Case Name: GENERAL BRONZE CORPORATION v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1964-11-13
Citations: 168 Ct. Cl. 176
Docket Number: No. 198-61
Parties: GENERAL BRONZE CORPORATION v. THE UNITED STATES
Judges: Before Cowen, Chief Judge, Laramore, Dureee, Davis and Collins, Judges.
Reporter: United States Court of Claims Reports
Volume: 168
Pages: 176–205

Head Matter:
GENERAL BRONZE CORPORATION v. THE UNITED STATES
[No. 198-61.
Decided November 13, 1964]
David V. Anthony for plaintiff. Gilbert A. Cu/neo, Joseph Saehter, Eldon H. Qrowell and Sellers, Conner & Cu/neo of counsel.
Edward L. Metzler, with, whom was Assistant Attorney General John W. Douglas, for defendant.
Before Cowen, Chief Judge, Laramore, Dureee, Davis and Collins, Judges.

Opinion:
Per Curiam :
This contract case, submitted without argument after a Commissioner's recommended opinion, involves both procedural and substantive issues. We treat the former in Part I and the latter in Part II.
I
Plaintiff agreed to rely for its factual proof on the administrative record of the proceedings before the Appeals Board for the Department of Commerce which was admitted into evidence. The defendant then moved, under former Buie 49(c) (now Buie 67(c)), for dismissal on the ground that, on the facts and the law, the plaintiff had not shown a right to recover. Due to the pendency of a counterclaim, Trial Commissioner Fletcher treated the motion, under Buie 49 (c), as a motion for judgment by the court that the plaintiff was not entitled as a matter of law to recover. In a report filed on September 19, 1963, Commissioner Fletcher included an opinion, findings of fact, and a recommended conclusion of law that plaintiff is not entitled to recover. Exceptions and briefs have been filed by the parties, and the case has been submitted without oral argument.
The Commissioner did not direct the parties to file requested findings of fact because he believed "that the facts relating to the issues as posed by the plaintiff are essentially imeontroverted, and that accordingly the time-consuming process of preparing and filing of requested findings may properly be omitted without prejudice to the position taken by either party." In its brief to the court plaintiff objects that Buie 49 (c) required that it be accorded the right to file requested findings of fact pertinent to the issues raised by the defendant's motion. Although the Commissioner may have erred in believing that the facts were uncontroverted, we believe that the case need not be delayed for the presentation of such requested findings. Plaintiff has informed the court, in detail, of its position on the findings made by the Commissioner (in his formal findings and in his opinion) and of its view of the facts. We have taken account of those exceptions and objections (as well as the defendant's) in making our findings and in rendering our opinion on the merits of the claim. Since plaintiff has thus had adequate opportunity to present its position to the court, there has been no material prejudice from the Commissioner's inadvertent failure to permit the parties to file requested findings. To remand for such a procedure would serve no end but to delay disposition of the case.
Another procedural issue requires mention before we reach the merits. In the proceedings before the Commissioner the administrative record before the Appeals Board for the Department of Commerce was admitted into evidence for the purpose of determining whether the Board's decision was arbitrary, capricious, not supported by substantial evidence, or erroneous as a matter of law. The court now determines the case on that same basis. The court's underlying findings of fact, insofar as they relate to the merits of the claim, are based either on facts found, explicitly or implicitly, by the Board which are supported by substantial evidence in the administrative record, or on facts conclusively shown by the administrative proceedings or admitted by the pleadings. Where there is room for legitimate disagreement, the court has not made its own independent findings on the basis of the administrative record. Plaintiff did not ask the Commissioner, nor does it ask the court, for anything more than a review of the Board's findings, and it is not entitled to more.
II
The opinion, of tbe court on tbe merits of tbe claim follows. Our discussion is largely based on tbe Trial Commissioner's opinion but we have modified it in several respects.
On June 28, 1957, plaintiff, as low bidder, was awarded a contract witb defendant for tbe construction of three pa-raboloidal antenna systems at a total contract price of $408,140. Tbe contract required plaintiff to furnish such antenna systems complete witb all necessary parts, hardware, accessories, feed systems, drawings, instructions on assembly, and "in short, everything necessary to enable National Bureau of Standards personnel to assemble and place tbe antenna system in operation." The paraboloidal reflectors specified were to be made of aluminum alloy witb a diameter of 60 feet and a focal length of 25 feet.
At the time this contract was awarded, antenna systems of such size and specification bad never been produced, and, according to tbe contracting officer, tbe National Bureau of Standards (NBS) fully realized that in tbe then state of the art, tbe Government's specifications could not be fully definitive in every detail. However, general specifications were set forth in the contract, the following of which are involved in the dispute here:
The surface of the reflector shall be expanded or punched aluminum alloy having openings no larger than 0.25 inches in any dimension.
After assembly, the deviation of this parabola from a perfect parabolic surface shall be no greater than ±)4 iuch at any point on its surface.
The supporting structure reflector and feed system shall be designed to allow the antenna to operate at full precision in winds of 30 mph and at reduced precision with winds of 50 mph.
The elevation drive assembly shall be mounted on a platform on the ring gear of the azimuth drive assembly. This drive shall consist of either a single or double ball screw mounted on trunnions, and shall be driven by a servo motor connected by means of a chain and sprocket or gear train.
In addition to the dispute over the foregoing specifications, the parties disagree in their interpretation of the contract requirements regarding operating frequency minimums.
During its performance of the contract, plaintiff experienced some difficulties, most of which appear to have been attributable to a Teamsters' strike and to delay by a subcontractor in furnishing certain required material. During the course of its performance, plaintiff asked the contracting officer in writing for permission to deviate from the specifications in some respects, which requests were granted with one exception. Although the contract required final delivery by April 28, 1958, plaintiff did not actually complete its delivery until August 11, 1958. Shortly thereafter, NBS notified plaintiff of its intention to assess liquidated damages against plaintiff for the 106 calendar days' delay.
