Case: KINGS ELECTRONICS CO., INC. v. THE UNITED STATES
Abbreviation: Kings Electronics Co. v. United States
Decision Date: 1965-02-19
Docket Number: No. 487-56
Citation: 169 Ct. Cl. 433
Volume: 169
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: KINGS ELECTRONICS CO., INC. v. THE UNITED STATES
Judges: Before Cowen, Chief Judge, Laramore, Durfee, Davis, and Collins, Judges.
Pages: 433–465

Head Matter:
KINGS ELECTRONICS CO., INC. v. THE UNITED STATES
[No. 487-56.
Decided February 19, 1965]
John I. Heise, Jr., for plaintiff. Edgar ParJce Reese on the briefs.
Richard R. MoTlewr, with, whom was Assistant Attorney General John W. Douglas, for defendant. Raymond R. Rohr edit, Jr., on the brief.
Before Cowen, Chief Judge, Laramore, Durfee, Davis, and Collins, Judges.

Opinion:
Collins, Judge,
delivered the opinion of the court:
This action is based upon a contract entered into by plaintiff, Kings Electronics Co., Inc., and the Department of the Navy's Bureau of Ships for the- manufacture of 28-foot and 35-foot aluminum whip antennas. Plaintiff seeks damages for an alleged breach of the contract or, in the alternative, seeks an equitable adjustment of the contract price.
After receipt, in September 1950, of an invitation to hid, Morton Weissman, president of plaintiff, prepared the bid for his company. In determining the amount and type of material required for each antenna, he used the drawings which were part of the invitation. Weissman assumed that standard commercial aluminum tubing could be used. The bid of plaintiff was submitted on October 13,1950.
On November 17, 1950, the contract (No. NObsr-52087) was awarded to plaintiff; delivery was to begin within 90 days. Plaintiff received notice of the award no later than. December 1, 1950, and began to process the contract on December 20th. Samuel H. Jackson, plaintiff's project engineer, requested from the Navy Bureau of Ships the latest revision of specification 44T30, the specification (for aluminum tubing) referred to in the drawings. In response, the Navy, in January 1951, sent specification MIL-T-855', which included the statement that it superseded specification 44T30b insofar as purchases for the Bureau of Ships were concerned. Jackson proceeded under the assumption that MIL-T-855 was applicable to the contract.
Shortly after the engineering work began, Jackson encountered difficulty with regard to the tolerances pertaining to the aluminum tubing. Jackson believed that it would not be feasible to meet the dimensional requirements of the drawings with tubing ordered in accord with the specification. In an effort to resolve this matter, plaintiff conferred with Aluminum Company of America, its supplier. In January and in March of 1951, Alcoa submitted proposals to plaintiff, but plaintiff did not consider them to be acceptable. Finally, on April 4, 1951, Jackson wrote the contracting officer of the difficulty. Jackson's letter described the dimensions of the tubing available from Alcoa which came closest to meet ing the requirements of the contract and requested approval of changes in the tolerances for the inside and outside diameters.
On April 5, 1951, prior to receiving the letter from Jackson, the contracting officer wrote plaintiff that, due to its failure to make deliveries as required, plaintiff was in default. Plaintiff was directed to cure the default within 10 days or to show why the contract should not be terminated. As a result of this correspondence, a meeting was held on April 26,1951, between representatives of plaintiff and of the Navy. The contract was not terminated, and plaintiff's proposal with regard to tolerances was accepted by the contracting officer.
On May 3, 1951, plaintiff submitted to the contracting officer its first progress report. After obtaining the agreement of Alcoa to an August delivery schedule, plaintiff placed its order for the aluminum tubing. On May SI, Alcoa returned the order to plaintiff because new directives regarding the allotment of strategic materials had been issued. The original allocation to plaintiff had been made on the basis of regulations which would cease to be effective after July 1951. Plaintiff's efforts to obtain aluminum from other sources were unsuccessful; however, in July plaintiff received a priority under the new regulations. Alcoa sent plaintiff formal acknowledgment of the purchase order; delivery was to be in November 1951.
In August 1951, Alcoa had called to plaintiff's attention the need to alter the elongation test provisions contained in specification MIL-T-855. At a meeting on September 26, 1951, this matter was resolved when the contracting officer orally accepted the proposed alteration.
On October 29,1951, the Navy wrote plaintiff that a change from specification MIL-T-855 to specification 'W'W-T-789 was contemplated; At a conference on October 31, Weiss-man told the contracting officer that the contemplated change would require plaintiff to "start from scratch." At that time, Weissman requested that-the. contract be terminated without cost to. either party. The contracting officer did not terminate the contract, and plaintiff, at the urging of the contracting officer,- continued its performance.
In November 1951, when the aluminum began to arrive, plaintiff's facilities were entirely occupied. Plaintiff then elected to perform by subcontracting the manufacture of the antennas.
The contract was completed'in July 1953. At the suggestion of the contracting officer, plaintiff filed a request for a contract price increase pursuant to Title II of the First War Powers Act. of 1941. Subsequently, this claim was withdrawn and resubmitted in the. form of a claim for an equitable adjustment under the "Changes" article. On February 3,1956, the contracting officer denied plaintiff's claim. An appeal to the Armed Services Board of Contract Appeals resulted (on March 27,1958) in a decision adverse to plaintiff. In -the present action, plaintiff seeks to recover $149,608.94,- which represents its'-losses of $144,108.32 plus $5,500.62, the-5 percent profit which, according to plaintiff, was included in its bid. .
Plaintiff .asserts, that, under either the breach of contract or the equitable adjustment theory, the measure of damages should be the. total amount of plaintiff's losses, plus the 5 percent profit included in the bid. Defendant denies any liability to plaintiff. • This court finds neither party's position to be totally convincing. Although not persuaded that plaintiff should recover the entire amount claimed, we are of the opinion that defendant is liable for some of plaintiff's losses.
The Matter of Delays
Plaintiff's argument is based, to a considerable extent, upon the assumption that defendant must bear the responsibility for tbe delays which occurred during the performance of the contract and for losses allegedly caused by the delays. Completion of the contract, although originally scheduled for May 1951, did not occur until July 1953. Undoubtedly, certain of plaintiff's losses resulted from the protraction of performance of the contract. The initial issue, then, is whether or not the various delays are attributable to the Government.
First, consideration must be given to the lapse of time which occurred between December 1,1950, the date by which plaintiff had received notice of award of the contract, and April 4,1951, when plaintiff wrote defendant regarding the problem of "tolerances." This initial period of delay is important, for, according to plaintiff, the time consumed in dealing with the matter of "tolerances" had a causal relation with the subsequent delays.
