Source: http://supreme.nolo.com/us/384/424/case.html
Timestamp: 2019-04-26 14:36:27+00:00

Document:
Respondent was the successful bidder on an invitation for bids to construct military housing. It received a letter of acceptability which provided that, unless the contract were closed in a specified time, the Air Force could cancel the bid, which decision, under a disputes clause, was final unless appealed to the Board of Contract Appeals within 30 days. A disagreement arose, the contract was not closed, and the bid was cancelled. Respondent appealed to the Board of Contract Appeals, which dismissed the appeal as untimely without considering the merits of the case. Respondent then filed suit in the Court of Claims to recover its bid deposit and for damages. That court held that the appeal to the Board was timely, and that the Board erred in not reaching the merits. The court then remanded the case to its trial commissioner to make a record and consider the merits. The Government challenged this procedure.
Held: The Court of Claims should have returned the dispute to the Board for consideration of the merits, in accordance with the contractual agreement of the parties. United State v. Carlo Bianchi & Co., 373 U. S. 709, 373 U. S. 717-718. Pp. 384 U. S. 428-433.
170 Ct.Cl. 688, 345 F. 2d 808, reversed.
courts is limited to the administrative record made below in determining the finality to be given departmental decisions and findings made by a Board of Contract Appeals pursuant to a standard government disputes clause. In the present case, we are called upon to decide whether the reviewing court or the Board of Contract Appeals should make the original record on an issue which the Board did not resolve because it erroneously dismissed the appeal before it as untimely.
first the Housing Commissioner and then the Department of the Air Force to raise the contract price. These requests were refused, and respondent then notified the Air Force that it would be unable to complete the closing until this matter was cleared up. In the ensuing exchange of letters, the contracting officer informed respondent that its bid and the letter of acceptability were being canceled and its deposit was being retained. Pursuant to the disputes clause, respondent appealed this decision to the Armed Services Board of Contract Appeals, which dismissed the appeal as out of time without considering the merits of the case. Respondent then sued in the Court of Claims to recover its deposit and for damages resulting from the Government's alleged wrongful cancellation. That court concluded that the appeal to the Board was timely, and that the Board had erred in not reaching the merits of the case. With Judges Davis and Laramore dissenting, the court then decided to remand the case to its own trial commissioner, rather than to the Board of Contract Appeals, to make a record and consider the case on its merits. The Government asked us to grant certiorari to consider whether this was in violation of the principles announced in the Wunderlich Act [Footnote 3] and United States v. Carlo Bianchi & Co., supra. We granted certiorari, 382 U.S. 901, and we now reverse.
"First, there would undoubtedly be situations in which the court would be warranted, on the basis of the administrative record, in granting judgment for the contractor without the need for further administrative action. Second, in situations where the court believed that the existing record did not warrant such a course, but that the departmental determination could not be sustained under the standards laid down by Congress, we see no reason why the court could not stay its own proceedings pending some further action before the agency involved. Cf. Pennsylvania R. Co. v. United States, 363 U. S. 202. Such a stay would certainly be justified where the department had failed to make adequate provision for a record that could be subjected to judicial scrutiny, for it was clearly part of the legislative purpose to achieve uniformity in this respect."
United States v. Moorman, 338 U. S. 457; United States v. Joseph A. Holpuch Co., 328 U. S. 234; United States v. Blair, 321 U. S. 730; United States v. Callahan Walker Construction Co., 317 U. S. 56; Kihlberg v. United States, 97 U. S. 398. Preeminently, this policy is grounded on a respect for the parties' rights to contract and to provide for their own remedies. See United States v. Utah Construction & Mining Co., 384 U. S. 394; United States v. Moorman, supra, at 338 U. S. 461-462. But, beyond that, there is also a belief that resort to administrative procedures is an expeditious way to settle disputes, conducive to speed and economy. [Footnote 4] United States v. Blair, supra, at 321 U. S. 735. Such procedures also facilitate a department's supervisory control over contracting officers, and perhaps enhance the possibility of harmonious agreement. Ibid. Further, reliance upon a few expert agencies to make the records and initially to pass on the merits of the claims properly presented to them will lead to greater uniformity in the important business of fairly interpreting government contracts.
the contractor would always be available to the Court."
