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Is a claimant's position any different after a GAO "settlement" than after a mere agency payment? If the claim is paid he is theoretically better off because the GAO will be estopped from later “disallowing" the payment." On the other hand, if the agency turns the claimant down he can then appeal to the GAO, while the converse is not true.

Even GAO denial of a claim is not the last word, however. GAO settlement of a claim is said to be "conclusive on the Executive Branch of the Government but not on the claimant." but once again the talk of a "conclusive" decision confuses more than clarifies the matter. A far better way to put the rationale for the finality of both agency and GAO payments at this initial level is the concept of accord and satisfaction. In reality, when the GAO becomes involved it offers to settle the claim for a particular sum. If the claimant likes the offer, he takes it and the matter is closed.98 If it is unacceptable, he pursues his further judicial or administration remedies. The power to "settle . . . all claims" appears absolute, but that language was written fifty years before creation of the Court of Claims as a viable judicial remedy.99 Now many claimants can sue directly in that court, and the GAO's conclusions in the matter are utterly irrelevant,100 just as settlement negotiations would be in any other case.

Surprisingly little conflict has arisen between the GAO and executive agencies with respect to this parallel and overlapping jurisdiction to settle claims.101 Sums at stake have usually been small, relatively

96. Cf. Lambert Lumber Co. v. Jones Eng'r & Constr. Co., 47 F.2d 74 (8th Cir. 1931).

97. Shnitzer § 1739.

98. Cf. Marr v. United States, 106 F. Supp. 204, 207 (Ct CL 1952). Seen in this light, the GAO's presumption that the agency is right seems far less arbitrary. It also is reasorable for it to deny any claim "as to which there exists any substantial question of fact or law." Shnitzer § 1739.

99. The Court of Claims was created in 1855. Act of Feb. 24, 1855, ch. 122, 10 Stat. 612 (1855). The growth in significance of the Court of Claims seems to have taken the GAO somewhat by surprise. In 1924, Comptroller General McCarl wrote: [JJudgments of the courts are to be reported to the Congress for appropriations. The appropriations originally available for the particular subject matter are not ordinarily chargeable with such judgments. The difference in the result in the two forums-the courts and the General Accounting Office-here clearly appears. A favorable determination by the General Accounting Office upon a claim makes it immediately payable from such moneys as may remain unexpended in the obligated appropriation.

4 COMP. GEN. 404, 406 (1924).

100. E.g., Iran Nat'l Airlines Corp. v. United States, 360 F.2d 640, 641-42 (Ct. Cl. 1966).

101. One area of minor conflict is illustrated by Marr v. United States, 106 F. Supp. 204 (Ct. Cl. 1952). There a claim for work done for the Alaskan Road Com

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few claimants have gone to the GAO for relief, and as to those that have, the agencies have tended to believe their position was getting fair consideration from the GAO. In theory, this same basic process might be available for "settlement" of disputed sums due under Government contracts. Whether or not it is so available has been a matter of major controversy reaching the United States Supreme Court.

GAO Intervention in the Disputes Process

A Government contract contains clauses that transform what would ordinarily be a breach of contract by the Government into a claim for "equitable adjustment" of the contract price.102 The con

mission was barred by the Court of Claims' six-year statute of limitations. A claim to the GAO may be filed any time within ten years so the GAO settled the claim in question. The Commission resisted paying this sum since it thought the Court of Claims statute protected it. The Court of Claims held, however, that the GAO has clear authority to so settie. The Court of Claims then had jurisdiction to enforce the GAO settlement even though not the original debt.

102. For example, the "Changes" clause in a standard contract for supply of material reads:

The Contracting officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scone of this contract, in any one or more of the following: (i) Drawings, designs, or specifications, where the supplies to be furnished are to be specially manufac tured for the Government in accordance therewith; (ii) method of shipment or packing; and (iii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for, the performance of any part of the work under this contract, whether changed or not changed by any such order, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accordingly. Any claim by the Contractor for adjustment under this clause must be asserted within 30 days from the date of receipt by the Contractor of the notification of change: Provided, however, 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.

Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed.

