835 F.2d 865 (Fed. Cir. 1987), 87-1203, Mil-Spec Contractors, Inc. v. United States

Docket Nº:87-1203.
Citation:835 F.2d 865
Party Name:MIL-SPEC CONTRACTORS, INC., Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
Case Date:December 16, 1987
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 865

835 F.2d 865 (Fed. Cir. 1987)

MIL-SPEC CONTRACTORS, INC., Plaintiff-Appellant,


The UNITED STATES, Defendant-Appellee.

No. 87-1203.

United States Court of Appeals, Federal Circuit

December 16, 1987

Page 866

Rachel L. Howard, Haas & Najarian, San Francisco, Cal., argued, for plaintiff-appellant.

Carolyn E. Galbreath, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued, for defendant-appellee. With her on the brief, were Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director. Also on the brief, was Stephen E. Temmell, Trial Atty., U.S. Army Engineer Dist., Los Angeles, Cal., of counsel.

Before FRIEDMAN, SMITH, and MAYER, Circuit Judges.

FRIEDMAN, Circuit Judge.

This is an appeal from a decision of the Armed Services Board of Contract Appeals (Board), dismissing a contractor's claim for additional compensation on the ground that an oral agreement to settle the claims constituted an accord and satisfaction. Mil-Spec Contractors, Inc., 87-1 B.C.A. (CCH) p 19,391 (Sept. 23, 1986). We hold that there was not a valid accord and satisfaction, and therefore reverse and remand.


The government awarded to the predecessor of the appellant Mil-Spec Contractors, Inc. (Mil-Spec), a contract to insulate certain buildings on Norton Air Force Base in California. The contract was funded from an Air Force general account for energy conservation. The Air Force allocated approximately $622,000 for the work. The contract price was $581,247, and a contingency fund of $6,000 to $7,000 was available for contract modifications.

After completing the work, Mil-Spec submitted to the government a series of increasing claims for additional costs it allegedly incurred. After Mil-Spec had rejected several of the government's proposals for additional payment, Mr. Hooppaw, the resident contracting officer (who was also the resident engineer), telephoned Mr. Barnes, Mil-Spec's principal officer, in late August or early September 1983. Mr. Hooppaw explained that he could not obtain extra funds for additional payment under the contract because the money came from an appropriation that would expire on September 30, 1983, and that after that date the $6,000-$7,000 in the contingency fund would not be available. Mr. Barnes was advised that if he did not agree to a settlement, "the only other way to get funds is to go to court."

Three days before the funds would expire, Mr. Barnes and Mr. Barker, a negotiator, had several telephone conversations during which they orally agreed upon a settlement. Mr. Barker's notes state that Mr. Barnes

agreed to drop his proposal of [a] $70,956.00 increase in Contract amount and accept the Government estimate amount of $6,367.00. In doing so, the contractor requested that all remaining funds (less $100.00) be paid to him with this settlement.

Both parties agreed to accept [a] $6367.00 increase in [the] Contract amount as fair and reasonable. The Contract time was extended 87 calendar days to a final completion date of 20 June 1980. The negotiated price of $6367.00 is hereby accepted subject to approval of the Contracting Officer.

The contracting officer, Mr. Hooppaw, then prepared a contract modification (standard form 30), signed it and mailed it to Mr. Barnes for his signature. In the interval, an Internal Revenue Service (IRS) employee had told Mr. Barnes that with a legitimate claim Mr. Barnes could have obtained more than the government had offered. Mr. Barnes telephoned Mr. Hooppaw and stated that he did not accept the government's settlement offer.

On September 30, 1983, the government...

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