Singer Co., Librascope Division v. United States

Decision Date14 December 1977
Docket NumberNo. 132-75.,132-75.
CourtU.S. Claims Court


Herbert L. Fenster, Washington, D.C., for plaintiff; Gilbert A. Cuneo, Washington, D.C., Atty. of record; Steven L. Briggerman and Sellers, Conner & Cuneo, Washington, D.C., of counsel.

R. W. Koskinen, Washington, D.C., with whom was Asst. Atty. Gen. Barbara Allen Babcock, Washington, D.C., for defendant.

Before LARAMORE, Senior Judge, NICHOLS and KASHIWA, Judges.



This case under the Wunderlich Act, 41 U.S.C. §§ 321, 322, comes before the court on cross-motions for summary judgment, and on the plaintiff's request for review of a report and recommended decision by Trial Judge John P. Wiese, filed by him pursuant to Rule 166(c), and affirming a decision of the Armed Services Board of Contract Appeals (ASBCA). It has been submitted on the briefs and oral argument of counsel.

Plaintiff excepted only to the trial judge's recommended dispositions respecting Claim Items 9, 3.c, 10.d, and 11, and has offered no opposition to the recommendations of the trial judge on other items. Before us, oral argument was confined by both sides to Item 11.

Upon consideration thereof, the court agrees with the trial judge's recommended decision respecting all claim items, and hereby affirms and adopts the same as the basis for its judgment in the case.

Item 11 demands that the equitable adjustment for changes should incorporate an allowance for the cost of borrowing money to finance added work required by the constructive change orders on which such adjustment was allowed by the ASBCA, the amount thereof, absent interest, being $479,641. The Board denied this item as does the trial judge and as do we, but the trial judge alters the Board's grounds somewhat. He takes the view in substance that the evidence before the Board, read most favorably to plaintiff, fails to establish a nexus or causal connection between the expenditures by plaintiff and the borrowings by plaintiff's corporate parent to provide cash for all its activities and those of its subsidiaries. He refers to a decisional trend by the ASBCA to allow interest not actually paid as such, "as an element of profit based upon the imputed value of the equity capital." Plaintiff before us argued that the full scope of this new doctrine would make the nexus evidence found missing by the trial judge wholly irrelevant. But the case was not presented to the Board on any such theory, and the issue is not without its difficulties for us in view of the ancient doctrine disallowing interest against the Government, in the absence of express statute or contractual provision. E.g., United States v. Mescalero Apache Tribe, 518 F.2d 1309, 207 Ct.Cl. 369 (1975), cert. denied, 425 U.S. 911, 96 S.Ct. 1506, 47 L.Ed.2d 761 (1976). Our decision here rests solely on the insufficiency of the showing before the Board as to plaintiff's and plaintiff's parent's actual debt policy, how its debt structure was made up in the relevant period, and what connection extra work on constructive changes might have with that structure, all of which were things we could not judicially know and were essential to support Item 11 on the theory on which it was actually prosecuted. Nothing said or done in this case should be taken as intimating how interest or imputed interest should in general be dealt with in computation of equitable adjustments, where a contractor has financed additional work without contemporary reimbursement for it, nor what proof should be requisite to sustain a claim of that sort. This case stands on its own peculiar history. We note, however, that in a decision contemporaneous with this, another panel of this court grapples with the problem and establishes a precedent with respect to it. Framlau Corp. v. United States, Ct.Cl., 568 F.2d 687 (decided December 14, 1977).

It is therefore, concluded that the Board decision was supported by substantial evidence, was not arbitrary or capricious, and was not contrary to law. The plaintiff is not entitled to recover, and its motion for summary judgment is denied. The defendant's motion for summary judgment is granted and the petition is dismissed.