41 C.F.R. § 1-7.101-2 (1972). The "Disputes" clause then reads:

(a) Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting officer shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary. The decision of the Secretary or his duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause. the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor

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[Vol. 51 tractor must continue work despite the "breach" and must seek his equitable adjustment first from the contracting officer. If they can agree, that is the end of the matter, but if they cannot agree, the contractor has thirty days to appeal to the head of the agency.

103

Almost invariably this in practice means bringing the case before a board of contract appeals. Such boards are not creatures of statutes. They are established by administrative regulations of their agencies to hear cases arising under agency contracts. The boards range from legal personnel assigned to hear cases on a part time basis to large, full-time boards sitting in regular panels. All, however, hold full, adversary hearings on the facts and law and render a decision on the merits.

It may initially seem somewhat surprising that the GAO would have tolerated so long such an executive procedure that supplants much of its theoretical authority over clains. Comptroller General McCarl had early declared himself authorized to consider even unliquidated disputed claims.105 The Supreme Court, however, had long held that the power of executive agencies to make contracts includes the power to settle them.106 The GAO can, and to some extent has, argued that the Budget and Accounting Act amended that rule, but even McCarl recognized that the General Accounting Office has never been equipped to hold adversary hearings. 10 As a result it has been severely hampered in making factual determinations. Deciding whether work was done, at what cost, whether changes were ordered, appropriate overhead rates, and so on, are virtually impossible for the GAO without

shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision.

(b) This "Disputes" clause does not preclude consideration of law questions in connection with decisions provided for in paragraph (a) above: Provided, That nothing in this contract shall be construed as making final the decision of any administrative official, representative, or board on a question of law.

41 C.F.R. § 1-7.101-12 (1972).

103. See Shedd, Disputes and Appeals: The Armed Services Board of Contract Appeals, 29 LAW & CONTEMP. PROB. 39, 66 (1954).

104. There are now eleven different boards. A listing of them can be found in 4 REPORT OF THE COMM'N ON GOV'T PROCUREMENT 14 (1972) Thereinafter cited as PROC. COMM'N]. A good discussion of Board rules of procedure is provided in Burch, Discovery Procedures and Techniques Before Government Boards of Contract Appeals, 4 PUB. CONT. L.J. 119 (1971).

105. 4 COMP. GEN. 404 (1924).

106. United States v. Corliss Steam-Engine Co., 91 U.S. 321 (1875). See also Cannon Constr. Co. v. United States, 319 F.2d 173, 178 (G. Cl. 1963).

107. 4 COMP. GEN. 404, 405-06 (1924), quoting Comptroller of the Treasury Downey in 21 Comp. Dec. 134, 138 (1914).

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some sort of documentary record it can take as true. The GAO likewise has never had technical personnel on its own staff, so it must rely on a written record to assess the quality or sufficiency of work done. As a result, deference to agency fact-finding has been a practical necessity. The GAO calls this "exhaustion of administrative remedies, but the label is misleading. The practice derives solely from expediency and not from primary jurisdiction or any perceived need to defer agency expertise.19

If a contractor is dissatisfied with a board of contract appeals decision, his ordinary remedy is an appeal to the Court of Claims.110 That court's review is not de novo. In the early 1950's, in United States v. Moorman and later United States v. Wunderlich,112 the Supreme Court had held that there was no judicial review at all of an administrative decision rendered under the disputes clause absent "conscious wrongdoing, an intention to cheat or be dishonest." Congress reversed those decisions by the so-called Wunderlich Act, which provided for an appeal to the Court of Claims on questions of law and the issue of whether the administrative decision was based on substantial evidence.

113

The GAO was not disinterested in the content of the Wunderlich legislation. In early drafts of the Act, some prepared by it, the GAO

108. 37 Co. GEN. 568 (1958); Comp. Gen. Dec. No. B-169375 (May 13, 1970) (unpublished); Comp. Gen. Dec. No. B-166501 (Apr. 7, 1968) (unpublished); Comp. Gen. Dec. No. B-160778 (Apr. 25, 1968) (unpublished).

