987 F.2d 1575 (Fed. Cir. 1993), 92-1362, Community Heating & Plumbing Co., Inc. v. Kelso

Docket Nº:92-1362.
Citation:987 F.2d 1575
Party Name:COMMUNITY HEATING & PLUMBING COMPANY, INC., Appellant, v. Admiral Frank B. KELSO, II, Acting Secretary of the Navy, Appellee.
Case Date:March 11, 1993
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

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987 F.2d 1575 (Fed. Cir. 1993)



Admiral Frank B. KELSO, II, Acting Secretary of the Navy, Appellee.

No. 92-1362.

United States Court of Appeals, Federal Circuit

March 11, 1993

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Gary R. Boehlert, Watt, Tieder, Killian & Hoffar, McLean, VA, argued for appellant. With him on the brief was Douglas C. Proxmire.

Dean L. Grayson, Atty., Commercial Litigation Branch, Dept. of Justice, Washington, DC, argued for appellee. With him on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Martha H. DeGraff, Asst. Director. Also on the brief was Ronald L. Fouse, Office of Gen. Counsel, Dept. of the Navy, of counsel.

Before NEWMAN, Circuit Judge, BENNETT, Senior Circuit Judge, and LOURIE, Circuit Judge.

BENNETT, Senior Circuit Judge.

This is an appeal from a decision of the Armed Services Board of Contract Appeals (board) denying the claims brought by Community Heating and Plumbing Co., Inc. (Community), against the Secretary of the United States Navy (Navy). 1 The claims arose out of a contract to remove and replace the condensate and steam system located at the Marine Corps Air Station, Cherry Point, North Carolina. Community seeks compensation for: 1) the costs associated with the installation of conduit sleeves in existing manholes; and, 2) the costs which arose from delays experienced by the project. 2 We affirm the decision of the board.

The Conduit Sleeve Claim

On May 18, 1982, Community submitted a bid in response to the Navy's Invitation for Bids. On May 19, Navy Contract Specialist Rosalind D. Rogers replied by mail informing Community that although it was the apparent low bidder, its bid appeared "somewhat out of line" as compared to the Navy's estimate and the other bids received. In fact, Community's estimate for the project was 14% below the Navy estimate and 5% below the second lowest bid received. Accordingly, Ms. Roger's letter instructed Community to check its proposal and confirm its bid price in writing. In addition, Navy officials decided that if the bid were confirmed, Community should also be required to meet with the Navy officials to reverify the project's scope. On June 1, 1982, Community confirmed its bid, and on June 3 a bid confirmation meeting was held at the Navy's offices. Those present at the meeting included Mr. Levy for Community and Mr. Manger (LANTDIV Engineer), Mr. Hiteshaw (the drafter of the project drawings), and Ms. Rogers for the Navy. 3 The only evidence in the record regarding the discussions which took place at the meeting was the testimony of those in attendance and a memorandum written by Ms. Rogers the following day.

On June 4, 1982, the day after the meeting, Mr. Levy wrote a letter to the Navy

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referencing the meeting and stating in part:

The items listed below were discussed and approved during our June 3, 1982 conference.


  1. The conduit sleeves shown on Sheet M-5 in the lower righthand corner are for the new manholes only for both condensate and steam.

(Emphasis added.)

The Navy responded to Community's June 4 communication with a letter dated June 21, 1982. That letter made no express objection to Community's contract interpretation regarding the conduit sleeves, but it did state in part:

The meeting referred to in your letter was held as part of the bid confirmation process in order to insure that you had considered all components of the job in preparing your bid. Contract awards on formally advertised procurements must be made in strict accordance with the terms of the Invitation for Bids.


It is requested that you verify in writing the correctness of your bid in accordance with the Invitation for Bids.

On June 30, 1982, the bid was confirmed in writing, and on July 15, 1982, the contract, No. N62470-81-C-1345, was awarded to Community.

After the contract was awarded, the Navy directed Community to furnish conduit sleeves in new and existing manholes "where needed." Community then brought a claim for additional compensation, ASBCA No. 38167, arguing that the contract required installation of conduit sleeves at new manholes only. Upon consideration of the evidence, the board ruled in favor of the Navy in a final decision dated February 24, 1992. The board held that the contract was unambiguous since there was "no way" the contract could be construed in the manner advocated by Community. Community now appeals.

Standard of Review

Under 41 U.S.C. § 609(b) (1988), the decision of the board on any question of law is not final or conclusive, but the decision on any question of fact "shall be final and conclusive and shall not be set aside unless the decision is fraudulent, or arbitrary, or capricious or so grossly erroneous as to necessarily imply bad faith, or if such decision is not supported by substantial evidence." See Triax-Pacific v. Stone, 958 F.2d 351, 353 (Fed.Cir.1992).

Community argues that the contract contained latent ambiguity and, because the June 4 letter gave notice of Community's contract interpretation, the Navy is bound to that interpretation by its failure to object. Lykes-Youngstown Corp. v. United States, 420 F.2d 735, 190 Ct.Cl. 348, cert. denied, 400 U.S. 865, 91 S.Ct. 102, 27 L.Ed.2d 104 (1970); Maxwell Dynamometer Co. v. United States, 386 F.2d 855, 181 Ct.Cl. 607 (1967); Midwest Transit, Inc., PSBCA No. 1504, 87-3 BCA (CCH) p 20,079 at 101,656. However, Community's alternate contract interpretation cannot be adopted if the present contract is unambiguous, Perry &amp...

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