UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 97-20281

CENTURY MARINE INCORPORATED,

Plaintiff-Appellant;

VERSUS

UNITED STATES OF AMERICA,

Defendant-Appellee.

Appeal from the United States District Court

For the Southern District of Texas

August 27, 1998

Before BARKSDALE, BENAVIDES and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

Appellant Cent ury Marine, Inc. (“Century”), appeals the

dist rict court’s dismissal of its claims for additional

compensation under a fixed-price vessel repair contract with the

Maritime Administration of the United States Department of

Transportation (“MARAD”). MARAD terminated the contract because of

Century’s default in failing to complete the work within the time

specified by the contract. Century filed suit against the United

States seeking to have the termination for default converted to a

termination for the Government’s convenience; and for payments in

addition to the amount MARAD had paid Century under the terminated2

contract. After a bench trial, the district court rej ected

Century’s dem ands and dismissed its suit with prejudice. We

affirm. On appeal Century does not contest the trial court’s

determination that its contract was properly ter minated for

default. Despite its default, Century argues that it is entitled

to recover an amount equal to the unpaid balance of the full fixed

price of the contract less the cost of completion of the unfinished

work under the contract. Century’s argument is contrary to well

established law and feder al regulations. Under the Government’s

termination of a fixed-price contract because of the contractor’s

default, the Government is not liable to the contractor for

unperformed or undelivered work. Anticipated but unearned profits

are not recoverable by the contractor when the Government

terminates the contract for the contractor’ s default or for the

convenience of th e Government. Century’s additional contention

that it should be compensated for extra work is also without merit.

There is warrant in the record and an applicable basis in law for

the district court’s rejection of this claim after a trial on the

merits.

I. FACTUAL AND PROCEDURAL BACKGROUND

In September 1992, Cent ury and MARAD entered into a fixedprice contract for the repair and renovation of cargo and ballast

tanks of the S.S. MOUNT WASHINGTON, a public vessel of the United

States. Thereafter, MARAD issued three contract modifications

(“Mods”) that increased the contract value by $1,050,000.000, for

a total contract amoun t of $8,521,910.000. When Century fell1 Pursuant to the Federal Acquisition Regulations, the

Go vernment may, by written notice of default to the contractor,

terminate the contract in whole or in part if the contractor fails

to perform the services within the time specified in the contract

or any extension. 48 C.F.R. § 52.249.8(a)(1)(i). “Federal

regulations which are based upon a grant of authority ‘have the

force and effect of law, and, if they are applicable, they must be

deemed terms of the contract even if not specifically set out

therein, knowledge of which is charged to the contractor.’”

General Eng’g & Mach. Wo rks v. O’Keefe, 9 91 F.2d 775, 780 (Fed.

Cir. 1993).

2 Under the Federal Acquisition Regulations, when the services

to be provided by the terminated contractor are still required

after default, the contracting officer shall repurchase the same

services against the contractor’s account as soon as practicable,

48 C.F.R. § 49.402-6(a), and the contractor is liable to the

Government for any excess costs i ncurred in acquiring services

similar to those terminated for default. 48 C.F.R. § 49.402-2(e).

3 behind schedule on the original completion date of May 3, 1993,

MARAD issued three additional Mods that extended the completion

date until September 15, 1993. Despite these extensions, Century

continued to fall behind its work schedule. When it became evident

that Century could not complete the contract timely, by letter

dated September 8, 1993, MARAD terminated Century for default. 1 At

the time of termination, MARAD ha d made progress payments to

Century of $5,903,135.50. On September 22, 1993, the Government

issued Modification No. 0009 (“Mod 9") to the contract that

adjusted the contract price for the value of the unfinished work,

and calculated the final progress payment to Century based on its

compl eted work. MARAD eventually retained another contractor to

finish Century’s work. 2

Mod 9, admitted as a Government exhibit at trial, sets forth

the percentage of completion of each work item, and adjusts the

total contract price by deducting the contract value of Century’s3 Under the Federal Acquisition Regulations, “the contracting

officer s hall use all retained percentages of progress payments

previously made to the contractor and any progress payments due for

work completed before the termination to liquidate the contractor’s

liability to the Government.” 48 C.F.R. § 49.406.

