functions and
responsibilities or the organization convening the conference. DLA
shall hold conferences for its representatives and Military Service/
Defense Agency representatives to discuss areas of common
concern and resolve differences. Air Force shall chair a DoD
Reclamation Work Group, consisting of representatives from each
Service and DLA, concerning DoD aircraft, aircraft engines, and
end item reclamation policy and procedures.

3. Guidelines for property reutilizaton and marketing
conferences are as follows:

a. Any entity may request a conference be convened.
b. Conferences shall be of the working type, with a

minimum of formal presentation and a maximum or open exchange
of thought through discussion or agenda subjects.

6la

Appendix H

c. The organization convening the conference shall
ensure an agenda is developed and submitted to the next higher
management echelon for review, when pertinent, before publication.
Participation by entities outside DoD (such as, representation of
Federal civil agencies or private industry) depends upon the scope
and type of conference. Conference sites shall be selected with
consideration of minimizing travel. The length of conferences

shall be predicated upon the subject matter and scope of
participation.

d. Type and frequency of conferences.

(1) Defense Logistics Agency — as required.
Participation shall include reutilization and marketing personnel
from HQ DLA, DRMS, selected DRMRs, representatives from
Army, Navy, Air Force, Marine Corps, Coast Guard, Defense

Agencies and when necessary, representatives of other
Government agencies.

(2) Air Force — annual or more often as necessary.
Participation shall include the DoD Reclamation Work Group
members and other participants as considered pertinent.

e. Summary of Conferences. A summary shall be
made available to the headquarters concerned and all participants
after the completion of a conference. The summary shall outline
each subject discussed and state the resultant conclusions.

62a
Appendix H
CHAPTER II
RESPONSIBILITIES

A. GENERAL.

1. The Federal Property and Administrative Services Act of
1949, as amended (Act of 30 June 1949, 63 Stat. 377, 40 U.S.C.
471), assigned the responsibility for the supervision and direction
over the disposition of excess and surplus property to the
Administrator of General Services. The Act further assigned the
responsibility for supervision and direction over the disposition
of DoD foreign excess property to the Secretary of Defense.

2. The Administrator of General Services delegated to the
Secretary of Defense the responsibility for the disposition of
excess and surplus property generated by the DoD.

3. The Secretary of Defense has assigned to the Director.
DLA responsibility for the administration of the DoD Personal
Property Reutilization and Marketing Program and the DoD
Precious Metals Recovery Program.

B. RESPONSIBILITIES OF DEFENSE LOGISTICS AGENCY
(DLA).

1. Administer the DoD Personal Property Reutilization and
Marketing Program worldwide in the role of integrated program
manager and administer the Precious Metals Recovery Program.

2. Establish, coordinate and supervise policy, system
concepts and requirements, resource management, program
guidance, budgeting and funding, training and career development,

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Pil 0 SAE iS LAE NM lige tially tet:

63a
Appendix H

management review and analysis, internal control measures, and
schedule crime prevention surveys relatable to the DoD Personal
Property Reutilization and Marketing Program and the Precious
Metals Recovery Program.

3. Apprise the Assistant Secretary of Defense (Production
and Logistics) (ASD(P&L)) of progress and significant
developments within the DaP Personal Property Reutilization
and Marketing Program and the Precious Metals Recovery
Program.

4. Maintain the DoD 4160.21-M ina current status to reflect
policy guidance prescribed, by the ASD(P&L) or other
organizational elements of the Office of the Secretary or Defense,
Coordinate changes to the DoD 4160.21-M, before publication,
with the Military Services, other DoD components, and Federal
civil agencies when the proposed change affects their areas of
responsibility or operation; refer to the ASD(P&L) with pertinent
comments unresolved nonconcurrences with proposed changes.
As an objective, change action to this manual shall be initiated
not less frequently than on a semiannual basis.

NOTE. Interim instructions reflecting new/revised policy shail
be issued after proper coordination has been obtained. These
issuances shall be coordinated in the some manner as formal
changes to this manual.

5. Promote maximum reutilization of excess, surplus, and
foreign excess personal property.

6. Establish/disestablish Defense reutilization and marketing
organizations under the control of the DLA and coordinate such
action with the Military Services and other DoD components when

64a
Appendix H |

it will affect the disposal support currently being provided their
activities. Except when diplomatic considerations do not permit
it in overseas areas, this formal coordination shall be accomplished
in sufficient time for the Military Service or other DoD components
affected to properly program and acquire resources, in accordance
with prescribed procedures. Coordinate such establishment/
disestablishment with ASD (P&L).