Thereupon, on September 24, 1958, plaintiff wrote the Secretary of Commerce via the contracting officer that it desired to appeal any imposition of liquidated damages because it believed such delays as had occurred were excusable. In that letter plaintiff also advised of its intention "to pursue our claim for the additional compensation to which we believe ourselves entitled." This was the first time that the contracting officer was aware of any intention by plaintiff to claim any amounts beyond the contract price. By letter dated November 8, 1958, plaintiff elaborated further upon its claim for additional compensation, and asserted that, with the concurrence of NBS engineers, it had exceeded the contract specifications.
Thereafter, personal conferences were held between representatives of plaintiff and defendant at the offices of NBS in Boulder, Colorado. On January 5, 1959, plaintiff wrote the contracting officer a letter setting forth certain alleged changes, extras, and modifications which plaintiff believed should entitle it to an equitable adjustment of the contract price. That letter did not propose, however, any dollar amounts claimed by plaintiff.
The contracting officer responded to plaintiff's letter of January 5, 1959, by a letter of January 16th reproduced, in pertinent part, in finding 11. After paying high, tribute to plaintiff's work under the contract, he stated:
I realize that to have produced so superior a product your company has undoubtedly incurred a substantial loss. Had I any discretion in this matter I should be pleased to see you receive additional compensation. The fact remains, however, that only the contracting officer could approve any extras and these, under the terms of the contract, had to be approved in writing. I not only did not approve any extras but was actually never requested to do so and was completely unaware until recently that your company had in any respect exceeded the minimum requirements of our specifications. Under the circumstances, although I should like to see you compensated for the extra costs incurred, I completely lack any authority to approve such compensation.
He suggested that plaintiff "appeal" to the Comptroller General and invited a conference with plaintiff's engineers to work out "a list of those points where we are in agreement that you have actually exceeded the specifications." Apparently such a conference took place shortly thereafter following which the contracting officer wrote plaintiff his letter of January 28, 1959, as set forth at length in finding 12. In that letter he listed five instances as to which "we are in agreement that you have clearly exceeded the specifications
Armed with this correspondence, plaintiff appealed to the Comptroller General who, on May 29,1959, issued his decision No. B-138987. In that decision the Comptroller General disagreed with the contracting officer's assertion that he lacked authority to approve additional compensation. The decision pointed out that the contract contained standard provisions as to "changes" and "extras". By reason of there being no time limit in these standard provisions, and in view of the fact that final payment under the contract had not yet been made, the Comptroller General held that the contracting officer did have authority to issue orders for both changes and extras, and accordingly, he returned the case to NBS "for disposition by the contracting officer."
By letter dated June 25, 1959, the contracting officer advised plaintiff, in effect, that he had erred in his prior statements of January 28, 1959, to the effect that in five respects plaintiff had exceeded the specifications. He, therefore, refused to award a change order for extra compensation on any of those five items. He said, however, that he would be willing, on a proper showing, (1) to issue a change order for a substitute made by plaintiff on the feed support ring and (2) to adjust the matter of liquidated damages.
Plaintiff's appeal from that decision to the Secretary of Commerce was referred to the Appeals Board for the Department of Commerce. After a hearing at which testimony and documentary exhibits were received, the Board issued a decision denying plaintiff's appeal, without prejudice, however, to an equitable adjustment for the feed support ring and relief from liquidated damages. Thereafter, following an audit by defendant of plaintiff's costs in supplying a different type of feed support ring, defendant paid an additional sum to plaintiff in the amount of $22,592. Also, the liquidated damages assessment against plaintiff was canceled.
The text of the Board's decision is reproduced in its entirety as the Appendix to Defendant's Answer and Counterclaim herein and will not be reproduced here. Suffice it to say, by way of summary, that the Board gave full consideration to the contracting officer's letters of January 16 and 28, 1959, and disagreed with plaintiff's contention that the letter of January 28, 1959, constituted a binding agreement which the contracting officer could not unilaterally repudi ate. Since the contract had been fully performed by plaintiff long prior to the time those letters were written, the Board found that plaintiff had not altered its contract performance in reliance on anything said therein. In addition to that finding, the Board gave its consideration to each of the five points contained in the letter of January 28, 1959, and concluded that in none of them had plaintiff actually exceeded the contract specifications. The contracting officer's statements to the contrary in that letter were simply attributable, so the Board thought, to his failure to quote the specifications accurately.
Insofar as the decision of the Appeals Board involved factual issues within the Disputes clause, the Board's findings are indubitably supported by substantial evidence and cannot be overturned. Insofar as in its interpretation of the contract specifications the Board was dealing with questions of law, it reached proper and reasonable results which commend themselves to this court. The plaintiff does not now contend that the Board misinterpreted the specifications; in fact, the plaintiff's briefs contain no argument on that point.
Plaintiff's presentation to this court takes a different tack. Throughout pretrial proceedings and in its briefs, plaintiff has constantly reiterated its basic reliance upon the contracting officer's letter of January 28, 1959. Plaintiff considers that letter to be a supplemental compromise agreement by defendant which recognized liability leaving open only the amount of plaintiff's recovery and which could not be unilaterally repudiated. To use plaintiff's words in its response to defendant's motion:
The case is basically a very simple case. Plaintiff alleges an agreement with the Contracting Officer whereby the Contracting Officer agreed to pay certain amounts to the plaintiff but for the fact that he did not believe he had such authority. The matter was then referred to the General Accounting Office. The Comptroller General stated that the Contracting Officer did have such authority. When the matter was finally referred back to the Contracting Officer for his action, he had changed his mind and decided that he would not make any payment in accordance with his previous agreement.
