Court Opinion

ID: 210891
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:21:10+00
Date Added: 2024-06-11T17:28:03.541945
License: Public Domain

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                      NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit

                                      2006-1215

            SCHLEICHER COMMUNITY CORRECTIONS CENTER, INC.,

                                                            Appellant,

                                           v.

                            Alberto R. Gonzales,
                ATTORNEY GENERAL, DEPARTMENT OF JUSTICE,

                                                           Appellee.

       Gilbert J. Ginsburg, Attorney and Counselor-At-Law, of Washington, DC, argued
for appellant.

       Russell A. Shultis, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, argued for appellee. With him
on the brief were Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director; and Kathryn A. Bleecker, Assistant Director. Also on the brief was William
Robinson, Office of the General Counsel, Bureau of Prisons, of Washington, DC.

            W. Bruce Shirk, Powell Goldstein LLP, of Washington, DC, for amicus
curiae. With him on the brief was David J. Taylor, Tighe Patton Armstrong Teasdale
LLP, of Washington, DC.

Appealed from: United States Department of Transportation Board of Contract Appeals
                      NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit

                                      2006-1215

            SCHLEICHER COMMUNITY CORRECTIONS CENTER, INC.,

                                                            Appellant,

                                          v.

                            Alberto R. Gonzales,
                ATTORNEY GENERAL, DEPARTMENT OF JUSTICE,

                                                            Appellee.

                          __________________________

                          DECIDED: January 8, 2007
                          __________________________

Before RADER, Circuit Judge, ARCHER, Senior Circuit Judge, and PROST, Circuit
Judge.

PROST, Circuit Judge.

      Schleicher Community Corrections Center, Inc. (“Schleicher”) appeals a

September 29, 2005 decision by the Department of Transportation Board of Contract

Appeals (“Board”) denying Schleicher’s claim for interest on back wages, benefits, and

taxes due under the Contract Dispute Act (“CDA”), and limiting profits awarded to

Schleicher for increased wages, benefits, taxes, and other costs due to the belated

incorporation of a wage determination. Because the Board correctly limited Schleicher’s
profit award and held that Schleicher could not receive CDA interest for wages, benefits,

and taxes it had not actually paid, we affirm.

                                    I. BACKGROUND

       On November 6, 1990, Schleicher was awarded a contract by the Federal

Bureau of Prisons (“BOP”) to provide residential community corrections center services

for Federal offenders in the greater Salt Lake City area. At the time the contract was

awarded, a wage rate determination had been requested from the Department of Labor

(“DOL”), but not yet received. On April 1, 1992, the wage determination was issued by

DOL, and the contracting officer then issued a contract modification to incorporate the

wage determination retroactive to the beginning of the contract. Subsequently, revised

wage rates were also incorporated into the contract.

       During the course of performance, Schleicher submitted a number of requests for

increased payments based largely on the contention that it was owed additional funds to

pay for increased wages required by the Service Contract Act (“SCA”). Although BOP

paid Schleicher $262,811 via price adjustments and manday increases during the

performance period, Schleicher submitted a claim to the contracting officer seeking

$826,797. The contracting officer denied the claim in its entirety.

       Schleicher appealed the contracting officer’s decision to the Board. In a decision

dated June 19, 2002, the Board recognized that Schleicher’s case raised some issues

that were within the exclusive jurisdiction of DOL. The Board, however, went on to

resolve the contractual matters that were within its jurisdiction. Because the issues

relating to unresolved labor standards were reserved to DOL, the Board remanded the

determination of the total amount of increased wages and fringe benefits for which

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Schleicher was liable to DOL. After this determination, the amount of the award due to

Schleicher’s wage and fringe benefits liability would be transferred to DOL for

distribution to Schleicher’s former employees. With regard to interest, the Board stated

Schleicher was “automatically entitled to interest in the amount prescribed by [the CDA]

upon the award we will make once the DOL determines the amount of back wage

liability.” Schleicher Cmty. Corr. Ctr., Inc., DOTBCA No. 3067, 02-2 BCA ¶31,902 (June

19, 2002). Schleicher appealed the adverse aspects of the Board’s decision, and we

affirmed. Schleicher Cmty. Corr. Ctr., Inc. v. Ashcroft, 96 Fed. Appx. 718 (Fed. Cir.

2004).

