579 F.2d 586 | Ct. Cl. | 1978
Lead Opinion
delivered the opinion of the court: Grumman Aerospace Corp. seeks review under the Wunderlich Act, 41 U.S.C. §§ 321,322 (1970), of two decisions of the National Aeronautical Space Administration Board of Contract Appeals (NASA BCA) on the company’s right to reimbursement, under cost-plus-fixed-fee contracts with NASA and the Department of the Navy,
On November 30, 1960, Grumman was issued a letter contract by NASA for the design and development of an Orbiting Astronomical Observatory satellite and related ground equipment. The formalized contract included the standard clauses prescribed by NASA Procurement Regulations for use in cost-reimbursement research and development contracts.
Renegotiation of Grumman’s earnings in 1966 had a slightly different history. Following Grumman’s refusal to accept the Regional Board’s August 15, 1967 final recommendation that it had earned excessive profits in 1966, the statutory Board confirmed, on December 16, 1970, the Regional Board’s decision as to the existence of excessive profits. Plaintiff was granted repeated extensions of time to indicate whether it would enter into a refund agreement on the basis of that decision. However, a unilateral order for 1966 was never issued because Grumman’s December 15, 1972 offer of full settlement for 1965 and 1966 was accepted by the Government in February 1973.
During its proceedings before the Renegotiation Board and pending its de novo appeal to the court, Grumman was also involved in a suit under the Freedom of Information Act (FOIA), 5 U.S.C. § 552 (1970) (amended 1976), to force disclosure to it of two kinds of information used by the Board in determining the excessiveness of its profits for 1965 and 1966. The first request, made to the Board in April 1968 (after the Board’s initial determination of the excessiveness of the profits earned in 1965, but prior to the issuance of its unilateral order), sought disclosure of "the final opinions, determinations, unilateral orders, agreements, clearance notices and letters not to proceed, as well as the written summaries of facts and reasons upon which such were based, issued in the adjudication of renegotiation cases from 1962-65 involving fourteen of its competitors.” Grumman’s request was made "as further assistance in enabling us to determine whether to enter into an agreement with the Board.” On May 21, 1968, the date of the Board’s unilateral order for 1965, the Board upheld its General Counsel’s denial of this request on the basis that the records requested were subject to exemptions under the FOIA set forth in subsections (b)(3) and (b)(4),
On June 27, 1968, Grumman filed suit in the District Court for the District of Columbia under 5 U.S.C. § 552(a)(3) (1970) (amended 1974), seeking to enjoin the Board from withholding, and ordering the production of, the records relating to its competitors’ renegotiation cases and the documents concerning its own case. The District Court granted the Government’s motion for summary judgment without opinion. On appeal, the Court of Appeals held that plaintiff was entitled to access to the records and documents after suitable deletions by the Board of confidential commercial or financial information, as required by exemption (b)(4) of the Freedom of Information Act, see note 7, supra. Grumman Aircraft Eng’r Corp. v. Renegotiation Board, 425 F.2d 578 (D.C. Cir. 1&70). On remand, the District Court held that summaries of facts and reasons,
Legal and accounting fees incurred in the renegotiation proceedings and in the FOIA suit were at stake in the NASA BCA decision we are asked to review. Plaintiff did not seek reimbursement of those fees as such, but only as part of the general and administrative expenses allocated to the particular contract (No. NAS5-814). Grumman’s expenses for these outside legal and accounting fees can be separated into three categories: (1) costs incurred in proceedings before the Renegotiation Board; (2) costs of appealing the Board’s unilateral order for 1965, including the costs of settlement negotiations pending such judicial redetermination, and (3) the expenses of suing to compel disclosure, under the Freedom of Information Act, of information used by the Renegotiation Board in making its decision. Plaintiff, however, did not so distinguish its legal and accounting fees incurred during 1970, 1971, and 1972, but instead recorded and charged them as a general and administrative expense, thereby allocating them among all of its contracts on a total cost input basis.
