Hensel Phelps Const. Co. v. U.S., 88-1545

• Decision Date: 29 September 1989
• Docket Number: No. 88-1545,88-1545
• Citation: 886 F.2d 1296
• Parties: 35 Cont.Cas.Fed. (CCH) 75,736 HENSEL PHELPS CONSTRUCTION CO., Appellant, v. The UNITED STATES, Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1296

886 F.2d 1296

35 Cont.Cas.Fed. (CCH) 75,736

HENSEL PHELPS CONSTRUCTION CO., Appellant, v. The UNITED STATES, Appellee.

No. 88-1545.

United States Court of Appeals Federal Circuit.

Sept. 29, 1989.

John B. Hayes, Looney, Nichols, Johnson & Hayes, of Oklahoma City, Okl., submitted for appellant.

Catherine A. Christman, Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., submitted for appellee. With her on the brief were John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director, M. Susan Burnett, Asst. Director and Howard Lipper.

Before SMITH, Senior Circuit Judge, ^* NIES and ARCHER, Circuit Judges.

ARCHER, Circuit Judge.

Hensel Phelps Construction Co. (Hensel Phelps) appeals the decision of the Armed Services Board of Contract Appeals, ASBCA No. 35767, 88-2 BCA (CCH) p 20,701, denying its claim for an equitable adjustment in the amount of $100,983.00 on Contract No. DACA 56-87-C-0002. We reverse and remand.

Background

Hensel Phelps' contract with the United States, entered into on October 29, 1986, was for the construction of a jet engine blade repair facility at Tinker Air Force Base, Oklahoma. The initial contract price was $33,617,000.00.

On December 4, 1986, Hensel Phelps requested a contract interpretation, pointing out that the specifications called for a minimum of 18 inches of non-expansive fill under the concrete floor slabs, whereas a note on the drawings called for 36 inches of non-expansive fill. ¹ The contracting officer was advised that Hensel Phelps and its subcontractor, C. Watts Construction Company (Watts), had used the requirement of the specifications in calculating the bid instead of the conflicting drawing note requirement because the contract provided that the specifications control over the drawings. The pertinent clause, which is commonly referred to as the "order of precedence" clause, provides:

Anything mentioned in the specifications and not shown on the drawings, or shown on the drawings and not mentioned in the specifications, shall be of like effect as if shown or mentioned in both. In case of difference between drawings and specifications, the specifications shall govern. In case of discrepancy in the figures, in the drawings, or in the specifications, the matter shall be promptly submitted to the Contracting Officer, who shall promptly make a determination in writing. Any adjustment by the Contractor without such a determination shall be at its own risk and expense.

Contract Clause No. 47, entitled "52.236-21 SPECIFICATIONS AND DRAWINGS FOR CONSTRUCTION (Apr 1984)" (emphasis added).

The contracting officer directed that 36 inches of non-expansive fill should be placed under the concrete floor slabs as required by the drawings and Hensel Phelps and Watts proceeded as instructed. Thereafter Hensel Phelps timely submitted The Board found that Watts, in preparing its subcontract bid to Hensel Phelps,

a $100,983.00 claim, properly certified, for equitable adjustment in the contract price based on an asserted modification of contract terms. The claim was denied by the contracting officer.

recognized the clear conflict between the drawings and the specification. There was no way that the conflict could be resolved or harmonized. [Watts] relied on the "Order of Precedence" clause and prepared [its] bid based upon the 18 inches set out in the specification, rather than the 36 inches called for by the contract drawings.

88-2 BCA (CCH) p 20,701, at 104,600. The Board also found that Hensel Phelps "relied upon Watts' bid in preparing its own bid which it submitted to the government on this contract." ²

The Board concluded, however, that the decision of the United States Court of Claims in Franchi Constr. Co. v. United States, 609 F.2d 984 (Ct.Cl.1979), and the decision in Shirley Contracting Corp., ASBCA No. 29028, 87-1 BCA (CCH) p 19,389, applying the Franchi case, were controlling and precluded recovery by Hensel Phelps.

OPINION

The Court of Claims has held that when the requirements of the specifications of a government contract conflict with the drawings and the contract contains an order of precedence clause, the specifications shall control as the order of precedence clause provides. Franchi Constr. Co. v. United States, 609 F.2d at 989-90; William F. Klingensmith, Inc. v. United States, 505 F.2d 1257, 1261 (Ct.Cl.1974).

The government argues, however, that Franchi limits the applicability of the order of precedence clause to situations in which the contractor was not aware of the discrepancy prior to bidding and notes that Hensel Phelps' subcontractor knew of the discrepancy between the specification and the drawings before it submitted its bid. The Board accepted the government's position, stating that

[i]t was clearly unreasonable for the appellant to presume that the Government intended to set out such blatantly conflicting requirements and leave it to the operation of the "boiler plate" clause to resolve and establish the Government's specific needs. In these circumstances, it was unreasonable for appellant to bid as it did, knowing as it must have, that a serious mistake had been made.

88-2 BCA (CCH) p 20,701 at 104,602. Thus, the Board appeared to interpret Franchi as foreclosing reliance on an order of precedence clause whenever the contractor knows, or should know, of a discrepancy prior to bidding. See also Shirley Contracting Corp., ASBCA No. 29028, 87-1 BCA (CCH) p 19,389 (holding contractor should have sought clarification despite order of precedence clause when three of appellant's representatives knew of the difference between the specification and the drawing before bid). We disagree with the Board's holding and do not find that its interpretation is consistent with Franchi.

In Franchi the trial judge found that there was a patent discrepancy between the specifications and drawings but held that the order of precedence clause could be relied on to resolve the discrepancy. In his opinion the trial judge stated:

The Government authored the order of precedence clause as a mechanism to automatically remove conflict between specifications and drawings by assigning preeminence to the former....

The plaintiff is entitled to take the Government sponsored order of precedence clause at face value. Once its right to do so in the present situation is recognized, no conflict sufficient to occasion inquiry remains....

Franchi Constr. Co. v. United States, 609 F.2d at 989-90 (citation omitted). In appealing the trial judge's ruling, the defendant argued that the clause should not apply when a discrepancy is patent. The Court of Claims said:

We cannot...