To accept plaintiff's position, however, would be to pass by the hornbook rule that, even if it were possible to consider the January 28th letter as a new and supplementary agreement, before it could be a legally binding contract there must have been an independent and present consideration to support it. If this was a new and supplementary agreement, past consideration would not be sufficient. In the succinct words of Professor Williston:
Consideration, by its very definition, must be given in exchange for the promise, or at least in reliance upon the promise. Accordingly, something which has been given before the promise was made and, therefore, without reference to it, cannot, properly speaking, be legal consideration. The doctrine that past consideration is no consideration represents the overwhelming weight of authority and is almost universally followed. This has been the law since early times.
1 Williston on Contracts Sec. 142 (3d ed. 1957).
This court's agreement with that well-recognized rule of contract law is reflected in its decision in Houdaille Industries, Inc. v. United States, 138 Ct. Cl. 301, 317, 151 F. Supp. 298, 308 (1957).
Here the Appeals Board has found that, since performance of the contract had already been completed, plaintiff did not alter its performance in reliance on anything said by the contracting officer in the letter on which plaintiff relies. That finding, as we have said, is fully supported by the administrative record and is final and conclusive. See the Wunderlich Act, 68 Stat. 81, 41 TJi.S.C. § 321-322, and United States v. Carlo Bianchi & Co., 373 U.S. 709 (1963).
In recognition of the fact that, to prevail here on the theory of a new and supplementary agreement, it must in some way show a quid pro quo for the alleged January 28th separate agreement by the contracting officer, plaintiff has developed a theory of what might be called vicarious consideration. It said to the Comptroller General that "in the interest of full agreement" it was willing to give up other possible claims under the contract and accept the contracting officer's descrip tion of five instances where he considered, that plaintiff had exceeded the contract specifications. However, it is implicit in the Appeal Board's decision that the contracting officer was not induced to say what he did on January 28th by any undertaking or promise on plaintiff's part to waive its other contract claims, mythical or real. That conclusion is sustained by the evidence before the Board which fails to support plaintiff's contention that any such quid fro quo was offered or accepted. The letter of January 28th did not reflect a compromise or a new agreement, but simply the contracting officer's unilateral feeling at that time.
Although, as stated, plaintiff's primary theory of liability appears to be based on its contention that the contracting officer's letter of January 28th, standing alone, constituted a new and binding agreement, it also seems to rely for the required consideration on a contention that, frior to performance, NBS engineers had concurred in plaintiff's proposed changes and extras. As proof of this, plaintiff points to a letter from the Assistant Secretary of Commerce to the General Accounting Office in which it is stated that "the five changes listed in the Contracting Officer's letter of January 28, 1959 were concurred in by the Government engineers prior to performance by the Contractor." See finding 13.
As previously stated, the Appeals Board in its comparison of the so-called "five changes" against the actual specifications could find no instance wherein plaintiff had exceeded the specifications as written. But, even if it be assumed that, during performance, "five changes" occurred in which NBS engineers "concurred," plaintiff remains confronted with an insuperable difficulty. At no time did the contrac-ing officer by written order make the five alleged changes hi the contract or authorize in writing any extras thereunder. Thus, the plaintiff is unable to bring itself within the clear requirements of the "changes" and "extras" clauses of the contract which require any changes or extras to be ordered in writing by the contracting officer. That plaintiff was aware of this contractual requirement is evidenced by the fact that in October and November 1957, it requested and received in writing permission to deviate from the specifications as to requirements not here involved. See finding 4.
Long ago, the United States Supreme Court held that a failure to obtain from the department head a written approval for changes or extras is fatal to a contractor's recovery under a Government contract. Plumley v. United States, 226 U.S. 545 (1913). The Court said at 226 U.S. 547:
The other items for extra work were properly disallowed. The contract provided that changes increasing or diminishing the cost must be agreed on in writing by the contractor and the architect,. with a statement of the price of the substituted material and work. In every instance it was necessary that the change should be approved by the Secretary. There was a total failure to comply with these provisions, and though it may be a hard case, since the court found that the work was in fact extra and of considerable value, yet Plumley cannot recover for that which, though extra, was not ordered by the officer and in the manner required by the contract. [Emphasis supplied.]
The Court of Claims has also considered "another case where the defendant has received the benefit of work done by the contractor on the order of defendant's representatives in charge of the work, but refuses to pay for it because the contract requirements were not complied with." Globe Indemnity Co. v. United States, 102 Ct. Cl. 21, 35 (1944), cert. denied, 324 U.S. 852 (1945). Because the additional work did not have the written approval of the department head, as required by the contract, this court held, albeit reluctantly, that the contractor could not recover, saying at 102 Ct. Cl. 38:
contractors must study their contracts and insist on compliance with their terms; before relying on any promise they should ascertain that it is made by a per- ' son having authority to make it.
On its facts, the present case is an even stronger one for defendant, for it must be remembered that here the contracting officer has steadfastly denied that he had any prior knowledge of the alleged five changes, much less did he order them orally or in writing. See, for example, his letter to plaintiff dated January 16, 1959, quoted hi finding 11. The record does not indicate that plaintiff ever disputed that assertion other than to contend that the "concurrence" of NBS engineers constituted constructive notice to the contracting officer. Hence, this case is not like W. H. Armstrong & Co. v. United States, 98 Ct. Cl. 519 (1943). There, in the interest of a just result, a divided court permitted recovery where the contracting officer himself had ordered the extras and promised an adjustment, even though orally.
That, in a claim for extra costs, the contractor must show some action on the part of the contracting officer (or his authorized representative) , as distinguished from subordinates, is demonstrated by this court's decision in The Woodcraft Corporation v. United States, 146 Ct. Cl. 101, 173 F. Supp. 613 (1959). There the plaintiff sought additional compensation for extra costs incurred in manufacturing camp tables for the Army. Plaintiff contended that its added expense resulted from its compliance with erroneous instructions from a Government inspector, which error had not been corrected until a successor inspector was assigned to the contract. In dismissing the plaintiff's petition, the court said at 146 Ct. Cl. 103, 173 F. Supp. 614:
For our decision, we may accept the plaintiff's assertion of ambiguity in both of the pertinent specifications. We may likewise grant that the new work was actually not within the contract and, also arguendo, that the first inspector's directions caused the excess investment now claimed by the plaintiff. But still the loss would be unrecoverable. The reason is that in these disbursements the plaintiff was a volunteer.