Before the NASA Board, the Government conceded the allowability of those legal and accounting fees incurred before the Renegotiation Board on the theory that expenses, such as these, incurred in connection with the preparation of reports designed to help settle an issue before or during the formulation of the final Government position (unilateral order) were allowable, while subsequent expenses incurred in an adversarial relationship to that position were disallowed as "claims against the Government.” Following the defendant’s concession, the NASA Board granted Grumman’s expenses of pursuing renegotiation before the Renegotiation Board’s unilateral order of May 21, 1968 (for the 1965 year) and "with regard to its 1966 renegotiation case wherein at the instance of [plaintiff] a unilateral order was never issued, prior to the [Renegotiation] Board’s determination of excess profits dated December 16, 1970.” The NASA Board disallowed all the other legal and accounting expenses which were claimed.
In this court, the Government does not challenge the NASA Board’s decision insofar as it awarded reimbursement to Grumman. That portion of the administrative determination has not been put before us and even if we could we have no occasion to probe into it for ourselves. We shall be concerned only with the portion of Grumman’s demand which the NASA BCA rejected. In doing so, we shall treat separately with the disallowed expenses in the renegotiation proceedings themselves and then with those involved in the FOIA suit.
As for the renegotiation proceeding itself, Grumman does not deny that "prosecution of claims against the Government” — the ASPR phrase see note 5, supra, we have to construe — includes (at the least) adversary monetary demands on the Government for sums the claimant alleges are owing. See Part III, infra.
a. Relying heavily upon certain language in Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1 (1974), plaintiff asserts that renegotiation consists of a series of stages of bargaining and consultation as to the appropriate level of profits — with each stage free to make new findings. When the proceedings leave the Renegotiation Board because the contractor and the Board cannot agree, the transfer to this court is alleged to be no more significant than the transfer between prior levels of negotiation under the Board — that is, the whole continuum from the first step in the administrative board through resolution in this court is merely a series of stages in a single process of negotiation. Issuance of a unilateral order does not, it is said, transform the nature of the proceeding into the prosecution of a claim by the contractor against the Government; rather it constitutes another factor in the contractor’s calculus in deciding whether to reach an agreement with the Government.
We do not, however, see renegotiation as a unique or distinctive process for the purposes of cost allowability; the similarities of proceedings before the Renegotiation Board and before a contracting officer in "under the contract” disputes make relevant the analogy to contract-appeals litigation (administrative and judicial) — the cost of which
The sum of it is that, for present purposes, renegotiation does not differ significantly from contract disputes, and therefore that plaintiff, which accepts the application of the ASPR clause to professional fees incurred in the course of an appeal to a board of contract appeals or in a court suit to review such a board decision (see, e.g., Reed & Prince Mfg. Co., ASBCA No. 3172, 59-1 BCA ¶ 2172 (1959), note 18, infra), cannot complain that it is improper to reimburse professional expenses at one stage of a continuous process while denying reimbursement at a later step; it is common to disallow such costs incurred in appealing a contracting officer’s final decision as constituting the "prosecution of a claim against the Government, see 3 J. McBride and I. Wachtel, Government Contracts, § 24.240 [10] (1974), even though the appeal is also part of a continuous process undertaken by the claimant.
Certainly, a renegotiation suit in this court differs so drastically from a proceeding before the Renegotiation Board — in the formal nature and due process of the proceedings here, the availability of discovery, the existence of other procedural and substantive legal rights — that the carrying on of renegotiation litigation in this court can properly be described as "prosecution of a claim” even if the parallel characterization for Renegotiation Board proceedings would be negotiation and bargaining.