7. Administer the DoD donable surplus personal property
program as it applies to approved Service Educational Activities.
This includes such actions as prescribing procedures,
development of donation agreements, and processing requests
to higher authority for deviation from formal agreements.

8. Assure maximum compatibility between documentation
procedures, codes, and formats used in property reutilization
and marketing systems and the military standard systems.

9. Program, budget, fund, account, allocate, and control
personnel spaces and other resources for its respective activities.

10. Prepare and distribute reports as prescribed.

1]. Assume the worldwide disposal of all DoD hazardous
property except for those categories specifically designated in
paragraph B1. Chapter IX. Hazardous Property Management.
(DLA may perform a sale/ultimate disposal service on a
case-by-case basis. In these cases, specific funding shall be
confirmed in writing.)

Torey ee

65a
Appendix H

C. RESPONSIBILITIES OF THE MILITARY SERVICES.

1. Recommend fo the Director, DLA, for action policy and
procedural changes, and participate in decision-making processes
pertaining to the DoD Personal Property Reutilization and
Marketing Program and the DoD Precious Metals Recovery
Program. Information copies of such recommendations shall be
furnished to the ASD(P&L).

2. Provide assistance to the Director, DLA, upon request,
in the resolution of mutual problems within the DoD Personal
Property Reutilization and Marketing Program and the DoD
Precious Metals Recovery Program.

3. Furnish to the Director, DLA, mutually agreed upon data
necessary to administer the DoD Personal Property Reutilization
and Marketing Program and the DoD Precious Metals Recovery
Program.

4. Promote maximum reutilization of supply system stocks,

excess, surplus, and foreign excess personal property and fine
precious metals for internal use or as GFM.

5. Nominate schools or organizations in the United States.
American Samoa, Guam, Puerto Rico, TTPI, and the Virgin
Islands to the ASD(P&L) for special interest consideration as
Service Educational Activities.

a. Recommend to ASD(P&L) categories of property
considered usable by, and necessary for, Service Educational
Activities.

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Appendix H

b. Inspect annually the property administration of
schools or organizations sponsored by the Military Service to
assure compliance with the donation agreement, and specifically
to review categories and quantities of property received to assure
that only that type and quantity of property actually needed is
acquired. National organizations such as Boy Scouts and Boys
Clubs are exempt from the annual inspection requirement of the
Military Services.

6. Provide support to tenanted DRMRs and their field sales
offices. and DRMOs, under applicable interservice support
agreements. Except when diplomatic considerations do not permit
it in overseas areas, the disestablishment of the host of one of
these offices shall be formally coordinated with DLA to properly
plan and program the realignment of reutilization and marketing
support which should occur as a result of the disestablishment.

7. Accomplish the disposal of property not authorized by
this manual for transfer to a disposal account.

8. Participate in the Precious Metals Recovery Program to
the maximum extent, and:

a. Maintain a focal point to coordinate on all matters
pertaining to the Precious Metals Recovery Program.

b. Maximize the use of fine precious metals for authorized
internal use or as GFM.

c. Identify the type, quantity, and location of the precious
metal contained in the item management assigned assets. Notify
DLA in order that such items may be included in the Federal
Catalog records.

en Siete Revs Sete ee Oe ee Te ete

67a
Appendix H

d. Operate recovery equipment currently under their
purview, and additional equipment, if required, when jointly
agreeable and approved by DLA. Perform maintenance which
can be accomplished by operator or activity maintenance
personnel for equipment they operate. Advise DLA when major
repairs or services are needed and skills or parts are not available
at the local activity for equipment they operate. Recommend to

DLA when replacement equipment is needed to maximize recovery
efforts.

e. Transfer precious metals-bearing material to the
nearest DRMO or, when jointly agreeable or approved by
DRMS-OCP and subject to receipt of fund citation from
DRMS-OCP, ship to other collection or recovery activity
designated by DRMS.

f. Assist in the identification of additional generating
activities within DoD and report to DLA.

9. Conduct property reutilization and marketing training
courses (Army only).

10. Administer reclamation programs and accomplish
reclamation of needed items from Military Service excess material.

11. Store and reclaim excess complete aircraft (Air Force
only).

12. Administer the reclamation and rernoval of equipment
and spare parts from stricken naval vessels (Navy only).

13. Establish and administer disposal accounts, as jointly
agreed to by DLA and the Military Services, to support the

68a

Appendix H

demilitarization and reclamation functions to be performed by
the Military Services.