109. Even now, in fact, the Comptroller General insists that some classes of claims, for example, claims for breach of contract, may only be settled in his office. E.g., 44 COMP. GEN. 353, 358 (1969). But see Shedd, Administrative Authority to Settle Claims for Breach of Government Contracts, 27 GEO. WASH. L. REV. 481 (1959). This view has been contested by the agencies and the Court of Claims does not agree, e.g., Cannon Constr. Co. v. United States, 319 F.2d 173 (Ct. Cl. 1963), but it illustrates that the GAO still considers determination of sums the Government owes to be its function and any power in the agencies in this regard to be more a matter of convenience than a matter of right. Some have proposed an "all breach" disputes clause to eliminate any distinction between breaches covered by the clause and those which are not. E.g., Lane. Administrative Resolution of Government Breaches-The Case for an Ali-Breach Clause, 28 FED. B.J. 199 (1968): 4 PROC. COMM'N 22-23. The Supreme Court has insisted upon "exhaustion of administrative remedies" before a contractor can file suit in court. E.g., United States v. Joseph A. Holpuch Co., 328 U.S. 234 (1946). In part, then, the exhaustion of remedies language is one more example of the GAO conceiving of itself as functionally like a court.

110. The coun's jurisdiction is based on 28 U.S.C. § 1491 (1970). suits founded upon an "express or implied contract with the United States." Concurrent jurisdiction exists in the United States District Courts for claims not exceeding 10,000 dollars. 28 U.S.C. § 1346(2) (1970).

111. 338 U.S. 457 (1950).

112. 342 U.S. 98 (1951).

113. 41 U.S.C. § 321-22 (1964).

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[Vol. 51 was given a right of review of administrative decisions coequal with the courts.11 That is, either side could "appeal" a board of contract appeals decision to the GAO. Substantial opposition was raised to that, however, primarily by contractors who feared the GAO would be a "watchdog of the Treasury" and regularly reverse decisions favorable to them.115 Faced with probable defeat of any bill specifically giving the GAO a right of review, the Comptroller General supported deletion of that power in exchange for the following language in the House committee report: "The elimination of the specific mention of the General Accounting Office from the provisions of the bill as amended should not be construed as taking away any of the jurisdiction of that office."116 The Comptroller General asserted the GAO had lost nothing and was "in precisely the same situation it was in before [the Wunderlich case]."117

The Function of a Contract Appeals Board

To find one's way through the rhetoric in this area, it is important to see that there are two inconsistent but often simultaneously held views of the nature of an agency board of contract appeals. On the one hand, the disputes clause provides that the board is the "duly authorized representative" of the head of the agency. This may imply that it provides a high level review from the perspective of the Secretary.118 On the other hand, the trial-type, objective character of the proceeding and the relative finality that is accorded its findings of fact make the Board seem more like an independent administrative court

114. S. 2487, 82d Cong., 2d Sess. (1952). as amended by the Senate. See S. REP. No. 1670, 82d Cong., 2d Sess. 1 (1952). This history is set out in great detail in Justice Brennan's dissent in S & E Contractors v. United States, 406 U.S. 1, 23-90 (1972).

115. The flavor of this period is captured in Schultz, Proposed Changes in Government Contract Disputes Settlement: The Legislative Battle Over the Wunderlich Case, 67 HARV. L. REV. 217 (1953); Spector, Is it "Bianch?'s Ghost"-Or “Much Ado About Nothing," 29 Law & CONTEMP. PROB. 87, 108-111 (1964). In particular, concern was expressed over what uncertainty over possible GAO "reversal" would do to a contractor's ability to get further credit. Schultz, supra at 243-244.

116. H.R. REP. No. 1380, 83d Cong., 2d Sess: 6-7 (1954).

117. Hearings before Subcommittee No. 1 of the House Judiciary Committee on H.R. 1839 et al., 83d Cong., 2d Sess. (1953-54) at 136. The question then arises what the GAO's authority was before Wunderlich. Courts following the Kihlberg analysis had generally not upheld review. See James Graham Mig. Co. v. United States, 91 F. Supp. 715 (N.D. Cal. 1950); Note, S & E Contractors and the GAO Role in Government Contract Disputes: A Funny Thing Happened on the Way to Finality, 55 VA. L. REV. 762, 770-72 (1969).

118. See, c.g., McWilliams Dredging Co. v. United States, 118 Ct. Cl. 1 (1950).