617 F.2d 223 | Ct. Cl. | 1980
delivered the opinion of the court:
These two cases, argued in tandem, present the question of whether, under S & E Contractors, Inc. v. United States, 406 U.S. 1 (1972), the heads of two separate procuring agencies could properly refuse to accept a determination of the agency’s board of contract appeals favorable to the contractor, and thus compel the latter to litigate the merits of its claim in this court.
I.
No. 377-78:
In February 1977, the Acting Director of U.S.I.A. informed plaintiff in writing that it would pay all of the award except the $190,000 allowed for increased profit. That segment of the ASBCA award was considered by the agency head to be erroneous as a matter of law and therefore not binding on U.S.I.A. under the Wunderlich Act. Plaintiff subsequently received payment of the balance of the award ($606,067) and now sues for the $190,000 withheld by the agency. Plaintiffs position is that it is entitled to that sum because it was awarded by the board and neither the agency head nor this court has authority to consider whether the board’s determination on that point was or was not erroneous. Defendant urges that we can and should hold that the award of the $190,000 was erroneous as a matter of law, and therefore unrecoverable by plaintiff.
No. 385-78:
Plaintiff then submitted a claim for $700,819 as the equitable adjustment to which it was entitled, but the Administrator of G.S.A. wrote in response that he considered the board’s decision as lacking finality under the Wunderlich Act and the Disputes clause and therefore as not binding on G.S.A. A copy of this letter was furnished to the contracting officer. It is undisputed that the Administrator’s letter constituted a refusal to pay plaintiff or to allow any amount to be determined by the contracting officer as the equitable adjustment under the board’s decision.
By its motion for judgment on the pleadings, or alternatively, for summary judgment,
II.
The seminal decision on the power vel non of the Government to compel Wunderlich Act review by this court of a determination, favorable to the contractor, by the procurement agency of a Disputes-clause controversy is S & E Contractors, Inc. v. United States, 406 U.S. 1 (1972). There, the dispute was determined, on the contractor’s
In the current cases the defendant would read the Supreme Court’s S & E decision as restricted solely to the situation in which the procuring agency (there, the AEC) is satisfied with its determination favorable to the contractor but in which outside agencies (there, the General Accounting Office and the Department of Justice) are attempting to upset the procuring agency’s determination. The present cases are significantly different, defendant insists, because the heads of the procuring agencies (U.S.I.A. and G.S.A.) have made it clear that they reject and repudiate the determinations favorable to the contractors rendered by the boards of contract appeals.
Even if we accept defendant’s general approach that S & E was concerned only with a "settlement” made by the procuring agency and the contractor which is later challenged by an outside body, we think that rationale squarely covers the cases now before us. In arguing to the contrary, defendant passes over the critical fact here that in each instance the head of the procuring agency had expressly delegated his full Disputes clause authority to the board of contract appeals without reserving power to review, reconsider, or reject the rulings of the board.
In plain lay language the question then is whether, absent fraud or bad faith, the contractor can rely on the ruling of the federal agency with which it made the contract or can be forced to go through still another tier of federal review. We hold that absent fraud or bad faith the federal agency’s settlement under the disputes clause is binding on the Government; that there is not another tier of administrative review; and that, save for fraud or bad faith, the decision of AEC is "final and conclusive,” it being for these purposes the Federal Government. 406 U.S. at 4.
Throughout its opinion, the Court refers to the successful resolution of the contractor’s "dispute” with the procuring agency as settling or ending the controversy. See 406 U.S. at 4, 8-10, 12, 14-15, 17-19. In summing up, the opinion says: "This is simply an instance where a contractor successfully resolved its disputes with the agency with which it had contracted and to whom that power had been delegated.” 406 U.S. at 19. The same emphasis is revealed in Mr. Justice Blackmun’s concurring opinion for four Justices. 406 U.S. at 19-23.
There is no reason why this principle should not apply as much to cases where (as here) the agency’s power is wholly
The prevailing S&E opinions show, too, that the Supreme Court was quite aware of the boards of contract appeals and their role in the adjudication of Disputes-clause controversies. 406 U.S. at 17-18, 21. "So far as the Wunderlich Act is concerned, it is irrelevant whether the administrative agency deciding the dispute is the AEC or the AEC’s board of contract appeals.” 406 U.S. at 17. The Court’s opinion then goes on to reject the view that a board decision should be treated differently under the Wunder-lich Act from a determination by the head of the agency. 406 U.S. at 18.
