April 29, 1964

the ruling. The Supreme Court held against the contractor, saying that the decision of the subordinate was "clearly appealable" under the "Disputes" clause, and that "no justifiable excuse is apparent for respondent's failure to exhaust the appeal provisions" of that clause.28

The principle affirmed by these decisions has, moreover, been recognized as extending to decisions upon the question of whether the defense of untimeliness should be waived. In the appeal of Burton-Rodgers, Inc.,29 counsel for the Government sought to have the Armed Services Board of Contract Appeals dismiss a claim which the contracting officer had denied on the specific ground of untimeliness. The claim was asserted under a "Changes" clause which provided that claims must be asserted within 30 days from receipt of the notification of change, but that "the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract." 30 The Board refused to dismiss, saying:

Counsel contends that the power to receive and act upon late claims is within the sole discretion of the Contracting Officer and that his decision in this respect is not appealable to the Secretary of the Navy, or this Board as his authorized representative for the purpose of deciding disputes on appeals.

Clearly, the question of whether Appellant's claim should be received and acted upon was a matter about which the parties could, and did dispute. The Contracting Officer rendered a decision adverse to Appellant in this respect. However, in the absence of any language giving finality to this particular determination, the case falls within the provision of the disputes clause, article 6. *** In the absence of language giving finality to decisions called for by separate clauses, such as the one in the changes clause regarding temporal circumstances, such decisions are not exceptions to the disputes clause. This interpretation was established by the Comb case and its application extends as far back as to include the view taken by the predecessors of this Board. See Leo Sanders, BCA No. 955, dated 15 June 1945, 3 CCF 862; Everett Marine Ways, Inc., NBCA No. 203, dated 14 March 1947. In the instant case, we hold that the Contracting Officer's decision as to whether the facts justify receiving and acting upon Appellant's claim is appealable to the Secretary of the Navy under the terms of the disputes clause of the contract. Hence, as the authorized representative of the Secretary

2 Id. at 239-40.

ASBCA No. 5438 (March 7, 1960), 60–1 BCA par. 2558.

The contract was a Navy Department contract that included the same "Changes" clause and, so far as pertinent to the decision, the same "Disputes" clause as Standard Form 32 (November 1949 edition).

for such purpose, there is no lack of jurisdiction on the part of the Board to consider the matter."

The position that determinations of the contracting officer with respect to waiver of the defense of untimeliness are subject to review under the "Disputes" clause has been upheld by us in a long line of decisions.32 It has been upheld by the Armed Services Board of Contract Appeals and its predecessors, not only in Burton-Rodgers, Inc. and the appeals there cited, but in other decisions as well.33 It has also been upheld by the Corps of Engineers Board of Contract Appeals.34

Further support for this position is to be found in the decision of the Court of Claims in Guyler v. United States.35 There the contracting officer had rejected, under a "Changes" clause which contained the same temporal provisions as the clause here involved, a claim that had been presented more than 30 days after receipt of the notification of change.36 The Court began its discussion of the subject by quoting the proviso in the "Changes" clause which permitted the contracting officer to consider late claims, and then went on to hold:

The contracting officer was hundreds of miles away. As soon as plaintiff learned that the contracting officer intended to require the plaintiff to paint the interior masonry walls, he immediately filed a claim for pay for the extra work. These facts clearly called for the contracting officer to make an adjustment under the plain terms of the proviso. The ends of justice required that he do so. If the facts of this case do not justify the use of the quoted proviso, it is difficult to conceive a set of circmustances that would.

31 60-1 BCA at pp. 12, 416-17.