This Lykes Bros, statement is not dispositive because the opinion makes clear that it was deciding an issue wholly different from the one now before us. In Lykes Bros., the court drew support for its decision that the Government should bear the burden of persuasion by observing that "perhaps the best analogy involves those cases before the boards of contract appeals in which a contractor appeals from a contracting officer’s assessment of extra costs,” 198 Ct. Cl. at 329, 459 F.2d at 1402-03. "Here, as in those cases,” the court continued, "the Government claims that the contractor owes it money.” 198 Ct. Cl. at 330, 459 F.2d at 1403. The court’s purpose in drawing the analogy was to note that, in that type of contract case, the Government also had the burden of proof in the de novo hearing before the appeals board. Yet at the time Lykes Bros, was decided, a long-standing board of contract appeals case, interpreting ASPR 15-205.31(d) and identical language in a related ASPR, had indicated that a contractor appealing an excess cost determination was prosecuting a claim against the Government for cost-allowability purposes, Reed & Prince Mfg. Co., ASBCA No. 3172, 59-1 BCA ¶ 2172, (1959) see note 18, infra; and this was so notwithstanding that the burden of proof was on the Government, Eastern Tool & Mfg. Co., ASBCA No. 4815, 58-2 BCA ¶ 1947 (1958), and notwithstanding the Government’s assertion in that type of case that the contractor owed it money, Lykes Bros. S.S. Co. v. United States, 198 Ct. Cl. at 329-30, 459 F.2d at 1402-03. This explicit reliance in Lykes Bros, upon the rule in excess cost cases makes it apparent that the Lykes Bros, comment with regard to burden of proof in the renegotiation process is not dispositive in the different context we now have.
c. Having rejected plaintiffs reasons why its case (as to the renegotiation aspects) differs from the rule applicable to reimbursement of fees incurred in contract disputes, we hold that a renegotiation suit in our court falls under ASPR 15-205.31(d). Whether viewed as a challenge to a final Government position or as the end of non-adversarial negotiations, a contractor’s failure to accept the Board’s unilateral order and its seeking of a de novo redetermination in the Court of Claims is the prosecution of a claim against the Government.
There remains the question of the fees expended by Grumman in pursuing its Freedom of Information Act suit in 1970, 1971, and 1972. On that aspect of the case, the controlling factor is, in our view, that the ASPR clause relating to "prosecution of claims against the Government” covers monetary claims only (or claims for property), not demands or suits against the Government for other types of relief.
The proscription on allowance for reimbursement of expenditures for prosecuting claims against the Government goes back at least to Treasury Department Regulation T.D. 5000, 1940-2 Cum Bull. 397, governing cost computations under the Vinson-Trammell Act which limited profits on certain war and defense items (now 10 U.S.C. §§2382, 7300 (1970)). At that time and for many years thereafter, the normal and usual understanding of a "claim against the Government” was a demand for money or property as of right. See United States v. McNinch, 356 U.S. 595, 599 (1958); United States v. Tieger, 234 F.2d 589, 591 (3rd Cir.), cert. denied, 352 U.S. 941 (1956). This traditional understanding of "claim against the Government” is reflected in the name of our court and the limitation of our jurisdiction to "judgments for money,” United States v. Alire, 73 U.S. (6 Wall.) 573, 575 (1868); see United States v. King, 395 U.S. 1, 2-3 (1969). Similarly with our basic jurisdictional statute, 28 U.S.C. § 1491 (1970 & Supp. V 1975), which refers and has long referred to a "claim against the United States” as meaning only a pecuniary demand. When T.D. 5000 was formulated in 1940 and even when this "prosecution of claims” provision was first
The same result emerges from the present structure of ASPR 15-205.31 itself. In that subsection, "prosecution of claims against the Government” is juxtaposed to disal-lowance of "defense of antitrust suits”; had "claim” been defined as broadly as is advocated by the Government — any demand on the Government for some action as a matter of right or duty or to forbear from some activity as a matter of duty — the drafters would not have had to exclude antitrust litigation explicitly. Similarly the disputed phrase appears even more particularized when compared to the exclusion of professional fees incurred in connection with "patent infringement litigation”; had the drafters desired to exclude the expenses of "litigating” with or suing the Government, as defendant has urged, it seems plain that they knew how to use language to accomplish that result.
The NASA Board felt constrained to adopt the broader definition of "claim” in order to avoid reimbursing contractors for fees incurred in injunctive and/or private attorney general litigation, as well as for cases involving contractor resistance to Government assertions that it is owed money. We need not decide here whether other types of injunctive suit are sufficiently related to a demand by the contractor for money so as to constitute a claim within the meaning of ASPR 15 — 205.31(d); nor need we decide whether appeals from various kinds of contracting officer’s decisions, directing the transfer to or crediting to the
On this premise it is clear to us that plaintiffs expenses in pursuing its Freedom of Information Act suit, which sought to enjoin the Renegotiation Board from withholding certain evidence and to order it to produce that information, did not constitute the prosecution of a "claim” against the Government within the meaning of the ASPR regulation.
