Mason v. United States

• Decision Date: 20 February 1980
• Docket Number: No. 116-77.,116-77.
• Citation: 615 F.2d 1343
• Parties: James MASON, Individually and as President of Sommers Construction Company, Inc., and Sommers Construction Company, Inc., a corporation, v. The UNITED STATES.
• Court: U.S. Claims Court

615 F.2d 1343

James MASON, Individually and as President of Sommers Construction Company, Inc., and Sommers Construction Company, Inc., a corporation, v. The UNITED STATES.

No. 116-77.

United States Court of Claims.

February 20, 1980.

Richard D. Horne, Mobile, Ala., atty. of record, for plaintiffs. Hess, Atchison & Stout, Mobile, Ala., of counsel.

Gerald L. Schrader, Washington, D. C., with whom was Asst. Atty. Gen. Alice Daniel, Washington, D. C., for defendant.

Before DAVIS, KASHIWA and SMITH, Judges.

ON PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT AND DEFENDANT'S CROSS MOTION FOR SUMMARY JUDGMENT

KASHIWA, Judge:

The plaintiff, Sommers Construction Company,¹ seeks damages for the Government's alleged breach of contract. The case is before the court on plaintiff's motion for partial summary judgment and defendant's cross motion for summary judgment. For the reasons stated below, we hold for defendant.

Sommers Construction Company is a maintenance contracting firm whose principal place of business is Theodore, Alabama. During the years 1974, 1975, and 1976, the General Services Administration G.S.A., after competitive bidding, awarded eight "term contracts" to plaintiff. Each term contract was in effect for a one-year period, covered a fixed geographical area, and contained descriptions of a number of different construction type projects — painting, plastering, partition relocation, etc. — with a fixed price per project. Under each such contract, when plaintiff performed any of the described work within the one-year term and described geographical area, it would be paid this predetermined price.

All eight term contracts contained a provision entitled "Section 3, Special Conditions." This was a part of the bid specifications sent to all prospective bidders on these contracts and was incorporated by reference and became a part of each contract awarded to plaintiff. Section 3, Special Conditions, provided in relevant part as follows:

3-1 GENERAL

a. Purpose of Contract: The U.S. Government proposes to enter into a term contract whereby partitions, doors, hardware, painting, electrical work and other necessary materials, labor and equipment for a complete installation will be furnished and installed by a single contractor at the unit price established * * * in quantities and heights as may be required from time to time during the term of the contract * * *. The work ordered under this contract will be performed in any or all Government-owned and Government-leased buildings within a specified geographical area.²

* * * * * *

3-3 QUANTITIES OF WORK

a. Bidders are hereby cautioned that quantities shown and listed on the bid form as the bid evaluation estimated quantities are not guaranteed minimums or maximums and in no way have any connection with any required quantities or intend any scope of work. These quantities are for bid evaluation purposes only.³

b. The minimum quantity of work which will be required under this contract * * * will not total less than five thousand dollars ($5,000).⁴

* * * * * *

Two of the eight contracts covered the area in and around Nashville, Tennessee. These contained, in Section 3, Special Conditions, an additional clause, hereinafter referred to as the "Nashville clause," which stated that "Any award under this contract will not prohibit or restrict the Government from having any work items performed by Government employees or by others." None of plaintiff's other contracts contained this language.

During the life of, and within the geographical area covered by, each contract, defendant had others perform work similar or identical to that described in plaintiff's contracts. Defendant also ordered at least $5,000 of work under each of these term contracts.

Plaintiff places primary emphasis on the Purpose of Contract clause. In its view, while the Government had no obligation to have any of the described work performed, if the Government decided to have any of such work done in "any or all Government-owned and Government-leased buildings" within the applicable areas of the respective contracts, this clause gave plaintiff, as the "single contractor," the exclusive right to perform this work. That is, a single contractor was to do all this work in all these buildings. Plaintiff further argues that the Guaranteed Minimum Quantity clause was only included to ensure mutuality of obligation, and that its presence in the contracts is totally consistent with the exclusive right created by the Purpose of Contract clause. In addition, in plaintiff's view, the Nashville clause when read in conjunction with the Purpose of Contract clause creates an ambiguity which, since the Government drafted the contracts, should be construed against the defendant under the doctrine of contra proferentem, leaving intact the exclusive performance rights created by the Purpose of Contract clauses in the Nashville contracts.

