Erickson Air Crane Co. of Washington, Inc. v. U.S.

• Citation: 731 F.2d 810
• Decision Date: 26 March 1984
• Docket Number: No. 83-891,83-891
• Parties: 32 Cont.Cas.Fed. (CCH) 72,392 ERICKSON AIR CRANE COMPANY OF WASHINGTON, INC., * Appellant, v. The UNITED STATES, Appellee. Appeal
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 810

731 F.2d 810

32 Cont.Cas.Fed. (CCH) 72,392

ERICKSON AIR CRANE COMPANY OF WASHINGTON, INC., ^* Appellant, v. The UNITED STATES, Appellee.

Appeal No. 83-891.

United States Court of Appeals, Federal Circuit.

March 26, 1984.

Hugh J. McClearn and Wilford A. Beesley, Salt Lake City, Utah, argued for appellants. With them on brief was Joseph J. Bronesky, Denver, Colo.

Mary Mitchelson, Washington, D.C., argued for appellee. With her on brief were J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Director, and Sandra P. Spooner, Washington, D.C., Betty London-Jimmerson, Golden, Colo., of counsel.

Before MARKEY, Chief Judge, FRIEDMAN, Circuit Judge, and NICHOLS, Senior Circuit Judge.

NICHOLS, Senior Circuit Judge.

This is an appeal from a United States Department of Energy Board of Contract Appeals (EBCA or board) decision, 83-1 BCA p 16,145 (1982), denying recovery to appellant of amounts allegedly due it under certain clauses and due to breaches of other clauses of United States Contract No. 6/07/DC/71720. We affirm.

I Background

On January 12, 1976, the United States Department of the Interior's Bureau of Reclamation (government) entered into Contract No. 6/07/DC/71720 with Erickson Air Crane Company of Washington, Inc. (Erickson) to construct approximately 136 miles of 345 kilovolt transmission line from a point near Steamboat Springs, Colorado to Ault, Colorado. The contract required Erickson to have the transmission line in service by November 30, 1977, or suffer liquidated damages of $5,250 per additional day.

Since much of the transmission line's route lay over mountainous and heavily timbered terrain, Erickson intended to assemble and erect the steel transmission towers with a Sikorsky S-64 Sky Crane helicopter. Erickson subcontracted for the other "more routine" parts of the project with Pacific States Clearing (PSC) to build access roads and to clear the structure sites and the right-of-way; with a joint venture of Professional Hole Drilling, Inc. and Caissons, Inc. (PHD/C) to construct foundations for the transmission towers; with Tri-O, Inc. to string the conductor and overhead ground wire on the towers; and with New Growth, Inc. to landscape and revegetate the tower sites and temporary roads.

Erickson developed a comprehensive schedule for it and its subcontractors to follow: in rapid succession, PSC would clear a site, PHD/C would lay a foundation, Erickson would erect a transmission tower, Tri-O would begin wire stringing, and New Growth would begin revegetation. Due to Erickson's tight scheduling, however, single problems during construction often multiplied into several problems affecting other subcontractors down the line. Subcontractors' schedules became unsynchronized; costs rose for most of those involved in the project.

Erickson subsequently filed several dozen claims on its and its subcontractors' (claimants) behalf with the government's contracting officer, then in the Department of Energy (DOE). (DOE assumed responsibility for the project pursuant to the Department of Energy Organization Act, Pub.L. No. 95-91, 91 Stat. 565 (1977). DOE assigned the project's administration to the Western Area Power Administration.) The contracting officer made his final decision on July 18, 1979, holding for the government on some claims, and against it on others.

Erickson, on behalf of all the claimants, appealed thirty-five of these adverse decisions to the EBCA pursuant to section 7 of the Contract Disputes Act of 1978, 41 U.S.C. Sec. 606 (1982). The EBCA consolidated claimants' appeals for the purpose of a hearing. Counsel represented each of the claimants, with Erickson's counsel designated as "lead" counsel and called upon mostly for procedural matters.

Claimants' claims fell into three general categories. The first category consisted of claims alleging that during construction, the government delayed the work and disrupted the work sequence, and thus breached its contractual obligations or constructively changed the terms of the contract. Claimants argued that these government actions caused them to incur additional time, labor, and equipment costs for which the government is liable. The government responded that it merely enforced the terms of the contract and that any damages claimants suffered were due to their own failure to observe, acknowledge, or reasonably interpret various contract provisions.