Plaintiffs legal and accounting expenses incurred in pursuing its 1965 renegotiation case subsequent to the Board’s unilateral order, and with respect to the 1966 year after December 16, 1970, are disallowed as constituting the prosecution of claims against the Government within the exclusionary provision of ASPR 15-205.31(d), while the legal expense incurred in its litigation to compel the production of Renegotiation Board information under the Freedom of Information Act is held to be reimbursable under ASPR 15-205.31(a) since it does not constitute a "claim” within the meaning of subsection (d)’s exclusion. The parties’ motions for summary judgment are granted and denied to this extent and the petition is partially dismissed in accord with this disposition. The case is remanded under Rule 149 to the NASA Board of Contract Appeals to determine the quantum of the allowed expenses and fees. Further proceedings in this court are suspended for a period not to exceed six (6) months, and plaintiffs attorney is designated to advise the court under Rule 149(f).
The parties have stipulated that the decision on the contract now before us (NAS5-814) would determine the cost allowability of these fees in other contracts with NASA and the Department of the Navy which were the subject of separate appeals to the NASA BCA and the Armed Services Board of Contract Appeals (ASBCA).
The first NASA BCA decision denied reimbursement of some of these expenses; the second Board decision denied plaintiffs motion to reopen the hearing in order to permit it to introduce additional evidence which it alleged would alter the previous Board decision denying reimbursement.
The Allowable Cost, Fixed Fee and Payment clause provided in pertinent part: "ALLOWABLE COST, FIXED FEE AND PAYMENT (July 1970)
(a) For the performance of this contract, the Government shall pay to the Contractor:
(i) the cost thereof (hereinafter referred to as 'allowable cost’) determined by the Contracting Officer to be allowable in accordance with—
(A) Part 15, Subpart 2 of the NASA Procurement Regulation as in effect on the date of this contract; and
(B) the terms of this contract; and
(ii) such fixed fee, if any, as may be provided for in the Schedule.
"(d) At any time or times prior to final payment under this contract the Contracting Officer may have the invoices or vouchers and statements of cost audited. Each payment theretofore made shall be subject to reduction for amounts included in the related invoice or voucher which are found by the Contracting Officer, on the basis of such audit, not to constitute allowable cost. Any payment may be reduced for overpayments, or increased for underpayments, on preceding invoices or vouchers.”
Article XX of the contract provided:
"ARTICLE XX — FINAL AUDIT
"This contract shall be subject to a final audit of costs by a Government Agency prior to approval of a final or completion voucher.
"It is understood and agreed that Part II, Section 15 of ASPR shall prevail with respect to allowability of cost hereunder. The Contractor shall be reimbursed at billing rates acceptable to the Contracting Officer or his authorized representative, subject to appropriate adjustment when the final rates for that period are established.”
For the purposes of this case, the 1960 Edition of ASPR Section XV contained essentially the same provisions as the present Section XV of both ASPR and NASA PR. In conformity with the Board’s opinion and the parties’ briefs before us, we will refer to and cite only the current ASPR provisions.
Section 15-205.31, 32 C.F.R. § XV, Part II (1976), provides in pertinent part:
*290 "15-205.31 Professional and Consultant Service Costs — Legal, Accounting Engineering, and Other.
"(a) Costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill and who are not officers or employees of the contractor are allowable, subject to (b), (c), and (d) below when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Government (but see 15-205.26).
"(d) Costs of legal, accounting, and consulting services, and related costs, incurred in connection with organization and reorganization, defense of anti-trust suits, and the prosecution of claims against the Government, are unallowable. Costs of legal, accounting, and consulting services, and related costs, incurred in connection with patent infringement litigation, are unallowable unless otherwise provided for in the contract. (Also see 15-205.23.)”