WIESE, Trial Judge:

In a contract with defendant dated May 3, 1962, plaintiff (also referred to herein as Librascope or the contractor) agreed to design and fabricate a Data Processing Subsystem which was to form the computer nucleus of a world-wide Air Force information gathering, recording and dispensing system—a logistics management tool to be known as the 473-L System. Plaintiff has alleged that in the performance of this contract, the Government ordered work beyond that required by the terms of the agreement, the costs of which are claimed to be compensable under the Changes clause of the contract. Following an unsuccessful presentation of its claims to the contracting officer, plaintiff appealed to the Armed Services Board of Contract Appeals,1 requesting that it be compensated in the amount of $3,918,000 on account of the alleged changes. The appeal was allowed in part and denied in part by the Board, which after reconsideration,2 awarded the contractor the sum of $479,641. Relying now on both sections of the Wunderlich Act,3 plaintiff appeals to this court certain of the claims that were denied by the Board. We affirm the Board's denial of these claims.

I. Facts

The contract for the Data Processing Subsystem portion of the 473-L System resulted from a two-step advertised procurement procedure. The proposal that plaintiff submitted in response to the Government's request for technical proposals was incorporated into the contract. The original contract covered only what was termed the Interim Operational Capability (IOC) configuration of the Data Processing Subsystem, that is, one-half of a proposed paired system which, in its entirety, was to be referred to as the Complete Operational Capability (COC) configuration. The Government retained and eventually exercised its option to order the complete system.

Librascope had previously provided a computer system to the Federal Aviation Administration (FAA) which it believed to be similar to the Government's contemplated 473-L System. Accordingly, in the instant situation, Librascope's proposal envisioned use of this FAA computer as a baseline from which to develop the subsystem for the 473-L program. Also, that proposal relied significantly on the use of off-the-shelf components, a practice which was encouraged by the Air Force.

The 473-L System was made up of three major hardware components: the Data Processing Subsystem (DPSS) which was to receive, process, store and dispense information received from other components of the system, the AUTODIN which was an existing world-wide Air Force communications network, and the Integrated Console Subsystem (ICSS) which was to be used to display information received from the Data Processing Subsystem. It was understood by all parties that a crucial aspect of contract performance would involve successful integration of these three major elements.

A number of other contractors were involved in the development of the 473-L System as a whole. In addition to contractors that supplied hardware elements, there were those that provided software and others who advised the Government on different technical aspects of the system. The Data Processing Subsystem was the first part of the 473-L System to be procured, although considerable work had previously been done by the Government (as well as other contractors) in preparation for the work of the Data Processing Subsystem contractor.

Given its scope and complexity, effective administration of the procurement demanded the participation of several Government agencies and private contractors. Thus, overall responsibility (i. e., the contracting officer) was located in the System Program Office of the Electronics Systems Division (ESD) of the Air Force Systems Command; Rome Air Development Center (RADC), another command in the Air Force, was assigned responsibility for providing technical engineering consultation to the 473-L Engineering Division at the Electronics Systems Division (ESD); MITRE Corporation (MITRE), a nonprofit organization, provided technical assistance in electronics design to the System Program Office; International Business Machines Corporation (IBM) was placed under contract to provide technical assistance to the Electronics Systems Division; finally, International Telephone and Telegraph Corporation (ITT) was contractually responsible for the Integrated Console Subsystem portion of the 473-L System.

The Data Processing Subsystem contract was essentially completed in the fall of 1964, more than a year later than scheduled. Additional facts are provided as part of the discussion of each of the several claims that follow.

II. The Contractor's Claims4
Claim 6.e
Elimination of Duplexer

In plaintiff's original technical proposal of February 19, 1962, the COC installation (that is, the total paired system) that was depicted included, as a part of the Data Processing Subsystem, a freestanding piece of equipment referred to as a duplexer. The purpose of the duplexer was to provide the COC configuration with a switching capability that would permit either of the two central processing units to function with either of the two mass memory units. In the COC equipment, as finally installed, a freestanding duplexer was not included. Plaintiff's claim is that elimination of the duplexer had been unilaterally ordered by the Government and that, because of this action, it became necessary to substitute a more complex (and more expensive) distributed switching system. Recovery of the additional costs associated with this claimed extra effort was denied by the...

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