905 F.2d 1518 (Fed. Cir. 1990), 89-1592, Salsbury Industries v. United States

Docket Nº:89-1592.
Citation:905 F.2d 1518
Party Name:SALSBURY INDUSTRIES, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
Case Date:June 13, 1990
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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905 F.2d 1518 (Fed. Cir. 1990)

SALSBURY INDUSTRIES, Plaintiff-Appellant,


The UNITED STATES, Defendant-Appellee.

No. 89-1592.

United States Court of Appeals, Federal Circuit

June 13, 1990

Rehearing Denied July 6, 1990.

Suggestion for Rehearing In Banc

Declined July 27, 1990.

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Eugene R. Fidell, Feldesman, Tucker, Leifer, Fidell & Bank, Washington, D.C., argued, for plaintiff-appellant. With him on the brief, was Edward S. Wactlar, Blau, Kramer, Wactlar & Lieberman, P.C., Jericho, N.Y., of counsel.

Agnes M. Brown, Commercial Litigation Branch, Dept. of Justice, Washington, D.C., argued, for defendant-appellee. With her on the brief, were Stewart E. Schiffer, Asst. Atty. Gen., David M. Cohen, Director and Thomas W. Petersen, Asst. Director. Also on the brief, was Mark E. Dennett, Postal Service Counsel, U.S. Postal Service, Washington, D.C., of counsel.

Before MARKEY, Chief Judge, MAYER, Circuit Judge, and DUFF, District Judge. [*]


MAYER, Circuit Judge.

Salsbury Industries appeals the judgment of the United States Claims Court, 17 Cl.Ct. 47 (1989), sustaining the convenience termination of Salsbury's contract with the United States Postal Service and denying Salsbury certain incentive payments. We affirm.


The Postal Service solicited bids for the manufacture and installation of aluminum post office lockboxes, and Salsbury and four other bidders were awarded contracts. Salsbury's contract required delivery of 2900 lockboxes for $9.7 million, and provided for an additional ten percent incentive payment for lockboxes delivered ahead of the specified delivery schedule. Prior to termination of its contract, Salsbury had delivered almost half of the lockboxes called for in the contract and was paid about $4.6 million, including over $260,000 in incentive payments.

Another bidder, Doninger Metal Products Corporation, had been disqualified because the contracting officer said it was not a responsible offeror. Doninger brought suit in the United States District Court for the District of Columbia challenging the nonresponsibility determination and asking for an injunction requiring the Postal Service to terminate all contracts awarded under the solicitation and either award a contract to Doninger or resolicit bids. The Postal Service notified Salsbury of Doninger's suit, but Salsbury did not seek to intervene. The district court ruled that Doninger had been unlawfully prevented from receiving a contract and ordered the Postal Service to "suspend the performance of so much of the contracts awarded pursuant to [the] [s]olicition ... as would have been awarded to [Doninger] ... had [Doninger's] offer been accepted in full and award an aluminum door lockbox contract to [Doninger] in accordance with

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that offer." Doninger Metal Products Corp. v. United States Postal Service, No. 83-2725 (D.D.C. Jan. 9, 1984). The Postal Service did not pursue an appeal.

Following this injunction, the contracting officer sent Salsbury a stop work order "to implement the order of the ... district court." A couple weeks later, the contracting officer notified Salsbury that, effective immediately, its contract was "terminated for the convenience of the Postal Service pursuant to clause 8 of the General Provisions for Fixed Price Contracts." Clause 8 provides in part: "The performance of work under this contract may be terminated by the Postal Service in accordance with this clause in whole, or from time to time in part, whenever the Contracting Officer shall determine that such termination is in the best interest of the Postal Service." The Postal Service authorized Salsbury to deliver the lockboxes it had manufactured but not yet delivered prior to termination. Doninger was awarded a $15.7 million lockbox contract.

Salsbury submitted a claim to the contracting officer for $112,639 in delivery incentives allegedly earned prior to termination and was paid $25,457 on this claim. The contracting officer determined that the remaining $87,182 was for post-termination lockbox deliveries to which delivery incentives did not apply.

The parties entered into a settlement agreement under which the Postal Service paid Salsbury an additional $3.4 million in convenience termination costs, which included a profit. This settled all claims arising under the contract prior to the agreement except those specifically reserved. A claim for $630,767, the amount of delivery incentives that could have been earned on the remaining lockboxes due under the contract, was reserved. Salsbury submitted this claim to the contracting officer, and it was denied.

Salsbury then filed a complaint in the Claims Court, claiming $87,182 in incentive payments for lockboxes delivered subsequent to termination, and $630,767 in incentive payments it allegedly would have earned had the contract not been terminated. On cross-motions for summary judgment, the Claims Court held that the Postal Service was entitled to judgment as a matter of law on both claims.


Salsbury argues that termination for convenience was improper because the contracting officer never made the required determination that termination was in the best interest of the Postal Service. It relies primarily on the contracting officer's deposition testimony that...

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