S&E Contractors, Inc. v. United States

• Decision Date: 30 November 1970
• Docket Number: No. 104-67.,104-67.
• Citation: 433 F.2d 1373
• Parties: S & E CONTRACTORS, INC. v. The UNITED STATES.
• Court: U.S. Claims Court

433 F.2d 1373 (1970)

S & E CONTRACTORS, INC. v. The UNITED STATES.

No. 104-67.

United States Court of Claims.

November 30, 1970.

Geoffrey Creyke, Jr., Washington, D. C., attorney of record for plaintiff; John P. Wiese, Hudson & Creyke, Washington, D. C., and Locke, Purnell, Boren, Laney & Neely, Dallas, Tex., of counsel.

James F. Merow, Washington, D. C., with whom was Asst. Atty. Gen. William D. Ruckelshaus, for defendant; Edward M. Jerum, and Vasil S. Vasiloff, Washington, D. C., General Accounting Office, of counsel.

Robert F. Keller, Asst. Comptroller General of the United States, filed a brief for the General Accounting Office as amicus curiae; Paul G. Dembling, General Counsel, General Accounting Office, and Vasil S. Vasiloff, attorney, General Accounting Office, Washington, D. C., on the brief.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS, SKELTON and NICHOLS, Judges.

ON DEFENDANT'S REQUEST FOR REVIEW OF THE COMMISSIONER'S RECOMMENDED OPINION

NICHOLS, Judge.

This is a contract case before us on defendant's request for review of our commissioner's recommended opinion. Stripped of subordinate and extraneous issues, the central question presented is whether the "Wunderlich" Act, 41 U.S.C. §§ 321, 322 (1964) (hereinafter referred to as the Act), affords the Government a right to obtain judicial review — coextensive with that of the contractor — of decisions of administrative tribunals unfavorable to it, on contract claims made in the course of the standard "disputes" procedure under the Wunderlich Act.

On August 4, 1961, plaintiff S & E Contractors, Inc. contracted with the Atomic Energy Commission (AEC) to build a testing facility at the National Reactor Test Station in Idaho. Performance of this contract generated numerous claims which the contractor properly filed with the contracting officer; those decided adversely to the contractor were seasonably appealed to the AEC. Since at this time the AEC did not have a contract appeals board to represent it, the contractor, under the AEC's then current procedures, was referred to a hearing examiner specially appointed to hear grievances and render findings of fact. Consequently, eight of plaintiff's claims were sustained by the hearing examiner and remanded to the contracting officer for negotiation and settlement on damage questions. Contrary to this directive, the contracting officer petitioned the AEC to review the hearing examiner's findings as to these eight claims. His petition was accepted and the AEC's review resulted in an affirmance of the hearing examiner's findings on seven of the eight claims. (The Government explains that the AEC did not actually affirm on these seven claims, but rather it merely declined to exercise its certiorari-like discretion to rehear them. This procedural clarification is of no real importance to our analysis, however, because the Government conceded at oral argument that the AEC's refusal to review these claims was itself sufficient to give the hearing examiner's findings administrative finality).

Again the matter was remanded to the contracting officer for final settlement. This time, however, settlement discussions were interrupted and finally terminated by the intervention of the General Accounting Office (GAO). Our commissioner found that an AEC certifying officer requested advice from the GAO with regard to the certification of a voucher for the making of payment on one of the successful claims. No mention was made nor was any advice solicited concerning paying out on the remaining claims. Despite the narrowness of this request, the GAO advised the AEC in decision No. B-153841 (46 Comp.Gen. 441 (1966)) that payment on any of the disputed claims would be improper because the AEC's findings as to these claims were not supported by substantial evidence and were erroneous on matters of law. In view of this decision, the AEC informed plaintiff that plaintiff had "exhausted its administrative recourse to the Commission. * * * and that no action would be taken by the Commission, in connection with the claims, inconsistent with the views expressed by the Comptroller General in * * * B-153841."