Jji # % ij*
As the plaintiff must admit, the additional costs were ultra contractum. Therefore, to win their recovery some extrinsic promise, implied or express, must be shown, such as an involuntary and compelled compliance, an allowed extra or a change in the contract. But an expenditure could not be involuntary and compelled without a previous protest to the contracting officer; J. A. Ross & Company v. United States, 126 C. Cl. 323, 329 (1953); and under the contract he alone could bind the defendant to an extra or a change. Thus, the plaintiff having acceded without objection to the inspector's demands, and now unable to plead either an ordered extra or an authorized change, the plaintiff's claim is without legal predicate.
If the Government is to be held strictly to its contractual obligations as though it were a private obligor, then, of course, it is entitled to insist that those who contract with it shall be held to the same accountability. Rolin v. United States, 142 Ct. Cl. 73, 160 F. Supp. 264 (1958). If one can imagine the parties here in reversed positions, it is inconceivable that plaintiff would not insist — and rightly so — upon its freedom from a decrease in the contract price because of some change which was not specified, as the contract requires, "by. written order." The mere fact that the defendant is also a sovereign should not prejudice it in asking that its contractual rights be honored.
There remains to be considered whether the contracting officer's letter of January 28, 1959, can itself be deemed a change order or an authorization for extras at a stated price by the contracting officer. If the letter, fairly read, could be considered to be either, then the fact that it was written after completion of the contract performance would not preclude plaintiff because, as the Comptroller General held, final payment had not yet been made and the changes and extras clauses do not contain a time limit. However, reading language in its ordinary sense, it cannot be said that the letter took the usual form of an order for changes or an authorization for "extras and the price therefor." It simply stated (erroneously, in the Board's view of the specifications) that plaintiff had "clearly exceeded the specifications" in five respects. This is a far cry from ordering plaintiff to exceed the specifications and from authorizing payment of a stated price for extras.
Because of tbe "technical nature" of the contract, the Comptroller General was uncertain as to what the letter did mean. After correcting the erroneous view of the contracting officer that he had no authority to issue an order for changes and extras, the Comptroller General simply returned the matter "for disposition by the contracting officer." When thus required by higher authority to make a decision in the matter, the contracting officer by his letter to plaintiff dated June 25,1959, specifically refused to issue a change order or authorize payment for extras (except in a single instance not now involved). See finding 15. Here was meaningful action by the contracting officer within the provisions of the "changes" and "extras" clauses. Prior to that time, he had done nothing more than agree that plaintiff had exceeded the specifications while at the same time denying that he had ordered or authorized it to do so. As we have indicated, if one views his January 1959 correspondence in context, it appears reasonably obvious that the contracting officer was highly pleased with what he considered to be an excellent performance and which he believed in some respects went beyond the contract requirements. Equally obvious, however, is his belief that in so doing plaintiff acted simply as a volunteer whose only source of relief might be the Comptroller General. This is not the action of a contracting officer engaged in the issuance of a written change order. And insofar as plaintiff argues that the contracting officer should have issued a change order, the contention fails, as we have already held, because there were no actual changes in the contract specifications or requirements.
For the foregoing reasons, it is the opinion of the court that plaintiff has failed to make a prima facie case and that, accordingly, as a matter of law, plaintiff is not entitled to recover. The counterclaim is not now before the court and will have to be considered separately under proper proceedings.
FINDINGS OF FACT
The court, having considered the evidence, the report of Trial Commissioner Lloyd Fletcher, and the briefs, makes findings of fact as follows:
1. Plaintiff is a New York corporation engaged in the design and manufacture of metal works, radio, and electronic products. The agency of the defendant involved herein is the National Bureau of Standards in the United States Department of Commerce (hereinafter generally referred to as NBS).
2. On March 18, 1957, NBS issued to selected manufacturers its invitation to bid on the construction of parabolo-idal antenna systems in accordance with attached specifications. This original invitation was replaced by another invitation dated June 2, 1957. On June 21, 1957, plaintiff submitted its bid in the amount of $408,140. It stated that its presentation was made "without taking exception to any of the specifications" and also that "a review of the specifications indicates no fundamental limitations to their achievement The design of the antenna is suitable to straight forward calculations employing known techniques." Plaintiff was the lowest bidder. After plaintiff had satisfied the Government representatives that certain printed material on its letterhead was not intended in any way to condition its bid, plaintiff received an award from NBS which resulted in Contract No. CST-7013.
On the same date that it submitted its bid, plaintiff wrote a separate letter to NBS in which it referred to an earlier bid which it had made in response to a prior invitation from NBS to bid on these antenna systems. Such prior invitation was superseded by the later invitation of March 18, 1957, due to minor changes made by NBS in the specifications, and plaintiff contended that its earlier bid should have been considered as the basis for an award. In that letter plaintiff stated:
We have been and are prepared to demonstrate that products of the kind here involved may be procured on an entirely competitive basis, and we strongly, desire to prove that we are a fully qualified supplier of such products on the most stringently competitive terms. As a result of the procedure followed in advertising and re-advertising and the resultant disclosure of earlier bids in this matter, it has been necessary for us, even though there was no substantial change in the specifications, to reduce normal minimum profit margins and overhead allowances in the accompanying bid, in order to maintain our established competitive priority on this bidding, and to prove our continuing ability and desire to devote our facilities to supplying the government's need for qualified competitive procurement of these products.
