Baldwin-Lima-Hamilton Corporation v. United States

• Decision Date: 11 December 1970
• Docket Number: No. 339-66.,339-66.
• Citation: Baldwin-Lima-Hamilton Corporation v. United States, 434 F.2d 1371, 193 Ct.Cl. 556 (Fed. Cl. 1970)
• Parties: BALDWIN-LIMA-HAMILTON CORPORATION, a Wholly-Owned Subsidiary of Armour and Company, and Armour and Company v. The UNITED STATES.
• Court: U.S. Claims Court

434 F.2d 1371 (1970)

BALDWIN-LIMA-HAMILTON CORPORATION, a Wholly-Owned Subsidiary of Armour and Company, and Armour and Company v. The UNITED STATES.

No. 339-66.

United States Court of Claims.

December 11, 1970.

Gilbert A. Cuneo, Washington, D. C., attorney of record, for plaintiff. Roger N. Boyd, Charles E. Yonkers and Sellers, Conner & Cuneo, Washington, D. C., of counsel.

John Charles Ranney, Washington, D. C., with whom was Asst. Atty. Gen., William D. Ruckelshaus, for defendant.

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

ON PLAINTIFF'S MOTION AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

PER CURIAM:

This case was referred to Trial Commissioner Louis Spector with directions to prepare and file his opinion on the issues of plaintiff's motion and defendant's cross-motion for summary judgment under the order of reference and Rule 166(c). The commissioner has done so in an opinion and report filed on June 25, 1970, wherein such facts as are necessary to the opinion are set forth. Defendant filed a request for review by the court and the case has been submitted to the court on oral argument of counsel and the briefs of the parties.

In this case the burden was on the defendant to prove that the plaintiff was responsible for the misfunctioning of the turbines. The court agrees with the trial commissioner, for the reasons he gives, that the Corps of Engineers Board of Contract Appeals could not properly find that the defendant has sustained that burden. On several grounds, taken together, the Board's contrary determination is not entitled to acceptance. First, the Board's reasoning is summary, conclusionary and inadequate, and lumps conclusions of law with purported factual findings in such a way that it is impossible to tell how much the Board relied on legal conclusions which were erroneous and how much on true findings of fact unaffected by legal error. See Loral Electronics Corp. v. United States, 387 F.2d 975, 980, 181 Ct.Cl. 822, 831-833 (1967); Sundstrand Turbo v. United States, 389 F.2d 406, 418, 182 Ct.Cl. 31, 52-53 (1968). In this connection, it is important that the Board appears to rely very heavily on its erroneous legal conclusion that the "Cooperation" clause of the contract required plaintiff to investigate the consequences of, and then make the necessary adjustments for, the switch to single bearing generators. As Commissioner Spector points out, plaintiff had no such responsibility under that clause or under any other part of its contract, but the error nevertheless seems central to, and necessarily infects, the Board's determination.^* As for the few factual findings which are untainted by legal error, they are insufficient in themselves to sustain the administrative result. The court is satisfied that on the whole record the Board could not reasonably and correctly come to the conclusion that the Government adequately proved that the problems with the turbines came about because of any failure by plaintiff in its responsibilities.

Since the court agrees with the opinion and recommended conclusion of the trial commissioner, as hereinafter set forth, it hereby adopts the same, together with the foregoing discussion in the paragraph above, as the basis for its judgment in this case. Therefore, plaintiff's motion for summary judgment is granted, defendant's cross-motion is denied and judgment is entered for plaintiff in the sum of $112,053.86.

OPINION OF COMMISSIONER

SPECTOR, Commissioner:

Plaintiff's claim, in the amount of $112,053.86, grows out of a contract dated October 19, 1956, for the design, manufacture, testing and supervision of erection of two 90,000 horsepower hydraulic turbines for the fourth and fifth power plant units at the Garrison Dam Project, Riverdale, North Dakota. The total estimated contract price was $2,569,200. It was one of four independent contracts with defendant contributing to the completion of these power units, there being separate contracts for the manufacture of the generator, the manufacture of the governor, and for the erection and installation of the power units. Hydraulic turbines such as these are equipped with upper and lower sets of stationary and rotating "seal rings" which increase the efficiency of the turbine by preventing water from by-passing it.¹ The claim has heretofore been the subject of decisions adverse to plaintiff by defendant's contracting officer, and, on appeal, by the Army Corps of Engineers Board of Contract Appeals. Describing the claim, the board opinion states:

As will appear in greater detail hereinafter, soon after the installation and early operation of the Unit 4 and 5 turbines damage to seal rings was discovered. In testimony and briefs the parties have usually referred to the rings in question as "seal" rings. In the specifications they are called "wearing" rings. The dispute focuses principally on this damage and contentions of the parties as to the cause of such damage. * * *

The claim consists generally of costs incurred thereafter by plaintiff at defendant's direction, plus costs incurred by defendant and withheld from sums otherwise due plaintiff. Under the "Disputes" provision contained in the contract, which is worded in accordance with the so-called Wunderlich Act,² such decisions by the contracting agency, to the extent that they concern a dispute on a question of fact, are final "unless determined by a court of competent jurisdiction to have been fraudulent or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or not be sic supported by substantial evidence." Decisions concerning a question of law are not mentioned in this provision.³

General Statement of Facts

The facts hereinafter related generally parallel those recited in the board's opinion, occasionally supplemented by uncontested facts, and facts not mentioned in the agency opinion although mandated by the record.⁴

Baldwin Locomotive Works, plaintiff's predecessor, had previously furnished the turbines for the first, second, and third power plant units at the Garrison Dam. The bidding documents leading to the present contract for the fourth and fifth turbines, provided that a number of the bid items could be omitted upon award if "* * * a bid is based on furnishing turbines sufficiently similar to the installed turbines * * *."⁵ Because plaintiff's bid proposed to furnish turbines identical to those successfully employed in units 1, 2 and 3, it was awarded a contract omitting items 7 through 9, and 12 through 20 of the 20 bid items, thereby saving defendant approximately $108,000. Eliminated were first model and additional model tests; tools, wrenches and lifting devices; and spare parts. Also, the original shop drawings for units 1, 2 and 3 were permitted to be reused.

Plaintiff commenced performance and by letter dated January 10, 1957, submitted shop drawings for units 4 and 5 to defendant for approval. All but five of these drawings were identical to those previously submitted and approved for units 1, 2 and 3. Among these identical drawings previously submitted and approved, were those two which contained the dimensions for the upper and lower stationary and rotating seal rings and the manufacturing goals for the seal ring clearances. On February 5, 1957, defendant approved and returned these two drawings which recited a manufacturing goal of between .050" and .053" for the upper seal ring clearance and between .062" and .066" for the lower seal ring clearance.

During February 1959, plaintiff completed delivery of the components for turbine units 4 and 5, and the turbines were installed in the project under a separate contract, as previously mentioned, between defendant and P. S. Lord Company. The board opinion acknowledges that:

Turbine units 1, 2 and 3 at Garrison Dam were identical in all material respects to units 4 and 5 furnished under the instant contract. Units 1, 2 and 3 have operated without difficulty ever since their original installation with seal ring clearances nearly identical to the original field clearances of units 4 and 5. The original field clearances for units 4 and 5 were substantially less than the minimum clearances shown on the approved shop drawings. The minimum clearance measured for the upper seal of unit 4 was .039 in. and for the lower seal .041. Original minimum field seal clearances for unit No. 5 were .043 in. for the upper seal and .040 in. for the lower. Emphasis supplied.

The contract specifications provide in TP 2-15 that:

* * * The wearing rings on the runner and stationary wearing rings shall be made of suitable steel, having sufficiently dissimilar characteristics from those of the runner to prevent seizing in case of accidental rubbing. The rings shall be securely fastened in place by approved means. The radial clearances between the moving and stationary wearing rings shall be as small as possible, consistent with safe operation and with the clearances required in the turbine and generator guide bearings. * * * Emphasis supplied.⁶

Specification SC-4 states that "approval by the Contracting Officer of the Contractor's drawings shall not be held to relieve the Contractor of any part of the Contractor's obligation to meet all of the requirements of these specifications or of the responsibility for the correctness of the Contractor's drawings."

Meanwhile, defendant prepared specifications for a separate contract for the generators which were to be coupled to the turbines in power units 4 and 5. The bidding documents gave prospective bidders the option of furnishing either a less expensive one-bearing generator, or the more expensive two-bearing generator previously installed in units 1, 2 and 3. This option was provided upon the recommendation of the Interior Department which was responsible for purchasing and marketing the power generated at Garrison Dam, and therefore interested in cost-saving. General...