4 uncompleted work, estimated at $1,260,861.00. In Mod 9, MARAD

based the percentage of completion in part on Century’s own percent

completion fig ure provided in its last progress payment request

submitted to MARAD one week prior to termination, with this figure

adjusted for work accomplished by Century during the final week of

the terminated contract. The Government’s estimate in Mod 9 of the

contract value of Century’s uncompleted work also was based on a

thorough inspection and videotaping of each item of unfinished work

by Richard Volkmann, the contracting officer’s technical

representative, who testified at trial.

Based on the Government’s calculations in Mod 9, MARAD made a

final payment to Century of $409,023.56, representing compensation

for all work performed after the latest progress payment but before

Century was terminated for default. According to the contracting

officer’s decision denying Century’s administrative claims for

additional compensation, this final payment to Century represented:

(1) payment for the progress made by Century between the time of

its last progress payment and termination of the contract

($51,532.00); (2) payment of the balance of retainage owed to

Century after deducting the excess cost of procur e ment

($285,539.06) 3 ; and (3) payment of funds withheld at the direction

of the Government‘s legal department until a separate claim on

another contract was settled ($71,952.50).5

In July 1994, Century submitted a “Request For Equitable

Adjustment and For Conversion of a Termination For Default to a

Termination For Convenience .” Century’s Request For Equitable

Adjustment presented an administrative claim for additional

payments of a lmost $1.3 million under the contract, based on

Century’s allegations that MARAD had underestimated the percentage

of completion of finished work items in Mod 9, and that MARAD was

not entitled to retain excess costs of reprocurement from the

retainage withheld from the final payment to Century because

Century was wrongfully terminated. Century also asserted a claim

for $21,254 in extra work performed pursuant to Century’s Request

For D elivery Orders (RDOs). Finally, Century requested that its

termination for default be converted to a termination for

convenience.

In December 1994, the Government’s contracting officer issued

a final administrativ e decision on Century’s claims, denying any

further payments to Century. This 48-page decision, with attached

supporting exhibits, rebuts in detail each allegation in Century’s

Request For Equitable Adjustment, concluding that Century’s

“termination for default is valid,” and that Century “is not

entitled to a further equitable adjustment.”

In September 1994, pursuant to the Contract Disputes Act, 41

U.S.C. § 603, and the Suits in Admiralty Act, 46 U.S.C. § 741 e t

seq., Century sued the United States in the Court of Federal

Claims, which transferred the case to the Southern District of4 Under § 603 of the Contract Disputes Act, subject matter

jurisdiction in appeals of administrative decisions involving

federal maritime contracts vests in the federal distr ict courts,

rather than in the Court of Claims (now the Court of Federal

Claims) or the Court of Appeals for the Federal Circuit. B ethlehem

Steel Corp. v. Avondale Shipyards, Inc., 951 F.2d 92, 93, 94 (5th

Cir. 1992). Government maritime contracts are otherwise governed

by the Contract Disputes Act. Id. at 94.

6 Texas. 4 The United States elected not to file a counterclaim

a g ainst Century for liquidated damages, which are recoverable

against a contractor terminated for default. S ee 48 C.F.R. §§

49.402-6(c), 49.402-7, 49.402-2(e). Century’s claims were tried to

a judge in December 1996.

In the district court, Century presented no evidence

supporting the claim in its admin istrative level Request For

Equitable Adjustment that it was entitled to recover the excess

costs of reprocurement that the Government had deduct ed from

Century’s retainage. Exhibit K of the Contracting Officer’s

decision, which was the only evid ence of the Government’s excess

reprocurement costs an d the amount of retainage withheld at

termination, was withdrawn at trial after Century objected to its

admissibility.