For purposes of the immediate discussion, it is assumed that the drawings and specifications of the contract did contain a conflict with regard to dimensional tolerances. One significant fact is that, although plaintiff's project engineer discovered the problem in December 1950, it was not until April 4,1951, that plaintiff informed the Government of the matter. In an effort to justify their actions, plaintiff's officers testified that, as the contractor, plaintiff had the responsibility to find the best possible solution and that the first suitable proposal reached was the one contained in plaintiff's letter of April 4 (which proposal was subsequently accepted by defendant). Conceding arguendo that, during the period prior to April, plaintiff made a diligent effort to arrive at a solution, there is still no adequate basis for plaintiff's contention that responsibility for this delay must be placed upon the Navy. If, within a reasonable' time after discovery of the conflict, plaintiff had apprised the Navy of the matter, then, clearly, the time spent in reaching a solution could have been characterized as a Government-caused delay. How ever, instead of notifying the Navy promptly, plaintiff sought to work the matter out for itself. Under these circumstances, plaintiff is not in a position to place upon the Government responsibility for the time plaintiff expended in reaching a solution. Also, it is of some significance that, despite the contractual obligation of plaintiff to submit monthly progress reports, plaintiff did not notify defendant of the difficulty until April 1951. Therefore, this court concludes that the "tolerance" delay is not attributable to the Government.
Another step in plaintiff's argument is the assertion that the problem of allocation was a result of the "tolerance" delay. The original allocation of aluminum for the contract was based upon National Production Authority regulations, but these regulations were effective only until July 1951. Thus, with regard to the order placed in May 1951, calling for delivery in August, the original priority was of no avail. According to plaintiff, since it was the "tolerance" delay which caused the need to obtain new priority and the resulting postponement of delivery, the party who caused the former delay was also responsible for the allocation difficulty. However, this court has found that defendant cannot be held liable for the "tolerance" delay, and it follows, therefore, that the priority matter, the second link in plaintiff's chain of causation, cannot be charged to the Navy.
The next difficulty encountered by plaintiff related to the matter of "elongation." Plaintiff asserts that the provisions of specification MXL-T-855 regarding the elongation test were defective and that the time spent in correcting this defect was another source of delay. Although defendant takes the contrary position, this court has concluded, for reasons explained m/m, that MIL-T-855 was the applicable specification. However, the significant fact is that the elon gation problem was disposed of prior to November 1951, the month during which Alcoa was to begin delivery of the aluminum. Thus, the events relating to elongation had no real delaying effect and no "delay damages" can be based upon the elongation matter.
By the time the aluminum was delivered, plaintiff's plant was fully occupied with work on other contracts. This led to the decision of plaintiff to have subcontractors produce the antennas. According to plaintiff, the necessity to use subcontractors was the culmination of the delays caused by the Government's faulty drawings and specifications. The view of plaintiff regarding causation and damages is subject to serious doubt. It is evident that a number of factors, many of which were unconnected with contract NObsr-52087, led to plaintiff's situation. For example, in scheduling its production activities, plaintiff failed to allow for the eventual manufacture of the antennas. The decision to use subcontractors was plaintiff's and the relation between (1) the consequences of subcontracting and (2) the alleged fault on the part of defendant is too remote to warrant recovery by plaintiff , on. this ground. This does not mean, however, that no recovery is possible; consideration must be given to losses which would have resulted whether or not performance of the contract had been protracted.
The Matter of Dimensional Tolerances
Of central importance is the problem of dimensional tolerances. The antennas were to consist of 7-foot lengths of hollow aluminum tubing. To enable the different sections of the antenna to fit together, the outside of one end was to be machined down and the inside of the other end was to be reamed out. Since the drawings indicated only a nominal dimension, e.g., 3.000 inches, for the middle portion of the antenna sections, Jackson found it necessary to resort to the specification in order to learn the applicable tolerances. Specification MIL-T-855 contained a table showing the tolerances for various ranges of outside diameters. For the range which included the nominal dimension of 3.000 inches, the applicable tolerance was plus or minus 0.006 of an inch. Under Jackson's view, this created, a conflict with the drawing which indicated that the end portion, after machining down, was to have a minimumi outside diameter of 3.000 inches. This was the difficulty which was the subject of plaintiff's negotiations with Alcoa in early 1951.
It is not disputed that, at the meeting on April 26, 1951, the contracting officer granted plaintiff permission to use aluminum with the tolerances proposed by plaintiff and Alcoa. However, defendant takes the position that, the act of acceding to plaintiff's proposal did not amount to a "change" in the contract. Defendant relies upon a note contained in the specifications which states:
If so specified in the contract or order, a "plus only" or a "minus only" tolerance will be allowed on the outside diameter, in which case the tolerance shall be double the value of the "plus or minus" tolerance, i.e., equal to the full range of tolerance.
According to defendant, the tolerances suggested by plaintiff are within the limits of the specification when the use of "plus only" tolerance is taken into consideration. Even assuming that the limits suggested by plaintiff would be encompassed by the "plus only" tolerances, the conclusion does not necessarily follow that plaintiff's proposed limits could be used without effecting a change in the contract.
Contrary to defendant's interpretation of the contract, plaintiff believed that there could be no purchase of "plus only" material without express authorization from the Government. Here, the contract did not specify that "plus only" limits could be used. The word "order," as used in the note, is subject to two interpretations, namely, a purchase order sent by the contractor to its supplier, or a change order issued by the contracting officer. The latter interpretation is a reasonable one and this matter should be governed by the following rule:
Where the Government draws specifications which are fairly susceptible of a certain construction and the contractor actually and reasonably so construes them, justice and equity require that that construction be adopted. Where one of the parties to a contract draws the document and uses therein language which is susceptible of more than one meaning, and the intention of the parties does not otherwise appear, that meaning will be given the document which is more favorable to the party who did not draw it. This rule is especially applicable to Government contracts where the contractor has nothing to say as to its provisions. [Citations omitted.] Peter Kiewit Sons' Co. v. United States, 109 Ct. Cl. 390, 418 (1947).
In Anderson Construction Co. v. United States, 153 Ct. Cl. 475, 481, 289 F. 2d 809 (1961), this court held that the Kiewit rule applied to' the interpretation of contract drawings as well as to the interpretation of written words.
