Opinion ID: 413419
Heading Depth: 1
Heading Rank: 2

Heading: resolution of government contract disputes

Text: 13 Before turning to the core question of whether the bankruptcy court or the ASBCA should liquidate the government contract claims, we must first delve a little deeper into the nature of governmental dispute resolution. More specifically, we are concerned with how the ASBCA gets its customers, by what right the ASBCA resolves disputes. The parties present two polar positions, believing that the correct characterizations of the disputes clause is dispositive of the jurisdictional issue. See infra Part IV.C.1. On one hand, the government believes the disputes clause is as binding as if it were statutorily mandated; on the other hand, Gary believes the disputes clause is of no more force than an arbitration clause in a contract between two private parties. We find, on the third hand, that an intermediate view is most compelling; accordingly, our characterization of the disputes clause is not automatically dispositive of the jurisdictional issue. See infra Part IV.C.2. 14 The government's most aggressive position is that the disputes clause is, in effect, statutorily mandated. The government claims that the Armed Services Procurement Act, 10 U.S.C. Secs. 2202-2774 (1976), which provides the authority to issue the Armed Services Procurement Regulations (ASPR). ASPR Sec. 7-203.12, 31 C.F.R. Sec. 7-3.12 (1976), mandates the dispute clause in question. Thus, the dispute clause is, in effect, congressionally mandated. The Court of Claims has held, in fact, that this line of reasoning results in contracts being read as if they contained required clauses, even when the actual contract did not. G.L. Christian & Assoc. v. United States, 312 F.2d 418, 424 (Ct.Cl.), cert. denied, 375 U.S. 954, 84 S.Ct. 444, 11 L.Ed.2d 315 (1963). See also Chris Berg, Inc. v. United States, 426 F.2d 314, 317 (Ct.Cl.1970). 3 15 We do not agree with the government's analysis. It is worth noting that the Contract Disputes Act of 1978, 41 U.S.C. Secs. 601-613 (Supp.1979) does indeed make the disputes clause statutorily mandated, but that was not in effect at the time of the contracts in question here. Our initial point of disagreement is that we find no specific authority in the Armed Services Procurement Act for the ASPRs. Indeed, the Legislative history of the Contract Disputes Act of 1978 notes that [b]asically the methods and forums for handling such disputes exist by executive branch fiat--that is, by the insertion of contract terms specifying how disputes in specific areas will be resolved--and by agency regulations governing the procedural and substantive adjudication of disputes. S.Rep. No. 1118, 95th Cong., 2d Sess. 2 (1978), reprinted in 1978 U.S.Code Cong. & Ad.News 5235, 5236. See also S & E Contractors, Inc. v. United States, 406 U.S. 1, 18, 92 S.Ct. 1411, 1421, 31 L.Ed.2d 658 (1972) (Boards of Contract Appeals are not statutory creations but are established by administrative regulations. S.Doc. No. 99, 89th Cong., 2d Sess., Operation and Effectiveness of Government Boards of Contract Appeals 20-21.). Many cases hold that dispute clauses gain their compelling force through contractual agreement. See, e.g., Patton Wrecking and Demolition Co. v. TVA, 465 F.2d 1073 (5th Cir.1972), Bethlehem Steel Corp. v. Grace Line, Inc., 416 F.2d 1096, 1105-06 (D.C.Cir.1969). In summary, we do not view the dispute clause as having the force of congressional enactment. 16 Gary takes the complementary extreme position that because the dispute clause gains its force through contractual agreement, it is merely a contractual clause. We believe this conclusion is not supported by law, logic, or common sense. First, the logical underpinnings of the conclusion are flawed. The fact that Gary became subject to the dispute clause by contractual agreement does not entail the conclusion that all the consequences of the dispute clause are merely contractual and of little moment. After all, the Constitution is merely the product of agreement by the citizens and governments of the thirteen colonies. 17 Second, the fact that dispute clauses were not statutorily mandated does not mean that they have no official stature. Congress was certainly cognizant of the existence of dispute clauses and at the least condoned them. See, e.g., United States v. Moorman, 338 U.S. 457, 460, 70 S.Ct. 288, 290, 94 L.Ed. 256 (1950) (Contractual clauses such as these have long been used by the Government. No congressional enactment condemns their creation or enforcement.). In fact, the only enacted evidence of congressional knowledge of dispute clauses, the Wunderlich Act, 41 U.S.C. Secs. 321, 322 (1976), providing for judicial review of Board of Contract Appeals decisions, suggests at least tacit approval. As the Supreme Court has said, a dispute clause 18 is something more than a dead letter to be revived only at the convenience or discretion of the contractor. It is a clear, unambiguous provision applicable at all times and binding on all parties to the contract. No court is justified in disregarding its letter or spirit.... This mechanism, moreover, is exclusive in nature. Solely through its operation may claims be made and adjudicated as to matters arising under the contract. 19 United States v. Joseph A. Holpuch Co., 328 U.S. 234, 239-40, 66 S.Ct. 1000, 1003, 90 L.Ed. 1192 (1946) (citations omitted, emphasis added). This is something more than mere contractual verbiage. 20 Finally, and perhaps most importantly, common sense suggests it is a bit disingenuous to treat the dispute clause as just another binding arbitration clause in a contract between two parties. One has merely to look at the vast body of case law, digests, and treatises to realize that government contracting law is complex, technical, esoteric, important and monumental. The raison d'etre of the various Boards of Contract Appeals is that both expertise and uniformity are needed to resolve adequately and fairly questions within the purview of government contracting law. The keystone of this entire edifice is the dispute clause--hardly just another contract clause. 21 The parties have attempted to confine our choices by classifying the dispute clause along a spectrum from private law to public law, with their preferences at the two extreme ends of the spectrum. Our quarrel lies not so much with the extremities as with the spectrum. Focusing on the dispute clause unduly narrows the scope of our inquiry. The dispute clause itself is undoubtedly a creature of contract. The clause, however, is but one creature in the zoo of government contracting. To compare the nature of the triggering event of government contract dispute resolution, a purely contractual clause, with the nature of the entire process is to compare appaloosas and orangutans.