Brunswick Corp. v. U.S., 91-1201

• Decision Date: 11 December 1991
• Docket Number: No. 91-1201,91-1201
• Citation: 951 F.2d 334
• Parties: 37 Cont.Cas.Fed. (CCH) P 76,232 BRUNSWICK CORPORATION, Appellant, v. The UNITED STATES, Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 334

951 F.2d 334

37 Cont.Cas.Fed. (CCH) P 76,232

BRUNSWICK CORPORATION, Appellant, v. The UNITED STATES, Appellee.

No. 91-1201.

United States Court of Appeals, Federal Circuit.

Dec. 11, 1991.

John B. Denniston, of Covington & Burling, Washington, D.C., argued (F. James Tennies, of counsel), for appellant.

Paul A. D'Aloisio, of the Civ. Div., Dept. of Justice, Washington, D.C., argued (Stuart M. Gerson, Asst. Atty. Gen., David Before ARCHER, LOURIE and RADER, Circuit Judges.

M. Cohen, Director, and Martha H. DeGraff, Asst. Director, on brief), for appellee.

LOURIE, Circuit Judge.

Brunswick Corporation appeals the decision of the Armed Services Board of Contract Appeals (Board) granting summary judgment in favor of the United States. Brunswick had sought an adjustment to its contract to supply camouflage systems to the United States Army Troop Support Command (TROSCOM). The Board held that TROSCOM's interpretation of the contract's "Adjustment for Unanticipated Economic Fluctuation" clause (EPA clause) was correct, that Brunswick's was incorrect, and that the contract was unambiguous. See Brunswick Corp., ASBCA Nos. 32973, 33726 and 34151, 91-1 B.C.A. (CCH) p 23,458 at 117,679 (Oct. 19, 1990). We affirm.

BACKGROUND

Brunswick entered into a $64 million contract with TROSCOM which required Brunswick to deliver camouflage systems during a three-year period. The original Request for Proposal (RFP) and the final contract contained an EPA clause which provided that the contract price would be adjusted after performance to account for economic fluctuations (inflation or deflation). The pertinent parts of the EPA clause are provided in the attached Appendix.

The EPA clause assumed, and it is not disputed, that offerors included in their bid price an amount for anticipated economic fluctuations during the contract years. According to the clause, the contract price was to be adjusted further after performance to represent unanticipated economic fluctuations. The amount of the adjustment to the contract price would depend upon the difference between the actual economic fluctuations which occurred during performance and anticipated economic fluctuations included in the contract price. A 2% threshold was provided; no adjustments were to be made if the fluctuation did not exceed 2%. ¹ According to the EPA clause, "ANTICIPATED COMPOSITE ESCALATION FACTORS," set forth in Table I, would be used to "determine the base against which unanticipated economic fluctuations may be made." (Emphasis added).

The factors in Table I represented the government's estimated multiplier for labor and material costs in a given year, e.g., labor and material that cost $1.00 at the time of Brunswick's offer would cost $1.0293 at the end of the first year of the contract. The Table I factors were derived entirely from the forecasted indices in Table II of the EPA clause. The forecasted indices used in Table II were from the United States Department of Labor, Bureau of Labor and Statistics (BLS).

Prior to the award, Brunswick had an opportunity to request changes in the contract provisions; it in fact claimed that the BLS indices in Table II were not representative of its costs, and recommended that a cap on any upward adjustment provided in the original RFP be eliminated. The government agreed to these changes.

When Brunswick prepared its bid, it did not use the procedures in the EPA clause for calculating anticipated economic fluctuation; it used its own predictions to arrive at the $64 million contract price. The original date for submission of responses to the RFP was January 31, 1983. This date was extended by subsequent amendments, to June 7, 1983. TROSCOM awarded the contract to Brunswick on September 28, 1983, about five months after the assumed April 1983 date in the EPA clause.

At the end of each performance year, Brunswick submitted a request for adjustment under the EPA clause. Instead of using the BLS indices in Table II, it replaced the Table II values with BLS indices The government denied the requests for adjustment, asserting that the contract's Table I factors were to be used to calculate any contract price adjustment, and that Brunswick was only entitled to an upward adjustment of $338,279. Brunswick appealed to the Board, and the Board agreed with the government, holding that the EPA clause provided that the unchanged Table I factors should be used to determine the anticipated inflation. Brunswick now appeals to this court.

                which reflected the delay in the award.   It used these new indices to calculate new Table I factors, and requested contract price adjustments based upon its own Table I factors.   The result of that calculation showed that Brunswick was entitled to an upward adjustment of $952,090
                

DISCUSSION

The question before us in determining whether the Board correctly interpreted the EPA clause is whether the factors used to calculate anticipated economic fluctuations, which were set forth in the contract, can be varied as a result of a delay in the award of the contract. We note at the outset that the Board's interpretation of a contract is a legal conclusion, which is therefore freely reviewable. George Hyman Constr. Co. v. United States, 832 F.2d 574, 579 (Fed.Cir.1987). However, the Board's interpretation is given careful consideration, as the Board has considerable experience and expertise in interpreting government contracts. Alvin Ltd. v. United States Postal Serv., 816 F.2d 1562, 1564 (Fed.Cir.1987). In determining how a reasonable person intended the terms of the contract, we give the language its ordinary and commonly accepted meaning unless it is shown that the parties intended otherwise. Hol-Gar Mfg. Corp. v. United States, 169 Ct.Cl. 384, 351 F.2d 972, 976 (1965).

Subparagraph (a) of the EPA clause provides that part of the contract price "is subject to adjustment for unanticipated economic fluctuation. That portion of the price (70%) will be deemed by the Government to include an amount for anticipated economic fluctuation based on the factors set forth in Table I." (Emphasis added). Paragraph (e) of the clause similarly requires that "[t]he Government shall use the forecasted composite escalation factors set forth in Table I to determine the base against which unanticipated economic fluctuation adjustments may be made." (Emphasis added). Thus, the contract language is unambiguous in requiring that each offer contain an amount for anticipated economic fluctuations, and that the amount be based on the Table I factors provided. ²

Brunswick...