NEW YORK SHIPBUILDING CORPORATION v. United States

• Decision Date: 09 June 1967
• Docket Number: No. 97-66.,97-66.
• Citation: 180 Ct. Cl. 446,385 F.2d 427
• Parties: NEW YORK SHIPBUILDING CORPORATION v. The UNITED STATES.
• Court: U.S. Claims Court

180 Ct. Cl. 446, 385 F.2d 427 (1967)

NEW YORK SHIPBUILDING CORPORATION v. The UNITED STATES.

No. 97-66.

United States Court of Claims.

June 9, 1967.

Edgar H. Brenner, Washington, D. C., for plaintiff. Paul A. Porter, Sarah C. Carey, Arnold & Porter, Washington, D. C., Glickstein, Crenshaw, Glickstein & Hulsey, Jacksonville, Fla., and Richard A. Hinckley, Camden, N. J., of counsel.

David Orlikoff, Washington, D. C., with whom was Asst. Atty. Gen., Barefoot Sanders, for defendant.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS, SKELTON and NICHOLS, Judges.

ON DEFENDANT'S REQUEST FOR REVIEW OF THE COMMISSIONER'S ORDER DENYING DEFENDANT'S MOTION TO SUSPEND PROCEEDINGS

DAVIS, Judge.^*

This case grows out of the construction by the plaintiff for the defendant of the N.S. SAVANNAH, the world's first nuclear-powered passenger-cargo ship. The work was done under a contract (No. MA-1675) (entered into as of November 16, 1957) between the plaintiff and the defendant (acting through the Maritime Administrator and the Director of the Division of Reactor Development, Atomic Energy Commission). Unlike the usual Government construction contract, which vests in an official designated in the contract as the "contracting officer" both the authority to act for the Government in the day-to-day administration of the contract and the quasi-judicial function of deciding disputes concerning questions of fact arising under the contract, this agreement did not contain any reference to a "contracting officer." Instead, the administration of the contract on behalf of the Government was provided for in Article 34 of the general provisions, which stated in part that "Authority to give directions under this contract and to approve for the Government actions taken by the Contractor in the performance of the contract work shall be vested in such officers or employees of the Maritime Administration or the Atomic Energy Commission as they jointly designate". Article 35 of the general provisions, entitled "Disputes," stated that "any dispute concerning a question of fact arising under this contract which is not disposed of by agreement of the parties to this contract, shall be decided by the Nuclear Projects Officer of the Maritime Administration," with the contractor having the right to appeal within 30 days from the decision to the Maritime Administrator.

The N.S. SAVANNAH was delivered to the defendant at Yorktown, Virginia, on May 1, 1962. Subsequently, about May 20, 1963, the plaintiff submitted its final claim to the defendant. The claim contained more than 131 pages of text and exhibits; it set forth in a detailed and comprehensive manner the final payment due under the contract, and the amount claimed was broken down under various headings. According to the claim, the total contract price was $39,892,180 (later revised to $39,842,336.42). Of the total amount claimed, the sum of $8,721,747.53 was unpaid as of May 1, 1963. (According to the petition, the defendant later made a payment of $71,419.50 in December 1965 and a further payment of $1,235,000 in January 1966, so that the sum of $7,415,328.03 is said to remain due and unpaid.)

Rather extensive negotiations between the parties followed the submission of the plaintiff's final claim. On September 20, 1965, the plaintiff received from E. M. MacCutcheon, Chief, Office of Research and Development, Maritime Administration, a letter dated September 17, 1965, and stating in part as follows:

The claim has been examined and considered exhaustively with full consideration of all elements including the claimed costs of disruption, delay and the other construction problems associated with the construction of the N.S. SAVANNAH and the related work required under the Contract. As Chief, Office of Research and Development, I find on the basis of the above examination and consideration that New York Shipbuilding Corporation is properly entitled to the sum of $33,882,625 for its claim with respect to the Contract.

This is a final decision of the Chief, Office of Research and Development. New York Shipbuilding Corporation may appeal this decision in accordance with the provision of the Disputes Article of Contract No. MA-1675.