For a detailed description of the Renegotiation Board’s procedures, see Renegotiation Board v. Grumman Aircraft Eng’r Corp., 421 U.S. 168, 170-79 (1975); Bannercraft Clothing Co. v. Renegotiation Board, 466 F.2d 345, 349-50 (D.C. Cir. 1972), rev’d, 415 U.S. 1 (1974).
5 U.S.C. § 552(b)(3M4) (1970) (amended 1976) provides:
*292 "This section does not apply to matters that are—
"(3) specifically exempt from disclosure by statute;
"(4) trade secrets and commercial or financial information obtained from a person and privileged or confidential;”
Regulation 1480.9(a)(3M4), 32 C.F.R. § 1480.9(a)(3H4) (1977) provides:
"(a) In general. The provisions of [5 U.S.C. § 552] do not apply to the following:
"(3) Matters specifically exempted from disclosure by statute * * * *
"(4) Trade secrets and commercial, financial or other information that is privileged or that was given to the Board in confidence or would not customarily be made public by the person from whom it was obtained.”
Regulation 1480.9(b), 32 C.F.R. § 1480.9(b) (1968) (revoked 1971) provides:
"(b) Certain records. Without limiting the generality of the provisions of paragraph (a) * * * the following are exempt:
"(1) Financial statements filed with the Board pursuant to § 1470.3(a) and (b) of this subchapter.
"(2) Reports from any Department, or from any contractor, providing information to the Board for renegotiation purposes with respect to the performance of any contract or subcontract
"(3) Determinations, unilateral orders, agreements, clearance notices and letters not to proceed * * * *”
No issue is now raised as to allocation of the fees (if reimbursable) or as to their reasonableness. Although 85% of Grumman’s contracts at this time were renegotiate, we do not know what portion of such contracts were of the cost-reimbursement type and thus what portion of such expense is actually sought to be recovered in this suit.
The DCAA is the agency of the Department of Defense authorized to audit contractors’ records and recommend to cognizant contracting officers the extent to which payments should issue against vouchers and invoices submitted by contractors.
As part of a compromise agreement covering its 1969 renegotiable year, Grumman had previously concurred in a similar disallowance of these fees for that year.
In this connection, plaintiff does not dispute the contract rule, accepted by the NASA B.oard, that normally when a dispute “under the contract” goes on appeal to a board of contract appeals or into court litigation it becomes a “claim” which is being “prosecuted.”
Recognition of this difference has been implicit in Supreme Court discussions of the renegotiation process where our role has been described as the "post administrative de novo proceeding” and "the judicial remedy at law provided by the Renegotiation Act”, and where the Court has noted, "There is no limitation or denial of the contractor’s litigation rights when the renegotiation process is at an end. The contractor may institute its de novo proceeding in the Court of Claims, unfettered by any prejudice from the agency proceeding * * Renegotiation Board v. Banner-craft Clothing Co., 415 U.S. 1, 21, 23 (1974).
Grumman would have us view the repeated judicial reluctance to interfere with the renegotiation process (Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. 1 (1974); Aircraft & Diesel Equip. Corp. v. Hirsch, 331 U.S. 752 (1947); Lichter v. United States, 334 U.S. 742 (1948); Macauley v. Waterman S.S. Corp., 327 U.S. 540 (1946)) as proof that our renegotiation proceedings are an integral part of a unified administrative process and that this unity establishes the integral nature of the relationship between the Renegotiation Board and proceedings in our court. We need not decide whether an Article III court, such as ours, can ever be considered part of an administrative process, see, Renegotiation Board v. Bannercraft Clothing Co., 415 U.S. at 21, 23, 27; Bannercraft Clothing Co. v. Renegotiation Board, 466 F.2d 345, 350
As a corollary to its argument that the Government is making a claim against the contractor in renegotiation, plaintiff also makes a vague reference to cost allowability of professional fees when necessarily incurred by reason of some act or demand of the Government. The cases cited, The Remler Co., ASBCA No. 5354. 59-1 BCA ¶ 2264 (1959), Lake Union Drydock Co., ASBCA No. 3073, 59-1 BCA ¶ 2229 (1959), permitted recovery primarily because the contractor equitably deserved reimbursement due to unreasonable refusals and demands by the Government. These equitable considerations are not applicable to the Government’s good faith assertion that the contractor had earned excessive profits.