32 Morgan Construction Company, IBCA-299 (September 6, 1963), 1963 BCA par. 3855, 5 Gov. Contr. 489 (g) (notices of changed conditions and delays); C. C. Terry, IBCA-330 (July 30, 1963), 1963 BCA par. 3805, 5 Gov. Contr. 405 (protests); Montgomery-Macri Company and Western Line Construction Company, Inc., IBCA-59 and IBCA-72 (June 28, 1963), 70 I.D. 242, 253-59, 1963 BCA par. 3819, 5 Gov. Contr. 419 (notices of changes. changed conditions, and delays); Monarch Lumber Company, IBCA-217 (May 18, 1960), 67 I.D. 198, 200-03, 60–2 BCA par. 2674, 2 Gov. Contr. 290 (notices of changed conditions and delays); Utility Construction Company, IBCA-149 and IBCA-161 (June 19, 1958), 65 I.D. 278, 58-1 BCA par. 1804 (notices of delays); see Flora Construction Company, IBCA-101 (September 4, 1959), 66 I.D. 315, 322, 326, 59-2 BCA par. 2312, 1 Gov. Contr. 647-50 (protests and notices of changes); McWaters and Bartlett, supra note 6 (protests); J. D. Armstrong Company, Inc., supra note 6 (protests).

33 Todd Shipyards Corporation, ASBCA Nos. 2911 and 2912 (January 25, 1957), 57-1 BCA par. 1185 (notices of changes); Raylaine Worsteds, Inc., ASBCA No. 1842 (January 21, 1955) (notices of delays).

34 See J. A. Jones Construction Company, Eng. C & A No. 1082 (May 20, 1957) (notices of changed conditions).

35 314 F. 2d 506 (1963).

36 The contract was a Corps of Engineers contract that included the same "Changes" clause and, so far as pertinent to the decision, the same "Disputes" clause as Standard Form 23A (March 1953).

April 29, 1964

In the light of the entire record, we find that plaintiff is entitled to recover on his claim for the additional painting *

# 37

These statements reveal that the Court of Claims is unwilling to attach finality to an arbitrary or capricious failure or refusal of the contracting officer to waive the defense of untimeliness. The appeal taken by the contractor under the "Disputes" clause had resulted in the contracting officer's rejection of the claim being sustained, and, hence, there was no occasion for the Court to make an explicit ruling that the defense of untimeliness could have been waived by the appeals board. Nevertheless, the holding of the Court that the contracting officer's determination was not conclusive leads naturally to an inference that his determination was open to review under the general appellate procedures established by the "Disputes" clause.

The only authority cited in Dec. Comp. Gen. B-152346 as support for the statement that "The Board itself cannot waive the defense" is P.L.S. Coat & Suit Corporation v. United States.38 The claim involved in that case arose under a "Changes" clause which contained temporal provisions identical with those interpreted in BurtonRodgers, Inc. The Court summarized its ruling in the following words:

Deliveries under this contract were completed May 15, 1953, and final payment was made June 18, 1953. Plaintiff's claim directed to the contracting officer was made on January 12, 1954, some seven months after final payment. It was rejected on the very same grounds which we find applicable here, i.e., that it was untimely under the contract provisions. The ASBCA, despite the Government's assertion of untimeliness, rendered a decision against plaintiff on the merits of the claim. However, the question as to whether plaintiff's claim was timely and in conformity with the contract provisions is one of law which may be decided here. Poloran Products, Inc. v. United States, 126 C. Cls. 816, 824. We hold it was not, and plaintiff's petition with regard to its claim under this contract must be dismissed. Adherence must be had to those provisions of Government contracts which provide the mechanics for settling disputes on the administrative level. United States v. Holpuch Co., 328 U.S. 234; United States v. Blair, 321 U.S. 730, 735.40

This passage reveals that the Court of Claims rejected the claim because it was filed after final payment and, therefore, was not within

314 F. 2d at 510.

Supra note 9.

Supra note 29.

40 Supra note 9, at 300-01.

the scope of the waiver authority expressly granted the contracting officer by the "Changes" clause. There is no intimation that if the claim had been filed before final payment, the Court would still have rejected it, on the quite different ground, nowhere mentioned in the opinion, that the ASBCA lacked authority to review the contracting officer's determination not to waive. On the contrary, the last sentence of the quoted passage with its citation of the Holpuch case, supra,“ in which the Supreme Court applied the "Disputes" clause to a decision upon a matter that another provision of the contract specifically authorized a particular official to decide, is an intimation that determinations with respect to waiver are not exempt from review under that clause.