About September 30, 1965, the plaintiff filed a notice of appeal with the Maritime Administration. In this notice, the plaintiff pointed out that the letter purporting to be a final decision of the contracting officer had not been signed by the Nuclear Projects Officer of the Maritime Administration, as provided in Article 35 of the general provisions of the contract. The plaintiff requested written assurance that Mr. MacCutcheon's letter, in the view of the Maritime Administration and of the Atomic Energy Commission, constituted the decision of the contracting officer.

On October 26, 1965, representatives of the plaintiff had a conference with officials of the Maritime Administration in Washington. The plaintiff's representatives repeated a request that had been previously made over the telephone for a detailed explanation of the decision purporting to be that of the contracting officer, and indicated that it would be improper to require the plaintiff to base an appeal on Mr. MacCutcheon's letter of September 17, 1965, since that letter did no more than state a conclusion, unsupported by factual findings.

Early in November 1965, the Maritime Administrator informed the plaintiff that "In the view of the Maritime Administration, Mr. MacCutcheon's letter does constitute such decision of the contracting officer * * *." On November 30, 1965, after further requests for information sufficient to enable the contractor to determine the basis for Mr. MacCutcheon's decision, he furnished a list of figures, which indicated only the amount requested and the amount allowed with respect to various portions of the claim.

In a letter of February 21, 1966, addressed to the Maritime Administrator, the plaintiff stated that it was still awaiting a decision within the meaning of the "Disputes" provision, and asserted that it was entitled to such a decision. The plaintiff reiterated its position that the list of figures furnished by Mr. MacCutcheon on November 30, 1965, without any explanation, did not provide a sufficient basis for an appeal. As of March 18, 1966 (3 days prior to the filing of the petition in this court), the plaintiff had not received a reply to its letter of February 21st.

These are among the allegations — thus far undenied¹ — in the petition which was filed on March 21, 1966, and asserted various claims of breach of contract and failure to make awards under the contract. The petition said that it was unnecessary and futile for the contractor to seek further administrative relief and that immediate resort to this court was appropriate.

The next step (aside from a stipulation extending the Government's time to answer or respond to the petition) was the present motion, filed by the defendant on August 10, 1966, to suspend proceedings in the court. According to this motion, the Maritime Administrator, on March 23, 1966 (two days after the petition was filed), appointed a panel of three Government officials to act as the Administrator's authorized representatives for the purpose of hearing the plaintiff's appeal. The motion asks that the proceedings here be suspended "until the conclusion of the administrative proceedings now pending before the Maritime Administrator so as to give the said Administrator an opportunity to hold a hearing and issue a decision on the plaintiff's appeal from the contracting officer's decision." Conceding that the major substantive areas of its claim could have been decided under the Disputes clause if a proper decision had been made, the plaintiff opposed the motion on the ground that the Government had failed to provide a "timely and meaningful contracting officer's decision from which an appeal could be taken and a proper administrative hearing held."

Commissioner White denied this motion (on September 6, 1966) in an order stating that "it is unclear from the record now before the court whether this claim was ever acted on by the duly designated contracting officer", but placing the ruling mainly on the ground that Mr. MacCutcheon's summary letter of September 17, 1965, containing a mere decision without factual findings, "was not the sort of decision on the disputed questions of fact involved in the plaintiff's claim for which the plaintiff had contracted in Article 35 of the general provisions of the contract."

On the defendant's request for review of the commissioner's order, the court heard argument and then entered an order referring the case back to the commissioner "for determination, by a trial or other proceedings, as to whether E. M. MacCutcheon was the contracting officer for the Government under Article 35 of Contract No. MA-1675 on September 17, 1965, when he issued his letter of that date." A trial on that issue was then held, with oral testimony and documentary evidence. The commissioner concluded that Mr. MacCutcheon was not the contracting officer as of September 17, 1965, and was not authorized by Article 35 to decide disputes under the contract. We have had another oral argument, and the case is now before us for disposition of defendant's request for reversal of the commissioner's original order denying suspension. We agree with Commissioner White that Mr. MacCutcheon was not authorized by the contract to decide the disputed claim, and on that ground we uphold the refusal to suspend further proceedings in this court.²

The biblical line of succession, as set forth by the commissioner, is not disputed. At the time when the contract was entered into, one of the major organizational components of the Maritime Administration was a Nuclear Projects Office, headed by an official with the title of Nuclear Projects Officer. The Administrator had delegated to the Nuclear Projects Officer authority for the...