Franklin Company v. United States

• Decision Date: 20 July 1967
• Docket Number: No. 85-66.,85-66.
• Parties: The FRANKLIN COMPANY v. The UNITED STATES.
• Court: U.S. Claims Court

180 Ct. Cl. 666, 381 F.2d 416 (1967)

The FRANKLIN COMPANY v. The UNITED STATES.

No. 85-66.

United States Court of Claims.

July 20, 1967.

Theodore M. Kostos, Philadelphia, Pa., for plaintiff. Stassen, Kephart, Sarkis & Kostos, Philadelphia, Pa., of counsel.

Stephen M. Joynt, Bladensburg, Md., with whom was Asst. Atty. Gen., Barefoot Sanders, for defendant. Frances L. Nunn, Washington, D. C., of counsel.

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

DAVIS, Judge.

The Franklin Company was engaged in June 1962 to prepare technical manuals for the Army and its Engineer Maintenance Center under an "indefinite delivery requirements type contract", with payments originally estimated at $1,063,795.92. The agreement contained both cost-plus-fixed-fee and fixed-price provisions — the latter being the basis for this suit. Although the estimated cost of work to be performed under the fixed-price section was $471,213.75, plaintiff received only about $212,933.06 worth in assignments and urges that the Government's failure to provide sufficient projects, which were available but assigned to companion contractors, caused an improper and uneven flow of work, resulting in increased costs per unit for the items directed to Franklin. It seeks recovery for these additional costs, alleging that the diversions constituted a breach, or a change under the contract, or a partial termination for the Government's convenience. Compensation is also sought for three projects which, it is contended, were improperly cancelled and reassigned to the others.

The contract was part of a comprehensive manual procurement program conducted by the Engineer Maintenance Center. This project included receiving and disassembling items of equipment, analyzing procedures for their repair, maintenance and operation, and incorporating the information into printed manuals for use of servicemen and civilian employees. The work was conducted at two Ohio army depots — Marion and Columbus. To facilitate procurement, the Government let separate contracts, nearly identical on their face, for the operations to be performed at each depot. These agreements were for one-year terms, interlacing rather than fully overlapping. Plaintiff's contract, performed at Marion, extended from June 20, 1962 to June 19, 1963. During this period, the parallel Columbus contracts were held by the Hayes Corporation (from Dec. 1, 1961 to Nov. 30, 1962) and the Technical Services Corporation (Dec. 1, 1962-Nov. 30, 1963). Since it generally took six or more months to complete a work order, assignments were normally issued during the first six months of the annual term. Bruce E. Scott, an official of the Engineer Maintenance Center, was responsible for allocating the jobs to the respective contractors.

Franklin's claim that it was improperly short-changed in its assignments was rejected by the contracting officer and the Armed Services Board of Contract Appeals (ASBCA No. 10285). Each party now asks for summary judgment on the basis of the administrative record.

The answer to these requests lies chiefly in the meaning of the contract. Plaintiff sees it as obligating the defendant to direct to the Marion depot all of the Maintenance Center's technical-manual work falling within the numerous equipment-types enumerated in the agreement, at least up to the specified "estimated requirement" ($471,213.75). The Government counters that its responsibility was only to make a good faith effort to assign to plaintiff that portion of the whole program which was normally performed at Marion, leaving to Columbus the part traditionally and ordinarily allocated there — and that this was in fact done.

In choosing between these interpretations, we look both to the written terms and to the surrounding circumstances, availing ourselves "of the same light which the parties possessed when the contract was made." Merriam v. United States, 107 U.S. 437, 441, 444, 2 S.Ct. 536, 540, 27 L.Ed. 531 (1882). Though these two components — words and setting — may be differentially stressed in different situations, courts have never completely shut their eyes to evidence of the parties' shared understanding drawn from the transaction's milieu or working-out. See Micrecord Corp. v. United States, 361 F.2d 1000, 1004, 176 Ct.Cl. 46, 53 (1967); Williamsburg Drapery Co. v. United States, 369 F.2d 729, 735, 177 Ct.Cl. ___, ___ (1966); Cresswell v. United States, 173 F.Supp. 805, 811, 146 Ct.Cl. 119, 126 (1959); 3 Corbin, Contracts §§ 536, 539 (1960). This is as true of requirements-type contracts as of the more precise kind. Merriam v. United States, supra; First Suburban Water Utility Dist. v. United States, 129 Ct.Cl. 8, 13 (1954).