Thus, we conclude (1) that plaintiff was correct iii assuming that "plus only" tolerances could not be used without express authorization from the Navy and (2) that the action of the contracting officer in assenting to plaintiff's proposed tolerances amounted to a "change" in the contract. In order to determine whether or not the alteration in dimensional limits should have resulted in an equitable adjustment of the contract price, further consideration must be given to the nature of the change. The meeting of April 26,1951, was significant in several respects. First, after hearing plaintiff's explanation of the "tolerance conflict" and of the efforts to resolve it, the contracting officer determined not to terminate the contract for default. Secondly, the proposal of plaintiff regarding tolerances was accepted and plaintiff was authorized to establish new dates for delivery. Thirdly, though the testimony on the matter is in conflict, we find that the contracting officer did inform plaintiff that, if the Navy were responsible for the delays and plaintiff's increased costs, plaintiff would be reimbursed. These events should be sufficient to demonstrate that the contracting officer considered plaintiff's interpretation of the contract to be reasonable and found that a change was necessary in order to achieve performance of the contract. We are willing to overlook the failure of plaintiff to discover the "tolerance problem" prior to submission of its bid and, although subsequent events proved that the contract could not be performed with standard tubing, we accept as reasonable the initial assumption of plaintiff that standard commercial tubing could be used. Again, it is important to bear in mind the notion that ambiguities in Government-prepared contracts are construed against the Government. Peter Kiewit Sons' Co. v. United States, supra. We are of the opinion, therefore, that not only was a change in the contract effected but also that the change should have resulted in an equitable adjustment of the contract price.
The Measuee of Becovery
It is apparent that plaintiff cannot recover its entire loss (exclusive of profit) of $144,108.32. The task of the court, under our theory of recovery, is to determine which of plaintiff's losses can be attributed, not to the delays, but to the use of aluminum with specially ordered dimensions.' Stated differently, we must estimate what the extra costs would have been if plaintiff itself had fabricated the antennas using the custom-made tubing. In view of the manner in which the contract was actually performed, precise computation of such extra expenses is not possible. However, as stated in Western Contracting Corp. v. United States, 144 Ct. Cl. 318, 320 (1958) : "This court has many times held that the measure of damages is not an exact science calling for a hard and fast rule, but is a determination based upon the facts and circumstances of each case." Thus, we must determine an amount which represents a reasonable recovery.
One element which should be included in the judgment for plaintiff is the extra cost of the special aluminum; the trial commissioner found this amount to be $10,486.64. Secondly, recovery for certain engineering costs is in order. Plaintiff estimated its total engineering expense to be $8,604. The commissioner found that plaintiff's claim was excessive, but that $4,302, one-half of the total, would be a reasonable amount to award for extra costs of engineering. While it seems clear that one result of the problems regarding tolerance and elongation was to add to the cost of engineering, plaintiff is not entitled to recover the total amount claimed. With some hesitation because of the uncertainty involved, this court accepts the determination of the commissioner that engineering expense of $4,302 is recoverable.
Another element included by the commissioner was an estimate of the profit paid to the subcontractors. In this regard, we decline to follow the theory of the commissioner since, under our view, recovery is limited to those extra ex penses which would have resulted if the manufacturing had been performed by plaintiff. However, use of the aluminum with larger tolerances was a source of increased manufacturing costs and this is the type of additional expense which would have occurred even if plaintiff had done the fabricating. As to the amount to be recovered for this element, the court can only make an estimate. The president of plaintiff, in 1953, attempted to reproduce the original cost analysis which had led to plaintiff's bid of $97,186.80. Although Weissman's reconstructed analysis is not completely accurate, it does afford a reasonable guide for measuring damages. Weissman's analysis indicates that the amount which plaintiff had planned to spend for all categories other than aluminum tubing was $37,323.80. That is, the total cost of such items as labor, manufacturing overhead, and administrative overhead was expected to be $37,323.80. In actuality, plaintiff's "other-than-aluminum" expense was $148,052.67. The latter figure represents the amount which plaintiff paid subcontractors for manufacturing the antennas. The difference of $110,728.87 between the estimated costs ($37,323.80) and the actual costs ($148,052.67) reflects the difficulties and delays in performance. Some part of this difference is attributable to the use of tubing with larger tolerances. We are of the opinion that $27,682.22 or one-fourth of the difference is a reasonable amount for plaintiff to recover. The $27,682.22 is intended to include such costs as overhead as well as extra labor expense. Therefore, the total amount to be awarded plaintiff is $42,470.86.
Having concluded that an equitable adjustment in the contract price should have been made and that plaintiff should recover accordingly, this court finds it unnecessary to discuss the contentions of plaintiff regarding impossibility of performance. We note, however, that in view of our decision regarding the delays, under no theory could plaintiff recover more than the amount described above.
Finalitt of ASBCA Decision
One issue which remains is that of the finality of the decision of the Armed Services Board of Contract Appeals. Despite the assertion of defendant to the contrary, we hold that, in determining whether or not finality should be accorded to the findings of the ASBCA, our review is not limited to the record which was before the Board. At the trial before the commissioner of this court, defendant made no objection to the introduction of de novo evidence; in fact, both parties introduced such evidence. Therefore, defendant's objection (based upon United States v. Carlo Bianchi & Co., 373 U.S. 709 (1963)) to the use of de novo evidence was waived. WPC Enterprises, Inc. v. United States, 163 Ct. Cl. 1, 323 F. 2d 874 (1963), and Stein Bros. Mfg. Co. v. United States, 162 Ct. Cl. 802, 337 F. 2d 861 (1963).
The denial by the Armed Services Board of Contract Appeals of the claim of plaintiff rested upon a set of conclusions, several of which differ from those reached by this court. With regard to the "elongation claim," the Board determined that the only applicable specification was 44T30 (which contained the proper elongation test) and that, therefore, no compensation was in order. The decision of this court that plaintiff can recover the extra engineering expense caused by the elongation problem is based upon a conclusion that specification MIL-T-855 became applicable. If determining which specification applied to the contract is a question of law (i.e., a matter of interpreting the instruments), then it is sufficient to state our belief that the Board was incorrect. However, even if the matter is a question of fact, we reach the same result, because the record shows that both parties considered specification MIL-T-855 to be applicable. At a meeting with plaintiff on September 26, 1951, the contracting officer permitted the exception to the elongation test of MIL-T-855; on October 29, 1951, the Inspector of Naval Material in New York wrote plaintiff that, with regard to contract NObsr-52087, the Bureau of Ships was contemplating a change from specification MIL-T-855 to specification WW-T-789. It is unnecessary to comment upon the other matters in support of plaintiff's view, for the above two actions on the part of Navy personnel demonstrate conclusively that MIL-T-855 was applicable to the contract. Thus, the decision that the only relevant specification was 44T30 was not based upon substantial evidence.
In denying the "tolerance" claim, the Board rested upon its conclusion that plaintiff's interpretation of the contract was unreasonable. According to the interpretation of the Board, precise dimensions were not required for the central portions of the tubular sections, and commercially available tubing which approximated the nominal dimensions would suffice. Clearly, interpretation of the contract is a question of law and, therefore, the "findings" of the Board limited to this legal question are not entitled to finality under the Wunderlich Act.
Thus, the circumstances of the instant case are such that the adverse decision of the ASBCA does not preclude recovery by plaintiff.
In conclusion, judgment for plaintiff is hereby entered in the amount of $42,470.86.
