International Electronics Corp. v. United States
| Decision Date | 08 April 1981 |
| Docket Number | No. 445-78.,445-78. |
| Citation | 646 F.2d 496 |
| Parties | INTERNATIONAL ELECTRONICS CORPORATION v. The UNITED STATES. |
| Court | U.S. Claims Court |
Leonard Petkoff, Washington, D.C., attorney of record, for plaintiff; Tod Gold, Washington, D.C., of counsel.
Donald Boday, Washington, D. C., with whom was Acting Asst. Atty. Gen. Thomas S. Martin, Washington, D. C., for defendant.
Before FRIEDMAN, Chief Judge, COWEN, Senior Judge, and KASHIWA, Judge.
ON DEFENDANT'S MOTION AND PLAINTIFF'S CROSS-MOTION FOR SUMMARY JUDGMENT
This case is before the court on defendant's request for review of the report of Trial Judge Lloyd Fletcher.
After consideration of the briefs and oral argument of the parties, we adopt the report, as modified, as an opinion of this court. Because we find it unnecessary to reach the issue of whether the Government's actions constituted a "cardinal change" of the contract, we delete that portion of the report discussing the issue.
The trial judge's report, as modified, follows:
This case comes before the court for review of a decision by the Armed Services Board of Contract Appeals pursuant to the well-known standards of the Wunderlich Act.1 The dispute arises out of a contract for the calibration, preventive maintenance, and repair of test, measuring, and diagnostic equipment (TMDE) at various United States Government sites located throughout the Republic of Korea.
The contract was entered into by International Electronics Corporation (IEC) and the Eighth United States Army on October 1, 1973, and was to run until September 30, 1974, for a consideration not to exceed $206,254.08. However, the contract was terminated for default on November 3, 1973, on the ground that IEC had failed to provide the number of technicians allegedly required by the contract. IEC timely appealed from this default termination on November 13, 1973.
The services to be performed under the contract were subsequently provided by in-house Army personnel located in Korea and at Sugami Depot, Japan, until a reprocurement contract for the required services was awarded to Kentron Hawaii, Ltd.2 On February 6, 1974, the Government made demand on IEC for excess reprocurement costs in the amount of $44,123.70. IEC timely appealed from this decision on February 21, 1974.
A hearing on both appeals was held in Seoul, Korea, by the Armed Services Board of Contract Appeals between April 15-28, 1974. On February 25, 1976, the Board rendered an opinion3 which denied IEC's appeals and awarded the Government excess costs in the amount of $56,971.87 for a total of $12,848.17 greater than the excess costs originally asserted in the Contracting Officer's decision. Plaintiff then filed a Motion for Reconsideration which was denied by the Board on June 2, 1976.4
In this appeal to the Court of Claims, IEC makes a series of alternative arguments. It says that the default termination sustained by the Board must be changed to termination for the convenience of the Government. This contention is essentially based on IEC's assertion that its contractual obligation to provide "sixteen man month's level of effort" did not, and was never intended to, obligate the contractor to provide 16 technicians in the form of 16 different persons. In support of this interpretation, IEC points to a liquidated damages provision in the contract and says it was the Government's sole remedy for any failure by the contractor to provide a "sixteen man month's level of effort". In any event, IEC claims it was excusably delayed in performing its contractual obligations due to both an unanticipated technicians' strike and to the defendant's failure to provide contract-designated Government furnished property.5
IEC further seeks reversal of the Board on the ground that procedural errors were committed by the Contracting Officer in the default termination and by the Board at the first ASBCA hearing. In the alternative, IEC argues that the Board's award of excess costs must be stricken even if this court should determine that the default termination was properly done.
In the view I take of this case, it becomes unnecessary to address the latter arguments made by plaintiff in this extensive laundry list. In my opinion, the plaintiff's cross-motion for summary judgment should be granted and the defendant's motion for summary judgment denied for the more restrictive reasons set forth below.
At the outset, it is necessary to determine whether the facts as found by the ASBCA satisfy the Wunderlich Act criteria that "any such decision shall be final and conclusive unless the same is fraudulent or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence".6
With the exception of finding No. 6, the Board's factual findings do appear to satisfy these tests. The remaining findings, however, are insufficient in scope to reveal the errors committed by the Board in arriving at its conclusions of law. This opinion must therefore commence with a chronology of the events that put an end to this contract during its very first month of existence.
On August 7, 1973, the United States Army Korea Procurement Agency (KPA) issued solicitation number DAJB 03-73-R-3182 for the procurement of the calibration, preventive maintenance, and repair of test, measuring, and diagnostic equipment at seven designated sites in the Republic of Korea. The work to be contracted comprised use of precisely measured "standards" to test and correct the calibration accuracy of sensitive electronic equipment employed in advanced military technology. Performance of these services was thus essential for maintenance of a combat readiness posture by American troops in Korea.
Of the nine firms submitting proposals, negotiations were conducted with those four offering the lowest bids. The lowest offeror, Universal American Enterprises, was determined to be non-responsive, and the contract was awarded to IEC on September 27, 1973, at a price of $206,254.08.7
The contract went into effect on October 1, 1973, and was to continue for a 12-month period. Under its terms, IEC was to provide a total of 16 "man months level of effort per month"8 of technician services at the designated locations in Korea. In elaboration of this unusual manning terminology, the contract included two clarifying provisions, as follows:
Provision for minimum staffing was made in a separate article in which it will be noted there is no provision requiring a minimum number of technicians:
Minimum Supervisory and Administrative Staffing Requirements:
Area Supervisor .................... 1 ea
Electronic Supply Specialist ....... 1 ea
(must have typing ability)
The contract also established detailed qualification standards for the technicians hired by IEC and required IEC to furnish the Contracting Officer with evidence of compliance with those standards.
In a separate Article designated "Government Furnished Property", the contract obligated the Government to furnish all tools, equipment, materials, supplies and facilities needed to perform the TMDE and calibration services specified in the contract.
In addition, the contract incorporated by reference the then current ASPR standard clauses governing Changes, Disputes, Default, Termination for Convenience of the Government, and Government Delay of Work.
In its proposal submitted September 4, 1973, the contractor submitted a list of 14 technicians it intended to employ and enclosed their resumes. IEC submitted an additional list of 9 technicians, all of whom were incumbent technicians or had previously worked on the earlier calibration contract. On September 13, a further list of 9 others, together with supporting resumes, was submitted. During pre-award negotiations, KPA informed IEC that two of these technicians were not qualified according to their resumes....
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