Ball State University v. United States, 381-72.

• Decision Date: 19 December 1973
• Docket Number: No. 381-72.,381-72.
• Parties: BALL STATE UNIVERSITY and the American Association of Colleges for Teacher Education v. The UNITED STATES.
• Court: U.S. Claims Court

203 Ct. Cl. 291, 488 F.2d 1014 (1973)

BALL STATE UNIVERSITY and the American Association of Colleges for Teacher Education v. The UNITED STATES.

No. 381-72.

United States Court of Claims.

December 19, 1973.

George E. Cranwell, Arlington, Va., atty. of record for plaintiff.

Lawrence S. Smith, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.

Before DAVIS, NICHOLS and KUNZIG, Judges.

NICHOLS, Judge:

This is a review of a decision of the Armed Services Board of Contract Appeals (ASBCA), Appeal of Ball State University, ASBCA No. 16344, 72-1 BCA § 9246. We must apply the standards of the Wunderlich Act, 41 U.S.C. §§ 321, 322. The facts are not seriously in issue, the question to be decided being a matter of law, the interpretation of a contract. Since we agree entirely with the Board, it is possible to restrict our discussion to the minimum necessary to explain our decision, leaving those who desire to know more about the case to refer to the published Board decision, and the able briefs before us.

The contract in dispute was awarded by the Department of Health, Education and Welfare, and its purpose was in-service development of teachers for the disadvantaged, as authorized by the National Defense Education Act, 20 U.S.C. § 591. By the terms of that Act, the contract had to be awarded to an institution of higher education but the one here involved, Ball State University, our plaintiff, subcontracted to American Association of Colleges for Teacher Education (AACTE). Both prime and subcontracts called basically for cost reimbursement, without profit, so there was no cushion to absorb unreimbursed costs.

The prime contract clause in dispute, Article 12, reads as follows:

Article 12. Allowable Costs

A. For the performance of this contract, the Government shall pay to the Contractor the costs determined by the Contracting Officer to be allowable in accordance with Federal Procurement Regulations Part 1-15, Contract Cost Principles and Procedures (41 CFR 1-15) as in effect on the date of this contract, and such other costs as may be specifically provided in this contract. Allowable costs shall include, but not necessarily be limited to, the following:

(1) Direct Costs:

(a) Personal services

(b) Employee benefits

(c) Travel

(d) Office supplies

(e) Reproduction

(f) Instructional supplies

(g) Miscellaneous services

(h) Rental of space & equipment

(i) Communications

(2) Indirect, or overhead, costs in the amount of $23,000

(3) Stipend payments to eligible enrollees attending the Institutes B. The total allowable cost payable under this contract shall be determined on the basis of an audit by representatives of the Commissioner. The Contractor agrees to repay to the United States Office of Education any amount of payment received in excess of the actual cost, and the Government agrees to pay to the Contractor any amount due as determined by such audit.

(Except for the caption of Article 12, all of the above emphasis italics were supplied to indicate what was typed into the original contract, the remainder being printed. The Board called the printed part "boilerplate".)

Afterwards, by amendment, the $23,000 figure for indirect costs was increased to $39,000. The contract cost ceiling was $1,340,738, which amount has been paid to plaintiff, of which $1,226,966.40 was for direct costs, the remainder for indirect costs. The total amount of indirect costs was $197,466.31, by Government audit. Plaintiff claims an additional $83,724.71 for unreimbursed indirect costs but according to the Board has been overpaid by $74,741.60 since the $1,340,738 payment included $74,741.60 in excess of the allowable $39,000 for indirect costs. Defendant counterclaims for the overpayment. Only the meaning of the contract is in serious dispute. We agree with the Board that the $39,000 figure was a contractual ceiling on reimbursement for indirect costs, that plaintiff cannot recover, and has been overpaid in the amount stated. Of course, it was AACTE that actually incurred the extra costs, but it is not in privity of contract with defendant and its claim if any, against Ball State University is not before us and we do not pass on it.

It is unnecessary to consider how plaintiff could be paid above the $1,340,738 cost ceiling, since Article 12 is decisive against it. Plaintiff, however, invites attention to the words in Article 12A "Allowable costs shall include, but not necessarily be limited to," and the statement in paragraph B that the total allowable cost shall be determined on the basis of an audit. The difficulty is that plaintiff's view would make wholly ineffective the specific provision that the indirect costs will be $39,000. Interpretations are not favored that leave portions of contract language useless, inexplicable, inoperative, meaningless or superfluous. Hol-Gar Mfg. Corp. v. United States, 351 F.2d 972, 979, 169 Ct.Cl. 384, 395 (1965). This is especially true when the clause...