FINDINGS OF FACT
The court, having considered the evidence, the report of Trial Commissioner Paul H. McMurray, and the 'briefs and argument of counsel, makes findings of fact as follows:
1. Plaintiff, Kings Electronics Co., Inc., is a corporation organized and existing under the laws of the State of New York, and located in that state. Its president is Mr. Morton Weissman.
At all times material to this action, plaintiff was engaged in manufacturing certain electronic equipment, namely, television antennas, variable capacitors, connectors for sound equipment, and microphones. A large volume of plaintiff's business has involved contract work for defendant, and prior to 1950 plaintiff was experienced in performing Government contracts.
2. Plaintiff brings this action to recover damages and increased costs allegedly incurred as a result of its performance of Contract No. NObsr-52087 awarded plaintiff by the Bureau of Ships, Department of the Navy (hereafter sometimes referred to as the Navy), on November 17, 1950. Plaintiff contends that the contract, as awarded, was impossible of performance and that certain delays were encountered due to the Navy's failure to provide a contract which could be performed. Plaintiff has contended that MIL-T-855 was the applicable specification for performance of the contract. Defendant insists that the contract, as awarded, was possible of performance and was performed by plaintiff, and that any additional costs or damages suffered by plaintiff in connection with delay in completing the contract were chargeable to plaintiff.
The contract was completed only after certain changes concerning (1) dimensions and elongation, (2) the anodizing requirement, and (3) delivery date were approved by defendant. Plaintiff was paid the contract price, as modified by change order, in the amount of $110,012.37.
3. In September 1950 plaintiff received an invitation (No. 2711S) from the Navy, acting by and through the Bureau of Ships, to bid for the construction of 28-foot and 35-foot aluminum whip antennas. The invitation provided, among other things, that the items furnished "shall be in accordance with Bureau of Ships Drawing EE 66F499D dated 5 May 1948."
Drawing EE 66F499D, dated April 27,1944, and amended through May 5, 1948, accompanied the invitation and pro vided in the legend thereon that the aluminum to be supplied was to meet the requirements of Navy Specification 44T30.
4. Plaintiff's president, Mr. Weissman, a graduate mechanical engineer, was responsible for the preparation of plaintiff's bid. Upon receipt of the invitation, he examined the drawings and computed the quantity of tubing required to make the antennas; plaintiff's purchasing department ascertained from suppliers the price and availability of the aluminum needed, using specification 44T30 for material description; then the cost of tooling and direct labor involved in machining the tubing and assembly was computed; and finally costs for subcontracted material, overhead, and a percentage for profit were added to the estimates to arrive at the final bid figure.
5. On October 13, 1950, plaintiff submitted its bid: For 28-foot antenna, Navy type 66046, complete with adapter, $37.80; and for 35-foot antenna, Navy type 66047, complete with adapter, $40.80. Plaintiff agreed to supply 25 percent of each type of antenna within 90 days after date of contract and 25 percent each 30 days thereafter. Plaintiff's bid price was $97,186.80.
6. On October 13,1950, defendant issued a notice postponing the date for the opening of bids from October 17, 1950, to October 24, 1950, and adding the following paragraph to the invitation:
Finish- — All aluminum parts to be anodized — -degree of finish of stock shall be as commercially furnished from mill.
7. There was some testimony from defendant indicating that the bid was made "at a loss" because plaintiff was very anxious to obtain the contract. There is also some testimony by plaintiff to the effect that the low bid involved "a small profit margin," but "no loss."
8. On November 17, 1950, contract NObsr-52087 was awarded to plaintiff to supply 1,278 28-foot antennas and 1,198 35-foot antennas at a total price of $97,186.80. The contract was certified under NPA Regulation 2, DO-07.
It is a reasonable assumption that the notice of award was received by plaintiff between November 17 and December 1, 1950.
9. Contract NObsr-52087 contained, among others, the following standard general provisions:
2. CHANGES
The Contracting Officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scope of this contract, in any one or more of the following: (i) drawings, designs, or specifications, where the supplies to be furnished are to be specially manufactured for'the Government in accordance therewith; (ii) method of shipment or packing; and (iii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for, performance of this contract, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accordingly. Any claim by the Contractor for adjustment under this clause must be asserted within 30 days from the date of receipt by the Contractor of the notification of change: Provided, however, That the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed.
3. EXTEAS
Except as otherwise provided in this contract, no payment for extras shall be made unless such extras and the price therefor have been authorized in writing by the Contracting Officer.
* ‡ # *
12. DISPUTES
Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy, thereof to the Contractor. Within 30 days from the date of receipt of such copy, the Contractor may appeal by mailing or otherwise furnishing to the Contracting Officer a written appeal addressed to the Secretary, and the decision of the Secretary or his duly authorized representative for the hearing of such appeals shall be final and conclusive: Provided, That if no such appeal is taken, the decision of the Contracting Officer shall be final and conclusive. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal, Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision.
The contract also contained the standard termination for default clause, which provided, in pertinent part, as follows:
11. DEFAULT
(a) The Government may, subject to the provisions of paragraph (6) below, by written Notice of Default to the Contractor terminate the whole or any part of this contract in any one of the following circumstances :
(i) if the Contractor fails to make delivery of the supplies or to perform the services within the time specified herein or any extension thereof; or
(ii) if the Contractor fails to perform any of the other provisions of this contract, or so fails to make progress as to endanger performance of this contract in accordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days (or such longer period as the Contracting Officer may authorize in writing) after receipt of notice from the Contracting Officer specifying such failure.
10. Plaintiff started processing the contract on December 20, 1950. The contract was first sent to plaintiff's Government Contract Section for preparation of necessary folders, shipping orders, and delivery schedules. Thereafter the contract was sent to plaintiff's Engineering Department for processing.
11. Plaintiff's project engineer, Samuel H. Jackson, a graduate engineer, started the engineer processing of the contract in December 1950. Upon examining the contract drawings, he identified a specification referenced on the drawings as Navy Specification 44T30; and, as was bis custom, wrote to tbe Department of tbe Navy requesting tbe latest revision of tbis specification. In response to this request, the Navy sent military specification MIL-T-855 (Ships), entitled "Tubing, Aluminum — Alloy," which provided, in part, at page 9:
SPECIAL NOTICE: This specification supersedes Navy Department Specification 44T30b, dated 16 April 1945, insofar as purchases for the Bureau of Ships are concerned.
Specification 44T30b contained the following diameter tolerance information and table:
E-5a. Diameter. — The diameter of any tube measured at any cross section along its length shall not deviate from that specified by an amount greater than the tolerance shown in table III. The tolerance on diameters applies to the mean of two readings taken at right angles to each other at any point along the length of the tube. Individual readings may deviate from the specified diameter by an amount not greater than twice the tolerances shown in table III.
