Court Opinion

ID: 8596221
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:03:27.92581+00
Date Added: 2024-06-11T16:54:57.027985
License: Public Domain

Nichols, Judge,
dissenting:
Respectfully, I dissent. Since Schlesinger v. United States, 182 Ct. Cl. 571, 390 F.2d 702 (1968), there has been no doubt that a default termination under the relevant standard clauses in government contracts is not automatic. It is discretionary. Where the default is technical only, it can be an abuse of discretion to terminate. The result in a case of such abuse is that under the usual clauses the termination becomes one for convenience. That is the proper result here.
The immediate occasion for the default arose on May 3, 1973. The plaintiff was performing a contract to manufacture "survival vests” for paratroopers. He had previously filled orders for this item with success, but this time there was a minor variation in the specifications. The vest included a holster for a small hand gun. Plaintiff, having carried his production to the point near 90 percent of completion, found, or thought he found, that the new specification called for a defective vest, in that it was impossible to close the holster strap over the gun. He *376suspended production, notifying defendant he had done so, and of the nature of the defect. Defendant sent a "quality assurance specialist” to the plant on May 7, at the same time stating the visit was not to be construed as a waiver of the delivery schedule. Defendant alleges it notified plaintiff on May 8 that the specification was all right, but plaintiff denied receiving the notice and no finding was made as to who told the truth. On May 10, an increment of vests was due and not delivered. The next day, May 11, defendant sent the notice of default termination, misdirecting it to Boston where plaintiff had no plant or office. It was received May 18. This embarrassing gaffe by defendant increased the loss to plaintiff, as it continued production except for the holster strap until May 18, but does not otherwise affect the case.
The haste to terminate the plaintiff for default appears to me indecent in the circumstances. As even the trial judge admits, the default could have been waived "if excusable.” He looks to the contract to find what is excusable, and defines it as something outside the control of the contractor, by analogy to the clause applicable in case of assessment of reprocurement costs. This was not outside the control of the contractor because, heedless of the possible consequences, he could have gone on manufacturing what he believed in good faith to be a defective product.
It is not my intention to challenge the Board finding that the specifications were not defective. That finding has evidentiary support and binds us in my view. We now have before us an exhibit, a sample of the vest. The strap can now be closed easily, though I have no evidence how many Board and court personnel have closed it previous to me, nor how much stretch such handling may have imparted. It is of record that the Board member who heard the testimony had difficulty with it. It is not even intimated that plaintiffs belief was wholly without foundation, still less that it was mere pretext to cover something else. Nobody wants to be in the position of supplying a defective product, especially when it is to be used by soldiers in combat. The military were not in any great rush to obtain delivery: if they had been, they would have waived the *377technical default and got their vests in a week. It is significant there are no reprocurement costs in the case: the Board finds there was no repurchase. It is simply a case of using a technical default to eliminate paying for a product no longer needed.
In Schlesinger, the delivery time was not met and the pertinent contract clauses were the same as here. The court did not apply them in the wooden way it does here. Mr. Schlesinger had some things going for him that tended to gain him the court’s sympathy. He had been a victim of Congressional pressure; legislators, as they sometimes do, had concluded he was a public enemy and should be allowed no rights. Plaintiff here does not benefit from that kind of backlash. Essentially, though, he was in "technical default” just as Schlesinger was. He had a right to have the defendant’s officials exercise their discretion, just as with Schlesinger. Here, as in Schlesinger, there is no evidence defendant’s officials ever exercised their discretion or realized they had any. Since plaintiff stopped production of his own decision, he had no legal right to relief from the default, but he did, if you like, have a right to an informed and deliberate exercise of discretion. The speed of action here reflects a plain intent to effect the default before plaintiff knew it was imminent and before he could urge anything in his own behalf.
I would hold the termination converted into one for convenience, and remand to the Board for determination of quantum.