3. Contract CST-7013 was executed by the parties as of the date of the award, namely, June 28, 1957. It required plaintiff to furnish to NBS specified paraboloidal antenna systems for a total contract price of $408,140. The antenna systems were to be furnished complete with all necessary parts, hardware, accessories, feed systems, drawings, instructions on assembly, and "in short, everything necessary to enable National Bureau of Standards personnel to assemble and place the antenna system in operation." The para-boloidal reflectors specified were to be made of aluminum alloy with a diameter of 60 feet and a focal length of 25 feet.
The contract contained lengthy "general speoipications" and "mounting specification for elevation azimuth antenna", only the following of which are involved in the dispute here:
The surface of the reflector shall be expanded or punched aluminum alloy having openings no larger than 0.25 inches in any dimension.
After assembly, the deviation of this parabola from a perfect parabolic surface shall be no greater than ± 14-inch at any point on its surface.
The supporting structure reflector and feed system shall be designed to allow the antenna to operate at full precision in winds of 30 mph and at reduced precision with winds of 50 mph.
The elevation drive assembly shall be mounted on a platform on the ring gear of the azimuth drive assembly. This drive shall consist of either a single or double ball screw mounted on trunnions, and shall be driven by a servo motor connected 'by means of a chain and sprocket or gear train.
In addition to their dispute as to the foregoing specifications, the parties disagree in their interpretation of the contract requirements regarding frequency minimums. The specifications provided for feed system frequencies of 233 megacycles and 1046 megacycles but made no reference to operating frequencies for the 60-foot reflectors themselves. In providing reflectors which, would perform at approximately 10,000 megacycles, plaintiff claims it exceeded the specification requirements. NBS denies this claim.
The contract provided for the delivery of the completed antenna systems within 10 months from notice of award and contained a clause for the assessment of liquidated damages at the rate of $75 per day of delay in excess of the time specified. Also, the contract incorporated by reference the general provisions of Standard Form 32 (November 1949 edition) with its standard clauses as to changes, extras, and disputes.
4. By letter of July 10, 1957, plaintiff advised the contracting officer that it was proceeding "full-speed" on the antenna systems and invited all members of the NBS staff "to visit our premises and review the submitted program at any stage of development." On October 24, 1957, plaintiff requested in writing that it be permitted to deviate from the specifications in two respects. On November 7, 1957, NBS granted the requested deviation in one respect but not in the other. On November 12, 1957, plaintiff again requested a deviation from the specifications in still another respect, which request was granted by NBS on November 21, 1957.
5. On February 21, 1958, plaintiff advised NBS that a strike called on February 3,1958, by the International Brotherhood of Teamsters would affect plaintiff's ability to deliver on schedule and requested a three-week extension of time. On February 26, 1958, the contracting officer advised plaintiff that the information submitted was insufficient to justify an extension of time and requested the furnishing of further information. The record does not indicate that any further information was furnished by plaintiff in this regard. However, on April 8, 1958, plaintiff advised the contracting officer that so far as the strike was concerned, plaintiff had "solved this delivery problem by the expenditure of more funds " but that plaintiff's subcontractors had encountered unforeseen difficulties in the manufacture of bearings for the antenna systems which would further delay deliveries. Plaintiff's April 8 letter requested relief from the "Penalty Clause" and contained the following statement:
As previously stated to your representatives,. we have spared no expense in designing and manufacturing what we believe will be the most representative parabolic antenna system in the art conforming to the most rigid performance specification with guaranteed long life and reliability. At this time we have invested several hundred thousand dollars over and above our contract price to make these antenna systems in accordance with the design and manufacturing philosophy we believe to be necessary for successful performance.
On April 10, 1958, the contracting officer advised plaintiff that he lacked authority to grant relief from the penalty clause except for delays beyond plaintiff's control. He also stated:
You will recall, rather vividly I presume, that during the controversy over the award of this contract the technical members of our staff as well as our contracting officer expressed grave doubts as to the ability of your company to supply the three antennas within the time limits of the contract. This was based, not upon any doubts as to the general competence of your staff or integrity of your company, but on the simple fact that you had never before built a dish of this size and we thought it unlikely that you could build one without encountering unforeseen difficulties that would result in delays. In spite of this warning that perhaps your company was underestimating the difficulties of the job it was undertaking, you persisted in your desire to be awarded the contract. Accordingly we cancelled the original invitations to bid and readvertised and in the new invitation to bid we included a penalty clause which you accepted as part of your contract.
6. Plaintiff completed its delivery under Contract CST-1013 on August 11, 1958 (but supervision of installation remained) Under date of September 2, 1958, NBS advised plaintiff that in accordance with the contract terms, liquidated damages at the rate of $75 per day would be assessed against plaintiff for a delay of 106 calendar days, and that, accordingly, $7,950 in liquidated damages would be withheld in final payment under the contract.
On September 24, 1958, plaintiff wrote the Secretary of Commerce as follows:
We hereby appeal from the decision in the form of a letter to us dated September 2,1958 signed by Mr. J. S. Roettenbacher, Procurement Officer which imposed upon us liquidated damages for alleged delays in the performance of the above contract.
If a decision by the Contracting Officer, the official referred to in the Disputes article is required, we respectfully request such decision embodying his findings and conclusions, so as to insure perfection of this appeal.
We take the position that such delays as occurred were excusable under the terms of the contract. We also wish to advise that it is our intention to pursue our claim for the additional compensation to which we believe ourselves entitled.
7. By Office Memorandum dated October 1,1958, the contracting officer advised the Director of NBS as to the previous correspondence with plaintiff on the matter of liquidated damages and then concluded the memorandum with the following paragraph:
With regard to the last sentence in Mr. Olsen's letter of September 24 that it is their intention to pursue their claim for the additional compensation to which they believe themselves entitled, I am at a loss to know what additional compensation they refer to. Perhaps he only means the $7,950 being withheld, but his reference to "additional compensation" sounds as if General Bronze may be thinking in terms of claiming more than the contract price, since Mr. Kamen has stated several times in the past that the company has invested large sums of capital in excess of the contract price in producing these antennas.
