Dynamics Corporation of America v. United States
| Decision Date | 19 January 1968 |
| Docket Number | No. 366-64.,366-64. |
| Citation | 389 F.2d 424,182 Ct. Cl. 62 |
| Parties | DYNAMICS CORPORATION OF AMERICA, as Successor in Interest to International Fermont, Inc. v. The UNITED STATES. |
| Court | U.S. Claims Court |
Alan Y. Cole, Washington, D. C., attorney of record, for plaintiff. Isaac N. Groner, Jerry D. Anker, Stephen E. Moss, and Cole & Groner, Washington, D. C., of counsel.
Thomas J. Lydon, Washington, D. C., with whom was Acting Asst. Atty. Gen. Carl Eardley, 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
This matter is before the Court of Claims on cross-motions for summary judgment. There are no disputed issues of fact. For reasons hereafter given, plaintiff's motion is granted, and defendant's cross-motion is denied.
This is a suit based upon a fixed-price, indefinite-quantity contract (No. AF 04(606)-7880), between the defendant, acting through the Department of the Air Force, and plaintiff.1 Under said contract, plaintiff was to supply diesel generator sets, both skid and wheel mounted, known as the MB-Teen series (MB-15 through MB-19), which vary in capacity from 15 to 150 kilowatts. Defendant agreed to order certain minimum quantities specified in the contract schedule, and plaintiff agreed to furnish, when ordered by defendant, additional quantities of each item up to the maximum quantities specified in the schedule.2 The schedule also set forth the prices at which the items were to be furnished.
The basic dispute before the court is whether certain orders were "issued" within the time period specified in the contract.
Part XIII of the contract, the provision in question, provided:
CONTRACT PERIOD: Any resulting contract shall be effective and binding as of the date of approval thereof * * * and shall remain in effect * * * until all items ordered have been accepted by and delivered to the Government. The Government reserves the right to issue orders against this contract for a period not to exceed eighteen (18) months from date of approval of the Contract. Emphasis supplied.
The contract was subject to the written approval of the Secretary of the Air Force and expressly stated that it would not be binding until so approved. Plaintiff and defendant are in full agreement that the contract was duly approved on March 11, 1961, and thus, under the terms of the contract, became effective on that date.
The contract provided that Order No. 1 for the minimum quantities would be issued at the time of the award of the contract. Order No. 1 was mailed to plaintiff with the contract on March 11, 1961, the date the contract became effective. Nine more orders were placed from time to time. These orders were termed "calls."
Call No. 1 ordered quantities substantially in excess of the minimum contract quantities. Plaintiff admits that Call Nos. 2 through 7 were issued within the contractual time limitation. However, plaintiff contends that the calls in the following table were issued after termination of defendant's contract right to place additional orders:
Date of Date Date
Order Description Amount mailed received
9/10/62 Call 10 ....................... $ 11,119.64 9/10/62 After 9/11/62
9/11/62 Call 8 ........................ 1,120,891.17 9/11/62 " "
9/11/62 Call 9 ........................ 89,544.18 9/11/62 " "
9/11/62 Modification 1 to Call 8 ...... (314,699.00) 9/17/62 After 9/17/62
9/11/62 Modification 1 to Call 10 ..... 314,699.00 9/17/62 " "
Since defendant insisted plaintiff supply such orders, plaintiff contends it is entitled to recover the difference between the reasonable value of the additional sets and the amount paid by defendant.
On September 17, 1962, defendant mailed Modification 1 to Call No. 8, dated September 11, 1962, which was received by plaintiff after September 17, 1962. The items deleted by Modification 1 to Call No. 8 were identical to the items added by Modification 1 to Call No. 10. Defendant states that the only effect of this transfer was that the items would be delivered, invoiced, and paid for under Call No. 10 instead of under Call No. 8.
Plaintiff gives two reasons for its contention that Call Nos. 8 through 10 were not timely ordered by defendant within the period specified in the contract: (1) The 18-month period during which orders under the contract could be issued commenced on March 11, 1961, the effective date of the contract, and thus expired on September 10, 1962; (2) an order was not "issued" under the contract until it was received by the contractor, and thus, since Order Nos. 8 through 10 were received after September 11, 1962, they were untimely even if the 18-month period is computed in the manner suggested by defendant. If the plaintiff is correct on either contention, it is entitled to recover.