That decision there states:
"In fact, a renegotiation case is unlike any other case filed in this court, because the plaintiff here [the contractor] is not seeking to recover a money judgment against the United States. It is the Government, based upon a unilateral order of the Renegotiation Board, which asserts that the contractor owes it money. If the contractor wholly prevails, the court will enter a declaratory judgment that no excessive profits were realized during the year involved.”
Also, see Lykes Bros. S. S. Co. v. United States, 198 Ct. Cl. at 328, 459 F.2d at 1402; Aero Spacelines, Inc. v. United States, 208 Ct. Cl. 704, 715, 530 F.2d 324, 332 (1976).
Certainly Lykes Bros., in holding that the Government bears the burden of proof in renegotiation, does not stand for the proposition that the party with that burden in a proceeding is the one who is making a claim against the other for all purposes. And this is as it should be for decisions allocating burdens of proof consider factors not relevant to cost allowability. Important in Lykes Bros., for example, was the recognition that placing the burden upon the contractor might run askew of statutory commands that our redetermination proceedings not be treated as review of the Board’s order, 50 U.S.C. App. §§ 1218, 1215(a) (1970 & Supp. V*, 1975). Lykes
Because we find the nature of the suit sufficiently related to a demand for money for purposes of ASPR 15-205.31(d), we need not consider the Government’s assertion that title to the money paid under the contract did not pass to the contractor because all payments were subject to divestment under either the renegotiation clause or the final audit clause, see note 3 supra.
In Reed & Prince Mfg. Co., ASBCA No. 3172, 59-1 BCA ¶ 2172 (1959), the Government had asserted that the contractor owed it money for default and reprocurement costs. The contractor’s demand for reimbursement for attorneys fees incurred in resisting that assertion was denied under ASPR 15-205.31(d) and another regulation using identical language. Although the contractor’s successful suit similarly resulted in a declaration that it did not owe the Government the money the latter alleged was due it, the board found such suit to be a claim against the Government, stating:
"Suppose that appellant could have and actually did litigate the validity of the default action after, instead of before, it had paid the assessed default costs and reprocurement costs to the Government. Could it then urge that what it did was not the prosecution of a claim against the United States? We think not. In substance, except for bookkeeping, the two actions are the same.”
Other board cases have stated the proposition more broadly. In Drexel Dynamics Corp., ASBCA Nos. 9502, 9617, 9793, 10608, 67-2 BCA ¶ 6410 (1967), the Government asserted the contractor owed it money through counterclaims for unliquidated progress payments, excess costs of reprocurement and actual damages. In denying the contractor’s claim for reimbursement of the attorneys fees expended in defense of these counterclaims, the Board stated, "We can see no reason for making the defense of a Government claim an exception to the general rule prohibiting payment of attorneys fees.” In Olive Hill Mfg Co. ASBCA No.. 8365, 65-1 BCA ¶ 4863 (1965), the contractor’s reimbursement for attorneys fees in defense of the Government’s assertion of entitlement to a downward equitable adjustment resulting from a change order was denied, the board saying, "We see no difference in principle between a case where the appellant is asserting a right against the Government and one when it is resisting a claim by the Government.” But cf., Hayes Int’l Corp., ASBCA No. 18447, 75-1 BCA j| 11,076(1975).
Plaintiff has explicitly disavowed different treatment of legal and accounting
Also, Grumman has not argued that its professional fees were incurred in pursuit of settlement negotiations which would have made unnecessary suit in this court, and whose nature and form were more akin to expenses incurred before the Renegotiation Board. Cf. Acme Process Equip. Co. v. United States, 171 Ct. Cl. 251, 262, 347 F.2d 538, 545-46 (1965) (nature and form of attorneys fees expended in settlement negotiations with contracting officer subsequent to his final decision held reimbursable under contract prohibiting reimbursement for formal appeal of such decision).