8. On October 15, 1958, plaintiff's attorney wrote NBS, setting forth the reasons why he believed plaintiff should be relieved from the assessment of any liquidated damages under the contract. No mention was made in said letter of plaintiff's claim for additional compensation.
9. On November 3, 1958, plaintiff wrote the contracting officer a letter elaborating to some extent on its claim for additional compensation and stated:
These extras and changes prove to be the solutions required to overcome the deficiencies in the contract and were concurred in by your engineering staff, in order that a functionally adequate unit be produced; otherwise, compliance with the antenna design around which the Government specifications as drawn, would have been a waste of Government funds, as everyone came to realize. The net result of these additional efforts on our part, was that we delivered a scatter propagation and paraboloidal antenna system, which not only produced the end item the Government desired, but exceeded the maximum expectations of your laboratory.
On January 5,1959, plaintiff wrote the contracting officer a lengthy letter referring to a personal conference held between the parties on December 16, 1958, and then setting out in detail "the changes that were made and the extra work we performed, beyond and in addition to, the terms and scope of the contract, concurred in through engineering discussions with members of your staff during the earlier stages of performance "
10. On January 14, 1959, the contracting officer received an Office Memorandum from A. F. Barghausen, the NBS Project Engineer most intimately acquainted with plaintiff'» performance under the contract. Mr. Barghausen analyzed plaintiff's January 5 letter and concluded that the contract specifications adequately covered all of the changes claimed in the letter. However, Mr. Barghausen concluded:
We feel there are a number of points which could be stated where the antenna exceeds the performance criteria as written in our original contract which would be valuable in their attempt to obtain increased expenditure cost. In other words, quote the various performance requirements from the contract and say these were met and in addition the antennas are performing beyond these specifications by a certain amount.
We feel GB Electronic Corporation should re-write their proposal for justification of increased costs such that it meets with our approval, not something we feel obligated to contradict by reading the original specifications.
11. Thereupon, the contracting officer responded to plaintiff's letter of January 5,1959 by a letter dated January 16, 1959, reading, in pertinent part, as follows:
With reference to your letter of January 5,1 have no hesitancy in stating that we are delighted with the antennas furnished by your company. In several respects they definitely exceed even what we had hoped to get by means of the specifications that we wrote. At the time we undertook to obtain these antennas we were aware of only two organizations that had ever produced an antenna of this size and neither of these fully met the specifications for the dish that we needed for our work. Our radio engineers wrote our specifications around the best products with which they were familiar at the time. We fully realized that the state of the art and our knowledge of it meant that our specifications could not be fully definitive in every detail. You are also aware that we had and expressed grave doubts that General Bronze could start from scratch, design, develop and build antennas to meet our specifications for anything like the price quoted by the manufacturer that had complete designs, jigs, and manufacturing processes all worked out. We were concerned for fear that as your costs mounted you would ultimately either default on the contract, or cut corners on the product with the result that in either case we would receive an inferior product or suffer grave delay in our program. That General Bronze did neither of these things, even when faced with a staggering loss on the contract, is in my opinion a great tribute to the integrity of your company.
Actually, as stated above, the product you delivered is superior in a number of respects to anything we had expected to get. I realize that to have produced so superior a product your company has undoubtedly incurred a substantial loss. Had I any discretion in this matter I should be pleased to see you receive additional compensation. The fact remains, however, that only the contracting officer could approve any extras and that these, under the terms of the contract, had to be approved in writing. I not only did not approve any extras but was actually never requested to do so and was completely unaware until recently that your company had in any respect exceeded the minimum requirements of our specifications. Under the circumstances, although I should like to see you compensated for the extra costs incurred, I completely lack any authority to approve such compensation. Your first point of appeal is, I believe, to the Comptroller General, and in this effort I can only wish you luck and say that you did produce a superior product and for this we are extremely grateful. One thing that we could do would be to work out with your engineers a list of those points where we are in agreement that you have actually exceeded the specifications. I understand that your Mr. Doundoulakis will probably stop off here when returning from the west coast, and we shall be glad to work with him on this list.
12. (a) The contracting officer again wrote plaintiff under date of January 28,1959, as follows:
In my last letter I promised that as soon as your Dr. Doundoulakis and our Mr. Barghausen could meet for a discussion and agree, I would send you a list of the particular respects in which we feel that the antennas furnished by your corporation definitely exceed the specifications. It turns out that there are five points in which our engineers were able to agree that you had, in fact, exceeded the specifications. The last of these five does not really lend itself to precise measurement, but we are in agreement that you have clearly exceeded the specifications and that your product should give a performance superior to that specified or even hoped for.
1. The specifications stated that the surface accuracy should be ±14 inch. A survey by the U.S. Geological Survey contracted by this agency has shown that for 80% of the total area the surface was well within dt % inch.
2. The specifications stated that the surface should be covered with an expanded aluminum metal having openings no greater than % inch in any dimension. During discussions with NBS engineers a sample of the covering material was shown and agreed to by both parties. This material was approximately % inch thick and had an open area of approximately 24% as compared to 76% open area in the material NBS thought would be supplied.
3. During discussions with GB engineers it was stated in the specifications that a single ball-jack screw should be used for the elevation adjustment of the antennas. It was shown that a dual screw would perform the adjustment in a far superior maimer ana was agreed to by both parties, although it was not necessary to meet the requirements of the specifications.
4. Verbal discussions with NBS engineers and GB engineers revealed the fact that NBS proposed to use these antennas at 10,000 Me in addition to the 1000 Me frequency requested in the specifications. This question was raised since the tolerance and performance requirements stated in the specifications far exceeded those necessary for efficient operation at the requested frequency. The GB corporation supplied a product which is believed will perform at this upper frequency with a minimum loss in efficiency, mostly at their own expense.
