Court Opinion

ID: 9489699
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:21:58.665503+00
Date Added: 2024-06-11T17:53:40.156222
License: Public Domain

PAULINE NEWMAN, Circuit Judge,
dissenting.
The Armed Services Board of Contract Appeals, resolving the several disputes arising from this contract, found that the Navy did not have unrestricted use of Cessna’s aircraft and flight services up to 17,000 hours of flight time. The Board held that it was an incorrect interpretation of the contract to require Cessna to provide services beyond those explicitly set forth in the contract, up to the maximum of 17,000 hours. This is the ruling that the Navy appeals.
The Board held that the Navy’s requirements imposed after the contract was let, that Cessna fly VIP’s to various places, that the Cessna planes be used for target flights, that Cessna fly to ski and beach resorts and passengers’ hometowns, that the Cessna *1307planes be used for general rescue flights, that the Cessna planes be used to provide flight time for non-student Navy personnel, that Cessna fly substantially more than three overnight flights per week, and that Cessna provide substantially more than 58 flight training hours per student, all violated the contract. The Board explicitly rejected the government’s argument that it had unlimited call on up to 17,000 hours of Cessna’s flight time.
The Navy appeals only one category of unauthorized activity. The Navy does not appeal the Board’s findings concerning the 17,000 hour ceiling, including the Board’s finding that the explicit contract limitations are not overridden by an open-ended entitlement to 17,000 flight hours for any purpose. The Board heard testimony to the effect that both the Navy and Cessna viewed the contract in the same way when it was bid; i.e., that the 17,000 hours was a maximum figure to accommodate possible enlargement of the Wing, and not a blank cheek for flight activities beyond those explicitly provided. There was no unresolved, patent ambiguity at the time the contract was entered into.
The contract explicitly provided .for “approximately 58 hours” of flight training per student. In evidence was the statement of the contracting officer that the Navy “does not intend to modify the syllabus.” Section 3.1.1 of the Statement of Work provided that the curriculum for student training (the Syllabus) was attached for “Contractor planning purposes” and that its purpose was to “define the contractor effort necessary to support the training requirement of Undergraduate Naval Flight Officers.” Although the panel majority chooses to find that there was a patent ambiguity concerning the obligation to provide 58 hours per student, in view of the ceiling of 17,000 hours, the Board, viewing the mutual understandings embodied in the contract, did not find such ambiguity. Indeed, the Navy did not state that it was entitled to 78, not 58, hours per student until three years into contract performance.
The Navy does not dispute, as indeed it can not, that the contract is explicit as to the “approximately 58 hours” of flight time per student. The Navy does not argue that 78 is approximately 58. The Board rejected the Navy’s litigation-created position that it had unlimited call on the Cessna planes and personnel, and held that the Navy was bound by the provisions of the contract, including the provision of approximately 58 hours per student. Indeed, the Navy has taken the strange position of arguing that its own contract requirement is of no significance.
Evidence as to the representations during the bid process were before the Board. There was an inquiry as to the 17,000 figure, and witnesses for both sides testified that their understanding was that this figure was a maximum, “if Congress approved a battle group increase,” in the words of the Navy wing Commander. The Navy represented explicitly that its training schedule was 58 hours per student, and included this figure in the contract. The contract states:
SECTION C — DESCRIPTION OR SPECIFICATIONS ... These services shall consist of an annual rate of 17,000 airborne training service hours (approximately 58 airborne training service hours per graduated student)....
Cessna structured its low bid in accordance with these representations and requirements. See Sylvania Elec. Prods., Inc. v. United States, 198 Ct.Cl. 106, 458 F.2d 994, 1008 (1972) (if contractors can not rely on government representations “the amounts of the bids received would soon show the results”).
The Board held that the Navy was bound by the representations in the Training Syllabus, the pre-bid explanations, and the contract itself. The panel majority, overruling the Board, holds that Cessna was properly required to provide 78 airborne training hours when the Navy so chose, three years into contract performance. The Board found that was not the agreement. Although Cessna took the risk of whether “Congress approved a battle group increase,” the stated purpose of the 17,000 hour limit, that did not include a change of the 58 hour figure to 78 hours, any more than it included the Navy’s other excursions beyond the contract provisions. This court is required to respect the Board’s findings
unless the decision is fraudulent, or arbitrary, or capricious, or so grossly errone*1308ous as to necessarily imply bad faith, or if such decision is not supported by substantial evidence.
41 U.S.C. § 609(b). None of the statutory conditions of reversal is here met. There is no ground for reversing the Board’s holding that the contract did not permit enlarging Cessna’s various obligations beyond those set forth in the Syllabus, and that the 17,000 hour figure did not contradict the explicit contract provisions as to the various obligations of the parties to the contract.
Nonetheless, the panel majority holds that the requirement of providing approximately 58 flight hours per student is “patently ambiguous” in view of the 17,000 hour figure. The consequence of this holding is very strange, for the panel majority will not hear Cessna’s argument on the merits of the issue of contract interpretation. Instead, the panel majority holds that Cessna can not now challenge the Navy’s litigation-induced interpretation, on the theory that Cessna should have foreseen and resolved this problem before it entered into the contract. Since it did not, the panel majority holds that Cessna is barred from disputing the government’s position, and that Cessna is not entitled even to attempt to sustain the Board’s findings in its favor.
The question of the meaning of the 17,000 hour limitation and its effect on the Navy’s various attempts to enlarge Cessna’s responsibilities under the contract was decided by the Board. This portion of the Board’s decision was not appealed. The Navy did not appeal the Board’s ruling that the contract did not give the Navy an unrestricted call on 17,000 hours of flight time. It is not before us to re-decide this question.
Thus I must dissent from the ruling of the panel majority, that bars Cessna from challenging the government’s position on what this contract means. The role of the courts is to assure fair and just resolution of contract disputes — not to bar access to Board or judicial review. The panel majority, in barring the contractor from the opportunity to challenge the government’s current interpretation, disserves the nation in its dependence on private contractors to meet governmental needs. See United States v. Winstar Corp., - U.S. -,-, 116 S.Ct. 2432, 2459-60, 135 L.Ed.2d 964 (1996) (“ ‘punctilious fulfillment of contractual obligations is essential to the maintenance of the credit of public as well as private debtors’ ”) (quoting Lynch v. United States, 292 U.S. 571, 580, 54 S.Ct. 840, 844, 78 L.Ed. 1434 (1934)).
In view of the rules favoring the government that exist only in contracts with the government, to protect those who deal with the government it is essential to distinguish between latent and patent ambiguity. The Board, on full hearing, with witnesses from both sides, determined that the 17,000 hour limit was understood the same way by both sides. No error has been shown in the Board’s findings on this point. On this unchallenged finding there can be no patent ambiguity.
However, the panel majority permits none of these approaches to appellate review, and simply reverses the Board’s decision, which favored the contractor, on the quixotic ground that the contractor should havé foreseen and resolved this dispute before bidding on the contract, and because the contractor did not, it can not now challenge the government’s theory. I must, respectfully, dissent.