14. Report surplus merchant vessels or vesse!s of 1500 gross
tons or more, capable of conversion to merchant use, to the
Office of Management Services (Code MAR-310), Maritime
Administration. U.S. Department of Transportation, 400 Seventh
Street SW., Washington, DC 20590.

15. Establish the program and direct operations related to
lumber and timber products.

16. Dispose of hazardous property specifically designated
in paragraph Bl, Chapter IX, Hazardous Property
Management.

D. RESPONSIBILITIES OF DEFENSE REUTILIZATION AND
MARKETING SERVICE (DRMS).

1. Exercise program management and staff supervision of
the DoD Personal Property Reutilization and Marketing
Program.

2. Manage the assigned DoD screening systems for screening
excess personal property within the Military Services, Defense
Agencies and eligible foreign countries.

3. Release DoD excess personal property to GSA for Federal
civil agency screening as provided in Chapter XI, Reutilization

Screening of Excess Personal Properly.

4. Assure donation policies and procedures are carried out.

= oe 6h et Ete Its See IS.

69a
Appendix H

5. Carry out policies and develop procedures and techniques
for publication here or in other approved media after coordination
by HQ DLA with the Military Services.

6. Maintain and control the consolidated DoD bidders list
and serve as the DoD focal point for inquiries pertaining to the
sale of disposable preerty.

7. Develop and administer a system for controlling in
consonance with DLA system requirements and accounting for
all disposable property.

8. Develop, compile, and publish pertinent data relating to
the reutilization, donation, and marketing of excess, surplus,
and foreign excess property.

9. Act as the principal advisor and assistant to DLA in
administering the implementation of the DLA Programs for
Protective Services, Personnel and information Security as related
to the DoD Personal Property Reutilization and Marketing
Program.

10. Develop programs for surveillance of disposable
property and related operations to assure optimum reutilization,
proper demilitarization, and performance of functions under
pertinent regulations.

11. Manage the DRMRs, including control and distribution
of approved resources (such as, personnel and facilities) and
procedures.

12. Operate the Precious Metals Recovery Program.

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Appendix H

13. Maintain and publish the Directory of DoD Reutilization
and Marketing Program Contact Points. Changes shall be issued
as required, but as a minimum annually.

14. Maintain effective liaison and take coordinated actions,
through proper channels, to assist in resolving, eliminating, or
reducing operating problems.

15. Prepare and distribute reports as prescribed.
10. Dispose of hazardous property as delegated by DLA.

E. RESPONSIBILITIES OF DEFENSE REUTILIZATION AND
MARKETING REGIONS (DRMRs).

1. Exercise operational supervision of assigned field sales
offices, and DRMOs.

2. Perform centralized support service functions needed for
operational control, coordination, and administrative support to
include coordination of civilian personnel administration and
training, and coordination of the interservice support agreements.

3. Perform surveillance and give technical assistance to
DRMOs to assure performance of functions in accordance with
regulations. In addition, review DRMO operations to ensure
proper identification of Munitions List and Strategic List items
and that related demilitarization functions are done.

4. Monitor property accountability, appoint Accountable
Property Officers, and approve adjustments/corrections to
property accounts for assigned DRMOs.

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Appendix H

5. Monitor DRMO excess reporting and physically screen,

as necessary, any property located at the DRMO to promote
reutilization of excess property.

6. Furnish technical guidance in all areas of property
reutilization and marketing to DRMOs.

7. Prepare sale solicitations, conduct sales, and execute and
administer all sales contracts including the processing of disputes,
protests, and claims pertaining to sales and sales contracts.

8. Comply with implementing guidance relative to
relationships with Commanders of Unified Commands as
prescribed in DoD Directive 5105.22, Defense Logistics Agency
enclosure 2. (Overseas only.)

9. Assume responsibility for integrated management of

disposable Military Assistance Program (MAP) property.
(Overseas only.)

10. Maintain a “Central Unit” to implement and monitor
guidance on the DoD Security Trade Control Program (DoD
Instruction 2030.6. Jmplementing Procedures for Security Trade
Controls on Sales for Foreign Excess Personal Property, and
DoD Directive 2030.7, Security Trade Controls on DoD
Personal Property Sold in Foreign Areas). (Overseas only.)

