PLS Coat & Suit Corp. v. United States

• Citation: 180 F. Supp. 400
• Decision Date: 20 January 1960
• Docket Number: No. 213-56,513-56.,213-56
• Parties: P.L.S. COAT & SUIT CORP. v. UNITED STATES. Arthur S. SACHS, as Trustee in Bankruptcy of Ansonia Garment Co., Inc., Bankrupt v. UNITED STATES.
• Court: Court of Federal Claims

180 F. Supp. 400

P.L.S. COAT & SUIT CORP. v. UNITED STATES.

Arthur S. SACHS, as Trustee in Bankruptcy of Ansonia Garment Co., Inc., Bankrupt v. UNITED STATES.

Nos. 213-56, 513-56.

United States Court of Claims.

January 20, 1960.

Edwin J. McDermott, Philadelphia, Pa., for plaintiff in No. 213-56.

Alexander Boskoff, Washington, D. C., for plaintiff in No. 513-56.

Lawrence S. Smith, Washington, D. C., with whom was George Cochran Doub, Asst. Atty. Gen., for defendant.

PER CURIAM.

In these cases plaintiffs seek to recover extra costs alleged to have been incurred in manufacturing raincoats under contracts with the Department of the Navy. Each plaintiff had two contracts under which claims have been made. Plaintiffs allege that their costs were increased because the raincoat material which was furnished by the Government was not in conformity with contract specifications and was otherwise defective.

Defendant has moved for summary judgments dismissing plaintiffs' petitions on the grounds (1) that plaintiffs' claims are barred because of their failure to comply with contract provisions relative to replacement of defective material, failure to obey the contracting officer's written instructions regarding such replacement, and failure to follow the disputes and appeals provision of the contracts; (2) that the decisions of the Armed Services Board of Contract Appeals (ASBCA) on questions of fact relating to the quality of the Government-furnished cloth which decisions were adverse to plaintiffs, should be accorded finality here; and (3) that irrespective of the aforementioned decisions, summary judgments should be granted defendant on the basis of independent documentary evidence now before the court in the form of affidavits and exhibits in support of its motions.

Plaintiffs urge recovery on two grounds: First, that defendant breached the contracts in its failure to furnish non-defective cloth, or second that under applicable contract provisions plaintiff is entitled to an equitable adjustment of the contract prices because of the defective cloth supplied.

With respect to one of the contracts in the PLS case, No. DA30-352-TAP-135, recovery must be denied on the grounds that plaintiff itself has failed to conform to the contract provisions. The applicable provisions are as follows:¹

"Substitution of Government Furnished Property

"The Government reserves the right to substitute material in lieu of the material listed herein as `Government Furnished Property', and in the event such substitution affects the cost of performance of this contract, it shall be treated as coming within the terms of Section 2 (changes) of the General Provisions hereof, and an equitable adjustment in price shall be effected in accordance with the provisions of that Section.

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Clause "A" — Government-furnished Property

"(a) The Government shall deliver to the Contractor, for use in connection with and under the terms of this contract, the property which the schedule or the specifications state the Government will furnish (hereinafter referred to as "Government-furnished Property"). The delivery or performance dates for the supplies or services to be furnished by the Contractor under this contract are based upon the expectation that Government-furnished property of a type suitable for use will be delivered to the Contractor at the times stated in the schedule or if not so stated in sufficient time to enable the Contractor to meet such delivery or performance dates. In the event that Government-furnished property is not delivered to the Contractor by such time or times, the Contracting Officer shall, if requested by the Contractor, make a determination of the delay occasioned the Contractor thereby, and shall grant to the Contractor a reasonable extension of time in respect of such delivery or performance dates. The Government shall not be liable to the Contractor for damages or loss of profit by reason of any delay in delivery of or failure to deliver any or all of the Government-furnished property, except that in case of such delay or failure, upon the written request of the Contractor, an equitable adjustment shall be made in the delivery or performance dates, or price, or both, and in any other contractual provision affected thereby, in accordance with the procedures provided for in the clause of this contract entitled `Changes'.

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"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.

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"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. * * *"

Under these provisions the Government upon proper notice was to have the opportunity to replace defective material, and/or provide for an equitable adjustment of the contract price. The need for a prompt request to the contracting officer is quite obvious. Both provisions make reference to the Changes provision in the contract which provides that any claim by the contractor for adjustment under this clause is to be made within 30 days from the date of receipt of the notification of change by the contractor. However, the Changes provision further states that the contracting officer if he decides the facts warrant it may receive and act upon any such claim at any time prior to final payment. It also provides that failure to agree shall constitute a dispute concerning a question of fact within the Disputes clause of the contract.

Deliveries under this contract were completed May 15, 1953, and final payment was made June 18, 1953. Plaintiff's claim directed to the contracting officer was made on January 12, 1954, some seven months after final payment. It was rejected on the very same grounds which we find applicable here, i. e., that it was untimely under the contract provisions. The ASBCA, despite the Government's assertion of untimeliness, rendered a decision against plaintiff on the merits of the claim. However, the question as to whether plaintiff's claim was timely and in conformity with the contract provisions is one of law which may be decided here. Poloron Products, Inc. v. United States, 116 F.Supp. 588, 126 Ct.Cl. 816, 824. We hold it was not, and plaintiff's petition with regard to its claim under this contract must be dismissed. Adherence must be had to those provisions of Government contracts which provide the mechanics for settling disputes on the administrative level. United States v. Joseph A. Holpuch Co., 328 U.S. 234, 66 S.Ct. 1000, 90 L.Ed. 1192; United States v. Blair, 321 U.S. 730, 735, 64 S.Ct. 820, 88 L.Ed. 1039.

We now pass to a consideration of plaintiffs' claims under the remaining contract in the P.L.S. case and the two contracts in the Sachs case. The ASBCA board in denying plaintiffs' appeals found that the Government-furnished cloth met specifications, and while it did present difficulties in the manufacturing process, it was suitable for use in manufacturing the raincoats called for by the contracts.

Under the Disputes clause of the contract, supra, and the so-called Wunderlich statute, 68 Stat. 81, 41 U.S.C.A. § 321, the board's decision is "final and conclusive unless the same is fraudulent or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence."

In actions where the decision of the board is contested the plaintiffs must as we stated in Volentine & Littleton v. United States, 145 F.Supp. 952, 954, 136 Ct.Cl. 638, "do more than repeat the derogatory language of the statute." Facts must be alleged which if proved will show that under the language of the above statute the board's decision cannot stand.

Taking the position that the petitions fail in this regard and that therefore the board's decision should be accorded finality, defendant has moved for summary judgments on the basis of the board's decision, as well as on the basis of independent documentary evidence attached as exhibits and affidavits to its motions.

Plaintiffs' position in urging a denial of defendant's motions is in the first instance one of...