         Subsequently, DOL completed its determination of the wages and fringe benefits

due Schleicher’s employees, and the Board asked the parties to submit briefs

addressing the outstanding quantum issues, including CDA interest in light of Richlin

Security Services Co., DOTBCA No. 3034, 04-2 BCA ¶32,670 (2004), a subsequent

opinion, since affirmed by this court, Richlin Security Services Co. v. Chertoff, 437 F.3d

1296 (Fed. Cir. 2006), in which the Board held that a contractor was not entitled to

receive CDA interest on unpaid back wages or associated taxes.

         Determining that the ruling in Richlin was applicable to this case, the Board

revisited its earlier decision awarding Schleicher CDA interest, and held that Schleicher

could not recover CDA interest since it had not advanced its own funds to pay the

underlying wages, benefits, and taxes. The Board also addressed an inconsistency in

its earlier opinion, in which the summary stated that Schleicher was entitled to profit

upon all of the increased wages, taxes, insurance, and other costs associated with the

incorporation and subsequent revisions of the wage determination, but the body of the

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opinion held that only the increased wages resulting from the belated incorporation of

the wage determination were subject to profit.        Recognizing this inconsistency, the

Board’s second opinion limited Schleicher’s profit on the increased wages to the first

year of the contract alone, consistent with the holding in the body of its earlier opinion.

       Pursuant to 41 U.S.C. § 607(g)(1)(A), Schleicher appeals the Board’s decision to

this court. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(10).

                                     II. DISCUSSION

                                             A

       The standard of review in cases under the Contract Disputes Act is governed by

41 U.S.C. § 609(b). As to questions of fact, if the Board’s factual findings are supported

by substantial evidence, we will not alter them unless the decision “is fraudulent,

arbitrary, capricious, or so grossly erroneous as to necessarily imply bad faith.” Id.; see

Fruin-Colnon Corp. v. United States, 912 F.2d 1426, 1428-29 (Fed. Cir. 1990). As to

questions of law, however, the Board’s decision is not final or conclusive. Am. Elec.

Labs., Inc. v. United States, 774 F.2d 1110, 1112 (Fed. Cir. 1985). Although “we give

careful consideration and great respect to a board’s interpretation[,]” Fruin-Colnon, 912

F.2d at 1429, the interpretation of the CDA is a matter of law reviewed de novo by this

court. Abraham v. Rockwell Int’l Corp. 326 F.3d 1242, 1249 (Fed. Cir. 2003); 41 U.S.C.

§ 609(b).

                                             B

       On appeal, Schleicher challenges the Board’s opinion on three grounds: (1) that

the Board’s original opinion was final and could not be revisited by the Board; (2) that

the Board erred on the merits in denying Schleicher interest under the CDA; and (3) that

2006-1215                                     4
the Board erred on the merits in limiting Schleicher’s profit to the first year of the

contract. We take each issue in turn.

                        1. Finality of the Board’s Original Opinion

       Schleicher argues that the Board erred when it decided Schleicher could not

receive CDA interest on unpaid wages, fringe benefits, and associated taxes because

that issue had been finally decided in the Board’s June 19, 2002 opinion. According to

Schleicher, the Board was not free to reopen the issue on its own. Schleicher bases

this argument on the fact that this court has already heard at least one appeal arising

out of that opinion and went so far as to state that all that remained for the Board was

“essentially a ministerial act . . . to issue its quantum order.” Schleicher Cmty. Corr.

Ctr., Inc. v. Ashcroft, No. 03-1039, slip op. at 2 (Fed. Cir. Jun. 30, 2003).

       We disagree. The fact that this court reviewed other aspects of the Board’s

original opinion is not dispositive of the finality of an issue not appealed from that

opinion. “The classical doctrine of finality generally requires that the order below ‘end[]

the litigation on the merits and leave[] nothing for the court to do but execute judgment.’”

Dewey Elecs. Corp. v. United States, 803 F.2d 650, 653 (Fed. Cir. 1986) (quoting

Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373 (1981)). Accordingly, in the

context of reviewing a district court decision, the Supreme Court has held that the

issues of damages and liability are a single claim and that both must be resolved to

constitute a final decision. Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 744 (1976).

We have held that this principle also applies to appeals from boards of contract appeals.

Teledyne Cont’l Motors, Gen. Prods. Div. v. United States, 906 F.2d 1579, 1582 (Fed.