5. Operational efficiency requirements in the specifications stated that the antennas shall operate at full efficiency in winds up to 35 mph with decreased efficiency in winds up to 50 mph. It is believed by NBS engineers that these specifications have been exceeded. Demonstrations of this are almost impossible to perform but design analysis of the entire structure supports this statement.
(b) This letter did not reflect or incorporate any compromise by the parties of plaintiff's claims. Nor was this letter intended as a change order.
13. Basing its case particularly upon the above correspondence, plaintiff applied to the Comptroller General for an "equitable adjustment in the contract price for extras and changes." In its application, plaintiff stated that, while other modifications could be urged, it was willing in the interest of full agreement "to limit its claims to the ones clearly acknowledged by the Government," i.e., the five instances listed in the contracting officer's letter of January 28.
By letter to the Secretary of Commerce dated March 26, 1959, the Office of General Counsel, General Accounting Office, requested a full report on plaintiff's claim and asked for information as to "the extent, if any, to which the engineering staff of the Government concurred in the extras and changes prior to performance by the contractor." On May 5, 1959, the Assistant Secretary of Commerce replied to the GAO inquiry stating, in pertinent part:
In connection with your request for information on the extent, if any, to which the engineering staff of the Government concurred in the extras and changes, you are advised that the five changes listed in the Contracting Officer's letter of January 28, 1959 (copy of which was attached to your referenced letter) were concurred in by the Government engineers prior to performance by the Contractor.
It should be pointed out, however, that at no time did any representative of the General Bronze Corporation suggest that these changes would result in an increase in the cost of the contract. If there had been any such suggestion, the changes would not have been approved, because the Government engineers were fully aware of the fact that no funds were available and, also, that they lacked authority to commit the Government to additional costs, which under the terms of the contract could be done only by the Contracting Officer in writing.
14. On May 29, 1959, the Comptroller General issued his decision No. B-138987 to the Secretary of Commerce. That decision referred to the "five points" on which the Government engineers had agreed that plaintiff had exceeded the contract specifications and to the contracting officer's letter in which he had stated that he did not approve any extras and lacked authority to approve compensation for extras. The Comptroller General then stated:
Because of the technical nature of the contract it is not clear whether the five agreed points are changes, extras or a combination of the two. In any event, changes are covered by section 2 and extras by section 3 of the General Provisions (Standard Form 32, November 1949 edition) which were incorporated in the contract by the reference. As to changes it is provided that the contracting officer may at any\ time make changes. On the question of extras, section 3 provides as follows:
"Except as otherwise provided in this contract, no payment for extras shall be made unless such extras and the price therefor have been authorized in writing by the Contracting Officer."
There is no time limit as to when such authorization must occur. It would appear that under the terms of the contract and in view of the fact that final payment has not been made, the contracting officer does have authority to issue orders for both changes and extras.
Accordingly, we are returning the case to you for disposition by the contracting officer.
15. Upon the matter being thus returned to him, the contracting officer again considered the case, and on June 25, 1959, wrote to plaintiff, in pertinent part, as follows:
In addition to this decision by the Comptroller General I have the further instruction from the Director of the Bureau that — "Any changes or extras recognized by a change order should be confined to those which the engineers previously understood might result in additional costs even though additional compensation was not mentioned at the time." You are aware that there were no such changes or extras approved where increased costs were involved.
As evidence that our engineers were fully aware of the limitations on their authority to authorize extras or approve of any changes that might result in extra cost to the government is the fact that two such changes were discussed at length. In each case General Bronze Corporation was requested to prepare and did prepare and submit formal technical proposals. These were your estimates Nos. 6971-203 dated April 1958 and 6971-328 dated October 1958. Each of these proposals woul d have cost more than the amount available and in neither case were you asked to proceed with the work.
Upon receipt of this case from the Washington office I have reviewed the whole file carefully with Messrs. Peterson and Barghausen, our engineers on the project. This analysis has uncovered several interesting facts. You will recall that following our initial Invitation to Bid, Messrs. Betts, Barghausen and Peterson visited your plant in Long Island and discussed the proposed contract, I believe, principally with Mr. Iva-men. During these discussions General Bronze indicated that they would prefer to use 2 jack screws instead of 1, and pieced aluminum sheets instead of expanded aluminum. When the initial Invitation to Bid was can-celled, our new invitation which resulted in Contract CST-7013 was altered in order to provide for the alternatives which had been proposed by General Bronze. At this time we also removed the requirement that bidders must have successfully built antennas of the size desired. Later when Mr. Doundoulakis visited here to discuss the various points at which you felt you had exceeded the specifications, inadvertently, the original specifications written, rather than the modified ones, were apparently used in their conversations. At any rate the specifications on which you bid read as follows:
^ j{í #
It will be seen by a careful comparison of these six particular points taken from the specifications that points 1 and 2 of my letter of January 28 are eliminated in that it can no longer be said that the reflectors exceed these 2 specifications. Also on page Y, Item II, A 5., the specification reads as follows: "This drive shall consist of either a single ot double ball screw moimted etc.", thus point 8 of my letter is also eliminated in that the double ball screw used at your suggestion had already been taken care of in the revised specifications, but had inadvertently been overlooked in the current conversations. Item 4 of my letter states clearly that we had written into our specifications requirements in excess of those needed for operation at 1,000 megacycles. In discussions with our engineers you questioned the necessity for this and were told that we hoped that with small loss in efficiency we might be able to use the antennas at 10,000 megacycles. We believe that the product you delivered will actually operate at this higher frequency with but little loss in efficiency. This, however, was merely in accord with specifications and did not result from any requested change on our part that should have resulted in extra cost. We had specified and you had already bid on antennas that had tolerances specified adequate to provide for this hoped-for performance. Point 5 related to paragraph 5 of the specifications quoted above. It is clear by comparison of these two that the product which you delivered probably conforms adequately to specification, although this is very difficult to measure, but there is no upper limit to that specification and however much you may have exceeded the minimum requirement it cannot be said you exceeded the specification. Thus, a review of the five points covered in my letter of January 28, taken one at a time, leads me back to the position which I have always held — • that nowhere in these 5 points did you make any changes or modifications in the antennas which departed from the written specifications on which you had bid which would in any way entitle you to extra compensation. Therefore, I cannot award a change order for extra compensation for any of these five items.
