Yosemite Park v. United States, 375-75.

• Decision Date: 14 July 1978
• Docket Number: No. 375-75.,375-75.
• Citation: 582 F.2d 552
• Parties: YOSEMITE PARK and Curry Company v. The UNITED STATES.
• Court: U.S. Claims Court

582 F.2d 552

YOSEMITE PARK and Curry Company v. The UNITED STATES.

No. 375-75.

United States Court of Claims.

July 14, 1978.

Robert H. Thau, Beverly Hills, Cal., attorney of record, for plaintiff. Rosenfeld, Meyer & Susman, Beverly Hills, Cal., of counsel.

Bernard M. Brodsky, Washington, D.C., with whom was Asst. Atty. Gen. Barbara Allen Babcock, Washington, D.C., for defendant. Lars A. Hanslin, Dept. of Interior, Washington, D.C., of counsel.

Before DAVIS, KUNZIG, and BENNETT, Judges.

ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

KUNZIG, Judge.

This action, arising from plaintiff's attempted recovery on a contract which defendant now contends is invalid and unenforceable under Government procurement law, is before the court on the parties' cross-motions for summary judgment. Although we agree with the defendant that a contract with terms such as the express written contract entered into by Yosemite Park and Curry Company (YPC or plaintiff) and the National Park Service (NPS) is rendered invalid as not in accordance with applicable Government procurement statutes and regulations, we conclude that plaintiff did perform and defendant did knowingly receive the benefit of certain bargained-for and agreed-upon services and that plaintiff is, therefore, entitled to recover in quantum meruit the reasonable value of the services rendered. Because a determination of the reasonable value of the benefit received by defendant is subject to proof of facts and is not ascertainable from the record now before us, we must remand this case to our Trial Division for further proceedings in accordance with Rule 131(c)(2).

The contractual relationship between plaintiff and the defendant, operating through the NPS of the Department of the Interior, began in May of 1963, when they executed a concession contract pursuant to 16 U.S.C. § 3 (1976). Under the terms of this agreement, defendant granted to plaintiff the right to establish certain public facilities and accommodations, including lodging, food and beverage services, and other merchandising operations, in Yosemite National Park, with plaintiff establishing reasonable rates and prices for its goods and services.

This contract also authorized the concessioner (plaintiff) to provide a transportation service within the Park, with fees to be paid by the public but subject to a review for reasonableness by the Secretary of the Interior. Various transportation services, including a shuttle bus, were begun by YPC under this contract.

On March 26, 1971, however, the Park transportation service was modified when the parties entered into a Memorandum of Agreement for the Furnishing of a Transportation System at Yosemite National Park (the Agreement). This Agreement arose, at least partially, from the successful experiment which YPC had conducted, beginning in February of 1970, in an effort to ease the ever increasing pollution and congestion in the Park, by operating its shuttle bus service without charge to the public. The NPS then decided, in July of 1970, to ban private automobiles from the Park. The Agreement was the natural outgrowth of this move toward overall public transportation in the Park.

Under the terms of the Agreement, plaintiff agreed to provide bus service to the public without charge and defendant agreed to reimburse YPC for its actual expenses plus a reasonable profit for providing this service.¹ Addendum Number Two to the Agreement provided that plaintiff was able to recover federal income taxes as a reimbursable fixed cost and that plaintiff's annual operating fee was to be calculated as 12½ percent of its average gross investment in the transportation equipment employed in the service.

The form of the Agreement and its Addenda were selected and authorized by the NPS and all papers were drafted, approved and signed by a representative of the NPS. In addition, each document recited that it was entered into pursuant and subject to the original Concession Contract.

Plaintiff contends, and defendant does not contest (1) that defendant's first two audits, under the Agreement,² dated August 1971 and August 1972, approved all costs and payments and made no objection to the validity of the Agreement or to any of the terms or provisions thereof; (2) that YPC invested, based on the required performance and expected income of the Agreement, over $459,000 in transportation equipment during fiscal year 1972, and spent many weeks formalizing optimum equipment, design, fuel, routes and schedules with NPS representatives; (3) that the audit for fiscal year 1973, in which the terms of the Agreement were first questioned, was subject to an unexplained "inordinate delay" at the hands of the Government of over 18 months while YPC continued to perform under the Agreement in expectation of complete reimbursement according to its terms; and (4) that, in approving the acquisition of YPC by MCA, Inc., in June of 1973, the NPS at no time questioned the validity of any of the contracts under which YPC was operating.