Table III. — Diameter tolerances
Specification MIL-T-855 provided, in part, in this regard:
3.7.1 Bound tubing. — The outside diameter of any tube, measured at any cross section along the length, shall not deviate from that specified by an amount greater than the tolerance shown in table III. These tolerances on diameters apply to the mean of two readings taken at right angles to each other at any point along the length of the tube. Individual readings of the diameter for tubing in solution heat-treated condition (T4) and solu tion heat-treated and artificially aged condition (T6) having a wall thickness not less than 2.5 percent of the diameter and not less than 0.020 inch may deviate from the nominal by an amount equal to twice the tolerances specified in table III. Thinner walled tubes and all tubes in annealed condition (O) shall be commercially round.
3.7.2 Rectangular and square tubing. — Measurements of distance across flats where made at corners shall not deviate from the nominal by an amount greater than the tolerance specified in table III for a round tube whose diameter is- equal to the specified dimensions. When made at a distance from the comer, this dimension may deviate from the nominal by an amount equal to double the tolerance for a round tube whose diameter is eqúal'to the dimension of the rectangle at right angles to the one which is being measured.
Table III. — Diameter tolerances
The tolerance requirements are the same in both specifications.
Both specifications contained the following note:
If so specified in the contract or order, a "plus only" or a "minus only" tolerance will be allowed on the outside diameter, in which case the tolerance shall be double the value of the "plus or minus" tolerance, i.e., equal to the full range of tolerance.
12. After receipt of specification MIL-T-855 in January 1951, plaintiff's project engineer made a detailed examination of the drawings and the specification. A result of this examination was discovery of the problem regarding dimensional tolerances. For example, the drawings required that each section of 3-inch aluminum tubing be machined down on one end for a distance of 9'% inches, to a prescribed outside tolerance as set forth on each drawing, and reamed out to an inside tolerance on the other end, for a distance of 8% inches. The sections of 1, l1/^, 2, and 2^-inch tubing were to be similarly machined. This machining was required to enable one section of tubing of approximately 7 feet in length to be fitted into another section, thereby forming the entire length of antenna, either 28 feet or 85 feet. Close adherence to specified tolerances was required to insure a proper fitting. The remaining 5 y2 feet of each tube was not to be machined. For the center or unmachined length of the tubing, the drawings set forth nominal dimensions, but no tolerances. Thus, to learn the tolerances, J ackson resorted to the specification which included the table of tolerances described in finding 11. The contract contemplated that sections of tubing within the tolerance range would be ordered from available commercial sources and that only the ends would be turned down or reamed out. The difficulty, from plaintiff's standpoint, was the fact that the tolerance range (contained in the specification) for the unmachined center sections fell outside the permissible tolerance range set forth on the drawings for the machined ends of the tubing. Plaintiff could not be certain that tubing ordered pursuant to the specification would, after machining, meet the size requirements of the drawings.
13. Plaintiff attempted to resolve this matter by calling upon its supplier, Aluminum Company of America (here after referred to as Alcoa). Conferences were held with Alcoa's representative by telephone and during personal visits of the representative to plaintiff's plant.
14. By letter from Alcoa dated January 25,1951, plaintiff obtained its first written confirmation of Alcoa's oral quotations.
15. During the period when plaintiff was attempting to obtain from Alcoa quotations on tubing close to the required tolerances, plaintiff's engineering department prepared some 38 work drawings to guide the production program.
16. As a result of continued contact with plaintiff by telephone and personal visits, Alcoa submitted quotations to plaintiff on March 20 and 22, 1951, designed to solve the tubing problem. Although the material quoted was more specialized and more costly than that initially contemplated when plaintiff submitted its bid, these quotations still failed to solve the problem. Plaintiff's engineer testified that, as the contractor, plaintiff was required to perform the contract and it was therefore plaintiff's obligation to "find the best possible solution to the problem."
17. On April 4,1951, plaintiff wrote the contracting officer requesting deviations which it had worked out in conjunction with Alcoa, designed to enable plaintiff to perform the contract. The letter read as follows:
Due to difficulties encountered in obtaining material suitable for use on the reference contract, we find it necessary to request minor deviations from dimensions specified in drawing EE 66F499 Items 8,12,16, 20, and 24.
The above Items are fabricated from aluminum alloy tubing covered by specification MIL-T-855 (Ships) which supersedes N. D. Spec. 44T30. Drawing EE 66F499 gives dimensions as follows:
Tolerances on the nominal outside. and inside diameters and on the lengths are prescribed in the above specification paragraph 3.7. As an example, the nominal outside diameter of Item 8 would have an actual mean diameter of 3.000±006 and an actual diameter at any point of 3.000±012 when the out of roundness tolerance is considered. Should the tolerances fall to the minus side, it is patently impossible to bring the 9%" long finished section of the outside diameter to its required 3.002±002 dimension. The corresponding situation occurs with the reamed section of the inside diameter. Items 12, 16, 20 and 24 are also subject to the same limitations, ie, the nominal inside and outside diameters with tolerances applied in accordance with MIL-T-855 do not permit finishing to required dimensions. '
We have made every effort to obtain material held to tolerances closer than those specified in order that we might satisfy the drawing requirements. Our efforts have been without success.
To obtain the finished outside diameters and reamed inside diameters called for, it will be necessary to increase the nominal outside and reduce the nominal inside diameters.
We have been negotiating with the Aluminum Com-Eany of America for three months. They state that the est material they can supply will have the following dimensions:
Mean diameters in the above table are the average of two measurements made ninety degrees apart. The limiting diameters are measured at any point and account for the out of roundness of the tubing. It should be noted that the lower limit of the O.D. and the upper limit of the I.D. are those required on the finished and reamed sections of the tubing by the drawing. These dimensions and tolerances which are the best we have thus far been able to secure and which we have been assured by our supplier are the closest tolerances they can hold, involve an extra tolerance change. We are willing to go to the extra expense but will require your approval of these dimensional deviations.
The requested deviations are sufficiently small to make no functional change in the antennas and the parts involved will retain their interchangeability with parts manufactured by other vendors.
As a corollary to the above request, we also will require an extension of our scheduled • delivery date to August 1951 due to the difficulty of obtaining the above material.
We will appreciate your expediting the approval of this request since we are forced to hold up production pending such approval.
18. By letter dated April 5, 1951, the contracting officer (before receiving plaintiff's letter of April 4, 1951) wrote plaintiff as follows: •
Reference is made to' contracts NObsr-49098 and NObsr-52087 awarded to you on 19 April 1950 and 17 November 1950, respectively.
Contract NObsr-49098 calls for 1000 Navy Type 66053 antennas and specifies delivery of 250 units per month beginning within 60 days after date of the contract or the first 250 on' 18 June 1950. The balance to be delivered at the rate of 250 per month until completion of the. contract. To date, no deliveries. have. been made under this contract.