There is one point however, where you did definitely depart from the specifications with the concurrence of our engineers and although they were not informed that any additional cost would be involved it is perhaps not unreasonable to assume that they should have known that the proposal would be more costly than the method specified. This was the substitution which you made for milled casting instead of the stainless steel annular ring for mounting the feed mechanism. , This milled ring, without doubt, effected a clear improvement over the specified method and it seems reasonable that it was more costly to produce. I am therefore prepared, upon a submission by you of a detailed statement of the extra costs involved, to issue a change order to cover this item. Also, as I stated in a previous letter, you will, I believe, be entitled to an adjustment on the liquidated damages since, from the meager information in my possession, it would appear that the delays may have resulted from causes beyond your control. If these two detailed statements, one concerning the feed ring, and the other, the liquidated damages could be forwarded at your earliest convenience they will be given my immediate attention.
16. The foregoing findings are based either on facts admitted by the pleadings in this case or facts found, explicitly or implicitly, by the Appeals Board for the Department of Commerce and adequately supported by substantial evidence in the administrative record, or on facts conclusively shown by the administrative record.
17. On November 23, 1959, the contracting officer advised plaintiff that his letter of June 25, 1959, partially denying extra compensation and equitable adjustment under the contract constituted his final determination. Plaintiff appealed that decision to the Secretary of Commerce by letter dated December 2, 1959. The Secretary referred the appeal on January 15,1960 to the Appeals Board for the Department of Commerce.
On May 18, 1960, the Board held a hearing on plaintiff's claim at which time oral testimony was taken and documentary exhibits received in evidence. So far as the administrative record discloses, it was at this hearing where plaintiff first stated the total amount of its claim in dollars, namely, $416,914. Briefs were filed with the Board by both parties, and on July 21,1960, the Board rendered its Opinion and Decision denying plaintiff's appeal without prejudice, however, to an equitable adjustment for increased cost as to the feed support ring and relief from the Government's as-section of liquidated damages.
The Opinion and Decision of the Appeals Board is re produced in full as the Appendix to Defendant's Answer and Counterclaim in this suit and is incorporated herein by reference. By way of summarization, the Board considered the contracting officer's letters of January 16 and 28, 1959 (on which plaintiff relied as creating a binding agreement) and arrived at an ultimate finding as follows:
since the antennas had been completely constructed, delivered, and installed prior to the time these letters were written, the Contractor did not alter his performance under the contract in reliance on anything said in them
However, not being content to rest its decision on the above finding, the Board thereupon proceeded to consider on its merits the contracting officer's letter of January 28, 1959, particularly as to its assertion that plaintiff had exceeded the specifications in five respects. The Board interpreted the applicable specifications of the contract as being "performance specifications" which merely provided minimum standards and which, in order to fulfill its contract, the contractor was obliged to meet or exceed by methods of its own choosing. The Board analyzed each specification involved and determined that plaintiff had not in fact exceeded the minimum requirements of the specifications. It attributed the contracting officer's contrary statements in his January 28 letter to his failure properly to describe therein the contract specifications at issue. The Board did determine, however, that in providing an aluminum type feed support ring (with NBS prior approval), the plaintiff had exceeded one requirement of the specifications for which it was entitled to a change order. Upon audit by defendant of plaintiff's invoice for additional costs in this respect, plaintiff was paid by defendant the additional sum of $22,592. NBS also canceled its assessment against plaintiff of liquidated damages in the amount of $7,950.
18. On May 17, 1961, plaintiff filed its petition herein, seeking this court's judgment in the sum of $416,914, on the ground that the Appeals Board had acted arbitrarily and capriciously and had passed upon a question of law beyond the scope of its jurisdiction.
In addition to its denial of those contentions, defendant has counterclaimed herein for judgment against plaintiff in the sum of $22,592, with interest, on the ground that such amount was paid plaintiff in error and without the approval of the contracting officer.
CONCLUSION OE LAW
Upon the foregoing findings of fact which are made a part of the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover. The petition will not be dismissed due to the pendency of defendant's counterclaim.
Plaintiff's brief to the court admits that in view of United States v. Carlo Bianchi & Co., 373 U.S. 709 (1963), "plaintiff is now probably required to rely upon the Board record."
"The Contracting Officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scope of this contract, in any one or more of the following: (1) drawings, designs, or specifications, where the supplies to be furnished are to be specially manufactured for the Government in accordance therewith; (ii) method of shipment or packing; and (iii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for, performance of this contract, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accordingly. Any claim by the Contractor for adjustment under this clause must be asserted within 30 days from the date of receipt by the contractor of the notification of change: Provided, however, That the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled 'Disputes.' However, nothing in this clause shaR excuse the Contractor from proceeding with the contract as changed."
"Except as otherwise provided in this contract, no payment for extras shall be made unless such extras and the price therefor have been authorized in writing by the Contracting Officer."
The testimony of its Director of Research ana Development, on which plaintiff relies heavily, is so unclear, so general, and so equivocal that it cannot support the claim that a compromise was offered or consummated.
There can be no factual dispute regarding this statement, although presumably plaintiff would contend as a matter of law that the contracting officer's letter of January 28th itself constituted the required written change order or authorization. This matter is discussed below.
There is no showing at all that the engineers here were authorized representatives of the contracting officer for the purpose of ordering changes.
The record contains a few references to July 11, 1958, as the completion date and the Appeals Board so found. It clearly appears, however, that the July date stemmed from an inadvertent error by the Project Engineer for NBS in a memorandum to the contracting officer dated November 3, 1959.