11. Monitor DRMO operational aspects of the Precious
Metals Recovery Program within assigned geographical areas and
provide support through Disposal Service Representatives, to
DoD and participating Federal civil agencies.

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Appendix H

F. RESPONSIBILITIES OF DEFENSE REUTILIZATION AND
MARKETING OFFICES (DRMOs).

1. Provide technical assistance (such as, explanation of turn
in procedures, training in scrap segregation practices) to generating
activities, not in conflict with this manual, military standard
procedures, or other regulations.

2. Receive excess, surplus, foreign excess, nonsalable
materiel, and other authorized turn ins from generating-activities.

3. Maintain property accountability and control or DLA
property reutilization and marketing assets and furnish input for
establishment and updating of centralized accounting record.

4. Maintain adequate liaison with generating activities to
ensure visibility of generations to avoid unmanageable fluctuations
in workload.

5. Inspect and classify property; verify identity and quantity;
determine disposal condition code and process for reutilization
and marketing actions.

6. Provide storage for property and assure that stored
property is properly protected and secured.

7. Represent their parent agency in matters pertaining to
established interservice support agreements and coordinate with
local installation personnel in resolving matters or mutual concern.

8. Promote and ensure maximum conservation of strategic
and critical materials and precious metals.

= Ri Ek ag a i ae

73a
Appendix H

9. Conduct periodic physical inventory of disposable
property on hand; prepare inventory adjustment documents when
required.

10. Provide for screening of excess and surplus property.

11. Provide technical and management assistance to all
authorized screeners, donees, and other interested persons.

12. Accomplish authorized transfer of property to DoD and
Federal civil agencies.

13. Process approved donation requests and release property
to authorized donees.

14. Perform research to determine market potential of
property available for sale.

15. Coordinate with the DRMRs to promote effective
marketing techniques in the sale of property.

16. Segregate, lot, display, and describe property in
accordance with good merchandising practices and techniques.

17. Identify and segregate scrap and manage scrap
operations in accordance with recognized practices.

18. Prepare and submit listings of property for sale and
recommend the method of sale when pertinent. Recommend
special conditions for unusual requirements or restrictions for
inclusion in the sale as applicable.

74a

Appendix H

19. Promote and conduct, as authorized by the servicing.
DRMR, local sales to expedite the process of removal of property
if inclusion in regional or national sales would not be
advantageous.

20. Conduct retail sales or property as authorized.
21. Provide technical assistance to prospective purchasers.

22. Assure that demilitarization or destruction of surplus or
foreign excess personal property is accomplished as required.

23. Release property to buyers upon receipt of proper
documentation.

24. Provide assistance to Sales Contracting Officers as
required to administer the terms of the sale.

25. Deposit sale proceeds and other funds received,
including storage charges.

26. Supervise operations of its field offices.

27. Accomplish demilitarization of inert Munitions List and
Strategic List iterns that must be demilitarized before disposal.

28. Where local demilitarization is not feasible, prepare,
package, and crate small arms weapons and parts for shipment
to Rock Island for demilitarization in accordance with DoD
4160.21-M-1. and DoD 5100.76-M, Physical Security of Sensitive
Conventional Arms, Ammunition, and Explosives.

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75a

Appendix H

29. Promote the DoD Precious Metals Recovery Program
and:

a. Accept excess/surplus precious metals-bearing
material from DoD components and participating Federal civil
agencies in their areas.

b. Process such material in accordance with Precious
Metals Recovery Program operatiig procedures contained in
Chapter X, Precious Metals Recovery Program.

c. Maintain liaison with generating activities so that
technical assistance can be given as needed.

d. Accept custodial responsibility for silver recovery
supplies and equipment in their possession.

¢. Supervise, in conjunction with the DRMS-OCP,
precious metals recovery operations of subordinate field offices.

tf. Operate silver recovery equipment at DRMOs which
are assigned central silver recovery responsibilities for hypo,
perform maintenance, and identify and recommend repair parts
and services needed to maximize recovery efforts.

G. RESPONSIBILITIES OF DEFENSE REUTILIZATIONS
AND MARKETING REGION PACIFIC (DRMR-P) FIELD
OFFICES. As DRMR-P extensions, they are responsible for the
following within designated countries:

1. Represent DRMR-P Commander as point of contact in
relations with Unified Commands, Service components, MAAGs,
U.S. Embassy, and foreign government sales missions.

