Court Opinion

ID: 9493322
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:05:03.907059+00
Date Added: 2024-06-11T17:55:46.960092
License: Public Domain

BOGGS, Circuit Judge,
dissenting.
TVA had a long-term coal contract with a supplier, Diversified, who was engaged in providing benefits to a TVA officer in violation of the contract. TVA thought it should, within the bounds of legality, not do business with such a supplier. Instead, it now finds itself in the position of paying potentially millions of dollars to the malefactor. Because I believe this result is not compelled by law, I dissent.
TVA basically raises two reasons that it should prevail: (1) The terms of the contract caused the contract to terminate automatically in 1993 under certain circumstances; and (2) Diversified breached the contract’s terms by providing favors to TVA employees engaged in the administration of the contract. I agree fully with the first argument, and believe that the second has merit as well.

TERM OF THE CONTRACT

In my view, the relevant provision, quoted by the court at page 331, taken as a whole, clearly allowed either party to walk away from the contract in 1993 if it so desired. The only language possibly favorable to Diversified’s position is the statement that “this contract may be reopened by either party ... for the purpose of negotiating price and other terms and conditions.... ” However:
1. There is no other reference in the “Term ” paragraph to this “purpose” language and no indication of any method for judging the purpose of an announced reopening;
2. The operational language in the paragraph is purely volitional: “[I]f either party exercises this reopener it shall give ... notice” (emphasis added);
3. There is a clearly stated consequence of mere exercise: “If the reopen-er provision has been exercised, this contract will terminate” unless there is an agreement in writing to continue; and
4. The paragraph concludes with the quite strong and explicit summary that “[njeither party shall be under any obligation or liability to extend this contract if either party desires to terminate deliveries.”
Thus, I believe that a careful reading of the language of the contract shows that TVA was permitted to terminate the contract at will under this provision. In addition, even a fair interpretation of the term “negotiating ... other terms and conditions” would cover refusing to continue a contract that the other party has been breaching. What kind of “term and condition” could be inserted to ensure compliance with the exact term that has previously been violated? We would be requiring an act of utter futility to insist that TVA sit down with Diversified and *341simply repeat: “We can’t trust you, you’ve cheated before.”
Diversified also contends that even if the analysis above were to be correct, TVA may not invoke its protection because it did not properly invoke the terms of the contract by having the proper official give the notice of reopening. As I explain below, this alleged error in no way disadvantaged Diversified, Diversified did not raise it at any time prior to this appeal, and’ there is no indication that the provision was meant to limit the government’s options under the circumstances. Further, a careful parsing of the “chain of command” in TVA indicates that there was no breach of the contract’s provisions, and any argument that there was a breach of the regulations or statute is quite tenuous.