Plaintiff, accordingly, contends that with respect to each of its contracts, it had the exclusive contractual right to perform the work which defendant in fact awarded to others. The Government has thus breached each term contract, entitling plaintiff to damages. Plaintiff also asserts that it had a corresponding legal obligation to perform all such work. Plaintiff, however, refuses to characterize its contracts as requirements contracts.

A careful examination of plaintiff's argument convinces us that, stripped to its legal essentials, plaintiff does contend it held requirements contracts. We must ignore the label plaintiff attaches to its contracts and see what legal rights it claims it received.

The projects enumerated in these contracts were all construction type work. Such work cannot be performed now, then stored away for future use. For the Government to order more work than it needed done would therefore make no sense, and in interpreting a contract, we should keep in mind that "the Government is no more devoid of minimal business sense than are contractors." Franklin Co. v. United States, 381 F.2d 416, 419, 180 Ct.Cl. 666, 672 (1967). Logically then, regardless of who actually performed the described work, the Government would order such work done only if it needed it done. Plaintiff's argument that for the one-year term of each contract it had the exclusive right and the legal obligation to fill all of defendant's orders for work of the type described in its contracts thus reduces to an argument that during the life of each contract it had the exclusive right and legal obligation to satisfy defendant's needs for such work. This, however, is the definition of a requirements contract. As we said in Media Press, Inc. v. United States, "a requirements contract has been defined as a contract in which the purchaser agrees to buy all of its needs of a specified material from a particular supplier, and the supplier agrees, in turn, to fill all of the purchaser's needs during the period of the contract." 566 F.2d 1192, 215 Ct.Cl. 985, 986 (1977).

Under these contracts, plaintiff had to provide the services at a predetermined, fixed price. This does not undercut our characterization of plaintiff's argument — fixed price terms are totally consistent with requirements contracts. Shader Contractors, Inc. v. United States, 276 F.2d 1, 4, 149 Ct.Cl. 535, 540 (1960).

Defendant insists that, with respect to each contract, all the clauses in Section 3, Special Conditions, should be read as a whole, and when so viewed, these are all indefinite quantities contracts with a $5,000 minimum purchase amount per contract. Thus, its only obligation to plaintiff was to order at least $5,000 of work under each contract.⁵ Having done so, it has fully performed and its award of work to others is not a breach of contract.

Consistent with this, defendant interprets the Purpose of Contract clause as speaking to the plaintiff's obligations, not the Government's. It describes what the contractor's capabilities shall be and where he may be required to perform his services — not what the Government is obligated to order. The first sentence of this clause and the reference therein to a "single contractor" make clear that with respect to any one work project, the contractor awarded the term contract must itself perform all the tasks necessary for a complete installation. It would not be allowed to subcontract some of the work to others and would therefore be the "single contractor" involved in the project. The second sentence defined only the geographical area within which the contractor may be required to perform the work to be ordered. The defendant, accordingly, finds nothing in this clause which would give the recipient of a term contract the exclusive right within the geographical area of its contract to perform all the described work.

Resolution of this controversy depends upon a determination of the respective rights conferred by these term contracts on plaintiff and defendant. If these are requirements contracts, then within the one-year time frame and geographical area of each contract, whenever defendant chose to order work of the types described in plaintiff's contracts, it was legally bound to order all such work from plaintiff. The Government admittedly failing to do so, it would be in breach of contract. If these are indefinite quantities contracts, then defendant was only obligated to order the guaranteed minimum amount from plaintiff — here $5,000 per contract — and could order all additional work from others. The Government having ordered at least this amount under each contract, its awarding additional work to other contractors would not be a breach.

Our examination of the contracts convinces us that in deciding whether these are requirements or indefinite quantities contracts, the only relevant contractual terms are those contained in our above quotation from Section 3, Special Conditions. We must, therefore, see whether this language is supportive of the former or the latter type...