76a

Appendix H

2. Perform supervision and procedural direction of the
property reutilization and marketing operations.

3. Perform supervision and procedural direction in
reutilization, marketing, and sales.

4. Perform physical assistance and operational review of
assigned property reutilization and marketing operations.

H. RESPONSIBILITIES OF DEFENSE PRECIOUS METALS
RECOVERY FACILITY (PMRF-XE). This facility is responsible
for collection of precious metals-bearing property, such as
batteries, high purity precious metals scrap, film, and silver
recovery cartridges. The facility also performs assays of materials
to determine precious metal content. Fuil responsibilities of the
PMRF-XE and other special assignments relating to precious
metals recovery are contained in Chapter X, Precious Metals
Recovery Program.

I. RESPONSIBILITIES OF INVENTORY CONTROL POINTS
(ICPs)

1. Assure maximum reutilization of property located in the
DRMOs.

2. Prepare and forward interrogations to other ICPs in
accordance with Chapter IV, Interservice Utilization of Supply
System Stocks.

3. Process other ICP interrogations/requisitions (fill/kill) for
requirements assigned a Uniform Material Movement and Issue
Priority System (UMMIPS) Priority Designator falling within Issue

77a

Appendix H

Priority Group 1 (Priorities 01-03) considering on-hand assets to
the same extent it would to satisfy its own Service requisitions.

4. Prepare data, reports, and recommendations as prescribed
here and maintain backup materiel for audit review.

5. Provide DRMS with points of contact for policy and
operational matters, such as: Reutilization, Donation,
Demilitarization, Precious Metals, Hazardous Property.

6. Identify items that must be demilitarized and accomplish
demilitarization of those items which cannot be physically
accepted by a DRMO in accordance with DoD policy.

7. Assure the submission of available technical data needed
in preparing specialized offers and reclamation requirements, when
requested.

8. Identify items that need reclamation and, as applicable,
advise Military Service/ Defense Agency ICPs//ntegrated Materiel
Managers (IMMs) of items considered to have reclamation
potential.

9. Prepare and forward reclamation transactions for the
interservice interchange of data for component parts with
reclamation potential.

10. Process reclamation notifications/data interchange
transactions of other ICPs.

//. Participate in all other programs specified at this manual.

|

78a

Appendix H
CHAPTER VI

RECEIPT AND HANDLING OF PROPERTY
AT DEFENSE REUTILIZATION AND
MARKETING OFFICES

A. LOCATION.

1. A suitable location, separate and apart from host
installation active stocks, shall be established at each DRMO for
the receipt and storage of excess, surplus, or foreign excess
personal property. This area shall be of sufficient size to permit
proper segregation or material and should be convenient to a
road net and railroad siding. The DRMO shall be responsible for
warehousing or otherwise storing all property physically received
and shall be responsible for:

a. Administering the established locator system for all
property under the control of the DRMO.

b. Property segregation bins or areas prominently
marked, labeled, or tagged so as to be readily identifiable with
the proper locator record. Property should, to the extent
practicable, be baled, boxed, bundled, bagged, binned, or
otherwise stored to prevent mixing and to facilitate handling and
accessibility.

c. Separate storage locations when sufficient space,
covered and open, is available for property that must undergo
centralized and local area screening. Sale of property should be
conducted from these locations to avoid double handling of

property.

79a

Appendix H

d. Adequate covered storage space for the protection
from the elements of such items as papers, textiles, and other
sensitive items of property. Materials shall be stored so as to
prevent contamination or mixing and to be readily accessible for
inspection.

e. Hazardous waste storage facilities operated by
DRMO, meeting all applicable environmental standards and
requirements, including the requirements of RCRA, as amended,
and the National Environmental Policy Act (NEPA).

2. The organizational elements of a DRMO shall be
positioned so that the flow of materials and paperwork is orderly
from the time of receipt to ultimate disposal.

a. The receiving section should be located near the
entrance to the DRMO warehouse or yard for convenience in
property verification so that the property may be directed to a
prearranged storage location. DRMOs should encourage
generating units to furnish advance copies of the DTID, or other
documentation to permit preplanning for storage purposes.

b. The storage location for scrap property shall be
separate from that of usable property and should be situated near
railroad facilities, if available. Truck scales for weighing the scrap
should be located adjacent to the receiving section. Railroad
scales should also be made available where possible.

c. Property appearing on a sale solicitation (catalog)
and property awaiting sale shall be separated by signs from
property being screened for reutilization, transfer, or donation
to eliminate confusion on the part of inspecting bidders and

screeners.