On January 3, 1997, the district court issued findings of fact

and conclusions of law rejecting Century’s claims, finding that the

United States’ termination of Century for default was justified by

Century’s breach of the contract, and that Century had no valid

claim for an equitable adjustment to the contract. Also on January

3, 1997, the district court rendered a final judgment dismissing

Century’s claims against the United States with prejudice.7

On January 10, 1997 Century filed a Motion to Amend or Make

Additional Findings of Fact, asserting that Century had made a

p rima facie case on two claims that had not been rebutted by the

United States: (1) a claim for extra work performed on seven RDOs

in the amount of $20,583; and (2) a claim for the “contract

balance” due of $1,293,218.54 resulting from the following

computation:

Modified Contract Amount $8,521,910.00

Less-Payments and Deducts $6,492,159.46

Less-Work not performed $ 714,187.00

Less-Tow credit and Item 058 $ 22,345.00

Contract Balance Due $1,293,218.54

On March 4, 1997 the district court entered an order denying

Century’s Motion to Amend or Make Additional Findings of Fact.

Century appealed.

II. STANDARD OF REVIEW

The district court’s findings of fact must be reviewed under

the “clearly erroneous” standard of Fed R. Civ. P. 52(a). A

finding of fact is said to be “clearly erroneous” when,

not withstanding there is evidence to support it, the reviewing

court upon examination of the entire evidence is left with the

definite and firm conviction that a m istake has been committed.

Justiss Oil Co. v. Kerr-McGee Refining Corp., 75 F.3d 1057, 1062

(5th Cir. 1996) (citing United States v. United States Gypsum Co.,

333 U.S. 364, 395 (1948)). With respect to the legal conclusions

reached by the trial court on the basis of the facts so found, this

court will conduct a de novo review. Reich v. Lancaster, 55 F.3d8

1034, 1045 (5th Cir. 1995).

III. DISCUSSION

On appeal, Century does not contest the district court’s

determination that MARAD properly terminated the contract for

Century’s default. Nor does Century reurge its administrative

level claim that MARAD had with held an excessive amount of

retainage from the final payment to Century. Century argues only

that the district court’s judgment denying its claim s for the

“contract balance” and extra work was clearly erroneous and must be

reversed because: (1) Century made a prima facie case at trial for

its contract balance and extra work claims; (2) MARAD failed to

rebut Century’s proof on these claims; (3) the district court made

no express findings on each of th ese claims; and (4) no such

findings can be implied because an implied finding is not supported

by the evidence.

A. Century’s “Contract Balance” Claim

Century contends that it made out a prima facie case for

recovery of a “contract balance” of either $1,293,218.54 or

$768,889.54. It is undisputed that the total amount of the fixedprice contract, including all modifications, was $8,521,910.00, and

that MARAD had paid Century $6,492,159.46 for work completed prior

to Century’s termination for default, leaving an unpaid balance of

$2,029,750.54 und er the contract at that time. MARAD and Century

presented conflicting technical expert evidence as to the estimated

cost of completing the contract: Century’s estimate was $736,532.00

and MARAD’s was $1,260,861.00. Consequently, Century asserts,9

after subtracting the estimated cost of completing the work under

the contract from the unpaid balance, Century is entitled to the

difference, viz.

, either $1,293,218.54 or $768,889.54, depending on

whether the Century or the MARAD estimate is used.

Century’s argument lacks a sou nd basis in law. Termination

for default is generally the exercise of the Government’s

contractual right to completely or partially terminate a contract

because of th e contractor’s actual or anticipated failure to

perform its contractual obligations. 48 C.F.R. § 49.401(a). The

G overnment has the right to terminate a fixed-price contract for

default if the contractor fails to deliver the supplies or to

perform the services within the time specified in the contract. 48

C.F.R. § 49.402-1. Under a termination for default, the Government

is not liable for the contractor’s costs on undelivered work. 48

C.F.R. § 49.402-2(a). In contrast, under a fixed-price contract

terminated for the conven ience of the Government, a settlement

should compensate the contractor fairly for the work actually done

and for the preparations made for the terminated portions of the

contract, including a reasonable allowance for profit applicable to

that work and preparation s. 48 C.F.R. §§ 49.201, 49.202.

Anticipatory profits and consequential damages shall not be allowed

under either a terminati on for convenience or a termination for

default of a fixed-price contract. 48 C.F.R. §§ 49.201, 49.202,

49.402-2; S ee Mega Constr. Co. v. United States

, 29 Fed. Cl. 396,

475 (1993); G.L. Christian & Assocs. v. United States

, 312 F.2d

418, 426 (Ct. Cl.), cert. denied, 375 U.S. 954 (1963).10

Consequently, as a contractor terminated for default, Century

cannot, as a matter of law, recover the “unpaid balance” of the

contract less the “cost of completion” of the work under the

contract. To allow such recovery would permit Century to do

indirectly what it could not do directly, viz.