This information impelled plaintiff to bring suit in this court. Cross motions for summary judgment supported only by arguments and counter-arguments regarding the evidential substantiality and the legal correctness of the AEC's findings and conclusions were submitted to our trial commissioner. He, however, chose to disregard these arguments in favor of other theories. Essentially his opinion recommends that the AEC's failure to implement its own decision made under the contract's disputes provision (which he terms a repudiation) "must be regarded as a breach of that provision." Moreover, he suggests that the GAO intervention on substantiality and on legal grounds exceeded its authority and that therefore decision No. B-153481 "was too slender a reed * * * to support the Commission's repudiation of its own decision." The commissioner granted plaintiff's motion for summary judgment, and rather than have the parties go back to the AEC for findings on quantum, he concluded that in view of the AEC's continuing refusal to pay plaintiff over a period of five years since its original decision, future relief there would be inadequate and unavailable. Hence, he recommends that plaintiff's damages be fixed by this court under a Rule 131(c) proceeding. The points are ably made and the arguments are substantial, but we disagree.

The pervasive question running through this controversy is whether the Government has a right at all to seek judicial review based on Wunderlich Act standards where a tribunal of its own creation issues a contract disputes decision favorable to the contractor. Should this question be answered affirmatively, we must also decide whether the Government's method of obtaining judicial relief in this case, simply by denying payment was proper.

Before tackling these provocative questions, we think it appropriate to define clearly the perimeters of our analysis. The factual background indicates that the Comptroller General effectively stopped payment of the claims. The Government, however, as represented by the Justice Department, which alone speaks for it in court, says that plaintiff would have been victorious by default in this court at the outset had Justice not decided to defend this suit. Specifically, it argues that this decision to defend was not prompted by any sort of requirement to give mandatory defense to opinions of the Comptroller General, but rather it was the uninfluenced product of the Justice Department's own thorough and independent review of the case. The Department considered the AEC's decision erroneous on matters of law and unsupported by substantial evidence in this case before us. Counsel for the Government therefore urges us to ignore the Comptroller's intervention as being the occasion but not the cause of the litigation and in no way itself an administrative decision having effect here or coming under our review.

We agree that the Comptroller's powers of decision and settlement, though great, may be assumed to lapse and fail at the Court House door. Therefore, it is not necessary for us to determine what decisions he might make or what finality they might have in cases not brought before us. When a Wunderlich Act case is pending here, the only question is how much finality attaches to the findings and holdings of the Board set up to execute the powers of the head of the agency in the premises. Really it makes no difference now whether the failure of defendant to pay out as the Board determined results, as here, from the Comptroller General's implied threat to charge the certifying officer's account, or from a change of heart in the agency itself, as was the case in C. J. Langenfelder & Son, Inc. v. United States, 169 Ct.Cl. 465, 341 F.2d 600 (1965). We hold that in either event, a refusal by defendant to pay a Board award is not a breach of the disputes clause if the involved award is not supported by substantial evidence or otherwise is not entitled to finality under the Wunderlich Act. The reasons for this view follow.

The focus of our inquiry is the Wunderlich Act; the exact wording of the contract disputes clause in question has no bearing, at least as applied to the case before us. As we said in an earlier case, "it is the Wunderlich Act which is determinative. The minimal bounds of judicial review must be drawn from the terms, history, and policy of that Act, not from policies speculatively drawn from the contract clauses which are themselves governed by the statute." C. J. Langenfelder & Son, Inc. v. United States, 169 Ct.Cl. at 477 n. 7, 341 F.2d at 607 n. 7 (1965).

Enacted in 1954 and unmodified thereafter, the Wunderlich Act reads as follows:

§ 321. Limitation on pleading contract-provisions relating to finality; standards of review

No provision of any contract entered into by the United States, relating to the finality or conclusiveness of any decision of the head of any department or agency or his duly authorized representative or board in a dispute involving a question arising under such contract, shall be pleaded in any suit now filed or to be filed as limiting judicial review of any such decision to cases where fraud by such official or his said representative or board is alleged: Provided, however, That any such decision shall be final and conclusive unless the same is fradulent (sic) or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence. (Emphasis supplied for word any).

§ 322. Contract-provisions making decisions final on questions of law

No Government contract shall contain a provision making final on a question of law the decision of any administrative official, representative, or board. (Emphasis supplied).

Strictly read the Act favors neither Government nor...