Our decisions since S&E are likewise in harmony with the position that, once a dispute has been resolved by a contract appeals board and the contractor accepts that
In Pierce Associates, Inc., No. 385-78, defendant charges that the board decision is improper because its factual findings are not supported by substantial evidence, the decision was arbitrary and capricious, and was also grounded in errors of law. In that respect the case before us is precisely on all fours with S & E Contractors, 406 U.S. at 3, as involving an attack by the defendant on administrative findings of fact. In S & E the Supreme Court indicated clearly that neither facts nor law were to be reviewed.
In Fischbach and Moore, No. 377-78, the defendant’s only charge of invalidity is that the board’s allowance of a profit factor measured by interest was erroneous as a matter of law, because contrary to the prohibition against an interest award (unless affirmatively authorized by contract or statute). We agree that on this score there is grave doubt as to the correctness of the board’s legal ruling. See Framlau v. United States, 215 Ct. Cl. 185, 196-99, 568 F.2d 687, 693-95 (1977);
IV.
It follows from our holdings in Parts II and III, supra, that it was a breach of contract for U.S.I.A. to refuse to pay Fischbach and Moore, in No. 377-78, the $190,000 still owing from the award of the ASBCA, and for G.S.A. to refuse to allow the G.S.A. contracting officer to negotiate and, if necessary, determine the amount of the equitable adjustment owing to Pierce Associates, Inc., in No. 385-78, under the decision of the GSBCA. In neither case were the requirements of the Disputes clause, calling in these cases for acceptance of the board determinations without further litigation or delay, observed by the Government. These refusals were substantial breaches, vindicable in this court. De Mauro Constr. Corp. v. United States, 215 Ct. Cl. 364, 376-77, 568 F.2d 1322, 1329 (1978); Manpower Inc. of Tidewater v. United States, 206 Ct. Cl. 726, 731, 513 F.2d 1396, 1398 (1975); Universal Ecsco Corp. v. United States, 181 Ct. Cl. 10, 18-19, 385 F.2d 421, 425-26 (1967); New York Shipbuilding Corp. v. United States, 180 Ct. Cl. 446, 461-64, 385 F.2d 427, 436-38 (1967).
In Fischbach and Moore, No. 377-78, there is no need for any further proceedings. Under the board’s award, plaintiff is still owed $190,000, and we can enter judgment for that amount.
In Pierce Associates, Inc., No. 385-78, the amount of the equitable adjustment is still to be determined.
CONCLUSION
In No. 377-78, plaintiffs motion for summary judgment is granted, defendant’s motion is denied, and judgment is entered for plaintiff in the sum of One Hundred and Ninety Thousand Dollars ($190,000).
In No. 385-78, plaintiffs motion for judgment on the pleadings is granted,
The eases were both filed well before the effective date of the Contract Disputes Act of 1978, Pub. L. No. 95-563, 92 Stat. 2383, 41 U.S.C. §§ 601 et seq. and are not governed by that statute. See note 12, infra.
The relevant, undisputed facts are shown by the cross-motions for summary judgment.
In their briefs on plaintiffs motion for judgment on the pleadings or, alternatively, for summary judgment, both parties agree on these relevant facts.
Ruling that the ease at the outset required only a consideration of the Government’s right to compel review by its refusal to honor the finality of the administrative decision (which plaintiff in no way contests), the trial judge ordered plaintiff to file such a motion.
Fraud and bad faith on the part of the contractor were not involved in S & E Contractors, just as they are not asserted by the defendant in the present cases.
In both cases the contracts contained the standard Disputes clause, with immaterial variations. These clauses each provided for the contractor’s appeal from a contracting officer’s decision to be decided by "the head of the agency or his duly
The Director of U.S.I.A. had delegated his authority to decide Disputes clause controversies to the ASBCA. 41 C.F.R. § 19-60.000 (1976), provided that the ASBCA was "designated the authorized representative of the Director of the U.S. Information Agency to hear, consider, and determine appeals by contractors from final decisions of contracting officers * * *,” and 41 C.F.R. § 19-60.402 (1976) declared that the "Armed Services Board of Contract Appeals is the authorized representative of the Director, U.S. Information Agency, in hearing, considering and determining, as fully and finally as might the Director, U.S. Information Agency:
(a) Appeals by contractors from decisions of contracting officers * * *” (emphasis added).
There is no contention that the Director lacked authority to make this delegation.