Contract NObsr-52087 calls for 1278 and 1198 Navy Type 66046 and 66047 antennas, respectively. Three hundred of each type are specified for delivery within 90 days after date of the contract or by 15 February 1951 and continuing with 300 of each item, each 30 days thereafter until completion of the contract. To date, no deliveries have been made under this contract.
Deliveries under contract NObsr-49098 were promised in August 1950 and again in February 1951. These delivery promises were not kept.
You have failed to make deliveries of the articles called for within the time specified in each of these contracts.
In view of the foregoing, you are hereby notified, pursuant to Section 11 of the General Provisions of these contracts that your performance under such contracts is in default due to your failure to deliver the articles called for within the times specified in the contracts or to otherwise make satisfactory progress.
You are directed to cure this default within 10 days from your receipt of this notice or submit your reasons, if any, why these contracts should not be terminated for default.
Your reply in order to be considered, must be received in the Bureau not later than 10 days after your receipt of this notice.
If you desire a discussion of this matter with representatives of this Bureau within the 10 day period, arrangements will be made, upon receipt of your request, for a meeting in the Bureau.
19. Plaintiff replied to defendant's letter of April 5,1951, on April 16, 1951, and a conference was scheduled for April 25 (later changed to April 26,1951), at which time plaintiff's proposals set out in the letter of April 4, 1951, were considered.
20. Those present at the conference representing the Navy were the contracting officer Mr. Marley, Mr. Markman of the production section, Messrs. Day and Woody of the technical section, and a member of the legal staff. Plaintiff's representatives were Mr. Weissman, president, and Mr. Jackson, project engineer. Plaintiff's representatives advised those present that plaintiff had made every effort to perform its aluminum antenna contract (NObsr-5208'T), which is the subject of this action, as well as its stainless steel antenna contract (NObsr-49098), also a subject of the conference, but that resolution of the tolerance problem had delayed plaintiff. Plaintiff's representatives explained the technical problem of conflict between the specifications and drawings which made it impossible for plaintiff to obtain from its supplier, Alcoa, the aluminum tubing necessary to perform the contract without a deviation from the specification requirements. The contracting officer directed the Navy's technical personnel to confer with plaintiff's representatives and attempt to resolve the difficulty.
At the later session the Navy technical staff accepted plaintiff's deviation proposal, as outlined in plaintiff's letter of April 4,1951, and reported the results of the conference to the contracting officer. The contracting officer authorized the deviation from the original contract specification and ruled that plaintiff was not in default. Plaintiff's president advised the contracting officer that the aluminum to be procured under the deviation was a "custom-built, tailor-made" type of aluminum which would greatly increase plaintiff's costs. The contracting officer stated that if the delays and plaintiff's increased costs were caused by the Navy, plaintiff would be reimbursed. Plaintiff was paid for delays under the steel antenna contract.
21. The technical section of the Navy initiated a work order change to authorize the contracting officer to issue to plaintiff the specification deviation requested. Although plaintiff's representatives requested orally and in writing that a change order be issued, the work order change authorized by the technical section was never transmitted in writing to plaintiff. (See footnote 26.)
22. Following the meeting of April 26, 1951, plaintiff reported its progress by letter of May 3, 1951, to the contracting officer, and immediately contacted Alcoa to secure a delivery schedule for a tubing order to be placed under the new tolerance deviations granted by the contracting officer. Upon receipt of an agreement from Alcoa to an August delivery schedule, plaintiff placed its order on May 24, 1951, for tubing in accordance with the specification deviation allowed by the contracting officer.
23. Following receipt of plaintiff's purchase order, Alcoa's representative visited plaintiff's plant on May 31, 1951, to return plaintiff's order because new directives covering allocation of strategic materials had been issued due to the increased tempo of the Korean conflict and thereby no allotment of material could be made under the National Production Authority regulations (NPA) which covered the original contract and which would not be effective after July 1951. Plaintiff immediately sought assistance from the contracting officer to obtain a priority under the CMP (controlled materials for production) regulations.
24. Plaintiff tried to locate stock among New York distributors but was unsuccessful.
25. By letter of July 9, 1951, plaintiff advised the Navy that the CMP priority had been finally obtained and that plaintiff had been assigned the NPA control number C36447. Plaintiff received formal acknowledgment from Alcoa of its purchase order of May 24,1951, and was given delivery date of November 1951.
26. With regard to purchase order of May 24,1951, plaintiff received a notification from Alcoa on August 23, 1951 changing Alcoa's acknowledgement of August 20 as follows:
ADD TO DESCRIPTIVE HEADING: TO CONFORM TO SPEC. MIL-T-855 EXCEPT THAT THE ELONGATION MAY BE 2% LESS THAN THAT SPECIFIED ON ITEMS 3, 4 AND ,5 AND SPECIAL TOLERANCES LISTED BELOW SHALL APPLY IN LIEU OF THOSE SPECIFIED. • •
27. Plaintiff's purchase order 2505, dated July 27, 1951, was acknowledged by Alcoa on August 21, 1951. This' acknowledgment also included the proposed exception to MILT-855 as set forth in finding 26.
28. Plaintiff notified its supplier Alcoa by letter of August 29,1951, as. follows:
This letter is to confirm the telephone conversation between Mr. Fitting and Mr. Olsson and the writer, during which we discussed the exception to MIL-T-855, which is specified in your acknowledgment of August 21, and your change orders of August 23 on our orders #1991 and 2505.
Your exception states that the elongation for certain items on these orders may be 2% less than that called for in MIL-T-855.
As we discussed, it will be necessary for the Bureau of Ships to approve this deviation before we can agree to it. Before requesting this deviation from the Navy, we require a statement of the specific technical reasons why the requirements of MIL-T-855 should be modified on this material.
29. By letter of August 31,1951, Alcoa responded to plaintiff's inquiry as follows:
In accordance with your telephone inquiry, we wish to submit the following information regarding Specification MIL-T-855 (Ships), as referred to on your referenced aluminum alloy tubing orders.
The reason it is necessary for ns to require the lower elongation on tubing in diameters greater than 2 inches is that in these sizes the tension test specimen is a cut out specimen, similar to that used for testing sheet, whereas for smaller sizes the tube is tested in full section. The smaller cross section of the cut out specimen results in less necking down prior to fracture and consequently a lower elongation.
This fact is recognized in Federal Specification WWT-789 which covers the same material. It was likewise recognized in the Navy Specification which is superseded by MIL-T-855 (Ships) but was inadvertently omitted from the latter specification. This matter has been called to the attention of the Bureau of Ships with a request that the specification be revised.
We trust that the above gives you the information you require; however, if there is anything further you believe we can do in this connection, please do not hesitate to get in touch with us.