See the Davis-Bacon Act, 46 Stat. 1494, as amended, 40 U.S.C. § 276a (1964 ed.). No provision was made in the bid invitation or letter of acceptability for review of the determinations of the Secretary of Labor or the Housing Commissioner. The Armed Services Board of Contract Appeals has held that, in these circumstances, it is without jurisdiction to review such determinations. Len Co. & Associates, 1962 B.C.A. � 3498, 17,854 (ASBCA). This Court has indicated that, as to the wage standards set by the Secretary of Labor, there is no judicial review. United States v. Binghamton Construction Co., 347 U. S. 171, 347 U. S. 177.
"Failure to perform all obligations prior to the time prescribed for closing will be just cause for cancelling all commitments undertaken with you in connection with the housing project and for the recovery under your bid security of liquidated damages in the sum of $25,000, together with actual damages to the Department, such actual damages to be itemized and determined by the Contracting Officer, whose decision will be reduced to writing and furnished to you by mail or otherwise. Such decision shall be final and conclusive unless, within 30 days from the receipt thereof, you appeal in writing to the head of the Department or his duly authorized representative, and his decision shall, unless determined by a court of competent jurisdiction to have been fraudulent or capricious or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence, be final and conclusive. In connection with any appeal under this paragraph, you will be afforded an opportunity to be heard and to offer evidence in support of your appeal."
"That no provision of any contract entered into by the United States, relating to the finality or conclusiveness of any decision of the head of any department or agency or his duly authorized representative or board in a dispute involving a question arising under such contract, shall be pleaded in any suit now filed or to be filed as limiting judicial review of any such decision to cases where fraud by such official or his said representative or board is alleged: Provided, however, that any such decision shall be final and conclusive unless the same is fradulent [sic] or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence."
"SEC. 2. No Government contract shall contain a provision making final on a question of law the decision of any administrative official, representative, or board."
See Hearing before the Subcommittee for Special Investigations of the House Committee on Armed Services on H.R.Res. No. 67, Inquiry Into the Administration and Operation of the Armed Services Board of Contract Appeals, 85th Cong., 2d Sess., 794-795 (1958).
To the extent that the Court of Claims may have been worried about duplicity of evidentiary hearings, see United States v. Carlo Bianchi, supra, at 373 U. S. 717, it partially answered itself in Morrison-Knudsen Co. v. United States, 345 F.2d 833, 170 Ct.Cl. 757, decided the same day. There, the Court of Claims held that, when the Board of Contract Appeals has jurisdiction to consider a certain issue and to award full relief and it makes a record on the factual matters underlying that issue, judicial review of those factual findings, for whatever purposes, shall be limited to the record made by the Board. We hold, in United States v. Utah Construction & Mining Co., supra, that factual findings made by a board pursuant to a claim properly before it, if they otherwise satisfy the standards of the Wunderlich Act, shall not be relitigated even in a court action for relief that is not available under the contract. Hence, there will be only one evidentiary hearing.
"The parties are in complete agreement that it was and is their mutual interpretation that in the event a timely appeal is taken thereunder the 'disputes paragraph' of the Letter of Acceptability confers jurisdiction on the Board to review a decision relating to cancellation of commitments, withholding of bid security, and itemization and determination of actual damages."
Both the Court of Claims and the Trial Commissioner observed that there were "unresolved issues of fact" underlying the issues in this case. 345 F.2d 808, 810, 170 Ct.Cl. 688, 691.
There is analogy for the rule we announce today in other areas of administrative law. See, e.g., Securities and Exchange Comm. v. Chenery Corp., 318 U. S. 80, and Connecticut Light & Power Co. v. Federal Power Comm., 324 U. S. 515, where this Court ordered the cases remanded to the agencies for further findings and consideration rather than itself curing the inadequacies of the records below. See generally Davis, Administrative Law Treatise, §§ 16.01, 20.06 (1958). The same general rule also applies in the area of labor arbitration. In United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U. S. 593, the arbitrator had failed to determine the amount of back pay to which reinstated employees would be entitled and this Court ordered the matter remanded to the arbitrator for resolution of this issue. The Court observed there that it was the arbitrator's determination "which was bargained for." Much the same thing can be said here, although of course the findings and conclusions of the Board of Contract Appeals do not have the same finality on review. See also International Association of Machinists v. Crown Cork and Seal Co., 300 F.2d 127.

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