ROSCOE-AJAX CONSTRUCTION CO., INC. v. United States

• Decision Date: 19 June 1974
• Docket Number: No. 839-71.,839-71.
• Citation: 499 F.2d 639
• Parties: ROSCOE-AJAX CONSTRUCTION CO., INC. v. The UNITED STATES.
• Court: U.S. Claims Court

499 F.2d 639 (1974)

ROSCOE-AJAX CONSTRUCTION CO., INC. v. The UNITED STATES.

No. 839-71.

United States Court of Claims.

June 19, 1974.

O. P. Easterwood, Jr., Washington, D. C., attorney of record for plaintiff. McNutt, Dudley, Easterwood & Losch, Washington, D. C., of counsel.

Clarence T. Kipps, Jr., Washington, D. C., for The National Security Industrial Ass'n, amicus curiae. John L. Rice and Miller & Chevalier, Washington, D. C., of counsel.

David R. Schlee, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant. Rose Adewale-Mendes, Washington, D. C., of counsel.

Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.

ON PLAINTIFF'S MOTION AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

DAVIS, Judge.

Plaintiff was the general contractor for the construction of missile launcher shelters at McGuire Air Force Base in New Jersey. The fabrication and installation of the roof-and-door-opening mechanisms was subcontracted to a joint venture which found its work interrupted repeatedly by contract modifications (under the Changes clause) made necessary by inconsistencies in the contract drawings. Dissatisfied with the contracting officer's allowances for these changes, plaintiff appealed, on behalf of itself and its subcontractor, to the Corps of Engineers Board of Contract Appeals, and then (as was its right under the contract) to the Armed Services Board of Contract Appeals. Now it seeks review, under the Wunderlich Act, of a portion of the ASBCA's final decision. Defendant supports the Board's determination insofar as it is challenged by Roscoe-Ajax, but has counterclaimed as to aspects of that decision which were favorable to the claimant.

On cross-motions for summary judgment, Trial Judge Cooper essentially affirmed the ASBCA decision as against plaintiff's challenge¹ and held the largest part of the counterclaim barred by the doctrine of S & E Contractors, Inc. v. United States, 406 U.S. 1, 92 S.Ct. 1411, 31 L.Ed.2d 658 (1972). Each side has asked us to reverse the trial judge's main rulings adverse to it. The case's center of gravity lies in the Government's counterclaim, but with a bow to judicial convention we shall first treat with the plaintiff's affirmative claim.

I

Before the ASBCA there were a large number of controversies over individual items involved in the various change orders. The Board resolved the entitlement issues favorably to to the contractor and plaintiff has not raised in this court any question of that type. As for the amount of recovery, neither before the trial judge nor before us has plaintiff attacked any of the Board's factual determinations as to the quantum for any of the series of changes. The claim is wholly centered on a few overall computation contentions, only one of which remains for our decision—that the Board erred when it failed to add the sum stated in Modification No. 47 ($144,065) to the other amounts awarded for contract changes. We concur with the trial judge that plaintiff's position is completely wrong.

The contracting officer had to consider several individual changes and claims for additional compensation directed to those separate changes. This was an ongoing process, involving negotiations, conferences, an audit, and preliminary calculations. In August 1965 the contracting officer issued a "formal" decision on plaintiff's demands, finding the total additional direct and indirect costs due to these numerous and various changes, but expressly reserving determination of the subcontractor's profit and the prime contractor's (plaintiff's) markup and profit. In October 1965, he rendered a final decision, covering all costs, specifically including the matters he had reserved in August; on this computation the "gross amount of money" due Roscoe-Ajax for all the changes involving the subcontractor was found to be $641,706. The sums already paid the plaintiff for the changes were then determined to be $497,640.81, and the difference ($144,065) was found to be the "total amount of money presently owed" the contractor.² With respect to that amount, the decision said: "Funds are not available for payment of the above sums, but action will be initiated to obtain them. When this has been accomplished, a modification will be issued increasing the contract price, and payment will be made."

Modification No. 47, issued in April 1966, became the modification thus anticipated. It formally increased the contract price in precisely the amount determined (in October 1965) to be still owing—$144,065.