A fortiori, the concept of "private attorney general” suits against the Government was unknown (or almost so).
Indeed, at oral argument the Government conceded that such a suit did not constitute a demand for money within the narrower, monetary, definition of "claim.”
This holding makes it unnecessary to consider plaintiffs challenge to the decision of the NASA Board refusing to reopen the case.
Concurrence in Part
with whom Kunzig, Judge, joins, concurring and dissenting:
I agree with and join in Parts I and III of the court’s opinion. As to Part II, respectfully, I dissent. I would not allow defendant’s motion for summary judgment in any part, nor would I dismiss any part of the petition. I would remand all parts of the claim to the NASA Board for determination of quantum.
Turning first to the parts I agree with, as to Part III, I would add the caveat that the Freedom of Information Act (FOIA), 5 U.S.C. § 552, as amended, appears to me to have been intended, among other things, to permit discovery by persons carrying on controversies with the government, that have not yet ripened into litigation. If such a person should be prosecuting a claim properly defined, at the time he made his FOIA demand, and if the demand was demonstrably ancillary to such prosecution, I would be inclined to exclude the case from our Part III analysis.
I would apply the court’s Part III analysis and interpretation of the Armed Services Procurement Regulation (ASPR) at issue, § 15.205.31(d) also to Part II. I would add that in situations where the demand for money was originally by the government, and was collected and converted somewhere along the line to a petition against the government, I would designate the claim according to its original character. Thus for example, if Mr. A is notified that the Commissioner of Internal Revenue has determined a deficiency in his income tax payments for a prior year, I would for purposes of § 15.205.31(d), and only for those purposes, treat any subsequent litigation as not prosecution of a claim against the government, no matter who initiated it, at least so long as the only procedure available required Mr. A to assume the role of petitioner, which the government maneuvered him into by statutes and regulations adopted to better its own position and worsen that of Mr. A.
My analysis starts with the proposition that § 15-205.31(d) is hopelessly and utterly ambiguous, that is, impossible to construe by mere scrutiny of its terms. As to this, the divergent interpretations given in this case in the executive branch, and the conflicting views among our own judges, are res ipsa loquitur. Should the Supreme Court take this case — as I believe there is need for it to do — it well may come up with a sixth interpretation all its own, as it has recently done in a tax case involving similar ambiguities, Commissioner v. Standard Life & Accident Ins. Co., 433 U.S. 148 (1977).
The usual recourse in such cases to legislative history, is here unavailing. Those who put forward T.D. 5000 in 1940 have gone from the scene and not left any explanation of their reasoning behind. The court opines in Part III that their purpose was to free the government from having to
The penalty here is assessed for exercise of a constitutional right, insofar as the statutory provisions for a due process hearing, once in the Tax Court, now in this, were essential to save the constitutionality of the renegotiation scheme. See Lichter v. United States, 334 U.S. 742, 791 (1948).
The interpretation given by the court leads to a plainly overbroad result in the case of tax litigation. When the government goes into the market place to purchase goods and services, it takes on a different legal identity from the one it ordinarily occupies as a sovereign.
Thus the procurement officer is not responsible for "sovereign acts” by other branches of the government, that interfere with performance of the contract, though the same acts done by him would constitute breaches. Cf. J. A. Jones Construction Co. v. United States, 182 Ct. Cl. 615, 390 F.2d 886 (1968). By the same token, if not required by statute it must be an abuse for the procurement officer to frame his contracts to attempt to deter the contractor from carrying on tax litigation against another and different branch of the government.