, recover anticipated

but unearned profits after the contract has been terminated because

of its default. A contractor’s right to recover for anticipated

profits arises only if the termination of the contract by the

Government is wrongful and constitutes a breach. G.L. Christian,

312 F.2d at 423 (citing United States v. Behan , 110 U.S. 338, 346

(1884); United States v. Spearin

, 248 U.S. 132, 138 (1918);

Broadbent Portable Laundry Corp. v. United States

, 56 Ct. Cl. 128,

132 (1921)). Any recovery of profits by a contractor on a contract

terminated because of its own default is limited to earned profit

on work actually performed prior to the termination. M ega Constr.

,

29 Fed. Cl. at 475.

B. Century’s Claim For Extra Work

Century argues that the district court’s findings and

conclusions are legally insufficient because the court made no

express finding addressing its e xtra work claim, and that any

implied finding by the court on the e xtra work issue is not

supported by the evidence.

R ule 52(a) of the Federal Rules of Civil Procedure provides

that “[i]n all actions tried upon the facts without a jury. . .,

the court shall find the facts specially and state separately its

conclusions of law thereon.

. . .” The articulation of findings of11

fact and conclusions of law allows this court to ascertain the

factual and legal bases for the district court’s decision, thereby

providing a sufficiently definite predicate for appellate review.

Chandler v. City of Dallas, 958 F.2d 85, 90 (5th Cir. 1992). But

Rule 52(a) “exacts neither punctilious detail nor slavish tracing

o f the claims issue by issue and witness by witness.” Burma

Navigation Corp. v. Reliant Seahorse M/V, 99 F.3d 652, 656 (5th

Cir. 1996) (quoting Schlesinger v. Herzog, 2 F.3d 135, 139 (5th

Cir. 1993)); see also Uni ted States v. Northside Realty Assocs.,

Inc., 4 74 F.2d 1164, 1170 n.5 (5th Cir. 1973) (“‘Courts need not

indulge in exegetics, or parse or declaim every fact and each

nuance and hypothesis.’”) (quoting Gulf King Shrimp Co. v. Wirtz,

407 F.2d 508, 516 (5th Cir. 1969)). The rule is satisfied if the

district court’s fi ndings give the reviewing court a clear

understanding of the basis for the decision. B urma Navigation, 99

F.3d at 656.

If a trial judge fa ils to make a specific finding on a

particular fact, the reviewing court may assume that the court

impliedly made a finding consistent wit h its general holding so

long as the implied finding is suppor ted by the evidence. I n re

Texas Mortgage Servs. Corp., 761 F.2d 1068, 1075 n.12 (5th Cir.

1985); Gilbert v. Sterrett, 509 F.2d 1389, 1393 (5th Cir.), cert.

denied, 423 U.S. 951 (1975).

According to the district court’s factual findings and

conclusions of law, Century had been compensated for the ten valid

delivery orders under which it performed “extr a work” to repair12

weld fractures. The court also reached the legal conclusion that

“there is no valid basis for an equitable adjustment to the

contract.” In rejecting Century’s general claim for equitable

adjustment, which encompassed the ext ra work claim, the district

court impliedly found that Century was not entitled to compensation

for any other extra work.

The district court’s 12-page findings of fact and conclusions

of law are sufficiently detailed to adequately state the factual

and legal bases for the district court’s denial of Century’s claim

for extra work, thereby providing a sufficiently definite predicate

for proper appellate review. The court’s implied denial of

Century’s extra work claim is fully supported by the evidence,

particularly Mod 9, which sets forth the percentage of completion

for unfinished delivery orders; the contracting officer’s decision,

which provides de tailed reasons for MARAD’s denial of Century’s

claims for extra work; a nd the testimony of Volkmann, the

contracting officer’s technical representative, who testified that

he personally inspected and v ideotaped Century’s unfinished work

and that he researched and drafted 90% of the contracting officer’s

decision with the assistance of Billy Greer, another MARAD employee

who testified at trial.