Plaintiff's contract defines the "scope" of Franklin's duties in this way:

1-1 Scope:

a. The work to be accomplished herein represents that which is required to perform phases of the technical manual program, including related provisioning work required, which is the assigned responsibility of the Engineer Maintenance Center, Columbus, Ohio. The contract site is the Marion Engineer Depot, Marion, Ohio. * * *

Thirty-three "family types" of engineer equipment, ranging from augers to tractors, were listed as "subject to the preparation of publications under this contract," although the Government could also assign other types of equipment if needed (§ 1-8(b)). While the defendant estimated the dollar amount of its requirements (i. e. the work to be assigned to Franklin), the agreement specified that "the Government will not be held responsible for any variation or fluctuation thereof" (§ 1-6). The Government also retained the right to have technical manuals prepared by other means, such as "by contract obtained by competitive negotiation for preparation of TM's technical manuals in excess of this contractor's capacity to complete under the contract, or where the necessary technical capabilities cannot be equaled under this contract" (§ 1-8(a)). The Hayes and Technical Services contracts were identical in language, with two major exceptions — their "Scope" clauses indicated that the contract site was the Columbus Engineer Depot, and, also, three items of equipment were listed in the Columbus contracts which were not mentioned in plaintiff's.

By themselves, the words of the single agreement before us could lead to the interpretation plaintiff puts upon them, but they are also open (perhaps less easily) to the defendant's view that the "phases of the technical manual program" (in the "Scope" provision), taken together with the reference to the "contract site" at Marion, refer to the segment of the total program normally done at Marion (in contrast to that performed at the Columbus depot). The decisive clue, we think, lies in the contractual history and background.

The chief factor is that from 1959 through 1963, when plaintiff's present one-year contract terminated, the Engineer Maintenance Center's manual procurement program was operated on a dual-contract basis — Marion and Columbus. This system was created to maximize use of the facilities at both depots. Franklin's present contract was plainly a part of this unified project. The Engineer Maintenance Center did not indicate, either at the prebid conference or when plaintiff's agreement was signed, that it would suddenly halt the assignment of work to its Columbus contractor (then, Hayes Corporation) and channel all subsequent orders to Franklin. Nor did the Government alter its dual procurement policy during the course of plaintiff's performance; bids were accepted and the Columbus contract, previously held by Hayes, was awarded, at the end of November 1962, to the Technical Services Corporation. There is likewise no reason to reject the ASBCA's findings that Franklin knew, from the beginning, that it would have to share its assignments with the Columbus contractor. Plaintiff was no stranger to the Maintenance Center's manual procurement program. It had been awarded and performed the immediate predecessor contract at the Marion Depot (1961-1962) — a document identical, in all material respects, to the present contract. During that period, the dual assignment program, which is now challenged as being beyond the scope of plaintiff's agreement, was fully in existence. Franklin, although then possessing the Marion contract, bid in addition for the Columbus contract which was eventually awarded to the Hayes Corporation in November 1961; apparently plaintiff then assumed that the letting of the Marion contract did not foreclose the making of further work assignments to Columbus. Moreover, at the prebid conference for the contract in suit, the Maintenance Center's traditional work assignment process seems to have been discussed. If there were any indication that the Government intended to embark on a new policy of the dimensions now advanced, the change would surely have been reviewed at that conference. The failure of anyone to raise this issue supports the position that plaintiff understood that the new contract, the same as its predecessor (which...