41

A provision which states, as does the "Changes" clause, that the contracting officer "if he determines that the facts justify such action, may" (Italics supplied) consider a late claim, necessarily reposes a considerable measure of judgment and discretion in the contracting officer. The exercise of judgment and discretion, however, is something which is often required of contracting officers, and which is quite capable of being reviewed in an appropriate manner under the "Disputes" clause. The appeal of Conn Structors, contains an apt illustration. One of the matters there in controversy was the propriety of a ruling by the contracting officer that concrete forms should not be stripped from the lower floors of a building before the concrete pouring operations for the upper floors had been completed, unless secondary shoring was placed to support the upper floors. The contract provided that "Forms shall be removed only with approval of Contracting Officer." The decision of the ASBCA states:

*** Having agreed to be bound by the discretionary decision of the contracting officer, appellant can prevail in its claim for additional compensation under the "Changes and Extras" article of the contract only by establishing that the discretion was abused and the decision was arbitrary or unreasonable.

The contracting officer here was obligated [by a contract provision] to prohibit the removal of supporting forms and shoring “until members have acquired sufficient strength to support safely their weight and the load thereon. ** He was compelled to consider the "complete safety of the structure" requirements of the contract provision. In making his decision he had also to consider the safety of appellant's employees and Government personnel who were required to

41 Supra note 27.

42 ASBCA Nos. 5162, 5195 and 5245 (April 28, 1960), 60–1 BCA par. 2627.

April 29, 1964

be in and about the buildings being constructed. To permit early stripping of forms, desired by appellant, the contracting officer decided complete safety of the structure and personnel required secondary shores as prescribed in his directives. The testimony of some of the experts indicates that secondary shoring was necessary. In these circumstances, that is, where qualified experts differ, a decision made and requirements imposed which are in accord with the opinions of some of the experts cannot be said to be arbitrary or unreasonable. Where the safety of property and personnel is involved, we believe it reasonable to expect the decision to be in accord with that opinion which assured the desired result. We find the decision to be reasonable and that the requirements imposed were not "Changes or Extras." 43

It follows that the presence in a contract of language explicitly authorizing the contracting officer to determine whether the defense of untimeliness should be waived, and in so doing to exercise the judgment and discretion inherent in such expressions as "justify" and "may," offers no valid reason for a holding that the exercise of such judgment and discretion is exempt from review under the "Disputes" clause.

We are forced to conclude that the statement "The Board itself cannot waive the defense" is inconsistent with sound principles that are supported by the weight of authority.

14

There remains the question of whether this statement, by virtue of its inclusion in Dec. Comp. Gen. B-152346, has binding effect with respect to the instant appeal. As Department Counsel points out, we have ruled that decisions by the Comptroller General on specific questions of law are binding upon the Board. In making these rulings we had regard to the policy expressed in the Dockery Act of July 31, 1894, as amended by the Budget and Accounting Act of June 10, 1921, that "Balances certified by the General Accounting Office, upon the settlement of public accounts, shall be final and conclusive upon the Executive Branch of the Government *** 45

The situation presented by the instant appeal, however, does not fall within the statutory policy. The cases mentioned in the preceding

4360-1 BCA at p. 12,988.

"Merritt-Chapman & Scott Corporation, IBCA-240 (November 9, 1961), 68 I.D. 363, 364, 61-2 BCA par. 3194, 4 Gov. Contr. 83; Reid Contracting Company, Inc., IBCA-74 (December 19, 1958), 65 I.D. 500, 516-19, 58-2 BCA par. 2037, 1 Gov. Contr. 50-52. Accord: Gainesville Scrap Iron & Metal Company, ASBCA No. 3460 (May 28, 1957), 57–1 BCA par. 1274.

46

July 31, 1894, sec. 8, 28 Stat. 207; June 10, 1921, title III, sec. 304, 42 Stat. 24; 31 U.S.C. sec. 74. See Brooks-Calloway Company v. United States (on remand by the Supreme Court), 97 Ct. Cl. 702, 704-05 (1943); Economy Pumps, Inc., IBCA-94 (February 13, 1957), 57–1 BCA par. 1173.