In so doing, we reject Century’s argument that the contracting

officer’s decision is a “pleading” and therefore cannot be used as

evidentiary support for the trial court’s implied denial of

Century’s claim for extra work. Under the Contract Disputes Act,

contracting officers are not required to make specific findings of5 The Contract Disputes Act provides that, after a contracting

officer renders a decision on a claim, a contractor may bring an

action directly on the claim in the United States Court of Federal

Claims (formerly the United State s Claims Court), 41 U.S.C. §

6 09(a)(1), where the action “shall proceed de novo in accorda nce with the rules of the appropriate court.” 41 U.S.C. § 609(a)(3).

13 fact, but, if made, they “shall not be binding in any subsequent

proceeding.” 41 U.S.C. § 605(a). However, there is nothing in the

Contract Dispu tes Act that prohibits the use of the contracting

officer’s findings and conclusions as evidence in a subsequent de

novo proceeding. 5 C upey Bajo Nursing Home, Inc. v. United States,

36 Fed. Cl. 122, 130 (1996) (“[T]his court re views the facts and

law decided by a contracting officer similar to other evidence

before it[ .]”). A ccord Lathan Co. v. United States, 20 Cl. Ct.

122, 125 (1990) (“This court may weigh the [contracting officer’s]

findings and conclusions as it would any other evidence.”). S ee

Wilner v. United States, 24 F.3d 1397, 1403-04 (Fed. Cir. 1993) (en

banc) (expressly overruling pre-Contracts Dispute Act precedent

holding that a contracting officer’s decision “constitutes a strong

presumption or an evidentiary admission.

. . albeit subject to

rebuttal,” but cautioning that its opinion does not “suggest[] that

a contracting officer’s final dec ision has no place in . . .

litigation in the Court of Federal Claims”). Therefore, in its

role as the finder-of-fact, a district court may give the

contracting officer’s administrative determinations weight, not

deference. M

ega Constr., 29 Fed. Cl. at 414. C f. Universal Camera

Corp. v. National Labor Relations Bd., 340 U.S. 474, 493-94 (1951)

(holding that the nonbinding findings of an NLRB “trial examiner”14

may be considered in a subsequent appeal to establish whether an

employee’s removal was supported by substantial evidence); Chandler

v. Roudebush, 425 U.S. 840, 864 n.39 (1976) (holding that prior

administrative findings can be used as evidence of the ultimate

matters at issue in a subsequent de novo proceeding).

Accordingly, we conclude that the Contract Disputes Act does

not preclude the use of the contracting officer’s decision as

evidence of the ultimate matters at issue in a subsequent de novo

proceeding, provided that it is not given deference or a rebuttable

presumption of correctness.

IV. CONCLUSION

Having reviewed the record and considered all of Ce ntury’s

arguments, we conclude that the district court did not commit any

error of law or clear error of fact in finding Century in default

and in rejecting Century’s claims with prejudice. As for Century’s

“contract balance” argument, we conclude that there is no basis in

law for a defaulted contractor to recover the difference between

the unpaid balance of the contract and the cost of completing the

unfinished work under the contract. It is well settled that a

defaulted contractor cannot recover anticipated but unearned

profits. Accordingly, the judgment of the district court is

AFFIRMED.15

RHESA HAWKINS BARKSDALE, Circuit Judge, specially concurring:

I concur in the judgment being AFFIRMED

, but wou ld do so on

the basis that, pursuant to the district court’s findings of fact

and conclusions of law, and the underlying evidence upon which they

are based (especially, modification No. 009 and the Gov ernment

contacting officer’s written response to the request for equitable

adjustment), Century Marine’s claims presented in this court fail,

to include its primary claim that it was not paid for work which it

performed.

Concerning that primary claim, the references in the majority

opinion concerning anticipated but unearn ed profits seem wide of

the mark. Such a “lost-profit” claim is not raised by Century

Marine; and, contrary to the approach taken by the majority, I

would not assume that this is the indirect or implied thrust of the

position asserted here. To do as the majority has done results, in

my view, in this court reaching outside the record—something we

should not, indeed cannot, do.