The ambiguity of the phrase "claim against the Government” was first appreciated by the bar, I think, as a result of United States v. Bergson, 119 F.Supp 459 (1954). The United States Attorney obtained an indictment of Mr. Bergson for violating a statute prohibiting him, as an ex-government lawyer, from "prosecuting any claims against the United States involving any subject matter directly connected with which such person was so employed * * *,” 18 U.S.C. § 284, as then codified. Having been Assistant Attorney General in charge of the Antitrust Division, he was retained to obtain a "clearance letter” from his former division. The decision, which is still often cited, though it was by a single District Judge, construed the statutory language substantially as the court construes the instant ASPR provision in Part III, i.e., as applying solely to "claims against the United States Government for money or for property,” p. 464. Accordingly, Mr. Bergson enjoyed many fruitful years as an honored member of the D. C. Bar, passing away only recently. This may have been what
The present False Claims Act, 31 U.S.C. §§ 231, 235, though now divorced from any criminal provision, and prescribing civil penalties only, likewise limits the notion of a claim against the government to one involving "a demand for money or some transfer of public property.” United States v. McNinch, 356 U.S. 595, 599 (1958), recently reaffirmed in United States v. Bornstein, 423 U.S. 303, n. 8 at 313 (1976); see more extended discussion in Hageny v. United States, 215 Ct. Cl. 412, 437, 570 F. 2d 924, 938 (1978) (Nichols, J. concurring).
Defendant herein took the somewhat unusual step of citing a Trial Division opinion which is due to come before the court for review next October, O’Brien Gear & Machine Co. v. United States, No. 105-72 (Trial judge’s opinion filed August 16, 1977.) I should not and do not rely on its conclusions in the circumstances. It holds that plaintiff, a petitioner for renegotiation redetermination just as Grumman was, forfeited its claim for falsity in the proof under 28 U.S.C. § 2514, which so forfeits only "a claim against the United States * * *.” The able trial judge holds, for reasons which he gives, that the breadth of meaning of a "claim” under that statute is broader than in the criminal statutes and really covers all cases prosecuted in the U. S. Court of Claims, whether or not they are claims for money. I think even now I can rely on that exhaustive and brilliant analysis as supporting my proposition that the words "claim against the Government,” or "against the United States” are utterly and hopelessly ambiguous, and must vary in meaning with every context in which they are used. This is what Trial Judge Schwartz says.
The court relies on Board authority, largely on Reed & Prince Mfg. Co., ASBCA No. 3172, 59-1 BCA ¶ 2172, to the
The court makes no attempt in its Part II to show that the result reached is fair and reasonable; nor does it justify the difference in results in Parts II and III on fairness grounds. That kind of analysis would be gratutitous if the ASPR provision was clear, but here it is murky. When the legislators have failed to make their meaning clear, legislative history is unavailable, and valid precedent decisions cannot be found, it seems to me the time has come for the court to call into play its own notions of fairness. This is not to make ourselves moral adjudicators (cf. United States v. Oneida Nation of New York, ante, at 45, but because the authors of T.D. 5000 and the ASPR probably intended to be fair, if we call upon our own sense of fairness we may stumble upon what they intended.
The authors must have realized that mandatory disal-lowances of otherwise valid items of indirect cost would have an influence upon behavior, more or less according to the percentage of government cost type contracting on the contractor’s order board. If this item was a large one, and the business all of that type, the impact of disallowance
I think, too, that the authors would have thought it unfair to penalize a contractor for incurring overhead expenses it could not avoid. I think, if they had thought •about it, they would have excluded from the category of claims against the government, claims originating with the government. They would not have seen anything in the
I confess that my analysis has not been much aided by the efforts of both parties to put across their own theories of the nature of renegotiation, and a lot of briefing effort has been wasted so far as my feeble intellect is concerned.
It does stick in my mind as an incontrovertible fact that a unilateral order of the Renegotiation Board was and is a demand for money by the government. It may and may not be successful. There is nothing in the Renegotiation Act to require a contractor to set aside funds to pay future such demands. Solitron Devices, Inc. v. United States, 210 Ct. Cl. 352, 537 F.2d 417 (1976), cert. denied, 430 U.S. 930 (1977), and cases cited therein, illustrate a wide variety of instances where the contractor has not set money aside and as a result, is unable to pay the refund the board proposes. Contractors who cannot pay usually cannot obtain a bond to stay execution of the board’s order under 50 U.S.C. app. § 1218. Accordingly, the government is entitled to obtain before trial and normally does obtain in such cases a judgment in aid of execution, for which it asks in a pleading called a counterclaim. It is my impression that
Accordingly, I concur and dissent to the extent I have indicated.