Cir. 1990). Indeed, in Dewey, this court held that it could review a board’s denial of four

2006-1215                                     5
claims, while five other claims involved in the dispute awaited a quantum determination

from a contracting officer. 803 F.2d at 658. The fact that the court reviewed the denial

of four claims did not render the five claims on remand final as well. Id. Accordingly,

since the quantum issues were still outstanding, the Board’s original decision regarding

Schleicher’s claim for CDA interest was not final, and the Board was free to reexamine

the issue in light of the intervening case law.

         Moreover, even if the Board’s original opinion had been final, the Board is

allowed to revisit an issue it has already decided if: (1) there has been a substantial

change in the evidence; (2) there is a subsequent change in the controlling law; or (3)

the prior decision was clearly erroneous and would work a manifest injustice. Gould,

Inc. v. United States, 67 F.3d 925, 930-31 (Fed. Cir. 1995). In the present case, the

parties do not dispute that Richlin represents a subsequent change in the controlling

law. Accordingly, had the Board’s decision been final, the subsequent change in the

law represented by Richlin would have nonetheless allowed the Board to revisit the

issue.

                             2. Contract Disputes Act Interest

         Schleicher argues that the Board erred by denying it interest under the CDA on

the increased wages, fringe benefits, and taxes resulting from the belated incorporation

and subsequent revision of the wage determination from DOL. According to Schleicher,

the plain meaning of 41 U.S.C. § 611 requires the payment of interest whether or not

the underlying amount was actually paid.

         Schleicher’s argument appears to us one that was flatly rejected in Richlin, an

opinion that is binding on this panel. As explained by this court, “the contractor can

2006-1215                                     6
recover interest only on amounts it actually paid.” Richlin, 437 F.3d at 1301-02. See

also Raytheon Co. v. White, 305 F.3d 1354, 1365 (Fed. Cir. 2002).

       Although, Schleicher attempts to distinguish Richlin from this case and argues

that it should be limited to its particular facts, we find Richlin directly on point. In Richlin,

the award of back wages did not compensate the contractor for any past, present, or

future out-of-pocket expense.1       Richlin, 437 F.3d at 1302.        Schleicher attempts to

distinguish Richlin based on the fact that the back wages and associated taxes were

paid to the contractor’s employees through an escrow mechanism, making the

contractor a mere “conduit” in the court’s eyes.               This argument, however, is

unpersuasive. As discussed above, the back wages in this case were to be transferred

to DOL for distribution to Schleicher’s employees.          Therefore, like the contractor in

Richlin, Schleicher is serving as little more than a conduit, and is not entitled to interest

under the CDA. Accordingly, the Board correctly denied Schleicher’s claim for interest.

                                        3. Profit Claim

       Schleicher also argues that the Board erred by limiting Schleicher’s profit claim to

monies paid for the first contract year. However, as explained above, the Board was

merely clarifying an inconsistency in its original opinion. Moreover, the substance of the

Board’s original opinion, as well as its second opinion, properly applied the applicable

Federal regulations.

       1
             Schleicher argues that it did pay a significant portion, approximately
$250,000, of the increases wages, fringe benefits, and taxes due to the belated
incorporation wage determination.       However, Schleicher had already been
compensated for that amount by BOP’s price adjustments and manday increases during
the performance period, and that amount is not the subject of this appeal. The issue of
whether interest is due on that amount was not addressed below, nor briefed by the
parties.

2006-1215                                      7
       Section 52.222-43(e) of Title 48 of the Code of Federal Regulations explicitly

states that a contract price adjustment due to a SCA wage determination “shall not

otherwise include any amount for . . . profit.” The contracting officer may, however,

“equitably adjust” the contract price “retroactively” due to any changed cost resulting

from Governmental error, such as belated incorporation of a wage determination,

pursuant to 48 C.F.R. § 22.1015. Therefore, any profit claim due to the SCA wage

determination could only be paid under § 22.1015 as a retroactive equitable adjustment.

Accordingly, since the contract modification only applied to the first year of the contract,

the profit claim was properly limited to that period, as well.

                                     III. CONCLUSION

       The decision of the Board denying Schleicher’s claim for interest on the back

wages, fringe benefits, and taxes due to the incorporation of the wage determination

and limiting Schleicher’s profit award to the first year of the contract is affirmed.

2006-1215                                     8