30. On September 26,1951, plaintiff's project engineer met with the Navy technical staff to see if the Navy would accede to the "elongation" exception taken by Alcoa. Specification MIL-T-855 contained certain test requirements for measuring the elongation of the metal before it broke when stretched; however, the method of testing acceptable to the industry in general was omitted from MIL-T-855. The contracting officer orally accepted the elongation test exception proposed by Alcoa, but, although plaintiff's representative requested a written change at this time, none was issued.
31. The evidence in the record discloses that, effective October 11, 1951, the Bureau of Ships issued revision "F" to the contract drawing BE 66F499 and incorporated by legend reference on the face thereof specification WW-T-Y89 in lieu of MIL-T-855.
32. By delivery endorsement of October 29, 1951, the Inspector of Naval Material in New York, forwarded to plaintiff a contemplated contract change dated October 23, 1951. which provided as follows:
Subj: Contract NObsr-52087; Navy type antenna with adapter
1. The Bureau is contemplating issuing a change order to the subject contract as follows :
a. Under the heading "Equipment" on page 2 of the Schedule, add: "Federal Specification WW-T-789," in lieu of MIL-T-855 (ships).
2. It is requested that you advise the Bureau within thirty (30) days as to what effect, if any, the above change would have on the delivery schedule and contract price, and whether it can be accomplished without interference with any other order or contract rated in accordance with CMP Regulations.
3. This letter shall not be construed as an order or modification of the subject contract.
33. Upon receipt of the proposal set out in finding 32, plaintiff's president telephoned the contracting officer and requested a conference. During a conference on October 31, 1951, at the Bureau of Ships, plaintiff's president stated that the Navy's contemplated change to specification WW-T-789, in place of specification MIL-T-855, would require plaintiff to "start from scratch." Accordingly, he (Weissman) requested that the Navy terminate the contract at no cost to plaintiff or defendant. The contract was not terminated. Plaintiff's proof is to the effect that the contracting officer advised plaintiff's president that the equipment was badly needed by the Navy, that plaintiff had made progress, and that if plaintiff would complete the contract the Navy would make it "whole," i.e., plaintiff would break even, with no profit guaranteed. Defendant's proof is in direct conflict with plaintiff's on this subject.
The contracting officer made no finding that plaintiff was in default. He urged plaintiff to complete performance of the contract.
34. The elongation exception requested by plaintiff was allowed, but no change order was issued.
35. When plaintiff submitted its bid and was awarded the contract in question, performance was scheduled for completion during the first 6 months of 1951. Plaintiff's plant capacity and work-in-process schedule were such that the contract could have been completed by June 1951. However, delivery of the tubing (ordered pursuant to the new priority) did not begin until late 1951. When the tubing did arrive at the end of 1951, plaintiff's plant was taxed to capacity. Plaintiff bad the alternatives of expanding its plant facilities and obtaining additional machinery, requesting termination of the contract, or subcontracting the machining and antenna assembly.
36. Plant facilities were not available at that time for purchase and expansion, and machinery was not for sale. After being specifically requested to complete the contract, plaintiff obtained competitive costs for subcontracting the machining assembly and packaging the antennas and selected those suppliers offering the best price, best delivery dates, and best quality of work. The entire performance of the contract by these subcontractors was conducted under naval inspection and without objection by defendant.
37. The parties have stipulated that plaintiff's "out-of-pocket" expenses totaled $227,348.36; this amount includes $2,003.82, which is attributable to an overrun in the purchase of materials. The cost of the aluminum tubing (including freight charges of $2,177.39) was $70,349.64 and the remaining payments to subcontractors (excepting payments for anodizing) accounted for $148,052.67 of the total.
Plaintiff seeks to recover $149,608.94. Of this amount, $5,500.62 represents a 5 percent profit on the amount received under the contract, $110,012.37. The remainder was arrived at as follows:
Out-of-pocket costs_$227, 348.36
Engineering cost as estimated by plaintiff- 8,604.00
235, 952.36
7.7% of above (for general and administrative overhead)_ 18,168.33
Total claimed costs_ 254,120.69
Less amount paid to plaintiff under contract- 110,012.37
Claimed loss-$144,108.32
Essentially, plaintiff asks recovery of the excess of its total outlay over the contract price.
38. Plaintiff did not operate a cost accounting system during tbe period of the contract. In 1953 the president of plaintiff made an attempt to reproduce plaintiff's original cost analysis. According to this analysis, the amount included for the aluminum for "direct prime material") was $59,863. The remaining $37,323.80 was allocated among such items as purchased parts, manufacturing labor, and administrative expense.
39. The contract was completed in July of 1953. Early in 1953 plaintiff filed a request for a contract price increase (pursuant to authority for such relief under Title II of the First War Powers Act of 1941, as amended) as plaintiff was advised to do by the contracting officer.
40. Subsequently, the Title II claim was withdrawn, and plaintiff submitted a claim for an equitable adjustment of the contract price. On February 3, 1956, the contracting officer denied plaintiff's claim. Plaintiff filed a timely appeal with the Armed Services Board of Contract Appeals on February 23, 1956. On March 27, 1958, the Board (1) found that specification MIL-T-855 did not supersede specification 44T30 for performance of this contract; (2) concluded that plaintiff's interpretation of the contract drawing with respect to tolerances was incorrect; and (3) found that the specification tolerances were inapplicable to the unma-chined parts of the tubing and that commercial tubing could be ordered in the approximate size without adherence to tolerance requirements for the center parts.
41. Plaintiff's original petition was filed November 16, 1956, and the amended petition was filed February 16,1959.
42. Some of plaintiff's losses are attributable to the use of tubing with the larger tolerances. One such item is the extra cost of the custom-made tubing. The difference between plaintiff's actual expense for tubing ($70,349.64, including freight charges of $2,177.39) and the estimate ($59,863) included in plaintiff's bid was $10,486.64.
Part of plaintiff's engineering expense can be attributed to the use of aluminum with nonstandard tolerances (and to the elongation problem). A reasonable estimate of such extra engineering costs is $4,302, one-half of the total engineering expense.
Finally, use of tubing with the larger tolerances led to increases in the cost of such items as labor and overhead. According to Weissman's estimated cost analysis, such items were expected to amount to $37,323.80. These same categories are reflected in the amount of $148,052.67, which plaintiff paid subcontractors (excluding payments for the tubing and for anodizing). The difference between the actual expense of $148,052.67 and the estimate of $37,323.80 is $110,728.87. It is reasonable to attribute one-fourth of this difference or $27,682.22 to the use of aluminum with special tolerances. The total amount of such extra expenses is as follows:
Extra cost of aluminum_$10, 486.64
Additional engineering expense_ 4, 302.00
Recoverable portion (25%) of increased costs of manufacturing_ 27, 682.22
Total-$42, 470.86
CONCLUSION OK LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that the plaintiff is entitled to recover, and it is therefore adjudged and ordered that the plaintiff recover of and from the United States the sum of forty-two thousand four hundred seventy dollars eighty-six cents ($42,470.86).