IDENTITY OF THE CONTRACTING OFFICER

The court is correct that the Contract Disputes Act specifics how disputes are to be settled, and who can speak for a government agency. The chain of authority is:
... “contracting officer” means “any person who ... has the authority to enter into and administer contracts ... including] the authorized representative of the contracting officer....”
41 U.S.C. § 601(3).
In TVA, “contracting officer” means the “Director of Purchasing, or duly authorized representative”; specifically, the “Purchasing Agent who administers a contract. ...” 18 C.F.R. § 1308.2(e).
This contract contained essentially the same provision. JA 43.
Diversified’s case rests on the alleged failure by TVA to have the proper Contracting Officer bring the claims against Diversified. However, Diversified never complained, until this appeal, about this alleged breach. Even more, Diversified was fully aware of the claimed defects, and not only did not raise them, but affirmatively proceeded as though the procedures were valid.
With respect to the raising of TVA’s claim of breach, it is true that Diversified objected to the claimed termination of the contract on this basis by Mr. Vincent’s letter of March 19, 1993. However, once that letter had been set aside, and Mr. King, the Manager of Purchasing, appointed himself as Disputes Contracting Officer, Diversified made no further objection throughout the course of the proceedings to the consideration of that claim. Indeed, that was the whole purpose of the proceedings. King had informed Diversified of TVA’s claim in his original letter of June 25, 1993 appointing himself. Diversified can hardly be heard to say now that it is entitled to set at nought the entire proceeding in which it cheerfully participated, on the ground that it knew all along that a technical defect had occurred.
Stripped to its essence, Diversified’s claim is that TVA could never have acted with respect to this contract, once Mr. Hardy left, without having had a new delegation letter issued. This is despite the fact that Diversified continued to deal with TVA through a succession of other employees (first Ronald Martin, then Marion Duncan, then Gregory Nicely, according to Diversified) and never complained that it was in any doubt as to the person with whom it should deal, nor expressed any hesitance as to the authority of the person with whom it was dealing.
The only complaint came with respect to the letter sent by Mr. Vincent purporting to terminate the contract. Diversified objected to his authority to speak for TVA, and to the possibility of one of his subordinates adjudicating the dispute as Disputes Contracting Officer. This objection was rectified following the order by Judge Jarvis on April 22, 1993. Diversified was informed by Mr. King, the TVA Director of Purchasing, that he would now be acting as the Disputes Contracting Officer, responsive to Diversified’s complaint about having a subordinate of Vincent be the *342Disputes Contracting Officer. See JA 235; slip op. at 334. He also informed Diversified of TVA’s position that Diversified had breached the contract by giving benefits. Diversified again never complained about the nature of the notice, nor as to the person who gave notice, nor as to King being the Disputes Contracting Officer. The issue was fully litigated on the merits in the administrative proceeding, without further difficulty.
In short, Diversified’s position, now accepted by this court, is that it was free to laugh up its sleeve during all of the administrative proceedings over the contract dispute. If it prevailed in those proceedings, well and good. If it did not, it knew, in this court’s opinion, that it was free to disregard any adverse action, simply because TVA failed to send a perfunctory letter over the previous year. To me this is neither sound policy nor sound administrative law.
Whatever was the case prior to June 25, 1993, King’s actions in appointing himself as the Disputes Contracting Officer and exercising his power as Contracting Officer at that point cured any possible earlier difficulties. As Vice President for Purchasing, he was at the top of the contracting hierarchy and was directly authorized to serve as Contracting Officer to bring the complaint about Diversified’s actions that breached the contract.
None of the cases cited by the court in section II B, supra at 337-38, involve a situation where a claim was held invalid simply for failure of signature or approval by one administrative official rather than another. Indeed, it would be surprising if there were such cases, involving matters fully and properly litigated, where the only alleged defect is in the technical propriety of the initiation of a proceeding. In the much more serious matter of criminal liability, it has been repeatedly held that similar defects in commencing a criminal proceeding are to be disregarded if the matter has been otherwise fairly tried. See, e.g., Hobby v. United States, 468 U.S. 339, 345, 104 S.Ct. 3093, 82 L.Ed.2d 260 (1984) (citing Frisbie v. United States, 157 U.S. 160, 163-65, 15 S.Ct. 586, 39 L.Ed. 657 (1895)) (foreman’s failure to sign grand jury indictment not necessarily fatal to the indictment); United States v. Wright, 365 F.2d 135 (7th Cir.1966) (indictment sufficient though signed by an assistant, rather than United States Attorney); Wiltsey v. United States, 222 F.2d 600 (4th Cir.1955) (indictment sufficient though not actually signed by anyone). See generally 1 Charles A. Wright, Federal Practice & Procedure, § 103, p. 314 and § 123, p. 537 (3d ed.1999).
Numerous cases attest that substantial compliance with administrative requirements is generally sufficient, and that “magic words” are not required. See State of Florida, Department of Insurance v. United States, 81 F.3d 1093, 1098 (Fed.Cir.1996) (citing and quoting cases, especially Philadelphia Regent Builders v. United States, 225 Ct.Cl. 234, 634 F.2d 569, 573 (Ct.Cl.1980)) (“To nullify this termination for default solely on the ground of these harmless technical defects would grant plaintiff an entirely unwarranted windfall”). Thus, even prior to King’s actions, the successive persons who replaced Hardy and dealt with Diversified did not lose all ability to act on behalf of TVA as Contracting Officer. Diversified has not even alleged any plausible harm to its substantive interests from the alleged variations from the proper chain of command. Diversified’s “sandbagging” approach to these defects should constitute a waiver of any technical procedural objection that it may have.
It may be that the court’s opinion will serve as a good lesson to bureaucrats that the failure to send a specific type of routine letter to parties who are already adequately informed of changes in the administrative hierarchy can cost millions of dollars. Unfortunately, the “benefits” of that lesson will not be visited on the bureaucrats themselves but on the taxpayers and rate payers involved. I believe that *343the eases cited by the court do not support this result, and I therefore respectfully dissent.