Similarly, the Administrator of G.S.A. had expressly delegated his Disputes clause authority to the General Services Administration Board of Contract Appeals and likewise declared that "The Board has authority to determine appeals falling within the scope of its jurisdiction as fully and finally as might the Administrator himself. (emphasis added). 41 C.F.R. § 5A-60.101 (1)(1976). Here, too, there is no argument that the Administrator lacked power to make such a delegation, and the statutory basis for the delegation is plain. See 41 U.S.C. § 257(a).
We have consistently held that where the contract or the controlling regulations designate (without qualification) a specific officer or body as the one to render a contractual decision under a Disputes clause (or comparable provision), other persons (including higher officials) cannot displace the designated decision-maker. See New York Shipbuilding Corp. v. United States, 180 Ct. Cl. 446, 457-61, 385 F.2d 427, 433-36 (1967); Schlesinger v. United States, 182 Ct. Cl. 571, 581-84, 390 F.2d 702, 708-09 (1968); General Electric Co. v. United States, 188 Ct. Cl. 620, 629-30, 412 F.2d 1215, 1221-22 (1969); Southern Waldrip and Harvick Co. v. United States, 167 Ct. Cl. 488, 495-97, 334 F.2d 245, 249-50 (1964).
Neither the Director, U.S.I.A., nor the Administrator of G.S.A. had qualified the delegations referred to in note 6, supra, nor had they indicated in any way that they
In No. 385-78, Pierce Associates, Inc., the then Administrator of G.S.A. has given an affidavit saying, conclusorily, that he interpreted G.S.A. regulations "as not precluding the Administrator from making a decision contrary to the decision of the Board.” We find no support for this position and hold that it is contrary to the text, purpose, and history of the delegation to the board and the relevant G.S.A regulations. See also note 11, infra.
The Court pointed out in S&E that "[t]he purpose [of the Disputes clause system] of avoiding 'vexatious litigation’ would not be served, however, by substituting the action of officials acting in derogation of the contract (footnote omitted). The result in some cases might be sheer disaster. In the present case nearly a decade has passed since petitioner [S & E] completed the performance of a contract under which the only agency empowered to act determined that it was entitled to payment. To postpone payment for such a period is to sanction precisely the sort of 'vexatious litigation’ which the disputes process was designed to avoid.” 406 U.S. at 8.
Justice Blackmun’s opinion pointed out the anomaly of giving finality to a contracting officer’s decision favoring the contractor "while a decision at the higher level of the agency itself does not.” In that connection he quoted at length from the dissenting opinion of Judge Collins in this court which explicitly refers to board decisions favorable to the contractor. 406 U.S. at 20-21.
This court’s S&E opinion, which the Supreme Court reviewed, pointed out that the Secretary of Defense and the Administrator of G.S.A. had reserved to themselves no power of review or ratification of Board decisions. 193 Ct. Cl. at 348, 433 F.2d at 1379. It can be assumed, therefore, that the Supreme Court knew that at least the main procurement agencies have given final authority to their boards of contract appeals.
So far as we are aware, very few, if any, agency heads have such reservations in effect, or have had for many years, with respect to boards of contract appeals. Prior to the 1974 rules (which govern No. 385-78) the Administrator of G.S.A. did reserve the right initially to decide an appeal himself (instead of having the board do it), but even then he reserved no power to review or reverse a board decision made by the board in ordinary course. See Rules of the General Services Administration Board of Contract Appeals, Preface to Rules (November 2, 1964); and second paragraph of note 10, supra. It is relevant that the 1964 Rules provided that when the Administrator reserved initial decision for himself he could still have the board submit findings and recommendations, but it is plain, contrary to the normal situation, that in those special circumstances the board acted only in an advisory capacity and the Administrator was the deciding official.
For the future the Contract Disputes Act of 1978, Pub. L. No. 95-563, 92 Stat. 2383, 41 U.S.C. §§ 601 et seq., provides in section 8(g)(1)(B) that an agency head may appeal an adverse board decision to this court if he determines an appeal should be taken and receives the prior approval of the Attorney General. See also section 10(b) and (c). This part of the new Act does not govern or apply to the present cases. See note 1, supra.
The Framlau decision refused to follow the board’s decision in the instant Fischbach & Moore case. 215 Ct. Cl. at 199, 568 F.2d at 694.
The Court’s opinion does not even discuss the content of the legal issues raised by the Government in S & E though it observes that such issues were included in the attack on the AEC’s determination. 406 U.S. at 3.
There is no basis for simply accepting, without consideration or probing, plaintiffs claim to the G.S.A. of $700,819 as the proper sum.
Because the pleadings contain all the appropriate information for our disposition of the case, it is unnecessary to consider plaintiffs alternative motion for summary judgment.