The second general category consisted of claims alleging that the government's bid documents misrepresented the physical conditions under which claimants would work, and that this misrepresentation affected the required method and manner of performance. The government responded that the specifications clearly spelled out the required performance and the working conditions associated therewith.

The third category contained one claim for costs under the value engineering (VE) provisions of the contract. Erickson based this claim on the government's acceptance of a proposal Erickson presented to it on behalf of PHD/C to allow the modification of a specified type of tower footing under certain conditions. The government denied that Erickson's proposal for use of the particular footing was a VE proposal. The government also asserted that Erickson's proposal did not meet the technical requirements of a VE change proposal but was merely a contract change proposed and approved under the contract's "Changes" clause.

The EBCA issued its decision on September 30, 1982. Erickson, PHD/C, and Tri-O each filed a notice of appeal of the board's decision adverse to them. Over the objection of the United States, we allowed PHD/C's and Tri-O's motions to attack through their own briefs the EBCA decisions adverse to them.

II Standing of Subcontractors

It is a hornbook rule that, under ordinary government prime contracts, subcontractors do not have standing to sue the government under the Tucker Act, 28 U.S.C. Sec. 1491, in the event of an alleged government breach or to enforce a claim for equitable adjustment under the Contract Disputes Act of 1978. United States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed.Cir.1983); Putnam Mills Corp. v. United States, 479 F.2d 1334, 202 Ct.Cl. 1 (1973). The government consents to be sued only by those with whom it has privity of contract, which it does not have with subcontractors. Johnson Controls, Inc., 713 F.2d at 1550-52. Aggrieved subcontractors have the option of enforcing their subcontract rights against the prime contractor in appropriate proceedings, or of prosecuting a claim against the government through and in right of the prime contractor's contract, and with the prime contractor's consent and cooperation.

As a practical matter, prime contractors often do allow subcontractors to prosecute claims in the prime's name when they perceive that the subcontractors really have more at stake in a claim and are therefore willing to work harder on its enforcement. Subcontractors may also be the only ones in full possession of the facts. In the former Court of Claims, in contract cases, it was quite usual for prime contractors to step aside and allow counsel retained by subcontractors to prosecute claims, though always in the name and right of the prime. It is to be noted, too, that bonding requirements are often for protection of subcontractors and give them better assurance of being paid, in compensation for their inability to enforce liens against work which has become property of the government. Johnson Controls, Inc., 713 F.2d at 1553-54; United States Fidelity & Guaranty Co. v. United States, 475 F.2d 1377, 1381, 201 Ct.Cl. 1 (1973). In this case the board stated that Erickson took all the appeals before it, but elsewhere used language implying that subcontractors were appellants. Counsel entered appearances for them and the board made awards to them.

We directed the clerk in this case to accept briefs on behalf of subcontractors in their own names. This was done because of the role played by them below, because of recollection of the Court of Claims practice, and because the prime contractor sponsored their claims.

By hindsight, this was probably a mistake. It allowed avoidance of the rule of this court respecting length of briefs, Rule 13(b). In view of the number of appeal issues, it is possible, perhaps probable, the court would have allowed additional pages, but the procedure adopted denied the court any opportunity to keep down the briefing to the length most helpful to it. The object of briefs is, after all, to aid the court, not to enhance the earnings of counsel.

A more serious unfortunate consequence of our decision was that the brief writers, giving lip service to the rule that the subcontractors had no privity of contract with the government, in practice seemed to assume that the contrary was the law. They argued, ostensibly against the government, grievances that if valid were valid only against the prime. They tended to disregard negotiations between the prime and the government, or else agreements or transactions, in which they did not participate, that would have a strong bearing on whether the government was liable to pay an equitable adjustment to the prime. For this reason, the briefs were confusing and difficult for the court to follow. It appeared from statements by counsel that some suit or suits by the subcontractors against the prime are pending in other courts, but are stayed pending the outcome of this case. It seems almost as if there may be a feeling that the subcontractors must exhaust their remedies against the government before their claims against the prime can be adjudicated.

It is but fair to say that despite the confusion incident to allowing subcontractors to participate as if parties, the appeal board in its able decision before us always kept clearly in mind who was the party against whom the claims were made, and who was the party properly prosecuting those claims. This is probably easier for a body...