American Satellite Co. v. U.S., No. 92-5136

• Citation: 998 F.2d 950
• Decision Date: 07 July 1993
• Docket Number: No. 92-5136
• Parties: 38 Cont.Cas.Fed. (CCH) P 76,536 AMERICAN SATELLITE COMPANY, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 950

998 F.2d 950

38 Cont.Cas.Fed. (CCH) P 76,536

AMERICAN SATELLITE COMPANY, Plaintiff-Appellant, v. The UNITED STATES, Defendant-Appellee.

No. 92-5136.

United States Court of Appeals,

Federal Circuit.

July 7, 1993.

Rehearing Denied; Suggestion for Rehearing In Banc Declined

Oct. 27, 1993.

Caryl A. Potter, III, Sonnenschein, Nath & Rosenthal, Washington, DC, argued, for plaintiff-appellant.

Terrence S. Hartman, Dept. of Justice, Washington, DC, argued, for defendant-appellee. Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Allen D. Bruns, Asst. Director, Commercial Litigation Branch, Dept. of Justice, Washington, DC, were on the brief, for defendant-appellee. Also on the brief were June W. Edwards, Associate Gen. Counsel and William J. Bierbower, Sr. Atty., National Aeronautics and Space Admin., of counsel.

Before RICH, MAYER and LOURIE, Circuit Judges.

MAYER, Circuit Judge.

American Satellite Company (ASC) appeals the judgment of the United States Court of Federal Claims, ¹ 26 Cl.Ct. 146 (1992), which held it could not recover damages under its August 3, 1984, contract with the National Aeronautics and Space Administration (NASA) where NASA's failure to launch ASC's spacecraft was the result of a change in United States space policy announced by the President. ASC also appeals the Court of Federal Claims' judgment that the government did not breach a second Agreement, executed December 6, 1988, because ASC failed to obtain appropriate government clearances authorizing NASA to reclassify ASC's spacecraft as a priority payload. We reverse in-part, vacate in-part and remand.

Background

ASC and NASA executed a Launch Services Agreement (LSA) on August 3, 1984, pursuant to which NASA agreed to use its "best efforts" to launch two ASC satellites through its Space Shuttle program. In all relevant parts, this Agreement was identical to one executed between Hughes Communication, Inc., and NASA on December 5, 1985, which is the subject of our opinion in Hughes Communications, Inc. v. United States, 998 F.2d 953 (Fed.Cir.1993), issued today. Pursuant to the LSA, NASA launched ASC's first spacecraft (ASC-1) on August 27, 1985. At the time of the space shuttle Challenger explosion on January 28, 1986, ASC's second spacecraft, ASC-2, was scheduled for launch on January 27, 1987. Initially, NASA informed ASC that it was endeavouring to establish a new manifest which would accommodate commercial payloads in essentially the same priority as the previous manifest. On June 3, 1986, NASA informed ASC that ASC-2 had been assigned a new launch date in December 1989. However, on August 15, 1986, the President announced that NASA would no longer be in the business of launching commercial payloads. See id., at 956.

On September 25, 1986, the President issued a memorandum to NASA which directed that only commercial payloads which were "Shuttle Unique" or had "National Security and Foreign Policy" implications would be launched. Id. Like Hughes' spacecraft, ASC-2 was not included in either of these categories and was not included on the new shuttle manifest. Accordingly, on October 30, 1986, NASA informed ASC by letter of the new manifest and stated that "it appears almost certain you will not be provided launch services either prior to or after your current contract expires in September 1995." NASA also reminded ASC of its termination rights under the contract, pursuant to which it could receive a refund of its progress payments made up to that date. Instead of exercising its right to terminate, ASC informed NASA that it considered its actions to be a "breach and final repudiation" of the LSA. NASA returned ASC's progress payments under an Agreement that neither party was terminating the LSA.

On December 6, 1988, NASA and ASC executed a new document entitled "Agreement." The first paragraph of this Agreement provided: "Contel ASC will attempt to obtain by January 31, 1989, any governmental clearances, certifications, or determinations necessary to authorize a Shuttle launch of ASC-2. If by January 31, 1989, NASA is not authorized to provide a Shuttle launch for ASC-2, this Agreement will terminate." ² Paragraph 2 of the Agreement provided that if "NASA is authorized to provide a Shuttle launch for ASC-2," NASA would within 30 days provide ASC with a new proposed launch date for ASC-2. Agreement, p 2.a. In addition, ASC would have 30 days within which to respond to NASA's "offer." Agreement, p 2.b. If ASC responded favorably, NASA and ASC were to enter into negotiations for the launch of ASC-2 pursuant to the original LSA. Agreement, p 2.b. (1). However, if ASC rejected the proposed launch date, the Agreement would terminate. Agreement, p 2.b. (2). Finally, paragraph 3 of the Agreement provided: "This Agreement and the actions of NASA and Contel ASC pursuant hereto shall not be deemed to affect, modify, or waive any claims of Contel ASC arising under LSA 1306-002, or otherwise, nor to affect, modify, or waive any of NASA's defenses to such claims, except as may be agreed to as set forth in paragraph 2.b. (1)."

ASC undertook the task of obtaining appropriate government authorization by contacting Lieutenant General John T. Myers, the Director of the Defense Communications Agency. General Myers wrote a memorandum to Gordon A. Smith, the Assistant Secretary of Defense, Office of Command, Control, Communications and Intelligence, stating that ASC-2 would be the "only readily available domestic satellite" possessing certain encryption technology necessary for national security policy directives relating to government communications. Smith sent a letter to NASA on January 26, 1989, stating that he had "determined that the services to be provided by the ASC-2 satellite have national security implications. Therefore, NASA is authorized to process the ASC-2 satellite as involving national security interest when manifesting space shuttle payloads."

However, a NASA official wrote Smith on February 21, 1989, stating that two other Department of Defense (DOD) officials had informed him that the matter of ASC-2's classification was still under review by the DOD. The official explained that NASA could not change the priority determination until NASA was sure that the DOD was making a final recommendation which represented an agency-wide determination. Finally, the Under Secretary of Defense wrote to the Acting NASA Administrator on June 22, 1989. After summarizing NASA and DOD communications up to that point, the Under Secretary stated:

On behalf of the Secretary of Defense, I would like to affirm the DOD interest in the ASC-2, based upon the planned use of leased circuits and on this satellite's compliance with national policy concerning the protection of its command and control links. However, this should not be construed as DOD sponsoring a modification of the existing National Space Policy, or a reversal of the previous Presidential decision on the provision of launch services by NASA for commercial payloads that removed the ASC-2 from the Shuttle manifest.

NASA did not add ASC-2 to...