Pee eT et en tee ee

80a

Appendix H

B. FACILITIES AND EQUIPMENT REQUIREMENTS.

1. Equipment. The host activity shall furnish the DRMO
maintenance support of operating equipment and vehicles. Use
of available equipment and vehicles to support both normal
and temporary needs shall be obtained from the host as
available. This support shall be identified in an /SA.

2. Facilities. The host activity shall furnish the DRMO such
facilities as are necessary to do the assigned reutilization and
marketing mission. All DRMO facilities are owned by the host
and shall be identified in an ISA. Host site approval must be
obtained for all facility improvement projects. Nonreimbursable
host maintenance and repair support, not exceeding that
prescribed by the regulations of the host activity, shall be
included in the ISA.

C. SAFEGUARDING MATERIAL. The DRMO yard shall be
fenced or otherwise protected to ensure that materials are
safeguarded against theft, pilferage, or unauthorized withdrawals.
Support to DRMOs on security matters is covered in ISAs among
investigative agencies and implementing security regulations
of the Military Services Defense Agencies.

D. DISPOSAL PROCESSING.

1. The DRMO is responsible for reutilizalion and marketing
of all DoD generated excess, surplus, and foreign excess, and
other personal property authorized for turn in (excluding
nonsalable property) except those specific categories identified
im, subparagraph D2 below.

8la

Appendix H

a. The DRMO shall physically accept and process
property for which it has reutilization and marketing
responsibility. There are, however, certain categories of property,
such as radioactive materiels (see paragraph B, Chapter VIII,
Property Requiring Special Processing), which the DRMO may
not accept physically based upon special storage or special
handling needs. When this occurs accountability shall be accepted
by the DRMO and the property processed for reutilization,
transfer, donation, and sale actions even though the property
physically remains in place. Accountability of property which is
not reutilized or sold may not be returned to the generating activity.
Hazardous property shall be disposed of on hazardous waste
service contracts. Other property shall be downgraded to scrap,
processed for abandonment or destruction, or disposed of by
service contract. Where the DRMO lacks resources or the
technical expertise to physically handle property for which it has
reutilization and marketing responsibility, the DRMO shall
arrange for such support with the local host installation or the
generating activity on a case-by-case basis. Reimbursement shall
be as shown in the existing JSA and related governing documents.

b. The following types of property may not be physically
accepted by any DRMO regardless or its resources or technical
expertise unless specifically authorized by DRMS.

(1) Live animals.

(2) Explosives and ammunition.

(3) Incendiary products.

(4) Drugs, biologicals, and controlled substances.

82a

Appendix H

(5) Nitrate base film.
(6) Psychodiagnostic test sets.

c. Acceptance or physical custody of hazardous material
shall be determined based upon the guidelines in paragraph C.
Chapter IX, Hazardous Property Management.

2. The DRMO may not accept (either physically or on its
account) the following categories of property and no reutilization
or sale service shall be given.

a. Radioactive waste, thermal batteries, and unsalable
material of a nonhazardous nature; that is, material for which sale
or other disposal is prohibited by U.S. law or Federal or military
regulations. This category includes, but is not limited to classified
material. DoD inspection stamps and devices, consecrated
religious items, and cryptographic equipment.

b. Hazardous property designated for disposal by the
Military Services as stated in Chapter LX, Hazardous Properiy
Management.

c. Refuse and trash; that is, post consumer waste material
such as litter and rubbish collected by the installation engineer.
The collection of refuse and trash is the responsibility of the
installation engineer, however, some refuse and trash when
properly segregated may possess reutilization, transfer, donation,
or sale potential. The DRMO shall assist the host installation by
advising the commander or his or her designee or any known
possibility to dispose of property through established DRMO
channels based upon proper segregation techniques. Proper

83a

Appendix H

Segregation action shall be performed and monitored by personnel
of the host installation, not the DRMO.

3. Nonsalable materiel (other than refuse and trash); that is,
materiel which has no reutilization, transfer, donation or sale
value as determined by the DRMO, but is not otherwise restricted
from disposal by U.S. law or Federal or military regulations.
The DRMO is responsible for accepting and processing this type
property and shall ensure that ultimate disposition

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1167%3A2. Public record. Not legal advice.