The ASBCA redetermined and recomputed all the monies to be allowed the contract on account of the myriad of changes imposed on the subcontractor (including profit, overhead and markup), but after ascertaining this total, the board did not increase that sum by the $144,065 set forth in Modification No. 47. Plaintiff insists that it should receive this amount, in addition to the gross sum found owing by the ASBCA, on the ground that the modification was a self-sufficient accord and satisfaction, showing the contractor entitled to that amount, which must be accepted, in the amount for which it stands, without inquiring into its context or purpose or role in the contracting officer's computation.

The trial judge and defendant are correct that plaintiff is trying to recover twice for certain portions of the increased costs attributable to the changes. At plaintiff's request, the Board considered de novo on its merits all of the quantum due plaintiff (and, of course, its subcontractor) for the changes—without regard to Modification No. 47—and thus covered the very same ground as that instrument (in addition, of course, to much other ground). It would obviously be an unfair duplication to add the $144,065 mentioned in that document to the total to which the Board found plaintiff entitled through its own process of cost-finding.

We are not compelled by either the existence or the contents of the modification to reach such an unjust result. It is quite clear on the face of the document that it was not an independent settlement but was, instead, a simple implementation of the contracting officer's decisions of August and October 1965 with respect to profit and markup. It states plainly that it is intended "to provide for an increase in the amount due the contractor for all changes ordered by the Contracting Officer which involved the subcontractor for the roof-and-door-opening mechanisms as set forth in Contracting Officer's decision dated 25 August 1965 and 25 October 1965." There is no indication in its text, or in the way plaintiff treated it before the case reached the court, that it was a separate accord and satisfaction, to be given a wholly independent status. If it were such an unconnected settlement, the items it covered should have been excluded from the Board's own calculations, but plaintiff does not suggest that it asked the Board to take that course, or that the Board did so on its own. On the contrary, the contractor presented all issues of quantum for determination by the appellate administrative tribunals, and those boards decided the case on that basis. Plaintiff cannot have it both ways; as the trial judge put it: "Obviously, plaintiff cannot both appeal the amount of the award and, simultaneously claim an absolute right to that amount." The emptiness of plaintiff's position is tellingly revealed by a complete absence in its brief and argument of any convincing explanation of what the $144,065 was payment for, if not attributable to costs already included in the ASBCA's own computation There is thus no solidity to plaintiff's claim with respect to Modification No. 47, and it must be rejected out of hand.³

II

The Government's counterclaim cannot be so readily disposed of. The meat of that demand is a recomputation of the quantum of the equitable adjustments allowable on all (or at least some) of the individual changes appealed to the ASBCA, and defendant also makes other, subsidiary arguments concerning the amounts due Roscoe-Ajax. The trial judge held that consideration of the bulk of the counterclaim is precluded by S & E Contractors, Inc. v. United States, 406 U.S. 1, 92 S.Ct. 1411, 31 L.Ed.2d 658 (1972). In the light of that decision we must consider the general criteria for testing when, if ever, the Government may challenge via a counterclaim an adverse finding or determination by a board of contract appeals (or other ultimate contract administrative tribunal).

In S & E Contractors, Inc. the contractor was satisfied with the administrative decision and did not seek court review of any part of it. The contracting agency, the Atomic Energy Commission, was also content with its determination and willing to pay the award. It was the General Accounting Office which first indicated that the award should not be paid, and the Department of Justice took the same view when the contractor brought suit to collect the sum found by the agency to be owing but withheld because of the GAO's position. In that situation the Supreme Court ruled that the administrative decision was not reviewable under the standards of the Wunderlich Act but must be accepted as final on its face.

S & E Contractors obviously controls where the claimant accepts the agency decision in toto, but gives no flat directive where, as here, the contractor brings suit attacking a part of the administrative decision which is unfavorable to him. Drawing on different aspects of the S & E opinions, the parties (with amicus on plaintiff's side) proffer to us opposing rules representing the extreme ends of the spectrum.⁴ From the contractor's viewpoint, it is said that any administrative finding or ruling (subsidiary or ultimate), favorable to the claimant, which the board makes in the course of a decision must be accepted without inquiry, even though the board ultimately rejects the entire claim and the contractor then sues here on...