Finally, in letters dated June 2 and June 4, 1975, the NPS informed YPC that it would not pay plaintiff's invoices but, instead, would offset these charges against allegedly improper payments previously made by the Government. The NPS audit had determined that treating federal income taxes as reimbursable fixed costs and allowing more than 10 percent of the cost of the contract on a "cost-plus" contract violated federal procurement statutes and regulations.

Plaintiff, alleging that NPS now owes plaintiff $481,257.89, plus interest, on account of past transportation services rendered pursuant to the Agreement, has filed this action in an effort to recover those sums on which defendant has refused payment.

Defendant, in its motion for summary judgment, asserts that the plaintiff may not recover under the terms of the Agreement because those terms are not within the allowable guidelines established for federal procurement contracts by applicable statutes and regulations. Defendant relies particularly on 41 U.S.C. § 254(b) (1970)³ in contesting the 12½ percent allowance and on the federal procurement regulations, 41 C.F.R. § 1-15.205-41(a)(1) (1977),⁴ in arguing that YPC's federal income tax payments should not be reimbursable.

The Government notes that the relevant procurement statute makes it mandatory for executive agencies to follow the above-cited regulations in purchasing property or services, except in certain very limited circumstances,⁵ and reasons that the provisions which violate procurement statutes and regulations must be held unenforceable as a matter of law, citing Whiteside v. United States, 93 U.S. 247, 23 L.Ed. 882 (1876) and G. L. Christian & Associates v. United States, 312 F.2d 418, 160 Ct.Cl. 1, cert. denied, 375 U.S. 954, 84 S.Ct. 444, 11 L.Ed.2d 314 (1963).

Defendant anticipates the position of plaintiff by arguing that the Secretary of the Interior's general concession authority, delineated in 16 U.S.C. §§ 3, 17b, 20b(a)-(b) (1976)⁶ does not except the Agreement from the ambit of the procurement statutes and regulations. Nowhere in any of these sections, asserts defendant, is statutory language sufficiently explicit to render the generally effective procurement law "inapplicable pursuant to . . . any other law" within the meaning of 41 U.S.C. § 252(a)(2) (1970). In fact, the defendant continues, the explicit statement in § 17b, that the Secretary shall not be bound by "section 5 of title 41" (emphasis added) would appear to imply he is bound, as would be any Government procurement officer, by the other sections of that title, and that the very fact that 16 U.S.C. § 3 specifically permits the Secretary of the Interior authority to enter into section 3 contracts "without advertising and without competitive bids" implies that other statutory requirements are applicable to concession contracts if they, in effect, serve to purchase goods or services.

Plaintiff counters with the argument that both the original contract and the Agreement were executed under the Secretary's broad concession authority and that, as concession contracts, these agreements were exempt from the restrictions of general procurement law.

Alternatively, plaintiffs contends that, even if the Agreement does fall within the ambit of general procurement law, the defendant has not shown that the Agreement, in fact, violates the statutes and regulations cited by the Government. YPC argues that the Agreement involved experimental transportation schemes and should, therefore, have been subject to the alternate 15 percent limitation on research and development cost-plus contracts rather than the normal 10 percent limit, adding that the Government has not even demonstrated to the court that reimbursement to the plaintiff exceeded 10 percent of the cost of the contract (since the face of the Agreement called for reimbursement of 12 1/2 percent on plaintiff's investment and the two percentages are not immediately comparable). YPC also contends that, since the regulation prohibiting federal income tax reimbursement was subject to deviation, the plaintiff was entitled to rely on the Government's approval of the Agreement in its first two audits in believing that the NPS had followed proper deviation procedures (see note 10, infra).

Additionally, plaintiff adds to its repertoire the argument that the Government should be estopped now to assert the invalidity of the Agreement under which the parties operated successfully for two years and under which the Government allowed the plaintiff to operate, with expectation of full reimbursement, for almost two years after first questions had arisen. YPC contends (1) that it signed the Agreement reluctantly — only after insistent urging by NPS — and then proceeded to invest over $664,000 in transportation equipment; (2) that the Government was paid and accepted the required concession fees and accepted the full benefits of the Agreement for more...