Actually, the letter related to two contracts, NOhsr-52087 and another contract which is not involved in the present action.
The invitation for bids which became part of the contract contained a re* quirement that progress reports to the inspector be submitted by plaintiff at least once each month.
Specification 44T30 had contained the standard provisions regarding the elongation test, but a certain portion had been omitted from MIL — T—855. The purpose of the suggested alteration was to cure this omission.
The Act, as amended, Is found in 50 U.S.C. App. § 611.
Plaintiff was paid $110,012.37 under the contract; this included compensation for a change regarding anodizing. The amount $144,108.32 represents the excess of plaintiff's expenses over the amount received.
Note should he made of tile difference between the facts of the Instant ease and those of Laburnum Construction Corp. v. United States, 163 Ct. Cl. 339, 325 F. 2d 451 (1963), a ease in which recovery was allowed because of delays resulting from deficiencies in Government-prepared specifications. In Laburnum,, there was no need to discuss the obligation of a contractor to notify the Government upon discovery of a defect in specifications, for the facts illus trated that timely notice had been given (e.fif., finding 12, pp. 365-66). Furthermore, much of the delay -was clearly attributable to the tardiness of the Government, after having notice of the errors, in making corrections. It is also noteworthy that no recovery was allowed for that portion of the delay which was due to the fault of the plaintiff or to other factors beyond the control of the defendant (p. 351).
In view of our conclusion, it is unnecessary to emphasize such facts as the several weeks' delay by plaintiff in commencing work on the contract.
When new priority was obtained, delivery was set for November 1951.
The same table was included in specification 44T30. See finding 11, infra.
The limit of 0.006 of an inch was applicable to the mean or average of two diameters (taken at any point) which intersected at right angles. To allow for the characteristic of ovality or out-of-roundness, a further limit applied to individual diameters; this limit was an amount equal to twice the tolerance for mean diameters. Nor example, regarding the tubing with nominal diameter of 3.000 inches, the limits for an individual outside diameter were plus or minus 0.012 of an inch. Thus, a given piece of tubing would satisfy the specification if its mean outside diameter was between 3.006 and 2.294 inches and its individual outside readings were between 3.012 and 2.288 inches.
The note appears in both specification 44T30 and specification MIL-T-855. See finding 11, infra.
Nor example, under defendant's view, if the tubing with nominal outside diameter of 3.000 inches were ordered with "plus only" tolerance, the limits for the mean diameter would range from 3.000 to 3.012 inches and the limits for individual diameters would be 3.000 and 3.024.
Contract NObsr — 52087 contained the standard "Changes" article; this is Quoted in finding 9, infra,.
It should be noted that there were basic conflicts between the witnesses of defendant and those of plaintiff regarding what transpired at the April 26th meeting. The trial commissioner to a great extent accepted the version presented by plaintiff. After a review of the entire record, this court adopts for the most part the findings of the commissioner. It is significant that the commissioner had the opportunity to evaluate the witnesses. See Rule 66 of the Court of Claims (1964 rev.).
It is correct, as defendant points out, that plaintiff in its letter of April 4, 1951, offered to pay the extra cost of the aluminum if the deviation in tolerances were granted. However, the evidence shows not that the Government relied upon plaintiff's offer, but that the contracting officer stated that the Navy would pay the extra costs incurred by plaintiff if the Navy were responsible for them. Therefore, the offer contained in the letter of April 4, 1951, does not preclude recovery by plaintiff of the expense resulting from the use of custom-made tubing. Nor does the absence of a written change order bar recovery. In the present case, as in Fox Valley Engineering, Inc. v. United States, 151 Ct. Cl. 228, 237 (1960), both the contracting officer and the ASBCA considered the merits of the claim, despite the lack of a written change order.
This amount includes freight charges of $2,177.39,
Our previous conclusion that the elongation matter was not a source of delay does not prevent recovery for the extra engineering expense occasioned by the defective elongation test of specification MIIj-T-855. (The question of the applicable specification is discussed infra.)
According to a stipulation of the parties, plaintiff's out-of-pocket costs totaled $227,34S.36. The figure of $148,052.67 was arrived at by subtracting from $227,348.36 the cost of the aluminum and the payments for anodizing. See finding 37, infra.
The total was arrived at by adding the following items :
Extra cost of aluminum_$10, 486. 64
Additional engineering expense_ 4, 302. 00
Recoverable portion (25%) of increased costs of manufac-turing_ 27, 682. 22
Total_$42, 470. 86
We have declined to include the element of lost profit since plaintiff has not shown that it would have earned any profit under its original bid.
Plaintiff is not entitled to interest on its claim. 28 U.S.C. § 2516(a) states:
Interest on a claim against the United States shall be allowed in a judgment of the Court of Claims only under a contract or Act of Congress expressly providing for payment thereof.
The distinction between questions of fact and questions of law is discussed in River Construction Corp. v. United States, 159 Ct. Cl. 254, 262 (1962).
The ASBCA, because of its conclusions regarding- the merits of plaintiff's claims, did not reach the question of additional costs. With regard to the matter of tolerance, the "findings" of the Board consist almost entirely of interpretation of the contract.
41 U.S.C. § 321, 322.
There is no evidence which establishes the exact date on which notice of award was received by plaintiff. Plaintiff's president testified without contradiction that the award was received not on the 17th of November, but sometime thereafter.
Plaintiff's project engineer, Samuel H. Jackson, testified, In part, as follows:
"These tolerances which are defined in the specification create a conflict on the drawing. The drawing also has a basic conflict in its requirements. The machined section of the outside diameter on the left-hand end of Item 8 has a nominal diameter of 3.002, whereas the major section of the tubing, which Is not machined, has a nominal diameter of 3.000, and it is rather obvious that the machined portion that we are going to make out of the raw tubing is supposed to be larger than the raw tubing itself. Now there is no way of machining something to make it larger; when you machine you remove material. We have a basic conflict here.
"Now we examined the tolerance on the 3.002 diameter in section; we find that can be of a minimum value 3.000; we go back and we look at the raw tubing portion, and we find a nominal 3.000 plus or minus the extreme values of .012. The raw tubing can be as large as 3.012 or as small as 2.988. When we compare these figures with the limits on the machined section, we see that immediately 50% of our material, if we obtain nominal 3-Inch material per specification tolerances, is absolutely useless; you cannot possibly produce 3.000 out of material that is smaller than 3.000. This was the conflict."
Delivery date appears on last page of plaintiff's exhibit 22.
Revision E, made April 30, 1951, reflected not only that MIL-T-855 was the specification, but that on April 30, 1951 (a few days after the conference of April 26,1951) the drawings were revised.
The difference of $12,825.57 between tlie amount which plaintiff received ($110,012.37) and the bid of $97,186.80 represents an adjustment for the change regarding anodizing.