In reference to the above contentions, defendant argues that the orders were timely because (1) the first day of the contract should be excluded so that the 18-month period commenced on March 12, 1961, and expired on September 11, 1962; (2) the mailing of such orders by defendant on September 10, 1962 (Call No. 10), and September 11, 1962 (Call Nos. 8 and 9), was issuance under the contract, and the date of receipt is irrelevant.3
However, plaintiff's position, as described above, was not always so well defined. Round 1 of the dispute was signaled by plaintiff's letter of September 25, 1962, in which plaintiff's contract administrator advised defendant's contracting officer that the issuance of Call Nos. 8 and 9 had been exercised beyond the 18-month contract period. No mention was made of Call No. 10. Plaintiff expressed its willingness "to negotiate this additional quantity if you defendant so desire." On September 28th, the Government replied by letter that Call Nos. 8 and 9 "were issued 11 September 1962, which is within the time period set forth" in the contract.
This led to another letter by plaintiff's contract administrator, dated October 1st. After citing the provision of the contract which gave the Government the right to issue orders for a period of 18 months from the date of approval of the contract, the letter (1) made the erroneous observation that the date of approval of the contract was March 10, 1961, and (2) concluded from this that the contract period terminated on September 10, 1962, and therefore Call Nos. 8 and 9 were not exercised within the contract period. Plaintiff did not dispute the assertion in defendant's September 28th letter that Call Nos. 8 and 9 were "issued" on September 11, 1962. On October 4, 1962, plaintiff's contract administrator sent a letter returning Call Nos. 8 and 9, "which have been issued after the expiration of the contract period * * *." Both returned calls had been mailed by defendant on September 11, 1962. However, plaintiff did not return Call No. 10, which had been mailed September 10th and received by it after September 11, 1962.
The Government responded by a letter dated October 9, 1962, in which it pointed out that the contract actually became effective March 11, 1961, contrary to plaintiff's erroneous assumption that it had become effective March 10th. "Therefore," the letter continued, "since Calls #8 and #9 were issued 11 September 1962, they were issued within the time period defined in subject contract for this issuance."
On October 23, 1962, plaintiff's contract administrator responded in a letter in which he explained the source of his erroneous assumption that the contract became effective March 10th. He acknowledged that plaintiff's "calculations of the time period allowable for the issuance of Call orders were based upon the date of 10 March 1961."
Judging from plaintiff's mistaken assumption that the contract was effective March 10th and from the correspondence presented thus far, it is reasonable to assume that plaintiff had not yet taken the position that issuance was accomplished by receipt or that the effective date of the contract was to be included in computing the 18-month period. Rather, plaintiff's initial position seems to have been that, since the effective date of the contract was March 10, 1961, then all calls were untimely if mailed after midnight September 10, 1962 (a computation presumably arrived at by excluding the erroneous March 10th effective date and computing from March 11, 1961, to September 10, 1962).
However, once plaintiff became aware that March 11th was the effective date, it changed its method of computing the 18-month period, and by letter dated January 21, 1963, plaintiff's vice president advised the Government that it remained firm in its position "that Calls #8 and #9 and Modification #1 to Call #10 were not exercised within the time period specified in the subject contract." The letter further stated, that, even on the basis of a March 11th effective date, On January 28, 1963, defendant's contracting officer, by telegram, reaffirmed his position that Call Nos. 8 and 9 were issued within the contract time period and directed plaintiff to produce the generator sets involved. This direction was confirmed by the contracting officer's letter to plaintiff, dated February 5, 1963. The contracting officer also noted in that letter that "Because of the Government's urgent need for these generator sets, we would appreciate a current production report on these two calls." Plaintiff, in its reply of February 8, 1963, reasserted the position stated in its January 21st letter and further stated that, since the Government had directed it to honor the disputed calls, it would do so, but would process a claim under...
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